ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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72-1455213
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(State or Other Jurisdiction of
Incorporation or Organization)
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(IRS Employer
Identification No.)
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818 Town & Country Blvd., Suite 200
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Houston, Texas
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77024
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
¨
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Accelerated filer
ý
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Non-accelerated filer
¨
(Do not check if a smaller
reporting company)
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Smaller reporting company
¨
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Part I.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II.
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Item 1A.
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Item 2.
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Item 6.
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ITEM 1.
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FINANCIAL STATEMENTS
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ERA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
|
|||||||
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June 30,
2015 |
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December 31,
2014 |
||||
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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17,002
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$
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40,867
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Receivables:
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Trade, net of allowance for doubtful accounts of $1,982 and $1,955 in 2015 and 2014, respectively
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39,866
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33,390
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Other, net of allowance for doubtful accounts of $0 and $437 in 2015 and 2014, respectively
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2,110
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2,062
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Inventories, net
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25,808
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26,869
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Deferred income taxes
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2,507
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|
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1,996
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Prepaid expenses and other
|
3,847
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2,661
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Escrow deposits
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6,762
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—
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Total current assets
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97,902
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107,845
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Property and equipment
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1,192,445
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1,171,267
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Accumulated depreciation
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(314,484
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)
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(308,141
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)
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Net property and equipment
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877,961
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863,126
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Equity investments and advances
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30,945
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31,753
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Goodwill
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1,823
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352
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Intangible assets
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1,410
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—
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Other assets
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14,547
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14,098
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Total assets
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$
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1,024,588
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$
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1,017,174
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LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST
AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable and accrued expenses
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$
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12,026
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$
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15,120
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Accrued wages and benefits
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7,293
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7,521
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Accrued interest
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813
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949
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Current portion of long-term debt
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26,130
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27,426
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Derivative instruments
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192
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1,109
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Accrued income taxes
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7,613
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267
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Other current liabilities
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3,556
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3,162
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Total current liabilities
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57,623
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55,554
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Long-term debt
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267,671
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282,118
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Deferred income taxes
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218,802
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217,027
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Other liabilities
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1,994
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2,111
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Total liabilities
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546,090
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556,810
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Commitments and contingencies (see Note 8)
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Redeemable noncontrolling interest
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5,195
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—
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Equity:
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Era Group Inc. stockholders’ equity:
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Common stock, $0.01 par value, 60,000,000 shares authorized; 20,582,391 and 20,371,672 outstanding in 2015 and 2014, respectively, exclusive of treasury shares
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206
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204
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Additional paid-in capital
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431,233
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429,109
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Retained earnings
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43,088
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31,797
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Treasury shares, at cost, 19,209 and 18,609 shares in 2015 and 2014, respectively
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(563
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)
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(551
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)
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Accumulated other comprehensive income (loss), net of tax
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(44
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)
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95
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Total Era Group Inc. stockholders’ equity
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473,920
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460,654
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Noncontrolling interest
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(617
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)
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(290
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)
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Total equity
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473,303
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460,364
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Total liabilities, redeemable noncontrolling interest and stockholders’ equity
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$
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1,024,588
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$
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1,017,174
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ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
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|||||||||||||||
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2015
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2014
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2015
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2014
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||||||||
Operating revenues
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$
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70,738
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$
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86,580
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$
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138,153
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$
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166,023
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Costs and expenses:
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Operating
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39,784
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54,679
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83,389
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104,319
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Administrative and general
|
10,779
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10,065
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20,522
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21,399
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Depreciation
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11,398
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11,425
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23,000
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22,712
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Total costs and expenses
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61,961
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76,169
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126,911
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148,430
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Gains (losses) on asset dispositions, net
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(242
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)
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3,139
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3,146
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6,030
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Operating income
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8,535
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13,550
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14,388
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23,623
|
|
||||
Other income (expense):
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Interest income
|
317
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|
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143
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568
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288
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|
||||
Interest expense
|
(2,881
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)
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(3,840
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)
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(6,426
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)
|
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(7,593
|
)
|
||||
Gain on debt extinguishment
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—
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—
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|
|
264
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|
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—
|
|
||||
Derivative losses, net
|
(10
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)
|
|
(11
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)
|
|
(22
|
)
|
|
(41
|
)
|
||||
Note receivable impairment
|
—
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|
|
(2,457
|
)
|
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—
|
|
|
(2,457
|
)
|
||||
Foreign currency gains (losses), net
|
543
|
|
|
21
|
|
|
(2,417
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)
|
|
(36
|
)
|
||||
Gain on sale of FBO (see Note 5)
|
12,946
|
|
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—
|
|
|
12,946
|
|
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—
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|
||||
Other, net
|
(9
|
)
|
|
13
|
|
|
(9
|
)
|
|
13
|
|
||||
Total other income (expense)
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10,906
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|
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(6,131
|
)
|
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4,904
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|
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(9,826
|
)
|
||||
Income before income taxes and equity earnings
|
19,441
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|
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7,419
|
|
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19,292
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|
|
13,797
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|
||||
Income tax expense
|
8,138
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|
|
2,759
|
|
|
8,083
|
|
|
5,262
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|
||||
Income before equity earnings
|
11,303
|
|
|
4,660
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|
|
11,209
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|
|
8,535
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|
||||
Equity earnings (losses), net of tax
|
(198
|
)
|
|
536
|
|
|
(343
|
)
|
|
1,035
|
|
||||
Net income
|
11,105
|
|
|
5,196
|
|
|
10,866
|
|
|
9,570
|
|
||||
Net loss attributable to non-controlling interest in subsidiary
|
228
|
|
|
25
|
|
|
425
|
|
|
96
|
|
||||
Net income attributable to Era Group Inc.
|
$
|
11,333
|
|
|
$
|
5,221
|
|
|
$
|
11,291
|
|
|
$
|
9,666
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.55
|
|
|
$
|
0.26
|
|
|
$
|
0.55
|
|
|
$
|
0.48
|
|
Diluted
|
$
|
0.55
|
|
|
$
|
0.26
|
|
|
$
|
0.55
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
20,273,780
|
|
|
20,066,060
|
|
|
20,235,082
|
|
|
20,009,808
|
|
||||
Diluted
|
20,332,657
|
|
|
20,134,473
|
|
|
20,295,498
|
|
|
20,080,117
|
|
ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)
|
||||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net income
|
|
$
|
11,105
|
|
|
$
|
5,196
|
|
|
$
|
10,866
|
|
|
$
|
9,570
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
|
(137
|
)
|
|
(52
|
)
|
|
(140
|
)
|
|
(54
|
)
|
||||
Income tax benefit
|
|
—
|
|
|
23
|
|
|
1
|
|
|
24
|
|
||||
Total other comprehensive loss
|
|
(137
|
)
|
|
(29
|
)
|
|
(139
|
)
|
|
(30
|
)
|
||||
Comprehensive income
|
|
10,968
|
|
|
5,167
|
|
|
10,727
|
|
|
9,540
|
|
||||
Comprehensive loss attributable to non-controlling interest in subsidiary
|
|
228
|
|
|
25
|
|
|
425
|
|
|
96
|
|
||||
Comprehensive income attributable to Era Group Inc.
|
|
$
|
11,196
|
|
|
$
|
5,192
|
|
|
$
|
11,152
|
|
|
$
|
9,636
|
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ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited, in thousands)
|
||||||||||||||||||||||||||||
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained Earnings
|
|
Treasury
Shares
|
|
Accumulated
Other
Comprehensive
Income
|
|
Non-
controlling
Interest In
Subsidiary
|
|
Total
Equity
|
||||||||||||||
December 31, 2014
|
|
$
|
204
|
|
|
$
|
429,109
|
|
|
$
|
31,797
|
|
|
$
|
(551
|
)
|
|
$
|
95
|
|
|
$
|
(290
|
)
|
|
$
|
460,364
|
|
Issuance of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Restricted stock grants
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Employee Stock Purchase Plan
|
|
—
|
|
|
612
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
612
|
|
|||||||
Share award amortization
|
|
—
|
|
|
1,321
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,321
|
|
|||||||
Stock option amortization
|
|
—
|
|
|
171
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
171
|
|
|||||||
Employee Stock Purchase Plan amortization
|
|
—
|
|
|
109
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|||||||
Cancellation of restricted stock
|
|
—
|
|
|
12
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Tax deficit from share award plans
|
|
—
|
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|||||||
Net income
(1)
|
|
—
|
|
|
—
|
|
|
11,291
|
|
|
—
|
|
|
—
|
|
|
(327
|
)
|
|
10,964
|
|
|||||||
Currency translation adjustments, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(139
|
)
|
|
—
|
|
|
(139
|
)
|
|||||||
June 30, 2015
|
|
$
|
206
|
|
|
$
|
431,233
|
|
|
$
|
43,088
|
|
|
$
|
(563
|
)
|
|
$
|
(44
|
)
|
|
$
|
(617
|
)
|
|
$
|
473,303
|
|
(1)
|
Excludes net
loss
of
$98
attributable to redeemable noncontrolling interests in subsidiary.
|
ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
|
|||||||
|
Six Months Ended
June 30, |
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
10,866
|
|
|
$
|
9,570
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
23,000
|
|
|
22,712
|
|
||
Amortization of deferred financing costs
|
516
|
|
|
417
|
|
||
Debt discount amortization
|
129
|
|
|
123
|
|
||
Share-based compensation
|
1,601
|
|
|
2,304
|
|
||
Note receivable impairment
|
—
|
|
|
2,457
|
|
||
Bad debt expense (recovery)
|
(149
|
)
|
|
126
|
|
||
Gains on asset dispositions, net
|
(3,146
|
)
|
|
(6,030
|
)
|
||
Gain on debt extinguishment
|
(264
|
)
|
|
—
|
|
||
Gain on sale of FBO
|
(12,946
|
)
|
|
—
|
|
||
Derivative losses, net
|
22
|
|
|
41
|
|
||
Cash settlements on derivative transactions, net
|
(186
|
)
|
|
(245
|
)
|
||
Foreign currency losses, net
|
2,725
|
|
|
37
|
|
||
Deferred income tax expense (benefit)
|
(1,235
|
)
|
|
4,821
|
|
||
Equity losses (earnings), net of tax
|
343
|
|
|
(1,035
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Increase in receivables
|
(7,234
|
)
|
|
(14,550
|
)
|
||
Decrease (increase) in prepaid expenses and other assets
|
891
|
|
|
(717
|
)
|
||
Increase in accounts payable, accrued expenses and other liabilities
|
5,794
|
|
|
11,252
|
|
||
Net cash provided by operating activities
|
20,727
|
|
|
31,283
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(39,663
|
)
|
|
(52,133
|
)
|
||
Proceeds from disposition of property and equipment
|
8,384
|
|
|
6,978
|
|
||
Cash settlements on forward contracts, net
|
(1,103
|
)
|
|
—
|
|
||
Business acquisitions, net of cash acquired
|
(3,165
|
)
|
|
—
|
|
||
Proceeds from sale of FBO
|
14,252
|
|
|
—
|
|
||
Principal payments on notes due from equity investees
|
340
|
|
|
324
|
|
||
Principal payments on third party notes receivable
|
25
|
|
|
273
|
|
||
Escrow deposits, net
|
(500
|
)
|
|
—
|
|
||
Escrow deposits on like-kind exchanges, net
|
(6,174
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(27,604
|
)
|
|
(44,558
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments on long-term debt
|
(31,320
|
)
|
|
(1,491
|
)
|
||
Proceeds from Revolving Credit Facility
|
25,000
|
|
|
—
|
|
||
Revolving Credit Facility issuance costs
|
—
|
|
|
(2,393
|
)
|
||
Extinguishment of long-term debt
|
(9,297
|
)
|
|
—
|
|
||
Proceeds from share award plans
|
612
|
|
|
836
|
|
||
Net cash used in financing activities
|
(15,005
|
)
|
|
(3,048
|
)
|
||
Effects of exchange rate changes on cash and cash equivalents
|
(1,983
|
)
|
|
(72
|
)
|
||
Net decrease in cash and cash equivalents
|
(23,865
|
)
|
|
(16,395
|
)
|
||
Cash and cash equivalents, beginning of period
|
40,867
|
|
|
31,335
|
|
||
Cash and cash equivalents, end of period
|
$
|
17,002
|
|
|
$
|
14,940
|
|
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
9,548
|
|
|
$
|
8,939
|
|
Cash paid (refunded) for income taxes
|
$
|
(20
|
)
|
|
$
|
681
|
|
1
.
|
BASIS OF PRESENTATION AND ACCOUNTING POLICY
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Balance at beginning of period
|
$
|
32,666
|
|
|
$
|
26,469
|
|
|
$
|
31,047
|
|
|
$
|
24,243
|
|
Revenues deferred during the period
|
12,321
|
|
|
8,568
|
|
|
20,150
|
|
|
16,912
|
|
||||
Revenues recognized during the period
|
(7,903
|
)
|
|
(6,560
|
)
|
|
(14,113
|
)
|
|
(12,678
|
)
|
||||
Balance at end of period
|
$
|
37,084
|
|
|
$
|
28,477
|
|
|
$
|
37,084
|
|
|
$
|
28,477
|
|
2
.
|
FAIR VALUE MEASUREMENTS
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
June 30, 2015
|
|
|
|
|
|
||||||
LIABILITIES
|
|
|
|
|
|
||||||
Derivative instruments
(1)
|
$
|
—
|
|
|
$
|
192
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
December 31, 2014
|
|
|
|
|
|
||||||
LIABILITIES
|
|
|
|
|
|
||||||
Derivative instruments
(1)
|
$
|
—
|
|
|
$
|
1,109
|
|
|
$
|
—
|
|
(1)
|
The fair value of the Company’s derivative instruments was estimated using market data gathered by a third party financial institution, adjusted for market and credit risks applicable to the Company.
|
3
.
|
DERIVATIVE INSTRUMENTS
|
4
.
|
ESCROW DEPOSITS
|
5
.
|
ACQUISITIONS AND DISPOSITIONS
|
6
.
|
INCOME TAXES
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||
7.750% senior notes (excluding unamortized discount)
|
|
$
|
190,100
|
|
|
$
|
200,000
|
|
Senior secured revolving credit facility
|
|
80,000
|
|
|
85,000
|
|
||
Promissory notes
|
|
26,130
|
|
|
27,426
|
|
||
Other
|
|
182
|
|
|
—
|
|
||
|
|
296,412
|
|
|
312,426
|
|
||
Less: portion due within one year
|
|
(26,130
|
)
|
|
(27,426
|
)
|
||
Less: debt discount, net
|
|
(2,611
|
)
|
|
(2,882
|
)
|
||
Total long-term debt
|
|
$
|
267,671
|
|
|
$
|
282,118
|
|
8
.
|
COMMITMENTS AND CONTINGENCIES
|
9
.
|
EARNINGS (LOSS) PER COMMON SHARE
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Net income (loss) attributable to Era Group Inc.
(1)
|
|
$
|
11,163
|
|
|
$
|
5,150
|
|
|
$
|
11,148
|
|
|
$
|
9,539
|
|
Shares:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding - basic
|
|
20,273,780
|
|
|
20,066,060
|
|
|
20,235,082
|
|
|
20,009,808
|
|
||||
Net effect of dilutive stock options and restricted stock awards based on the treasury stock method
(2)
|
|
58,877
|
|
|
68,413
|
|
|
60,416
|
|
|
70,309
|
|
||||
Weighted average common shares outstanding - diluted
|
|
20,332,657
|
|
|
20,134,473
|
|
|
20,295,498
|
|
|
20,080,117
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.55
|
|
|
$
|
0.26
|
|
|
$
|
0.55
|
|
|
$
|
0.48
|
|
Diluted
|
|
$
|
0.55
|
|
|
$
|
0.26
|
|
|
$
|
0.55
|
|
|
$
|
0.48
|
|
(1)
|
Excludes net income of
$170
and
$71
attributable to unvested common shares for the three months ended
June 30, 2015
and
2014
, respectively and
$143
and
$127
for the
six
months ended
June 30, 2015
and
2014
, respectively.
|
(2)
|
Excludes weighted average common shares of
105,000
and
45,000
for the three months ended
June 30,
2015
and
2014
, respectively, and
79,000
and
25,500
for the
six
months ended
June 30, 2015
and
2014
, respectively, for certain share awards as the effect of their inclusion would have been antidilutive.
|
10
.
|
RELATED PARTY TRANSACTIONS
|
11
.
|
SHARE-BASED COMPENSATION
|
|
Number of Shares
|
|
Weighted Average Grant Price
|
|||
Non-vested as of December 31, 2014
|
195,920
|
|
|
$
|
25.48
|
|
Restricted stock awards granted:
|
|
|
|
|||
Non-employee directors
|
16,938
|
|
|
$
|
21.26
|
|
Employees
|
161,750
|
|
|
$
|
21.26
|
|
Vested
|
(66,227
|
)
|
|
$
|
25.51
|
|
Forfeited
|
(600
|
)
|
|
$
|
23.66
|
|
Non-vested as of June 30, 2015
|
307,781
|
|
|
$
|
23.02
|
|
Risk free interest rate
|
|
1.47
|
%
|
|
Expected life (years)
|
|
5
|
|
|
Volatility
|
|
35.11
|
%
|
|
Dividend yield
|
|
—
|
%
|
|
Weighted average exercise price of options granted (per option)
|
|
$
|
21.26
|
|
Weighted average grant-date fair value of options granted (per option)
|
|
$
|
7.04
|
|
12
.
|
GUARANTORS OF SECURITIES
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
dependence on, and the cyclical nature of, offshore oil and gas exploration, development and production activity;
|
•
|
fluctuations in worldwide prices of and demand for oil and natural gas;
|
•
|
reliance on a small number of customers and reduction of our customer base resulting from consolidation;
|
•
|
inherent risks in operating helicopters;
|
•
|
the failure to maintain an acceptable safety record;
|
•
|
the ability to successfully expand into other geographic and helicopter service markets;
|
•
|
the impact of increased United States (“U.S.”) and foreign government regulation and legislation, including potential government implemented moratoriums on drilling activities;
|
•
|
the requirement to engage in competitive processes or expend significant resources with no guaranty of recoupment;
|
•
|
the grounding of all or a portion of our fleet for extended periods of time or indefinitely;
|
•
|
reduction or cancellation of services for government agencies;
|
•
|
reliance on a small number of helicopter manufacturers and suppliers;
|
•
|
political instability, governmental action, war, acts of terrorism and changes in the economic condition in any foreign country where the Company does business, which may result in expropriation, nationalization, confiscation or deprivation of our assets or result in claims of a force majeure situation;
|
•
|
declines in the global economy and financial markets;
|
•
|
foreign currency exchange controls and exposure, including the impact of fluctuations in foreign currency exchange rates on the Company’s cost to purchase helicopters, spare parts and related services and on asset values;
|
•
|
credit risk exposure;
|
•
|
the ongoing need to replace aging helicopters;
|
•
|
reliance on the secondary used helicopter market to dispose of older helicopters;
|
•
|
reliance on information technology;
|
•
|
allocation of risk between the Company and its customers;
|
•
|
liability, legal fees and costs in connection with providing emergency response services;
|
•
|
risks associated with the Company’s debt structure;
|
•
|
operational and financial difficulties of the Company’s joint ventures and partners;
|
•
|
conflict with the other owners of the Company’s non-wholly owned subsidiaries and other equity investees;
|
•
|
adverse results of legal proceedings;
|
•
|
adverse weather conditions and seasonality;
|
•
|
adequacy of insurance coverage;
|
•
|
the attraction and retention of qualified personnel;
|
•
|
restrictions on the amount of foreign ownership of the Company’s common stock; and
|
•
|
various other matters and factors, many of which are beyond the Company’s control.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||||||||||
|
(in thousands)
|
|
%
|
|
(in thousands)
|
|
%
|
|
(in thousands)
|
|
%
|
|
(in thousands)
|
|
%
|
||||||||||||
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
$
|
58,458
|
|
|
83
|
|
|
$
|
74,941
|
|
|
87
|
|
|
113,917
|
|
|
82
|
|
|
142,263
|
|
|
86
|
|
||
Foreign
|
12,280
|
|
|
17
|
|
|
11,639
|
|
|
13
|
|
|
24,236
|
|
|
18
|
|
|
23,760
|
|
|
14
|
|
||||
Total operating revenues
|
70,738
|
|
|
100
|
|
|
86,580
|
|
|
100
|
|
|
138,153
|
|
|
100
|
|
|
166,023
|
|
|
100
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Personnel
|
15,975
|
|
|
23
|
|
|
19,488
|
|
|
23
|
|
|
33,311
|
|
|
24
|
|
|
37,573
|
|
|
23
|
|
||||
Repairs and maintenance
|
12,399
|
|
|
17
|
|
|
17,628
|
|
|
20
|
|
|
25,572
|
|
|
18
|
|
|
34,303
|
|
|
21
|
|
||||
Insurance and loss reserves
|
1,991
|
|
|
3
|
|
|
2,440
|
|
|
3
|
|
|
4,124
|
|
|
3
|
|
|
5,068
|
|
|
3
|
|
||||
Fuel
|
2,916
|
|
|
4
|
|
|
6,913
|
|
|
8
|
|
|
6,399
|
|
|
5
|
|
|
13,048
|
|
|
8
|
|
||||
Leased-in equipment
|
263
|
|
|
—
|
|
|
320
|
|
|
—
|
|
|
492
|
|
|
—
|
|
|
557
|
|
|
—
|
|
||||
Other
|
6,240
|
|
|
9
|
|
|
7,890
|
|
|
9
|
|
|
13,491
|
|
|
10
|
|
|
13,770
|
|
|
8
|
|
||||
Total operating expenses
|
39,784
|
|
|
56
|
|
|
54,679
|
|
|
63
|
|
|
83,389
|
|
|
60
|
|
|
104,319
|
|
|
63
|
|
||||
Administrative and general
|
10,779
|
|
|
15
|
|
|
10,065
|
|
|
12
|
|
|
20,522
|
|
|
15
|
|
|
21,399
|
|
|
13
|
|
||||
Depreciation
|
11,398
|
|
|
16
|
|
|
11,425
|
|
|
13
|
|
|
23,000
|
|
|
17
|
|
|
22,712
|
|
|
14
|
|
||||
Total costs and expenses
|
61,961
|
|
|
87
|
|
|
76,169
|
|
|
88
|
|
|
126,911
|
|
|
92
|
|
|
148,430
|
|
|
90
|
|
||||
Gains (losses) on asset dispositions, net
|
(242
|
)
|
|
—
|
|
|
3,139
|
|
|
4
|
|
|
3,146
|
|
|
2
|
|
|
6,030
|
|
|
4
|
|
||||
Operating income
|
8,535
|
|
|
13
|
|
|
13,550
|
|
|
16
|
|
|
14,388
|
|
|
10
|
|
|
23,623
|
|
|
14
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income
|
317
|
|
|
—
|
|
|
143
|
|
|
—
|
|
|
568
|
|
|
1
|
|
|
288
|
|
|
—
|
|
||||
Interest expense
|
(2,881
|
)
|
|
(4
|
)
|
|
(3,840
|
)
|
|
(4
|
)
|
|
(6,426
|
)
|
|
(5
|
)
|
|
(7,593
|
)
|
|
(5
|
)
|
||||
Gain on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Derivative losses, net
|
(10
|
)
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
||||
Note receivable impairment
|
—
|
|
|
—
|
|
|
(2,457
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(2,457
|
)
|
|
(1
|
)
|
||||
Foreign currency gains (losses), net
|
543
|
|
|
1
|
|
|
21
|
|
|
—
|
|
|
(2,417
|
)
|
|
(2
|
)
|
|
(36
|
)
|
|
—
|
|
||||
Gain on sale of FBO
|
12,946
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
12,946
|
|
|
9
|
|
|
—
|
|
|
—
|
|
||||
Other, net
|
(9
|
)
|
|
—
|
|
|
13
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Total other income (expense)
|
10,906
|
|
|
15
|
|
|
(6,131
|
)
|
|
(7
|
)
|
|
4,904
|
|
|
3
|
|
|
(9,826
|
)
|
|
(6
|
)
|
||||
Income before income taxes and equity earnings
|
19,441
|
|
|
28
|
|
|
7,419
|
|
|
9
|
|
|
19,292
|
|
|
13
|
|
|
13,797
|
|
|
8
|
|
||||
Income tax expense
|
8,138
|
|
|
12
|
|
|
2,759
|
|
|
4
|
|
|
8,083
|
|
|
5
|
|
|
5,262
|
|
|
3
|
|
||||
Income before equity earnings
|
11,303
|
|
|
16
|
|
|
4,660
|
|
|
5
|
|
|
11,209
|
|
|
8
|
|
|
8,535
|
|
|
5
|
|
||||
Equity earnings (losses), net of tax
|
(198
|
)
|
|
—
|
|
|
536
|
|
|
1
|
|
|
(343
|
)
|
|
—
|
|
|
1,035
|
|
|
1
|
|
||||
Net income
|
11,105
|
|
|
16
|
|
|
5,196
|
|
|
6
|
|
|
10,866
|
|
|
8
|
|
|
9,570
|
|
|
6
|
|
||||
Net loss attributable to noncontrolling interest in subsidiary
|
228
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
425
|
|
|
—
|
|
|
96
|
|
|
—
|
|
||||
Net income attributable to Era Group Inc.
|
$
|
11,333
|
|
|
16
|
|
|
$
|
5,221
|
|
|
6
|
|
|
$
|
11,291
|
|
|
8
|
|
|
$
|
9,666
|
|
|
6
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||||||||
|
(in thousands)
|
|
%
|
|
(in thousands)
|
|
%
|
|
(in thousands)
|
|
%
|
|
(in thousands)
|
|
%
|
||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oil and gas:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Gulf of Mexico
|
$
|
41,821
|
|
|
59
|
|
|
$
|
51,715
|
|
|
60
|
|
|
83,734
|
|
|
61
|
|
|
100,856
|
|
|
61
|
|
Alaska
|
6,009
|
|
|
9
|
|
|
9,305
|
|
|
11
|
|
|
9,810
|
|
|
7
|
|
|
15,502
|
|
|
9
|
|
||
International
|
47
|
|
|
—
|
|
|
173
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
1,418
|
|
|
1
|
|
||
Total oil and gas
|
47,877
|
|
|
68
|
|
|
61,193
|
|
|
71
|
|
|
93,591
|
|
|
68
|
|
|
117,776
|
|
|
71
|
|
||
Dry-leasing
|
12,233
|
|
|
17
|
|
|
11,466
|
|
|
13
|
|
|
24,189
|
|
|
18
|
|
|
22,342
|
|
|
13
|
|
||
Search and rescue
|
4,989
|
|
|
7
|
|
|
5,095
|
|
|
6
|
|
|
10,227
|
|
|
7
|
|
|
11,247
|
|
|
7
|
|
||
Air medical services
|
1,914
|
|
|
3
|
|
|
3,137
|
|
|
4
|
|
|
4,281
|
|
|
3
|
|
|
6,228
|
|
|
4
|
|
||
Flightseeing
|
3,118
|
|
|
4
|
|
|
2,946
|
|
|
3
|
|
|
3,118
|
|
|
2
|
|
|
2,946
|
|
|
2
|
|
||
FBO
|
614
|
|
|
1
|
|
|
2,858
|
|
|
3
|
|
|
2,760
|
|
|
2
|
|
|
5,700
|
|
|
3
|
|
||
Eliminations
|
(7
|
)
|
|
—
|
|
|
(115
|
)
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(216
|
)
|
|
—
|
|
||
|
$
|
70,738
|
|
|
100
|
|
|
$
|
86,580
|
|
|
100
|
|
|
138,153
|
|
|
100
|
|
|
166,023
|
|
|
100
|
|
(1)
|
Primarily oil and gas services, but also includes revenues from activities such as firefighting and utility support.
|
|
|
Owned
(1)
|
|
Joint
Ventured
|
|
Leased-in
|
|
Managed
|
|
Total
|
|
Max.
Pass.
(2)
|
|
Cruise
Speed
(mph)
|
|
Approx.
Range
(miles)
|
|
Average
Age
(3)
(years)
|
|||||||||
Heavy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
H225
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
19
|
|
|
162
|
|
|
582
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Medium:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
AW139
|
|
38
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
12
|
|
|
173
|
|
|
426
|
|
|
6
|
|
B212
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
11
|
|
|
115
|
|
|
299
|
|
|
36
|
|
B412
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
11
|
|
|
138
|
|
|
352
|
|
|
34
|
|
S76 A++
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
12
|
|
|
155
|
|
|
348
|
|
|
25
|
|
S76 C+/C++
|
|
5
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6
|
|
|
12
|
|
|
161
|
|
|
348
|
|
|
8
|
|
|
|
56
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
58
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Light—twin engine:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
A109
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
161
|
|
|
405
|
|
|
9
|
|
BK-117
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
3
|
|
|
9
|
|
|
150
|
|
|
336
|
|
|
N/A
|
|
BO-105
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
4
|
|
|
138
|
|
|
276
|
|
|
26
|
|
H135
|
|
16
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
19
|
|
|
7
|
|
|
138
|
|
|
288
|
|
|
8
|
|
H145
|
|
3
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
5
|
|
|
9
|
|
|
150
|
|
|
336
|
|
|
6
|
|
|
|
29
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
37
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Light—single engine:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
A119
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
7
|
|
|
161
|
|
|
270
|
|
|
9
|
|
AS350
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
5
|
|
|
138
|
|
|
361
|
|
|
19
|
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48
|
|
|
|
|
|
|
|
|
|
||||
Total Fleet
|
|
142
|
|
|
1
|
|
|
4
|
|
|
5
|
|
|
152
|
|
|
|
|
|
|
|
|
12
|
|
(1)
|
Includes three BO-105 helicopters and one AS350 helicopter owned by Hauser at the time of the acquisition.
|
(2)
|
In typical configuration for our operations.
|
(3)
|
Reflects the average age of helicopters that are owned by us.
|
|
Six Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Cash flows provided by or (used in):
|
|
|
|
||||
Operating activities
|
$
|
20,727
|
|
|
$
|
31,283
|
|
Investing activities
|
(27,604
|
)
|
|
(44,558
|
)
|
||
Financing activities
|
(15,005
|
)
|
|
(3,048
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1,983
|
)
|
|
(72
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(23,865
|
)
|
|
$
|
(16,395
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
Operating income before depreciation and gains on asset dispositions, net
|
$
|
34,242
|
|
|
$
|
40,305
|
|
Changes in operating assets and liabilities before interest and income taxes
|
(9,505
|
)
|
|
(5,983
|
)
|
||
Cash settlements on derivative transactions, net
|
(186
|
)
|
|
(245
|
)
|
||
Interest paid, excluding capitalized interest of $3,631 and $2,064 in 2015 and 2014, respectively
|
(5,917
|
)
|
|
(6,875
|
)
|
||
Income taxes
|
20
|
|
|
(681
|
)
|
||
Note receivable impairment
|
—
|
|
|
2,457
|
|
||
Other
|
2,073
|
|
|
2,305
|
|
||
Total cash flows provided by operating activities
|
$
|
20,727
|
|
|
$
|
31,283
|
|
•
|
Capital expenditures were
$39.7 million
, which consisted primarily of a base expansion project and deposits on future helicopter deliveries.
|
•
|
Proceeds from the disposition of property and equipment were
$8.4 million
.
|
•
|
Proceeds from the sale of the FBO were
$14.3 million
.
|
•
|
Deposits into escrow accounts, including for like-kind exchanges, net were
$6.7 million
.
|
•
|
Cash outflows for business acquisitions, net of cash acquired, were
$3.2 million
.
|
•
|
Net cash outflows for the settlement of derivative transactions were
$1.1 million
.
|
•
|
Net principal payments from notes receivable from equity investees and third parties were
$0.4 million
.
|
•
|
Capital expenditures were
$52.1 million
, which consisted primarily of helicopter acquisitions and deposits on future helicopter deliveries.
|
•
|
Proceeds from the disposition of property and equipment were
$7.0 million
.
|
•
|
Net principal payments on notes due from equity investees and third parties were
$0.6 million
.
|
•
|
Principal payments on long-term debt were
$31.3 million
.
|
•
|
Proceeds from our Revolving Credit Facility were
$25.0 million
.
|
•
|
Cash used for the repurchase of a portion of our 7.750% Senior Notes was
$9.3 million
.
|
•
|
Proceeds from share award plans were
$0.6 million
.
|
•
|
Issuance costs related to our Revolving Credit Facility were
$2.4 million
.
|
•
|
Principal payments on long-term debt were
$1.5 million
.
|
•
|
Proceeds from share award plans were
$0.8 million
.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
|
Total Number of Shares Repurchased
|
|
Average Price Paid Per
Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs
|
|||||
April 1, 2015 - April 30, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
25,000,000
|
|
May 1, 2015 - May 31, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
25,000,000
|
|
June 1, 2015 - June 30, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
25,000,000
|
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
Era Group Inc. (Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DATE:
|
August 4, 2015
|
By:
|
|
/s/ Christopher S. Bradshaw
|
|
|
|
|
|
Christopher S. Bradshaw, President, Chief Executive Officer and Chief Financial Officer
|
|
|
|
|
|
|
|
DATE:
|
August 4, 2015
|
By:
|
|
/s/ Jennifer Whalen
|
|
|
|
|
|
Jennifer Whalen,
Vice President and Chief Accounting Officer
|
|
|
|
|
|
|
|
10.1
|
|
Era Group Inc. Senior Executive Severance Plan
|
31.1
|
|
Certification by the Principal Executive and Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act.
|
32.1
|
|
Certification by the Principal Executive and Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
1.32
|
"
Tax Counsel
" shall have the meaning set forth in Section 9.3 hereof.
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[PARTICIPANT NAME]
|
|
|
|
|
|
|
|
|
|
|
|
Date: _____________________________________
|
1.
|
I have reviewed this quarterly report on Form 10−Q of Era Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a−15(e) and 15d−15(e)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
|
c)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 4, 2015
|
|
|
||
/s/ Christopher S. Bradshaw
|
||
Name:
|
Christopher S. Bradshaw
|
|
Title:
|
President, Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer) |
Date:
|
August 4, 2015
|
|
|
||
/s/ Christopher S. Bradshaw
|
||
Name:
|
Christopher S. Bradshaw
|
|
Title:
|
President, Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer) |