PETROLEUM HELICOPTERS INC - 10-Q Quarterly Report

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Securities and Exchange Commission
Washington, D. C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant To Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended: September 30, 2002

OR

[ ] 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.
(Exact name of registrant as specified in its charter)

LOUISIANA 72-0395707
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)

2001 SE EVANGELINE THRUWAY
LAFAYETTE, LOUISIANA 70508
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

Registrant's telephone number, including area code: (337) 235-2452

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No
--- ---

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.

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PETROLEUM HELICOPTERS, INC.

INDEX - FORM 10-Q

Part I - Financial Information

Item 1. Financial Statements - Unaudited
Condensed Consolidated Balance Sheets - September 30, 2002
and December 31, 2001 ............................................ 3
Condensed Consolidated Statements of Operations -
Three Months and Nine Months Ended September 30, 2002
and 2001.......................................................... 4
Condensed Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 2002 and 2001 ......................... 5
Notes to Consolidated Financial Statements .......................... 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................. 16

Item 3. Quantitative and Qualitative Disclosures about
Market Risk ......................................................... 26

Item 4. Controls and Procedures................................................... 26

Part II - Other Information

Item 1. Legal Proceedings ....................................................... 26

Item 6. Exhibits and Reports on Form 8-K ........................................ 27

Signatures .............................................................. 28

Certifications .......................................................... 29

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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)

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

3

PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

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PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)

The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. GENERAL

The accompanying unaudited condensed consolidated financial statements include
the accounts of Petroleum Helicopters, Inc. and subsidiaries ("PHI" or the
"Company"). In the opinion of management, these financial statements reflect all
adjustments, consisting of only normal, recurring adjustments, necessary to
present fairly the financial results for the interim periods presented. These
condensed consolidated financial statements should be read in conjunction with
the financial statements contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001 and the accompanying notes and Management's
Discussion and Analysis of Financial Condition and Results of Operations.

The Company's financial results, particularly as they relate to the Company's
Domestic Oil & Gas operations, are influenced by seasonal fluctuations as
discussed in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001. Therefore, the results of operations for interim periods are
not necessarily indicative of the operating results that may be expected for a
full fiscal year.

On April 23, 2002, the Company issued $200 million of 9 3/8% Senior Unsecured
Notes ("Notes") that are due in 2009. The Company used the proceeds to acquire
substantially all of the aircraft that it leased and to pay all amounts
outstanding under its then existing bank loan agreement ("Terminated Loan
Agreement"). As a result, the Company will incur significantly increased
depreciation and interest expense and decreased aircraft lease expense. In the
first quarter of 2002, lease expenses related to the acquired aircraft were $3.8
million.

2. SEGMENT INFORMATION

The Company has identified four principal segments: Domestic Oil and Gas,
International, Aeromedical, and Technical Services. The Domestic Oil and Gas
segment primarily provides helicopter services to oil and gas customers
operating in the Gulf of Mexico. The International segment, which primarily
consists of operations off the West Coast of Africa, provides helicopter
services in various foreign countries to oil and gas customers. The Aeromedical
segment provides helicopter services to hospitals and medical programs in
several U.S. states. The Company's Air Evac subsidiary is included in the
Aeromedical segment. The Technical Services segment provides helicopter repair
and overhaul services, primarily to certain military aircraft, flight operations
customers, and original equipment manufacturers.

Effective July 1, 2002, the Company no longer allocates interest expense to its
segments when evaluating operating performance. All results prior to July 1,
2002 have been restated to remove interest expense from the segment operating
results.

Beginning in late 2001, the Company changed the strategic focus of Technical
Services from providing maintenance and overhaul services to all customers, to
providing such services only to certain military aircraft, flight operations
customers and original equipment manufacturers. The Company also plans to
fulfill a contractual obligation to provide maintenance to certain military
aircraft.

Segment operating income is operating revenues less direct expenses and selling,
general, and administrative costs allocated to the operating segment.
Unallocated overhead consists primarily of corporate selling, general, and
administrative costs that the Company does not allocate to the operating
segments.

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- ----------
(1) Includes gains on dispositions of property and equipment and other
income.

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During the second quarter of 2002, the Company acquired substantially all of the
aircraft that it leased. As a result, Domestic Oil & Gas segment assets
increased by approximately $103.8 million and Aeromedical segment assets
increased by approximately $11.6 million.

3. COMMITMENTS AND CONTINGENCIES

Environmental Matters -- The Company has recorded an aggregate estimated
liability of $1.8 million as of September 30, 2002 for environmental remediation
costs at various operation facilities that are probable and estimable. The
Company has conducted environmental surveys of the Lafayette facility that it
vacated in 2001, and has determined that contamination exists at that facility.
To date, borings have been installed to determine the type and extent of
contamination. Preliminary results indicate limited soil and groundwater
impacts. Once the extent and type of contamination are fully defined, a risk
evaluation in accordance with regulatory standards will be submitted and
evaluated by the appropriate agency. At that point, the regulatory agency will
establish what cleanup standards must be met at the site. When the process is
complete, the Company will be in a position to develop the appropriate
remediation plan and the resulting cost of remediation. The Company has not
recorded any estimated liability for remediation at the facility, but based on
preliminary surveys and ongoing monitoring, the Company believes the ultimate
remediation costs for the Lafayette facility will not be material.

Legal Matters -- The Company is named as a defendant in various legal actions
that have arisen in the ordinary course of its business and have not been
finally adjudicated. The amount, if any, of ultimate liability with respect to
such matters cannot be determined. In the opinion of management, the amount of
the ultimate liability with respect to these actions will not have a material
adverse effect on results of operations, cash flow or financial position of the
Company.

Long-Term Debt -- On April 23, 2002, the Company issued Notes of $200 million
that have an interest rate of 9 3/8% payable semi-annually on May 1 and November
1 of each year, beginning November 1,

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2002, and mature in May 2009. The Notes contain certain covenants, including
limitations on indebtedness, liens, dividends, repurchases of capital stock and
other payments affecting restricted subsidiaries, issuance and sales of
restricted subsidiary stock, dispositions of proceeds of asset sales, and
mergers and consolidations or sales of assets.

The proceeds of the Notes were used to retire existing bank debt, interest rate
swap agreements ("Swaps"), and to purchase 101 aircraft previously under lease.
As of September 30, 2002, the Company had used $186.3 million of the proceeds as
follows (in thousands):

Pay amounts outstanding under the Terminated Loan
Agreement:
Revolving credit facility $ 44,500
Term debt facility 16,271
Acquisition of 101 aircraft from leasing companies
and financial institutions:
Capital leases 2,679
Operating leases 115,397
Settlement of interest rate swap agreements 1,575
Fees and expenses related to the issue of the Notes 5,835
------------
Total $ 186,257
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Also on April 23, 2002, the Company entered into a new credit agreement with a
commercial bank for a $50 million revolving credit and letter of credit
facility. The credit agreement permits both prime rate based borrowings and
"LIBOR" rate borrowings plus a spread. The spread for LIBOR borrowings is from
2.0% to 3.0%. Any amounts outstanding under the revolving credit facility are
due July 31, 2004. The Company will pay an annual 0.375% commitment fee on the
unused portion of the revolving credit facility. The Company may also obtain
letters of credit issued under the credit facility up to $5.0 million with a
0.125% fee payable on the amount of letters of credit issued. As of October 31,
2002, the Company had no borrowings and a $0.6 million letter of credit
outstanding under the revolving credit facility.

The Company is subject to certain financial covenants under the credit
agreement. These covenants include maintaining certain levels of working capital
and shareholders' equity and contain other provisions including a restriction on
purchases of the Company's stock. The credit agreement also limits the creation,
incurrence, or assumption of Funded Debt (as defined, which includes long-term
debt) and the acquisition of investments in unconsolidated subsidiaries.

Operating Leases -- The Company leases three aircraft and certain facilities and
equipment used in its operations. The related lease agreements, which include
both non-cancelable and month-to-month terms, generally provide for fixed
monthly rentals and, for certain real estate leases, renewal options. During the
second quarter of 2002, the Company acquired 99 aircraft that it had previously
leased under operating leases. At September 30, 2002, the Company had
approximately $22.1 million in aggregate lease commitments under operating
leases of which approximately $2.3 million is payable during the next twelve
months.

Purchase Commitments -- At September 30, 2002, the Company had commitments of
$10.5 million for the upgrade of certain aircraft and the purchase of other
equipment. The upgrades are to be performed in 2002 and 2003.

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4. ACCUMULATED OTHER COMPREHENSIVE INCOME

Following is a summary of the Company's comprehensive income (loss) for the
quarter and nine months ended September 30, 2002 and 2001 (in thousands):

During the second quarter of 2002, the Company settled its interest rate swaps
with the counterparties in conjunction with the payment of outstanding bank debt
on April 23, 2002.

5. VALUATION ACCOUNTS

The Company establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific customers, current market conditions,
and other information. The allowance for doubtful accounts was $0.6 million and
$0.4 million at September 30, 2002 and December 31, 2001, respectively.

The Company also establishes valuation reserves related to obsolescent and
excess inventory. The inventory valuation reserves were $4.8 million and $4.3
million at September 30, 2002 and December 31, 2001, respectively.

6. SEVERANCE LIABILITY

At December 31, 2001, the Company had an outstanding severance liability of $0.3
million covering two employees. During the nine months ended September 30, 2002,
the Company recorded costs of approximately $1.7 million related to a plan of
termination and early retirement covering approximately 50 employees. At
September 30, 2002, the Company had an outstanding severance liability of $0.5
million. The Company expects to pay the remaining severance liability, covering
12 employees, over the next nine months.

7. EMPLOYEE INCENTIVE COMPENSATION

During the second quarter of 2002, the Company recorded $1.1 million of
compensation expense for a discretionary incentive bonus paid to certain
executive employees.

Also during the second quarter of 2002, the Company implemented an incentive
compensation plan for non-executive employees. Under the plan, the Company
expects that it will pay incentive compensation of up to 7% of earnings before
tax, net of the incentive compensation. For the quarter and nine months

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ended September 30, 2002, the Company recorded $0.3 million and $0.9 million of
incentive compensation expense, respectively, that is payable in 2003.

8. PROPERTY AND EQUIPMENT

The Company used $118.1 million of proceeds from the issuance of the Notes to
acquire aircraft that it had previously leased. The Company will depreciate the
acquired aircraft over five to 15 years using a 30% residual value.

9. NOTES FEES AND EXPENSES

As a result of the issuance of the Notes, the Company incurred $5.8 million of
fees and expenses. The Company has recorded these costs in other assets and will
amortize the costs over the term of the Notes as an addition to interest
expense.

10. RECEIVABLE FROM CLINTONDALE AVIATION, INC.

As a result of the Company's previous divestiture of its 50% equity interest and
related assets of Clintondale Aviation, Inc. ("Clintondale"), the Company had a
promissory note receivable of $0.5 million recorded at its estimated net
realizable value. During May 2002, the Company entered into a final agreement
and received a $1.2 million payment from Clintondale in August 2002, resulting
in a settlement that was $0.7 million better than previously estimated, which
was included in the results of operations (in "Other") during the second quarter
of 2002.

11. CONDENSED CONSOLIDATED FINANCIAL INFORMATION

On April 23, 2002, the Company issued Notes of $200 million that are fully and
unconditionally guaranteed on a senior basis, jointly and severally, by all of
the Company's existing operating subsidiaries ("Guarantor Subsidiaries").

The following supplemental condensed financial information sets forth, on a
consolidating basis, the balance sheet, statement of operations, and statement
of cash flows information for Petroleum Helicopters, Inc. ("Parent Company
Only") and the Guarantor Subsidiaries. The principal eliminating entries
eliminate investments in subsidiaries, intercompany balances, and intercompany
revenues and expenses.

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PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(THOUSANDS OF DOLLARS)

11

PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(THOUSANDS OF DOLLARS)

12

PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS)

13

PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS)

14

PETROLEUM HELICOPTERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") should be read in conjunction with the accompanying
unaudited condensed consolidated financial statements and the notes thereto, as
well as the Company's Annual Report on Form 10-K for the year ended December 31,
2001.

FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact contained in this Form
10-Q, other periodic reports filed by the Company under the Securities Exchange
Act of 1934, and other written or oral statements made by it or on its behalf,
are forward-looking statements. When used herein, the words "anticipates",
"expects", "believes", "goals", "intends", "plans", or "projects" and similar
expressions are intended to identify forward-looking statements. It is important
to note that forward-looking statements are based on a number of assumptions
about future events and are subject to various risks, uncertainties, and other
factors that may cause the Company's actual results to differ materially from
the views, beliefs, and estimates expressed or implied in such forward-looking
statements. Although the Company believes that the assumptions reflected in
forward-looking statements are reasonable, no assurance can be given that such
assumptions will prove correct. Factors that could cause the Company's results
to differ materially from the results discussed in such forward-looking
statements include but are not limited to the following: flight variances from
expectations, volatility of oil and gas prices, the substantial capital
expenditures and commitments required to acquire aircraft, environmental risks,
competition, government regulation, unionization, operating hazards, risks
related to international operations, the ability to obtain insurance, and the
ability of the Company to implement its business strategy. All forward-looking
statements in this document are expressly qualified in their entirety by the
cautionary statements in this paragraph. PHI undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events, or otherwise.

OVERVIEW

Operating revenues decreased $5.4 million for the quarter ended September 30,
2002, compared to the quarter ended September 30, 2001, primarily as a result of
a decrease in flight hour activity in the Gulf of Mexico due to a decline in oil
and gas activity ($3.6 million), and a $2.2 million decline in Technical
Services segment's revenue resulting from a change in focus to limit its
maintenance services primarily to certain military aircraft, flight operations
customers, and original equipment manufacturers. Additionally, revenues in the
Aeromedical segment increased for the quarter ($0.5 million) due to rate
increases implemented by the Company, offset to an extent by the termination of
certain Aeromedical contracts as a result of those rate increases. Both the
number of aircraft and flight hours declined in the Aeromedical segment.

Operating revenues for the nine months ended September 30, 2002, compared to the
nine months ended September 30, 2001, decreased $0.7 million due to a decrease
in flight hour activity in the Gulf of Mexico ($3.7 million) resulting from a
decline in oil and gas activity. The decrease was partially offset by an
increase in Technical Services revenues ($1.7 million) due to completion of a
project for the upgrade and refurbishment of a customer's aircraft in the first
half of this year, which had commenced in the first quarter of 2001. There was
also an increase in operating revenues in the Aeromedical segment for the nine
months ($1.1 million) due to rate increases implemented by the Company, offset
to an extent by the termination of certain Aeromedical contracts as a result of
those rate increases.

Flight hours declined in all flight segments during both the quarter and
nine-month periods, primarily due to decreased activity in the Gulf of Mexico
and termination of certain contracts in the Aeromedical

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segment as a result of proposed rate increases on those contracts. The effect of
the decline on revenues was offset to a large extent by rate increases.

Direct expenses plus selling, general, and administrative expense decreased in
total for the quarter and nine months. Technical Services costs decreased for
the quarter ($2.2 million) and increased for the nine months ($1.4 million) due
to costs related to a project for the refurbishment and upgrade of a customer's
aircraft completed in the first half of 2002. Employee compensation costs
decreased for the quarter ($0.6 million) and increased year to date ($1.6
million) due to severance costs ($1.7 million) and a management bonus ($1.1
million) offset in part by a reduction in headcount. No significant severance
costs or bonuses were recorded in the same period of 2001. Depreciation expense
increased for the quarter and nine months ($2.4 million and $3.4 million,
respectively) due to the purchase of leased aircraft described below. There were
decreases in maintenance costs ($0.5 million for the quarter and $3.6 million
for the nine months), fuel costs ($0.7 million for the quarter and $2.1 million
for the nine months), helicopter rent ($4.2 million for the quarter and $7.1
million for the nine months), and insurance costs due in part to a decrease in
the number of aircraft the Company operates ($1.2 million for the quarter and
$1.7 million for the nine months). There was also a provision recorded in the
prior year quarter ($0.6 million) related to the Clintondale joint venture.

Interest expense increased $3.5 million for the quarter and $7.4 million for the
nine months due to interest on the Notes issuance described below, and $1.9
million of costs incurred in the second quarter related to the retirement of the
Company's bank debt and liquidation of the Company's interest rate swap
agreements ("Swaps") in the second quarter, which were charged to interest
expense.

On April 23, 2002, the Company issued $200 million in 9 3/8% Notes due May 1,
2009. The proceeds from the offering were used to retire $62.3 million of
existing bank debt and the Swaps, and to acquire 101 aircraft for $118.1
million, that the Company previously leased. Also on April 23, 2002, the Company
entered into a new $50 million revolving credit facility with a commercial bank.
As of September 30, 2002, the Company had no borrowings and a $0.6 million
letter of credit outstanding under the revolving credit facility.

As a result of the Notes issuance and the purchases of the leased aircraft, the
Company has incurred and will incur increased interest and depreciation expense,
and decreased aircraft rent expense. Although the Company expects that these
changes will reduce earnings before income taxes by approximately $1.2 million
per quarter, management believes that the changes will improve overall liquidity
over the next several years, which will allow the Company to pursue earnings
growth opportunities, by increasing cash from operations by approximately $5.7
million in 2002 and $10.5 million in 2003, including incremental tax effects. In
later years, this amount reduces due to the effects of lower tax depreciation.
Additionally, until 2009 when the Notes become due, the Company will be able to
retain cash that would have otherwise been needed for bank debt principal
payments.

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OPERATIONS STATISTICS

The following tables present certain non-financial operational statistics for
the quarter and nine months ended September 30, 2002 and 2001:

QUARTER ENDED SEPTEMBER 30, 2002 COMPARED WITH QUARTER ENDED SEPTEMBER 30, 2001

COMBINED OPERATIONS

REVENUES -- Operating revenues were $68.2 million for the quarter ended
September 30, 2002, as compared to $73.6 million for the quarter ended September
30, 2001, a decrease of $5.4 million. This decrease was primarily the result of
a decline in flight hours in the Gulf of Mexico ($3.6 million) caused by a
decline in oil and gas activity. Combined flight hours for the quarter ended
September 30, 2002 were 43,976, as compared to 48,566 for the quarter ended
September 30, 2001, a decrease of 4,590 flight hours, or 9.5%. Additionally,
Technical Services revenues decreased $2.2 million due to that segment's change
in strategic focus to limit maintenance services primarily to certain military
aircraft, flight operations customers, and original equipment manufacturers.
Operating revenues in the Aeromedical segment increased for the quarter ($0.5
million) due to rate increases implemented by the Company, offset to an extent
by the termination of certain Aeromedical contracts as a result of those rate
increases. Both the number of aircraft and flight hours declined in the
Aeromedical segment. Additionally there was a decrease in operating revenues in
the International segment ($0.2 million).

OTHER INCOME AND LOSSES -- Gain (loss) on equipment dispositions decreased $1.0
million for the quarter ended September 30, 2002 as compared to the quarter
ended September 30, 2001. The decrease was due to a decrease in the sale of
aircraft as compared to the prior period.

DIRECT EXPENSES -- Direct expenses for the quarter ended September 30, 2002 were
$53.8 million, compared to $60.5 million for the same period in the prior year.
The decrease in direct expenses was the result of decreased maintenance and fuel
costs due to the decline in activity ($0.5 million and $0.7 million
respectively), decreased helicopter rent as a result of the purchase of leased
aircraft ($4.2 million), decreased insurance costs due in part to a decrease in
the number of aircraft the Company

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operates ($1.2 million), decreased employee compensation cost due to a reduction
in headcount in the first quarter of 2002 ($0.3 million), and decreased
Technical Services costs due to a reduction in activity resulting from a change
in the strategic focus of that segment's operations as previously described
($2.2 million). These decreases were partially offset by an increase in
depreciation expense of $2.4 million as a result of the purchase of leased
aircraft.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES -- Selling, general, and
administrative expenses for the quarter ended September 30, 2002, were $4.0
million, as compared to $5.1 million for the quarter ended September 30, 2001.
The decrease is due to a reduction in employee compensation cost ($0.3 million)
resulting from a reduction in headcount in the first quarter 2002, a decrease in
legal costs ($0.2 million), and a provision recorded in the quarter ended
September 30, 2001 related to the Clintondale joint venture ($0.6 million).

INTEREST EXPENSE -- Interest expense for the quarter ended September 30, 2002
increased to $5.0 million from $1.5 million in the same period of 2001. The
increase in interest expense is related to the Notes sold on April 23, 2002. As
a result of the issuance of Notes and related debt repayment, the Company
expects interest expense to increase by approximately $3.4 million per quarter
as compared to interest expense for the quarter ended March 31, 2002.

INCOME TAXES -- Income tax expense for the quarter ended September 30, 2002 was
$2.2 million, compared to $2.8 million for the quarter ended September 30, 2001.
The effective tax-rate was 40% for the quarter ended September 30, 2002, and 37%
for the quarter ended September 30, 2001. The increase in the effective tax rate
is primarily due to increased permanent book and tax differences, and higher
state taxes for the Company's Arizona operations.

EARNINGS -- The Company's net earnings for the quarter were $3.3 million,
compared to $4.8 million in the same period in the prior year. Earnings before
tax for the quarter were $5.5 million compared to $7.6 million in the same
period of the prior year. Earnings per diluted share for the quarter were $0.61
as compared to $0.90 per diluted share for the same quarter prior year. Although
there was a decline in flight hour activity, the principal reason for the
earnings decline was the increase in interest expense, described above.

SEGMENT DISCUSSION

Effective July 1, 2002, the Company no longer allocates interest expense to its
segments when evaluating operating performance. All results prior to July 1,
2002 have been restated to remove interest expense from the segment operating
results.

Domestic Oil and Gas -- Domestic Oil & Gas segment revenues were $47.6 million
for the quarter ended September 30, 2002, compared to $51.2 million for the
quarter ended September 30, 2001, a decrease of $3.6 million. There was a
decrease in flight activity offset in part by an increase in rates to customers
implemented in 2001. The decrease in flight activity was the result of reduced
oil and gas activity in the Gulf of Mexico, as indicated by a decrease in flight
hours of 1,216 hours for the quarter. The number of aircraft in the segment was
186 at September 30, 2002 as compared to 191 at September 30, 2001.

Direct expenses were unchanged in total for the quarter ended September 30, 2002
as compared to the quarter ended September 30, 2001. Human resource cost
increased $1.1 million in the segment due to the increase in compensation of
pilots and mechanics in the second quarter 2002, offset in part by a reduction
in headcount implemented in the first quarter of 2002. Maintenance costs also
increased in the quarter $1.0 million due to increased parts usage in the
quarter, and depreciation expense increased $2.2 million due to the purchase of
leased aircraft. The above amounts were offset by a decrease in insurance due in
part to a decrease in the number of aircraft the Company operates ($0.9
million), a decrease in fuel

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due to a decrease in activity ($0.5 million), a decrease in aircraft rent due to
the purchase of the leased aircraft ($3.1 million), and a net increase in other
items ($0.2 million).

The Domestic Oil & Gas segment operating income decreased $3.6 million due to
the decrease in operating revenues ($3.6 million). Operating margin of 17.0% for
the third quarter compares to 22.9% for the same quarter in the prior year.

International -- International segment revenues were $4.9 million for the
quarter ended September 30, 2002, compared to $5.1 million for the quarter ended
September 30, 2001. The decrease was due to reduced demand and flight activity
in West Africa, offset in part by rate increases recently implemented by the
Company. The number of aircraft in the segment was 18 at September 30, 2002 and
2001. Flight hours were 4,339 for the quarter ended September 30, 2002 as
compared to 4,853 for the quarter ended September 30, 2001.

Direct expenses decreased for the quarter ended September 30, 2002 as compared
to the quarter ended September 30, 2001 due to a decrease in maintenance costs
caused primarily by a decrease in flight hour activity ($0.4 million) and a
decrease in other items, net ($0.1 million).

The International segment had $0.5 million operating income for the quarter,
compared to $0.2 million operating income for the same period in 2001. Operating
margin of 10.0% for the quarter 2002 compares to 3.2% for the same quarter in
the prior year. The improvement in operating income and operating margin was due
to an increase in customer rates.

In October 2002, the Company exited an operation in Taiwan that included one
aircraft.

Aeromedical -- Aeromedical segment revenues were $12.3 million for the quarter
ended September 30, 2002, compared to $11.8 million for the quarter ended
September 30, 2001, an increase of $0.5 million. The increase was due to
customer rate increases implemented by the Company. This was offset to a
significant extent by a decrease in activity due to a decrease in aircraft and
flight hours caused by the termination of certain Aeromedical contracts as a
result of proposed rate increases on those contracts.

Direct expenses decreased in the Aeromedical segment for the quarter ended
September 30, 2002 as compared to the quarter ended September 30, 2001, due to
the termination of certain Aeromedical contracts as discussed above. Human
resource cost decreased $1.7 million, maintenance costs decreased $1.1 million,
fuel decreased $0.2 million, aircraft rent decreased $0.6 million, and other
items, net, decreased $0.5 million.

The Aeromedical segment operating income was $4.2 million for the quarter,
compared to an operating loss of $0.4 million for the same period in 2001.
Operating margin was 34.6% for the quarter and compares to (3.2)% for the same
quarter in 2001. The increase in operating income and operating margin is
attributable to an increase in customer rates on retained Aeromedical contracts,
and also due to a reduction in direct expense as a result of reduced aircraft
and flight hours caused by the termination of certain Aeromedical contracts as
mentioned above. The number of aircraft in the segment at September 30, 2002 was
27 compared to 40 at September 30, 2001, a reduction of 13 aircraft. Flight
hours for the quarter ended September 30, 2002 were 3,590 compared to 5,765 for
the quarter ended September 30, 2001, a reduction of 2,175 flight hours.

Technical Services -- Technical Services segment revenues for the quarter ended
September 30, 2002 were $3.4 million compared to $5.6 million in the prior year,
a decrease of $2.2 million. The decrease in Technical Services revenues is
related to that segment's change in focus to limit maintenance services
primarily to certain military aircraft, flight operations customers, and
original equipment manufacturers.

20

There was a decrease in direct expense of $2.2 million in the Technical Services
segment due to the decrease in activity in the quarter. The decrease was due to
the reduction in materials and labor associated with the decrease in activity.

The Technical Services segment had operating income of $0.8 million for the
quarter ended September 30, 2002, compared to $0.9 million for the quarter ended
September 30, 2001. The operating margin was 24.9% in the quarter, compared to
15.8% in the same quarter of the prior year.

NINE MONTHS ENDED SEPTEMBER 30, 2002
COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2001

COMBINED OPERATIONS

REVENUES -- Operating revenues for the nine months ended September 30, 2002 were
$204.7 million, compared to $205.4 million for the nine months ended September
30, 2001, a decrease of $0.7 million. The decrease in operating revenues was due
to a decrease in flight activity in the Domestic Oil and Gas segment ($3.7
million) resulting from decreased oil and gas activity in the Gulf of Mexico.
Combined flight hours for the nine months ended September 30, 2002 were 128,231,
as compared to 147,089 for the nine months ended September 30, 2001, a decrease
of 18,858 flight hours, or 12.8%. In addition, for the nine months ended
September 30, 2002, revenues from the Technical Services segment increased $1.7
million as a result of a maintenance contract for the upgrade and refurbishment
of two aircraft for a customer, which was completed in the first half of 2002.
There was also an increase in operating revenues in the Aeromedical segment for
the nine months ($1.1 million) due to rate increases implemented by the Company,
offset to an extent by the termination of certain Aeromedical contracts as a
result of those rate increases.

The number of aircraft at September 30, 2002 was 231 as compared to 249 at
September 30, 2001.

OTHER INCOME AND LOSSES -- Gain (loss) on disposition of property and equipment.
Gain (loss) on equipment dispositions was $0.8 million for the nine months ended
September 30, 2002, compared to $3.3 million for the nine months ended September
20, 2001, as fewer aircraft were sold in 2002.

Other. Other, which represents interest income and other gains and losses,
increased by $0.8 million for the nine months ended September 30, 2002 as
compared to the nine months ended September 30, 2001. The Company recorded $0.7
million for a favorable settlement of a note receivable from Clintondale in the
second quarter of 2002.

DIRECT EXPENSES -- Direct expenses for the nine months ended September 30, 2002
were $168.8 million, compared to $178.1 million for the comparable period in
2001. The decrease in direct expenses was the result of decreases in helicopter
rent ($7.1 million) as a result of the purchase of leased aircraft, insurance
costs ($1.7 million) due in part to a decrease in the number of aircraft the
Company operates, maintenance costs ($3.6 million) due to the decline in
activity, and fuel costs ($2.1 million) also due to decreased activity. In
addition, there was a decrease in recurring compensation cost ($1.5 million) due
to the decrease in head count. The above amounts were offset in part by
increases in Technical Services costs ($1.4 million) due to the contract
described above, severance charges ($1.4 million), management bonuses ($0.3
million), and depreciation expense included in direct expenses ($3.4 million)
due to the purchase of leased aircraft. There was also an increase in other
items, net, of $0.2 million.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES -- Selling, general, and
administrative expenses for the nine months ended September 30, 2002 were $14.1
million, compared to $14.2 million for the nine months September 30, 2001, a
decrease of $0.1 million. Selling, general, and administrative expense for 2002
includes $0.3 million of severance charges and $0.8 million related to
management bonuses. Legal

21

costs for the nine months ended September 30, 2002 decreased by $0.7 million,
and other items, net, decreased $0.5 million.

INTEREST EXPENSE -- Interest expense for the nine months ended September 30,
2002 was $12.3 million, as compared to $4.9 million for the nine months ended
September 30, 2001. Included in interest expense is $1.9 million related to
liquidating the Swaps and retirement of bank debt in the second quarter of 2002.
The remaining increase in interest expense is related to the Notes issued on
April 23, 2002.

As a result of the $200 million issuance of Notes and related debt repayment on
April 23, 2002, the Company expects interest expense to increase by
approximately $3.4 million per quarter, as compared to interest expense for the
quarter ended March 31, 2002.

INCOME TAXES -- Income tax expense for the nine months ended September 30, 2002
was $4.6 million, compared to $4.4 million for the nine months ended September
30, 2001. The effective tax rate for the nine months ended September 30, 2002
was 40%, as compared to 37% for the nine months ended September 30, 2001. The
increase in the effective tax rate is primarily due to increased permanent book
and tax differences, and higher state taxes for the Company's Arizona
operations.

EARNINGS -- The Company's net earnings for the nine months ended September 30,
2002 was $6.9 million, compared to net earnings of $7.6 million for the nine
months ended September 30, 2001. Earnings before tax for the nine months ended
September 30, 2002 was $11.5 million, compared to earnings before tax of $12.0
million for the same period in the prior year. Earnings per diluted share for
the nine months ended September 30, 2002 was $1.27 as compared to earnings per
diluted share of $1.43 for the nine months ended September 30, 2001. Earnings
before tax for the nine months ended September 30, 2002 were impacted by the
decline in revenues and increased interest costs described above, and by $1.7
million of severance costs. Flight hours were down 11,843 in the Domestic Oil
and Gas segment for the nine months due largely to a decrease in oil and gas
activity in the Gulf of Mexico.

SEGMENT DISCUSSION

Effective July 1, 2002, the Company no longer allocates interest expense to its
segments when evaluating operating performance. All results prior to July 1,
2002 have been restated to remove interest expense from the segment operation
results.

Domestic Oil and Gas -- Domestic Oil & Gas segment revenues were $133.7 million
for the nine months ended September 30, 2002, compared to $137.4 million for the
nine months ended September 30, 2001. A net decrease in revenue of $3.7 million
due to a reduction in flight hours of 11,843 was offset in part by customer rate
increases implemented in 2001. The decrease in flight activity was due to a
decline in oil and gas activity in the Gulf of Mexico. The number of aircraft in
the segment was 186 at September 30, 2002 as compared to 191 at September 30,
2001.

There was a decrease in direct expenses as of $2.7 million. Decreased
maintenance costs ($1.4 million) and fuel costs ($1.7 million) due to the
decline in activity, a decrease in insurance costs ($1.3 million) due to a
decrease in the number of aircraft the Company operates, and a decrease in
helicopter rent ($5.0 million) were offset by increases in employee compensation
costs ($1.3 million) due primarily to compensation increases for pilots and
mechanics, severance costs ($1.0 million), management bonuses ($0.3 million),
depreciation expense ($3.4 million) as a result of the purchase of leased
aircraft, and other items of $0.7 million. The net increase in employee
compensation was offset in part by a reduction in headcount.

Domestic Oil & Gas segment operating income was $20.3 million for the nine
months ended September 30, 2002, compared to $21.3 million for the nine months
ended September 30, 2001. The operating

22

margin for the nine months ended September 30, 2002 was 15.2%, compared to 15.5%
for the nine months ended September 30, 2001. The decrease in operating income
and operating margin was due to a decrease in flight hour activity resulting in
a $3.7 million net reduction in revenue, offset by a decline in direct expenses
of $2.7 million described above.

International -- International segment revenues were $16.4 million for the nine
months ended September 30, 2002, compared to $16.2 million for the nine months
ended September 30, 2001, an increase of $0.2 million. The increase in revenues
was due to rate increases recently implemented by the Company. This was
partially offset by a 2,360 decline in flight hour activity caused by reduced
demand in West Africa. The number of aircraft in the International segment was
18 at September 30, 2002 and 2001.

Direct expenses decreased for the nine months ended September 30, 2002 as
compared to the nine months ended September 30, 2001, due to a decrease in
maintenance costs ($0.7 million) and fuel costs ($0.1 million), both due
primarily to a decrease in flight hour activity, and a reduction in aircraft
rent ($1.0 million) due to the purchase of leased aircraft.

International segment operating income was $1.8 million for the nine months
ended September 30, 2002, compared to a loss of $0.1 million for the nine months
ended September 30, 2001. Operating margin of 11.1% for the nine months ended
September 30, 2002, compares to less than (1.0)% for the nine months ended
September 30, 2001. The improvement in operating income and operating margin was
due to rate increases implemented by the Company, and decreased maintenance and
fuel costs resulting from the decline in flight activity.

In October 2002, the Company exited an operation in Taiwan that included one
aircraft.

Aeromedical -- Aeromedical segment revenues were $36.5 million for the nine
months ended September 30, 2002, compared to $35.4 million for the same period
in the prior year, an increase of $1.1 million. The increase in operating
revenues for the Aeromedical segment is attributable to customer rate increases.
Those rate increases were offset in part by a decrease in operating revenue due
to a reduction of 3,911 flight hours caused by the termination of certain
Aeromedical contracts as a reaction to proposed rate increases. The number of
aircraft in the segment was 27 at September 30, 2002, as compared to 40 at
September 30, 2001, a reduction of 13 aircraft.

Direct expenses decreased in the Aeromedical segment for the nine months ended
September 30, 2002 as compared to the nine months ended September 30, 2001, due
to the termination of certain Aeromedical contracts as discussed above. Human
resource cost decreased $2.5 million, maintenance costs decreased $1.5 million,
fuel decreased $0.3 million, aircraft rent decreased $1.1 million and other
items, net, decreased $0.3 million.

Aeromedical segment operating income was $8.3 million for the nine months ended
September 30, 2002, compared to $1.2 million for the nine months ended September
30, 2001. The operating margin for the nine months ended September 30, 2002 was
22.6%, compared to 3.3% for the nine months ended September 30, 2001. The
increase in operating income and operating margin is attributable to an increase
in customer rates on remaining Aeromedical contracts, and also a reduction in
direct expense as a result of reduced aircraft and flight hours caused by the
termination of certain Aeromedical contracts as mentioned above.

Technical Services -- The Technical Services segment operating revenues for the
nine months ended September 30, 2002 were $18.1 million, compared to $16.4
million in the comparable period in the prior year, an increase of $1.7 million.
The increase in Technical Services revenues was related to revenue from a
contract for the refurbishment and upgrade of two aircraft completed in the
first half of 2002.

23

There was an increase in direct expense of $1.4 million in the Technical
Services segment due to the increase in activity in the first half of 2002. The
increase was due to the contract previously mentioned.

The Technical Services segment had operating income of $2.9 million for the nine
months ended September 30, 2002, compared to $2.6 million for the nine months
ended September 30, 2001. The operating margin was 16.1% in the nine months
ended September 30, 2002, compared to 16.0% for the nine months ended September
30, 2001. The increase in operating income is due to the increase in activity.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash position on September 30, 2002 was $25.0 million, compared to
$5.4 million at December 31, 2001. Working capital was $75.2 million at
September 30, 2002, as compared to $47.0 million at December 31, 2001, an
increase of $28.2 million. An increase in cash of $19.6 million, primarily the
remaining proceeds of the Notes issuance, and a decrease in current maturities
of long-term debt of $7.9 million as bank debt was repaid with the proceeds of
long-term Notes accounts for the increase in working capital. Net cash provided
by operating activities funded capital expenditure requirements of $26.3 million
in 2002. Notes issuance costs of $5.8 million were funded with proceeds from the
sale of the Notes.

On April 23, 2002, the Company issued Notes of $200 million that carry an
interest rate of 9 3/8% payable semi-annually on May 1 and November 1 of each
year, beginning November 1, 2002, and mature in May 2009. The Notes contain
certain covenants, including limitations on indebtedness, liens, dividends,
repurchases of capital stock and other payments affecting restricted
subsidiaries, issuance and sales of restricted subsidiary stock, dispositions of
proceeds of asset sales, and mergers and consolidations or sales of assets.

Proceeds from the Notes, net of $5.8 million of fees and expenses, were used to
retire the Company's $16.3 million term credit facility and $44.5 million
revolving credit facility, and to terminate the related Swaps for $1.6 million.
The Company also purchased 101 aircraft, which were previously leased, for
$118.1 million.

Also, on April 23, 2002, the Company executed a new credit agreement with a
commercial bank for a $50 million revolving credit facility. As of September 30,
2002, the Company had no borrowings and a $0.6 million letter of credit
outstanding under the revolving credit facility.

Capital expenditures totaled $26.3 million for the nine months ended September
30, 2002 as compared to $18.5 million for the nine months ended September 30,
2001. Capital expenditures primarily include amounts for the refurbishment of
certain aircraft and the upgrade of capability of certain aircraft. As discussed
above, the Company also purchased $118.1 million of aircraft it previously
leased. At September 30, 2002, the Company had commitments of $10.5 million for
the upgrade of certain aircraft and the purchase of other equipment. The upgrade
is to be performed in 2002 and 2003.

On November 1, 2002, the Company paid interest amounts due on the Notes of $9.8
million.

The effect of the purchases of the leased aircraft will be to improve cash flow
by the reduced lease payments, less the increased interest expense from the
issuance of the Notes. The Company believes that cash flow from operations will
be sufficient to fund required interest payments on the Notes and capital
expenditures for the next twelve months.

24

ENVIRONMENTAL MATTERS

As of September 30, 2002, the Company has an aggregate estimated liability of
$1.8 million for environmental remediation costs that are probable and
estimable. The Company has conducted environmental surveys of its Lafayette
facility, which it vacated in 2001, and has determined that contamination exists
at that facility. To date, borings have been installed to determine the type and
extent of contamination. Preliminary results indicate limited soil and
groundwater impacts. Once the extent and type of contamination are fully
defined, a risk evaluation in accordance with regulatory standards will be
submitted and evaluated by the appropriate agency. At that point, the regulatory
agency will establish what cleanup standards must be met at the site. When the
process is complete, the Company will be in a position to develop the
appropriate remediation plan and the resulting cost of remediation. The Company
has not recorded any estimated liability for remediation at the site, but based
on preliminary surveys and ongoing monitoring, the Company believes the ultimate
remediation costs for the Lafayette facility will not be material.

NEW ACCOUNTING PRONOUNCEMENTS

On September 29, 2001, Statement of Financial Accounting Standards ("SFAS") No.
142, "Goodwill and Other Intangible Assets" was approved by the Financial
Accounting Standards Board ("FASB"). SFAS No. 142 changes the accounting for
goodwill from an amortization method to an impairment-only approach.
Amortization of goodwill, including goodwill recorded in past business
combinations, ceased upon adoption of this statement. The Company had
implemented SFAS No. 142 on January 1, 2002. The implementation had no material
impact on the Company's consolidated financial position or results of operation.

SFAS No. 143, Accounting for Asset Retirement Obligations, requires the
recording of liabilities for all legal obligations associated with the
retirement of long-lived assets that result from the normal operation of those
assets. These liabilities are required to be recorded at their fair values
(which are likely to be the present values of the estimated future cash flows)
in the period in which they are incurred. SFAS No.143 requires the associated
asset retirement costs to be capitalized as part of the carrying amount of the
long-lived asset. The asset retirement obligation will be accreted each year
through a charge to expense. The amounts added to the carrying amounts of the
assets will be depreciated over the useful lives of the assets. The Company is
required to implement SFAS No. 143 on January 1, 2003, and does not expect that
this statement will have a material impact on its consolidated financial
position or results of operations.

SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets,
promulgates standards for measuring and recording impairments of long-lived
assets. Additionally, this standard establishes requirements for classifying an
asset as held for sale, and changes existing accounting and reporting standards
for discontinued operations and exchanges for long-lived assets. The Company
implemented SFAS No. 144 on January 1, 2002. The implementation of this standard
did not have a material effect on the Company's financial position or results of
operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 eliminates SFAS No. 4 and as a result, gains and losses from
extinguishments of debt should be classified as extraordinary items only if they
meet the criteria in APB Opinion No. 30. SFAS No. 145 amends SFAS No. 13,
"Accounting for Leases," to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. SFAS No. 145 also updates and amends existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their

25

applicability under changed conditions. The Company does not expect any of the
provisions of SFAS No. 145 will have a material impact on its consolidated
financial statements.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which is effective for fiscal periods after
December 31, 2002. SFAS No. 146 requires companies to recognize costs associated
with restructurings, discontinued operations, plant closings, or other exit or
disposal activities, when incurred rather than at the date a plan is committed
to. The Company will implement the provisions of this statement on a prospective
basis for exit or disposal activities that are initiated after December 31,
2002.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

On April 23, 2002, the Company paid its Terminated Loan Agreement. The
Terminated Loan Agreement had variable interest rates. In conjunction with the
payment of the Terminated Loan Agreement, the Company settled its interest rate
swaps by paying $1.6 to the counterparties.

Also on April 23, 2002, the Company issued Notes of $200 million that have an
interest rate of 9 3/8% payable semi-annually on May 1 and November 1 of each
year, beginning November 1, 2002, and mature in May 2009. The market value of
the Notes will vary as changes occur to general market interest rates, the
remaining maturity of the Notes, and the Company's credit worthiness. A
hypothetical 100 basis-point increase to the Notes' imputed interest rate
immediately after issue would have resulted in a market value decline to
approximately $190.2 million.

There were no other material changes to the Company's disclosures regarding
derivatives in its Form 10-K for the year ended December 31, 2001.

ITEM 4. CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of the Company's disclosure controls and procedures (as is
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934 (the "Exchange Act")) as of a date within 90 days before the filing date of
this quarterly report (the "Evaluation Date"). Based on such evaluation, such
officers have concluded that, as of the Evaluation Date, the Company's
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's periodic
filings under the Exchange Act.

Since the Evaluation Date, there have not been any significant changes in the
Company's internal controls or in other factors that could significantly affect
such controls.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in various legal proceedings primarily involving claims
for personal injury. The Company believes that the outcome of all such
proceedings, even if determined adversely, would not have a material adverse
effect on its consolidated financial statements.

26

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).

10.1 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).

10.2 Form of 9 3/8% Senior Note (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).

10.3 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).

99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 by Lance F. Bospflug, Chief Executive Officer.

99.2 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 by Michael J. McCann, Chief Financial Officer.

(b) Reports on Form 8-K

No reports were filed on Form 8-K during the quarter ended
September 30, 2002.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Petroleum Helicopters, Inc.

November 14, 2002 By: /s/ Lance F. Bospflug
----------------------------------------
Lance F. Bospflug
President and Chief Executive Officer

November 14, 2002 By: /s/ Michael J. McCann
----------------------------------------
Michael J. McCann
Chief Financial Officer and Treasurer

28

CERTIFICATIONS

I, Lance F. Bospflug, certify that:

1. I have reviewed this quarterly report on Form 10-Q of
Petroleum Helicopters, Inc.

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 14, 2002

By: /s/ Lance F. Bospflug
----------------------------------------
Lance F. Bospflug
President & Chief Executive Officer

29

I, Michael J. McCann, certify that:

1. I have reviewed this quarterly report on Form 10-Q of
Petroleum Helicopters, Inc.

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 14, 2002

By: /s/ Michael J. McCann
----------------------------------------
Michael J. McCann
Chief Financial Officer and Treasurer

30

INDEX TO EXHIBITS