##### 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 1934For the quarterly period ended: June 30, 2005ORo
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from  to
 Commission file number: 0-9827
 PETROLEUM HELICOPTERS, INC.
  Louisiana
(State or other jurisdiction of incorporation or organization)
    
    72-0395707
(I.R.S. Employer Identification No.)
 2001 SE Evangeline Thruway
Lafayette, Louisiana
(Address of principal executive offices)
    
    70508
(Zip Code)
   þ o
 þ o
   Class
    
    Outstanding at July 29, 2005Voting Common Stock
    
    2,852,616 sharesNon-Voting Common Stock
    
    7,418,892 shares




---



##### Table of Contents



PETROLEUM HELICOPTERS, INC.
 Index  Form 10-Q
 Part I  Financial InformationItem 1.
    
    Financial Statements  UnauditedCondensed Consolidated Balance Sheets  June 30, 2005 and December 31, 2004
    
    
    3Condensed Consolidated Statements of Operations  Quarter and Six Months Ended June 30, 2005 and 2004
    
    
    4Condensed Consolidated Statements of Cash Flows  Quarter and Six Months Ended June 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 CEO pursuant to Section 302Certification of CFO pursuant to Section 302Certification of CEO pursuant to Section 906Certification of CFO pursuant to Section 906
 2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars, except share data)
(Unaudited)
 June 30,
    
    December 31,2005
    
    2004ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    106,551
    
    
    $
    18,008Accounts receivable  net of allowanceTrade
    
    
    66,857
    
    
    
    58,242Other
    
    
    4,091
    
    
    
    1,134Inventory
    
    
    42,356
    
    
    
    39,225Other current assets
    
    
    8,163
    
    
    
    10,695Refundable income taxes
    
    
    637
    
    
    
    1,101Total current assets
    
    
    228,655
    
    
    
    128,405Property and equipment, net
    
    
    265,113
    
    
    
    253,241Other
    
    
    12,217
    
    
    
    12,527Total Assets
    
    $
    505,985
    
    
    $
    394,173LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    24,128
    
    
    $
    22,735Accrued liabilities
    
    
    10,638
    
    
    
    6,472Accrued vacation payable
    
    
    4,525
    
    
    
    3,775Accrued insurance payable
    
    
    
    
    
    
    1,526Accrued interest payable
    
    
    3,182
    
    
    
    3,181Notes payable
    
    
    
    
    
    
    2,000Total current liabilities
    
    
    42,473
    
    
    
    39,689Long-term debt
    
    
    200,000
    
    
    
    208,275Deferred income taxes
    
    
    30,641
    
    
    
    29,805Other long-term liabilities
    
    
    6,259
    
    
    
    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
    
    
    128,926
    
    
    
    15,098Retained earnings
    
    
    96,659
    
    
    
    94,339Total shareholders equity
    
    
    226,612
    
    
    
    109,975Total Liabilities and Shareholders Equity
    
    $
    505,985
    
    
    $
    394,173
  3




---



##### Table of Contents



PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Quarter Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Operating revenues
    
    $
    86,783
    
    
    $
    70,186
    
    
    $
    161,022
    
    
    $
    137,159Gain (loss) on disposition of
property and equipment, net
    
    
    (186
    )
    
    
    507
    
    
    
    460
    
    
    
    1,180Other
    
    
    198
    
    
    
    62
    
    
    
    293
    
    
    
    14586,795
    
    
    
    70,755
    
    
    
    161,775
    
    
    
    138,484Expenses:Direct expenses
    
    
    72,896
    
    
    
    58,048
    
    
    
    136,931
    
    
    
    115,333Selling, general and
administrative expenses
    
    
    5,472
    
    
    
    5,610
    
    
    
    10,701
    
    
    
    10,754Interest expense
    
    
    5,159
    
    
    
    5,010
    
    
    
    10,276
    
    
    
    10,02683,527
    
    
    
    68,668
    
    
    
    157,908
    
    
    
    136,113Earnings before income taxes
    
    
    3,268
    
    
    
    2,087
    
    
    
    3,867
    
    
    
    2,371Income taxes
    
    
    1,307
    
    
    
    974
    
    
    
    1,547
    
    
    
    1,255Net earnings
    
    $
    1,961
    
    
    $
    1,113
    
    
    $
    2,320
    
    
    $
    1,116Weighted average shares
outstanding:Basic
    
    
    6,158
    
    
    
    5,383
    
    
    
    5,773
    
    
    
    5,383Diluted
    
    
    6,246
    
    
    
    5,486
    
    
    
    5,858
    
    
    
    5,486Net earnings per shareBasic
    
    $
    0.32
    
    
    $
    0.21
    
    
    $
    0.40
    
    
    $
    0.21Diluted
    
    $
    0.31
    
    
    $
    0.20
    
    
    $
    0.40
    
    
    $
    0.20
  4




---



##### Table of Contents



PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
 Six Months EndedJune 30,2005
    
    2004Cash flows from operating activities:Net earnings
    
    $
    2,320
    
    
    $
    1,116Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation
    
    
    13,202
    
    
    
    13,699Deferred income taxes
    
    
    836
    
    
    
    768Gain on disposition of property & equipment, net
    
    
    (460
    )
    
    
    (1,180
    )Other
    
    
    658
    
    
    
    668Changes in operating assets and liabilities
    
    
    (7,197
    )
    
    
    (7,646
    )Net cash provided by operating activities
    
    
    9,359
    
    
    
    7,425Cash flows from investing activities:Purchase of property and equipment
    
    
    (30,910
    )
    
    
    (20,628
    )Proceeds from asset dispositions
    
    
    6,052
    
    
    
    7,331Net cash used in investing activities
    
    
    (24,858
    )
    
    
    (13,297
    )Cash flows from financing activities:Payments on line of credit and note payable
    
    
    (15,225
    )
    
    
    (3,900
    )Borrowings on line of credit
    
    
    4,950
    
    
    
    8,400Proceeds from stock issuance, net
    
    
    114,317
    
    
    
    Net cash provided by financing activities
    
    
    104,042
    
    
    
    4,500Increase (decrease) in cash and cash equivalents
    
    
    88,543
    
    
    
    (1,372
    )Cash and cash equivalents, beginning of period
    
    
    18,008
    
    
    
    19,872Cash and cash equivalents, end of period
    
    $
    106,551
    
    
    $
    18,500Supplemental Disclosures Cash Flow InformationInterest paid
    
    $
    9,605
    
    
    $
    9,503Taxes paid, net
    
    $
    290
    
    
    $
    310
  5




---



##### Table of Contents



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




---



##### Table of Contents



Quarter Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Thousands of dollars)
    
    (Thousands of dollars)Segment operating revenuesDomestic Oil and Gas
    
    $
    51,573
    
    
    $
    43,402
    
    
    $
    96,440
    
    
    $
    85,579Air Medical
    
    
    28,300
    
    
    
    18,462
    
    
    
    49,084
    
    
    
    34,478International
    
    
    5,781
    
    
    
    5,211
    
    
    
    12,799
    
    
    
    11,170Technical Services
    
    
    1,129
    
    
    
    3,111
    
    
    
    2,699
    
    
    
    5,932Total operating revenues
    
    
    86,783
    
    
    
    70,186
    
    
    
    161,022
    
    
    
    137,159Segment direct expenseDomestic Oil and Gas
    
    
    42,496
    
    
    
    35,971
    
    
    
    79,345
    
    
    
    72,645Air Medical
    
    
    25,773
    
    
    
    14,909
    
    
    
    47,097
    
    
    
    27,668International
    
    
    3,806
    
    
    
    4,422
    
    
    
    8,466
    
    
    
    9,753Technical Services
    
    
    821
    
    
    
    2,746
    
    
    
    2,023
    
    
    
    5,267Total direct expense
    
    
    72,896
    
    
    
    58,048
    
    
    
    136,931
    
    
    
    115,333Segment selling, general and administrative expenseDomestic Oil and Gas
    
    
    202
    
    
    
    759
    
    
    
    448
    
    
    
    1,266Air Medical
    
    
    1,538
    
    
    
    1,913
    
    
    
    2,904
    
    
    
    3,713International
    
    
    19
    
    
    
    21
    
    
    
    63
    
    
    
    24Technical Services
    
    
    2
    
    
    
    4
    
    
    
    5
    
    
    
    8Total selling, general and administrative expense
    
    
    1,761
    
    
    
    2,697
    
    
    
    3,420
    
    
    
    5,011Total direct and selling, general and administrative
expense
    
    
    74,657
    
    
    
    60,745
    
    
    
    140,351
    
    
    
    120,344Net segment profit (loss)Domestic Oil and Gas
    
    
    8,875
    
    
    
    6,672
    
    
    
    16,647
    
    
    
    11,668Air Medical
    
    
    989
    
    
    
    1,640
    
    
    
    (917
    )
    
    
    3,097International
    
    
    1,956
    
    
    
    768
    
    
    
    4,270
    
    
    
    1,393Technical Services
    
    
    306
    
    
    
    361
    
    
    
    671
    
    
    
    657Total
    
    
    12,126
    
    
    
    9,441
    
    
    
    20,671
    
    
    
    16,815Other, net (1)
    
    
    12
    
    
    
    569
    
    
    
    753
    
    
    
    1,325Unallocated selling, general and administrative costs
    
    
    (3,711
    )
    
    
    (2,913
    )
    
    
    (7,281
    )
    
    
    (5,743
    )Interest expense
    
    
    (5,159
    )
    
    
    (5,010
    )
    
    
    (10,276
    )
    
    
    (10,026
    )Earnings before income taxes
    
    $
    3,268
    
    
    $
    2,087
    
    
    $
    3,867
    
    
    $
    2,371
 
 (1)
    
    Including gains on disposition of property and equipment, equity in losses of
unconsolidated subsidiaries, and other income. 7




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



7. Condensed Consolidated Financial Information
   10




---



##### Table of Contents



PETROLEUM HELICOPTERS, INC AND SUBSIDIARIES
 CONDENSED CONSOLIDATING BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
 June 30, 2005ParentCompany
    
    GuarantorOnly
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    106,110
    
    
    $
    441
    
    
    $
    
    
    
    $
    106,551Accounts receivable  net of allowance
    
    
    61,732
    
    
    
    9,216
    
    
    
    
    
    
    
    70,948Inventory
    
    
    42,356
    
    
    
    
    
    
    
    
    
    
    
    42,356Other current assets
    
    
    7,772
    
    
    
    391
    
    
    
    
    
    
    
    8,163Refundable income taxes
    
    
    452
    
    
    
    185
    
    
    
    
    
    
    
    637Total current assets
    
    
    218,422
    
    
    
    10,233
    
    
    
    
    
    
    
    228,655Property and equipment, net
    
    
    260,571
    
    
    
    4,542
    
    
    
    
    
    
    
    265,113Investment in subsidiaries and other
    
    
    14,750
    
    
    
    33,705
    
    
    
    (36,238
    )
    
    
    12,217Total Assets
    
    $
    493,743
    
    
    $
    48,480
    
    
    $
    (36,238
    )
    
    $
    505,985LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    34,901
    
    
    $
    1,599
    
    
    $
    (1,734
    )
    
    $
    34,766Accrued vacation payable
    
    
    4,237
    
    
    
    288
    
    
    
    
    
    
    
    4,525Accrued interest payable
    
    
    3,182
    
    
    
    
    
    
    
    
    
    
    
    3,182Total current liabilities
    
    
    42,320
    
    
    
    1,887
    
    
    
    (1,734
    )
    
    
    42,473Long-term debt
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    200,000Deferred income taxes and other long-term
liabilities
    
    
    24,811
    
    

    
    11,896
    
    
    
    193
    
    
    
    36,900Shareholders Equity:Paid-in capital
    
    
    129,953
    
    
    
    4,402
    
    
    
    (4,402
    )
    
    
    129,953Retained earnings
    
    
    96,659
    
    
    
    30,295
    
    
    
    (30,295
    )
    
    
    96,659Total shareholders equity
    
    
    226,612
    
    
    
    34,697
    
    
    
    (34,697
    )
    
    
    226,612Total Liabilities and
Shareholders Equity
    
    $
    493,743
    
    
    $
    48,480
    
    
    $
    (36,238
    )
    
    $
    505,985
 11




---



##### Table of Contents



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
 12




---



##### Table of Contents



PETROLEUM HELICOPTERS, INC AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Thousands of dollars)
(Unaudited)
 For the quarter ended June 30, 2005ParentCompany
    
    GuarantorOnly
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedOperating revenues
    
    $
    73,698
    
    
    $
    13,085
    
    
    $
    
    
    
    $
    86,783Management fees
    
    
    895
    
    
    
    
    
    
    
    (895
    )
    
    
    Gain (loss) on dispositions of property and
equipment, net
    
    
    (186
    )
    
    
    
    
    
    
    
    
    
    
    (186
    )Other
    
    
    198
    
    
    
    
    
    
    
    
    
    
    
    19874,605
    
    
    
    13,085
    
    
    
    (895
    )
    
    
    86,795Expenses:Direct expenses
    
    
    64,994
    
    
    
    7,902
    
    
    
    
    
    
    
    72,896Management fees
    
    
    
    
    
    
    895
    
    
    
    (895
    )
    
    
    Selling, general, and administrative
    
    
    4,838
    
    
    
    634
    
    
    
    
    
    
    
    5,472Equity in net income of consolidated
subsidiaries
    
    
    (2,372
    )
    
    
    
    
    
    
    2,372
    
    
    
    Interest expense
    
    
    5,159
    
    
    
    
    
    
    
    
    
    
    
    5,15972,619
    
    
    
    9,431
    
    
    
    1,477
    
    
    
    83,527Earnings before income taxes
    
    
    1,986
    
    
    
    3,654
    
    
    
    (2,372
    )
    
    
    3,268Income taxes
    
    
    25
    
    
    
    1,282
    
    
    
    
    
    
    
    1,307Net earnings
    
    $
    1,961
    
    
    $
    2,372
    
    
    $
    (2,372
    )
    
    $
    1,961
 For the quarter ended June 30, 2004ParentCompany
    
    GuarantorOnly
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedOperating revenues
    
    $
    46,908
    
    
    $
    23,278
    
    
    $
    
    
    
    $
    70,186Management fees
    
    
    939
    
    
    
    
    
    
    
    (939
    )
    
    
    Equity in net income of consolidated
subsidiaries
    
    
    1,361
    
    
    
    
    
    
    
    (1,361
    )
    
    
    Gain on dispositions of property and
equipment, net
    
    
    507
    
    
    
    
    
    
    
    
    
    
    
    507Other
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    6249,777
    
    
    
    23,278
    
    
    
    (2,300
    )
    
    
    70,755Expenses:Direct expenses
    
    
    39,898
    
    
    
    18,150
    
    
    
    
    
    
    
    58,048Management fees
    
    
    
    
    
    
    939
    
    
    
    (939
    )
    
    
    Selling, general, and administrative
    
    
    3,690
    
    
    
    1,920
    
    
    
    
    
    
    
    5,610Interest expense
    
    
    5,010
    
    
    
    
    
    
    
    
    
    
    
    5,01048,598
    
    
    
    21,009
    
    
    
    (939
    )
    
    
    68,668Earnings before income taxes
    
    
    1,179
    
    
    
    2,269
    
    
    
    (1,361
    )
    
    
    2,087Income taxes
    
    
    66
    
    
    
    908
    
    
    
    
    
    
    
    974Net earnings
    
    $
    1,113
    
    
    $
    1,361
    
    
    $
    (1,361
    )
    
    $
    1,113
 13




---



##### Table of Contents



PETROLEUM HELICOPTERS, INC AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Thousands of dollars)
(Unaudited)
 For the six months ended June 30, 2005ParentCompany
    
    GuarantorOnly
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedOperating revenues
    
    $
    135,425
    
    
    $
    25,597
    
    
    $
    
    
    
    $
    161,022Management fees
    
    
    1,153
    
    
    
    
    
    
    
    (1,153
    )
    
    
    Gain on dispositions of property and
equipment, net
    
    
    460
    
    
    
    
    
    
    
    
    
    
    
    460Other
    
    
    293
    
    
    
    
    
    
    
    
    
    
    
    293137,331
    
    
    
    25,597
    
    
    
    (1,153
    )
    
    
    161,775Expenses:Direct expenses
    
    
    121,041
    
    
    
    15,890
    
    
    
    
    
    
    
    136,931Management fees
    
    
    
    
    
    
    1,153
    
    
    
    (1,153
    )
    
    
    Selling, general, and administrative
    
    
    9,398
    
    
    
    1,303
    
    
    
    
    
    
    
    10,701Equity in net income of consolidated
subsidiaries
    
    
    (4,918
    )
    
    
    
    
    
    
    4,918
    
    
    
    Interest expense
    
    
    10,276
    
    
    
    
    
    
    
    
    
    
    
    10,276135,797
    
    
    
    18,346
    
    
    
    3,765
    
    
    
    157,908Earnings before income taxes
    
    
    1,534
    
    
    
    7,251
    
    
    
    (4,918
    )
    
    
    3,867Income taxes
    
    
    (786
    )
    
    
    2,333
    
    
    
    
    
    
    
    1,547Net earnings
    
    $
    2,320
    
    
    $
    4,918
    
    
    $
    (4,918
    )
    
    $
    2,320
 For the six months ended June 30, 2004ParentCompany
    
    GuarantorOnly
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedOperating revenues
    
    $
    95,413
    
    
    $
    41,746
    
    
    $
    
    
    
    $
    137,159Management fees
    
    
    1,881
    
    
    
    
    
    
    
    (1,881
    )
    
    
    Gain on dispositions of property and
equipment, net
    
    
    1,180
    
    
    
    
    
    
    
    
    
    
    
    1,180Other
    
    
    145
    
    
    
    
    
    
    
    
    
    
    
    14598,619
    
    
    
    41,746
    
    
    
    (1,881
    )
    
    
    138,484Expenses:Direct expenses
    
    
    81,957
    
    
    
    33,376
    
    
    
    
    
    
    
    115,333Management fees
    
    
    
    
    
    
    1,881
    
    
    
    (1,881
    )
    
    
    Selling, general, and administrative
    
    
    7,018
    
    
    
    3,736
    
    
    
    
    
    
    
    10,754Equity in net income of consolidated
subsidiaries
    
    
    (1,651
    )
    
    
    
    
    
    
    1,651
    
    
    
    Interest expense
    
    
    10,026
    
    
    
    
    
    
    
    
    
    
    
    10,02697,350
    
    
    
    38,993
    
    
    
    (230
    )
    
    
    136,113Earnings before income taxes
    
    
    1,269
    
    
    
    2,753
    
    
    
    (1,651
    )
    
    
    2,371Income taxes
    
    
    153
    
    
    
    1,102
    
    
    
    
    
    
    
    1,255Net earnings
    
    $
    1,116
    
    
    $
    1,651
    
    
    $
    (1,651
    )
    
    $
    1,116
 14




---



##### Table of Contents



PETROLEUM HELICOPTERS, INC AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
 For the six months ended June 30, 2005ParentCompany
    
    GuarantorOnly
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedNet cash provided by (used in) operating
activities
    
    $
    9,208
    
    
    $
    151
    
    
    $
    
    
    
    $
    9,359Cash flows from investing activities:Purchase of property and equipment
    
    
    (30,910
    )
    
    
    
    
    
    
    
    
    
    
    (30,910
    )Proceeds from asset dispositions
    
    
    6,052
    
    
    
    
    
    
    
    
    
    
    
    6,052Net cash used in investing activities
    
    
    (24,858
    )
    
    
    
    
    
    
    
    
    
    
    (24,858
    )Cash flows from financing activities:Payments on long term debt
    
    
    (15,225
    )
    
    
    
    
    
    
    
    
    
    
    (15,225
    )Borrowings on long term debt
    
    
    4,950
    
    
    
    
    
    
    
    
    
    
    
    4,950Proceeds from stock issuance, net
    
    
    114,317
    
    
    
    
    
    
    
    
    
    
    
    114,317Net cash provided by financing
activities
    
    
    104,042
    
    
    
    
    
    
    
    
    
    
    
    104,042Increase in cash and cash equivalents
    
    
    88,392
    
    
    
    151
    
    
    
    
    
    
    
    88,543Cash and cash equivalents, beginning of
period
    
    
    17,718
    
    
    
    290
    
    
    
    
    
    
    
    18,008Cash and cash equivalents, end of period
    
    $
    106,110
    
    
    $
    441
    
    
    $
    
    
    
    $
    106,551
 For the six months ended June 30, 2004ParentCompany
    
    GuarantorOnly
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedNet cash provided by (used in) operating
activities
    
    $
    7,430
    
    
    $
    (5
    )
    
    $
    
    
    
    $
    7,425Cash flows from investing activities:Purchase of property and equipment
    
    
    (20,628
    )
    
    
    
    
    
    
    
    
    
    
    (20,628
    )Proceeds from asset dispositions
    
    
    7,331
    
    
    
    
    
    
    
    
    
    
    
    7,331Net cash used in investing activities
    
    
    (13,297
    )
    
    
    
    
    
    
    
    
    
    
    (13,297
    )Cash flows from financing activities:Proceeds from line of credit, net
    
    
    4,500
    
    
    
    
    
    
    
    
    
    
    
    4,500Net cash provided by financing
activities
    
    
    4,500
    
    
    
    
    
    
    
    
    
    
    
    4,500Decrease in cash and cash equivalents
    
    
    (1,367
    )
    
    
    (5
    )
    
    
    
    
    
    
    (1,372
    )Cash and cash equivalents, beginning of
period
    
    
    19,821
    
    
    
    51
    
    
    
    
    
    
    
    19,872Cash and cash equivalents, end of period
    
    $
    18,454
    
    
    $
    46
    
    
    $
    
    
    
    $
    18,500
 15




---



##### Table of Contents



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




---



##### Table of Contents



Operating Statistics
  Quarter Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Flight hours:Domestic Oil and Gas
    
    
    28,090
    
    
    
    25,854
    
    
    
    50,396
    
    
    
    48,585Air Medical
    
    
    6,944
    
    
    
    4,942
    
    
    
    11,573
    
    
    
    9,032International
    
    
    3,706
    
    
    
    3,608
    
    
    
    7,578
    
    
    
    7,562Total
    
    
    38,740
    
    
    
    34,404
    
    
    
    69,547
    
    
    
    65,179Air Medical Transports(1)
    
    
    4,323
    
    
    
    2,676
    
    
    
    7,469
    
    
    
    5,073
 June 30,2005
    
    2004Aircraft operated at period end:Domestic Oil and Gas
    
    
    158
    
    
    
    154Air Medical
    
    
    56
    
    
    
    47International
    
    
    16
    
    
    
    20Total (2)
    
    
    230
    
    
    
    221
 
 (1)
    
    Represents individual patient transports. Flight hours for these transports are included
in the above flight hour information.(2)
    
    Includes 22 and 14 aircraft as of June 30, 2005 and 2004, respectively that are customer owned
or leased. Quarter Ended June 30, 2005 compared with Quarter Ended June 30, 2004
 Combined Operations
 Revenues
 17




---



##### Table of Contents



Other Income and Losses
  Direct Expenses
  Selling, General, and Administrative Expenses
 Interest Expense
 Income Taxes
 18




---



##### Table of Contents



Earnings
 Segment Discussion
 Domestic Oil and Gas
    Air Medical
   19




---



##### Table of Contents



International
   Technical Services
   20




---



##### Table of Contents



Six Months Ended June 30, 2005 compared with Six Months Ended June 30, 2004
 Combined Operations
 Revenues
  Other Income and Losses
  Direct Expenses
 Selling, General, and Administrative Expenses
 Interest Expense
 Income Taxes
 21




---



##### Table of Contents



Earnings
 Segment Discussion
 Domestic Oil and Gas
    Air Medical
   22




---



##### Table of Contents



International
    Technical Services
   Liquidity and Capital Resources
 Cash Flow
   Financing Activities
  23




---



##### Table of Contents



24




---



##### Table of Contents



Payment Due by YearBeyondTotal
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009
    
    2009(Thousands of dollars)Purchase
commitments (1)
    
    $
    139,866
    
    
    $
    75,238
    
    
    $
    64,628
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Aircraft lease
obligations
    
    
    76,904
    
    
    
    3,724
    
    
    
    7,448
    
    
    
    7,448
    
    
    
    7,448
    
    
    
    7,448
    
    
    
    43,388Facility lease
obligations
    
    
    18,038
    
    
    
    1,317
    
    
    
    2,359
    
    
    
    1,825
    
    
    
    1,481
    
    
    
    1,067
    
    
    
    9,989Series B Senior
Notes (2)
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    $
    434,808
    
    
    $
    80,279
    
    
    $
    74,435
    
    
    $
    9,273
    
    
    $
    8,929
    
    
    $
    208,515
    
    
    $
    53,377
 
 (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. Additionally,
these represent purchase commitments or amounts for purchase options that we intend to
exercise.(2)
    
    Long term debt.  Environmental Matters
   25




---



##### Table of Contents



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




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
   
 Item 6. EXHIBITS AND REPORTS ON FORM 8-K
 (a)
    
    Exhibits
 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




---



##### 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 May 9, 2005, the Company filed a Form 8-K, reporting in Item 5 the Companys earnings for
the first quarter ended March 31, 2005.
 
 SIGNATURES
  Petroleum Helicopters, Inc.August 8, 2005
    
    By: /s/ Al A. GonsoulinAl A. GonsoulinChairman and Chief Executive OfficerAugust 8, 2005
    
    By: /s/ Michael J. McCannMichael J. McCannChief Financial Officer and Treasurer
 28