##### 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: September 30, 2005
 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
 PETROLEUM HELICOPTERS, INC.
  Louisiana
    
    72-0395707(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)2001 SE Evangeline ThruwayLafayette, Louisiana
    
    70508(Address of principal executive offices)
    
    (Zip Code)
   þ o
 þ o
 o þ
   Class
    
    Outstanding at November 2, 2005Voting Common Stock
    
    2,852,616 sharesNon-Voting Common Stock
    
    7,568,892 shares




---



PETROLEUM HELICOPTERS, INC.
 Index  Form 10-Q
 Part I  Financial InformationItem 1. Financial Statements  UnauditedCondensed Consolidated Balance Sheets  September 30, 2005
and December 31, 2004
    
    
    3Condensed Consolidated Statements of Operations  Quarter
and Nine Months Ended September 30, 2005 and 2004
    
    
    4Condensed Consolidated Statements of Cash Flows  Quarter
and Nine Months Ended September 30, 2005 and 2004
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures about
Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26Part II  Other InformationItem 1. Legal Proceedings
    
    
    27Item 6. Exhibits and Reports on Form 8-K
    
    
    27Signatures
    
    
    28Certification of Chairman & CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of Chairman & CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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PART
I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except share data)
(Unaudited)
 September 30,
    
    
    December 31,2005
    
    
    2004ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    91,553
    
    
    $
    18,008Accounts
receivable  net of allowanceTrade
    
    
    84,015
    
    
    
    58,242Other
    
    
    2,953
    
    
    
    1,134Inventory
    
    
    44,016
    
    
    
    39,225Other current assets
    
    
    7,814
    
    
    
    10,695Refundable income taxes
    
    
    644
    
    
    
    1,101Total current assets
    
    
    230,995
    
    
    
    128,405Property and equipment, net
    
    
    286,193
    
    
    
    253,241Other
    
    
    13,918
    
    
    
    12,527Total Assets
    
    $
    531,106
    
    
    $
    394,173LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    27,457
    
    
    $
    22,735Accrued liabilities
    
    
    4,996
    
    
    
    3,091Accrued salaries and wages
    
    
    7,409
    
    
    
    3,381Accrued vacation payable
    
    
    4,660
    
    
    
    3,775Accrued insurance payable
    
    
    
    
    
    
    1,526Accrued interest payable
    
    
    7,902
    
    
    
    3,181Notes payable
    
    
    2,000
    
    
    
    2,000Total current liabilities
    
    
    54,424
    
    
    
    39,689Long-term debt
    
    
    203,500
    
    
    
    208,275Deferred income taxes
    
    
    34,053
    
    
    
    29,805Other long-term liabilities
    
    
    6,384
    
    
    
    6,429Commitments 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
    
    
    742
    
    
    
    253Additional paid-in capital
    
    
    129,599
    
    
    
    15,098Retained earnings
    
    
    102,119
    
    
    
    94,339Total shareholders equity
    
    
    232,745
    
    
    
    109,975Total Liabilities and Shareholders Equity
    
    $
    531,106
    
    
    $
    394,173
  3




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PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Operating revenues
    
    $
    100,018
    
    
    $
    77,733
    
    
    $
    261,040
    
    
    $
    214,892Gain on disposition of
property and equipment, net
    
    
    26
    
    
    
    1,091
    
    
    
    486
    
    
    
    2,271Other
    
    
    861
    
    
    
    76
    
    
    
    1,155
    
    
    
    221100,905
    
    
    
    78,900
    
    
    
    262,681
    
    
    
    217,384Expenses:Direct expenses
    
    
    80,184
    
    
    
    63,805
    
    
    
    217,115
    
    
    
    179,138Selling, general and
administrative expenses
    
    
    6,561
    
    
    
    5,403
    
    
    
    17,263
    
    
    
    16,157Interest expense
    
    
    5,061
    
    
    
    5,026
    
    
    
    15,337
    
    
    
    15,05291,806
    
    
    
    74,234
    
    
    
    249,715
    
    
    
    210,347Earnings before income taxes
    
    
    9,099
    
    
    
    4,666
    
    
    
    12,966
    
    
    
    7,037Income taxes
    
    
    3,639
    
    
    
    2,007
    
    
    
    5,186
    
    
    
    3,262Net earnings
    
    $
    5,460
    
    
    $
    2,659
    
    
    $
    7,780
    
    
    $
    3,775Weighted average shares
outstanding:Basic
    
    
    10,271
    
    
    
    5,383
    
    
    
    7,288
    
    
    
    5,383Diluted
    
    
    10,295
    
    
    
    5,486
    
    
    
    7,314
    
    
    
    5,486Net earnings per shareBasic
    
    $
    0.53
    
    
    $
    0.49
    
    
    $
    1.07
    
    
    $
    0.70Diluted
    
    $
    0.53
    
    
    $
    0.48
    
    
    $
    1.06
    
    
    $
    0.69
  4




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PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
 Nine Months EndedSeptember 30,2005
    
    
    2004Cash flows from operating activities:Net earnings
    
    $
    7,780
    
    
    $
    3,775Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation
    
    
    19,923
    
    
    
    20,638Deferred income taxes
    
    
    3,806
    
    
    
    2,386Gain on disposition of property & equipment, net
    
    
    (486
    )
    
    
    (2,271
    )Other
    
    
    983
    
    
    
    997Changes in operating assets and liabilities
    
    
    (15,187
    )
    
    
    (9,937
    )Net cash provided by operating activities
    
    
    16,819
    
    
    
    15,588Cash flows from investing activities:Purchase of property and equipment
    
    
    (59,636
    )
    
    
    (27,189
    )Proceeds from asset dispositions
    
    
    6,147
    
    
    
    11,293Net cash used in investing activities
    
    
    (53,489
    )
    
    
    (15,896
    )Cash flows from financing activities:Proceeds from (Payments to) line of credit, net
    
    
    (4,775
    )
    
    
    4,900Proceeds from stock issuance, net
    
    
    113,909
    
    
    
    Proceeds from exercise of stock options
    
    
    1,081
    
    
    
    Net cash provided by financing activities
    
    
    110,215
    
    
    
    4,900Increase in cash and cash equivalents
    
    
    73,545
    
    
    
    4,592Cash and cash equivalents, beginning of period
    
    
    18,008
    
    
    
    19,872Cash and cash equivalents, end of period
    
    $
    91,553
    
    
    $
    24,464Supplemental Disclosures Cash Flow InformationInterest paid
    
    $
    9,887
    
    
    $
    9,587Taxes paid, net
    
    $
    296
    
    
    $
    310
  5




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




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##### Table of Contents



Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Thousands of dollars)
    
    
    (Thousands of dollars)Segment operating revenuesDomestic Oil and Gas
    
    $
    58,952
    
    
    $
    48,081
    
    
    $
    155,392
    
    
    $
    133,660Air Medical
    
    
    33,905
    
    
    
    21,441
    
    
    
    82,989
    
    
    
    55,919International
    
    
    6,766
    
    
    
    5,766
    
    
    
    19,565
    
    
    
    16,936Technical Services
    
    
    395
    
    
    
    2,445
    
    
    
    3,094
    
    
    
    8,377Total operating revenues
    
    
    100,018
    
    
    
    77,733
    
    
    
    261,040
    
    
    
    214,892Segment direct expensesDomestic Oil and Gas
    
    
    46,773
    
    
    
    38,762
    
    
    
    126,116
    
    
    
    111,407Air Medical
    
    
    28,701
    
    
    
    18,894
    
    
    
    75,799
    
    
    
    46,562International
    
    
    4,358
    
    
    
    4,094
    
    
    
    12,824
    
    
    
    13,847Technical Services
    
    
    352
    
    
    
    2,055
    
    
    
    2,376
    
    
    
    7,322Total direct expenses
    
    
    80,184
    
    
    
    63,805
    
    
    
    217,115
    
    
    
    179,138Segment selling, general and administrative expensesDomestic Oil and Gas
    
    
    256
    
    
    
    113
    
    
    
    704
    
    
    
    1,379Air Medical
    
    
    1,741
    
    
    
    1,866
    
    
    
    4,645
    
    
    
    5,579International
    
    
    118
    
    
    
    12
    
    
    
    182
    
    
    
    36Technical Services
    
    
    1
    
    
    
    3
    
    
    
    5
    
    
    
    11Total selling, general and administrative expenses
    
    
    2,116
    
    
    
    1,994
    
    
    
    5,536
    
    
    
    7,005Total direct and selling, general and administrative
expenses
    
    
    82,300
    
    
    
    65,799
    
    
    
    222,651
    
    
    
    186,143Net segment profitDomestic Oil and Gas
    
    
    11,923
    
    
    
    9,206
    
    
    
    28,572
    
    
    
    20,874Air Medical
    
    
    3,463
    
    
    
    681
    
    
    
    2,545
    
    
    
    3,778International
    
    
    2,290
    
    
    
    1,660
    
    
    
    6,559
    
    
    
    3,053Technical Services
    
    
    42
    
    
    
    387
    
    
    
    713
    
    
    
    1,044Total
    
    
    17,718
    
    
    
    11,934
    
    
    
    38,389
    
    
    
    28,749Other, net (1)
    
    
    887
    
    
    
    1,167
    
    
    
    1,641
    
    
    
    2,492Unallocated selling, general and administrative costs
    
    
    (4,445
    )
    
    
    (3,409
    )
    
    
    (11,727
    )
    
    
    (9,152
    )Interest expense
    
    
    (5,061
    )
    
    
    (5,026
    )
    
    
    (15,337
    )
    
    
    (15,052
    )Earnings before income taxes
    
    $
    9,099
    
    
    $
    4,666
    
    
    $
    12,966
    
    
    $
    7,037
 
 (1)
    
    Including gains on disposition of property and equipment, equity in losses of
unconsolidated subsidiaries, and other income. 7




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




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Operating Leases
  Purchase Commitments
 4. Valuation Accounts
   5. Employee Incentive Compensation
  6. Recent Accounting Pronouncements
  9




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7. Condensed Consolidated Financial Information
   10




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PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
 September 30, 2005ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    91,100
    
    
    $
    453
    
    
    $
    
    
    
    $
    91,553Accounts
receivable  net of allowance
    
    
    75,790
    
    
    
    11,178
    
    
    
    
    
    
    
    86,968Inventory
    
    
    44,016
    
    
    
    
    
    
    
    
    
    
    
    44,016Other current assets
    
    
    7,592
    
    
    
    222
    
    
    
    
    
    
    
    7,814Refundable income taxes
    
    
    459
    
    
    
    185
    
    
    
    
    
    
    
    644Total current assets
    
    
    218,957
    
    
    
    12,038
    
    
    
    
    
    
    
    230,995Property and equipment, net
    
    
    278,044
    
    
    
    8,149
    
    
    
    
    
    
    
    286,193Investment in subsidiaries and other
    
    
    16,451
    
    
    
    32,038
    
    
    
    (34,571
    )
    
    
    13,918Total Assets
    
    $
    513,452
    
    
    $
    52,225
    
    
    $
    (34,571
    )
    
    $
    531,106LIABILITIES AND
SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued liabilities
    
    $
    35,515
    
    
    $
    2,503
    
    
    $
    1,844
    
    
    $
    39,862Accrued vacation payable
    
    
    4,372
    
    
    
    288
    
    
    
    
    
    
    
    4,660Accrued interest payable
    
    
    7,902
    
    
    
    
    
    
    
    
    
    
    
    7,902Notes payable
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000Total current liabilities
    
    
    49,789
    
    
    
    2,791
    
    
    
    1,844
    
    
    
    54,424Long-term debt
    
    
    203,500
    
    
    
    
    
    
    
    
    
    
    
    203,500Deferred income taxes and other long-term
liabilities
    
    
    27,418
    
    
    
    12,826
    
    
    
    193
    
    
    
    40,437Shareholders Equity:Paid-in capital
    
    
    130,626
    
    
    
    4,402
    
    
    
    (4,402
    )
    
    
    130,626Retained earnings
    
    
    102,119
    
    
    
    32,206
    
    
    
    (32,206
    )
    
    
    102,119Total shareholders equity
    
    
    232,745
    
    
    
    36,608
    
    
    
    (36,608
    )
    
    
    232,745Total Liabilities and
Shareholders Equity
    
    $
    513,452
    
    
    $
    52,225
    
    
    $
    (34,571
    )
    
    $
    531,106
 11




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PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
 December 31, 2004ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    17,701
    
    
    $
    307
    
    
    $
    
    
    
    $
    18,008Accounts
receivable  net of allowance
    
    
    51,868
    
    
    
    7,508
    
    
    
    
    
    
    
    59,376Inventory
    
    
    39,225
    
    
    
    
    
    
    
    
    
    
    
    39,225Other current assets
    
    
    10,631
    
    
    
    64
    
    
    
    
    
    
    
    10,695Refundable income taxes
    
    
    916
    
    
    
    185
    
    
    
    
    
    
    
    1,101Total current assets
    
    
    120,341
    
    
    
    8,064
    
    
    
    
    
    
    
    128,405Property and equipment, net
    
    
    247,798
    
    
    
    5,443
    
    
    
    
    
    
    
    253,241Investment in subsidiaries and other
    
    
    14,910
    
    
    
    27,855
    
    
    
    (30,238
    )
    
    
    12,527Total Assets
    
    $
    383,049
    
    
    $
    41,362
    
    
    $
    (30,238
    )
    
    $
    394,173LIABILITIES AND
SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued liabilities
    
    $
    29,617
    
    
    $
    1,768
    
    
    $
    (652
    )
    
    $
    30,733Accrued vacation payable
    
    
    3,519
    
    
    
    256
    
    
    
    
    
    
    
    3,775Accrued interest payable
    
    
    3,181
    
    
    
    
    
    
    
    
    
    
    
    3,181Notes payable
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000Total current liabilities
    
    
    38,317
    
    
    
    2,024
    
    
    
    (652
    )
    
    
    39,689Long-term debt
    
    
    208,275
    
    
    
    
    
    
    
    
    
    
    
    208,275Deferred income taxes and other long-term
liabilities
    
    
    26,482
    
    
    
    9,559
    
    
    
    193
    
    
    
    36,234Shareholders EquityPaid-in capital
    
    
    15,636
    
    
    
    4,402
    
    
    
    (4,402
    )
    
    
    15,636Retained earnings
    
    
    94,339
    
    
    
    25,377
    
    
    
    (25,377
    )
    
    
    94,339Total shareholders equity
    
    
    109,975
    
    
    
    29,779
    
    
    
    (29,779
    )
    
    
    109,975Total Liabilities and
Shareholders Equity
    
    $
    383,049
    
    
    $
    41,362
    
    
    $
    (30,238
    )
    
    $
    394,173
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PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Thousands of dollars)
(Unaudited)
 For the quarter ended September 30, 2005ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    86,863
    
    
    $
    13,155
    
    
    $
    
    
    
    $
    100,018Management fees
    
    
    476
    
    
    
    
    
    
    
    (476
    )
    
    
    Gain on disposition of property and
equipment, net
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    26Other
    
    
    861
    
    
    
    
    
    
    
    
    
    
    
    86188,226
    
    
    
    13,155
    
    
    
    (476
    )
    
    
    100,905Expenses:Direct expenses
    
    
    71,027
    
    
    
    9,156
    
    
    
    
    
    
    
    80,184Management fees
    
    
    
    
    
    
    476
    
    
    
    (476
    )
    
    
    Selling, general, and administrative
    
    
    5,882
    
    
    
    680
    
    
    
    
    
    
    
    6,561Equity in net income of consolidated
subsidiaries
    
    
    (1,913
    )
    
    
    
    
    
    
    1,913
    
    
    
    Interest expense
    
    
    5,061
    
    
    
    
    
    
    
    
    
    
    
    5,06180,057
    
    
    
    10,312
    
    
    
    1,437
    
    
    
    91,806Earnings before income taxes
    
    
    8,169
    
    
    
    2,843
    
    
    
    (1,913
    )
    
    
    9,099Income taxes
    
    
    2,709
    
    
    
    930
    
    
    
    
    
    
    
    3,639Net earnings
    
    $
    5,460
    
    
    $
    1,913
    
    
    $
    (1,913
    )
    
    $
    5,460
 For the quarter ended September 30, 2004ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    51,787
    
    
    $
    25,946
    
    
    $
    
    
    
    $
    77,733Management fees
    
    
    939
    
    
    
    
    
    
    
    (939
    )
    
    
    Equity in net income of consolidated
subsidiaries
    
    
    603
    
    
    
    
    
    
    
    (603
    )
    
    
    Gain on disposition of property and
equipment, net
    
    
    1,091
    
    
    
    
    
    
    
    
    
    
    
    1,091Other
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    7654,496
    
    
    
    25,946
    
    
    
    (1,542
    )
    
    
    78,900Expenses:Direct expenses
    
    
    41,644
    
    
    
    22,161
    
    
    
    
    
    
    
    63,805Management fees
    
    
    
    
    
    
    939
    
    
    
    (939
    )
    
    
    Selling, general, and administrative
    
    
    3,562
    
    
    
    1,841
    
    
    
    
    
    
    
    5,403Interest expense
    
    
    5,026
    
    
    
    
    
    
    
    
    
    
    
    5,02650,232
    
    
    
    24,941
    
    
    
    (939
    )
    
    
    74,234Earnings before income taxes
    
    
    4,264
    
    
    
    1,005
    
    
    
    (603
    )
    
    
    4,666Income taxes
    
    
    1,605
    
    
    
    402
    
    
    
    
    
    
    
    2,007Net earnings
    
    $
    2,659
    
    
    $
    603
    
    
    $
    (603
    )
    
    $
    2,659
 13




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##### Table of Contents



PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Thousands of dollars)
(Unaudited)
 For the nine months ended September 30, 2005ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    222,288
    
    
    $
    38,752
    
    
    $
    
    
    
    $
    261,040Management fees
    
    
    1,629
    
    
    
    
    
    
    
    (1,629
    )
    
    
    Gain on disposition of property and
equipment, net
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    486Other
    
    
    1,155
    
    
    
    
    
    
    
    
    
    
    
    1,155225,558
    
    
    
    38,752
    
    
    
    (1,629
    )
    
    
    262,681Expenses:Direct expenses
    
    
    192,081
    
    
    
    25,034
    
    
    
    
    
    
    
    217,115Management fees
    
    
    
    
    
    
    1,629
    
    
    
    (1,629
    )
    
    
    Selling, general, and administrative
    
    
    15,280
    
    
    
    1,983
    
    
    
    
    
    
    
    17,263Equity in net income of consolidated
subsidiaries
    
    
    (6,843
    )
    
    
    
    
    
    
    6,843
    
    
    
    Interest expense
    
    
    15,337
    
    
    
    
    
    
    
    
    
    
    
    15,337215,855
    
    
    
    28,646
    
    
    
    5,214
    
    
    
    249,715Earnings before income taxes
    
    
    9,703
    
    
    
    10,106
    
    
    
    (6,843
    )
    
    
    12,966Income taxes
    
    
    1,923
    
    
    
    3,263
    
    
    
    
    
    
    
    5,186Net earnings
    
    $
    7,780
    
    
    $
    6,843
    
    
    $
    (6,843
    )
    
    $
    7,780
 For the nine months ended September 30, 2004ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    147,201
    
    
    $
    67,691
    
    
    $
    
    
    
    $
    214,892Management fees
    
    
    2,820
    
    
    
    
    
    
    
    (2,820
    )
    
    
    Equity in net income of consolidated
subsidiaries
    
    
    2,255
    
    
    
    
    
    
    
    (2,255
    )
    
    
    Gain on disposition of property and
equipment, net
    
    
    2,271
    
    
    
    
    
    
    
    
    
    
    
    2,271Other
    
    
    221
    
    
    
    
    
    
    
    
    
    
    
    221154,768
    
    
    
    67,691
    
    
    
    (5,075
    )
    
    
    217,384Expenses:Direct expenses
    
    
    123,602
    
    
    
    55,536
    
    
    
    
    
    
    
    179,138Management fees
    
    
    
    
    
    
    2,820
    
    
    
    (2,820
    )
    
    
    Selling, general, and administrative
    
    
    10,580
    
    
    
    5,577
    
    
    
    
    
    
    
    16,157Interest expense
    
    
    15,052
    
    
    
    
    
    
    
    
    
    
    
    15,052149,234
    
    
    
    63,933
    
    
    
    (2,820
    )
    
    
    210,347Earnings before income taxes
    
    
    5,534
    
    
    
    3,758
    
    
    
    (2,255
    )
    
    
    7,037Income taxes
    
    
    1,759
    
    
    
    1,503
    
    
    
    
    
    
    
    3,262Net earnings
    
    $
    3,775
    
    
    $
    2,255
    
    
    $
    (2,255
    )
    
    $
    3,775
 14




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##### Table of Contents



PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
 For the nine months ended September 30, 2005ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by operating
activities
    
    $
    16,673
    
    
    $
    146
    
    
    $
    
    
    
    $
    16,819Cash flows from investing activities:Purchase of property and equipment
    
    
    (59,636
    )
    
    
    
    
    
    
    
    
    
    
    (59,636
    )Proceeds from asset dispositions
    
    
    6,147
    
    
    
    
    
    
    
    
    
    
    
    6,147Net cash used in investing activities
    
    
    (53,489
    )
    
    
    
    
    
    
    
    
    
    
    (53,489
    )Cash flows from financing activities:Payments to line of credit, net
    
    
    (4,775
    )
    
    
    
    
    
    
    
    
    
    
    (4,775
    )Proceeds from stock issuance, net
    
    
    113,909
    
    
    
    
    
    
    
    
    
    
    
    113,909Proceeds from exercise of stock options
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081Net cash provided by financing
activities
    
    
    110,215
    
    
    
    
    
    
    
    
    
    
    
    110,215Increase in cash and cash equivalents
    
    
    73,399
    
    
    
    146
    
    
    
    
    
    
    
    73,545Cash and cash equivalents, beginning of
period
    
    
    17,701
    
    
    
    307
    
    
    
    
    
    
    
    18,008Cash and cash equivalents, end of period
    
    $
    91,100
    
    
    $
    453
    
    
    $
    
    
    
    $
    91,553
 For the nine months ended September 30, 2004ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in) operating
activities
    
    $
    15,607
    
    
    $
    (19
    )
    
    $
    
    
    
    $
    15,588Cash flows from investing activities:Purchase of property and equipment
    
    
    (27,189
    )
    
    
    
    
    
    
    
    
    
    
    (27,189
    )Proceeds from asset dispositions
    
    
    11,293
    
    
    
    
    
    
    
    
    
    
    
    11,293Net cash used in investing activities
    
    
    (15,896
    )
    
    
    
    
    
    
    
    
    
    
    (15,896
    )Cash flows from financing activities:Proceeds from line of credit, net
    
    
    4,900
    
    
    
    
    
    
    
    
    
    
    
    4,900Net cash provided by financing
activities
    
    
    4,900
    
    
    
    
    
    
    
    
    
    
    
    4,900Increase in cash and cash equivalents
    
    
    4,611
    
    
    
    (19
    )
    
    
    
    
    
    
    4,592Cash and cash equivalents, beginning of
period
    
    
    19,821
    
    
    
    51
    
    
    
    
    
    
    
    19,872Cash and cash equivalents, end of period
    
    $
    24,432
    
    
    $
    32
    
    
    $
    
    
    
    $
    24,464
 15




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##### Table of Contents



Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Forward-Looking Statements
  Overview
    16




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17




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##### Table of Contents



Operating Statistics
  Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Flight hours:Domestic Oil and Gas
    
    
    29,896
    
    
    
    27,242
    
    
    
    80,292
    
    
    
    75,826Air Medical
    
    
    7,811
    
    
    
    5,473
    
    
    
    19,384
    
    
    
    14,505International
    
    
    3,989
    
    
    
    3,821
    
    
    
    11,567
    
    
    
    11,384Total
    
    
    41,696
    
    
    
    36,536
    
    
    
    111,243
    
    
    
    101,715Air Medical Transports(1)
    
    
    5,018
    
    
    
    3,156
    
    
    
    12,489
    
    
    
    8,229
 September 30,2005
    
    
    2004Aircraft operated at period end:Domestic Oil and Gas
    
    
    158
    
    
    
    154Air Medical
    
    
    60
    
    
    
    49International
    
    
    16
    
    
    
    18Total (2)
    
    
    234
    
    
    
    221
 
 (1)
    
    Represents individual patient transports. Flight hours for these transports are included
in the above flight hour information.(2)
    
    Includes 12 and 13 aircraft as of September 30, 2005 and 2004, respectively that are customer
owned. Quarter Ended September 30, 2005 compared with Quarter Ended September 30, 2004
 Combined Operations
 Revenues
   18




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##### Table of Contents



Other Income and Losses
  Direct Expenses
 Selling, General, and Administrative Expenses
 Interest Expense
 Income Taxes
 Earnings
 Segment Discussion
 Domestic Oil and Gas
 19




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##### Table of Contents



Air Medical
      20




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##### Table of Contents



International
   Technical Services
   Nine Months Ended September 30, 2005 compared with Nine Months Ended September 30, 2004
 Combined Operations
 Revenues
  Other Income and Losses
  Direct Expenses
 21




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##### Table of Contents



Selling, General, and Administrative Expenses
 Interest Expense
 Income Taxes
 Earnings
 Segment Discussion
 Domestic Oil and Gas
  22




---



##### Table of Contents



Air Medical
    International
    23




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##### Table of Contents



Technical Services
   Liquidity and Capital Resources
 Cash Flow
   Financing Activities
    24




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##### Table of Contents



Payment Due by YearBeyondTotal
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009(Thousands of dollars)Purchase
commitments (1)
    
    $
    188,429
    
    
    $
    73,300
    
    
    $
    105,560
    
    
    $
    9,569
    
    
    $
    
    
    
    $
    
    
    
    $
    Aircraft lease
obligations
    
    
    79,296
    
    
    
    1,885
    
    
    
    7,541
    
    
    
    7,541
    
    
    
    7,541
    
    
    
    7,541
    
    
    
    47,247Facility lease
obligations
    
    
    18,958
    
    
    
    683
    
    
    
    2,557
    
    
    
    1,977
    
    
    
    1,649
    
    
    
    1,221
    
    
    
    10,871Series B Senior
Notes (2)
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    Revolving credit
Facility (2)
    
    
    3,500
    
    
    
    
    
    
    
    
    
    
    
    3,500
    
    
    
    
    
    
    
    
    
    
    
    $
    490,183
    
    
    $
    75,868
    
    
    $
    115,658
    
    
    $
    22,587
    
    
    $
    9,190
    
    
    $
    208,762
    
    
    $
    58,118
 
 (1)
    
    These commitments are for aircraft that we intend to finance with the proceeds of our
recent common stock offering, operating leases, or some combination thereof.(2)
    
    Long term debt. 25




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##### Table of Contents



Environmental Matters
   New Accounting Pronouncements
  
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
   26




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
   
 Item 6. EXHIBITS AND REPORTS ON FORM 8-K
  3.1
    
    (i)
    
    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 October 31, 1994).(ii)
    
    By-laws of the Company as amended (incorporated by reference to Exhibit No. 3.1 (ii) to
PHIs Report on Form 10-Q for the quarterly period ended March 31, 2002).
 4.1
    
    Indenture dated April 23, 2002 among Petroleum Helicopters, Inc., the Subsidiary
Guarantors named therein and The Bank of New York, as Trustee (incorporated by reference to
Exhibit 4.1 to PHIs Registration Statement on Form S-4, filed on April 30, 2002, File Nos.
333-87288 through 333-87288-08).4.2
    
    Form of 9 3/8% Senior Note (incorporated by reference to Exhibit A of Exhibit 4.1 to
PHIs Registration Statement on Form S-4, filed on April 30, 2002, File Nos. 333-87288
through 333-87288-08).10.1
    
    Loan Agreement dated as of April 23, 2002 by and among Petroleum Helicopters, Inc., 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).10.2
    
    First Amendment dated June 18, 2004, to Loan Agreement dated as of April 23, 2002 by
and among Petroleum Helicopters, Inc., 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, 2004.31.1
    
    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.
 27




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##### Table of Contents



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.
 (b)
    
    Reports on Form 8-KOn August 9, 2005, the Company filed a Form 8-K, reporting in Item 5 the Companys earnings
for the second quarter ended June 30, 2005.
 
 SIGNATURES
  Petroleum Helicopters, Inc.November 7, 2005
    
    By:
    
    /s/ Al A. GonsoulinAl A. GonsoulinChairman and Chief Executive OfficerNovember 7, 2005
    
    By:
    
    /s/ Michael J. McCannMichael J. McCannChief Financial Officer and Treasurer
 28




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##### Table of Contents



Exhibit Index
 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.