##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended: June 30, 2007
 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: 0-9827
 PHI, Inc.
  Louisiana
    
    72-0395707(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)2001 SE Evangeline ThruwayLafayette, Louisiana
    
    70508(Address of principal executive offices)
    
    (Zip Code)
 (337) 235-2452
  þ o
  o þ o
  o þ
   Class
    
    Outstanding at July 31, 2007Voting Common Stock
    
    2,852,616 sharesNon-Voting Common Stock
    
    12,423,992 shares




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##### 



PHI, INC.
 Index  Form 10-Q
 Part I  Financial InformationItem 1.
    
    Financial Statements  UnauditedCondensed Consolidated Balance Sheets  June 30, 2007
and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations  Quarter
and
Six Months Ended June 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows  Six
Months
Ended June 30, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    17Item 3.
    
    Quantitative and Qualitative Disclosures about
Market Risk
    
    
    28Item 4.
    
    Controls and Procedures
    
    
    28Part II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    29Item 1.A.
    
    Risk Factors
    
    
    29Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3.
    
    Defaults Upon Senior Securities
    
    
    36Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    37Item 5.
    
    Other Information
    
    
    37Item 6.
    
    Exhibits
    
    
    37Signatures
    
    
    38Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 PHI, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Thousands of dollars, except share data)
 (Unaudited)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    1,248
    
    
    $
    820Short-term investments
    
    
    95,251
    
    
    
    153,414Accounts receivable  net of allowance:Trade
    
    
    98,927
    
    
    
    87,366Other
    
    
    3,594
    
    
    
    1,928Inventories of spare parts and supplies
    
    
    54,036
    
    
    
    55,596Assets held for sale
    
    
    4,194
    
    
    
    Other current assets
    
    
    8,284
    
    
    
    7,930Refundable income taxes
    
    
    263
    
    
    
    635Total current assets
    
    
    265,797
    
    
    
    307,689Other
    
    
    41,347
    
    
    
    23,816Property and equipment, net
    
    
    405,594
    
    
    
    369,465Total assets
    
    $
    712,738
    
    
    $
    700,970LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    26,540
    
    
    $
    35,815Accrued liabilities
    
    
    10,528
    
    
    
    8,511Accrued interest
    
    
    3,061
    
    
    
    3,045Accrued vacation payable
    
    
    3,493
    
    
    
    2,583Accrued wages and salaries
    
    
    2,609
    
    
    
    3,636Total current liabilities
    
    
    46,231
    
    
    
    53,590Long-term debt
    
    
    213,100
    
    
    
    205,500Deferred income taxes
    
    
    37,206
    
    
    
    32,828Other long-term liabilities
    
    
    8,270
    
    
    
    8,927Commitments and contingencies (Note 3)Shareholders Equity:Voting common stock  par value of $0.10;
authorized shares of 12,500,000
    
    
    285
    
    
    
    285Non-voting common stock  par value of $0.10;
authorized shares of 12,500,000
    
    
    1,242
    
    
    
    1,242Additional paid-in capital
    
    
    290,695
    
    
    
    290,695Accumulated other comprehensive income
    
    
    51
    
    
    
    77Retained earnings
    
    
    115,658
    
    
    
    107,826Total shareholders equity
    
    
    407,931
    
    
    
    400,125Total liabilities and shareholders equity
    
    $
    712,738
    
    
    $
    700,970
  3




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PHI, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (Unaudited)
 Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating revenues
    
    $
    112,975
    
    
    $
    107,157
    
    
    $
    214,728
    
    
    $
    208,529Gain (loss) on disposition of
assets, net
    
    
    6,074
    
    
    
    (1,392
    )
    
    
    8,608
    
    
    
    (1,162
    )Other
    
    
    1,490
    
    
    
    2,497
    
    
    
    3,144
    
    
    
    3,417120,539
    
    
    
    108,262
    
    
    
    226,480
    
    
    
    210,784Expenses:Direct expenses
    
    
    97,119
    
    
    
    89,211
    
    
    
    190,352
    
    
    
    176,267Selling, general and
administrative expenses
    
    
    7,395
    
    
    
    6,724
    
    
    
    14,932
    
    
    
    13,409Interest expense
    
    
    4,260
    
    
    
    4,129
    
    
    
    8,367
    
    
    
    9,202Loss on debt restructuring
    
    
    
    
    
    
    12,790
    
    
    
    
    
    
    
    12,790108,774
    
    
    
    112,854
    
    
    
    213,651
    
    
    
    211,668Earnings (loss) before income
taxes
    
    
    11,765
    
    
    
    (4,592
    )
    
    
    12,829
    
    
    
    (884
    )Income taxes
    
    
    4,596
    
    
    
    (1,837
    )
    
    
    4,997
    
    
    
    (354
    )Net earnings (loss)
    
    $
    7,169
    
    
    $
    (2,755
    )
    
    $
    7,832
    
    
    $
    (530
    )Weighted average shares
outstanding:Basic
    
    
    15,288
    
    
    
    14,579
    
    
    
    15,288
    
    
    
    12,512Diluted
    
    
    15,307
    
    
    
    14,579
    
    
    
    15,307
    
    
    
    12,512Net earnings (loss) per shareBasic
    
    $
    0.47
    
    
    $
    (0.19
    )
    
    $
    0.51
    
    
    $
    (0.04
    )Diluted
    
    $
    0.47
    
    
    $
    (0.19
    )
    
    $
    0.51
    
    
    $
    (0.04
    )
  4




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PHI, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Thousands of dollars)
 (Unaudited)
 Six Months EndedJune 30,2007
    
    
    2006Cash flows from operating activities:Net earnings (loss)
    
    $
    7,832
    
    
    $
    (530
    )Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation
    
    
    15,781
    
    
    
    14,453Deferred income taxes (benefit)
    
    
    4,378
    
    
    
    (1,037
    )(Gain) loss on disposition of assets, net
    
    
    (8,608
    )
    
    
    1,162Loss on debt restructuring
    
    
    
    
    
    
    12,790Other
    
    
    434
    
    
    
    388Changes in operating assets and liabilities
    
    
    (19,174
    )
    
    
    (14,757
    )Net cash provided by operating activities
    
    
    643
    
    
    
    12,469Cash flows from investing activities:Purchase of property and equipment
    
    
    (61,843
    )
    
    
    (39,357
    )Proceeds from asset dispositions
    
    
    13,321
    
    
    
    28,232Purchase of short-term investments
    
    
    (18,337
    )
    
    
    (157,103
    )Proceeds from sale of short-term investments
    
    
    76,500
    
    
    
    6,800Deposits on aircraft
    
    
    (17,456
    )
    
    
    Net cash used in investing activities
    
    
    (7,815
    )
    
    
    (161,428
    )Cash flows from financing activities:Proceeds of debt issuance  Senior Notes
    
    
    
    
    
    
    200,000Premium and costs to retire debt early
    
    
    
    
    
    
    (10,208
    )Repayment of Senior Notes
    
    
    
    
    
    
    (200,000
    )Debt issuance costs
    
    
    
    
    
    
    (4,629
    )Proceeds from line of credit, net
    
    
    33,800
    
    
    
    77,500Payments on line of credit
    
    
    (26,200
    )
    
    
    (76,800
    )Proceeds from stock issuance
    
    
    
    
    
    
    160,815Net cash provided by financing activities
    
    
    7,600
    
    
    
    146,678Increase (decrease) in cash and cash equivalents
    
    
    428
    
    
    
    (2,281
    )Cash and cash equivalents, beginning of period
    
    
    820
    
    
    
    3,036Cash and cash equivalents, end of period
    
    $
    1,248
    
    
    $
    755Supplemental Disclosures Cash Flow InformationInterest paid
    
    $
    7,902
    
    
    $
    8,784Taxes paid, net
    
    $
    14
    
    
    $
    68
  5




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. General
   2. Segment Information
   Oil and Gas Segment.
 Air Medical Segment.
 Technical Services Segment.
 6




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Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(Thousands of dollars)
    
    
    (Thousands of dollars)Segment operating revenuesOil and Gas
    
    $
    71,690
    
    
    $
    72,198
    
    
    $
    136,990
    
    
    $
    140,752Air Medical
    
    
    39,652
    
    
    
    33,596
    
    
    
    73,197
    
    
    
    64,307Technical Services
    
    
    1,633
    
    
    
    1,363
    
    
    
    4,541
    
    
    
    3,470Total operating revenues
    
    
    112,975
    
    
    
    107,157
    
    
    
    214,728
    
    
    
    208,529Segment direct expenses (1)Oil and Gas
    
    
    61,760
    
    
    
    56,905
    
    
    
    119,195
    
    
    
    110,756Air Medical
    
    
    33,813
    
    
    
    30,758
    
    
    
    67,641
    
    
    
    62,377Technical Services
    
    
    1,546
    
    
    
    1,548
    
    
    
    3,516
    
    
    
    3,134Total direct expenses
    
    
    97,119
    
    
    
    89,211
    
    
    
    190,352
    
    
    
    176,267Segment selling, general and administrative expensesOil and Gas
    
    
    399
    
    
    
    257
    
    
    
    790
    
    
    
    649Air Medical
    
    
    1,898
    
    
    
    1,807
    
    
    
    3,839
    
    
    
    3,645Technical Services
    
    
    17
    
    
    
    7
    
    
    
    25
    
    
    
    9Total selling, general and administrative expenses
    
    
    2,314
    
    
    
    2,071
    
    
    
    4,654
    
    
    
    4,303Total direct and selling, general and administrative
expenses
    
    
    99,433
    
    
    
    91,282
    
    
    
    195,006
    
    
    
    180,570Net segment profit (loss)Oil and Gas
    
    
    9,531
    
    
    
    15,036
    
    
    
    17,005
    
    
    
    29,347Air Medical
    
    
    3,941
    
    
    
    1,031
    
    
    
    1,717
    
    
    
    (1,715
    )Technical Services
    
    
    70
    
    
    
    (192
    )
    
    
    1,000
    
    
    
    327Total
    
    
    13,542
    
    
    
    15,875
    
    
    
    19,722
    
    
    
    27,959Other, net (2)
    
    
    7,564
    
    
    
    1,105
    
    
    
    11,752
    
    
    
    2,255Unallocated selling, general and administrative costs
    
    
    (5,081
    )
    
    
    (4,653
    )
    
    
    (10,278
    )
    
    
    (9,106
    )Interest expense
    
    
    (4,260
    )
    
    
    (4,129
    )
    
    
    (8,367
    )
    
    
    (9,202
    )Loss on debt restructuring
    
    
    
    
    
    
    (12,790
    )
    
    
    
    
    
    
    (12,790
    )Earnings (loss) before income taxes
    
    $
    11,765
    
    
    $
    (4,592
    )
    
    $
    12,829
    
    
    $
    (884
    )
 
 (1)
    
    Included in direct expense are the depreciation expense amounts below: Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Oil and Gas
    
    $
    4,312
    
    
    $
    4,177
    
    
    $
    8,704
    
    
    $
    8,313Air Medical
    
    
    2,327
    
    
    
    2,192
    
    
    
    4,622
    
    
    
    4,284Technical Services
    
    
    151
    
    
    
    8
    
    
    
    385
    
    
    
    103Total
    
    $
    6,790
    
    
    $
    6,377
    
    
    $
    13,711
    
    
    $
    12,700Unallocated SG&A
    
    $
    1,021
    
    
    $
    884
    
    
    $
    2,070
    
    
    $
    1,753
 (2)
    
    Including gains (losses) on disposition of assets and other income.
 7




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3. Commitments and Contingencies
 Environmental Matters 
 Legal Matters
  Long-term Debt
   8




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##### Table of Contents



Operating Leases
  Purchase Commitments
 Assets Held for Sale
 4. Valuation Accounts
   5. Employees
 Union Related Matters 
   9




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##### Table of Contents



Employee Incentive Compensation 
 6. Recent Accounting Pronouncements
     10




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7. Shareholders Equity
   8. Comprehensive Income
  Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(Thousands of dollars)
    
    
    (Thousands of dollars)Net earnings (loss)
    
    $
    7,169
    
    
    $
    (2,755
    )
    
    $
    7,832
    
    
    $
    (530
    )SFAS No. 158 adjustment
    
    
    (8
    )
    
    
    
    
    
    
    (26
    )
    
    
    Comprehensive
income (loss)
    
    $
    7,161
    
    
    $
    (2,755
    )
    
    $
    7,806
    
    
    $
    (530
    )
 9. Condensed Consolidating Financial Information
    11




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PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(Thousands of dollars)
 June 30, 2007ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    602
    
    
    $
    646
    
    
    $
    
    
    
    $
    1,248Short-term investments
    
    
    95,251
    
    
    
    
    
    
    
    
    
    
    
    95,251Accounts receivable  net of allowance
    
    
    87,707
    
    
    
    14,814
    
    
    
    
    
    
    
    102,521Inventories of spare parts and supplies
    
    
    54,036
    
    
    
    
    
    
    
    
    
    
    
    54,036Assets held for sale
    
    
    4,194
    
    
    
    
    
    
    
    
    
    
    
    4,194Other current assets
    
    
    8,264
    
    
    
    20
    
    
    
    
    
    
    
    8,284Refundable income taxes
    
    
    44
    
    
    
    219
    
    
    
    
    
    
    
    263Total current assets
    
    
    250,098
    
    
    
    15,699
    
    
    
    
    
    
    
    265,797Investment in subsidiaries and other
    
    
    51,769
    
    
    
    
    
    
    
    (51,769
    )
    
    
    Intercompany receivable
    
    
    
    
    
    
    46,913
    
    
    
    (46,913
    )
    
    
    Other assets
    
    
    41,098
    
    
    
    249
    
    
    
    
    
    
    
    41,347Property and equipment, net
    
    
    395,026
    
    
    
    10,568
    
    
    
    
    
    
    
    405,594Total assets
    
    $
    737,991
    
    
    $
    73,429
    
    
    $
    (98,682
    )
    
    $
    712,738LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    38,459
    
    
    $
    4,279
    
    
    $
    
    
    
    $
    42,738Intercompany payable
    
    
    46,913
    
    
    
    
    
    
    
    (46,913
    )
    
    
    Accrued vacation payable
    
    
    3,204
    
    
    
    289
    
    
    
    
    
    
    
    3,493Total current liabilities
    
    
    88,576
    
    
    
    4,568
    
    
    
    (46,913
    )
    
    
    46,231Long-term debt
    
    
    213,100
    
    
    
    
    
    
    
    
    
    
    
    213,100Deferred
income taxes and other long-term liabilities
    
    
    28,384
    
    
    
    17,092
    
    
    
    
    
    
    
    45,476Shareholders Equity:Paid-in capital
    
    
    292,222
    
    
    
    4,402
    
    
    
    (4,402
    )
    
    
    292,222Accumulated other comprehensive
income
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    51Retained earnings
    
    
    115,658
    
    
    
    47,367
    
    
    
    (47,367
    )
    
    
    115,658Total shareholders equity
    
    
    407,931
    
    
    
    51,769
    
    
    
    (51,769
    )
    
    
    407,931Total liabilities and
shareholders equity
    
    $
    737,991
    
    
    $
    73,429
    
    
    $
    (98,682
    )
    
    $
    712,738
 
 1)
    
    Foreign subsidiaries represent minor subsidiaries and are included in the guarantors
subsidiaries amounts. 12




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PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(Thousands of dollars)
 December 31, 2006ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    385
    
    
    $
    435
    
    
    $
    
    
    
    $
    820Short-term investments
    
    
    153,414
    
    
    
    
    
    
    
    
    
    
    
    153,414Accounts receivable  net of allowance
    
    
    75,642
    
    
    
    13,652
    
    
    
    
    
    
    
    89,294Inventories of spare parts and supplies
    
    
    55,596
    
    
    
    
    
    
    
    
    
    
    
    55,596Other current assets
    
    
    7,922
    
    
    
    8
    
    
    
    
    
    
    
    7,930Refundable income taxes
    
    
    44
    
    
    
    591
    
    
    
    
    
    
    
    635Total current assets
    
    
    293,003
    
    
    
    14,686
    
    
    
    
    
    
    
    307,689Investment in subsidiaries and other
    
    
    46,226
    
    
    
    
    
    
    
    (46,226
    )
    
    
    Intercompany receivable
    
    
    
    
    
    
    44,085
    
    
    
    (44,085
    )
    
    
    Other assets
    
    
    23,759
    
    
    
    57
    
    
    
    
    
    
    
    23,816Property and equipment, net
    
    
    361,570
    
    
    
    7,895
    
    
    
    
    
    
    
    369,465Total assets
    
    $
    724,558
    
    
    $
    66,723
    
    
    $
    (90,311
    )
    
    $
    700,970LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    46,653
    
    
    $
    4,354
    
    
    $
    
    
    
    $
    51,007Intercompany payable
    
    
    44,085
    
    
    
    
    
    
    
    (44,085
    )
    
    
    Accrued vacation payable
    
    
    2,295
    
    
    
    288
    
    
    
    
    
    
    
    2,583Total current liabilities
    
    
    93,033
    
    
    
    4,642
    
    
    
    (44,085
    )
    
    
    53,590Long-term debt
    
    
    205,500
    
    
    
    
    
    
    
    
    
    
    
    205,500Deferred income taxes and other long-term
liabilities
    
    
    25,900
    
    
    
    15,855
    
    
    
    
    
    
    
    41,755Shareholders EquityPaid-in capital
    
    
    292,222
    
    
    
    4,402
    
    
    
    (4,402
    )
    
    
    292,222Accumulated other comprehensive
income
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    77Retained earnings
    
    
    107,826
    
    
    
    41,824
    
    
    
    (41,824
    )
    
    
    107,826Total shareholders equity
    
    
    400,125
    
    
    
    46,226
    
    
    
    (46,226
    )
    
    
    400,125Total liabilities and
shareholders equity
    
    $
    724,558
    
    
    $
    66,723
    
    
    $
    (90,311
    )
    
    $
    700,970
 13




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##### Table of Contents



PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Thousands of dollars)
 For the quarter ended June 30, 2007ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    95,874
    
    
    $
    17,101
    
    
    $
    
    
    
    $
    112,975Management fees
    
    
    684
    
    
    
    
    
    
    
    (684
    )
    
    
    Gain on disposition of assets, net
    
    
    6,074
    
    
    
    
    
    
    
    
    
    
    
    6,074Other
    
    
    1,486
    
    
    
    4
    
    
    
    
    
    
    
    1,490104,118
    
    
    
    17,105
    
    
    
    (684
    )
    
    
    120,539Expenses:Direct expenses
    
    
    85,973
    
    
    
    11,146
    
    
    
    
    
    
    
    97,119Management fees
    
    
    
    
    
    
    684
    
    
    
    (684
    )
    
    
    Selling, general, and administrative
    
    
    6,668
    
    
    
    727
    
    
    
    
    
    
    
    7,395Equity in net income of consolidated
subsidiaries
    
    
    (3,766
    )
    
    
    
    
    
    
    3,766
    
    
    
    Interest expense
    
    
    4,260
    
    
    
    
    
    
    
    
    
    
    
    4,26093,135
    
    
    
    12,557
    
    
    
    3,082
    
    
    
    108,774Earnings before income taxes
    
    
    10,983
    
    
    
    4,548
    
    
    
    (3,766
    )
    
    
    11,765Income taxes
    
    
    3,814
    
    
    
    782
    
    
    
    
    
    
    
    4,596Net earnings
    
    $
    7,169
    
    
    $
    3,766
    
    
    $
    (3,766
    )
    
    $
    7,169
 For the quarter ended June 30, 2006ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    94,010
    
    
    $
    13,147
    
    
    $
    
    
    
    $
    107,157Management fees
    
    
    579
    
    
    
    
    
    
    
    (579
    )
    
    
    Loss on disposition of assets, net
    
    
    (1,392
    )
    
    
    
    
    
    
    
    
    
    
    (1,392
    )Other
    
    
    2,493
    
    
    
    4
    
    
    
    
    
    
    
    2,49795,690
    
    
    
    13,151
    
    
    
    (579
    )
    
    
    108,262Expenses:Direct expenses
    
    
    79,748
    
    
    
    9,463
    
    
    
    
    
    
    
    89,211Management fees
    
    
    
    
    
    
    579
    
    
    
    (579
    )
    
    
    Selling, general, and administrative
    
    
    6,069
    
    
    
    655
    
    
    
    
    
    
    
    6,724Equity in net income of consolidated
subsidiaries
    
    
    (1,236
    )
    
    
    
    
    
    
    1,236
    
    
    
    Interest expense
    
    
    4,129
    
    
    
    
    
    
    
    
    
    
    
    4,129Loss on debt restructuring
    
    
    12,790
    
    
    
    
    
    
    
    
    
    
    
    12,790101,500
    
    
    
    10,697
    
    
    
    657
    
    
    
    112,854Earnings (loss) before income taxes
    
    
    (5,810
    )
    
    
    2,454
    
    
    
    (1,236
    )
    
    
    (4,592
    )Income taxes
    
    
    (3,055
    )
    
    
    1,218
    
    
    
    
    
    
    
    (1,837
    )Net loss
    
    $
    (2,755
    )
    
    $
    1,236
    
    
    $
    (1,236
    )
    
    $
    (2,755
    )
 
 1)
    
    Foreign subsidiaries represent minor subsidiaries and are included in the guarantors
subsidiaries amounts. 14




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PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Thousands of dollars)
(Unaudited)
 For the six months ended June 30, 2007ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    182,581
    
    
    $
    32,147
    
    
    $
    
    
    
    $
    214,728Management fees
    
    
    1,286
    
    
    
    
    
    
    
    (1,286
    )
    
    
    Gain on disposition of assets, net
    
    
    8,608
    
    
    
    
    
    
    
    
    
    
    
    8,608Other
    
    
    3,136
    
    
    
    8
    
    
    
    
    
    
    
    3,144195,611
    
    
    
    32,155
    
    
    
    (1,286
    )
    
    
    226,480Expenses:Direct expenses
    
    
    167,765
    
    
    
    22,587
    
    
    
    
    
    
    
    190,352Management fees
    
    
    
    
    
    
    1,286
    
    
    
    (1,286
    )
    
    
    Selling, general, and administrative
    
    
    13,453
    
    
    
    1,479
    
    
    
    
    
    
    
    14,932Equity in net income of consolidated
subsidiaries
    
    
    (5,543
    )
    
    
    
    
    
    
    5,543
    
    
    
    Interest expense
    
    
    8,367
    
    
    
    
    
    
    
    
    
    
    
    8,367184,042
    
    
    
    25,352
    
    
    
    4,257
    
    
    
    213,651Earnings before income taxes
    
    
    11,569
    
    
    
    6,803
    
    
    
    (5,543
    )
    
    
    12,829Income taxes
    
    
    3,737
    
    
    
    1,260
    
    
    
    
    
    
    
    4,997Net earnings
    
    $
    7,832
    
    
    $
    5,543
    
    
    $
    (5,543
    )
    
    $
    7,832
 For the six months ended June 30, 2006ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    181,387
    
    
    $
    27,142
    
    
    $
    
    
    
    $
    208,529Management fees
    
    
    1,086
    
    
    
    
    
    
    
    (1,086
    )
    
    
    Loss on disposition of assets, net
    
    
    (1,162
    )
    
    
    
    
    
    
    
    
    
    
    (1,162
    )Other
    
    
    3,410
    
    
    
    7
    
    
    
    
    
    
    
    3,417184,721
    
    
    
    27,149
    
    
    
    (1,086
    )
    
    
    210,784Expenses:Direct expenses
    
    
    157,628
    
    
    
    18,639
    
    
    
    
    
    
    
    176,267Management fees
    
    
    
    
    
    
    1,086
    
    
    
    (1,086
    )
    
    
    Selling, general, and administrative
    
    
    12,042
    
    
    
    1,367
    
    
    
    
    
    
    
    13,409Equity in net income of consolidated
subsidiaries
    
    
    (4,191
    )
    
    
    
    
    
    
    4,191
    
    
    
    Interest expense
    
    
    9,202
    
    
    
    
    
    
    
    
    
    
    
    9,202Loss on debt restructuring
    
    
    12,790
    
    
    
    
    
    
    
    
    
    
    
    12,790187,471
    
    
    
    21,092
    
    
    
    3,105
    
    
    
    211,668Earnings (loss) before income taxes
    
    
    (2,750
    )
    
    
    6,057
    
    
    
    (4,191
    )
    
    
    (884
    )Income taxes
    
    
    (2,220
    )
    
    
    1,866
    
    
    
    
    
    
    
    (354
    )Net loss
    
    $
    (530
    )
    
    $
    4,191
    
    
    $
    (4,191
    )
    
    $
    (530
    )
 15




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PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
 For the six months ended June 30, 2007ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    432
    
    
    $
    211
    
    
    $
    
    
    
    $
    643Cash flows from investing activities:Purchase of property and equipment
    
    
    (61,843
    )
    
    
    
    
    
    
    
    
    
    
    (61,843
    )Proceeds from asset dispositions
    
    
    13,321
    
    
    
    
    
    
    
    
    
    
    
    13,321Purchase (sale) of short-term investments
    
    
    58,163
    
    
    
    
    
    
    
    
    
    
    
    58,163Deposits on aircraft
    
    
    (17,456
    )
    
    
    
    
    
    
    
    
    
    
    (17,456
    )Net cash used in investing activities
    
    
    (7,815
    )
    
    
    
    
    
    
    
    
    
    
    (7,815
    )Cash flows from financing activities:Proceeds from line of credit, net
    
    
    7,600
    
    
    
    
    
    
    
    
    
    
    
    7,600Net cash provided by financing activities
    
    
    7,600
    
    
    
    
    
    
    
    
    
    
    
    7,600Increase in cash and cash equivalents
    
    
    217
    
    
    
    211
    
    
    
    
    
    
    
    428Cash and cash equivalents, beginning of
period
    
    
    385
    
    
    
    435
    
    
    
    
    
    
    
    820Cash and cash equivalents, end of period
    
    $
    602
    
    
    $
    646
    
    
    $
    
    
    
    $
    1,248
 For the six months ended June 30, 2006ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    12,388
    
    
    $
    81
    
    
    $
    
    
    
    $
    12,469Cash flows from investing activities:Purchase of property and equipment
    
    
    (39,308
    )
    
    
    (49
    )
    
    
    
    
    
    
    (39,357
    )Proceeds from asset dispositions
    
    
    28,232
    
    
    
    
    
    
    
    
    
    
    
    28,232(Purchase) sale of short-term investments
    
    
    (150,303
    )
    
    
    
    
    
    
    
    
    
    
    (150,303
    )Net cash used in investing activities
    
    
    (161,379
    )
    
    
    (49
    )
    
    
    
    
    
    
    (161,428
    )Cash flows from financing activities:Proceeds of debt issuance  senior notes
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    200,000Premium and costs to retire debt early
    
    
    (10,208
    )
    
    
    
    
    
    
    
    
    
    
    (10,208
    )Repayment of senior notes
    
    
    (200,000
    )
    
    
    
    
    
    
    
    
    
    
    (200,000
    )Debt issuance costs
    
    
    (4,629
    )
    
    
    
    
    
    
    
    
    
    
    (4,629
    )Proceeds from line of credit, net
    
    
    700
    
    
    
    
    
    
    
    
    
    
    
    700Proceeds from stock issuance, net
    
    
    160,815
    
    
    
    
    
    
    
    
    
    
    
    160,815Net cash provided by financing activities
    
    
    146,678
    
    
    
    
    
    
    
    
    
    
    
    146,678Increase (decrease) in cash and cash
equivalents
    
    
    (2,313
    )
    
    
    32
    
    
    
    
    
    
    
    (2,281
    )Cash and cash equivalents, beginning of
period
    
    
    2,577
    
    
    
    459
    
    
    
    
    
    
    
    3,036Cash and cash equivalents, end of period
    
    $
    264
    
    
    $
    491
    
    
    $
    
    
    
    $
    755
 
 1)
    
    Foreign subsidiaries represent minor subsidiaries and are included in the guarantors
subsidiaries amounts. 16




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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Forward-Looking Statements
  Overview
   17




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18




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19




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Operating Statistics
  Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006(1)
    
    
    2007
    
    
    2006(1)Flight hours:Oil and Gas
    
    
    28,604
    
    
    
    32,198
    
    
    
    54,690
    
    
    
    62,015Air Medical
    
    
    8,024
    
    
    
    7,725
    
    
    
    15,016
    
    
    
    14,880Technical Services
    
    
    
    
    
    
    
    
    
    
    408
    
    
    
    472Total
    
    
    36,628
    
    
    
    39,923
    
    
    
    70,114
    
    
    
    77,367Air Medical Transports(2)
    
    
    5,650
    
    
    
    5,311
    
    
    
    10,572
    
    
    
    10,133
 June 30,2007
    
    2006(1)Aircraft operated at period end:Oil and Gas
    
    
    163
    
    
    
    163Air Medical
    
    
    73
    
    
    
    67Technical Services
    
    
    4
    
    
    
    4Total (3)
    
    
    240
    
    
    
    234
 
 (1)
    
    All prior periods have been recast to conform to the 2007 segment presentation. See Note
2, Segment Information, to the Condensed Consolidated Financial Statements for discussion on
change in reportable segments.(2)
    
    Represents individual patient transports for the period. Flight hours for these transports
are included above.(3)
    
    Includes 12 aircraft as of June 30, 2007 and 2006 that are customer owned. Quarter Ended June 30, 2007 compared with Quarter Ended June 30, 2006
 Combined Operations
 Revenues
  20




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Other Income and Gains
  Direct Expenses
 Selling, General, and Administrative Expenses
 Interest Expense
 Loss on Debt Restructuring
 Income Taxes
 Earnings
 Segment Discussion
 Oil and Gas
 21




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Air Medical
     Technical Services
  22




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Six Months Ended June 30, 2007 compared with Six Months Ended June 30, 2006
 Combined Operations
 Revenues 
  Other Income and Gains
  Direct Expenses
 Selling, General, and Administrative Expenses
 Interest Expense
 23




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Loss on Debt Restructuring
 Income Taxes
 Earnings
 Segment Discussion
 Oil and Gas
    Air Medical
  24




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Technical Services
   Liquidity and Capital Resources
 General
   Cash Flow
   25




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Financing Activities
   Credit Facility
  Contractual Obligations
    26




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##### Table of Contents



Payment Due by YearBeyondTotal
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2011(Thousands of dollars)New aircraft purchase
commitments (1)
    
    $
    137,673
    
    
    $
    76,969
    
    
    $
    60,704
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    New aircraft purchase
commitments (2) (3)
    
    
    37,180
    
    
    
    18,590
    
    
    
    18,590
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Existing aircraft lease
obligations
    
    
    149,259
    
    
    
    7,832
    
    
    
    15,663
    
    
    
    15,663
    
    
    
    16,265
    
    
    
    17,533
    
    
    
    76,303Other lease
obligations
    
    
    21,741
    
    
    
    1,781
    
    
    
    3,170
    
    
    
    2,447
    
    
    
    2,150
    
    
    
    1,834
    
    
    
    10,359Long-term debt
    
    
    213,100
    
    
    
    
    
    
    
    13,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000$
    558,953
    
    
    $
    105,172
    
    
    $
    111,227
    
    
    $
    18,110
    
    
    $
    18,415
    
    
    $
    19,367
    
    
    $
    286,662
 
 (1)
    
    These commitments are for aircraft that we intend to finance with remaining cash from
the equity offering completed April 2006, with cash from operations, and operating leases.(2)
    
    These commitments are for aircraft that we intend to finance with an operating lease.
Once the leases are entered into, the lease payments will be spread out over future years.(3)
    
    One of these aircraft was delivered in April, 2007, and we paid the initial delivery
cost of that aircraft of $17.5 million. In August 2007, we executed an operating lease for
this aircraft and received back the initial delivery cost from the lessor. Environmental Matters
  New Accounting Pronouncements
  27




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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
   28




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PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
   
 Item 1. A. RISK FACTORS
  RISKS INHERENT IN OUR BUSINESS
 Our operations are affected by adverse weather conditions and seasonal factors.
  Ø
    
    the tropical storm and hurricane season in the Gulf of Mexico;Ø
    
    poor weather conditions that often prevail during winter and can develop in any season; and;Ø
    
    reduced daylight hours during the winter months.
    29




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We may not be able to obtain acceptable customer contracts covering some of our new helicopters,
and there will be a delay between the time that a helicopter is delivered to us and the time that
it can begin generating revenues.
    Our contracts generally can be terminated or downsized by our customers without penalty.
  Increased governmental regulations could increase our costs or reduce our ability to operate
successfully.
    30




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The helicopter services business is highly competitive.
    The failure to maintain our safety record would seriously harm our ability to attract new customers
and maintain our existing customers.
  Helicopter operations involve risks that may not be covered by our insurance or may increase the
cost of our insurance.
    31




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##### Table of Contents



Our air medical operations, which we are expanding, expose us to numerous special risks, including
collection risks, high start-up costs and potential medical malpractice claims.
   Our international operations are subject to political, economic and regulatory uncertainty.
  Ø
    
    political, social and economic instability;Ø
    
    terrorism, kidnapping and extortion;Ø
    
    potential seizure or nationalization of assets;Ø
    
    import-export quotas; andØ
    
    currency fluctuations or devaluation.
  Ø
    
    the awarding of contracts to local contractors;Ø
    
    the employment of local citizens; andØ
    
    the establishment of foreign subsidiaries with significant
ownership positions reserved by the foreign government for local
ownership.
 Our failure to attract and retain qualified personnel could adversely affect us.
  32




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RISKS SPECIFIC TO OUR COMPANY
 We are highly dependent on the offshore oil and gas industry.
  Ø
    
    the supply of, and demand for, oil and natural gas and market
expectations regarding supply and demand;Ø
    
    weather-related or other natural causes;Ø
    
    actions of OPEC, and Middle Eastern and other oil producing
countries, to control prices or change production levels;Ø
    
    general economic conditions in the United States and worldwide;Ø
    
    war, civil unrest or terrorist activities;Ø
    
    governmental regulation; andØ
    
    the price and availability of alternative fuels.
    Our pilot workforce represented by Office and Professional Employees International Union conducted
a general strike beginning on September 20, 2006.
  33




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##### Table of Contents



We depend on a small number of large oil and gas industry customers for a significant portion of
our revenues, and our credit exposure within this industry is significant.
  Our Chairman of the Board and Chief Executive Officer is also our principal stockholder and has
voting control of the Company.
  Our substantial indebtedness could adversely affect our financial condition and impair our ability
to operate our business.
    Ø
    
    require us to dedicate a substantial portion of our cash flow from
operations to pay principal of, and interest on, our indebtedness,
thereby reducing the availability of our cash flow to fund working
capital, capital expenditures or other general corporate purposes,
or to carry out other aspects of our business plan;Ø
    
    increase our vulnerability to general adverse economic and
industry conditions and limit our ability to withstand competitive
pressures;
 34




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##### Table of Contents



Ø
    
    limit our flexibility in planning for, or reacting to, changes in
our business and future business opportunities;Ø
    
    place us at a competitive disadvantage compared to our competitors
that have less debt; and limit our ability to obtain additional
financing to fund future working capital, capital expenditures and
other aspects of our business plan.Ø
    
    limit our ability to obtain additional financing for working
capital, capital expenditures and other aspects of our business
plan.
  The DOJ investigation could result in criminal proceedings and the imposition of fines and
penalties.
   Our stock has a low trading volume.
  We do not pay dividends.
  Provisions in our articles of incorporation and by-laws and Louisiana law make it more difficult to
effect a change in control, which could discourage a takeover of our company and adversely affect
the price of our common stock.
  35




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Future sales of our shares could depress the market price of our non-voting common stock.
  
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 Item 3. DEFAULTS UPON SENIOR SECURITIES
  36




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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Number of Votes CastBrokerName of Director
    
    For
    
    Withhold
    
    Non-VoteAl A. Gonsoulin
    
    
    1,500,585
    
    
    
    0
    
    
    
    0Lance F. Bospflug
    
    
    1,500,585
    
    
    
    0
    
    
    
    0Arthur J. Breault, Jr.
    
    
    1,500,585
    
    
    
    0
    
    
    
    0C. Russell Luigs
    
    
    1,500,585
    
    
    
    0
    
    
    
    0Richard H. Matzke
    
    
    1,500,585
    
    
    
    0
    
    
    
    0Thomas H. Murphy
    
    
    1,500,585
    
    
    
    0
    
    
    
    0
 
 Item 5. OTHER INFORMATION
  
 Item 6. EXHIBITS
 (a)
    
    Exhibits3.1
    
    (i)
    
    Amended and Restated Articles of Incorporation of the Company (incorporated
by reference to Exhibit No. 3.1(i) to PHIs Report on Form 10-Q for the quarterly
period ended June 30, 2006).(ii)
    
    Amended and Restated By-laws of the Company (As amended through
May 1, 2002) (incorporated by reference to Exhibit 3.1(iii) to PHIs Report on
Form 10-K for the year ended December 31, 2006).4.1
    
    Loan Agreement dated as of April 23, 2002 by and among PHI, Inc., Acadian
Composites, LLC, Air Evac Services, Inc., Evangeline Airmotive Inc., and International
Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to
Exhibit 10.3 to PHIs Report on Form 10-Q for the quarterly period ended June 30,
2002).4.2
    
    1st Amendment to Loan Agreement dated as of April 23, 2002 by and
among PHI, Inc. Acadian Composites, LLC, Air Evac Services, Inc., Evangeline Airmotive
Inc., and International Helicopter Transport, Inc. and Whitney National Bank
(incorporated by reference to Exhibit 10.4 to PHIs Report on Form 10-Q for the
quarterly period ended June 30, 2004).4.3
    
    Form of Senior Debt Indenture (incorporated by reference to Exhibit 4.5 to
PHIs Registration Statement on Form S-3, filed on March 23, 2005, File No. 333-123528)4.4
    
    Form of Subordinated Debt Indenture (incorporated by reference to Exhibit 4.6
to PHIs Registration Statement on Form S-3, filed on March 23, 2005, File No.
333-123528)4.5
    
    First Supplemental Indenture dated April 12, 2006, among PHI, Inc., the
Subsidiary Guarantors named therein and The Bank of New York, as Trustee (incorporated
by reference to Exhibit 10.1 to PHIs Report on Form 8-K filed on April 13, 2006).
 37




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##### Table of Contents



4.6
    
    Indenture dated April 12, 2006 among PHI, Inc., the Subsidiary Guarantors named
therein and The Bank of New York, as Trustee (incorporated by reference to Exhibit 10.2
to PHIs Report on Form 8-K filed on April 13, 2006).4.7
    
    Third Amendment to Loan Agreement dated April 12, 2006 by and among PHI, Inc.,
Air Evac Services, Inc., PHI Tech Services, Inc. (formerly Evangeline Airmotive, Inc.),
and International Helicopter Transport, Inc. and Whitney National Bank (incorporated by
reference to Exhibit 10.4 to PHIs Report on Form 8-K filed on April 13, 2006).4.8
    
    Registration Rights Agreement dated April 12, 2006 (incorporated by reference
to Exhibit 10.3 to PHIs Report on Form 8-K filed on April 13, 2006).31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Al
A. Gonsoulin, Chairman and Chief Executive Officer.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by
Michael J. McCann, Chief Financial Officer.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Al
A. Gonsoulin, Chairman and Chief Executive Officer.32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by
Michael J. McCann, Chief Financial Officer.
 
 SIGNATURES
  PHI, Inc.August 9, 2007
    By:
    /s/ Al A. GonsoulinAl A. GonsoulinChairman and Chief Executive OfficerAugust 9, 2007
    By:
    /s/ Michael J. McCannMichael J. McCannChief Financial Officer 38




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##### Table of Contents



Exhibit Index
 (a)
    
    Exhibits3.1
    
    (i)
    
    Amended and Restated Articles of Incorporation of the Company (incorporated
by reference to Exhibit No. 3.1(i) to PHIs Report on Form 10-Q for the quarterly
period ended June 30, 2006).(ii)
    
    Amended and Restated By-laws of the Company (As amended through
May 1, 2002) (incorporated by reference to Exhibit 3.1(iii) to PHIs Report on
Form 10-K for the year ended December 31, 2006).4.1
    
    Loan Agreement dated as of April 23, 2002 by and among PHI, Inc., Acadian
Composites, LLC, Air Evac Services, Inc., Evangeline Airmotive Inc., and International
Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to
Exhibit 10.3 to PHIs Report on Form 10-Q for the quarterly period ended June 30,
2002).4.2
    
    1st Amendment to Loan Agreement dated as of April 23, 2002 by and
among PHI, Inc. Acadian Composites, LLC, Air Evac Services, Inc., Evangeline Airmotive
Inc., and International Helicopter Transport, Inc. and Whitney National Bank
(incorporated by reference to Exhibit 10.4 to PHIs Report on Form 10-Q for the
quarterly period ended June 30, 2004).4.3
    
    Form of Senior Debt Indenture (incorporated by reference to Exhibit 4.5 to
PHIs Registration Statement on Form S-3, filed on March 23, 2005, File No. 333-123528)4.4
    
    Form of Subordinated Debt Indenture (incorporated by reference to Exhibit 4.6
to PHIs Registration Statement on Form S-3, filed on March 23, 2005, File No.
333-123528)4.5
    
    First Supplemental Indenture dated April 12, 2006, among PHI, Inc., the
Subsidiary Guarantors named therein and The Bank of New York, as Trustee (incorporated
by reference to Exhibit 10.1 to PHIs Report on Form 8-K filed on April 13, 2006).4.6
    
    Indenture dated April 12, 2006 among PHI, Inc., the Subsidiary Guarantors named
therein and The Bank of New York, as Trustee (incorporated by reference to Exhibit 10.2
to PHIs Report on Form 8-K filed on April 13, 2006).4.7
    
    Third Amendment to Loan Agreement dated April 12, 2006 by and among PHI, Inc.,
Air Evac Services, Inc., PHI Tech Services, Inc. (formerly Evangeline Airmotive, Inc.),
and International Helicopter Transport, Inc. and Whitney National Bank (incorporated by
reference to Exhibit 10.4 to PHIs Report on Form 8-K filed on April 13, 2006).4.8
    
    Registration Rights Agreement dated April 12, 2006 (incorporated by reference
to Exhibit 10.3 to PHIs Report on Form 8-K filed on April 13, 2006).31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Al
A. Gonsoulin, Chairman and Chief Executive Officer.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by
Michael J. McCann, Chief Financial Officer.32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Al
A. Gonsoulin, Chairman and Chief Executive Officer.32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by
Michael J. McCann, Chief Financial Officer.