Quote from OLOG Annual report.
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Bristow's operating margin declined from 5.2% in fiscal 1999 to 0.4% in the fiscal 2000. These low margins are due to the reduced utilization and pricing pressures discussed above and the terminated contracts and related restructuring charges of $5.0 million recognized in the second quarter of fiscal year 2000. The restructuring charges were incurred to adjust Bristow's staffing to the current volume of work and entailed a reduction in the North Sea workforce by 19%. Absent these charges, Bristow's operating margin for fiscal 2000 would have been 2.2%. The Company expects to realize at least $7 million in combined annual salary savings from the aforementioned redundancy program. In addition, further cost reductions, including additional employee terminations, renegotiating contracted maintenance services and revisions to employee benefit plans, are being pursued as management works to establish a more cost effective and competitive organization. However, given the significant reduction in North Sea flight activity, it is likely that Bristow's results and operating margins will be adversely affected for sometime absent increased activity in the North Sea market.
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Cash flows used in investing activities were $64.4 million, $13.0 million, and $54.2 million for 2000, 1999 and 1998, respectively. During 2000, the Company received proceeds of $10.3 million primarily from thirteen separate disposals of aircraft. During the same period, the Company purchased seven Bell 407's for $9.4 million; four S-61's for $10.9 million, two S-76's for $4.5 million, 5 Bell 412's for $19.8 million and three Super Puma's for $20.4 million. In addition, the Company placed $4.3 million into escrow, included in other assets as of March 31, 2000, for the purchase of three S-76 aircraft. Subsequent to year-end, the Company purchased two Bell 412's for $10 million. The Company has no other material capital commitments outstanding. The majority of these aircraft purchases were made to fulfill customer contract requirements. The three Super Pumas and two S76s referenced above were acquired in anticipation of international expansion. Capital expenditures during 1999 of $19.2 million included one AS332L-Super Puma and three Bell 407's. The Company used existing cash to purchase these aircraft. Deposits on two new AS332L-Super Pumas made during the third quarter of 1999 were refunded to the Company during the fourth quarter of 1999 after the Company decided to lease rather than purchase these aircraft (see Note F in the "Notes to Consolidated Financial Statements"). During 1998, the Company acquired five aircraft (including four AS332L-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. In addition to the financed aircraft, the Company used existing cash to purchase 13 Bell 407's, four Sikorsky S-76's and one Bell 214ST in 1998.