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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: March 31, 2009
 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
(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)
 (337) 235-2452
 þ o
 o o
  Large accelerated filer: o
Accelerated filer: þ
Non-accelerated filer: o(Do not check if a smaller reporting company)
Smaller reporting company: o o þ
  Class
    
    Outstanding at April 30, 2009Voting Common Stock
    
    2,852,616 sharesNon-Voting Common Stock
    
    12,448,992 shares




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##### 



PHI, INC.
 Index  Form 10-Q
 Part I  Financial InformationItem 1.
    
    Financial Statements  UnauditedCondensed Consolidated Balance Sheets  March 31, 2009
and December 31, 2008
    
    
    3Condensed Consolidated Statements of Operations  Quarter
ended March 31, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows  Quarter
ended March 31, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    25Part II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    26Item 1.A.
    
    Risk Factors
    
    
    26Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3.
    
    Defaults Upon Senior Securities
    
    
    26Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    26Item 5.
    
    Other Information
    
    
    26Item 6.
    
    Exhibits
    
    
    26Signatures
    
    
    27EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 
 PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    3,035
    
    
    $
    1,159Short-term investments
    
    
    48,927
    
    
    
    42,121Accounts receivable  netTrade
    
    
    99,490
    
    
    
    104,912Other
    
    
    13,925
    
    
    
    6,510Inventories of spare parts  net
    
    
    61,463
    
    
    
    58,249Other current assets
    
    
    11,226
    
    
    
    10,687Income taxes receivable
    
    
    565
    
    
    
    982Total current assets
    
    
    238,631
    
    
    
    224,620Other
    
    
    15,140
    
    
    
    23,988Property and equipment  net
    
    
    525,569
    
    
    
    528,574Total assets
    
    $
    779,340
    
    
    $
    777,182LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    16,495
    
    
    $
    25,449Accrued liabilities
    
    
    33,110
    
    
    
    25,193Total current liabilities
    
    
    49,605
    
    
    
    50,642Long-term debt
    
    
    203,000
    
    
    
    203,000Deferred income taxes
    
    
    66,524
    
    
    
    65,175Other long-term liabilities
    
    
    5,789
    
    
    
    5,969Commitments and contingencies (Note 3)Shareholders Equity:Voting common stock
    
    
    285
    
    
    
    285Non-voting common stock
    
    
    1,245
    
    
    
    1,245Additional paid-in capital
    
    
    291,262
    
    
    
    291,262Accumulated other comprehensive (loss) income
    
    
    (4
    )
    
    
    45Retained earnings
    
    
    161,634
    
    
    
    159,559Total shareholders equity
    
    
    454,422
    
    
    
    452,396Total liabilities and shareholders equity
    
    $
    779,340
    
    
    $
    777,182
  3




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PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Quarter EndedMarch 31,2009
    
    
    2008Operating revenues
    
    $
    116,952
    
    
    $
    117,145Gain on disposition of assets, net
    
    
    272
    
    
    
    2,949Other, principally interest income
    
    
    63
    
    
    
    302117,287
    
    
    
    120,396Expenses:Direct expenses
    
    
    102,127
    
    
    
    98,226Selling, general and
administrative expenses
    
    
    7,824
    
    
    
    7,389Interest expense
    
    
    3,879
    
    
    
    3,834113,830
    
    
    
    109,449Earnings before income taxes
    
    
    3,457
    
    
    
    10,947Income tax expense
    
    
    1,382
    
    
    
    4,379Net earnings
    
    $
    2,075
    
    
    $
    6,568Weighted average shares
outstanding:Basic
    
    
    15,302
    
    
    
    15,277Diluted
    
    
    15,317
    
    
    
    15,286Net earnings per shareBasic
    
    $
    0.14
    
    
    $
    0.43Diluted
    
    $
    0.14
    
    
    $
    0.43
  4




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PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
 Quarter EndedMarch 31,2009
    
    
    2008Operating activities:Net earnings
    
    $
    2,075
    
    
    $
    6,568Adjustments to reconcile net earnings to net cash
provided
by operating activities:Depreciation
    
    
    7,079
    
    
    
    6,585Deferred income taxes
    
    
    1,349
    
    
    
    4,091Gain on asset dispositions
    
    
    (272
    )
    
    
    (2,949
    )Other
    
    
    233
    
    
    
    231Changes in operating assets and liabilities
    
    
    646
    
    
    
    (3,365
    )Net cash provided by operating activities
    
    
    11,110
    
    
    
    11,161Investing activities:Purchase of property and equipment
    
    
    (11,254
    )
    
    
    (12,172
    )Proceeds from asset dispositions
    
    
    8,826
    
    
    
    4,005Purchase of short-term investments
    
    
    (14,368
    )
    
    
    (8,585
    )Proceeds from sale of short-term investments
    
    
    7,562
    
    
    
    15,289Deposits on aircraft
    
    
    
    
    
    
    (11,500
    )Net cash used in investing activities
    
    
    (9,234
    )
    
    
    (12,963
    )Financing activities:Proceeds from line of credit
    
    
    
    
    
    
    1,800Net cash provided by financing activities
    
    
    
    
    
    
    1,800Increase (decrease) in cash and cash equivalents
    
    
    1,876
    
    
    
    (2
    )Cash and cash equivalents, beginning of period
    
    
    1,159
    
    
    
    1,425Cash and cash equivalents, end of period
    
    $
    3,035
    
    
    $
    1,423Supplemental Disclosures Cash Flow InformationInterest paid
    
    $
    93
    
    
    $
    31Income taxes paid
    
    $
    12
    
    
    $
    4Accrued payables related to purchase of property and
equipment
    
    $
    153
    
    
    $
    338
  5




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




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Air Medical Segment.
   AccountsRevenue
    
    ReceivableQuarter EndedMarch 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008Gross billings
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Provision for contractual
discounts
    
    
    53
    %
    
    
    49
    %
    
    
    35
    %
    
    
    33
    %Provision for uncompensated care
    
    
    9
    %
    
    
    9
    %
    
    
    20
    %
    
    
    19
    %
  Quarter EndedMarch 31,2009
    
    2008Medicaid
    
    
    13
    %
    
    
    13
    %Medicare
    
    
    19
    %
    
    
    18
    %Insurance
    
    
    65
    %
    
    
    64
    %Self Pay
    
    
    3
    %
    
    
    5
    %
  Technical Services Segment.
  7




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##### Table of Contents



Quarter EndedMarch 31,2009
    
    
    2008(Thousands of dollars)Segment operating revenuesOil and Gas
    
    $
    74,825
    
    
    $
    74,601Air Medical
    
    
    39,093
    
    
    
    39,260Technical Services
    
    
    3,034
    
    
    
    3,284Total operating revenues
    
    
    116,952
    
    
    
    117,145Segment direct expenses (1)Oil and Gas
    
    
    61,284
    
    
    
    59,258Air Medical
    
    
    38,878
    
    
    
    37,084Technical Services
    
    
    1,965
    
    
    
    1,884Total direct expenses
    
    
    102,127
    
    
    
    98,226Segment selling, general and administrative expensesOil and Gas
    
    
    387
    
    
    
    313Air Medical
    
    
    1,489
    
    
    
    2,116Technical Services
    
    
    14
    
    
    
    26Total selling, general and administrative expenses
    
    
    1,890
    
    
    
    2,455Total direct and selling, general and administrative expenses
    
    
    104,017
    
    
    
    100,681Net segment profit (loss)Oil and Gas
    
    
    13,154
    
    
    
    15,030Air Medical
    
    
    (1,274
    )
    
    
    60Technical Services
    
    
    1,055
    
    
    
    1,374Total net segment profit
    
    
    12,935
    
    
    
    16,464Other, net (2)
    
    
    335
    
    
    
    3,251Unallocated selling, general and administrative costs (1)
    
    
    (5,934
    )
    
    
    (4,934
    )Interest expense
    
    
    (3,879
    )
    
    
    (3,834
    )Earnings before income taxes
    
    $
    3,457
    
    
    $
    10,947
 
 (1)
    
    Included in direct expenses and unallocated selling, general, and administrative costs are the
depreciation expense amounts below: Quarter EndedMarch 31,2009
    
    
    2008Oil and Gas
    
    $
    4,243
    
    
    $
    3,698Air Medical
    
    
    1,985
    
    
    
    1,988Technical Services
    
    
    100
    
    
    
    104Total
    
    $
    6,328
    
    
    $
    5,790Unallocated SG&A
    
    $
    751
    
    
    $
    795
 
 (2)
    
    Consists of gains on disposition of property and equipment, and other income. 8




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3. Commitments and Contingencies
 Environmental Matters 
 Legal Matters
  Operating Leases
  9




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Purchase Commitments
 4. Long-term Debt
   5. Valuation Accounts
   6. Employees
 Employee Incentive Compensation 
   10




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7. Fair Value Measurements
      March 31, 2009Significant OtherObservable InputsTotal
    
    
    (Level 2)(Thousands of dollars)Short-term investments
    
    $
    48,927
    
    
    $
    48,927Investments in other assets
    
    
    3,272
    
    
    
    3,272Total
    
    $
    52,199
    
    
    $
    52,199
  8. Recent Accounting Pronouncements
    11




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12




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9. Shareholders Equity
   10. Comprehensive Income
  Quarter EndedMarch 31,2009
    
    
    2008(Thousands of dollars)Net earnings
    
    $
    2,075
    
    
    $
    6,568Changes in pension plan assets
and benefit obligations
    
    
    (49
    )
    
    
    (1
    )Comprehensive income
    
    $
    2,026
    
    
    $
    6,567
 11. Condensed Consolidating Financial Information
   13




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PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(Thousands of dollars)
(Unaudited)
 March 31, 2009ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries (1)
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    2,219
    
    
    $
    816
    
    
    $
    
    
    
    $
    3,035Short-term investments
    
    
    48,927
    
    
    
    
    
    
    
    
    
    
    
    48,927Accounts receivable  net
    
    
    100,073
    
    
    
    13,342
    
    
    
    
    
    
    
    113,415Intercompany receivable
    
    
    
    
    
    
    59,301
    
    
    
    (59,301
    )
    
    
    Inventories of spare parts and supplies-net
    
    
    61,463
    
    
    
    
    
    
    
    
    
    
    
    61,463Other current assets
    
    
    11,201
    
    
    
    25
    
    
    
    
    
    
    
    11,226Income taxes receivable
    
    
    565
    
    
    
    
    
    
    
    
    
    
    
    565Total current assets
    
    
    224,448
    
    
    
    73,484
    
    
    
    (59,301
    )
    
    
    238,631Investment in subsidiaries and other
    
    
    65,771
    
    
    
    
    
    
    
    (65,771
    )
    
    
    Other assets
    
    
    14,913
    
    
    
    227
    
    
    
    
    
    
    
    15,140Property and equipment-net
    
    
    509,213
    
    
    
    16,356
    
    
    
    
    
    
    
    525,569Total assets
    
    $
    814,345
    
    
    $
    90,067
    
    
    $
    (125,072
    )
    
    $
    779,340LIABILITIES AND
SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    16,148
    
    
    $
    347
    
    
    $
    
    
    
    $
    16,495Accrued liabilities
    
    
    28,223
    
    
    
    4,887
    
    
    
    
    
    
    
    33,110Intercompany payable
    
    
    59,301
    
    
    
    
    
    
    
    (59,301
    )
    
    
    Total current liabilities
    
    
    103,672
    
    
    
    5,234
    
    
    
    (59,301
    )
    
    
    49,605Long-term debt
    
    
    203,000
    
    
    
    
    
    
    
    
    
    
    
    203,000Deferred income taxes and other long-term
liabilities
    
    
    53,251
    
    
    
    19,062
    
    
    
    
    
    
    
    72,313Shareholders Equity:Paid-in capital
    
    
    292,792
    
    
    
    2,674
    
    
    
    (2,674
    )
    
    
    292,792Accumulated other comprehensive loss
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (4
    )Retained earnings
    
    
    161,634
    
    
    
    63,097
    
    
    
    (63,097
    )
    
    
    161,634Total shareholders equity
    
    
    454,422
    
    
    
    65,771
    
    
    
    (65,771
    )
    
    
    454,422Total liabilities and
shareholders equity
    
    $
    814,345
    
    
    $
    90,067
    
    
    $
    (125,072
    )
    
    $
    779,340
 
 (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 BALANCE SHEETS
(Thousands of dollars)(Unaudited)
 December 31, 2008ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries (1) (2)
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    559
    
    
    $
    600
    
    
    $
    
    
    
    $
    1,159Short-term investments
    
    
    42,121
    
    
    
    
    
    
    
    
    
    
    
    42,121Accounts receivable  net
    
    
    97,618
    
    
    
    13,804
    
    
    
    
    
    
    
    111,422Intercompany receivable
    
    
    
    
    
    
    57,722
    
    
    
    (57,722
    )
    
    
    Inventories of spare parts and supplies-net
    
    
    58,249
    
    
    
    
    
    
    
    
    
    
    
    58,249Other current assets
    
    
    10,671
    
    
    
    16
    
    
    
    
    
    
    
    10,687Income taxes receivable
    
    
    982
    
    
    
    
    
    
    
    
    
    
    
    982Total current assets
    
    
    210,200
    
    
    
    72,142
    
    
    
    (57,722
    )
    
    
    224,620Investment in subsidiaries and others
    
    
    65,227
    
    
    
    
    
    
    
    (65,227
    )
    
    
    Other assets
    
    
    23,761
    
    
    
    227
    
    
    
    
    
    
    
    23,988Property and equipment-net
    
    
    511,986
    
    
    
    16,588
    
    
    
    
    
    
    
    528,574Total assets
    
    $
    811,174
    
    
    $
    88,957
    
    
    $
    (122,949
    )
    
    $
    777,182LIABILITIES AND
SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    25,174
    
    
    $
    275
    
    
    $
    
    
    
    $
    25,449Accrued liabilities
    
    
    20,886
    
    
    
    4,307
    
    
    
    
    
    
    
    25,193Intercompany payable
    
    
    57,722
    
    
    
    
    
    
    
    (57,722
    )
    
    
    Total current liabilities
    
    
    103,782
    
    
    
    4,582
    
    
    
    (57,722
    )
    
    
    50,642Long-term debt
    
    
    203,000
    
    
    
    
    
    
    
    
    
    
    
    203,000Deferred income taxes and other long-term
liabilities
    
    
    51,996
    
    
    
    19,148
    
    
    
    
    
    
    
    71,144Shareholders Equity:Paid-in capital
    
    
    292,792
    
    
    
    2,674
    
    
    
    (2,674
    )
    
    
    292,792Accumulated other comprehensive
income
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    45Retained earnings
    
    
    159,559
    
    
    
    62,553
    
    
    
    (62,553
    )
    
    
    159,559Total shareholders equity
    
    
    452,396
    
    
    
    65,227
    
    
    
    (65,227
    )
    
    
    452,396Total liabilities and
shareholders equity
    
    $
    811,174
    
    
    $
    88,957
    
    
    $
    (122,949
    )
    
    $
    777,182
 
 (1)
    
    Foreign subsidiaries represent minor subsidiaries and are included in the guarantors
subsidiaries amounts.(2)
    
    Certain revisions were made to conform to the current years
presentation. 15




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PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Thousands of dollars)
(Unaudited)
 For the quarter ended March 31, 2009ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries (1)
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    100,214
    
    
    $
    16,738
    
    
    $
    
    
    
    $
    116,952Management fees
    
    
    670
    
    
    
    
    
    
    
    (670
    )
    
    
    Gain on dispositions of assets, net
    
    
    272
    
    
    
    
    
    
    
    
    
    
    
    272Other, principally interest income
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    63101,219
    
    
    
    16,738
    
    
    
    (670
    )
    
    
    117,287Expenses:Direct expenses
    
    
    87,579
    
    
    
    14,548
    
    
    
    
    
    
    
    102,127Management fees
    
    
    
    
    
    
    670
    
    
    
    (670
    )
    
    
    Selling, general, and administrative
    
    
    7,211
    
    
    
    613
    
    
    
    
    
    
    
    7,824Equity in net income of consolidated
subsidiaries
    
    
    (544
    )
    
    
    
    
    
    
    544
    
    
    
    Interest expense
    
    
    3,879
    
    
    
    
    
    
    
    
    
    
    
    3,87998,125
    
    
    
    15,831
    
    
    
    (126
    )
    
    
    113,830Earnings before income taxes
    
    
    3,094
    
    
    
    907
    
    
    
    (544
    )
    
    
    3,457Income tax expense
    
    
    1,019
    
    
    
    363
    
    
    
    
    
    
    
    1,382Net earnings
    
    $
    2,075
    
    
    $
    544
    
    
    $
    (544
    )
    
    $
    2,075
 For the quarter ended March 31, 2008ParentCompany
    
    
    GuarantorOnly
    
    

Subsidiaries
(1) (2)
    
    
    Eliminations
    
    
    ConsolidatedOperating revenues
    
    $
    97,067
    
    
    $
    20,078
    
    
    $
    
    
    
    $
    117,145Management fees
    
    
    803
    
    
    
    
    
    
    
    (803
    )
    
    
    Gain on dispositions of assets, net
    
    
    2,949
    
    
    
    
    
    
    
    
    
    
    
    2,949Other, principally interest income
    
    
    302
    
    
    
    
    
    
    
    
    
    
    
    302101,121
    
    
    
    20,078
    
    
    
    (803
    )
    
    
    120,396Expenses:Direct expenses
    
    
    84,221
    
    
    
    14,005
    
    
    
    
    
    
    
    98,226Management fees
    
    
    
    
    
    
    803
    
    
    
    (803
    )
    
    
    Selling, general, and administrative
    
    
    6,496
    
    
    
    893
    
    
    
    
    
    
    
    7,389Equity in net income of consolidated
subsidiaries
    
    
    (3,822
    )
    
    
    
    
    
    
    3,822
    
    
    
    Interest expense
    
    
    3,834
    
    
    
    
    
    
    
    
    
    
    
    3,83490,729
    
    
    
    15,701
    
    
    
    3,019
    
    
    
    109,449Earnings before income taxes
    
    
    10,392
    
    
    
    4,377
    
    
    
    (3,822
    )
    
    
    10,947Income tax expense
    
    
    3,824
    
    
    
    555
    
    
    
    
    
    
    
    4,379Net earnings
    
    $
    6,568
    
    
    $
    3,822
    
    
    $
    (3,822
    )
    
    $
    6,568
 
 (1)
    
    Foreign subsidiaries represent minor subsidiaries and are included in the guarantors
subsidiaries amounts.(2)
    
    Certain revisions were made to conform to the current
years presentation. 16




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##### Table of Contents



PHI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
 For the quarter ended March 31, 2009ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1)
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    10,597
    
    
    $
    513
    
    
    $
    
    
    
    $
    11,110Investing activities:Purchase of property and equipment
    
    
    (10,957
    )
    
    
    (297
    )
    
    
    
    
    
    
    (11,254
    )Proceeds from asset dispositions
    
    
    8,826
    
    
    
    
    
    
    
    
    
    
    
    8,826Purchase of short-term investments, net
    
    
    (6,806
    )
    
    
    
    
    
    
    
    
    
    
    (6,806
    )Net cash used in investing activities
    
    
    (8,937
    )
    
    
    (297
    )
    
    
    
    
    
    
    (9,234
    )Increase in cash and cash equivalents
    
    
    1,660
    
    
    
    216
    
    
    
    
    
    
    
    1,876Cash and cash equivalents, beginning of
period
    
    
    559
    
    
    
    600
    
    
    
    
    
    
    
    1,159Cash and cash equivalents, end of period
    
    $
    2,219
    
    
    $
    816
    
    
    $
    
    
    
    $
    3,035
 For the quarter ended March 31, 2008ParentCompany
    
    
    GuarantorOnly
    
    
    Subsidiaries(1) (2)
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    10,257
    
    
    $
    904
    
    
    $
    
    
    
    $
    11,161Investing activities:Purchase of property and equipment
    
    
    (11,339
    )
    
    
    (833
    )
    
    
    
    
    
    
    (12,172
    )Proceeds from asset dispositions
    
    
    4,005
    
    
    
    
    
    
    
    
    
    
    
    4,005Proceeds from sale of short-term
investments, net
    
    
    6,704
    
    
    
    
    
    
    
    
    
    
    
    6,704Deposits on aircraft
    
    
    (11,500
    )
    
    
    
    
    
    
    
    
    
    
    (11,500
    )Net cash used in investing activities
    
    
    (12,130
    )
    
    
    (833
    )
    
    
    
    
    
    
    (12,963
    )Financing activities:Proceeds from line of credit
    
    
    1,800
    
    
    
    
    
    
    
    
    
    
    
    1,800Net cash provided by financing activities
    
    
    1,800
    
    
    
    
    
    
    
    
    
    
    
    1,800(Decrease) increase in cash and cash
equivalents
    
    
    (73
    )
    
    
    71
    
    
    
    
    
    
    
    (2
    )Cash and cash equivalents, beginning of
period
    
    
    1,004
    
    
    
    421
    
    
    
    
    
    
    
    1,425Cash and cash equivalents, end of period
    
    $
    931
    
    
    $
    492
    
    
    $
    
    
    
    $
    1,423
 
 (1)
    
    Foreign subsidiaries represent minor subsidiaries and are included in the guarantors
subsidiaries amounts.(2)
    
    Certain revisions were made to cash flows provided by (used in) operating and investing
activities to conform to the current years presentation. 17




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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
  18




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19




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Operating Statistics
  Quarter EndedMarch 31,2009
    
    
    2008Flight hours:Oil and Gas
    
    
    26,480
    
    
    
    24,831Air Medical (1)
    
    
    8,205
    
    
    
    8,675Technical Services
    
    
    378
    
    
    
    641Total
    
    
    35,063
    
    
    
    34,147Air Medical Transports(2)
    
    
    4,958
    
    
    
    5,480Aircraft operated at period end:Oil and Gas
    
    
    155
    
    
    
    152Air Medical
    
    
    89
    
    
    
    83Technical Services
    
    
    6
    
    
    
    4Total (3)
    
    
    250
    
    
    
    239
 
 (1)
    
    Flight hours include 1,871 flight hours associated with hospital-based contracts, compared to
1,593 flight hours in the prior year quarter.(2)
    
    Represents individual patient transports for the period.(3)
    
    Includes 16 aircraft as of March 31, 2009 and 14 aircraft as of March 31, 2008 that are
customer owned. Results of Operations
 Quarter Ended March 31, 2009 compared with Quarter Ended March 31, 2008
 Combined Operations
 Revenues
  20




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##### Table of Contents



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




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Air Medical
    22




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Technical Services
 Liquidity and Capital Resources
 General
  Cash Flow
    23




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Credit Facility
  Contractual Obligations
   Payment Due by YearBeyondTotal
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2013(Thousands of dollars)Aircraft purchase
obligations (1)
    
    $
    86,896
    
    
    $
    86,896
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Aircraft lease
obligations
    
    
    199,704
    
    
    
    18,667
    
    
    
    25,491
    
    
    
    26,759
    
    
    
    27,426
    
    
    
    27,791
    
    
    
    73,570Other lease
obligations
    
    
    19,616
    
    
    
    2,475
    
    
    
    2,943
    
    
    
    2,414
    
    
    
    1,811
    
    
    
    1,424
    
    
    
    8,549Long term debt
    
    
    203,000
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    $
    509,216
    
    
    $
    108,038
    
    
    $
    31,434
    
    
    $
    29,173
    
    
    $
    29,237
    
    
    $
    229,215
    
    
    $
    82,119
 
 1)
    
    These commitments are for aircraft that we intend to fund from operating leases. New Accounting Pronouncements
  
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  24




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Item 4. CONTROLS AND PROCEDURES
   25




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PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 1. A. RISK FACTORS
  
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 Item 5. OTHER INFORMATION
  
 Item 6. EXHIBITS
  3.1
    
    (i)

    
Composite Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to PHIs Report on Form 10-Q filed on August 7, 2008).
 (ii)
    
    Amended and Restated By-laws of the Company (incorporated by
reference to Exhibit 3.1 to PHIs Report on Form 8-K filed December 18, 2007).
 4.1
    
    Amended and Restated Loan Agreement dated as of March 31, 2008 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 4.1 to PHIs Report on Form 10-Q filed on
May 8, 2008).4.2
    
    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).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.
 26




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SIGNATURES
  PHI, Inc.May 11, 2009
    By:
    /s/ Al A. GonsoulinAl A. GonsoulinChairman and Chief Executive OfficerMay 11, 2009
    By:
    /s/ Michael J. McCannMichael J. McCannChief Financial Officer 27