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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
 
FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended 
March 31, 2014
 
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________________________________________________ to ___________________________________
 
Commission file number 0-16079
     
AIR METHODS CORPORATION
(Exact name of Registrant as Specified in Its Charter)
 
Delaware
 
84-0915893
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification Number)
     
7301 South Peoria, Englewood, Colorado
 
80112
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s Telephone Number, Including Area Code (303) 792-7400
 
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 o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated Filer x
Accelerated Filer o
Non-accelerated Filer o  (Do not check if a smaller reporting company)
Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)  Yes o  No  x
 
The number of shares of Common Stock, par value $.06 per share, outstanding as of May 2, 2014, was 39,151,441.
 


 
 

 

 
TABLE OF CONTENTS

Form 10-Q
         
   
       
     
         
     
1
         
     
3
         
     
4
         
     
6
         
   
11
         
   
18
         
   
18
         
   
       
   
19
         
   
19
         
   
19
         
   
19
         
   
19
         
   
19
         
   
19
         
 
20

 
 

 



Item 1. Condensed Consolidated Financial Statements

Air Methods Corporation and Subsidiaries
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
(unaudited)

   
March 31,
   
December 31,
 
   
2014
   
2013
 
Assets
           
             
Current assets:
           
Cash and cash equivalents
  $ 8,103       9,862  
Receivables:
               
Trade, net (note 4)
    252,880       237,856  
Refundable income taxes
    11,508       11,863  
Other
    6,933       953  
      271,321       250,672  
                 
Inventories
    47,781       47,804  
Work-in-process on medical interiors and products contracts
    5,385       5,313  
Assets held for sale
    4,532       5,103  
Costs and estimated earnings in excess of billings on uncompleted contracts
    2,646       2,888  
Refundable deposits
    8,363       8,459  
Prepaid expenses and other (note 6)
    10,869       10,449  
 
               
Total current assets
    359,000       340,550  
                 
Property and equipment:
               
Land
    251       251  
Flight and ground support equipment
    615,352       584,059  
Aircraft under capital leases
    235,105       246,752  
Aircraft rotable spare parts
    43,019       41,391  
Buildings and other equipment
    55,422       51,601  
      949,149       924,054  
Less accumulated depreciation and amortization
    (264,653 )     (259,212 )
                 
Net property and equipment
    684,496       664,842  
                 
Goodwill (note 2)
    128,737       128,121  
Intangible assets, net of accumulated amortization of $14,652 and $13,397 at March 31, 2014 and December 31, 2013, respectively
    86,875       88,215  
Other assets
    28,920       30,813  
                 
Total assets
  $ 1,288,028       1,252,541  

(Continued)
 
1
 

 

 
Air Methods Corporation and Subsidiaries
 
CONDENSED CONSOLIDATED BALANCE SHEETS, Continued
(Amounts in thousands, except share and per share amounts)
(unaudited)

   
March 31,
   
December 31,
 
   
2014
   
2013
 
Liabilities and Stockholders Equity
           
             
Current liabilities:
           
Notes payable
  $ 5,696       2,616  
Current installments of long-term debt
    43,129       39,415  
Current installments of obligations under capital leases
    27,966       29,116  
Accounts payable
    17,409       20,431  
Deferred revenue
    5,047       3,463  
Billings in excess of costs and estimated earnings on uncompleted contracts
    1,651       2,232  
Accrued wages and compensated absences
    19,430       24,346  
Due to third party payers
    8,565       7,789  
Deferred income taxes
    16,106       13,748  
Other accrued liabilities
    21,628       19,162  
                 
Total current liabilities
    166,627       162,318  
                 
Long-term debt, less current installments
    498,534       477,038  
Obligations under capital leases, less current installments
    124,286       131,249  
Deferred income taxes
    89,790       86,131  
Other liabilities
    19,402       19,733  
                 
Total liabilities
    898,639       876,469  
                 
Redeemable non-controlling interests
    8,324       8,113  
                 
Stockholders equity (note 3):
               
Preferred stock, $1 par value.  Authorized 15,000,000 shares, none issued
    --       --  
Common stock, $.06 par value. Authorized 70,500,000 shares; issued 39,367,250 and 39,301,407 shares at March 31, 2014 and December 31, 2013, respectively; outstanding 39,148,440 and 39,064,437 shares at March 31, 2014 and December 31, 2013, respectively
          2,345             2,343  
Additional paid-in capital
    115,116       112,890  
Retained earnings
    264,041       253,098  
Accumulated other comprehensive loss
    (437 )     (372 )
                 
Total stockholders equity
    381,065       367,959  
                 
Total liabilities and stockholders’ equity
  $ 1,288,028       1,252,541  
 
See accompanying notes to condensed consolidated financial statements.
 
2
 

 

 
Air Methods Corporation and Subsidiaries
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands, except share and per share amounts)
(unaudited)

   
Three Months Ended March 31,
 
   
2014
   
2013
 
Revenue:
           
Patient transport revenue, net of provision for contractual discounts (note 4)
  $ 250,596       193,824  
Provision for uncompensated care (note 4)
    (106,667 )     (85,992 )
Patient transport revenue, net
    143,929       107,832  
Air medical services contract revenue
    44,761       54,458  
Tourism and charter revenue
    24,338       10,391  
Medical interiors and products revenue
    7,820       4,434  
Dispatch and billing service revenue
    2,288       2,114  
      223,136       179,229  
                 
Operating expenses:
               
Flight centers
    88,406       85,152  
Aircraft operations (note 6)
    33,024       37,463  
Tourism operating expenses
    16,000       7,841  
Cost of medical interiors and products sold
    6,679       4,545  
Cost of dispatch and billing services
    2,529       1,300  
Depreciation and amortization
    20,516       20,122  
Loss on disposition of assets, net
    407       441  
General and administrative
    31,658       27,223  
      199,219       184,087  
                 
Operating income (loss)
    23,917       (4,858 )
                 
Other income (expense):
               
Interest expense
    (5,529 )     (4,802 )
Other, net
    (26 )     287  
                 
Income (loss) before income taxes
    18,362       (9,373 )
Income tax benefit (expense)
    (7,310 )     3,684  
                 
Net income (loss)
    11,052       (5,689 )
Less net income attributable to redeemable non-controlling interests
    163       --  
Net income (loss) attributable to Air Methods Corporation and subsidiaries
  $ 10,889       (5,689 )
                 
Other comprehensive income (loss), net of income taxes:
               
Foreign currency translation adjustments
    (65 )     --  
Comprehensive income (loss)
  $ 10,824       (5,689 )
                 
Basic income (loss) per common share (note 5)
  $ .28       (.15 )
Diluted income (loss) per common share (note 5)
  $ .28       (.15 )
                 
Weighted average number of common shares outstanding – basic
    39,119,397       38,831,102  
Weighted average number of common shares outstanding – diluted
    39,318,180       38,831,102  
 
See accompanying notes to condensed consolidated financial statements.
 
3
 

 

 
Air Methods Corporation and Subsidiaries
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)

   
Three Months Ended March 31,
 
   
2014
   
2013
 
             
Cash flows from operating activities:
           
Net income (loss)
  $ 11,052       (5,689 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Depreciation and amortization expense
    20,516       20,122  
Deferred income tax expense
    6,017       1,616  
Stock-based compensation
    774       1,215  
Tax benefit from exercise of stock options
    (975 )     (511 )
Loss on disposition of assets, net
    407       441  
Unrealized loss on derivative instrument
    53       117  
Loss from equity method investee
    441       --  
Changes in assets and liabilities, net of effects of acquisitions:
               
Increase in prepaid expenses and other current assets
    (377 )     (4,273 )
Decrease (increase) in receivables
    (19,925 )     15,295  
Increase in inventories
    (49 )     (2,603 )
Decrease (increase) in costs in excess of billings
    242       (175 )
Decrease in accounts payable, other accrued liabilities, and other liabilities
    (4,082 )     (10,943 )
Increase in deferred revenue and billings in excess of costs
    1,003       110  
Net cash provided by operating activities
    15,097       14,722  
                 
Cash flows from investing activities:
               
Acquisition of equipment and leasehold improvements
    (35,436 )     (11,847 )
Buy-out of previously leased aircraft
    (5,554 )     (22,672 )
Proceeds from disposition and sale of equipment and assets held for sale
    5,567       8,634  
Decrease in other assets, net
    535       993  
Net cash used by investing activities
    (34,888 )     (24,892 )

(Continued)
 
4
 

 


Air Methods Corporation and Subsidiaries
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(Amounts in thousands)
(unaudited)

   
Three Months Ended March 31,
 
   
2014
   
2013
 
             
Cash flows from financing activities:
           
Proceeds from issuance of common stock, net
  $ 479       528  
Borrowings under line of credit
    15,000       31,527  
Payments under line of credit
    (2,000 )     (30,000 )
Payments for financing costs
    (69 )     (113 )
Proceeds from long-term debt
    19,965       52,162  
Payments of long-term debt and notes payable
    (7,755 )     (5,384 )
Payments of capital lease obligations
    (8,661 )     (31,500 )
Tax benefit from exercise of stock options
    975       511  
Proceeds from non-controlling interests
    98       --  
Net cash provided by financing activities
    18,032       17,731  
                 
Increase (decrease) in cash and cash equivalents
    (1,759 )     7,561  
                 
Cash and cash equivalents at beginning of period
    9,862       3,818  
                 
Cash and cash equivalents at end of period
  $ 8,103       11,379  
                 
Interest paid in cash during the period
  $ 5,355       4,489  
                 
Income taxes paid in cash during the period
  $ 51       835  
 
Non-cash investing and financing activities:

In the quarter ended March 31, 2014, the Company entered into notes payable of $5,696 to finance the purchase of aircraft which were held in property and equipment pending permanent lease financing as of March 31, 2014, and into capital leases of $548 to finance the purchase of equipment. The Company also settled notes payable of $2,616 in exchange for the aircraft securing the debt.

In the quarter ended March 31, 2013, the Company entered into capital leases of $2,707 to finance the purchase of aircraft. The Company also settled notes payable of $3,570 in exchange for the aircraft securing the debt.
 
See accompanying notes to condensed consolidated financial statements.
 
5
 

 

 
Air Methods Corporation and Subsidiaries
(unaudited)

(1)           Basis of Presentation

 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the condensed consolidated financial statements for the respective periods. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2013.

 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company considers its critical accounting policies involving more significant judgments and estimates to be those related to revenue recognition, deferred income taxes, valuation of long-lived assets, and fair values of assets acquired and liabilities assumed in business combinations. Actual results could differ from those estimates.

(2)           Acquisition of Subsidiaries

On December 13, 2013, via a newly formed subsidiary, Blue Hawaiian Holdings, LLC, the Company acquired 100% of the membership interests of Helicopter Consultants of Maui, LLC (doing business as Blue Hawaiian Helicopters) and certain of its affiliates (collectively, BHH) for a cash purchase price of $66.8 million, subject to final determination of working capital, as defined in the merger agreement, as of the closing date. At December 31, 2013, the Company had recorded a liability of $2,282,000 for the estimated increase to the purchase price for the change in working capital. The liability was revised to $3,182,000 during the first quarter of 2014 and paid during the second quarter. No further amounts are due to the sellers. The former owners of BHH hold a 10% ownership interest in Blue Hawaiian Holdings, LLC, which the Company can redeem at any time for a price based on BHH’s current operating results. Between June 13 and December 13, 2015, the former owners of BHH can require the Company to redeem their 10% ownership interest for a price based on same formula. The purchase price was financed primarily through borrowings under our Amended and Restated Revolving Credit, Term Loan and Security Agreement with a commercial bank group.

The allocation of the purchase price was as follows (amounts in thousands):
                   
   
Allocation at
December 31, 2013
   
Adjustments
   
Revised
Allocation
 
                   
Aircraft
  $ 33,440       --       33,440  
Amortizable intangible assets
    24,525       --       24,525  
Goodwill
    5,985       590       6,575  
Other equipment and leasehold improvements
    5,183       --       5,183  
Working capital accounts, net
    5,964       310       6,274  
Total net assets
  $ 75,097       900       75,997  
Redeemable non-controlling interest
    (6,065 )     --       (6,065 )
Purchase price
  $ 69,032       900       69,932  
 
6
 

 

 
Air Methods Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements, continued
(unaudited)

(2)           Acquisition of Subsidiaries, continued

The Company is still evaluating the aircraft spare parts inventory and verifying open repair orders with aircraft parts vendors and other liabilities relating to pre-acquisition events. Therefore, the allocation of the purchase price is still subject to adjustment.

(3)           Stockholders’ Equity

 
Changes in stockholders’ equity for the three months ended March 31, 2014, consisted of the following (amounts in thousands except share amounts):
             
   
Shares Outstanding
   
Amount
 
             
Balances at January 1, 2014
    39,064,437     $ 367,959  
                 
Issuance of common shares for options exercised
    41,343       479  
Stock-based compensation
    42,660       774  
Tax benefit from exercise of stock options
    --       975  
Forfeiture of unvested restricted shares and related dividends
    --       4  
Adjustments to redeemable non-controlling interests
    --       50  
Other comprehensive loss
    --       (65 )
Net income
    --       10,889  
                 
Balances at March 31, 2014
    39,148,440     $ 381,065  

(4)           Patient Transport Revenue Recognition

Trade receivables are presented net of allowances for contractual discounts and uncompensated care. The Company determines its allowances for contractual discounts and uncompensated care based on estimated payer mix, payer reimbursement schedules, and historical collection experience. The allowances are reviewed monthly and adjusted periodically based on actual collections. Billings are charged off against the uncompensated care allowance when it is probable that the receivable will not be recovered. The allowance for contractual discounts is related primarily to Medicare and Medicaid patients. The allowance for uncompensated care is related primarily to receivables recorded for self-pay patients.

The Company has not changed its discount policies related to self-pay patients or deductible and copayment balances for insured patients during either 2014 or 2013. The allowance for uncompensated care was 37.7% of receivables from non-governmental payers as of March 31, 2014, compared to 39.2% at December 31, 2013, and 42.4% at March 31, 2013. Receivables from private insurance providers accounted for 63% of receivables from non-governmental payers as of March 31, 2014, compared to 60% as of December 31, 2013, and 59% as of March 31, 2013. The remainder of receivables from non-governmental payers are attributable to self-pay patients.
 
7
 

 

 
Air Methods Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements, continued
(unaudited)

(4)           Patient Transport Revenue Recognition, continued

The Company recognizes patient transport revenue at its standard rates for services provided, regardless of expected payer. In the period that services are provided and based upon historical experience, the Company records a significant provision for uncompensated care related to uninsured patients who will be unable or unwilling to pay for the services provided and a provision for contractual discounts related to Medicare and Medicaid transports. Air medical services contract revenue consists of monthly fees and hourly flight fees billed to hospitals or other institutions under exclusive operating agreements. These fees are earned regardless of when, or if, the institution is reimbursed for these services by its patients, their insurers, or the federal government. As a result, the Company does not maintain an allowance or provision for uncompensated care for air medical services contract revenue and related receivables.

Patient transport revenue, net of provision for contractual discounts but before provision for uncompensated care, by major payer class, was as follows (amounts in thousands) for the quarters ended March 31:
             
   
2014
   
2013
 
             
Third-party payers
  $ 178,933       142,840  
Self-pay
    71,663       50,984  
Total
  $ 250,596       193,824  

(5)           Income per Share

 
Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by all outstanding and dilutive potential common shares during the period.

 
In accordance with FASB ASC 480-10-S99, Distinguishing Liabilities from Equity, and solely for the purpose of calculating earnings per share, net income was increased by $50,000 for an adjustment to the value of redeemable non-controlling interests.

 
The reconciliation of basic to diluted weighted average common shares outstanding is as follows for the quarters ended March 31:
             
   
2014
   
2013
 
Weighted average number of common shares outstanding – basic
    39,119,397       38,831,102  
Dilutive effect of:
               
Common stock options
    125,950       --  
Unvested restricted stock
    72,833       --  
Weighted average number of common shares outstanding – diluted
    39,318,180       38,831,102  

 
Common stock options totaling 47,500 were not included in the diluted shares outstanding for the quarter ended March 31, 2014, because their effect would have been anti-dilutive.
 
8
 

 

 
Air Methods Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements, continued
(unaudited)

(6)
Fair Value of Financial Instruments

ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosures about how fair value is determined for assets and liabilities and establishes a hierarchy by which these assets and liabilities must be grouped based on the type of inputs used in measuring fair value as follows:

 
Level 1:
quoted prices in active markets for identical assets or liabilities;
 
Level 2:
quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or
 
Level 3:
unobservable inputs, such as discounted cash flow models or valuations.

 
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

 
Cash and cash equivalents, accounts receivable, notes receivable, notes payable, accounts payable, and accrued liabilities:

 
 
The carrying amounts approximate fair value because of the short maturity of these instruments.

 
 
Derivative instruments:

The Company endeavors to acquire jet fuel at the lowest possible cost and to reduce volatility in operating expenses through the use of short-term purchased call options. Financial derivative instruments covering fuel purchases are included in prepaid expenses and other current assets at fair value. Fair value is determined based on quoted prices in active markets for similar instruments and is classified as Level 2 in the fair value hierarchy. The fair value of all fuel derivative instruments included in prepaid expenses and other current assets was $17,000 at March 31, 2014 and $0 at December 31, 2013. The Company’s financial derivatives do not qualify for hedge accounting, and, therefore, realized and non-cash mark to market adjustments are included in aircraft operations expense in the Company’s statement of income. Aircraft operations expense included a non-cash mark to market derivative loss of $53,000 for the first quarter of 2014, compared to $117,000 for the first quarter of 2013. There were no cash settlements under the terms of the agreements in the first quarter of 2014 or 2013.

 
 
Long-term debt:

 
The fair value of long-term debt is classified as Level 3 in the fair value hierarchy because it is determined based on the present value of future contractual cash flows discounted at an interest rate that reflects the risks inherent in those cash flows. Based on the borrowing rates currently available to the Company for loans with similar terms and average maturities and on recent transactions, the fair value of long-term debt as of March 31, 2014, is estimated to be $536,987,000, compared to carrying value of $541,663,000. The fair value of long-term debt as of December 31, 2013, was estimated to be $513,436,000, compared to a carrying value of $516,453,000.
 
9
 

 

 
Air Methods Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements, continued
(unaudited)

(7)
Business Segment Information

 
Summarized financial information for the Company’s operating segments is shown in the following table (amounts in thousands). Amounts in the “Corporate Activities” column represent corporate headquarters expenses, corporate income tax expense, and results of insignificant operations. The Company does not allocate assets between all operating segments for internal reporting and performance evaluation purposes. Operating segments and their principal products or services are as follows:

 
Air Medical Services (AMS) - provides air medical transportation services to the general population as an independent service and to hospitals or other institutions under exclusive operating agreements. Services include aircraft operation and maintenance, medical care, dispatch and communications, and medical billing and collection.
 
Tourism – provides helicopter tours and charter flights, primarily focusing on Grand Canyon and Hawaiian Island tours.
 
United Rotorcraft (UR) Division - designs, manufactures, and installs aircraft medical interiors and other aerospace and medical transport products for domestic and international customers.

 
For quarter ended March 31:
 
AMS
   
Tourism
   
UR
   
Corporate
Activities
   
Intersegment
Eliminations
   
Consolidated
 
2014
                                   
External revenue
  $ 190,978       24,338       7,820       --       --       223,136  
Intersegment revenue
    --       --       3,067       --       (3,067 )     --  
Total revenue
    190,978       24,338       10,887       --       (3,067 )     223,136  
                                                 
Operating expenses, excluding depreciation & amortization
    (142,247 )     (20,011 )     (9,510 )     (9,511 )       2,576       (178,703 )
Depreciation & amortization
    (17,912 )     (1,564 )     (538 )     (502 )     --       (20,516 )
Interest expense
    (4,196 )     (622 )     --       (711 )     --       (5,529 )
Other income, net
    387       --       --       (413 )     --       (26 )
Income tax expense
    --       --       --       (7,310 )     --       (7,310 )
Segment net income (loss)
    27,010       2,141       839       (18,447 )     (491 )     11,052  
Less net income (loss) attributable to non-controlling interests
    (48 )     211       --       --       --       163  
Net income (loss) attributable to Air Methods Corporation and subsidiaries
  $ 27,058         1,930         839       (18,447 )     (491 )       10,889  
                                                 
2013
                                               
External revenue
  $ 164,406       10,391       4,421       11       --       179,229  
Intersegment revenue
    --       --       1,771       --       (1,771 )     --  
Total revenue
    164,406       10,391       6,192       11       (1,771 )     179,229  
                                                 
Operating expenses, excluding depreciation & amortization
    (141,061 )     (9,487 )     (6,298 )     (8,702 )       1,583       (163,965 )
Depreciation & amortization
    (18,709 )     (589 )     (425 )     (399 )     --       (20,122 )
Interest expense
    (4,006 )     (220 )     --       (576 )     --       (4,802 )
Other income, net
    254       --       --       33       --       287  
Income tax benefit (expense)
    --       --       --       3,684       --       3,684  
Segment net income (loss)
  $ 884       95       (531 )     (5,949 )     (188 )     (5,689 )
 
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Item 2.                      Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the results of operations and financial condition should be read in conjunction with our condensed consolidated financial statements and notes thereto included in Item 1 of this report. This report, including the information incorporated by reference, contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The use of any of the words “believe,” “expect,” “anticipate,” “plan,” “estimate,” and similar expressions are intended to identify such statements. Forward-looking statements include statements concerning the integration of Blue Hawaiian Helicopters (BHH); our possible or assumed future results; flight volume and collection rates for patient transports; size, structure and growth of our air medical services, aerial tourism, and products markets; continuation and/or renewal of hospital contracts; acquisition of new and profitable UR Division contracts; impact of the Patient Protection and Affordable Care Act (PPACA) and other changes in laws and regulations; and other matters. The actual results that we achieve may differ materially from those discussed in such forward-looking statements due to the risks and uncertainties described in the Risk Factors section of this report, in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in other sections of this report, as well as in our annual report on Form 10-K. We undertake no obligation to update any forward-looking statements.

Overview

We provide air medical transportation services throughout the United States and design, manufacture, and install medical aircraft interiors and other aerospace products for domestic and international customers. We also provide tourism operations in and around the Grand Canyon and Hawaiian Islands. Our divisions, or business segments, are organized according to the type of service or product provided and consist of the following:
Air Medical Services (AMS) - provides air medical transportation services to the general population as an independent service (also called community-based services) and to hospitals or other institutions under exclusive operating agreements (also called hospital-based services). Patient transport revenue consists of flight fees billed directly to patients, their insurers, or governmental agencies, and cash flow is dependent upon collection from these individuals or entities. Air medical services contract revenue consists of fixed monthly fees (approximately 80% of total contract revenue) and hourly flight fees (approximately 20% of total contract revenue) billed to hospitals or other institutions. In the first quarter of 2014 the AMS Division generated 86% of our total revenue, compared to 92% in the first quarter of 2013.
Tourism Division – provides helicopter tours and charter flights, primarily focusing on Grand Canyon and Hawaiian Island tours. The division was started with the acquisition of Sundance Helicopters, Inc., (Sundance) in December 2012. In the first quarter of 2014, the Tourism Division generated 11% of our total revenue, compared to 6% in the first quarter of 2013.
United Rotorcraft (UR) Division - designs, manufactures, and installs aircraft medical interiors and other aerospace and medical transport products for domestic and international customers. In the first quarter of 2014 the UR Division generated 3% of our total revenue, compared to 2% in the first quarter of 2013.

See Note 7 to the condensed consolidated financial statements included in Item 1 of this report for operating results by segment.
 
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We believe that the following factors have the greatest impact on our results of operations and financial condition:

Patient transport volume. Almost all of patient transport revenue is derived from flight fees, as compared to approximately 20% of AMS contract revenue. By contrast, 85% of AMS operating costs incurred during the quarter ended March 31, 2014, are mainly fixed in nature. While flight volume is affected by many factors, including competition and the effectiveness of marketing and business development initiatives, the greatest single variable has historically been weather conditions. Adverse weather conditions—such as fog, high winds, or heavy precipitation—hamper our ability to operate our aircraft safely and, therefore, result in reduced patient transport volume. Total patient transports for community-based locations were approximately 12,900 for the first quarter of 2014 compared to approximately 11,800 for the first quarter of 2013. Patient transports for community-based locations open longer than one year (Same-Base Transports) were approximately 11,900 in the first quarter of 2014, compared to 11,100 in the first quarter of 2013. Cancellations due to unfavorable weather conditions for community-based locations open longer than one year were 443 lower in the first quarter of 2014, compared to the first quarter of 2013. Requests for community-based services increased 4.1% for bases open greater than one year.

Reimbursement per transport. We respond to calls for air medical transports without pre-screening the creditworthiness of the patient and are subject to collection risk for services provided to insured and uninsured patients. Medicare and Medicaid also receive contractual discounts from our standard charges for flight services. Patient transport revenue is recorded net of provisions for contractual discounts and estimated uncompensated care. Both provisions are estimated during the period the related services are performed based on historical collection experience and any known trends or changes in reimbursement rate schedules and payer mix. The provisions are adjusted as required based on actual collections in subsequent periods. Net reimbursement per patient transport is primarily a function of price, payer mix, and timely and effective collection efforts. Both the pace of collections and the ultimate collection rate are affected by the overall health of the U.S. economy, which impacts the number of indigent patients and funding for state-run programs, such as Medicaid. Medicaid reimbursement rates in many jurisdictions have remained well below the cost of providing air medical transportation. PPACA is intended to decrease the number of uninsured Americans and reduce health care costs. Due to the uncertainty surrounding PPACA’s implementation, the impact on our reimbursement rates is, as yet, still not fully known. Net reimbursement per transport increased 20.1% in the quarter ended March 31, 2014, compared to the quarter ended March 31, 2013, attributed primarily to recent price increases. Provisions for contractual discounts and estimated uncompensated care related to patient transport revenue are as follows:

   
For quarters ended March 31,
 
   
2014
   
2013
 
Gross billings
    100 %     100 %
Provision for contractual discounts
    52 %     49 %
Provision for uncompensated care
    21 %     23 %

Although price increases generally increase the net reimbursement per transport from insurance payers, the amount per transport collectible from private patient payers, Medicare, and Medicaid does not increase proportionately with price increases. Therefore, depending upon overall payer mix, price increases will usually result in an increase in the percentage of uncollectible accounts. Although we have not yet experienced significant increased limitations in the amount reimbursed by insurance companies, continued price increases may cause insurance companies to limit coverage for air medical transport to amounts less than our standard rates. Payer mix for the quarters ended March 31 was as follows:

   
2014
   
2013
 
Private insurance carriers
    32.0 %     32.7 %
Medicare
    33.7 %     33.1 %
Medicaid
    20.1 %     20.7 %
Self-pay patients
    14.2 %     13.5 %
 
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Aircraft maintenance. AMS and Tourism operations are directly affected by fluctuations in aircraft maintenance costs. Proper operation of the aircraft by flight crews and standardized maintenance practices can help to contain maintenance costs. Increases in spare parts prices from original equipment manufacturers tend to be higher for aircraft which are no longer in production. Two models of aircraft within our fleet, representing 12% of the rotor wing fleet, are no longer in production and are, therefore, susceptible to price increases which outpace general inflationary trends. In addition, on-condition components are more likely to require replacement with age. Since January 1, 2013, we have taken delivery of fourteen new aircraft and have commitments to take delivery of 54 additional aircraft through the end of 2017. We have replaced discontinued models and other older aircraft with the new aircraft, as well as provided capacity for base expansion. Replacement models of aircraft typically have higher ownership costs than the models targeted for replacement but lower maintenance costs. Total AMS aircraft maintenance expense decreased 16.2% from the first quarter of 2013 to the first quarter of 2014, while total flight hours for AMS operations decreased 4.5% over the same period. The change in maintenance expense reflects normal fluctuations in the timing of overhaul and replacement cycles for aircraft parts.

Competitive pressures from low-cost providers. We are recognized within the industry for our standard of service and our use of cabin-class aircraft. Many of our competitors utilize aircraft with lower ownership and operating costs and do not require a similar level of experience for aviation and medical personnel. Reimbursement rates established by Medicare, Medicaid, and most insurance providers are not contingent upon the type of aircraft used or the experience of personnel. However, we believe that higher quality standards help to differentiate our service from competitors and, therefore, lead to higher utilization.

Employee recruitment and relations. The ability to deliver quality services is partially dependent upon our ability to hire and retain employees who have advanced aviation, nursing, and other technical skills. In addition, hospital contracts typically contain minimum certification requirements for pilots and mechanics. Our AMS pilots are represented by a collective bargaining unit and were covered under a CBA which expired in December 2013. Negotiations on a new CBA have begun but no agreement has yet been reached. Other employee groups may also elect to be represented by unions in the future.

Results of Operations

We reported net income of $10,889,000 for the three months ended March 31, 2014, compared to a net loss of $5,689,000 for the three months ended March 31, 2013. The results for 2014 include the impact of the BHH acquisition which closed in December 2013. Same-Base Transports were 7.0% higher in the first quarter of 2014 compared to the first quarter of 2013, while net reimbursement per patient transport increased 20.1%, primarily as a result of recent price increases.

Air Medical Services

Patient transport revenue is recorded net of provisions for contractual discounts and uncompensated care and increased $36,097,000, or 33.5%, for the three months ended March 31, 2014, compared to 2013, for the following reasons:
Increase of 20.1% in net reimbursement per transport for the first quarter of 2014, compared to 2013, due primarily to recent price increases.
Increase in Same-Base Transports of 780, or 7.0%, in the first quarter of 2014 compared to 2013. Cancellations due to unfavorable weather conditions for bases open longer than one year were 443 lower in the first quarter of 2014, compared to the first quarter of 2013. Requests for community-based services increased by 4.1% for bases open greater than one year.
Incremental net revenue of $12,980,000 generated from the addition of 22 new bases during or subsequent to the first quarter of 2013.
Closure of fourteen bases due to insufficient flight volume subsequent to the first quarter of 2013, resulting in a decrease in net revenue of approximately $4,051,000.
 
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Air medical services contract revenue decreased $9,697,000, or 17.8%, for the quarter ended March 31, 2014, compared to 2013, for the following reasons:
Cessation of service under eleven contracts and the conversion of four contracts to community-based operations during or subsequent to the first quarter of 2013, resulting in a decrease in revenue of approximately $11,770,000.
●  
Incremental revenue of $452,000 generated from the expansion to additional bases of operation under two contracts during the fourth quarter of 2013 and first quarter of 2014.
●  
Consistent flight volume for all contracts, excluding contract expansions and closed contracts described above, in the first quarter of 2014 compared to 2013.
●  
Annual price increases in the majority of contracts based on stipulated contractual increases, changes in the Consumer Price Index or spare parts prices from aircraft manufacturers, and the renewal of contracts at higher rates.
 
Flight center costs (consisting primarily of pilot, mechanic, and medical staff salaries and benefits) increased $3,254,000, or 3.8%, for the quarter ended March 31, 2014, compared to 2013, for the following reasons:
●  
Increase of approximately $6,305,000 for the addition of personnel to staff new base locations described above.
●  
Decrease of $8,650,000 due to the closure of base locations described above.
●  
Increases in salaries for merit pay raises and in the cost of employee medical insurance.
 
Aircraft operating expenses decreased $4,439,000, or 11.8%, for the quarter ended March 31, 2014, in comparison to the quarter ended March 31, 2013. Aircraft operating expenses consist primarily of fuel, insurance, and maintenance costs and generally are a function of the size of the fleet, type of aircraft flown, and number of hours flown. The increase in costs is due to the following:
●  
Decrease of $4,376,000, or 16.2%, in AMS aircraft maintenance expense to $22,710,000. Total flight volume for AMS operations decreased 4.5% for the first quarter of 2014 compared to 2013. The change in maintenance expense reflects normal fluctuations in the timing of overhaul and replacement cycles for aircraft parts.
●  
Decrease of approximately 6.2% in the cost of aircraft fuel per hour flown for AMS operations. Total fuel cost decreased by $11,000 to a total expense of $5,841,000 for 2014.
 
Tourism
 
Tourism and charter revenue increased $13,947,000, or 134.2%, for the first quarter of 2014 compared to the first quarter of 2013. During the first quarter of 2014, we transported approximately 87,300 passengers on tourism flights, compared to 39,800 in the first quarter of 2013. BHH generated revenue of $13,444,000 transporting approximately 47,100 passengers in the first quarter of 2014.
 
Tourism operating expenses consist primarily of pilot and mechanic salaries and benefits; aircraft maintenance, fuel, and insurance; landing fees; commissions; and cost of tour amenities and typically vary with passenger count, flight volume, and number and type of aircraft. Expenses increased $8,159,000, or 104.1%, for the first quarter of 2014 compared to 2013, primarily related to the acquisition of BHH. BHH operating expenses totaled $8,103,000 for the first quarter of 2014.
 
Medical Interiors and Products
 
Medical interiors and products revenue increased $3,386,000, or 76.4%, for the first quarter of 2014 compared to the first quarter of 2013. Significant projects in process during the first quarter of 2014 included work on 24 multi-mission interiors for the U.S. Army’s HH-60M helicopter, 35 interiors for an older generation of the U.S. Army’s Black Hawk helicopter, and seven aircraft interiors for commercial customers. Revenue by product line was as follows:
●  
$5,236,000 – governmental entities
●  
$2,584,000 – commercial customers
 
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Significant projects in process during the first quarter of 2013 included work under two contracts to produce a total of 53 multi-mission interiors for the U.S. Army’s HH-60M helicopter and two aircraft interiors for commercial customers. Revenue by product line was as follows:
●  
$2,809,000 – governmental entities
●  
$1,625,000 – commercial customers
 
Cost of medical interiors and products increased $2,134,000, or 47.0%, for the first quarter of 2014, as compared to the previous year, due primarily to the increase in related revenue. Cost of medical interiors and products also includes certain fixed costs, such as administrative salaries and facilities rent, which do not vary with volume of sales and which are absorbed by both projects for external customers and interdivisional projects.
 
General
 
Depreciation and amortization expense increased $394,000, or 2.0% for the first quarter of 2014, compared to 2013. During the fourth quarter of 2013 and the first quarter of 2014, we placed twelve aircraft with a total depreciable basis of $35 million into service. Depreciation and amortization related to BHH’s assets also totaled $829,000 for the first quarter of 2014. These increases were offset in part by the buyout of previously leased aircraft. Since March 31, 2013, we have bought out 29 aircraft which were previously leased under capital lease obligations and which had total depreciable basis of $66 million. Aircraft under capital leases are amortized over the terms of the underlying leases with no assigned salvage value. Aircraft which are owned directly are depreciated over a 25-year life, based on the year of manufacture, with a 25% salvage value. As a result, the buyout of aircraft from capital lease obligations resulted in a decrease in depreciation for the first quarter of 2014.
 
General and administrative (G&A) expenses increased $4,435,000, or 16.3%, for the first quarter of 2014, compared to the first quarter of 2013. G&A expenses include executive management, accounting and finance, billing and collections, information services, human resources, aviation management, pilot training, dispatch and communications, AMS program administration, and Tourism customer service and reservations. Total G&A expenses related to BHH operations were $2,070,000 for the first quarter of 2014. Excluding the impact of BHH, G&A expenses increased 8.7%  in the first quarter of 2014, compared to 2013, reflecting branding and marketing initiatives, as well as the addition of senior management positions to enhance the company’s ability to implement its growth strategy.
 
Interest expense increased $727,000, or 15.1%, for the first quarter of 2014, compared to the first quarter of 2013, primarily due to an additional $60 million term loan under our senior credit facility originated in December 2013 to finance the purchase of BHH and new term loans totaling $102.4 million with a weighted average interest rate of 4.1% originated subsequent to March 31, 2013, to fund the retirement of capital leases and the purchase of aircraft. The resulting increase in interest expense was offset in part by decreased borrowings against our line of credit, the retirement of $12.7 million in capital lease obligations with a weighted average effective interest rate of 4.5% subsequent to March 31, 2013, and to regularly scheduled payments of long-term debt and capital lease obligations. The average balance outstanding against our line of credit was $22.3 million during the first quarter of 2014, compared to $69.8 million in the first quarter of 2013.
 
Income tax expense was $7,310,000 in the first quarter of 2014, compared to a benefit of $3,684,000 in the first quarter of 2013, at effective tax rates of approximately 39.8% and 39.3%, respectively. The effective rate for 2014 increased primarily because of an increase in certain permanent book-tax differences. Changes in our effective tax rate are affected by the apportionment of revenue and income before taxes for the various jurisdictions in which we operate and by changing tax laws and regulations in those jurisdictions.
 
Liquidity and Capital Resources
 
Our working capital position as of March 31, 2014, was $192,373,000, compared to $178,232,000 at December 31, 2013. Cash generated by operations was $15,097,000 in the first quarter of 2014, compared to $14,722,000 in the first quarter of 2013, reflecting the results of operations described above. Receivables increased during the first quarter of 2014 by $19.9 million, reflecting the increase in net revenue described above.
 
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Days’ sales outstanding (DSO’s) related to patient transports, measured by comparing net patient transport revenue for the annualized previous three-month and six-month periods to outstanding open net accounts receivable, were as follows:
 
   
As of
March 31, 2014
   
As of
December 31, 2013
   
As of
March 31, 2013
 
Three-month measurement
    120       106       128  
Six-month measurement
    116       97       106  
 
DSO’s calculated using a three-month measurement period are more significantly impacted by seasonality in revenue than DSO’s using the six-month measurement period. The increase in DSO’s from December 31, 2013, to March 31, 2014, is largely attributed to increases in claims processing times by a private insurance company and a governmental insurance provider. The increases in processing times are not expected to decrease the ultimate collection rate from either payer.
 
Cash used by investing activities totaled $34,888,000 in 2014 compared to $24,892,000 in 2013. Equipment acquisitions in the first quarter of 2014 included the buy-out of four previously leased aircraft for approximately $5.6 million and the purchase of nine aircraft for approximately $26.0 million. We also sold seven aircraft for $5.4 million. In the first quarter of 2013 we bought out 21 previously leased aircraft for $22.7 million, purchased three aircraft for $10.1 million, and sold three aircraft for $7.4 million.
 
Financing activities provided $18,032,000 in 2014 compared to $17,731,000 in 2013. The primary uses of cash in both 2014 and 2013 were regularly scheduled payments of long-term debt and capital lease obligations and capital lease buyouts. During the first quarter of 2014, we originated seven notes primarily to finance the acquisition of aircraft. During the first quarter of 2013, we originated sixteen notes secured by aircraft to finance lease buyouts, retire variable rate debt, and finance the acquisition of aircraft.
 
We currently intend to exercise early lease buyout options on up to fourteen aircraft totaling approximately $28.3 million prior to the end of 2014. We expect to finance the buyouts with aircraft financiers under long-term notes and with internally generated cash flow or availability under the line of credit.
 
Critical Accounting Policies
 
Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
 
On an on-going basis, management evaluates our estimates and judgments, including those related to revenue recognition, deferred income taxes, and valuation of long-lived assets and goodwill. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of our consolidated financial statements.
 
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Revenue Recognition
 
Revenue relating to tourism and charter flights is recognized upon completion of the services. Fixed contract revenue under our operating agreements with hospitals is recognized monthly over the terms of the agreements. Revenue relating to patient transports is recognized upon completion of the services and is recorded net of provisions for contractual discounts and estimated uncompensated care. Both provisions are estimated during the period related services are performed based on historical collection experience and any known trends or changes in reimbursement rate schedules and payer mix. The provisions are adjusted as required based on actual collections in subsequent periods. We have from time to time experienced delays in reimbursement from third-party payers. In addition, third-party payers may disallow, in whole or in part, claims for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, determinations of medical necessity, or the need for additional information. Laws and regulations governing Medicare and Medicaid programs are very complex and subject to interpretation. We also provide services to patients who have no insurance or other third-party payer coverage. There can be no guarantee that we will continue to experience the same collection rates that we have in the past. If actual future collections are more or less than those projected by management, adjustments to allowances for contractual discounts and uncompensated care may be required. Based on related patient transport revenue for the quarter ended March 31, 2014, a change of 100 basis points in the percentage of estimated contractual discounts or uncompensated care would have resulted in a change of approximately $5,181,000 in flight revenue.
 
Revenue related to fixed fee medical interior and products contracts is recorded as costs are incurred using the percentage of completion method of accounting. We estimate the percentage of completion based on costs incurred to date as a percentage of an estimate of the total costs to complete the project. Losses on contracts in process are recognized when determined. If total costs to complete a project are greater or less than estimated, the gross margin on the project may be greater or less than originally recorded under the percentage of completion method.
 
Deferred Income Taxes
 
In preparation of the consolidated financial statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciable assets, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheets. We then assess the likelihood that deferred tax assets will be recoverable from future taxable income in the respective federal or state jurisdiction as appropriate and record a valuation allowance for those amounts we believe are not likely to be realized. We consider estimated future taxable income, tax planning strategies, and the expected timing of reversals of existing temporary differences in assessing the need for a valuation allowance against deferred tax assets. Establishing or increasing a valuation allowance in a period increases income tax expense. In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the valuation allowance would be charged to income in the period such determination was made. Likewise, should we determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the valuation allowance would increase income in the period such determination was made. The effect on deferred income tax assets and liabilities of a change in statutory tax rates applicable to the Company is also recognized in income in the period of the change. We evaluate the recognition and measurement of uncertain tax positions based on the facts and circumstances surrounding the tax position and applicable tax law and other tax pronouncements. Changes in our estimates of uncertain tax positions would be recognized as an adjustment to income tax expense in the period of the change.
 
Long-lived Assets Valuation
 
In accounting for long-lived assets, we make estimates about the expected useful lives, projected residual values and the potential for impairment. Estimates of useful lives and residual values of aircraft are based upon actual industry experience with the same or similar aircraft types and anticipated utilization of the aircraft. Changing market prices of new and used aircraft, government regulations and changes in our maintenance program or operations could result in changes to these estimates. Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. Our cash flow estimates are based on historical results adjusted for estimated current industry trends, the economy, and operating conditions.
 
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Goodwill Valuation
 
The Company’s goodwill relates to nine acquisitions and has been allocated to our reporting units. We evaluate goodwill annually in accordance with ASU No. 2011-08, Testing for Goodwill Impairment, which allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Factors considered include overall economic conditions within our markets, access to capital, changes in the cost of operations, the financial performance of the Company, and change in our stock price during the year. Based upon our qualitative assessment of factors impacting the value of goodwill as of December 31, 2013, we determined that it was not likely that the fair value of any reporting unit was less than its carrying amount and that a quantitative assessment of goodwill was not necessary. Changes in these factors or a sustained decline in general economic conditions could change our conclusion regarding an impairment of goodwill and potentially result in a non-cash impairment loss in a future period.
 
Item 3.     Quantitative and Qualitative Disclosures about Market Risk
 
There have been no material changes in market risk at March 31, 2014, from that reported in our Annual Report on Form 10-K for the year ended December 31, 2013.
 
Item 4.     Controls and Procedures
 
Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officers (referred to in this report as the Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Management, under the supervision and with the participation of the Certifying Officers, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2014, pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, the Certifying Officers have concluded that, as of March 31, 2014, our disclosure controls and procedures were effective.
 
Changes in Internal Control over Financial Reporting
 
There were no significant changes in our internal control over financial reporting that occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
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PART II: OTHER INFORMATION
 
Item 1.     Legal Proceedings
 
There have been no material changes in legal proceedings from those disclosed in our annual report on Form 10-K for the year ended December 31, 2013.
 
Item 1A.     Risk Factors
 
There have been no material changes in our risk factors from those disclosed in our annual report on Form 10-K for the year ended December 31, 2013.
 
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds
 
Not Applicable.
 
Item 3.     Defaults Upon Senior Securities
 
Not Applicable.
 
Item 4.     Reserved
 
Item 5.     Other Information
 
Not Applicable.
 
Item 6.     Exhibits
 
31.1
Chief Executive Officer Certification adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
31.2
Chief Financial Officer Certification adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32
Certification adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
101.INS
XBRL Instance Document
   
101.SCH
XBRL Taxonomy Extension Schema Document
   
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
   
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
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Pursuant to the requirements 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.
 
 
AIR METHODS CORPORATION
 
       
Date:  May 9, 2014
By
\s\   Aaron D. Todd  
   
Aaron D. Todd
 
   
Chief Executive Officer
 
   
(Principal Executive Officer)
 
 
Date:  May 9, 2014
By
\s\   Trent J. Carman  
   
Trent J. Carman
 
   
Chief Financial Officer
 
   
(Principal Financial Officer)
 
 
Date:  May 9, 2014 
By
\s\   Sharon J. Keck  
   
Sharon J. Keck
 
   
Chief Accounting Officer
 
   
(Principal Accounting Officer)
 
 
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