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Louisiana		4522		72-0395707
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

		Michael J. McCann Chief Financial Officer, Treasurer and Secretary
2001 S.E. Evangeline Thruway Lafayette, Louisiana 70508 (337) 235-2452 (Address, including zip code, and telephone number including area code, of registrant’s principal executive offices)		2001 S.E. Evangeline Thruway Lafayette, Louisiana 70508 (337) 235-2452 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Amount

Proposed Maximum

Proposed Maximum

Amount of

Title of Each Class of

to be

Offering

Aggregate

Registration

Securities to be Registered

Registered(1)

Price Per Unit(1)

Offering Price(1)

Fee(1)

Senior Notes due 2013

$200,000,000

100%

$200,000,000

$21,400

Guarantees of Senior Notes due 2013(2)

—

—

—

—(3)

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933.

(2)	Each of the subsidiaries of PHI, Inc. that is listed on the Table of Additional Registrant Guarantors on the following page has guaranteed the notes being registered hereby.
(3)	No separate consideration will be received for the Guarantees and, therefore, no additional registration fee is required.

*	Includes certain subsidiaries of PHI, Inc. identified on the following page.

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State or Other

Primary Standard

Jurisdiction of

I.R.S. Employer

Industrial

Incorporation or

Identification

Classification Code

Exact Name of Registrant Guarantor(1)

Organization

Number

Number

International Helicopter Transport, Inc.

Louisiana

72-0542540

4522

PHI Tech Services, Inc.

Louisiana

72-0835089

4522

Air Evac Services, Inc.

Louisiana

72-1404705

4522

PHI Air Medical, Inc.

Louisiana

72-1404703

4522

Petroleum Helicopters International, Inc.

Louisiana

72-1443677

4522

Helicopter Management, L.L.C.

Louisiana

03-0397562

4522

Helicopter Leasing, L.L.C.

Louisiana

03-0397710

4522

HELEX, L.L.C.

Florida

43-1991751

4522

Sky Leasing, L.L.C.

Montana

61-1462015

4522

(1)	The address and telephone number for each Registrant Guarantor is 2001 S.E. Evangeline Thruway, Lafayette, Louisiana 70508, (337) 235-2452.

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Information in this prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. We may not exchange these securities until the registration statement is effective. This prospectus is not an offer to sell or a solicitation of an offer to buy the securities in any state where the offer or sale is not permitted.

•	The exchange offer expires at 5:00 p.m., New York City time, on                 , 2006, unless extended.
•	We will pay interest on the registered notes semi-annually in arrears on April 15 and October 15 of each year, starting on October 15, 2006.
•	The registered notes will mature on April 15, 2013.
•	The terms of the registered notes are substantially identical to the terms of the unregistered notes, except that the registered notes will be freely transferable and issued free of any covenants regarding exchange and registration rights.
•	All unregistered notes that are validly tendered and not validly withdrawn will be exchanged.
•	Tenders of unregistered notes may be withdrawn at any time prior to expiration of the exchange offer.
•	We will not receive any proceeds from the exchange offer.
•	We may redeem the notes, in whole or in part, at any time on or after April 15, 2010, at a redemption price equal to 100% of the principal amount thereof plus a premium declining ratably to par, plus accrued and unpaid interest, and prior to such date pursuant to certain make-whole provisions. In addition, we may redeem up to 35% of the notes prior to April 15, 2009 with the net proceeds from qualified equity offerings. If we experience certain changes of control, each holder of the notes may require us to repurchase the notes at 101% of the principal amount thereof, plus accrued and unpaid interest.
•	The notes and the guarantees are general, unsecured obligations of us and our guarantor subsidiaries. They rank equally in right of payment with our and our guarantor subsidiaries’ existing and future senior debt, and are effectively subordinated to (1) secured debt that we and our guarantor subsidiaries incur to the extent of the value of the assets securing that debt and (2) any future debt of our non-guarantor subsidiaries.
•	No public market currently exists for the notes. We do not intend to apply for listing of the notes on any securities exchange or to arrange for them to be quoted on any quotation system.
•	The exchange of unregistered notes for registered notes will not be a taxable event for United States federal income tax purposes.
•	Holders of unregistered notes do not have any appraisal or dissenters’ rights in connection with the exchange offer.
•	Unregistered notes not exchanged in the exchange offer will remain outstanding and be entitled to the benefits of the indenture, but except under certain circumstances, will have no further exchange or registration rights under the registration rights agreement discussed in this prospectus.

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About this prospectus			ii
Available information			ii
Industry and market data			iii
Notice to New Hampshire Residents			iii
Cautionary Note Regarding Forward-Looking Statements			iv
Prospectus summary			1
Risk factors			16
The exchange offer			27
Use of Proceeds			40
Selected consolidated financial and other data			41
Management’s discussion and analysis of financial condition and results of operations			43
Business			60
Description of the notes			81
Book-entry, Delivery and Form of Securities			125
Material U.S. federal income tax consequences			127
Plan of distribution			131
Legal Matters			131
Experts			131
Index to consolidated financial statements			F-1
Opinion of Akin Gump Strauss Hauer & Feld LLP
Opinion of Jones, Walker, Waechter, Poitevent, Carrere and Denegre L.L.P.
Opinion of Crowley, Haughey, Hanson, Toole & Dietrich P.L.L.P.
Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P.
Consent of Deloitte & Touche LLP
Statement of Eligibility on Form T-1

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•	our Annual Report on Form 10-K for the year ended December 31, 2005;
•	our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006;
•	our Current Reports on Form 8-K filed with the SEC on April 6, 2006, April 7, 2006, April 14, 2006, May 1, 2006, May 8, 2006, August 10, 2006, September 21, 2006 and September 22, 2006; and
•	our definitive information statement on Schedule 14C relating to our 2006 Annual Meeting of Stockholders.

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•	unexpected variances in flight hours;
•	the effect on demand for our services caused by volatility of oil and gas prices and the level of exploration and production activity in the Gulf of Mexico generally;
•	work stoppages, contract negotiations with respect to our unionized employees and relations with our employees generally;
•	the effect on our operating costs of volatile fuel prices;
•	the availability of capital required to acquire aircraft;
•	the availability and timely delivery of new aircraft from our suppliers;
•	our ability to secure favorable customer contracts or otherwise utilize our new aircraft;
•	environmental risks;
•	hurricanes and other adverse weather conditions;
•	the activities of our competitors;
•	changes in government regulation;
•	operating hazards;
•	risks related to operating in foreign countries;
•	our ability to obtain adequate insurance; and
•	our ability to develop and implement successful business strategies.

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•	we will be required to dedicate a substantial portion of our cash flow from operations to interest and principal payments, reducing funds available for operations, working capital, capital expenditures, expansion, acquisitions or general corporate or other purposes;
•	our ability to obtain additional financing in the future may be impaired;
•	it may make it more difficult for us to satisfy our obligations with respect to the notes;
•	we may be more highly leveraged than our competitors, which may place us at a competitive disadvantage;
•	it may limit, along with the financial and other restrictive covenants in our senior revolving credit facility and future indebtedness, among other things, our ability to borrow additional funds or dispose of assets;
•	our flexibility in planning for, or reacting to, changes in our business and industry may be limited; and
•	our degree of leverage may make us more vulnerable in the event of a downturn in our business, our industry or the economy in general.

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•	pay cash dividends or distributions on our capital stock or to repurchase our capital stock or make other restricted payments;
•	make certain investments;
•	create certain liens on our assets to secure debt;
•	merge or to enter into other business combination transactions;
•	issue and sell capital stock of our subsidiaries;
•	enter into sale and leaseback transactions;
•	enter into certain transactions with affiliates; and
•	transfer and sell assets.

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•	the subsidiary incurred the guarantee with the intent to hinder, delay or defraud any present or future creditor, or contemplated insolvency with a design to favor one or more creditors to the exclusion of others; or
•	the subsidiary did not receive fair consideration or reasonably equivalent value for issuing the subsidiary guarantee and, at the time it issued the subsidiary guarantee, the subsidiary:

	•	was insolvent or became insolvent as a result of issuing the subsidiary guarantee,
	•	was engaged or about to engage in a business or transaction for which the remaining assets of the subsidiary constituted unreasonably small capital, or
	•	intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they matured,

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•	the tropical storm and hurricane season in the Gulf of Mexico;
•	poor weather conditions that often prevail during winter and can generally develop in any season; and
•	reduced daylight hours during the winter months.

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•	political, social and economic instability;
•	terrorism, kidnapping and extortion;
•	potential seizure or nationalization of assets;
•	import-export quotas; and
•	currency fluctuations or devaluation.

•	the awarding of contracts to local contractors;
•	the employment of local citizens; and
•	the establishment of foreign subsidiaries with significant ownership positions reserved by the foreign government for local ownership.

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•	the supply of, and demand for, oil and natural gas and market expectations regarding supply and demand;
•	actions of OPEC, and Middle Eastern and other oil producing countries, to control prices or change production levels;
•	general economic conditions in the United States and worldwide;
•	war, civil unrest or terrorist activities;
•	governmental regulation; and
•	the price and availability of alternative fuels.

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•	no later than the date (the “filing deadline date”) that is 90 days after the issue date to file a registration statement (the “exchange offer registration statement”) with the SEC with respect to a registered exchange offer (the “exchange offer”) to exchange the unregistered notes for registered notes of ours guaranteed by the guarantors (the “exchange notes”) having terms identical in all material respects to the unregistered notes (except that the registered notes will not contain terms with respect to transfer restrictions or liquidated damages (as defined));
•	to use our reasonable best efforts to cause the exchange offer registration statement to be declared effective under the Securities Act within 210 days after the issue date; and
•	to use our reasonable best efforts to complete the exchange offer within 240 days after the issue date.

•	any registered notes to be received by it will be acquired in the ordinary course of its business,
•	it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the registered notes in violation of the provisions of the Securities Act,
•	it is not an “affiliate” of ours, as defined in Rule 405 of the Securities Act, or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable,
•	if such holder is not a broker-dealer, it is not engaged in, and does not intend to engage in, a distribution of registered notes, and
•	if such holder is a broker-dealer (a “participating broker-dealer”) that will receive registered notes for its own account in exchange for unregistered notes acquired as a result of market-making or other trading activities, it will deliver a prospectus in connection with any resale of such registered notes.

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•	any changes in law or the applicable interpretations of the staff of the SEC do not permit us and the guarantors to effect such exchange offer,
•	for any other reason the exchange offer is not consummated within 240 days of the issue date,
•	any holder is prohibited by law or the applicable interpretations of the staff of the SEC from participating in the exchange offer or does not receive registered notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an affiliate of ours or any guarantor), or
•	the initial purchaser so requests with respect to notes that have, or that are reasonably likely to be determined to have, the status of unsold allotments in an initial distribution,

	(i) the exchange offer registration statement is not filed with the SEC on or prior to the 90th day following the issue date,

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	(ii) the exchange offer registration statement is not declared effective on or prior to the 210th day following the issue date,
	(iii) the exchange offer is not consummated or a shelf registration statement is not declared effective, in each case, on or prior to the 240th day following the issue date, or
	(iv) the shelf registration statement is declared effective but thereafter ceases to be effective or usable, except if the shelf registration ceases to be effective or usable as specifically permitted under the registration rights agreement (each such event referred to in clauses (i) through (iv) a “registration default”),

	(1)     to us, upon redemption thereof or otherwise,
	(2)     so long as the unregistered notes are eligible for resale pursuant to Rule 144A, to a person whom the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act, purchasing for its own account or for the

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	account of a qualified institutional buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A,
	(3)     in an offshore transaction in accordance with Regulation S under the Securities Act,
	(4)     pursuant to an exemption from registration in accordance with Rule 144, if available, under the Securities Act,
	(5)     in reliance on another exemption from the registration requirements of the Securities Act, or
	(6)     pursuant to an effective registration statement under the Securities Act.

•	the registered notes will have been registered under the Securities Act and will not bear legends restricting their transfer pursuant to the Securities Act, and
•	except as otherwise described above, holders of the registered notes will not be entitled to the rights of holders of unregistered notes under the registration rights agreement.

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	(1)     to delay accepting any unregistered notes,
	(2)     to extend the exchange offer,
	(3)     if any of the conditions set forth below under “—Conditions to the exchange offer” have not been satisfied, to terminate the exchange offer, or
	(4)     to amend the terms of the exchange offer in any manner.

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•	a properly completed letter of transmittal applicable to such notes (or a facsimile thereof) duly executed by the holder thereof, and any other documents required by the letter of transmittal, must be received by the exchange agent at one of its addresses set forth below, and tendered unregistered notes must be received by the exchange agent at such address (or delivery effected through the deposit of unregistered notes into the exchange agent’s account with DTC and making book-entry delivery as set forth below) on or prior to the Expiration Date of the exchange offer, or
•	the tendering holder must comply with the guaranteed delivery procedures set forth below.

•	properly complete and duly execute the letter of transmittal (or a facsimile thereof), and any other documents required by the letter of transmittal, and mail or deliver the letter of transmittal or such facsimile pursuant to the procedures for book-entry transfer set forth below, or

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•	transmit their acceptance through ATOP, for which the transaction will be eligible, and DTC will then edit and verify the acceptance and send an Agent’s Message to the exchange agent for its acceptance.

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	(1)     the tender is made by or through an Eligible Institution;
	(2)     a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by us herewith, or an Agent’s Message with respect to guaranteed delivery that is accepted by us, is received by the exchange agent on or prior to the Expiration Date, as provided below; and
	(3)     the certificates for the tendered unregistered notes, in proper form for transfer (or a Book-Entry Confirmation of the transfer of such unregistered notes into the exchange agent’s account at DTC as described above), together with the letter of transmittal (or facsimile thereof), property completed and duly executed, with any required signature guarantees and any other documents required by the letter of transmittal or a properly transmitted Agent’s Message, are received by the exchange agent within two business days after the date of execution of the Notice of Guaranteed Delivery.

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	(1)     returned by the exchange agent to the tendering holders, or
	(2)     in the case of unregistered notes tendered by book-entry transfer into the exchange agent’s account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described below, credited to an account maintained with such Book-Entry Transfer Facility.

	(a)     the registered notes to be acquired by the holder and any beneficial owner(s) of the unregistered notes in connection with the exchange offer are being acquired by the holder and any beneficial owner(s) in the ordinary course of business of the holder and any beneficial owner(s),
	(b)     the holder and each beneficial owner are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in a distribution of the registered notes,
	(c)     the holder and each beneficial owner acknowledge and agree that (x) any person participating in the exchange offer for the purpose of distributing the registered notes must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction with respect to the registered notes acquired by such person and cannot rely on the position of the Staff of the SEC set forth in no-action letters that are discussed herein under “—Resale of the registered notes; Plan of distribution,” and (y) any broker-dealer that receives registered notes for its own account in exchange for unregistered notes pursuant to the exchange offer must delivery a prospectus in connection with any resale of such registered notes, but by so acknowledging, the holder shall not be deemed to admit that, by delivering a prospectus, it is an “underwriter” within the meaning of the Securities Act,
	(d)     neither the holder nor any beneficial owner is an “affiliate,” as defined under Rule 405 of the Securities Act, of ours except as otherwise disclosed to us in writing, and
	(e)     the holder and each beneficial owner understands, that a secondary resale transaction described in clause (c) above should be covered by an effective registration statement containing the selling securityholder information required by Item 507 of Regulation S-K of the SEC.

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•	specify the name of the person having deposited the unregistered notes to be withdrawn,
•	identify the unregistered notes to be withdrawn, including the certificate number or numbers of the particular certificates evidencing the unregistered notes (unless such unregistered notes were tendered by book-entry transfer), and aggregate principal amount of such unregistered notes, and
•	be signed by the holder in the same manner as the original signature on the letter of transmittal (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the trustee under the indenture register the transfer of the unregistered notes into the name of the person withdrawing such unregistered notes.

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	(1)     the SEC has issued an order or orders declaring the indenture governing the notes qualified under the Trust Indenture Act of 1939,
	(2)     the exchange offer, or the making of any exchange by a holder, does not violate applicable law or any applicable interpretation of the staff of the SEC,
	(3)     no action or proceeding shall have been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer, which, in our judgment, might impair our ability to proceed with the exchange offer,
	(4)     there shall not have been adopted or enacted any law, statute, rule or regulation which, in our judgment, would materially impair our ability to proceed with the exchange offer, or
	(5)     there shall not have occurred any material change in the financial markets in the United States or any outbreak of hostilities or escalation thereof or other calamity or crisis the effect of which on the financial markets of the United States, in our judgment, would materially impair our ability to proceed with the exchange offer.

	(1)     refuse to accept any unregistered notes and return all tendered unregistered notes to the tendering holders,
	(2)     extend the exchange offer and retain all unregistered notes tendered prior to the Expiration Date applicable to the exchange offer, subject, however, to the rights of holders to withdraw such unregistered notes (see “—Withdrawal of tenders”), or
	(3)     waive such unsatisfied conditions with respect to the exchange offer and accept all validly tendered unregistered notes which have not been withdrawn.

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	(1)     in the over-the-counter market,
	(2)     in negotiated transactions,
	(3)     through the writing of options on the registered notes or a combination of such methods of resale,
	(4)     at market prices prevailing at the time of resale,
	(5)     at prices related to such prevailing market prices, or
	(6)     at negotiated prices.

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																							Six months
			Years ended December 31,																				ended June 30,
			2001				2002				2003				2004				2005				2005				2006
			(dollars in thousands																				(Unaudited
Statements of Operations Data:
Operating Revenues			$	282,437			$	283,751			$	269,392			$	291,308			$	363,610			$	161,022			$	208,529
Gain (loss) on disposition of property and equipment				1,351				586				1,988				2,569				1,173				460				(1,162	)
Other				1,461				1,675				686				392				2,057				293				3,417
				285,249				286,012				272,066				294,269				366,840				161,775				210,784
Expenses:
	Direct expenses			243,538				235,189				230,229				245,374				299,263				136,931				176,267
	Selling, general and administrative			18,029				18,189				19,983				21,034				24,896				10,701				13,409
	Interest expense			6,190				17,250				19,952				20,109				20,448				10,276				9,202
	Loss on debt restructuring			—				—				—				—				—				—				12,790
				267,757				270,628				270,164				286,517				344,607				157,908				211,668
Earnings (loss) before income taxes				17,492				15,384				1,902				7,752				22,233				3,867				(884	)
Income taxes				6,472				6,153				763				3,780				8,079				1,547				(354	)
Net earnings (loss)			$	11,020			$	9,231			$	1,139			$	3,972			$	14,154			$	2,320			$	(530	)
(footnotes on following page)

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																						Six months
		Years ended December 31,																				ended June 30,
		2001				2002				2003				2004				2005				2005				2006
		(dollars in thousands																				(Unaudited
Other Financial Data:
Capital expenditures			(29,502	)			(159,427	)			(36,863	)			(35,439	)			(96,165	)			(30,910	)			(39,357	)
Gross proceeds from asset dispositions			24,304				3,263				7,620				14,395				10,751				6,052				3,163
Cash flow from operating activities			18,680				39,529				29,415				10,905				28,020				9,359				12,469
Cash flow from investing activities, including capital expenditures			(4,848	)			(154,535	)			(29,243	)			(21,044	)			(85,414	)			(24,858	)			(11,125	)
Cash flow from financing activities			(9,260	)			127,245				2,026				8,275				108,947				104,042				146,678
Ratio of earnings to fixed charges(1)			2.3	x			1.8	x			1.1	x			1.4	x			2.1	x			1.4	x			.9	x

										June 30,
		December 31, 2005								2006
						As
		Actual				adjusted(2)				Actual
		(in thousands
Balance Sheet Data:
Cash and cash equivalents		$	69,561			$	206,463			$	217,583
Current Assets			224,265				361,167				381,687
Working Capital			162,527				302,604				324,257
Property and equipment, net			311,678				311,678				306,902
Total assets			549,209				686,111				708,270
Total debt, including current portion			204,300				204,300				204,000
Shareholders’ equity			239,051				392,253				399,336

(1)	Fixed charges are defined as the sum of interest and the estimated interest component of our rent expense. For this calculation, fixed charges are added back to net earnings before income taxes.
(2)	As adjusted figures assume the remaining proceeds from the notes offering and concurrent equity offering are to be used toward the purchase of aircraft.

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															Six months
															ended June 30,
			Year ended December 31,												(Unaudited)
			2003				2004				2005				2005				2006
			(dollars in thousands)
Segment operating revenues
	Domestic Oil and Gas		$	183,849			$	180,102			$	219,644			$	96,440			$	127,872
	Air Medical			46,674				77,476				112,123				49,084				64,307
	International			21,247				24,342				28,192				12,799				13,221
	Technical Services			17,622				9,388				3,651				2,699				3,129
Total operating revenues				269,392				291,308				363,610				161,022				208,529

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																Six months
																ended June 30,
				Year ended December 31,												(Unaudited)
				2003				2004				2005				2005				2006
				(dollars in thousands)
Segment direct expense
	Domestic Oil and Gas				163,328				151,107				173,177				79,345				102,900
	Air Medical				32,782				67,664				104,465				47,097				62,377
	International				21,093				18,668				19,099				8,466				8,611
	Technical Services				13,026				7,935				2,522				2,023				2,379
	Total direct expense				230,229				245,374				299,263				136,931				176,267
Segment selling, general and administrative expense
	Domestic Oil and Gas				1,494				1,499				1,003				448				540
	Air Medical				4,480				6,525				6,503				2,904				3,645
	International				214				49				214				63				61
	Technical Services				12				12				7				5				57
	Total selling, general and administrative expense				6,200				8,085				7,727				3,420				4,303
	Total direct and selling, general and administrative expense				236,429				253,459				306,990				140,351				180,570
Net segment profit (loss)
	Domestic Oil and Gas				19,027				27,496				45,464				16,647				24,432
	Air Medical				9,412				3,287				1,155				(917	)			(1,715	)
	International				(60	)			5,625				8,879				4,270				4,549
	Technical Services				4,584				1,441				1,122				671				693
Total					32,963				37,849				56,620				20,671				27,959
Other, net(1)					2,674				2,961				3,230				753				2,255
Unallocated selling, general and administrative costs					(13,783	)			(12,949	)			(17,169	)			(7,281	)			(9,106	)
Interest expense					(19,952	)			(20,109	)			(20,448	)			(10,276	)			(9,202	)
Loss on debt restructuring					—				—				—				—				(12,790	)
Earnings before income taxes				$	1,902			$	7,752			$	22,233			$	3,867			$	(884	)
Operating statistics:
Flight hours
	Domestic Oil and Gas				114,769				100,814				111,236				50,396				55,243
	Air Medical				11,542				19,595				26,619				11,573				14,880
	International				14,816				15,871				16,788				7,578				7,244
		Total			141,127				136,280				154,643				69,547				77,367

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																Six Months Ended
				Year ended December 31,												June 30,
				2003				2004				2005				2005				2006
Air Medical Transports					5,739				11,390				17,200				7,469				10,133
Aircraft operated at period end
	Domestic Oil and Gas				164				151				155				158				151
	Air Medical				42				51				64				56				67
	International				19				19				16				16				16
		Total(2)			225				221				235				230				234

(1)	Including gains on disposition of property and equipment, and other income.
(2)	Includes 14, 14, 12, 12 and 18 aircraft as of December 31, 2003, 2004 and 2005 and as of June 30, 2006 and 2005, respectively, that are customer owned.

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						Payment due by year
																										Beyond
		Total				2006				2007				2008				2009				2010				2010
		(thousands of dollars)
Aircraft Purchase commitments(1)		$	179,275			$	123,745			$	55,530			$	—			$	—			$	—			$	—
Aircraft lease obligations			134,177				6,532				13,064				13,064				13,064				13,666				74,787
Facility lease obligations			22,435				3,134				2,700				2,246				1,722				1,442				11,191
Revolving credit facility			4,000				—				4,000				—				—				—				—
Senior notes(2)			200,000				—				—				—				—				—				200,000
		$	539,887			$	133,411			$	75,294			$	15,310			$	14,786			$	15,108			$	285,978

(1)	These commitments are for aircraft that we intend to fund from existing cash from the equity offerings completed June 2005 and April 2006.
(2)	Amounts reflect new 7.125% senior notes issued subsequent to March 31, 2006, that mature 2013, and the retirement or redemption of the 93/8% senior notes on April 12, 2006 ($184.8 million) and May 1, 2006 ($15.2 million).

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											Increased
											Expansion
							Initial				Remaining
							Expansion				Deliveries(2)								Post-
			Current				Remaining												expansion
Industry segment and aircraft type			Fleet				Deliveries(1)				2006				2007				Fleet
Domestic Oil & Gas
	Light Aircraft.			98	(3)			4				4				6				117	(3)
	Medium Aircraft.			40	(4)			4				1				6				51	(4)
	Heavy Aircraft.			10				—				2				—				12
Total Domestic Oil & Gas				148	(3)(4)			8				7				12				175	(3)(4)
International Oil & Gas
	Light Aircraft.			8				—				—				—				8
	Medium Aircraft.			4				—				—				—				4
Total International Oil & Gas				12				—				—				—				12
Air Medical
	Light Aircraft.			53				—				—				—				53
	Medium Aircraft.			10	(5)			—				—				—				10	(5)
	Fixed-Wing			6	(6)			—				—				—				6	(6)
Total Air Medical				69	(5)(6)			—				—				—				68	(5)(6)
Other
	Light Aircraft.			2				—				—				—				2
	Medium Aircraft.			2				—				—				—				2
	Fixed-Wing			2				—				—				—				2
Total Other				6				—				—				—				6
TOTAL AIRCRAFT(1)(2)(3)(4)				235				8				7				12				262

(1)	Our initial expansion plan included 48 aircraft, with 31 planned for our domestic oil and gas operations and 17 for our air medical operations. Because of increased demand in our oil and gas operations, two of the aircraft originally scheduled for our air medical operations were subsequently reassigned to our oil and gas operations at the time those aircraft were delivered. From time to time, we may also reassign certain smaller helicopters that are less desirable to our oil and gas customers to our air medical operations.
(2)	Our increased expansion plan includes 21 additional aircraft for our oil and gas operations, of which two heavy aircraft have already been delivered and placed into service.
(3)	Includes three light aircraft that are customer owned, but operated by PHI. Excludes eight light aircraft that we sold during the second and third quarters of 2006.
(4)	Includes six medium aircraft that are customer owned, but operated by PHI.
(5)	Includes two medium aircraft that are hospital owned, but operated by PHI.
(6)	Includes one fixed-wing aircraft that is hospital owned, but operated by PHI.

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															Appr. range
Manufacturer & type			Quantity				Engine				Passengers				(miles)(1)
Oil & Gas
	Light Aircraft
	Bell 407			14				Turbine				6				420
	Eurocopter EC135(2)			12				Twin Turbine				6				330
	Aerospatiale AS350 B2			2				Turbine				5				385
	Medium Aircraft
	Sikorsky S-76C+ and C++(2)			18				Twin Turbine				12				400
	Heavy Aircraft
	Sikorsky S-92A(2)			8				Twin Turbine				19				495
Total New Oil & Gas Helicopters				54
Air Medical
	Light Aircraft
	Bell 407			2				Turbine				n/a	(3)			420
	Eurocopter EC135(2)			12				Twin Turbine				n/a	(3)			330
	Fixed-Wing
	Beechcraft King Air 200(2)			1				Turboprop				n/a	(3)			1200
Total New Air Medical Aircraft				15
Total New Aircraft				69

(1)	Based on maintaining a 30-minute fuel reserve.
(2)	Equipped to fly under instrument flight rules (IFR). All other types listed can only fly under visual flight rules (VFR).
(3)	Number of passengers in the air medical segment is not applicable, as each aircraft typically has a pilot, two medical personnel and a patient.

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			Number in												Appr. range
Manufacturer & type			fleet(1)(2)(3)(4)(5)				Engine				Passengers				(miles)(7)
Domestic Oil & Gas
	Light Aircraft
	Bell 206/407			87	(1)			Turbine				6				420
	Aerospatiale AS350 B2/ B3			2				Turbine				5				385
	Eurocopter BK-117/ BO-105			15				Twin Turbine				6				270
	Medium Aircraft
	Bell 212(7)/222(7)/230(7) /412(7)			15				Twin Turbine				13				370
	Sikorsky S-76(7) A, A++, C+			23	(2)			Twin Turbine				12				400
	Heavy Aircraft
	Bell 214ST(7)			4				Twin Turbine				18				450
Total Domestic Oil & Gas				146	(1)(2)(3)
International Oil & Gas
	Light Aircraft
	Bell 206/407			8				Turbine				6				420
	Medium Aircraft
	Bell 212(7)/222(7)/230(7) /412(7)			4				Twin Turbine				13				370
Total International Oil & Gas				12
Air Medical
	Light Aircraft
	Bell 206/407			12				Turbine				n/a	(9)			420
	Aerospatiale AS350 B2/ B3			18				Turbine				n/a	(9)			385
	Eurocopter BK-117/ BO-105			6				Twin Turbine				n/a	(9)			270
	Medium Aircraft
	Bell 212(7)/222(7)/230(7) /412(7)			7	(4)			Twin Turbine				n/a	(9)			370
	Sikorsky S-76(7) A, A++, C+			2				Twin Turbine				n/a	(9)			400
	Fixed-Wing Aircraft
	Cessna Conquest 441(7)			4	(5)			Turboprop				n/a	(9)			1,200
	Lear Jet 31A(7)			1	(6)			Turbojet				n/a	(4)			1,437
Total Air Medical(7)				50	(4)(5)
Other
	Light Aircraft
	Aerospatiale AS350 B2/ B3			2				Turbine				5				385
	Medium Aircraft
	Bell 212(7)/222(7)/230(7) /412(7)			2				Twin Turbine				13				370
	Fixed-Wing Aircraft
	Rockwell Aero Commander			2				Turboprop				n/a				1,600
Total Other				6
TOTAL AIRCRAFT(1)(2)(3)(4)				214	(3)

(1)	Includes three aircraft that are customer owned, but operated by PHI.
(2)	Includes six aircraft that are customer owned, but operated by PHI.
(3)	Includes eight light aircraft that have since been sold.
(4)	Includes two aircraft that are hospital owned, but operated by PHI.
(5)	Includes one aircraft that is hospital owned, but operated by PHI.
(6)	Acquired in July 2005 apart from our expansion plans.

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(7)	Based on maintaining a 30-minute fuel reserve.
(8)	Equipped to fly under instrument flight rules (IFR). All other types listed can only fly under visual flight rules (VFR).
(9)	Number of passengers in the air medical segment is not applicable, as each aircraft typically has a pilot, two medical personnel and a patient.

•	leverage our long-term customer relationships with major integrated energy companies and independent oil and gas producers to facilitate our expansion in the deepwater Gulf of Mexico, entering into long-term contracts where possible;
•	protect our leading position in the Gulf of Mexico by maintaining our reputation as one of the safest and most reliable providers of helicopter transportation services;
•	pursue opportunities to grow our air medical operations in existing and new geographic market segments where we believe demographics indicate a profitable patient transport volume; and
•	pursue attractive strategic acquisition opportunities in the domestic and international oil and gas air transportation business and the air medical business.

•	Leading market position in deepwater Gulf of Mexico. We believe we are currently the sole provider of helicopter services in the Gulf of Mexico to three of the top five oil and gas producers, including Shell Oil Company and BP America Production Company, the two largest producers in the Gulf of Mexico in 2005. In addition, we believe we are the sole provider to the operators of 17 of the 31 existing deepwater installations and six of the 13 forecasted deepwater installations to be placed into service by 2011. Our large operating scale and fleet size allow flexibility in scheduling helicopter services on a timely basis and over an extensive geographic area. Our role as the primary provider to many of the largest producers in the deepwater Gulf of Mexico as well as our recent investment in helicopters capable of servicing this market has given us a leading position.
•	Long-term customer relationships. We are the oldest provider of commercial helicopter services in the oil and gas industry in the Gulf of Mexico, and we have worked successfully for years with out customers, many for in excess of 30 years. Our fleet expansion is a product of these long term relationships. As the primary provider to many of the largest producers in the Gulf of Mexico, we have a close working relationship with these producers that has enabled us to anticipate increased activity levels in the Gulf of Mexico and expand our aircraft fleet accordingly. Our close relationships with these companies also may present us with additional international opportunities where our customers operate.
•	Recent operational enhancements. Since 2001, we have made operational enhancements to our business, including substantial investments in our facilities, upgrades of our computer systems and software, the refurbishment of our fleet, the implementation of a significant cost reduction program and, most recently, the raising of approximately $257 million in equity offerings in April 2006 and June 2005 to, among other things, partially finance a significant expansion of our fleet. In addition, we have sold helicopters that were not profitable or that did not complement our existing fleet, terminated or declined to renew lower margin contracts and significantly increased our rates. As a result of these changes, we have improved our profitability and are well positioned to expand our business to capitalize on opportunities in our industry.

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•	Modern, well-maintained fleet. We believe that our existing fleet, together with the aircraft we are adding, are among the most modern and best maintained aircraft operating in the Gulf of Mexico. We target a complete, full-scale refurbishment in our repair and maintenance facility every five years for each of our oil and gas aircraft to maintain this level of quality. The majority of our air medical aircraft have either been purchased new or have undergone an extensive refurbishment since November 2003. In addition, each is routinely inspected in accordance with manufacturer specifications.
•	Integrated operation and maintenance functions. We believe that we are an industry leader in helicopter maintenance, repair and refurbishment operations. We believe that our repair and refurbishment facility in Lafayette, Louisiana, which became operational in 2001, is the premier facility of its kind in the world due to its size, scope of operations, extensive inventory of parts and experienced technical and maintenance personnel. We believe this facility allows us to more efficiently and effectively service our fleet of aircraft, resulting in less downtime and safer operations.
•	Strong safety record; experienced and extensively trained pilots. Safety is critical to us and to our customers. Our pilots average over 9,000 hours of flight time and 15 years of experience, and must have at least 1,000 flight hours and an instrument rating before we hire them. Once hired, our pilots undergo rigorous additional training covering all aspects of helicopter operation. As a result of this training and experience, coupled with our detailed safety programs and comprehensive maintenance, we have one of the best safety records in the industry. According to the NTSB, for the ten-year period through 2005, our Gulf of Mexico operations averaged 1.33 accidents for each 100,000 flight hours, approximately 42% less than the average rate for our Gulf of Mexico competitors (2.29 accidents per 100,000 flight hours). On a company-wide basis, our accident rate for this period was 1.53 accidents per 100,000 flight hours, compared to a national average rate of 8.70 accidents per 100,000 flight hours.
•	Significant barriers to entry to serve our customers. We believe that there are significant barriers to entry in our industry, particularly with respect to operating aircraft for the major oil companies and the larger independent oil companies. Our largest customers have employees dedicated to setting extensive selection criteria for their helicopter transport providers. These criteria are based on safety and performance records, and very few companies have the substantial infrastructure and track record to meet these stringent requirements. Operators who are unable to meet these rigorous quality standards on a long-term basis generally are excluded from the bidding process. We work closely with our customers to meet their specific requirements. In addition, our primary targets for growth in the air medical industry are currently served by a limited number of major competitors.
•	Experienced management and operations team. Members of our senior management and operations team have significant experience in the oil and gas service industry and in the commercial helicopter service industry. Al A. Gonsoulin, our Chairman of the Board and Chief Executive Officer, has over 35 years of experience in the oil and gas service industry. The ten members of our senior management team have an average of approximately 18 years of service with us. Howard L. Ragsdale, the director of our air medical operations, has significant experience in establishing air medical operations throughout the continental U.S. He and his two regional directors have an aggregate of over 65 years in the emergency medical services industry.

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•	the Gulf of Mexico will remain the primary producing region in North America through 2010;
•	in 2010, over 23.3% of U.S. lower 48 natural gas production and 46.9% of U.S. crude oil production will come from the Gulf of Mexico;
•	U.S. demand for natural gas will increase from 61 Bcf per day in 2003 to 64 Bcf per day by 2010; and
•	U.S. demand for crude oil will grow from 20 MMBbls per day in 2003 to 22 MMBbls per day by 2010.

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Operator

Deepwater block

Field name

Year

ConocoPhillips

Green Canyon 184

Jolliet

1989

Shell

Garden Banks 426

Auger

1993

Kerr-McGee

Viosca Knoll 826

Neptune

1996

Shell

Mississippi Canyon 807

Mars

1996

Shell

Viosca Knoll 956

Ram-Powell

1997

Amerada Hess

Garden Banks 260

Baldpate

1998

ENI

Ewing Bank 921

Morpeth

1998

Chevron

Viosca Knoll 786

Petronius

1998

Chevron

Green Canyon 205

Genesis

1998

ENI

Green Canyon 254

Allegheny

1999

BP

Viosca Knoll 915

Marlin

1999

Shell

Mississippi Canyon 809

Ursa

1999

ExxonMobil

Alaminos Canyon 25

Hoover

1999

Chevron

Green Canyon 237

Typhoon

2001

Shell

Green Canyon 158

Brutus

2001

Kerr-McGee

East Breaks 643

Boomvang

2001

Kerr-McGee

East Breaks 602

Nansen

2001

BP

Mississippi Canyon 127

Horn Mountain

2002

Murphy

Mississippi Canyon 582

Medusa

2003

Total

Mississippi Canyon 243

Matterhorn

2003

Kerr-McGee

Garden Banks 668

Gunnison

2003

Dominion

Mississippi Canyon 773

Devils Tower

2003

BP

Mississippi Canyon 474

Na Kika

2003

Murphy

Green Canyon 338

Front Runner

2004

Anadarko

Green Canyon 608

Marco Polo

2004

BP

Green Canyon 645

Holstein

2004

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Operator

Deepwater block

Field name

Year

BP

Green Canyon 782

Mad Dog

2004

ConocoPhillips

Garden Banks 783

Magnolia

2004

Kerr-McGee

Garden Banks 876

Red Hawk

2004

BP

Mississippi Canyon 778

Thunder Horse

2005

Kerr-McGee

Green Canyon 680

Constitution

2005

ATP

Mississippi Canyon 711

Gomez

2006

Anadarko

Mississippi Canyon 920

Independence Hub

2006

BP

Green Canyon 743

Atlantis

2006

BHP

Green Canyon 613

Neptune

2007

Norsk Hydro

Atwater Valley 63

Telemark

2007

Chevron

Green Canyon 640

Tahiti

2008

BHP

Green Canyon 654

Shenzi

2008

Chevron

Mississippi Canyon 695

Blind Faith

2008

Dominion

Mississippi Canyon 734

Thunder Hawk

2008

Shell

Mississippi Canyon 809

GUMBO

2009

ExxonMobil

Mississippi Canyon 508

Hawkes

2010

Chevron

Atwater Valley 182

Sturgis

2010

Total

Mississippi Canyon 941

Mirage

2011

•	the potential for the discovery of significant natural gas reserves;
•	the abundance of existing platforms, production facilities and pipelines on the continental Shelf which allow new deep gas to flow quickly to market;
•	data indicating that higher natural gas production rates can be expected from wells drilled on the continental Shelf below 16,000 feet; and
•	MMS royalty relief programs enacted in 2001, and expanded in August 2003 and again in January 2004, which have reduced the development costs of these deep wells.

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Location		Facilities		Area		Lease expiration		Extension options
Morgan City (Louisiana)		Operational and maintenance facilities, landing pads for 46 helicopters		53 acres		June 30, 2008		Options to extend to June 30, 2018
Intracoastal City (Louisiana)		Operational and maintenance facilities, landing pads for 45 helicopters		18 acres		December 31, 2006		Options to extend to December 31, 2010
Houma-Terrebonne Airport (Louisiana)		Operational and maintenance facilities, landing pads for 30 helicopters		14 acres		August 31, 2007		Three options to extend for one year each
Galveston (Texas)		Operational and maintenance facilities, landing pads for 30 helicopters		4 acres		May 31, 2021		Lease period to May 31, 2021 with certain cancellation provisions
Fourchon (Louisiana)		Operational and maintenance facilities, landing pads for 10 helicopters		8 acres		May 31, 2016		Facility under three separate leases, of which two contain options to extend through 2026 and 2028

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					Years ended December 31,
Domestic oil and gas revenues					2003				2004				2005
					(in thousands, except
					contracted variable fee
					components data)
Contracted Revenues:
	Total Fixed Fees				$	79,605			$	76,431			$	90,255
	Total Variable Fees					75,960				69,235				91,695
		Total Contracted Revenues				155,565				145,666				181,950
	Spot Revenues					13,824				20,669				23,418
	Other Revenues(1)					14,460				13,767				14,276
			Total Revenues		$	183,849			$	180,102			$	219,644
Contracted Variable Fee Components:
		Aircraft Under Contract(2)				76				72				92
		Total Contract Hours Flown				95,720				82,630				97,377
		Average Contracted Flight Hours per Aircraft				1,259				1,148				1,058
		Average Contracted Revenue per Flight Hour			$	1,625			$	1,763			$	1,869

(1)	Contracted revenues from a major customer that owns its own aircraft.
(2)	As of the end of the period presented.

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•	an Unrestricted Subsidiary will not be subject to many of the restrictive covenants in the Indenture;
•	a Subsidiary that has previously been a Guarantor and that is designated an Unrestricted Subsidiary will be released from its Note Guarantee; and
•	the assets, income, cash flow and other financial results of an Unrestricted Subsidiary will not be consolidated with those of the Issuer for purposes of calculating compliance with the restrictive covenants contained in the Indenture.

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		Optional
		redemption
Year		price
2010			103.563%
2011			101.781%
2012			100.000%

•	100% of the principal amount of the Notes to be redeemed plus accrued but unpaid interest thereon, if any, to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); and
•	(a) the sum of the present values of the remaining scheduled payments of principal and interest thereon from the date of redemption to April 15, 2010 (except for currently accrued but unpaid interest, if any, to the date of redemption) (assuming the Notes are redeemed, and based on the applicable redemption price, on that date) discounted to the date of redemption, on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at the Treasury Rate, plus 50 basis points, plus (b) accrued but unpaid interest thereon, if any, to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).

	“Comparable Treasury Issue” means the United States Treasury security or securities selected by the Independent Investment Banker as having an actual or interpolated maturity

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	comparable to the remaining term of the notes to April 15, 2010 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity.
	“Comparable Treasury Price” means, for any redemption date, (1) the average of four Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.
	“Independent Investment Banker” means UBS Securities LLC and any successor firm, or if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee after consultation with the Issuer.
	“Reference Treasury Dealer” means UBS Securities LLC and its successors, plus three other dealers selected by the Independent Investment Banker that are primary U.S. government securities dealers in New York City; provided, if any of UBS Securities LLC or any primary U.S. government securities dealer selected by the Independent Investment Banker shall cease to be a primary U.S. government securities dealer, then such other primary U.S. government securities dealers as may be substituted by the Independent Investment Banker.
	“Reference Treasury Dealer Quotations” means, for each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) at 3:30 p.m., New York City time, on the third business day preceding such redemption date, as quoted in writing to the Trustee by such Reference Treasury Dealer.
	“Treasury Rate” means, with respect to any redemption date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining term of the Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week in which the calculation date falls (or in the immediately preceding week if the calculation date falls on any day prior to the usual publication date for such release) or does not contain such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Treasury Rate shall be calculated on the third Business Day preceding the redemption date. Any weekly average yields calculated by interpolation or extrapolation will be rounded to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward.

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	(1)     describing the transaction or transactions that constitute the Change of Control;
	(2)     offering to purchase, pursuant to the procedures required by the Indenture and described in the notice (a “Change of Control Offer”), on a date specified in the notice (which shall be a Business Day not earlier than 30 days nor later than 60 days from the date the notice is mailed) and for the Change of Control Purchase Price, all Notes properly tendered by such Holder pursuant to such Change of Control Offer; and
	(3)     describing the procedures that Holders must follow to accept the Change of Control Offer.

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	(1)     the Notes have an Investment Grade Rating from both of the Rating Agencies, and
	(2)     no Default has occurred and is continuing under the Indenture,

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	(1)     “—Limitations on Additional Indebtedness,”
	(2)     “—Limitations on Layering Indebtedness,”
	(3)     “—Limitations on Restricted Payments,”
	(4)     “—Limitations on Dividend and Other Restrictions Affecting Restricted Subsidiaries,”
	(5)     “—Limitations on Transactions with Affiliates,”
	(6)     “—Limitations on Asset Sales,”
	(7)     subclause (a) of clause (1) and clause (3) of “—Limitations on Sale and Leaseback Transactions,”
	(8)     “—Limitations on the Issuance or Sale of Equity Interests of Restricted Subsidiaries,”
	(9)     clause (3) of the first paragraph under “—Mergers, Consolidations, Etc.” and
	(10)     “—Conduct of Business.”

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	(1)     Indebtedness of the Issuer and any Guarantor under the Credit Agreement incurred pursuant to this clause (1) in an aggregate amount at any time outstanding not to exceed the greater of (x) $50.0 million and (y) 80% of the book value of the accounts receivable plus 50% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP;
	(2)     the Notes issued on the Issue Date and the Note Guarantees;
	(3)     Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Issue Date (other than Indebtedness referred to in clauses (1) and (2) above, and after giving effect to the intended use of proceeds of the Notes);
	(4)     Indebtedness under Hedging Obligations; provided that such Hedging Obligations are incurred by the Issuer or any Restricted Subsidiary in the ordinary course of business and not for the purpose of speculation;
	(5)     Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that upon any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (5);
	(6)     Indebtedness in respect of bid, performance or surety bonds issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed);
	(7)     Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding the greater of (a) $40.0 million and (b) 15% of the net book value of the aircraft owned by the Issuer and the Restricted Subsidiaries;
	(8)     Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of incurrence;
	(9)     Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
	(10)     Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or clause (2) or (3) above;
	(11)     Indebtedness of any Foreign Subsidiary in an aggregate amount at any time outstanding not to exceed $10 million (“Foreign Indebtedness”); and
	(12)     Indebtedness of the Issuer or any Restricted Subsidiary in an aggregate amount not to exceed $25.0 million at any time outstanding.

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	(1)     a Default shall have occurred and be continuing or shall occur as a consequence thereof;
	(2)     the Issuer cannot incur $1.00 of additional Indebtedness pursuant to the Coverage Ratio Exception; or
	(3)     the amount of such Restricted Payment, when added to the aggregate amount of all other Restricted Payments made after June 30, 2002 (other than Restricted Payments made pursuant to clause (2), (3), (4), (5) or (6) of the next paragraph), exceeds the sum (the “Restricted Payments Basket”) of (without duplication):

	(a)     50% of Consolidated Net Income for the period (taken as one accounting period) commencing on July 1, 2002 to and including the last day of the fiscal quarter ended immediately prior to the date of such calculation for which consolidated financial statements are available (or, if such Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit), plus
	(b)     100% of the aggregate net cash proceeds received by the Issuer either (x) as contributions to the common equity of the Issuer after June 30, 2002 or (y) from the issuance and sale of Qualified Equity Interests after June 30, 2002, other than any such proceeds which are used to redeem Notes in accordance with “—Optional Redemption— Redemption with Proceeds from Equity Offerings,” plus
	(c)     the aggregate amount by which Indebtedness incurred by the Issuer or any Restricted Subsidiary subsequent to June 30, 2002 is reduced on the Issuer’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Issuer) into Qualified Equity Interests (less the amount of any cash, or the Fair Market Value of assets, distributed by the Issuer or any Restricted Subsidiary upon such conversion or exchange), plus
	(d)     in the case of the disposition or repayment of or return on any Investment that was treated as a Restricted Payment made after June 30, 2002, an amount (to the

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	extent not included in the computation of Consolidated Net Income) equal to the lesser of (i) the return of capital with respect to such Investment and (ii) the amount of such Investment that was treated as a Restricted Payment, in either case, less the cost of the disposition of such Investment and net of taxes, plus
	(e)     upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the lesser of (i) the Fair Market Value of the Issuer’s proportionate interest in such Subsidiary immediately following such Redesignation, and (ii) the aggregate amount of the Issuer’s Investments in such Subsidiary to the extent such Investments reduced the Restricted Payments Basket and were not previously repaid or otherwise reduced.

	(1)     the payment by the Issuer or any Restricted Subsidiary of any dividend within 60 days after the date of declaration thereof, if on the date of declaration the payment would have complied with the provisions of the Indenture;
	(2)     the redemption of any Equity Interests of the Issuer or any Restricted Subsidiary in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests;
	(3)     the redemption of Subordinated Indebtedness of the Issuer or any Restricted Subsidiary (a) in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests or (b) in exchange for, or out of the proceeds of the substantially concurrent incurrence of, Refinancing Indebtedness permitted to be incurred under the “Limitations on Additional Indebtedness” covenant and the other terms of the Indenture;
	(4)     the redemption of any Equity Interests of the Issuer or any Restricted Subsidiary of the Issuer held by any of the Issuer’s (or any of its Restricted Subsidiaries’) current or former directors or employees (or their transferees, estates or beneficiaries under their estates) pursuant to any director or employee equity subscription agreement or stock option agreement; provided that the aggregate price paid for all such redeemed Equity Interests may not exceed $2.5 million in any twelve-month period (with unused amounts in any 12-month period being permitted to be carried over into the next 12-month period); provided, further, that the amounts in any 12-month period may be increased by an amount not to exceed (A) the cash proceeds received by the Issuer or any of its Restricted Subsidiaries from the sale of Issuer’s Equity Interests (other than Disqualified Equity Interests) to any such directors or employees that occurs after the Issue Date to the extent such proceeds have not otherwise been applied to the payment of Restricted Payments plus (B) the cash proceeds of key man life insurance policies received by the Issuer and its Restricted Subsidiaries after the Issue Date;
	(5)     the redemption of Equity Interests of the Issuer or any Restricted Subsidiary of the Issuer held by any of the Issuer’s (or any of its Restricted Subsidiaries’) current or former directors or employees in connection with the exercise or vesting of any equity compensation (including, without limitation, stock options, restricted stock and phantom stock) in order to satisfy the Issuer’s or such Restricted Subsidiary’s tax withholding obligation with respect to such exercise or vesting;
	(6)     repurchases of Equity Interests deemed to occur upon the exercise of stock options if the Equity Interests represent a portion of the exercise price thereof;
	(7)     in the event of a Change of Control, the redemption of Subordinated Indebtedness of the Issuer or any Guarantor, in each case, at a redemption price not greater than 101% of the principal amount (or, if such Subordinated Indebtedness were issued with original issue

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	discount, 101% of the accreted value) of such Subordinated Indebtedness, plus any accrued and unpaid interest thereon; provided, however, that prior to such redemption, the Issuer (or a third party to the extent permitted by the Indenture) has made a Change of Control Offer with respect to the Notes as a result of such Change of Control and has purchased all Notes validly tendered and not withdrawn in connection with such Change of Control Offer; or
	(8)     in the event of an Asset Sale that requires the Issuer to offer to repurchase Notes pursuant to the covenant described under “—Limitations on Asset Sales,” redemption of Subordinated Indebtedness of the Issuer or any Guarantor, in each case, at a redemption price not greater than 100% of the principal amount (or, if such Subordinated Indebtedness were issued with original issue discount, 100% of the accreted value) of such Subordinated Indebtedness, plus any accrued and unpaid interest thereon; provided, however, that (A) prior to such redemption, the Issuer has made a Net Proceeds Offer with respect to the Notes pursuant to the provisions of the covenant described under “—Limitations on Asset Sales” and has purchased all Notes required to be purchased by it under such covenant;

	(1)     pay dividends or make any other distributions on or in respect of its Equity Interests;
	(2)     make loans or advances or pay any Indebtedness or other obligation owed to the Issuer or any other Restricted Subsidiary; or
	(3)     transfer any of its assets to the Issuer or any other Restricted Subsidiary;

	(a)     encumbrances or restrictions existing under or by reason of applicable law;
	(b)     encumbrances or restrictions existing under the Indenture, the Notes and the Note Guarantees;
	(c)     non-assignment provisions of any contract, license or any lease entered into in the ordinary course of business;
	(d)     encumbrances or restrictions existing under agreements existing on the date of the Indenture (including, without limitation, the Credit Agreement) as in effect on that date;
	(e)     restrictions on the transfer of assets subject to any Lien permitted under the Indenture imposed by the holder of such Lien;
	(f)     any restriction with respect to a Restricted Subsidiary (or any of its assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Equity Interests or assets of such Restricted Subsidiary (or the assets that are subject to such restriction) pending the closing of such sale or disposition;

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	(g)     any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the assets of any Person, other than the Person or the assets of the Person so acquired;
	(h)     any other agreement governing Indebtedness entered into after the Issue Date that contains encumbrances and restrictions taken as a whole that are not materially more restrictive with respect to any Restricted Subsidiary than those in effect on the Issue Date with respect to that Restricted Subsidiary pursuant to agreements in effect on the Issue Date (including the Indenture and the Credit Agreement);
	(i)     customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person;
	(j)     Purchase Money Indebtedness incurred in compliance with the covenant described under “—Limitations on Additional Indebtedness” that impose restrictions of the nature described in clause (3) above on the assets acquired;
	(k)     encumbrances or restrictions applicable only to a Foreign Subsidiary;
	(l)     any encumbrances or restrictions imposed by any amendments or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (k) above; provided that such amendments or refinancings are, in the good faith judgment of the Issuer’s Board of Directors, no more materially restrictive with respect to such encumbrances and restrictions than those prior to such amendments or refinancings; and
	(m)     restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business.

	(1)     such Affiliate Transaction is on terms that are no less favorable to the Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction at such time on an arm’s-length basis by the Issuer or that Restricted Subsidiary from a Person that is not an Affiliate of the Issuer or that Restricted Subsidiary; and
	(2)     the Issuer delivers to the Trustee:

	(a)     with respect to any Affiliate Transaction involving aggregate value in excess of $5.0 million, an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and a Secretary’s Certificate which sets forth and authenticates a resolution that has been adopted by the Independent Directors approving such Affiliate Transaction; and
	(b)     with respect to any Affiliate Transaction involving aggregate value of $20.0 million or more, the certificate described in the preceding clause (a) and a written opinion as to the fairness of such Affiliate Transaction to the Issuer or such

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	Restricted Subsidiary from a financial point of view issued by an Independent Financial Advisor.

	(1)     transactions exclusively between or among (a) the Issuer and one or more Restricted Subsidiaries or (b) Restricted Subsidiaries; provided, in each case, that no Affiliate of the Issuer (other than another Restricted Subsidiary) owns Equity Interests of any such Restricted Subsidiary;
	(2)     reasonable director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans) and indemnification arrangements;
	(3)     the entering into of a tax sharing agreement, or payments pursuant thereto, between the Issuer and/or one or more Subsidiaries, on the one hand, and any other Person with which the Issuer or such Subsidiaries are required or permitted to file a consolidated tax return or with which the Issuer or such Subsidiaries are part of a consolidated group for tax purposes, on the other hand, which payments by the Issuer and the Restricted Subsidiaries are not in excess of the tax liabilities that would have been payable by them on a stand-alone basis;
	(4)     loans and advances permitted by clause (3) of the definition of “Permitted Investments”;
	(5)     Restricted Payments which are made in accordance with the covenant described under “—Limitations on Restricted Payments”; or
	(6)     any transaction with an Affiliate where the only consideration paid by the Issuer or any Restricted Subsidiary is Qualified Equity Interests.

	(1)     in the case of any Lien securing an obligation that ranks pari passu with the Notes or a Note Guarantee, effective provision is made to secure the Notes or such Note Guarantee, as the case may be, at least equally and ratably with or prior to such obligation with a Lien on the same collateral; and
	(2)     in the case of any Lien securing an obligation that is subordinated in right of payment to the Notes or a Note Guarantee, effective provision is made to secure the Notes or such Note Guarantee, as the case may be, with a Lien on the same collateral that is prior to the Lien securing such subordinated obligation,

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	(1)     the Issuer or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets included in such Asset Sale; and
	(2)     at least 75% of the total consideration received in such Asset Sale consists of cash or Cash Equivalents.

	(a)     the amount (without duplication) of any Indebtedness or other liabilities, as shown on Issuer’s most recent consolidated balance sheet, of the Issuer or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed by the transferee in such Asset Sale pursuant to a customary novation agreement that releases the Issuer or such Restricted Subsidiary from further liability;
	(b)     the amount of any obligations received from such transferee that are within 90 days converted by the Issuer or such Restricted Subsidiary to cash (to the extent of the cash actually so received); and
	(c)     the Fair Market Value of any assets (other than securities) received by the Issuer or any Restricted Subsidiary to be used by it in a Permitted Business.

	(1)     satisfy all mandatory repayment obligations under the Credit Agreement arising by reason of such Asset Sale;
	(2)     repay any Indebtedness which was secured by assets of the Company or a Restricted Subsidiary;
	(3)     invest all or any part of the Net Available Proceeds thereof in the purchase of assets (other than securities) to be used by the Issuer or any Restricted Subsidiary in a Permitted Business; and/or
	(4)     if such Asset Sale was consummated by a Foreign Subsidiary, repay any Indebtedness of such Foreign Subsidiary.

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	(1)     the Issuer will (a) make an offer to purchase (a “Net Proceeds Offer”) to all Holders in accordance with the procedures set forth in the Indenture, and (b) redeem (or make an offer to do so) any such Pari Passu Indebtedness, pro rata in proportion to the respective principal amounts of the Notes and such Pari Passu Indebtedness required to be redeemed, the maximum principal amount of Notes and such Pari Passu Indebtedness that may be redeemed out of the amount (the “Payment Amount”) of such Excess Proceeds;
	(2)     the offer price for the Notes will be payable in cash in an amount equal to 100% of the principal amount of the Notes tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest thereon, if any, to the date such Net Proceeds Offer is consummated (the “Offered Price”), in accordance with the procedures set forth in the Indenture and the redemption price for such Pari Passu Indebtedness (the “Pari Passu Indebtedness Price”) shall be as set forth in the related documentation governing such Indebtedness;
	(3)     if the aggregate Offered Price of Notes validly tendered and not withdrawn by Holders thereof exceeds the pro rata portion of the Payment Amount allocable to the Notes, Notes to be purchased will be selected on a pro rata basis; and
	(4)     upon completion of such Net Proceeds Offer in accordance with the foregoing provisions, the amount of Excess Proceeds with respect to which such Net Proceeds Offer was made shall be deemed to be zero.

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	(1)     no Default shall have occurred and be continuing at the time of or after giving effect to such Designation; and
	(2)     the Issuer would be permitted to make, at the time of such Designation, (a) a Permitted Investment or (b) an Investment pursuant to the first paragraph of “—Limitations on Restricted Payments” above, in either case, in an amount (the “Designation Amount”) equal to the Fair Market Value of the Issuer’s proportionate interest in such Subsidiary on such date.

	(1)     has no Indebtedness other than Non-Recourse Debt;
	(2)     is not party to any agreement, contract, arrangement or understanding with the Issuer or any Restricted Subsidiary unless the terms of the agreement, contract, arrangement or understanding are no less favorable to the Issuer or the Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates;
	(3)     is a Person with respect to which neither the Issuer nor any Restricted Subsidiary has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve the Person’s financial condition or to cause the Person to achieve any specified levels of operating results; and
	(4)     has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Issuer or any Restricted Subsidiary, except for any guarantee given solely to support the pledge by the Issuer or any Restricted Subsidiary of the Equity Interests of such Unrestricted Subsidiary, which guarantee is not recourse to the Issuer or any Restricted Subsidiary, and except to the extent the amount thereof constitutes a Restricted Payment permitted pursuant to the covenant described under “—Limitations on Restricted Payments.”

	(1)     no Default shall have occurred and be continuing at the time of and after giving effect to such Redesignation; and
	(2)     all Liens, Indebtedness and Investments of such Unrestricted Subsidiary outstanding immediately following such Redesignation would, if incurred or made at such time, have been permitted to be incurred or made for all purposes of the Indenture.

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	(1)     the Issuer or such Restricted Subsidiary could have (a) incurred the Attributable Indebtedness relating to such Sale and Leaseback Transaction pursuant to the covenant described under “—Limitations on Additional Indebtedness” and (b) incurred a Lien to secure such Indebtedness without equally and ratably securing the Notes pursuant to the covenant described under “—Limitations on Liens;”
	(2)     the gross cash proceeds of such Sale and Leaseback Transaction are at least equal to the Fair Market Value of the asset that is the subject of such Sale and Leaseback Transaction; and
	(3)     the transfer of assets in such Sale and Leaseback Transaction is permitted by, and the Issuer or the applicable Restricted Subsidiary applies the proceeds of such transaction in accordance with, the covenant described under “—Limitations on Asset Sales.”

	(1)     either:

	(a)     the Issuer will be the surviving or continuing Person; or
	(b)     the Person formed by or surviving such consolidation or merger or to which such sale, lease, transfer, conveyance or other disposition shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the “Successor”) is a corporation organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Successor expressly assumes, by supplemental indenture in form and substance satisfactory to the Trustee, all of the obligations of the Issuer under the Notes, the Indenture and the Registration Rights Agreement;

	(2)     immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(b) above and the incurrence of any Indebtedness to be incurred in connection therewith, no Default shall have occurred and be continuing; and

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(3)     immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (1)(b) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, the Issuer or the Successor, as the case may be, could incur $1.00 of additional Indebtedness pursuant to the Coverage Ratio Exception.

	(1)     either:

	(a)     such Guarantor will be the surviving or continuing Person; or
	(b)     the Person formed by or surviving any such consolidation or merger assumes, by supplemental indenture in form and substance satisfactory to the Trustee, all of the obligations of such Guarantor under the Note Guarantee of such Guarantor, the Indenture and the Registration Rights Agreement; and

	(2)     immediately after giving effect to such transaction, no Default shall have occurred and be continuing.

	(1)     execute and deliver to the Trustee within 20 days (a) a supplemental indenture in the form included in the Indenture pursuant to which such Restricted Subsidiary shall

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	unconditionally guarantee all of the Issuer’s obligations under the Notes and the Indenture and (b) a notation of guarantee in respect of its Note Guarantee; and
	(2)     deliver to the Trustee one or more opinions of counsel that such supplemental indenture (a) has been duly authorized, executed and delivered by such Restricted Subsidiary and (b) constitutes a valid and legally binding obligation of such Restricted Subsidiary in accordance with its terms.

	(1)     all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuer were required to file these Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Issuer’s certified independent accountants; and
	(2)     all current reports that would be required to be filed with the SEC on Form 8-K if the Issuer were required to file these reports.

	(1)     failure by the Issuer to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days;
	(2)     failure by the Issuer to pay the principal of or premium, if any, on any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise;
	(3)     failure by the Issuer to comply with any of its agreements or covenants described above under “—Certain Covenants— Limitations on Mergers, Consolidations, Etc.” or in respect of its obligations to make a Change of Control Offer as described above under “—Change of Control”;
	(4)     failure by the Issuer to comply with any other agreement or covenant in the Indenture and continuance of this failure for 60 days after notice of the failure has been given to the

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	Issuer by the Trustee or by the Holders of at least 25% of the aggregate principal amount of the Notes then outstanding;
	(5)     default under any mortgage, indenture or other instrument or agreement under which there may be issued or by which there may be secured or evidenced Indebtedness of the Issuer or any Restricted Subsidiary, whether such Indebtedness now exists or is incurred after the Issue Date, which default:

	(a)     is caused by a failure to pay when due principal on such Indebtedness within the applicable express grace period,
	(b)     results in the acceleration of such Indebtedness prior to its express final maturity or
	(c)     results in the commencement of judicial proceedings to foreclose upon, or to exercise remedies under applicable law or applicable security documents to take ownership of, the assets securing such Indebtedness, and

	(6)     one or more judgments or orders that exceed $20.0 million in the aggregate (net of amounts covered by insurance or bonded) for the payment of money have been entered by a court or courts of competent jurisdiction against the Issuer or any Restricted Subsidiary and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered;
	(7)     the Issuer or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

	(a)     commences a voluntary case,
	(b)     consents to the entry of an order for relief against it in an involuntary case,
	(c)     consents to the appointment of a Custodian of it or for all or substantially all of its assets, or
	(d)     makes a general assignment for the benefit of its creditors;

	(8)     a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

	(a)     is for relief against the Issuer or any Significant Subsidiary as debtor in an involuntary case,
	(b)     appoints a Custodian of the Issuer or any Significant Subsidiary or a Custodian for all or substantially all of the assets of the Issuer or any Significant Subsidiary, or
	(c)     orders the liquidation of the Issuer or any Significant Subsidiary,

(9)     any Note Guarantee of any Significant Subsidiary ceases to be in full force and effect (other than in accordance with the terms of such Note Guarantee and the Indenture) or is declared null and void and unenforceable or found to be invalid or any Guarantor denies its liability under its Note Guarantee (other than by reason of release of a Guarantor from its Note Guarantee in accordance with the terms of the Indenture and the Note Guarantee).

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	(1)     has failed to act for a period of 60 days after receiving written notice of a continuing Event of Default by such Holder and a request to act by Holders of at least 25% in aggregate principal amount of Notes outstanding;
	(2)     has been offered indemnity satisfactory to it in its reasonable judgment; and
	(3)     has not received from the Holders of a majority in aggregate principal amount of the outstanding Notes a direction inconsistent with such request within such 60-day period.

	(1)     rights of Holders to receive payments in respect of the principal of, premium, if any, on and interest on the Notes when such payments are due from the trust funds referred to below,
	(2)     the Issuer’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, replacement of mutilated, destroyed, lost or stolen Notes, and the

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	maintenance of an office or agency for payment and money for security payments held in trust,
	(3)     the rights, powers, trust, duties and immunities of the Trustee, and the Issuer’s obligations in connection therewith,
	(4)     the Issuer’s rights of optional redemption, and
	(5)     the Legal Defeasance provisions of the Indenture.

	(1)     the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, U.S. legal tender, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient (without reinvestment) in the opinion of a nationally recognized firm of independent public accountants selected by the Issuer, to pay the principal of, premium, if any, on and interest on the Notes on the stated date for payment or on the redemption date of the principal or installment of principal of or interest on the Notes, and the Holders must have a valid, perfected, exclusive security interest in such trust,
	(2)     in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that:

	(a)     the Issuer has received from, or there has been published by the Internal Revenue Service, a ruling, or
	(b)     since the date of the Indenture, there has been a change in the applicable U.S. federal income tax law,

	(3)     in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the Covenant Defeasance had not occurred,
	(4)     no Default shall have occurred and be continuing on the date of such deposit (other than a Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing),

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	(5)     the Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Indenture or any other material agreement or instrument to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound,
	(6)     the Issuer shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by it with the intent of preferring the Holders over any other of its creditors or with the intent of defeating, hindering, delaying or defrauding any other of its creditors or others, and
	(7)     the Issuer shall have delivered to the Trustee an Officers’ Certificate and an opinion of counsel, each stating that the conditions provided for in, in the case of the Officers’ Certificate, clauses (1) through (6) and, in the case of the opinion of counsel, clauses (1) (with respect to the validity and perfection of the security interest), (2) and/or (3) and (5) of this paragraph have been complied with.

	(1)     all the Notes that have been authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from this trust) have been delivered to the Trustee for cancellation, or
	(2)     (a)     all Notes not delivered to the Trustee for cancellation otherwise have become due and payable or will become due and payable within one year by reason of the mailing of a notice of redemption or otherwise, and the Issuer has irrevocably deposited or caused to be deposited with the Trustee funds in trust in an amount of money sufficient to pay and discharge the entire Indebtedness (including all principal, premium, if any, and accrued and unpaid interest) on the Notes not theretofore delivered to the Trustee for cancellation,

	(b)     the Issuer has paid all sums payable by it under the Indenture, and
	(c)     the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at stated maturity or on the date of redemption, as the case may be.

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	(1)     no such amendment may, without the consent of the Holders of two-thirds in aggregate principal amount of Notes then outstanding, amend the obligations of the Issuer under the heading “—Change of Control” or the related definitions that could adversely affect the rights of any Holder; and
	(2)     without the consent of each Holder affected, the Issuer, the Guarantors and the Trustee may not:

	(a)     change the maturity of any Note;
	(b)     reduce the amount, extend the due date or otherwise affect the terms of any scheduled payment of interest on or principal of the Notes;
	(c)     reduce any premium payable upon optional redemption of the Notes, change the date on which any Notes are subject to redemption or otherwise alter the provisions with respect to the redemption of the Notes;
	(d)     make any Note payable in money or currency other than that stated in the Notes;
	(e)     modify or change any provision of the Indenture or the related definitions to affect the ranking of the Notes or any Note Guarantee in a manner that adversely affects the Holders;
	(f)     reduce the percentage of Holders necessary to consent to an amendment or waiver to the Indenture or the Notes;
	(g)     impair the right of any Holder of the Notes to receive payment of principal of, premium, if any, and interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;
	(h)     release any Guarantor from any of its obligations under its Note Guarantee or the Indenture, except as permitted by the Indenture; or
	(i)     make any change in these amendment and waiver provisions.

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	(1)     an Investment by the Issuer or any Restricted Subsidiary of the Issuer in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary of the Issuer, or shall be merged or consolidated with or into the Issuer or any Restricted Subsidiary of the Issuer,
	(2)     the acquisition by the Issuer or any Restricted Subsidiary of the Issuer of all or substantially all of the assets of any other Person or any division or line of business of any other Person, or
	(3)     the acquisition by the Issuer or any Restricted Subsidiary of an asset.

	(1)     transfers of cash or Cash Equivalents;
	(2)     transfers of assets (including Equity Interests) that are governed by, and made in accordance with, the covenant described under “—Certain Covenants— Limitations on Mergers, Consolidations, Etc.;”
	(3)     Permitted Investments and Restricted Payments permitted under the covenant described under “—Certain Covenants— Limitations on Restricted Payments;”
	(4)     the creation or realization of any Permitted Lien;
	(5)     transfers of damaged, worn-out or obsolete equipment or other assets that, in the Issuer’s reasonable judgment, are no longer used or useful in the business of the Issuer or its Restricted Subsidiaries;

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	(6)     any transfer or series of related transfers of assets with a Fair Market Value not in excess of $2.0 million; and
	(7)     any transfer of assets acquired substantially contemporaneously with such transfer.

	(1)     marketable obligations with a maturity of not more than one year from the date of acquisition and directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof);
	(2)     demand and time deposits and certificates of deposit or acceptances with a maturity of 365 days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500 million and is assigned at least a “B” rating by Thomson Financial BankWatch;
	(3)     commercial paper maturing no more than 270 days from the date of creation thereof issued by a Person that is not the Issuer or an Affiliate of the Issuer, and is organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody’s;
	(4)     repurchase obligations with a term of not more than ten days for underlying securities of the types described in clause (1) above entered into with any commercial bank meeting the specifications of clause (2) above;
	(5)     investments in money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (1) through (4) above;
	(6)     overnight bank deposits and bankers’ acceptances at any commercial bank meeting the qualifications specified in clause (2) above; and

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(7)     deposits available for withdrawal on demand with any commercial bank not meeting the qualifications specified in clause (2) above but which is organized under the laws of (a) any country that is a member of the Organization for Economic Cooperation and Development (“OECD”) and has total assets in excess of $500.0 million or (b) any other country in which the Issuer or any Restricted Subsidiary maintains an office or is engaged in a Permitted Business, provided that, in either case (A) all such deposits are required to be made in such accounts in the ordinary course of business, (B) such deposits do not at any one time exceed $5.0 million in the aggregate and (C) no funds so deposited remain on deposit in such bank for more than 30 days.

	(1)     any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of Voting Stock representing more than 50% of the voting power of the total outstanding Voting Stock of the Issuer; provided, however, that such event shall not be deemed to be a Change of Control so long as the Permitted Holders own Voting Stock representing in the aggregate a greater percentage of the total voting power of the Voting Stock of the Issuer than such other person or group;
	(2)     during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election to such Board of Directors or whose nomination for election by the stockholders of the Issuer was approved by a vote of the majority of the directors of the Issuer then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Issuer;
	(3)     (a)     all or substantially all of the assets of the Issuer and the Restricted Subsidiaries on a consolidated basis are sold or otherwise transferred to any Person other than a Wholly-Owned Restricted Subsidiary or one or more Permitted Holders or (b) the Issuer consolidates or merges with or into another Person or any Person consolidates or merges with or into the Issuer, in either case under this clause (3), in one transaction or a series of related transactions in which immediately after the consummation thereof Persons owning Voting Stock representing in the aggregate a majority of the total voting power of the Voting Stock of the Issuer immediately prior to such consummation do not own Voting Stock representing a majority of the total voting power of the Voting Stock of the Issuer or the surviving or transferee Person; or
	(4)     the Issuer shall adopt a plan of liquidation or dissolution or any such plan shall be approved by the stockholders of the Issuer.

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	(1)     Consolidated Net Income, plus
	(2)     in each case only to the extent (and in the same proportion) deducted in determining Consolidated Net Income,

	(a)     Consolidated Income Tax Expense,
	(b)     Consolidated Amortization Expense (but only to the extent not included in Consolidated Interest Expense),
	(c)     Consolidated Depreciation Expense,
	(d)     Consolidated Interest Expense, and
	(e)     all other non-cash items reducing Consolidated Net Income (excluding any non-cash charge that results in an accrual of a reserve for cash charges in any future period) for such period,

	(3)     the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increased Consolidated Net Income for such period,

(1)     the incurrence of any Indebtedness or the issuance of any Disqualified Equity Interests of the Issuer or any Preferred Stock of any Restricted Subsidiary (and the application of the proceeds therefrom) and any repayment of other Indebtedness or redemption of other Preferred Stock (and the application of the proceeds therefrom) (other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to any revolving credit arrangement) occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such incurrence, repayment, issuance or redemption, as the case may

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	be, (and the application of the proceeds thereof) occurred on the first day of the Four-Quarter Period; and
	(2)     any Asset Sale or other disposition or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Issuer or any Restricted Subsidiary (including any Person who becomes a Restricted Subsidiary as a result of such Asset Acquisition) incurring Acquired Indebtedness and also including any Consolidated Cash Flow (including any pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Exchange Act) associated with any such Asset Acquisition) occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition or other disposition (including the incurrence of, or assumption or liability for, any such Indebtedness or Acquired Indebtedness) occurred on the first day of the Four-Quarter Period.

	(1)     interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the average of (a) the rate of interest on this Indebtedness in effect on the Transaction Date after giving effect to any Hedging Obligations then in effect and (b) the average of what the applicable rates were (or would have been) as of the last day of each of the six months immediately preceding the Transaction Date;
	(2)     if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate or other rates, then the interest rate deemed to have been in effect during the Four-Quarter Period will be the average of (a) the rate of interest on this Indebtedness in effect on the Transaction Date after giving effect to any Hedging Obligations then in effect and (b) the average of what the applicable rates would have been as of the last day of each of the six months immediately preceding the Transaction Date; and
	(3)     any Person that is Restricted Subsidiary on the Transaction Date will be deemed to be a Restricted Subsidiary at all times during the Four-Quarter Period and any Person that is not a Restricted Subsidiary on the Transaction Date will be deemed not to have been a Restricted Subsidiary at any time during such Four-Quarter Period.

	(1)     interest components of all payments associated with Capitalized Lease Obligations and imputed interest with respect to Attributable Indebtedness;
	(2)     commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations, bankers’ acceptance financing and receivables financings;
	(3)     the net payments associated with Hedging Obligations;

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	(4)     amortization of debt issuance costs, debt discount or premium (provided that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense) and other financing fees and expenses;
	(5)     the interest component of any deferred payment obligations;
	(6)     all other non-cash interest expense;
	(7)     capitalized interest;
	(8)     the product of (a) all dividend payments on any series of Disqualified Equity Interests of the Issuer or any Preferred Stock of any Restricted Subsidiary (other than any such Disqualified Equity Interests or any Preferred Stock held by the Issuer or a Wholly-Owned Restricted Subsidiary), multiplied by (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of the Issuer and the Restricted Subsidiaries, expressed as a decimal;
	(9)     all interest payable with respect to discontinued operations; and
	(10)     all interest on any Indebtedness of any other Person guaranteed by the Issuer or any Restricted Subsidiary.

	(1)     the net income (or loss) of any Person (other than a Restricted Subsidiary) in which any Person other than the Issuer and the Restricted Subsidiaries has an ownership interest, except to the extent that cash in an amount equal to any such income has actually been received by the Issuer or any of its Restricted Subsidiaries during such period;
	(2)     except to the extent includible in the consolidated net income of the Issuer pursuant to the foregoing clause (1), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Issuer or any Restricted Subsidiary or (b) the assets of such Person are acquired by the Issuer or any Restricted Subsidiary;
	(3)     the net income of any Restricted Subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted, directly or indirectly by any means, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary during such period, except that the Issuer’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining Consolidated Net Income;
	(4)     for the purposes of calculating the Restricted Payments Basket only, in the case of a successor to the Issuer by consolidation, merger or transfer of its assets, any income (or loss) of the successor prior to such merger, consolidation or transfer of assets;
	(5)     other than for purposes of calculating the Restricted Payments Basket, any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by the Issuer or any Restricted Subsidiary upon (a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the Issuer or any Restricted Subsidiary or (b) any Asset Sale by the Issuer or any Restricted Subsidiary; and

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	(6)     other than for purposes of calculating the Restricted Payments Basket, any extraordinary gain (or extraordinary loss), together with any related provision for taxes on any such extraordinary gain (or the tax effect of any such extraordinary loss), realized by the Issuer or any Restricted Subsidiary during such period.

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	(1)     all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof);
	(2)     all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments excluding trade payables and accrued expenses incurred by such Person in the ordinary course of business that are not more than 90 days overdue;
	(3)     all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto);
	(4)     all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business;
	(5)     the maximum fixed redemption price of all Disqualified Equity Interests of such Person;
	(6)     all Capitalized Lease Obligations of such Person;
	(7)     all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;
	(8)     all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that Indebtedness of the Issuer or its Subsidiaries that is guaranteed by the Issuer or the Issuer’s Subsidiaries shall only be counted once in the calculation of the amount of Indebtedness of the Issuer and its Subsidiaries on a consolidated basis;
	(9)     all Attributable Indebtedness;
	(10)     to the extent not otherwise included in this definition, Hedging Obligations of such Person; and
	(11)     all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person.

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	(1)     such Indebtedness is the obligation of a partnership or joint venture that is not a Restricted Subsidiary of such Person (a “Joint Venture”);
	(2)     such Person or a Restricted Subsidiary of such Person is a general partner of the Joint Venture (a “General Partner”); and
	(3)     there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Restricted Subsidiary of such Person; and then such Indebtedness shall be included in an amount not to exceed:

	(a)     the lesser of (i) the net assets of the General Partner and (ii) the amount of such Indebtedness to the extent that there is recourse, by contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary of such Person; or
	(b)     if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount.

	(1)     is independent with respect to the transaction at issue;
	(2)     does not have any material financial interest in the Issuer or any of its Affiliates (other than as a result of holding securities of the Issuer); and
	(3)     has not and whose Affiliates or affiliated firm has not, at any time during the twelve months prior to the taking of any action hereunder, directly or indirectly, received, or entered into any understanding or agreement to receive, any compensation, payment or other benefit, of any type or form, from the Issuer or any of its Affiliates, other than customary directors’ fees for serving on the Board of Directors of the Issuer or any Affiliate and reimbursement of out-of-pocket expenses for attendance at the Issuer’s or Affiliate’s board and board committee meetings.

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	(1)     all direct or indirect investments by such Person in any other Person in the form of loans, advances or capital contributions or other credit extensions constituting Indebtedness of such other Person, and any guarantee of Indebtedness of any other Person;
	(2)     all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Equity Interests or other securities of any other Person;
	(3)     all other items that would be classified as investments on a balance sheet of such Person prepared in accordance with GAAP; and
	(4)     the Designation of any Subsidiary as an Unrestricted Subsidiary.

	(1)     brokerage commissions and other fees and expenses (including fees and expenses of legal counsel, accountants and investment banks) of such Asset Sale;
	(2)     provisions for taxes payable as a result of such Asset Sale (after taking into account any available tax credits or deductions and any tax sharing arrangements);
	(3)     amounts required to be paid to any Person (other than the Issuer or any Restricted Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale or having a Lien thereon or in order to obtain a necessary consent to such Asset Sale;

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	(4)     payments of unassumed liabilities (not constituting Indebtedness) relating to the assets sold at the time of, or within 30 days after the date of, such Asset Sale; and
	(5)     appropriate amounts to be provided by the Issuer or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the Issuer or any Restricted Subsidiary, as the case may be, after such Asset Sale, including pensions and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officers’ Certificate delivered to the Trustee; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves shall constitute Net Available Proceeds.

	(1)     as to which neither the Issuer nor any Restricted Subsidiary (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender, except in any case to the extent it would be permitted to make an Investment in such Unrestricted Subsidiary pursuant to the first paragraph of the covenant described under “—Limitations on Restricted Payments;”
	(2)     no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of the Issuer or any Restricted Subsidiary to declare a default on the other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and
	(3)     as to which the lenders have been notified in writing that they will not have any recourse to the Equity Interests or other assets of the Issuer or any Restricted Subsidiary.

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	(1)     Investments by the Issuer or any Restricted Subsidiary in (a) any Restricted Subsidiary or (b) in any Person that is or will become immediately after such Investment a Restricted Subsidiary or that will merge or consolidate into the Issuer or a Restricted Subsidiary;
	(2)     Investments in the Issuer by any Restricted Subsidiary;
	(3)     loans and advances to directors, employees and officers of the Issuer and the Restricted Subsidiaries for bona fide business purposes and to purchase Equity Interests of the Issuer not in excess of $3.0 million at any one time outstanding;
	(4)     Hedging Obligations incurred in compliance with clause (4) of the second paragraph under the covenant described under “—Certain Covenants—Limitations on Additional Indebtedness”;
	(5)     Cash Equivalents;
	(6)     receivables owing to the Issuer or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Issuer or any such Restricted Subsidiary deems reasonable under the circumstances;
	(7)     Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates;
	(8)     Investments made by the Issuer or any Restricted Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with the covenant described under “—Certain Covenants—Limitations on Asset Sales;”
	(9)     Investments in prepaid expenses, negotiable instruments held for collection or deposit and lease, utility and workers’ compensation, performance and similar deposits entered into in the ordinary course of business;
	(10)     Investments made by the Issuer or a Restricted Subsidiary for consideration consisting only of Qualified Equity Interests of the Issuer;
	(11)     stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Issuer or any Restricted Subsidiary or in satisfaction of judgments;
	(12)     Investments of a Restricted Subsidiary acquired after the Issue Date or of any Person merged into the Issuer or merged into or consolidated or amalgamated with a Restricted Subsidiary in accordance with the covenant described under “—Certain Covenants—Limitations on Mergers, Consolidations, Etc.” to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, consolidation or amalgamation and were in existence on the date of such acquisition, merger, consolidation or amalgamation;
	(13)     Investments in international joint ventures in an aggregate amount not to exceed $15.0 million at any one time outstanding (with each Investment being valued as of the date made and without regard to subsequent changes in value); and

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	(14)     other Investments in an aggregate amount not to exceed $20.0 million at any one time outstanding (with each Investment being valued as of the date made and without regard to subsequent changes in value).

	(a)     upon the disposition or repayment of or return on any Investment made pursuant to clause (13) or (14) above, by an amount equal to the return of capital with respect to such Investment to the Issuer or any Restricted Subsidiary (to the extent not included in the computation of Consolidated Net Income), less the cost of the disposition of such Investment and net of taxes; and
	(b)     upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, by an amount equal to the lesser of (x) the Fair Market Value of the Issuer’s proportionate interest in such Subsidiary immediately following such Redesignation, and (y) the aggregate amount of Investments in such Subsidiary that increased (and did not previously decrease) the amount of Investments outstanding pursuant to clause (13) or (14) above.

	(1)     Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Issuer or the Restricted Subsidiaries shall have set aside on their books such reserves as may be required pursuant to GAAP;
	(2)     statutory or contractual Liens of landlords, carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;
	(3)     Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);
	(4)     Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
	(5)     judgment Liens not giving rise to a Default so long as such Liens are adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which the proceedings may be initiated has not expired;
	(6)     easements, rights-of-way, zoning restrictions and other similar charges, restrictions or encumbrances in respect of real property or immaterial imperfections of title which do not, in the aggregate, impair in any material respect the ordinary conduct of the business of the Issuer and the Restricted Subsidiaries taken as a whole;

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	(7)     Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other assets relating to such letters of credit and products and proceeds thereof;
	(8)     Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Issuer or any Restricted Subsidiary, including rights of offset and setoff;
	(9)     bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more of accounts maintained by the Issuer or any Restricted Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;
	(10)     leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Issuer or any Restricted Subsidiary;
	(11)     Liens arising from filing Uniform Commercial Code financing statements regarding leases;
	(12)     Liens securing all of the Notes and Liens securing any Note Guarantee;
	(13)     Liens existing on the Issue Date securing Indebtedness outstanding on the Issue Date;
	(14)     Liens in favor of the Issuer or a Guarantor;
	(15)     Liens securing Indebtedness under a Credit Agreement in an aggregate principal amount not to exceed the greater of (a) $50.0 million and (b) 80% of the book value of accounts receivable plus 50% of the book value of inventory of the Issuer and the Restricted Subsidiaries, calculated on a consolidated basis and in accordance with GAAP;
	(16)     Liens securing Purchase Money Indebtedness;
	(17)     Liens securing Acquired Indebtedness permitted to be incurred under the Indenture; provided that the Liens do not extend to assets not subject to such Lien at the time of acquisition (other than improvements and accessions thereto and replacements or proceeds thereof);
	(18)     Liens on assets of a Person existing at the time such Person is acquired or merged with or into or consolidated with the Issuer or any such Restricted Subsidiary (and not created in anticipation or contemplation thereof);
	(19)     Liens securing Indebtedness of the Issuer and the Restricted Subsidiaries in an aggregate principal amount that, together with Indebtedness secured by Liens incurred pursuant to clause (15) of this definition, does not exceed 15% of Consolidated Net Tangible Assets;
	(20)     Liens to secure Refinancing Indebtedness of Indebtedness secured by Liens referred to in the foregoing clauses (13), (15), (16) and (17); provided that in each case such Liens do not extend to any additional assets (other than improvements or accessions thereto and replacements or proceeds thereof);
	(21)     Liens to secure Attributable Indebtedness and/or that are permitted to be incurred pursuant to the covenant described under “—Limitations on Sale and Leaseback Transactions”; provided that any such Lien shall not extend to or cover any assets of the

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	Issuer or any Restricted Subsidiary other than the assets which are the subject of the Sale and Leaseback Transaction in which the Attributable Indebtedness is incurred;
	(22)     Liens securing Foreign Indebtedness in aggregate amount at any time outstanding not to exceed $10.0 million; and
	(23)     Liens incurred in the ordinary course of business of the Issuer or any Restricted Subsidiary with respect to obligations (other than Indebtedness) that do not in the aggregate exceed the greater of $25.0 million or 5% of Consolidated Net Tangible Assets determined as of the date of the incurrence after giving pro forma effect to such incurrence and the application of proceeds therefrom.

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	(1)     the Refinancing Indebtedness is the obligation of the Issuer or same Restricted Subsidiary as that of the Refinanced Indebtedness;
	(2)     if the Refinanced Indebtedness was subordinated to or pari passu with the Notes or the Note Guarantees, as the case may be, then such Refinancing Indebtedness, by its terms, is expressly pari passu with (in the case of Refinanced Indebtedness that was pari passu with) or subordinate in right of payment to (in the case of Refinanced Indebtedness that was subordinated to) the Notes or the Note Guarantees, as the case may be, at least to the same extent as the Refinanced Indebtedness;
	(3)     the Refinancing Indebtedness is scheduled to mature either (a) no earlier than the Refinanced Indebtedness being redeemed or refinanced or (b) after the maturity date of the Notes; and
	(4)     the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Notes.

	(1)     the declaration or payment of any dividend or any other distribution on Equity Interests of the Issuer or any Restricted Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Equity Interests of the Issuer or any Restricted Subsidiary, including, without limitation, any payment in connection with any merger or consolidation involving the Issuer but excluding (a) dividends or distributions payable solely in Qualified Equity Interests and (b) in the case of Restricted Subsidiaries, dividends or distributions payable to the Issuer or to a Restricted Subsidiary and pro rata dividends or distributions payable to minority holders of Equity Interests of any Restricted Subsidiary;
	(2)     the redemption of any Equity Interests of the Issuer or any Restricted Subsidiary or any direct or indirect parent of the Issuer, including, without limitation, any payment in connection

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	with any merger or consolidation involving the Issuer but excluding any such Equity Interests held by the Issuer or any Restricted Subsidiary;
	(3)     any Investment other than a Permitted Investment; or
	(4)     any redemption prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness.

	(1)     any corporation, limited liability company, association or other business entity of which more than 50% of the total voting power of the Voting Stock is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and
	(2)     any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof).

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•	an individual citizen or resident of the United States;
•	a corporation or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or of any state thereof or the District of Columbia;
•	an estate whose income is subject to U.S. federal income taxation regardless of its source; or
•	a trust if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or a trust that has a valid election in effect under applicable regulations to be treated as a United States person.

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•	do not actually or constructively own 10% or more of the combined voting power of all classes of our stock;
•	are not a controlled foreign corporation with respect to which we are a related person;
•	are not a bank receiving interest on a loan entered into in the ordinary course of business within the meaning of the Internal Revenue Code; and
•	you certify to us, our payment agent, or the person who would otherwise be required to withhold U.S. federal income tax, on IRS Form W-8BEN or applicable substitute form, under penalties of perjury, that you are not a U.S. person and provide your name and address.

•	the gain is effectively connected with your conduct of a trade or business within the United States, and, if an applicable tax treaty applies, is attributable to a permanent establishment or fixed base you maintain in the United States; or

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•	if you are an individual, you are present in the United States for 183 or more days in the taxable year of the disposition and certain other requirements are met.

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Consolidated Financial Statements of PHI, Inc.
Management’s Report on Internal Control over Financial Reporting		F-2
Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (Internal Control over Financial Reporting)		F-3
Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (Financial Statements)		F-4
Consolidated balance sheets as of December 31, 2004 and 2005 and June 30, 2006 (unaudited)		F-5
Consolidated statements of operations for the years ended December 31, 2003, 2004 and 2005 and the six months ended June 30, 2005 and 2006 (unaudited)		F-6
Consolidated statements of shareholders’ equity for the years ended December 31, 2003, 2004 and 2005 and the six months ended June 30, 2006 (unaudited)		F-7
Consolidated statements of cash flows for the years ended December 31, 2003, 2004 and 2005 and the six months ended June 30, 2005 and 2006 (unaudited)		F-8
Notes to consolidated financial statements		F-9

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														June 30,
						December 31,				December 31,				2006
						2005				2004				(Unaudited)
						(thousands of dollars)
ASSETS
Current Assets:
	Cash and cash equivalents					$	69,561			$	18,008			$	217,583
	Accounts receivable— net of allowance:
		Trade					89,351				58,242				92,489
		Other					6,766				1,134				7,551
	Inventory						48,123				39,225				52,758
	Other current assets						10,042				10,695				11,168
	Refundable income taxes						422				1,101				138
			Total current assets				224,265				128,405				381,687
Other							13,266				12,527				19,681
Property and equipment, net							311,678				253,241				306,902
			Total Assets			$	549,209			$	394,173			$	708,270
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
	Accounts payable					$	40,506			$	22,735			$	35,780
	Accrued liabilities						10,807				4,836				12,054
	Accrued interest						3,175				3,181				3,189
	Accrued insurance						—				1,526				—
	Accrued vacation payable						3,811				3,775				4,299
	Accrued salaries and wages						2,439				1,636				2,108
	Notes payable						1,000				2,000				—
			Total current liabilities				61,738				39,689				57,430
Long-term debt							203,300				208,275				204,000
Deferred income taxes							38,906				29,805				37,869
Other long-term liabilities							6,214				6,429				9,635
Commitments and contingencies (Note 8)
Shareholders’ Equity:
	Voting common stock— par value of $0.10; authorized shares of 12,500,000						285				285				285
	Non-voting common stock— par value of $0.10; authorized shares of 12,500,000						742				253				1,229
	Additional paid-in capital						129,531				15,098				289,859
	Retained earnings						108,493				94,339				107,963
			Total shareholders’ equity				239,051				109,975				399,336
				Total Liabilities and Shareholders’ Equity		$	549,209			$	394,173			$	708,270

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															Six months ended
															June 30,
			Year ended				Year ended				Year ended				(Unaudited)
			December 31,				December 31,				December 31,
			2005				2004				2003				2006				2005
			(thousands of dollars and shares,
			except per share data)
Operating revenues			$	363,610			$	291,308			$	269,392			$	208,529			$	161,022
Gain (loss) on disposition of property and equipment, net				1,173				2,569				1,988				(1,162	)			460
Other				2,057				392				686				3,417				293
				366,840				294,269				272,066				210,784				161,775
Expenses:
	Direct expenses			299,263				245,374				230,229				176,267				136,931
	Selling, general and administrative expenses			24,896				21,034				19,983				13,409				10,701
	Interest expense			20,448				20,109				19,952				9,202				10,276
	Loss on debt restructuring			—				—				—				12,790				—
				344,607				286,517				270,164				211,668				157,908
Earnings (loss) before income taxes				22,233				7,752				1,902				(884	)			3,867
Income taxes				8,079				3,780				763				(354	)			1,547
Net earnings (loss)			$	14,154			$	3,972			$	1,139			$	(530	)		$	2,320
Earnings per share
	Basic		$	1.76			$	0.73			$	0.21			$	(0.04	)		$	0.40
	Diluted		$	1.76			$	0.72			$	0.21			$	(0.04	)		$	0.40
Weighted average shares outstanding:
	Basic			8,040				5,383				5,383				12,512				5,773
	Diluted			8,063				5,486				5,486				12,512				5,858

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			Voting								Non-voting
			common stock								common stock								Additional
																			paid-in				Retained
			Shares				Amount				Shares				Amount				capital				earnings
			(thousands of dollars and shares)
Balance at Dec. 31, 2002				2,852			$	285				2,526			$	253			$	15,062			$	89,254
	Stock options exercised			—				—				5				—				26				—
	Other			—				—				—				—				—				(26	)
	Net earnings			—				—				—				—				—				1,139
Balance at Dec. 31, 2003				2,852				285				2,531				253				15,088				90,367
	Stock options exercised			—				—				—				—				10				—
	Net earnings			—				—				—				—				—				3,972
Balance at Dec. 31, 2004				2,852				285				2,531				253				15,098				94,339
	Stock issuance, net			—				—				4,887				489				113,352				—
	Stock options exercised			—				—				—				—				1,081				—
	Net earnings			—				—				—				—				—				14,154
Balance at Dec. 31, 2005				2,852			$	285				7,418			$	742			$	129,531			$	108,493
	Stock Issuance, Net			—				—				4,874				487			$	160,328			$	—
	Net earnings (loss)			—				—				—				—				—				(530	)
Balance at June 30, 2006 (unaudited)				2,852			$	285				12,292				1,229			$	289,859			$	107,963

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																Six months ended
																June 30,
				Year ended				Year ended				Year ended				(Unaudited)
				December 31,				December 31,				December 31,
				2005				2004				2003				2006				2005
				(thousands of dollars)
Cash flows from operating activities:
	Net earnings (loss)			$	14,154			$	3,972			$	1,139			$	(530	)		$	2,320
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation			27,133				27,843				25,209				14,453				13,202
		Deferred income taxes (benefit)			6,415				3,845				(293	)			(1,037	)			836
		(Gain) loss on asset dispositions			(1,173	)			(2,569	)			(1,988	)			1,162				(460	)
		Loss on debt restructuring			—				—				—				12,790				—
		Other			1,411				1,332				(323	)			388				658
	Changes in operating assets and liabilities:
		Accounts receivable— trade			(31,109	)			(16,499	)			(2,245	)			(3,138	)			(8,609	)
		Inventory			(8,898	)			1,180				(3,030	)			(4,635	)			(3,131	)
		Refundable income taxes			—				(876	)			2,011				—				—
		Other assets			(2,313	)			(7,241	)			3,021				(8,143	)			91
		Accounts payable, accrued liabilities and vacation payable			23,049				(146	)			7,239				(4,308	)			(3,491	)
		Income taxes payable			—				—				(504	)			—				—
		Other long-term liabilities			(649	)			64				(821	)			5,467				7,943
	Net cash provided by operating activities				28,020				10,905				29,415				12,469				9,359
Cash flows from investing activities:
	Purchase of property and equipment				(96,165	)			(33,921	)			(36,863	)			(39,357	)			(30,910	)
	Acquisition of additional operating locations				—				(1,518	)			—				—				—
	Proceeds from sale-leaseback transactions				—				—				—				25,069				—
	Proceeds from asset dispositions				10,751				14,395				7,620				3,163				6,052
	Net cash provided by (used in) investing activities				(85,414	)			(21,044	)			(29,243	)			(11,125	)			(24,858	)
Cash flows from financing activities:
	Proceeds of debt issuance—Senior Notes				—				—				—				200,000				—
	Premium and costs to retire debt early				—				—				—				(10,208	)			—
	Repayment of Senior Notes				—				—				—				(200,000	)			—
	Debt issuance costs				—				—				—				(4,629	)			—
	Proceeds from (payments on) Notes and long-term debt				(1,000	)			—				2,000				—				(2,000	)
	Proceeds from stock issuance				115,162				—				—				160,815				114,317
	Less related fees & expenses				(1,265	)			—				—				—				—
	Proceeds from (payments to) line of credit				114,875				37,008				—				700				(8,275	)
	Payments on line of credit				(119,850	)			(28,733	)			—				—				—
	Proceeds from exercise of stock options				1,025				—				50				—				—
	Net cash provided by financing activities				108,947				8,275				2,026				146,678				104,042
(Decrease) Increase in cash and cash equivalents					51,553				(1,864	)			2,198				148,022				88,543
Cash and cash equivalents, beginning of period					18,008				19,872				17,674				69,561				18,008
Cash and cash equivalents, end of period				$	69,561			$	18,008			$	19,872			$	217,583			$	106,551

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(1)	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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			Year Ended				Year Ended				Year Ended
			December 31,				December 31,				December 31,
			2005				2004				2003
			(thousands of dollars, except per share data)
Net earnings as reported			$	14,154			$	3,972			$	1,139
Add stock-based employee compensation expense included in reported net income net of related tax effects				122				45				300
Deduct total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects,				—				—				—
Net earnings— pro forma			$	14,276			$	4,017			$	1,439
Earnings per share
	Basic— as reported			1.76				0.74				0.21
	Basic— pro forma			1.78				0.75				0.27
	Diluted— as reported			1.76				0.72				0.21
	Diluted— pro forma			1.77				0.73				0.26
Average fair value of grants during the year				N/A				N/A				N/A
Black-Sholes option pricing model assumptions:
	Risk-free interest rate			N/A				N/A				N/A
	Expected life (years)			N/A				N/A				N/A
	Volatility			N/A				N/A				N/A
	Dividend yield			N/A				N/A				N/A

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(2)	PROPERTY AND EQUIPMENT

			December 31,				December 31,
			2005				2004
			(thousands of dollars)
Flight equipment			$	416,076			$	350,022
Other				67,645				61,710
				483,721				411,732
Less accumulated depreciation				(172,043	)			(158,491	)
	Property and equipment, net		$	311,678			$	253,241

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(3)	LONG-TERM DEBT

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(4)	INCOME TAXES

				Year Ended				Year Ended				Year Ended
				December 31,				December 31,				December 31,
				2005				2004				2003
				(thousands of dollars)
Current
	Federal			$	343			$	—			$	—
	State				(50	)			(1,142	)			102
	Foreign				1,371				1,077				954
Deferred— principally
	Federal				6,415				3,845				(293	)
		Total		$	8,079			$	3,780			$	763

			Year ended								Year ended								Year ended
			December 31,								December 31,								December 31,
			2005								2004								2003
			Amount				%				Amount				%				Amount				%
			(thousands of dollars, except percentage amounts)
Income taxes at statutory rate			$	7,559				34			$	2,636				34			$	647				34
Increase (decrease) in taxes resulting from:
Effect of foreign tax expense, net of U.S. benefits				—				—				679				9				—				—
Hurricane relief credit				(537	)			(2	)			—				—				—				—
Effect of state income taxes				762				3				298				4				195				10
Other items— net				295				1				167				2				(79)				(4	)
	Total		$	8,079				36			$	3,780				49			$	763				40

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					December 31,				December 31,
					2005				2004
Deferred tax assets:
	Deferred compensation				$	1,652			$	1,527
	Foreign tax credits					4,617				3,246
	Valuation allowance— tax credit carryforwards					(2,142	)			(2,142	)
	Vacation accrual					1,419				1,397
	Inventory valuation					3,549				3,733
	Workman’s compensation reserve					190				367
	Allowance for uncollectible accounts					2,297				282
	Alternative minimum tax credit					343				—
	Hurricane relief credit					814				—
	Other					1,321				157
	Net operating loss					23,282				28,913
		Total deferred tax assets				37,342				37,480
Deferred tax liabilities:
	Tax depreciation in excess of book depreciation					(68,167	)			(61,890	)
		Total deferred tax liabilities				(68,167	)			(61,890	)
			Net deferred tax liabilities		$	(30,825	)		$	(24,410	)

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(5)	EMPLOYEE BENEFIT PLANS

			Years ended
			December 31,
			2005				2004				2003
			(thousands of dollars)
Service cost			$	259			$	302			$	369
Interest cost				124				111				95
Recognized actuarial (gain) loss				53				(30	)			(36	)
	Net periodic plan cost		$	436			$	383			$	428

				December 31,
				2005				2004
				(thousands of dollars)
Change in benefit obligation:
	Benefit obligation at the beginning of the year			$	3,148			$	2,609
	Service cost				259				302
	Interest cost				124				111
	Actuarial loss				13				247
	Benefits paid				(131	)			(121	)
		Benefit obligation at the end of the year		$	3,413			$	3,148

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				December 31,
				2005				2004
				(thousands of dollars)
Reconciliation of funded status
	Unfunded status			$	(3,413	)		$	(3,148	)
	Unrecognized actuarial gains				(123	)			(82	)
		Total liability included in other long term liabilities on the consolidated balance sheet		$	(3,536	)		$	(3,230	)
Weighted average assumptions
	Discount rate				4.0	%			3.8	%
	Employee turnover/early retirement rate				—				—

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		1995 plan
		options								Weighted
										average
		Non-voting				Totals				exercise price
Balance outstanding at December 31, 2002			244,623				244,623				11.58
Options settled for cash			(21,250	)			(21,250	)			11.75
Options exercised			(5,670	)			(5,670	)			9.06
Balance outstanding at December 31, 2003			217,703				217,703				11.63
Options settled for cash			(10,750	)			(10,750	)			12.75
Balance outstanding at December 31, 2004			206,953				206,953				11.57
Options exercised			(150,000	)			(150,000	)			11.06
Options settled for cash			(10,203	)			(10,203	)			8.50
Balance outstanding at December 31, 2005			46,750				46,750				13.87
Shares exercisable at December 31, 2005			46,750				46,750				13.87
December 31, 2004			206,953				206,953				11.57
December 31, 2003			217,703				217,703				11.63

Options outstanding and exercisable
				Remaining
Number				contractual				Exercise
outstanding				life (years)				price
	31,750				3.5			$	12.75
	15,000				2.8				16.25
	46,750				3.3	(1)			13.87

(1)	Weighted Average

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(6)	OTHER ASSETS

			December 31,				December 31,
			2005				2004
			(thousands of dollars)
Goodwill acquired			$	2,747			$	1,878
Security deposits on aircraft				4,576				4,250
Deferred financing cost				3,520				3,892
Other				2,513				2,507
	Total		$	13,266			$	12,527

(7)	FINANCIAL INSTRUMENTS

December 31, 2005

December 31, 2004

Carrying

Estimated

Carrying

Estimated

amounts

fair value

amounts

fair value

Long-term debt

$200,000

$210,500

$200,000

$216,000

(8)	COMMITMENTS AND CONTINGENCIES

			Year ended				Year ended				Year ended
			December 31,				December 31,				December 31,
			2005				2004				2003
			(thousands of dollars)
Aircraft			$	5,817			$	748			$	1,094
Other				5,167				3,906				3,033
	Total		$	10,984			$	4,654			$	4,127

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		Aircraft				Other				Total
		(thousands of dollars)
2006		$	10,300			$	2,839			$	13,139
2007			10,300				2,249				12,549
2008			10,300				1,858				12,158
2009			10,300				1,386				11,686
2010			10,902				1,132				12,034
Thereafter			57,008				10,102				67,110
		$	109,110			$	19,566			$	128,676

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(9)	BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

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				Year ended December 31,
				2005				2004				2003
				(thousands of dollars)
Segment operating revenues
	Domestic Oil and Gas			$	219,644			$	180,102			$	183,849
	Air Medical				112,123				77,476				46,674
	International				28,192				24,342				21,247
	Technical Services				3,651				9,388				17,622
		Total operating revenues			363,610				291,308				269,392
Segment direct expense
	Domestic Oil and Gas				173,177				151,107				163,328
	Air Medical				104,465				67,664				32,782
	International				19,099				18,668				21,093
	Technical Services				2,522				7,935				13,026
		Total direct expense			299,263				245,374				230,229
Segment selling, general and administrative expense Domestic Oil and Gas					1,003				1,499				1,494
	Air Medical				6,503				6,525				4,480
	International				214				49				214
	Technical Services				7				12				12
		Total selling, general and administrative expense			7,727				8,085				6,200
Total direct and selling, general and administrative expense					306,990				253,459				236,429
Net segment profit
	Domestic Oil and Gas				45,464				27,496				19,027
	Air Medical				1,155				3,287				9,412
	International				8,879				5,625				(60	)
	Technical Services				1,122				1,441				4,584
		Total			56,620				37,849				32,963
Other, net(1)					3,230				2,961				2,674
Unallocated selling, general and administrative costs					(17,169	)			(12,949	)			(13,783	)
Interest expense					(20,448	)			(20,109	)			(19,952	)
Earnings before income taxes				$	22,233			$	7,752			$	1,902

(1)	Including gains on disposition of property and equipment and other income.

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				Year ended December 31,
				2005				2004				2003
				(thousands of dollars)
Expenditures for long lived Assets
	Domestic Oil and Gas			$	55,876			$	7,614			$	20,086
	Air Medical				39,361				18,071				12,881
	International				284				198				276
	Corporate				644				8,038				3,620
		Total		$	96,165			$	33,921			$	36,863

				Year ended December 31,
				2005				2004				2003
				(thousands of dollars)
Depreciation and Amortization
	Domestic Oil and Gas			$	15,829			$	18,342			$	19,042
	Air Medical				6,023				4,992				2,031
	International				1,236				1,587				1,928
	Technical Services				—				42				127
	Corporate				4,045				2,880				2,081
		Total		$	27,133			$	27,843			$	25,209
Assets
	Domestic Oil and Gas			$	247,657			$	227,929			$	253,064
	Air Medical				137,911				89,722				49,672
	International				13,560				12,289				14,733
	Technical Services				—				—				12,176
	Corporate				150,081				64,233				47,809
		Total		$	549,209			$	394,173			$	377,454

				Year ended				Year ended				Year ended
				December 31,				December 31,				December 31,
				2005				2004				2003
				(thousands of dollars)
Operating revenues:
	United States			$	335,418			$	266,966			$	248,145
	International				28,192				24,342				21,247
		Total		$	363,610			$	291,308			$	269,392
Long-Lived Assets:
	United States			$	303,924			$	246,819			$	248,211
	International				7,754				6,422				10,315
		Total		$	311,678			$	253,241			$	258,526

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(10)	EFFECTS OF HURRICANES

(11)	SEVERANCE LIABILITY

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(12)	QUARTERLY FINANCIAL DATA (UNAUDITED)

			Quarter ended
			March 31,				June 30,				September 30,				December 31,
			2005				2005				2005				2005
			(thousands of dollars, except per share data)
Operating revenues			$	74,239			$	86,783			$	100,018			$	102,570
Gross profit				10,203				13,887				19,834				20,422
Net earnings				359				1,961				5,460				6,374
Net earnings per share
	Basic			0.07				0.32				0.53				0.62
	Diluted			0.07				0.31				0.53				0.62

			Quarter ended
			March 31,				June 30,				September 30,				December 31,
			2004				2004				2004				2004
			(thousands of dollars, except per share data)
Operating revenues			$	66,973			$	70,186			$	77,733			$	76,416
Gross profit				9,688				12,138				13,928				10,180
Net earnings (loss)				3				1,113				2,659				197
Net earnings per share
	Basic			—				0.21				0.49				0.04
	Diluted			—				0.20				0.48				0.04

(13)	CONDENSED FINANCIAL INFORMATION— GUARANTOR ENTITIES

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					June 30, 2006
					(Unaudited)
					Parent
					company				Guarantor
					only				subsidiaries				Eliminations				Consolidated
					(thousands of dollars)
ASSETS
Current Assets:
	Cash and cash equivalents				$	217,092			$	491			$	—			$	217,583
	Accounts receivable— net of allowance					86,712				13,328				—				100,040
	Inventory					52,758				—				—				52,758
	Other current assets					11,128				40				—				11,168
	Refundable income taxes					44				94				—				138
		Total current assets				367,734				13,953				—				381,687
Intercompany receivable						—				40,832				(40,832	)			—
Other assets						19,672				9				—				19,681
Investment in subsidiaries and other						42,891				—				(42,891	)			—
Property and equipment, net						299,068				7,834				—				306,902
			Total assets		$	729,365			$	62,628			$	(83,723	)		$	708,270
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable and accrued liabilities				$	49,499			$	3,632			$	—			$	53,131
	Intercompany payable					40,832				—				(40,832	)			—
	Accrued vacation payable					4,011				288				—				4,299
		Total current liabilities				94,342				3,920				(40,832	)			57,430
Long-term debt						204,000				—				—				204,000
Deferred income taxes and other long-term liabilities						31,687				15,817				—				47,504
Shareholders’ Equity:
	Paid-in capital					291,373				4,402				(4,402	)			291,373
	Retained earnings					107,963				38,489				(38,489	)			107,963
		Total shareholders’ equity				399,336				42,891				(42,891	)			399,336
			Total liabilities and shareholders’ equity		$	729,365			$	62,628			$	(83,723	)		$	708,270

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					December 31, 2005
					Parent
					company				Guarantor
					only				subsidiaries				Eliminations				Consolidated
					(thousands of dollars)
ASSETS
Current Assets:
	Cash and cash equivalents				$	69,102			$	459			$	—			$	69,561
	Accounts receivable— net of allowance					81,881				14,236				—				96,117
	Inventory					48,123				—				—				48,123
	Other current assets					9,978				64				—				10,042
	Refundable income taxes					(61	)			483				—				422
		Total current assets				209,023				15,242				—				224,265
Investment in subsidiaries						38,700				—				(38,700	)			—
Intercompany receivable						—				39,867				(39,867	)			—
Other assets						13,253				13				—				13,266
Property and equipment, net						303,421				8,257				—				311,678
			Total assets		$	564,397			$	63,379			$	(78,567	)		$	549,209
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable and accrued liabilities				$	46,322			$	10,605			$	—			$	56,927
	Intercompany payable					39,867				—				(39,867	)			—
	Accrued vacation payable					3,522				289				—				3,811
	Notes payable					1,000				—				—				1,000
		Total current liabilities				90,711				10,894				(39,867	)			61,738
Long-term debt						203,300				—				—				203,300
Deferred income taxes and other long-term liabilities						31,335				13,785				—				45,120
Shareholders’ Equity
	Paid-in capital					130,558				4,402				(4,402	)			130,558
	Retained earnings					108,493				34,298				(34,298	)			108,493
		Total shareholders’ equity				239,051				38,700				(38,700	)			239,051
			Total liabilities and shareholders’ equity		$	564,397			$	63,379			$	(78,567	)		$	549,209

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					December 31, 2004
					Parent
					company				Guarantor
					only				subsidiaries				Eliminations				Consolidated
					(thousands of dollars)
ASSETS
Current Assets:
	Cash and cash equivalents				$	17,701			$	307			$	—			$	18,008
	Accounts receivable— net of allowance					51,868				7,508				—				59,376
	Inventory					39,225				—				—				39,225
	Other current assets					10,632				63				—				10,695
	Refundable income taxes					916				185				—				1,101
		Total current assets				120,342				8,063				—				128,405
Investment in subsidiaries						29,779				—				(29,779	)			—
Intercompany receivable						—				30,376				(30,376	)			—
Other assets						12,505				22				—				12,527
Property and equipment, net						247,797				5,444				—				253,241
			Total assets		$	410,423			$	43,905			$	(60,155	)		$	394,173
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable and accrued liabilities				$	29,796			$	4,118			$	—			$	33,914
	Intercompany payable					30,376				—				(30,376	)			—
	Accrued vacation payable					3,519				256				—				3,775
	Notes payable					2,000				—				—				2,000
		Total current liabilities				65,691				4,374				(30,376	)			39,689
Long-term debt						208,275				—				—				208,275
Deferred income taxes and other long-term liabilities						26,482				9,752				—				36,234
Shareholders’ Equity
	Paid-in capital					15,636				4,402				(4,402	)			15,636
	Retained earnings					94,339				25,377				(25,377	)			94,339
		Total shareholders’ equity				109,975				29,779				(29,779	)			109,975
			Total liabilities and shareholders’ equity		$	410,423			$	43,905			$	(60,155	)		$	394,173

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			For the six months ended June 30, 2006
			(Unaudited)
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Operating revenues			$	181,387			$	27,142			$	—			$	208,529
Management fees				1,086				—				(1,086	)			—
Gain (loss) on dispositions of property and equipment, net				(1,162	)			—				—				(1,162	)
Other				3,410				7				—				3,417
				184,721				27,149				(1,086	)			210,784
Expenses:
	Direct expenses			157,628				18,639				—				176,267
	Management fees			—				1,086				(1,086	)			—
	Selling, general, and administrative			12,042				1,367				—				13,409
	Equity in net income of consolidated subsidiaries			(4,191	)			—				4,191				—
	Interest expense			9,202				—				—				9,202
	Loss on debt restructuring			12,790				—				—				12,790
				187,471				21,092				3,105				211,668
	Earnings (loss) before income taxes			(2,750	)			6,057				(4,191	)			(884	)
	Income taxes			(2,220	)			1,866				—				(354	)
	Net earnings (loss)		$	(530	)		$	4,191			$	(4,191	)		$	(530	)

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			For the six months ended June 30, 2005
			(Unaudited)
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Operating revenues			$	135,425			$	25,597			$	—			$	161,022
Management fees				1,153				—				(1,153	)			—
Gain (loss) on dispositions of property and equipment, net				460				—				—				460
Other				293				—				—				293
				137,331				25,597				(1,153	)			161,775
Expenses:
	Direct expenses			121,041				15,890				—				136,931
	Management fees			—				1,153				(1,153	)			—
	Selling, general, and administrative			9,398				1,303				—				10,701
	Equity in net income of consolidated subsidiaries			(4,918	)			—				4,918				—
	Interest expense			10,276				—				—				10,276
				135,797				18,346				3,765				157,908
	Earnings before income taxes			1,534				7,251				(4,918	)			3,867
	Income taxes			(786	)			2,333				—				1,547
	Net earnings		$	2,320			$	4,918			$	(4,918	)		$	2,320

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			For the year ended December 31, 2005
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Operating revenues			$	310,868			$	52,742			$	—			$	363,610
Management fees				1,485				—				(1,485	)			—
Gain on dispositions of property and equipment, net				1,173				—				—				1,173
Other				1,988				69				—				2,057
				315,514				52,811				(1,485	)			366,840
Expenses:
	Direct expenses			263,861				35,402				—				299,263
	Management fees			—				1,485				(1,485	)			—
	Selling, general, and administrative			22,110				2,786				—				24,896
	Equity in net income of consolidated subsidiaries			(8,921	)			—				8,921				—
	Interest expense			20,448				—				—				20,448
				297,498				39,673				7,436				344,607
	Earnings before income taxes			18,016				13,138				(8,921	)			22,233
	Income taxes			3,862				4,217				—				8,079
	Net earnings		$	14,154			$	8,921			$	(8,921	)		$	14,154

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			For the year ended December 31, 2004
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Operating revenues			$	244,230			$	47,078			$	—			$	291,308
Management fees				4,943				—				(4,943	)			—
Gain on dispositions of property and equipment, net				2,575				(6	)			—				2,569
Other				373				19				—				392
				252,121				47,091				(4,943	)			294,269
Expenses:
	Direct expenses			217,072				28,302				—				245,374
	Management fees			—				4,943				(4,943	)			—
	Selling, general, and administrative			17,354				3,680				—				21,034
	Equity in net income of consolidated subsidiaries			(7,398	)			—				7,398				—
	Interest expense			20,109				—				—				20,109
				247,137				36,925				2,455				286,517
	Earnings before income taxes			4,984				10,166				(7,398	)			7,752
	Income taxes			1,012				2,768				—				3,780
	Net earnings		$	3,972			$	7,398			$	(7,398	)		$	3,972

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			For the year ended December 31, 2003
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Operating revenues			$	218,273			$	51,119			$	—			$	269,392
Management fees				3,763				—				(3,763	)			—
Gain on dispositions of property and equipment, net				1,988				—				—				1,988
Other				686				—				—				686
				224,710				51,119				(3,763	)			272,066
Expenses:
	Direct expenses			198,159				32,070				—				230,229
	Management fees			—				3,763				(3,763	)			—
	Selling, general, and administrative			16,600				3,383				—				19,983
	Equity in net income of consolidated subsidiaries			(7,141	)			—				7,141				—
	Interest expense			19,952				—				—				19,952
				227,570				39,216				3,378				270,164
	Earnings before income taxes			(2,860	)			11,903				(7,141	)			1,902
	Income taxes			(3,999	)			4,762				—				763
	Net earnings		$	1,139			$	7,141			$	(7,141	)		$	1,139

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			For the six months ended June 30, 2006
			(Unaudited)
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Net cash provided by operating activities			$	12,388			$	81			$	—			$	12,469
Cash flows from investing activities:
	Purchase of property and equipment			(39,308	)			(49	)			—				(39,357	)
	Proceeds from asset dispositions			3,163				—				—				3,163
	Proceeds from sale-leaseback transactions			25,069				—				—				25,069
	Net cash provided by (used in) investing activities			(11,076	)			(49	)			—				(11,125	)
Cash flows from financing activities:
	Proceeds of debt issuance—Senior notes			200,000				—				—				200,000
	Premium and costs to retire debt early			(10,208	)			—				—				(10,208	)
	Repayment of senior notes			(200,000	)			—				—				(200,000	)
	Debt issuance costs			(4,629	)			—				—				(4,629	)
	Proceeds from line of credit, net			700				—				—				700
	Proceeds from stock issuance, net			160,815				—				—				160,815
	Net cash provided by financing activities			146,678				—				—				146,678
Increase in cash and cash equivalents				147,990				32				—				148,022
Cash and cash equivalents, beginning of period				69,102				459				—				69,561
Cash and cash equivalents, end of period			$	217,092			$	491			$	—			$	217,583

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			For the six months ended June 30, 2005
			(Unaudited)
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Net cash provided by operating activities			$	9,208			$	151			$	—			$	9,359
Cash flows from investing activities:
	Purchase of property and equipment			(30,910	)			—				—				(30,910	)
	Proceeds from asset dispositions			6,052				—				—				6,052
	Net cash used in investing activities			(24,858	)			—				—				(24,858	)
Cash flows from financing activities:
	Proceeds from line of credit, net			(10,275	)			—				—				(10,275	)
	Proceeds from stock issuance, net			114,317				—				—				114,317
	Net cash provided by financing activities			104,042				—				—				104,042
Increase in cash and cash equivalents				88,392				151				—				88,543
Cash and cash equivalents, beginning of period				17,718				290				—				18,008
Cash and cash equivalents, end of period			$	106,110			$	441			$	—			$	106,551

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			For the year ended December 31, 2005
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Net cash provided by operating activities			$	27,864			$	156			$	—			$	28,020
Cash flows from investing activities:
	Purchase of property and equipment			(96,161	)			(4	)							(96,165	)
	Proceeds from asset dispositions			10,751				—				—				10,751
	Net cash used in investing activities			(85,410	)			(4	)			—				(85,414	)
Cash flows from financing activities:
	Proceeds from (payment of) long-term debt, net			(5,975	)			—				—				(5,975	)
	Proceeds from exercise of stock options			1,025				—				—				1,025
	Proceeds from stock issuance, net			113,897				—				—				113,897
	Net cash provided by financing activities			108,947				—				—				108,947
Increase in cash and cash equivalents				51,401				152				—				51,553
Cash and cash equivalents, beginning of period				17,701				307				—				18,008
Cash and cash equivalents, end of period			$	69,102			$	459			$	—			$	69,561

			For the year ended December 31, 2004
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Net cash provided by operating activities			$	10,644			$	261			$	—			$	10,905
Cash flows from investing activities:
	Acquisition of additional operating locations			(1,518	)			—				—				(1,518	)
	Purchase of property and equipment			(33,916	)			(5	)							(33,921	)
	Proceeds from asset dispositions			14,395				—				—				14,395
	Net cash used in investing activities			(21,039	)			(5	)			—				(21,044	)
Cash flows from financing activities:
	Proceeds from long-term debt, net			8,275				—				—				8,275
	Proceeds from exercise of stock options			—				—				—
	Other			—				—				—
	Net cash provided by financing activities			8,275				—				—				8,275
Increase (decrease) in cash and cash equivalents				(2,120	)			256				—				(1,864	)
Cash and cash equivalents, beginning of period				19,821				51				—				19,872
Cash and cash equivalents, end of period			$	17,701			$	307			$	—			$	18,008

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			For the year ended December 31, 2003
			Parent
			company				Guarantor
			only				subsidiaries				Eliminations				Consolidated
			(thousands of dollars)
Net cash provided by operating activities			$	29,386			$	29			$	—			$	29,415
Cash flows from investing activities:
	Purchase of property and equipment			(36,863	)			—				—				(36,863	)
	Proceeds from asset dispositions			7,620				—				—				7,620
	Net cash used in investing activities			(29,243	)			—				—				(29,243	)
Cash flows from financing activities:
	Proceeds from long-term debt, net			2,000				—				—				2,000
	Proceeds from exercise of stock options			50				—				—				50
	Other			(24	)			—				—				(24	)
	Net cash provided by financing activities			2,026				—				—				2,026
Increase in cash and cash equivalents				2,169				29				—				2,198
Cash and cash equivalents, beginning of period				17,652				22				—				17,674
Cash and cash equivalents, end of period			$	19,821			$	51			$	—			$	19,872

(14)	SUBSEQUENT EVENTS (UNAUDITED)

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ITEM 20.	INDEMNIFICATION OF DIRECTORS AND OFFICERS

ITEM 21.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit
number				Description of exhibit
	1.1			Purchase Agreement dated April 7, 2002 among PHI, Inc., the subsidiary guarantors signatory therein and UBS Securities LLC (incorporated by reference to Exhibit No. 10.1 to PHI’s Report on Form 8-K filed April 7, 2006).
	3.1			Articles of Incorporation of PHI, Inc. (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).
	3.2			Articles of Amendment to Articles of Incorporation of PHI, Inc. (incorporated by reference to Exhibit No. 3.1 to PHI’s Report on Form 8-K filed January 3, 2006).

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Exhibit
number				Description of exhibit
	3.3			Amended and Restated Bylaws of PHI, Inc. (incorporated by reference to Exhibit No. 3.1(ii) to PHI’s Report on Form 10-Q for the quarterly period ended March 31, 2002).
	4.1			Indenture dated April 12, 2006 among PHI, Inc., the subsidiary guarantors signatory therein and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit No. 10.2 to PHI’s Report on form 8-K filed April 14, 2006).
	4.2			Form of 7.125% Senior Note (contained in the Indenture filed as Exhibit 4.1).
	4.3			Registration Rights Agreement dated as of April 12, 2006 between PHI, Inc., the subsidiary guarantors signatory therein and UBS Securities LLC (incorporated by reference to Exhibit No. 10.3 to PHI’s Report on Form 8-K filed April 14, 2006).
	4.4			Loan Agreement dated as of April 23, 2002 by and among PHI, Inc., Acadian Composites, LLC, Air Evac Services, Inc., Evangeline Airmotive Inc., and International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 10.3 to PHI’s Report on Form 10-Q for the quarterly period ended June 30, 2002).
	4.5			1st Amendment to Loan Agreement dated as of April 23, 2002 by and among PHI, Inc. Acadian Composites, LLC, Air Evac Services, Inc., Evangeline Airmotive Inc., and International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 10.4 to PHI’s Report on Form 10-Q for the quarterly period ended June 30, 2004).
	4.6			Form of Senior Debt Indenture (incorporated by reference to Exhibit 4.5 to PHI’s Registration Statement on Form S-3, filed on March 23, 2005, File No. 333-123528).
	4.7			Form of Subordinated Debt Indenture (incorporated by reference to Exhibit 4.6 to PHI’s Registration Statement on Form S-3, filed on March 23, 2005, File No. 333-123528).
	5.1*			Opinion of Akin Gump Strauss Hauer & Feld LLP as to the legality of the securities being offered (New York law).
	5.2*			Opinion of Jones, Walker Waechter, Poitevent, Carrère & Denègre L.L.P. as to the legality of the securities being offered (Louisiana law).
	5.3*			Opinion of Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. as to the legality of the securities being offered (Florida law).
	5.4*			Opinion of Crowley, Haughey, Hanson, Toole & Dietrich P.L.L.P. as to the legality of the securities being offered (Montana law).
	10.1			The PHI, Inc. 401(k) Retirement Plan effective July 1, 1989 (incorporated by reference to Exhibit No. 10.4 to PHI’s Report on Form 10-K dated April 30, 1990).
	10.2			Amended and Restated PHI, Inc. 1995 Incentive Compensation Plan adopted by PHI’s Board effective July 11, 1995 and approved by the shareholders of PHI on September 22, 1995 (incorporated by reference to Exhibit No. 10.12 to PHI’s Report on Form 10-K dated April 30, 1996).
	10.3			Form of Non-Qualified Stock Option Agreement under the PHI, Inc. 1995 Incentive Compensation Plan between PHI and certain of its key employees (incorporated by reference to Exhibit No. 10.13 to PHI’s Report on Form 10-K dated April 30, 1996).
	10.4			Supplemental Executive Retirement Plan adopted by PHI’s Board effective September 14, 2000 (incorporated by reference to Exhibit No. 10.23 to PHI’s Report on Form 10-Q dated September 30, 2000).

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Exhibit
number				Description of exhibit
	10.5			Amendment to the Supplemental Executive Retirement Plan dated May 24, 2001 (incorporated by reference to Exhibit No. 10.25 to PHI’s Report on Form 10-Q dated June 30, 2001).
	10.6			Officer Deferred Compensation Plan adopted by PHI’s Board effective January 1, 2001 (incorporated by reference to Exhibit No. 10.21 to PHI’s Report on Form 10-K dated December 31, 2001).
	10.7			Articles of Agreement Between PHI, Inc. & Office & Professional employees International Union and its Local 108 dated June 13, 2001 (incorporated by reference to Exhibit No. 10.24 to PHI’s Report on Form 10-Q dated June 30, 2001).
	12.1*	*		Calculation of Ratio of Earnings to Fixed Charges.
	21.1			Subsidiaries of PHI, Inc. (incorporated by reference to Exhibit 21 to PHI’s Report on Form 10-K dated December 31, 2005).
	23.1*			Consent of Akin Gump Strauss Hauer & Feld LLP (included in its opinion filed as Exhibit 5 hereto).
	23.2*			Consent of Jones, Walker, Poitevent, Carrère & Denègre L.L.P. (included in its opinion filed as Exhibit 5.2 hereto).
	23.3*			Consent of Jones, Walker, Poitevent, Carrère & Denègre L.L.P. (included in its opinion filed as Exhibit 5.3 hereto).
	23.4*			Consent of Crowley, Haughey, Hanson, Toole & Dietrich P.L.L.P. (included in its opinion filed as Exhibit 5.4 hereto).
	23.5*			Consent of Deloitte & Touche LLP.
	24.1*	*		Power of attorney (included on signature pages to the Registration Statement on Form S-1 File No. 333-135674-01, filed with the SEC on July 10, 2006).
	25.1*			Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York.
	99.1*	*		Form of Letter of Transmittal.
	99.2*	*		Form of Notice of Guaranteed Delivery.
	99.3*	*		Form of Letter to Brokers.
	99.4*	*		Form of Letter to Clients.

*	Filed herewith.

**	Previously filed.

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ITEM 22.	UNDERTAKINGS.

	(1)     To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

	(i)     To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii)     To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the registration statement; and
	(iii)     To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

	(2)     That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3)     To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
	(4)     That, for purposes of determining liability under the Securities Act of 1933 to any purchaser:

(i)     Each prospectus filed pursuant to Rule 424(b) as part of the registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

	(5)     That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to

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	the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

	(i)     Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
	(ii)     Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
	(iii)     The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
	(iv)     Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

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	PHI, INC.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Chief Financial Officer, Treasurer & Secretary

				Title		Date
Signature
**   Al A. Gonsoulin				Chairman of the Board, Chief Executive Officer and Director		October 11, 2006
**   Lance F. Bospflug				Director		October 11, 2006
**   Arthur J. Breault				Director		October 11, 2006
**   Thomas H. Murphy				Director		October 11, 2006
**   Richard H. Matzke				Director		October 11, 2006
**   C. Russel Luigs				Director		October 11, 2006
/s/ Michael J. McCann   Michael J. McCann				Chief Financial Officer (Principal Financial and Accounting Officer)		October 11, 2006
By: /s/ Michael J. McCann   Michael J. McCann Attorney-in-fact

**	Pursuant to the power of attorney provided on the signature pages to the registration statement on Form S-4 of PHI, Inc. and the Registrant Guarantors filed with the SEC on July 10, 2006.

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	INTERNATIONAL HELICOPTER TRANSPORT, INC.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Vice President

				Title		Date
Signature
**   Al A. Gonsoulin				Chief Executive Officer and Director (Principal Executive Officer)		October 11, 2006
**   Richard A. Rovinelli				Director		October 11, 2006
/s/ Michael J. McCann   Michael J. McCann				Vice President and Director (Principal Financial and Accounting Officer)		October 11, 2006
By: /s/ Michael J. McCann   Michael J. McCann Attorney-in-fact

**	Pursuant to the power of attorney provided on the signature pages to the registration statement on Form S-4 of PHI, Inc. and the Registrant Guarantors filed with the SEC on July 10, 2006.

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	PETROLEUM HELICOPTERS INTERNATIONAL, INC.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Vice President

				Title		Date
Signature
**   Al A. Gonsoulin				Chief Executive Officer and Director (Principal Executive Officer)		October 11, 2006
**   Richard A. Rovinelli				Director		October 11, 2006
/s/ Michael J. McCann   Michael J. McCann				Vice President and Director (Principal Financial and Accounting Officer)		October 11, 2006
By: /s/ Michael J. McCann   Michael J. McCann Attorney-in-fact

**	Pursuant to the power of attorney provided on the signature pages to the registration statement on Form S-4 of PHI Inc. and the Registrant Guarantors filed with the SEC on July 10, 2006.

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	AIR EVAC SERVICES, INC.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Vice President

				Title		Date
Signature
**   Al A. Gonsoulin				Chief Executive Officer and Director (Principal Executive Officer)		October 11, 2006
**   Richard A. Rovinelli				Director		October 11, 2006
/s/ Michael J. McCann   Michael J. McCann				Vice President and Director (Principal Financial and Accounting Officer)		October 11, 2006
By: /s/ Michael J. McCann   Michael J. McCann Attorney-in-fact

**	Pursuant to the power of attorney provided on the signature pages to the registration statement on Form S-4 of PHI Inc. and the Registrant Guarantors filed with the SEC on July 10, 2006.

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	HELEX, L.L.C.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Chief Financial Officer of PHI, Inc.,
	the Managing Member

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	PHI AIR MEDICAL, INC.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Vice President

				Title		Dates
Signature
**   Al A. Gonsoulin				Chief Executive Officer and Director (Principal Executive Officer)		October 11, 2006
**   Richard A. Rovinelli				Director		October 11, 2006
/s/ Michael J. McCann   Michael J. McCann				Vice President and Director (Principal Financial and Accounting Officer)		October 11, 2006
By: /s/ Michael J. McCann   Michael J. McCann Attorney-in-fact

**	Pursuant to the power of attorney provided on the signature pages to the registration statement on Form S-4 of PHI Inc. and the Registrant Guarantors filed with the SEC on July 10, 2006.

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	PHI TECH SERVICES, INC.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Vice President

				Title		Date
Signature
**   Al A. Gonsoulin				Chief Executive Officer and Director (Principal Executive Officer)		October 11, 2006
**   Richard A. Rovinelli				Director		October 11, 2006
**   Glendon R. Cornett				Director		October 11, 2006
/s/ Michael J. McCann   Michael J. McCann				Vice President (Principal Financial and Accounting Officer)		October 11, 2006
By: /s/ Michael J. McCann   Michael J. McCann Attorney-in-fact

**	Pursuant to the power of attorney provided on the signature pages to the registration statement on Form S-4 of PHI Inc. and the Registrant Guarantors filed with the SEC on July 10, 2006.

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	HELICOPTER LEASING, L.L.C.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Chief Financial Officer of PHI, Inc.,
	the Managing Member

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	HELICOPTER MANAGEMENT, L.L.C.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Chief Financial Officer of PHI, Inc.,
	the Managing Member

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	SKY LEASING, L.L.C.

	By:	/s/ Michael J. McCann

	Michael J. McCann
	Chief Financial Officer of PHI, Inc.,
	the Managing Member

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Exhibit
number				Description of exhibit
	1	.1		Purchase Agreement dated April 7, 2006 among PHI, Inc., the subsidiary guarantors signatory therein and UBS Securities LLC (incorporated by reference to Exhibit No. 10.1 to PHI’s Report on Form 8-K filed April 7, 2006).
	3	.1		Articles of Incorporation of PHI, Inc. (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).
	3	.2		Articles of Amendment to Articles of Incorporation of PHI, Inc. (incorporated by reference to Exhibit No. 3.1 to PHI’s Report on Form 8-K filed January 3, 2006).
	3	.3		Amended and Restated Bylaws of PHI, Inc. (incorporated by reference to Exhibit No. 3.1(ii) to PHI’s Report on Form 10-Q for the quarterly period ended March 31, 2002).
	4	.1		Indenture dated April 12, 2006 among PHI, Inc., the subsidiary guarantors signatory therein and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit No. 10.2 to PHI’s Report on Form 8-K filed April 14, 2006).
	4	.2		Form of 7.125% Senior Note (contained in the Indenture filed as Exhibit 4.1).
	4	.3		Registration Rights Agreement dated as of April 12, 2006 between PHI, Inc., the subsidiary guarantors signatory therein and UBS Securities LLC (incorporated by reference to Exhibit No. 10.3 to PHI’s Report on Form 8-K filed April 14, 2006).
	4	.4		Loan Agreement dated as of April 23, 2002 by and among PHI, Inc., Acadian Composites, LLC, Air Evac Services, Inc., Evangeline Airmotive Inc., and International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 10.3 to PHI’s Report on Form 10-Q for the quarterly period ended June 30, 2002).
	4	.5		1st Amendment to Loan Agreement dated as of April 23, 2002 by and among PHI, Inc. Acadian Composites, LLC, Air Evac Services, Inc., Evangeline Airmotive Inc., and International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 10.4 to PHI’s Report on Form 10-Q for the quarterly period ended June 30, 2004).
	4	.6		Form of Senior Debt Indenture (incorporated by reference to Exhibit 4.5 to PHI’s Registration Statement on Form S-3, filed on March 23, 2005, File No. 333-123528).
	4	.7		Form of Subordinated Debt Indenture (incorporated by reference to Exhibit 4.6 to PHI’s Registration Statement on Form S-3, filed on March 23, 2005, File No. 333-123528).
	5	.1*		Opinion of Akin Gump Strauss Hauer & Feld LLP as to the legality of the securities being offered.
	5	.2*		Opinion of Jones, Walker, Waechter, Poitevent, Carrère and Denègre L.L.P. as to the legality of the securities being offered (Louisiana law).
	5	.3*		Opinion of Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. as to the legality of the securities being offered (Florida law).
	5	.4*		Opinion of Crowley, Haughey, Hanson, Toole & Dietrich P.L.L.P. as to the legality of the securities being offered (Montana law).
	10	.1		The PHI, Inc. 401(k) Retirement Plan effective July 1, 1989 (incorporated by reference to Exhibit No. 10.4 to PHI’s Report on Form 10-K dated April 30, 1990).
	10	.2		Amended and Restated PHI, Inc. 1995 Incentive Compensation Plan adopted by PHI’s Board effective July 11, 1995 and approved by the shareholders of PHI on September 22, 1995 (incorporated by reference to Exhibit No. 10.12 to PHI’s Report on Form 10-K dated April 30, 1996).

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Exhibit
number				Description of exhibit
	10	.3		Form of Non-Qualified Stock Option Agreement under the PHI, Inc. 1995 Incentive Compensation Plan between PHI and certain of its key employees (incorporated by reference to Exhibit No. 10.13 to PHI’s Report on Form 10-K dated April 30, 1996).
	10	.4		Supplemental Executive Retirement Plan adopted by PHI’s Board effective September 14, 2000 (incorporated by reference to Exhibit No. 10.23 to PHI’s Report on Form 10-Q dated September 30, 2000).
	10	.5		Amendment to the Supplemental Executive Retirement Plan dated May 24, 2001 (incorporated by reference to Exhibit No. 10.25 to PHI’s Report on Form 10-Q dated June 30, 2001).
	10	.6		Officer Deferred Compensation Plan adopted by PHI’s Board effective January 1, 2001 (incorporated by reference to Exhibit No. 10.21 to PHI’s Report on Form 10-K dated December 31, 2001).
	10	.7		Articles of Agreement Between PHI, Inc. & Office & Professional employees International Union and its Local 108 dated June 13, 2001 (incorporated by reference to Exhibit No. 10.24 to PHI’s Report on Form 10-Q dated June 30, 2001).
	12	.1**		Calculation of Earnings to Fixed Charges.
	21	.1		Subsidiaries of PHI, Inc. (incorporated by reference to Exhibit 21 to PHI’s Report on Form 10-K dated December 31, 2005).
	23	.1*		Consent of Akin Gump Strauss Hauer & Feld LLP (included in its opinion filed as Exhibit 5 hereto).
	23	.2*		Consent of Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. (included in its opinion filed as Exhibit 5.2 hereto).
	23	.3*		Consent of Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. (included in its opinion filed as Exhibit 5.3 hereto).
	23	.4*		Consent of Crowley, Haughey, Hanson, Toole & Dietrich P.L.L.P. (included in its opinion filed as Exhibit 5.4 hereto).
	23	.5*		Consent of Deloitte & Touche LLP.
	24	.1**		Power of attorney (included on signature pages to the Registration Statement on Form S-4, File No. 333-13567-01, filed with the SEC on July 10, 2006).
	25	.1*		Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York.
	99	.1**		Form of Letter of Transmittal.
	99	.2**		Form of Notice of Guaranteed Delivery.
	99	.3**		Form of Letter to Brokers.
	99	.4**		Form of Letter to Clients.

*	Filed herewith.

**	Previously filed.