10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

___________________________________________________________ 

FORM 10-Q

___________________________________________________________ 

 ☒    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2018

or

☐    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number: 0-9827 

PHI, Inc.

(Exact name of registrant as specified in its charter)

Louisiana	72-0395707
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2001 SE Evangeline Thruway
Lafayette, Louisiana	70508
(Address of principal executive offices)	(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                 Yes:  ☒    No:  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes:  ☒    No:  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer:	☐	Accelerated filer:  ☒	Smaller reporting company:	☐
Non-accelerated filer:	☐  (Do not check if a smaller reporting company)		Emerging Growth Company:	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act).                                                      Yes:  ☐    No:  ☒

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

Class	Outstanding at August 6, 2018
Voting Common Stock	2,905,757 shares
Non-Voting Common Stock	12,905,525 shares

PHI, INC.

Index – Form 10-Q

Part I – Financial Information
Item 1.	Financial Statements – Unaudited
	Condensed Consolidated Balance Sheets – June 30, 2018 and December 31, 2017	5
	Condensed Consolidated Statements of Operations – Quarter and Six Months ended June 30, 2018 and 2017	6
	Condensed Consolidated Statements of Comprehensive Income – Quarter and Six Months ended June 30, 2018 and 2017	7
	Condensed Consolidated Statements of Shareholders’ Equity – Six Months ended June 30, 2018 and 2017	8
	Condensed Consolidated Statements of Cash Flows – Six Months ended June 30, 2018 and 2017	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4.	Controls and Procedures	47
Part II – Other Information
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
	Signatures	53

2

Special Note Regarding Forward-Looking Statements

All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q (the “Quarterly Report”) and other periodic reports filed by PHI, Inc. (the “Company,” “PHI,” “we” or “our”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other written or oral statements made by it or on its behalf, are “forward-looking” statements, as defined by (and subject to the “safe harbor” protections under) the federal securities laws. When used herein, the words “anticipates,” “expects,” “believes,” “seeks,” “hopes,” “intends,” “plans,” “projects” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements are based on a number of judgments and assumptions as of the date such statement are made about future events, many of which are beyond our control. These forward-looking statements, and the assumptions on which they are based, (i) are not guarantees of future events, (ii) are inherently speculative and (iii) are subject to significant risks, uncertainties. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in those statements if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. All of our forward-looking statements are qualified in their entirety by reference to our discussion of certain important factors that could cause our actual results to differ materially from those anticipated, estimated, projected or implied by us in those forward-looking statements. Factors that could cause our results to differ materially from the expectations expressed in such forward-looking statements include but are not limited to the following:

• our ability to refinance our short-term debt and continue as a going concern;

• adverse changes in our access to credit markets on favorable terms, whether caused by changes in our financial position, lower debt credit ratings, unstable markets or otherwise;

• our substantial indebtedness and operating lease commitments, including any failure to meet the financial covenants or the other terms and conditions thereof;

• reduction in demand for our services due to volatility of oil and gas prices and the level of domestic and overseas exploration and production activity, which depends on several factors outside of our control;

• our dependence on a small number of customers for a significant amount of our revenue and our significant credit exposure within the oil and gas industry;

• the adverse impact of customers electing to terminate or reduce our services;

• any failure to maintain our strong safety record;

• our ability to secure favorable customer contracts or otherwise remain able to profitably deploy our existing fleet of aircraft;

• the availability of adequate insurance;

• adverse changes in the value of our aircraft or our ability to sell them in the secondary markets;

• political, economic, payment, regulatory and other risks and uncertainties associated with our international operations, some of which are conducted in challenging business environments;

• the effects of competition and changes in technology;

• the impact of current or future governmental regulations, including but not limited to the impact of new and pending regulation of healthcare, aviation safety and export controls;

• the special risks of our air medical operations, including collections risks and potential medical malpractice claims;

• weather conditions and seasonal factors, including tropical storms;

• our ability to timely realize the anticipated benefits of our December 29, 2017 acquisition of the HNZ Offshore Business (as defined below in Item 2 of Part I of this report);

• the hazards associated with operating in an inherently risky business, including the possibility that regulators could ground our aircraft for extended periods of time or indefinitely;

• our ability to timely collect our receivables in full;

• our ability to receive timely delivery of ordered aircraft and parts from a limited number of suppliers, and the availability of working capital, loans or lease financing to acquire such assets;

• our ability to develop and implement successful business strategies;

• changes in fuel prices;

• our ability to attract and retain key personnel and to avoid work stoppages or other labor problems;

• changes in our operating plans or strategies, whether based upon changes in our cash flows, cash requirements, financial performance, financial position, market conditions or otherwise;

• environmental and litigation risks; and

• the effects of more general factors, such as changes in interest rates, operating costs, tax rates, or general economic or geopolitical conditions; and other risks referenced in Item 1A or elsewhere in this Annual Report or other of our filings with the SEC.

Additional factors or risks that we currently deem immaterial, that are not presently known to us, that arise in the future or that are not specific to us could also cause our actual results to differ materially from our expected results. Given these uncertainties, investors are cautioned not to unduly rely upon our forward-looking statements, which speak only as of the date made. PHI

undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or developments, changed circumstances, or otherwise. Further, we may make changes to our business strategies and plans (including our capital spending plans) at any time and without notice, based on any changes in the above-listed factors, our assumptions or otherwise, any of which could or will affect our results.

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands of dollars, except share data)

(Unaudited)

	June 30, 2018		December 31, 2017
ASSETS
Current Assets:
Cash	$	5,852	$	8,770
Short-term investments	60,317		64,237
Accounts receivable – net
Trade	173,324		168,153
Other	21,008		17,826
Inventories of spare parts – net	77,747		80,881
Prepaid expenses	13,150		11,475
Income taxes receivable	623		1,271
Total current assets	352,021		352,613
Property and equipment – net	933,583		946,765
Restricted cash and investments	12,076		12,396
Other assets	9,605		8,741
Deferred income taxes	3,237		3,309
Goodwill	61,299		61,299
Intangibles	15,946		16,723
Total assets	$	1,387,767	$	1,401,846
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Revolving Credit Facility	$	122,220	$	—
Senior Notes issued March 17, 2014, net of debt issuance costs of $1,229	498,771		—
Accounts payable	50,645		37,186
Accrued and other current liabilities	40,626		41,850
Total current liabilities	712,262		79,036
Long-term debt:
Revolving credit facility	—		117,500
Senior Notes issued March 17, 2014, net of debt issuance costs of $1,506	—		498,494
Deferred income taxes	78,605		86,005
Other long-term liabilities	5,335		8,157
Commitments and contingencies (Note 9)
Shareholders’ Equity:
Voting common stock – par value of $0.10; 12,500,000 shares authorized, 2,905,757 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively	291		291
Non-voting common stock – par value of $0.10; 37,500,000 shares authorized, 12,905,525 and 12,897,614 issued and outstanding at June 30, 2018 and December 31, 2017, respectively	1,291		1,289
Additional paid-in capital	310,433		308,353
Accumulated other comprehensive income (loss)	624		(280		)
Retained earnings	278,926		303,001
Total shareholders’ equity	591,565		612,654
Total liabilities and shareholders’ equity	$	1,387,767	$	1,401,846

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

5

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands of dollars and shares, except per share data)

(Unaudited) 

	Quarter Ended    June 30,						Six Months Ended   June 30,
	2018			2017			2018			2017
Operating revenues, net	$	169,243		$	146,424		$	329,607		$	281,042
Expenses:
Direct expenses	155,083			126,951			311,309			263,464
Selling, general and administrative expenses	14,485			14,247			29,944			27,290
Total operating expenses	169,568			141,198			341,253			290,754
(Gain) loss on disposal of assets	(171		)	7			708			7
Equity in (gain) loss of unconsolidated affiliate, net	(81		)	991			(45		)	1,994
Operating (loss) income	(73		)	4,228			(12,309		)	(11,713		)
Interest expense	8,340			8,083			16,537			16,278
Other loss (income) – net	364			(705		)	1,404			(1,768		)
	8,704			7,378			17,941			14,510
Loss before income taxes	(8,777		)	(3,150		)	(30,250		)	(26,223		)
Income tax (benefit) expense	(1,684		)	123			(6,175		)	(7,702		)
Net loss	$	(7,093	)	$	(3,273	)	$	(24,075	)	$	(18,521	)
Weighted average shares outstanding:
Basic	15,806			15,716			15,806			15,716
Diluted	15,806			15,716			15,806			15,716
Net loss per share:
Basic	$	(0.45	)	$	(0.21	)	$	(1.52	)	$	(1.18	)
Diluted	$	(0.45	)	$	(0.21	)	$	(1.52	)	$	(1.18	)

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

6

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited) 

	Quarter Ended    June 30,						Six Months Ended   June 30,
	2018			2017			2018			2017
Net loss	$	(7,093	)	$	(3,273	)	$	(24,075	)	$	(18,521	)
Unrealized gain on short-term investments	(107		)	167			363			329
Currency translation adjustments	160			—			627			—
Changes in pension plan assets and benefit obligations	7			23			(1		)	22
Tax effect of the above-listed adjustments	100			(68		)	(85		)	(127		)
Total comprehensive loss	$	(6,933	)	$	(3,151	)	$	(23,171	)	$	(18,297	)

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

7

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Thousands of dollars and shares)

(Unaudited) 

	Voting Common Stock			Non-Voting Common Stock					Additional Paid-in Capital			Accumulated Other Com-prehensive (Loss) Income
	Shares	Amount		Shares		Amount									Retained Earnings			ShareHolders' Equity
Balance at December 31, 2016	2,906	$	291	12,779		$	1,278		$	304,246		$	(478	)	$	294,441		$	599,778
Net loss	—	—		—		—			—			—			(18,521		)	(18,521		)
Unrealized gain on short-term investments	—	—		—		—			—			210			—			210
Changes in pension plan assets and benefit obligations	—	—		—		—			—			14			—			14
Amortization of unearned stock-based compensation	—	—		—		—			1,816			—			—			1,816
Issuance of non-voting common stock (upon vesting of restricted stock units)	—	—		134		13			—			—			—			13
Cancellation of restricted non-voting stock units for tax withholdings on vested shares	—	—		(21	)	(2		)	(275		)	—			—			(277		)
Retirement of treasury stock	—	—		—		—			—			—			1,028			1,028
Balance at June 30, 2017	2,906	$	291	12,892		$	1,289		$	305,787		$	(254	)	$	276,948		$	584,061
	Voting Common Stock			Non-Voting Common Stock					Additional Paid-in Capital			Accumulated Other Com-prehensive (Loss) Income
	Shares	Amount		Shares		Amount									Retained Earnings			ShareHolders' Equity
Balance at December 31, 2017	2,906	$	291	12,897		$	1,289		$	308,353		$	(280	)	$	303,001		$	612,654
Net loss	—	—		—		—			—			—			(24,075		)	(24,075		)
Unrealized gain on short-term investments	—	—		—		—			—			278			—			278
Changes in pension plan assets and benefit obligations	—	—		—		—			—			(1		)	—			(1		)
Amortization of unearned stock-based compensation	—	—		—		—			2,132			—			—			2,132
Currency translation adjustment	—	—		—		—			—			627			—			627
Issuance of non-voting common stock (upon vesting of restricted stock units)	—	—		9		2			(2		)	—			—			—
Cancellation of restricted non-voting stock units for tax withholdings on vested shares	—	—		—		—			(50		)	—			—			(50		)
Balance at June 30, 2018	2,906	$	291	12,906		$	1,291		$	310,433		$	624		$	278,926		$	591,565

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

8

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited) 

	Six Months Ended   June 30,
	2018			2017
Operating activities:
Net loss	$	(24,075	)	$	(18,521	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	38,598			34,011
Deferred income taxes	(7,446		)	(7,791		)
Loss (gain) on asset dispositions	708			7
Equity in loss of unconsolidated affiliate, net	(45		)	1,994
Inventory valuation reserves	3,308			2,214
Changes in operating assets and liabilities	(5,638		)	(19,863		)
Net cash provided by (used in) operating activities	5,410			(7,949		)
Investing activities:
Purchase of property and equipment	(18,098		)	(43,892		)
Proceeds from asset dispositions	1,453			17
Purchase of short-term investments	(260,996		)	(134,518		)
Proceeds from sale of short-term investments	264,918			187,217
Payment of deposits on aircraft	—			(110		)
Loan to unconsolidated affiliate	(274		)	—
Net cash (used in) provided by investing activities	(12,997		)	8,714
Financing activities:
Proceeds from line of credit	34,295			66,525
Payments on line of credit	(29,575		)	(67,300		)
Repurchase of common stock	(51		)	(263		)
Net cash provided by (used in) financing activities	4,669			(1,038		)
Decrease in cash	(2,918		)	(273		)
Cash, beginning of period	8,770			2,596
Cash, end of period	$	5,852		$	2,323
Supplemental Disclosures Cash Flow Information
Cash paid during the period for:
Interest	$	15,755		$	15,250
Income taxes	$	813		$	1,131
Noncash investing activities:
Other current liabilities and accrued payables related to purchase of property and equipment	$	272		$	15

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

9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of PHI, Inc. and its subsidiaries (“PHI” or the “Company” or “we” or “our”). In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting of only normal, recurring adjustments, necessary to present fairly the financial results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Our financial results, particularly as they relate to our Oil and Gas segment, are influenced by seasonal fluctuations as discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. For this and other reasons, the results of operations for interim periods are not necessarily indicative of the operating results that may be expected for a full fiscal year.

Going Concern - The financial statements accompanying this Quarterly Report have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), which contemplates our continuation as a going concern. For the reasons described in Note 5, the classification of our indebtedness as current liabilities due within one year and other conditions raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements accompanying this Quarterly Report are filed.

Recently Adopted Accounting Pronouncements

In 2014, Financial Accounting Standard Board ("the FASB") issued ASC 606, Revenue from Contracts with Customers (“ASC 606”), replacing the existing accounting standard and industry specific guidance for revenue recognition with a five-step model for recognizing and measuring revenue from contracts with customers. The underlying principle of the new standard is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 became effective on January 1, 2018 and the Company adopted it using the modified retrospective method applied to open contracts and only to the version of the contracts in effect as of January 1, 2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with the Company’s historical accounting.  There was no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized.

In general, we recognize revenue when a service or good is sold to a customer and there is a contract. At contract inception, we assess the goods and services promised in our contracts with customers and identify all performance obligations for each distinct promise that transfers a good or service (or bundle of goods or services) to the customer. To identify the performance obligations, we consider all goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. Revenue is recognized when control of the identified distinct goods or services has been transferred to the customer, the transaction price has been determined and allocated to the performed performance obligations and we have determined that collection has occurred or is probable of occurring.

The Company measures revenue as the amount of consideration we expect to receive in exchange of the services provided. Taxes collected from customers and remitted to governmental authorities and revenues are reported on a net basis in the Company’s financial statements. Thus, the Company excludes taxes imposed on the customer and collected on behalf of governmental agencies to be remitted to these agencies from the transaction price in determining the revenue related to contracts with a customer.

Revenue Recognition Oil & Gas - The Company provides helicopter services to oil and gas customers operating in the Gulf of Mexico and a number of foreign countries. Revenues are recognized when performance obligations are satisfied over time in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered.  

Revenue Recognition Air Medical - The Company provides helicopter services to hospitals and emergency service providers in several U.S. states, and individuals, in which case the Company is paid by either a commercial insurance company, federal or state agency, or the patient. Our Air Medical segment operates primarily under the independent provider model and, to a lesser extent, under the traditional provider model. Revenues related to the independent provider model services are recorded in the period in which we satisfy our performance obligations under contracts by providing our services to our customers based upon established billing rates net of contractual allowances under agreements with third party payors and net of uncompensated care allowances. These amounts are due from patients, third-party payors (including health insurers and government programs), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations.

10

Generally, the Company bills the patients and third-party payors several days after the services are performed. Revenues generated under the traditional provider model are recognized as performance obligations are satisfied over time in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled in exchange for services rendered.

Performance Obligations Oil & Gas - A performance obligation arises under contracts with customers to render services and is the unit of account under ASC 606.  Operating revenue from our Oil and Gas segment is derived mainly from fixed-term contracts with our customers, a substantial portion of which are competitively bid. A small portion of our Oil and Gas segment revenue is derived from providing services on an "ad-hoc" basis. Our fixed-term contracts typically have original terms of one year to seven years (subject to provisions permitting early termination by the customers), with payment in U.S. dollars. The Company accounts for services rendered separately if they are distinct and the services are separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered on its own or with other resources that are readily available to the customer.  A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.  Within this contract type for helicopter services, we determined that each contract has a single distinct performance obligation. These services include a fixed monthly rate for a particular model of aircraft, and flight hour services, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. We also provide services to clients on an “ad hoc” basis, which usually entails a shorter contract notice period and duration. The charges for ad hoc services are based on an hourly rate or a daily or monthly fixed fee plus additional fees for each hour flown. The nature of our variable charges within our flight services contracts are not effective until a customer-initiated flight order and the actual hours flown are determined; therefore, the associated flight revenue generally cannot be reasonably and reliably estimated before hand. A contract’s standalone selling prices are determined based upon the prices that the Company charges for its services rendered.  The majority of the Company’s revenue is recognized as performance obligations are satisfied over time, by measuring progress towards satisfying the contracted services in a manner that best depicts the transfer of services to the customer, which is generally represented by a period of 30 days or less.  The Company typically invoices customers on a monthly basis with the term between invoicing and when the payment is due typically between 30 and 60 days.

Performance Obligations Air Medical - Performance obligations are determined based upon the nature of the services provided. Under the independent provider model, we measure the performance obligation from the moment the patient is loaded into the aircraft until it reaches its destination. Under this model, we have no fixed revenue stream and compete for transport referrals on a daily basis with other independent operators in the area. As an independent provider, we bill for our services on the basis of a flat rate plus a variable charge per patient-loaded mile, regardless of aircraft model, and are typically compensated by private insurance, Medicaid or Medicare, or directly by transported patients who self-pay. We recognize revenues for performance obligations satisfied at a point in time, which generally relate to patients receiving air medical services when: (1) services are provided; and (2) we do not believe the patient requires additional services. For the independent provider model, we determine the transaction price based upon gross charges for services provided reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients in accordance with Company policy, and/or implicit price concessions provided to uninsured patients. We determine estimates of contractual adjustments and discounts based upon contractual agreements, our discount policy, and historical experience. We determine our estimate of implicit price concessions based upon our historical collection experience with these classes of patients using a portfolio approach as a practical expedient to account for patient contracts as collective groups, rather than individually. The financial statement effects of using this practical expedient are not materially different from an individual contract approach.

Under the traditional provider model, we contract directly with the customer to provide their transportation services, with the contracts typically awarded or renewed through competitive bidding. As a traditional provider, we typically bill a fixed monthly rate for aircraft availability and an hourly rate for flight time. For each of these types of helicopter services, we have determined that each has a single distinct performance obligation. Traditional provider models services include fixed monthly rate for a particular model of aircraft, and flight hour services, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. The variable charges within the contracts are not effective until the customer initiates a flight order and the actual hours flown are determined; therefore, the associated revenue generally cannot be reasonably and reliably estimated beforehand. For the traditional provider model, we determine the transaction price based upon standard charges for goods and services provided.

As further described in Note 3, independent provider revenues are recorded net of contractual allowances under agreements with third party payors and estimated uncompensated care at the time the services are provided. Contractual allowances and uncompensated care are estimated based on historical collection experience by payor category (consisting mainly of private insurance, Medicaid, Medicare, and self-pay). The allowance percentages calculated are applied to the payor categories, and the necessary adjustments are made to the revenue allowance. Agreements with third-party payors typically provide for payments at amounts less than established charges.

11

As of June 30, 3018 and December 31, 2017, receivables related to Oil and Gas segment were $110.1 million and $106.8 million, Air Medical segment were $82.7 million and $74.4 million and Technical Services segment were $1.5 million and $4.8 million, respectively. Contract assets and contract liabilities were immaterial as of June 30, 2018. Our contracts typically include termination clauses that allow both parties to terminate existing contracts with a 30 to 180 day notice period.

The Company generally has a right to consideration in an amount that corresponds directly with the value to the customer of the entity's performance completed to date and may recognize revenue in the amount to which the entity has a right to invoice. We have elected to use the invoice practical expedient for revenue recognized when performance obligations are satisfied over time. In addition, payment for goods and services rendered is typically due in the subsequent month following satisfaction of the Company’s performance obligation.

The Technical Services segment provides helicopter flight services and helicopter repair and overhaul services for existing flight operations customers that own their own aircraft. Under this segment, the Company periodically provides certain services to governmental customers, including the Company’s agreement to operate six aircraft for the National Science Foundation in Antarctica. Under this segment, we also offer certain software as a service to our Oil and Gas customers. Revenues are recognized when performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered.   For these helicopter services, we determined that each has a single distinct performance obligation.

The following table presents the Company’s revenues by segment disaggregated by type (in thousands):

	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Service Revenue
Oil & Gas	$	97,068	$	74,668	$	192,702	$	146,399
Air Medical	67,151		67,222		124,139		122,559
Technical Services	5,024		4,534		12,766		12,084
Total Services	$	169,243	$	146,424	$	329,607	$	281,042
Air Medical Revenue
Traditional provider model	$	12,085	$	12,140	$	23,956	$	23,610
Independent provider model	55,066		55,082		100,183		98,949
Total Air Medicals Revenues	$	67,151	$	67,222	$	124,139	$	122,559

On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with the carrying amount as part of Step 2 of the goodwill impairment test. Under the new standard, the goodwill impairment loss will be measured as the excess of a reporting unit's carrying amount over its fair value, not exceeding the total amount of goodwill allocated to that reporting unit, which may increase the frequency of goodwill impairment charges if a future goodwill impairment test does not pass the Step 1 evaluation. ASU 2017-04 is effective prospectively for periods beginning on or after December 15, 2019, with early adoption permitted. The Company adopted ASU 2017-04 effective January 1, 2018. The Company will perform goodwill impairment testing under the new standard annually as of October 1st or when events or changes in circumstances indicate that a potential impairment exist.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent in a classified balance sheet. PHI, Inc. adopted this ASU in the fourth quarter of 2017 on a prospective basis. Beginning with the December 31, 2017 balances, all deferred taxes were classified as non-current. Periods prior to December 31, 2017 were not retrospectively adjusted.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which will require an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company adopted ASU 2016-16 effective January 1, 2018 with no material impact to the condensed consolidated financial statements.

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In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business and requires that an entity apply certain criteria in order to determine when a set of assets and activities qualifies as a business. The adoption of this standard is expected to result in fewer acquisitions of properties qualifying as acquisitions of businesses and, accordingly, acquisition costs for those acquisitions that do not qualify as businesses will be capitalized rather than expensed. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and should be applied on a prospective basis. The Company adopted ASU 2017-01 effective January 1, 2018 with no material impact to the condensed consolidated financial statements.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted which significantly reformed the U.S. Internal Revenue Code (the “Code”). The Tax Act, among other things, reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. Following the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin 118 - "Income Tax Accounting Implications of the Tax Cuts and Jobs Act" (SAB 118), which provides for a measurement period of up to one year from the enactment date to complete accounting under GAAP for the tax effects of the legislation. As of December 31, 2017, the Company had not completed its accounting for the tax effects of the Tax Act. However, the Company remeasured its net deferred tax liability at December 31, 2017 and provisionally recognized a net benefit of $49.2 million in its consolidated statement of operations for the year ended December 31, 2017.  As of June 30, 2018, the Company has not completed its accounting for the tax effects of the Tax Act. The Company is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to changes to its current provisional estimates.  The Company’s estimates may be affected by a wide variety of factors, including additional regulatory guidance issued with respect to the Tax Act.  Any adjustments to the provisional amounts will be recognized as a component of income tax in the period in which the adjustments are determined. We expect to complete the accounting by the time we file our 2017 U.S. corporate income tax return in the 3rd quarter of 2018.

New Accounting Pronouncements - In February 2016, the FASB issued ASU 2016-02, Leases, which replaces the existing guidance on leasing transactions in ASC 840 to require recognition of the assets and liabilities for the rights and obligations created by those leases on the balance sheet. The Company has formed an implementation team that is inventorying leases under ASC 840 and contracts which may be leases under ASC 842, and evaluating the impact that adoption of this guidance will have on the Company’s financial statements, which includes monitoring industry specific developments including recent exposure drafts issued by the FASB. Based on our lease portfolio as of June 30, 2018, we expect the adoption of this standard will result in a material change to our consolidated assets and liabilities. We plan to adopt this standard beginning January 1, 2019.

2. INVESTMENTS

We classify all of our short-term investments as available-for-sale. We carry these at fair value and report unrealized gains and losses, net of taxes, in Accumulated other comprehensive loss, which is a separate component of shareholders’ equity in our Condensed Consolidated Balance Sheets. These unrealized gains and losses are also reflected in our Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Shareholders’ Equity. We determine cost, gains, and losses using the specific identification method.

Investments consisted of the following as of June 30, 2018:

	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
	(Thousands of dollars)
Investments:
Money market mutual funds	$	72,393	$	—	$	—	$	72,393
Deferred compensation plan assets included in other assets	823		—		—		823
Total	$	73,216	$	—	$	—	$	73,216

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Investments consisted of the following as of December 31, 2017:

	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
	(Thousands of dollars)
Investments:
Money market mutual funds	$	5,601	$	—	$	—		$	5,601
U.S. government agencies	7,501		—		(34		)	7,467
Corporate bonds and notes	63,880		—		(330		)	63,550
Subtotal	76,982		—		(364		)	76,618
Deferred compensation plan assets included in other assets	2,685		—		—			2,685
Total	$	79,667	$	—	$	(364	)	$	79,303

At June 30, 2018 and December 31, 2017, we classified $12.1 million and $12.4 million of our aggregate investments as long-term investments and recorded them in our Condensed Consolidated Balance Sheets as restricted cash and investments, as they are securing outstanding letters of credit and a bond relating to foreign operations with maturities beyond one year.

The following table presents the cost and fair value of our debt investments based on maturities as of:

	June 30, 2018				December 31, 2017
	Amortized Costs		Fair Value		Amortized Costs		Fair Value
	(Thousands of dollars)
Due in one year or less	$	—	$	—	$	31,348	$	31,254
Due within two years	—		—		40,032		39,763
Total	$	—	$	—	$	71,380	$	71,017

The following table presents the average coupon rate percentage and the average days to maturity of our debt investments as of:

	June 30, 2018		December 31, 2017
	Average Coupon Rate (%)	Average Days To Maturity	Average Coupon Rate (%)	Average Days To Maturity
U.S. Government agencies	—	0	1.370	370
Corporate bonds and notes	—	0	1.766	392

The following table presents the fair value and unrealized losses related to our investments that have been in a continuous unrealized loss position for less than twelve months as of:

	June 30, 2018				December 31, 2017
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Thousands of dollars)
U.S. Government agencies	$	—	$	—	$	5,472	$	(28	)
Corporate bonds and notes	—		—		44,069		(271		)
Total	$	—	$	—	$	49,541	$	(299	)

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The following table presents the fair value and unrealized losses related to our investments that have been in a continuous unrealized loss position for more than twelve months as of: 

	June 30, 2018				December 31, 2017
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Thousands of dollars)
U.S. Government agencies	$	—	$	—	$	1,994	$	(6	)
Corporate bonds and notes	—		—		19,482		(59		)
Total	$	—	$	—	$	21,476	$	(65	)

From time to time over the periods covered in our financial statements included herein (and as illustrated in the foregoing tables), our investments have experienced net unrealized losses. We consider these declines in market value to be due to customary market fluctuations, and we typically do not plan to sell these investments prior to maturity. For these reasons, we do not consider any of our investments to be other than temporarily impaired at June 30, 2018 or December 31, 2017. For additional information regarding our criteria for making these assessments, see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017.

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3. VALUATION ACCOUNTS

We establish the amount of our allowance for doubtful accounts based upon factors relating to the credit risk of specific customers, current market conditions, and other information. Our allowance for doubtful accounts was approximately $7.3 million and $7.2 million at June 30, 2018, and December 31, 2017, respectively.

Revenues related to flights generated by our Air Medical segment are recorded net of contractual allowances under agreements with third party payors and estimated uncompensated care when the services are provided. The allowance for contractual discounts was $118.4 million and $117.8 million as of June 30, 2018 and December 31, 2017, respectively. The allowance for uncompensated care was $59.6 million and $52.5 million as of June 30, 2018 and December 31, 2017, respectively.

Included in the allowance for uncompensated care listed above is the value of services to patients who are unable to pay when it is determined that they qualify for charity care. The value of these services was $1.7 million and $2.0 million for the quarters ended June 30, 2018 and 2017, respectively. The value of these services was $3.3 million and $4.4 million for the six months ended June 30, 2018 and 2017, respectively. The estimated cost of providing charity services was $0.4 million for the quarters ended June 30, 2018 and 2017. The estimated cost of providing charity services was $0.8 million and $1.0 million for the six months ended June 30, 2018 and 2017, respectively. The estimated costs of providing charity services are based on a calculation that applies a ratio of costs to the charges for uncompensated charity care. The ratio of costs to charges is based on our Air Medical segment’s total expenses divided by gross patient service revenue.

The allowance for contractual discounts and estimated uncompensated care (expressed as a percentage of gross segment accounts receivable) as of the dates listed below was as follows: 

	June 30, 2018	December 31, 2017
Allowance for Contractual Discounts	50%	53%
Allowance for Uncompensated Care	25%	24%

We have also established valuation reserves related to obsolete and slow-moving spare parts inventory. The inventory valuation reserves were $22.7 million and $20.9 million at June 30, 2018 and December 31, 2017, respectively.

4. FAIR VALUE MEASUREMENTS

Accounting standards require that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

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The following table summarizes the valuation of our investments and financial instruments by the above pricing levels as of the valuation dates listed:

			June 30, 2018
	Total		(Level 1)		(Level 2)
	(Thousands of dollars)
Investments:
Money market mutual funds	$	72,393	$	72,393	$	—
Deferred compensation plan assets	823		823		—
Total	$	73,216	$	73,216	$	—
			December 31, 2017
	Total		(Level 1)		(Level 2)
	(Thousands of dollars)
Investments:
Money market mutual funds	$	5,601	$	5,601	$	—
U.S. government agencies	7,467		—		7,467
Corporate bonds and notes	63,550		—		63,550
	76,618		5,601		71,017
Deferred compensation plan assets	2,685		2,685		—
Total	$	79,303	$	8,286	$	71,017

We hold our short-term investments in an investment fund consisting of high quality money market instruments of governmental and private issuers, which is classified as a short-term investment. Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. These items are traded with sufficient frequency and volume to provide pricing on an ongoing basis. The fair values of the investments in these funds are based on observable market prices, and therefore, have been categorized in Level 1 in the fair value hierarchy. Level 2 inputs reflect quoted prices for identical assets or liabilities that are not actively traded. These items may not be traded daily; examples include commercial paper, corporate bonds and U.S. government agencies debt. There have been no reclassifications of assets between Level 1 and Level 2 investments during the periods covered by the financial statements included in this report. We hold no Level 3 investments. Investments reflected on our balance sheets as Other Assets, which we hold to fund liabilities under our Officers’ Deferred Compensation Plan, consist mainly of multiple investment funds that are highly liquid and diversified.

Cash, accounts receivable, accounts payable and accrued liabilities, and our revolving credit facility debt all had fair values approximating their carrying amounts at June 30, 2018 and December 31, 2017. Our determination of the estimated fair value of our 5.25% Senior Notes due 2019 is derived using Level 2 inputs, including quoted market indications of similar publicly-traded debt. The fair value of our 5.25% Senior Notes due 2019, based on quoted market prices, was $490.0 million and $499.2 million at June 30, 2018 and December 31, 2017, respectively.

5. DEBT

Listed below is information regarding our indebtedness, all of which was classified as short-term debt on our balance sheet as of June 30, 2018 and as long-term debt on our balance sheet as of December 31, 2017:

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	June 30, 2018				December 31, 2017
	Principal		Unamortized Debt Issuance Debt Cost		Principal		Unamortized Debt Issuance Debt Cost
	(Thousands of dollars)
Senior Notes issued March 17, 2014, interest only payable semi-annually at 5.25%, maturing March 15, 2019	$	500,000	$	1,229	$	500,000	$	1,506
Revolving Credit Facility due March 7, 2019 with a group of commercial banks, interest payable at variable rates	122,220		—		117,500		—
Total indebtedness	$	622,220	$	1,229	$	617,500	$	1,506

Senior Notes - Our 5.25% Senior Notes (the “2019 Notes”) will mature on March 15, 2019, are unconditionally guaranteed on a senior basis by each of PHI, Inc.’s wholly-owned domestic subsidiaries, and are the general, unsecured obligations of PHI, Inc. and the guarantors. Interest is payable semi-annually on March 15 and September 15 of each year. PHI has the option to redeem some or all of the 2019 Notes at any time on or after March 15, 2018 at par plus accrued interest. The indenture governing the 2019 Notes (the “2019 Indenture”) contains, among other things, certain restrictive covenants, including limitations on incurring indebtedness, creating liens, selling assets and entering into certain transactions with affiliates. The covenants also limit PHI’s ability to, among other things, pay cash dividends on common stock, repurchase or redeem common or preferred equity, prepay subordinated debt and make certain investments. Upon the occurrence of a “Change in Control Repurchase Event” (as defined in the 2019 Indenture), PHI will be required, unless it has previously elected to redeem the 2019 Notes as described above, to make an offer to purchase the 2019 Notes for a cash price equal to 101% of their principal amount.

Revolving Credit Facility – Our amended and restated revolving credit facility (our “revolving credit facility”) matures on March 7, 2019. Under this facility, we can borrow up to $130.0 million at floating interest rates based on either the London Interbank Offered Rate plus 275 basis points or the prime rate (each as defined in this facility), at our option. This facility includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under this facility is conditioned upon our continued compliance with such covenants, including, among others, (i) covenants that restrict our ability to engage in certain asset sales, mergers or other fundamental changes, to incur liens or to engage in certain other transactions or activities and (ii) financial covenants that stipulate that PHI will maintain a consolidated working capital ratio of at least 2 to 1, a net funded debt to consolidated net worth ratio not greater than 1.5 to 1, a fixed charge coverage ratio of at least 1 to 1 if our short term investments fall below $150.0 million, and consolidated net worth of at least $500.0 million (with all such terms or amounts as defined in or determined under this facility). Borrowings under our revolving credit facility are secured on a first-priority basis by our inventory, spare parts and accounts receivable.

Effective as of June 30, 2018, we once again received a waiver of our consolidated working capital ratio for the quarter then ended. As of June 30, 2018, we were in compliance with the remaining covenants. For information about other recent amendments or waivers relating to our revolving credit facility, see "Management Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

Letter of Credit Facility - We maintain a separate letter of credit facility that had $12.1 million in letters of credit outstanding at June 30, 2018 and $12.4 million at December 31, 2017. We have letters of credit securing our workers compensation policies and a traditional provider contract.

We also have outstanding a letters of credit for $7.7 million issued under our $130.0 million credit facility that reduces the amount we can borrow under that facility. The letters of credit were issued to guaranty our performance under an international contract that was awarded in late 2017 and an air medical license.

Other - PHI, Inc. has cash management arrangements with certain of its principal subsidiaries, in which substantial portions of the subsidiaries’ cash is regularly advanced to PHI, Inc. Although PHI, Inc. periodically repays these advances to fund the subsidiaries’ cash requirements throughout the year, at any given point in time PHI, Inc. may owe a substantial sum to its subsidiaries under these advances, which, in accordance with GAAP, are eliminated in consolidation and therefore not recognized on our consolidated balance sheets. For additional information, see Note 15.

Liquidity - Our revolving credit facility indebtedness matures on March 7, 2019 and our outstanding senior notes mature on March 15, 2019. As such, all of our outstanding revolving credit and senior note indebtedness is now due within less than one year. Beginning with our consolidated financial statements as of and for the quarter ended March 31, 2018, we have been required to

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classify under GAAP all such indebtedness as current liabilities on our consolidated balance sheets. This in turn has caused our current liabilities to exceed our current assets, and has necessitated us receiving two successive short-term waivers of the working capital ratio covenant in our revolving credit facility.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (the "Standard"). Under the Standard, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the entity’s financial statements are issued. Under the Standard, substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within this one year period. This evaluation initially must be undertaken without considering the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this initial determination, management must evaluate whether the mitigating effect of its plans sufficiently alleviates substantial doubt about an entity’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered under the Standard if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within the one year period. Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the financial statements are issued. PHI’s accompanying financial statements have been prepared in conformity with GAAP, which contemplates PHI’s continuation as a going concern.

Based on our discussions to date with our advisors and current market conditions, we plan to pursue several alternatives to refinance our short-term indebtedness. Nonetheless, because our plans to refinance our debt have not been finalized, and therefore not within our control, these plans cannot be considered probable. Consequently, in accordance with the Standard, these conditions in the aggregate raise substantial doubt about our ability to continue as a going concern within one year after the date the accompanying financial statements are filed. For additional information about our prior and current refinancing plans, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”

6. EARNINGS PER SHARE

The components of basic and diluted earnings per share for the quarter and six months ended June 30, 2018 and 2017 are as follows: 

	Quarter Ended    June 30,		Six Months Ended   June 30,
	2018	2017	2018	2017
	(Thousands of dollars)
Weighted average outstanding shares of common stock, basic	15,806	15,716	15,806	15,716
Dilutive effect of unvested restricted stock units	—	—	—	—
Weighted average outstanding shares of common stock, diluted (1)	15,806	15,716	15,806	15,716

(1) For the quarter ended June 30, 2018 and 2017, 425,317 and 438,812 unvested restricted stock units were excluded from the weighted average outstanding shares of common stock, diluted, respectively, as they were anti-dilutive to earnings per share. For the six months ended June 30, 2018 and 2017, 14,258 and 438,812 unvested restricted stock units were excluded from the weighted average outstanding shares of common stock, diluted, respectively as they were anti-dilutive to earnings per share.

7. STOCK-BASED COMPENSATION

We recognize the cost of employee compensation received in the form of equity instruments based on the grant date fair value of those awards. The table below sets forth the total amount of stock-based compensation expense for the quarter and six months ended June 30, 2018 and 2017. 

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	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
	(Thousands of dollars)
Stock-based compensation expense:
Time-based restricted stock units	$	435	$	556	$	1,077	$	1,111
Performance-based restricted stock units	378		705		1,055		705
Total stock-based compensation expense	$	813	$	1,261	$	2,132	$	1,816

During the quarter and six months ended June 30, 2018, 321,831 time-based restricted units and 448,012 performance-based restricted units were awarded to managerial employees.

During the quarter and six months ended June 30, 2017, 417,266 and 447,477 time-based restricted units, respectively, were awarded to managerial employees and 365,539 performance-based restricted units were awarded to managerial employees.

8. ASSET DISPOSALS

During the first quarter of 2018, we disposed of one light aircraft previously utilized in the Air Medical segment and donated to a charitable organization one aircraft previously used in our Oil and Gas segment. During the second quarter of 2018, we disposed of one medium and one light aircraft previously utilized in the Oil & Gas segment. These aircraft no longer met our strategic needs. Cash proceeds totaled $1.5 million, resulting in a $0.7 million loss on the disposal of these assets.

There were no sales or disposals of aircraft during the first quarter of 2017. During the second quarter of 2017, we disposed of five medium aircraft and related parts inventory utilized in the Oil and Gas segment. These aircraft no longer met our strategic needs.

9. COMMITMENTS AND CONTINGENCIES

Commitments – We currently have no aircraft purchase commitments.

Total aircraft deposits of $0.5 million were included in Other Assets as of June 30, 2018. This amount represents a deposit on a future lease buyout option. In the event we do not exercise the buyout option, the deposit will be applied against lease payments.

As of June 30, 2018, we had options to purchase aircraft under leases, with such purchase options becoming exercisable in 2018 through 2020. The aggregate option purchase prices are $105.9 million in 2018, $129.0 million in 2019, and $22.7 million in 2020. Under current conditions, we believe it is unlikely that we will exercise the 2018 purchase options, unless opportunistic conditions arise.

Environmental Matters – We have recorded an estimated liability of $0.15 million as of June 30, 2018 for environmental response costs. Previously, we conducted environmental surveys of our former Lafayette Facility located at the Lafayette Regional Airport, which we vacated in 2001, and determined that limited soil and groundwater contamination exist at two parcels of land at the former facility. An Assessment Report for both parcels was submitted in 2003 (and updated in 2006) to the Louisiana Department of Environmental Quality (LDEQ) and the Louisiana Department of Natural Resources (LDNR). Approvals for the Assessment Report were received from the LDEQ and LDNR in 2010 and 2011, respectively. Since that time, we have performed groundwater sampling of the required groundwater monitor well installations at both parcels and submitted these sampling reports to the LDEQ. Pursuant to an agreement with the LDEQ, we provided groundwater sample results semi-annually to the LDEQ for both parcels from 2005 to 2015. LDEQ approved a reduction in the sampling program from semi-annual to annual groundwater monitoring in 2015. Based on our working relationship and agreements with the LDEQ, and the results of ongoing former facility parcel monitoring, we believe that ultimate remediation costs for the subject parcels will not be material to our consolidated financial position, operations or cash flows.

Legal Matters – From time to time, we are involved in various legal actions incidental to our business, including actions relating to employee claims, medical malpractice claims, tax issues, grievance hearings before labor regulatory agencies, and miscellaneous third party tort actions. The outcome of these proceedings is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of our presently pending proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on our financial position, results of operations or cash flows.

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Operating Leases – We lease certain aircraft, facilities, and equipment used in our operations. The related lease agreements, which include both non-cancelable and month-to-month terms, generally provide for fixed monthly rentals, and certain real estate leases also include renewal options. We generally pay all insurance, taxes, and maintenance expenses associated with these leases. All aircraft leases contain purchase options exercisable by us at certain dates specified in the lease agreements.

At June 30, 2018, we had approximately $189.8 million in aggregate commitments under operating leases of which approximately $22.3 million is payable through the fourth quarter of 2018. The total lease commitments include $163.4 million for aircraft and $26.4 million for facility lease commitments.

10. GOODWILL

Our Goodwill represents the amount by which our purchase price for the HNZ Offshore Business exceeded the fair value of net assets acquired. Goodwill has an indefinite useful life and is not amortized. We test goodwill for impairment annually as of October 1st or when events or changes in circumstances indicate that a potential impairment exists.

Goodwill of $61.3 million as of June 30, 2018 and December 31, 2017 was as follow:

	Oil & Gas		Air Medical	Technical Services	Total
Balance December 31, 2017	$	61,299	—	—	$	61,299
Activity	—		—	—	—
Balance June 30, 2018	$	61,299	—	—	$	61,299

11. OTHER INTANGIBLE ASSETS

Intangible assets with finite useful lives are amortized over estimated useful lives on a straight-line basis. Our intangible assets, which arose in connection with our acquisition of the HNZ Offshore Business, consist of the following (in thousands):

	Estimated Useful Lives	Gross Amount at December 31, 2017		Accumulated Amortization			Net Balance at June 30, 2018
Customer Relationship	15	$	11,622	$	(387	)	$	11,235
Non-Compete Agreements	5	900		(90		)	810
Tradenames	7	4,201		(300		)	3,901
Total		$	16,723	$	(777	)	$	15,946

Based on the carrying values of our intangible assets at June 30, 2018, we estimate our amortization expense for the next five years (2018 through 2022) to be $1.6 million per year. For the quarter and six months ended June 30, 2018, amortization expense was $0.4 million and $0.8 million, respectively.

12. SEGMENT INFORMATION

PHI is primarily a provider of helicopter transport services, including helicopter maintenance and repair services. We report our financial results through the three reportable segments further described below.

A segment’s operating profit or loss is its operating revenues less its direct expenses and selling, general and administrative expenses. Each segment has a portion of selling, general and administrative expenses that is charged directly to the segment, and a small portion that is allocated. Direct charges represent the vast majority of segment selling, general and administrative expenses. Allocated selling, general and administrative expenses are based primarily on total segment costs as a percentage of total operating costs. A significant portion of our selling, general and administrative expenses are neither charged nor allocated to our segments.

Oil and Gas Segment - Our Oil and Gas segment, headquartered in Lafayette, Louisiana, provides helicopter services primarily for the major integrated and independent oil and gas production companies transporting personnel or equipment to offshore platforms in the Gulf of Mexico and a number of foreign countries. Our customers include Shell Oil Company, BP America

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Production Company, ExxonMobil Production Company, and ConocoPhillips Company, with whom we have worked for 35 or more years, and ENI Petroleum, with whom we have worked for more than 20 years. At June 30, 2018, we had available for use 125 aircraft in this segment.

Our fixed-term contracts typically have original terms of one year to seven years (subject to provisions permitting early termination upon short notice by the customers), with payment in U.S. dollars. For the quarters ended June 30, 2018 and 2017, respectively, approximately 57% and 51% of our total operating revenues were generated by our Oil and Gas segment, with approximately 87% and 88% of these revenues from fixed-term customer contracts. For the six months ended June 30, 2018 and 2017, respectively, approximately 58% and 52% of our total operating revenues were generated by our Oil and Gas segment, with approximately 87% and 88% of these revenues from fixed-term customer contracts. The remaining 13% and 12% of these revenues were attributable to work in the spot market and ad hoc flights for contracted customers.

Air Medical Segment - The operations of our Air Medical segment are headquartered in Phoenix, Arizona, where we maintain significant separate facilities and administrative staff dedicated to this segment.

We provide Air Medical transportation services for hospitals and emergency service agencies throughout the U.S. As of June 30, 2018, our Air Medical segment operated approximately 109 aircraft in 18 states at 74 separate locations.

For the quarters ended June 30, 2018 and 2017, approximately 40% and 46% of our total operating revenues were generated by our Air Medical segment, respectively. For the six months ended June 30, 2018 and 2017, approximately 38% and 44% of our total operating revenues were generated by our Air Medical segment.

Estimates regarding the payor mix and changes in reimbursement rates are the factors most subject to sensitivity and variability in calculating our allowances. We compute a historical payment analysis of accounts fully closed, by category.

Provisions for contractual discounts and estimated uncompensated care for our Air Medical segment (expressed as a percentage of gross segment billings) were as follows for the periods listed below:

	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
Provision for contractual discounts	67	%	63	%	66	%	66	%
Provision for uncompensated care	7	%	10	%	8	%	7	%

These percentages are affected by various factors, including rate increases and changes in the number of transports by payor mix.

Net reimbursement per transport from commercial payors generally increases when a rate increase is implemented. Net reimbursement from certain commercial payors, as well as Medicare and Medicaid, generally does not increase proportionately with rate increases.

Net revenue attributable to Insurance, Medicare, Medicaid, and Self-Pay (expressed as a percentage of net Air Medical revenues) were as follows for the periods listed below:

	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
Insurance	72	%	72	%	72	%	71	%
Medicare	19	%	18	%	20	%	18	%
Medicaid	8	%	8	%	8	%	9	%
Self-Pay	1	%	2	%	—	%	2	%

We also have a limited number of contracts with hospitals under which we receive a fixed fee component for aircraft availability and a variable fee component for flight time. Most of our contracts with hospitals contain provisions permitting early termination by the hospital, typically with 180 days’ notice for any reason and generally with penalty. Those contracts generated approximately 16% and 18% of the segment’s revenues for the quarters ended June 30, 2018 and 2017, respectively. For the six months ended June 30, 2018 and 2017, these contracts generated approximately 18% of the segment's revenues.

We also derive a small portion of the segment’s revenues from providing services under our patient navigation business.

22

Technical Services Segment - Our Technical Services segment provides helicopter repair and overhaul services for flight operations customers that own their aircraft. Costs associated with these services are primarily labor, and customers are generally billed at a percentage above our service costs. We also periodically provide flight services to governmental customers under this segment, including our current agreement to operate six aircraft for the National Science Foundation in Antarctica, typically in the first and fourth quarters each year. Also included in this segment are our proprietary Helipass operations, which provide software as a service to certain of our Oil and Gas customers for the purpose of passenger check-in and compliance verification.

For each of the quarters ended June 30, 2018 and 2017, approximately 3% of our total operating revenues were generated by our Technical Services segment. For each of the six month periods ended June 30, 2018 and 2017, approximately 4% of our total operating revenues were generated by our Technical Services segment.

23

Summarized financial information concerning our reportable operating segments for the quarters and six months ended June 30, 2018 and 2017 is as follows: 

	Quarter Ended    June 30,						Six Months Ended   June 30,
	2018			2017			2018			2017
	(Thousands of dollars)						(Thousands of dollars)
Segment operating revenues
Oil and Gas	$	97,068		$	74,668		$	192,702		$	146,399
Air Medical	67,151			67,222			124,139			122,559
Technical Services	5,024			4,534			12,766			12,084
Total operating revenues, net	169,243			146,424			329,607			281,042
Segment direct expenses
Oil and Gas (1)	94,442			73,681			190,985			155,410
Air Medical	56,776			50,402			110,608			101,243
Technical Services	3,784			3,858			9,671			8,804
Total direct expenses	155,002			127,941			311,264			265,457
Segment selling, general and administrative expenses
Oil and Gas	4,400			1,635			9,321			3,354
Air Medical	3,254			3,263			6,421			6,144
Technical Services	340			356			710			694
Total selling, general and administrative expenses	7,994			5,254			16,452			10,192
Total segment direct and selling, general and administrative expenses	162,996			133,195			327,716			275,649
Net segment (loss) profit
Oil and Gas	(1,774		)	(648		)	(7,604		)	(12,365		)
Air Medical	7,121			13,557			7,110			15,172
Technical Services	900			320			2,385			2,586
Total net segment profit	6,247			13,229			1,891			5,393
Other, net (3)	(193		)	697			(2,112		)	1,761
Unallocated selling, general and administrative costs (1) (4)	(6,491		)	(8,993		)	(13,492		)	(17,099		)
Interest expense	(8,340		)	(8,083		)	(16,537		)	(16,278		)
(Loss) earnings before income taxes	$	(8,777	)	$	(3,150	)	$	(30,250	)	$	(26,223	)

(1)  Included in direct expenses and unallocated selling, general, and administrative costs are the depreciation and amortization expense amounts below:

	Depreciation and Amortization Expense
	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
	(Thousands of dollars)
Segment Direct Expense:
Oil and Gas	$	11,486	$	9,824	$	23,269	$	19,686
Air Medical	6,091		5,219		11,715		10,696
Technical Services	142		148		287		294
Total	$	17,719	$	15,191	$	35,271	$	30,676
Unallocated SG&A	$	1,412	$	622	$	3,327	$	3,335

(2) Includes equity in (earnings) of unconsolidated affiliates, net.

(3) Consists of (gains) losses on disposition of property and equipment and other income.

(4) Represents corporate overhead expenses not allocable to segments.

24

13. INVESTMENT IN VARIABLE INTEREST ENTITY

We account for our investment in PHI Century Limited ("PHIC") as a variable interest entity, which is defined as an entity that either (a) has insufficient equity to permit the entity to finance its operations without additional subordinated financial support or (b) has equity investors who lack the characteristics of a controlling financial interest. As of June 30, 2018, we had a 49% investment in the common stock of PHIC, a Ghanaian entity. We acquired our 49% interest on May 26, 2011, PHIC’s date of incorporation. The purpose of PHIC is to provide oil and gas flight services in Ghana and the West African region. For the quarter ended June 30, 2018, we recorded income in equity of this unconsolidated affiliate of less than $0.1 million compared to loss in equity of $1.0 million for the quarter ended June 30, 2017 relative to our 49% equity ownership. For the six months ended June 30, 2018 and 2017, we recorded a gain in equity of this unconsolidated affiliate of less than $0.1 million and a loss of $2.0 million relative to our 49% equity ownership, respectively. We had $5.5 million and $4.0 million of trade receivables as of June 30, 2018 and December 31, 2017, respectively, from PHIC. During the six months ended June 30, 2018, we loaned PHIC $0.3 million for operating purposes. The $0.3 million loan balance is included in Accounts receivable - other on our Condensed Consolidated Balance Sheets at June 30, 2018. Our investment in the common stock of PHIC is included in Other Assets on our Condensed Consolidated Balance Sheets and was $0.4 million at June 30, 2018 and $0.3 million at December 31, 2017.

14. OTHER COMPREHENSIVE INCOME

Amounts reclassified from Accumulated other comprehensive income are not material and, therefore, not presented separately in the Condensed Consolidated Statements of Comprehensive Income.

15. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As discussed further in Note 5, on March 17, 2014, PHI, Inc. issued $500.0 million aggregate principal amount of 5.25% Senior Notes due 2019 that are fully and unconditionally guaranteed on a joint and several, senior basis by all of PHI, Inc.’s domestic subsidiaries. PHI, Inc. directly or indirectly owns 100% of all of its domestic subsidiaries.

The supplemental condensed financial information on the following pages sets forth, on a consolidated basis, the balance sheet, statement of operations, statement of comprehensive income, and statement of cash flows information for PHI, Inc. (“Parent Company”) the guarantor subsidiaries and the non-guarantor subsidiaries, each under separate headings. The eliminating entries eliminate investments in subsidiaries, intercompany balances, and intercompany revenues and expenses. The condensed consolidating financial statements have been prepared on the same basis as the consolidated financial statements of PHI, Inc. The equity method is followed by the Parent Company within the financial information presented below.

The transactions reflected in “Due to/from affiliates, net” in the following condensed consolidated statements of cash flows primarily consist of centralized cash management activities between PHI, Inc. and its subsidiaries, pursuant to which cash earned by the guarantor subsidiaries is regularly transferred to PHI, Inc. to be centrally managed. Because these balances are treated as short-term borrowings of the Parent Company, serve as a financing and cash management tool to meet our short-term operating needs, turn over quickly and are payable to the guarantor subsidiaries on demand, we present borrowings and repayments with our affiliates on a net basis within the condensed consolidating statement of cash flows. Net receivables from our affiliates are considered advances and net payables to our affiliates are considered borrowings, and both changes are presented as financing activities in the following condensed consolidating statements of cash flows.

25

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(Thousands of dollars)

(Unaudited)

	June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash	$	53		$	1,305	$	4,494		$	—		$	5,852
Short-term investments	60,317			—		—			—			60,317
Accounts receivable – net	76,291			84,882		35,346			(2,187		)	194,332
Intercompany receivable	—			119,963		—			(119,963		)	—
Inventories of spare parts – net	65,522			9,512		2,713			—			77,747
Prepaid expenses	9,494			2,715		941			—			13,150
Income taxes receivable	111			512		—			—			623
Total current assets	211,788			218,889		43,494			(122,150		)	352,021
Investment in subsidiaries	405,560			—		—			(405,560		)	—
Property and equipment – net	603,926			286,820		42,837			—			933,583
Restricted cash and investments	12,076			—		—			—			12,076
Other assets	140,158			794		(131,347		)	—			9,605
Deferred income tax	—			—		3,237			—			3,237
Goodwill	—			—		61,299			—			61,299
Intangible assets	—			—		15,946			—			15,946
Total assets	$	1,373,508		$	506,503	$	35,466		$	(527,710	)	$	1,387,767
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	620,991		$	—	$	—		$	—		$	620,991
Accounts payable	41,401			4,039		7,466			(2,261		)	50,645
Accrued and other current liabilities	23,230			10,891		6,505			—			40,626
Intercompany payable	100,982			—		18,907			(119,889		)	—
Total current liabilities	786,604			14,930		32,878			(122,150		)	712,262
Deferred income taxes and other long-term liabilities	(4,034		)	84,539		3,435			—			83,940
Shareholders’ Equity:
Common stock and paid-in capital	312,015			77,951		1,511			(79,462		)	312,015
Accumulated other comprehensive loss	(3		)	—		627			—			624
Retained earnings	278,926			329,083		(2,985		)	(326,098		)	278,926
Total shareholders’ equity	590,938			407,034		(847		)	(405,560		)	591,565
Total liabilities and shareholders’ equity	$	1,373,508		$	506,503	$	35,466		$	(527,710	)	$	1,387,767

26

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(Thousands of dollars)

	December 31, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash	$	47		$	1,072	$	7,651		$	—		$	8,770
Short-term investments	64,237			—		—			—			64,237
Accounts receivable – net	90,077			74,886		38,020			(17,004		)	185,979
Intercompany receivable	—			126,366		—			(126,366		)	—
Inventories of spare parts – net	68,737			9,049		3,095			—			80,881
Prepaid expenses	8,348			1,898		1,229			—			11,475
Income taxes receivable	345			9		917			—			1,271
Total current assets	231,791			213,280		50,912			(143,370		)	352,613
Investment in subsidiaries and others	397,301			—		—			(397,301		)	—
Property and equipment – net	617,488			284,984		44,293			—			946,765
Restricted investments	12,382			—		14			—			12,396
Other assets	139,754			908		(131,921		)	—			8,741
Deferred income tax	—			—		3,309			—			3,309
Goodwill	—			—		61,299			—			61,299
Intangible assets	—			—		16,723			—			16,723
Total assets	$	1,398,716		$	499,172	$	44,629		$	(540,671	)	$	1,401,846
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	28,130		$	4,636	$	21,425		$	(17,005	)	$	37,186
Accrued and other current liabilities	23,147			10,577		8,126			—			41,850
Intercompany payable	113,387			—		12,978			(126,365		)	—
Total current liabilities	164,664			15,213		42,529			(143,370		)	79,036
Long-term debt	615,994			—		—			—			615,994
Deferred income taxes and other long-term liabilities	5,404			84,300		4,458			—			94,162
Shareholders’ Equity:
Common stock and paid-in capital	309,933			77,951		1,375			(79,326		)	309,933
Accumulated other comprehensive loss	(280		)	—		—			—			(280		)
Retained earnings	303,001			321,708		(3,733		)	(317,975		)	303,001
Total shareholders’ equity	612,654			399,659		(2,358		)	(397,301		)	612,654
Total liabilities and shareholders’ equity	$	1,398,716		$	499,172	$	44,629		$	(540,671	)	$	1,401,846

27

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

(Unaudited)

	For the Quarter Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	79,857		$	68,717	$	51,404		$	(30,735	)	$	169,243
Expenses:
Direct expenses	78,955			58,263		48,658			(30,793		)	155,083
Selling, general and administrative expenses	8,395			3,256		2,838			(4		)	14,485
Total operating expenses	87,350			61,519		51,496			(30,797		)	169,568
Gain on disposal of assets, net	(150		)	—		(21		)	—			(171		)
Equity in income of unconsolidated affiliates, net	(81		)	—		—			—			(81		)
Operating (loss) income	(7,262		)	7,198		(71		)	62			(73		)
Equity in net income of consolidated subsidiaries	(6,064		)	—		—			6,064			—
Interest expense	8,337			—		542			(539		)	8,340
Other income, net	(365		)	—		128			601			364
	1,908			—		670			6,126			8,704
(Loss) earnings before income taxes	(9,170		)	7,198		(741		)	(6,064		)	(8,777		)
Income tax (benefit) expense	(2,077		)	—		393			—			(1,684		)
Net (loss) earnings	$	(7,093	)	$	7,198	$	(1,134	)	$	(6,064	)	$	(7,093	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

	For the Quarter Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	75,045		$	68,857		$	5,341		$	(2,819	)	$	146,424
Expenses:
Direct expenses	72,598			51,806			5,366			(2,819		)	126,951
Selling, general and administrative expenses	10,916			3,269			66			(4		)	14,247
Total operating expenses	83,514			55,075			5,432			(2,823		)	141,198
Loss (gain) on disposal of assets, net	8			(1		)	—			—			7
Equity in (income) loss of consolidated affiliate	(75		)	—			1,066			—			991
Operating (loss) income	(8,402		)	13,783			(1,157		)	4			4,228
Equity in net income of consolidated subsidiaries	(14,613		)	—			—			14,613			—
Interest expense	8,082			1			—			—			8,083
Other income, net	(708		)	(1		)	—			4			(705		)
	(7,239		)	—			—			14,617			7,378
(Loss) earnings before income taxes	(1,163		)	13,783			(1,157		)	(14,613		)	(3,150		)
Income tax (benefit) expense	2,110			(1,987		)	—			—			123
Net (loss) earnings	$	(3,273	)	$	15,770		$	(1,157	)	$	(14,613	)	$	(3,273	)

28

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	157,949		$	127,426	$	100,900		$	(56,668	)	$	329,607
Expenses:
Direct expenses	162,953			113,627		91,436			(56,707		)	311,309
Selling, general and administrative expenses	17,143			6,423		6,388			(10		)	29,944
Total operating expenses	180,096			120,050		97,824			(56,717		)	341,253
Loss (gain) on disposal of assets, net	729			—		(21		)	—			708
Equity in income of unconsolidated affiliates, net	(45		)	—		—			—			(45		)
Operating (loss) income	(22,831		)	7,376		3,097			49			(12,309		)
Equity in net income of consolidated subsidiaries	(8,163		)	—		—			8,163			—
Interest expense	16,533			—		1,085			(1,081		)	16,537
Other income, net	(63		)	—		337			1,130			1,404
	8,307			—		1,422			8,212			17,941
(Loss) earnings before income taxes	(31,138		)	7,376		1,675			(8,163		)	(30,250		)
Income tax (benefit) expense	(7,063		)	—		888			—			(6,175		)
Net (loss) earnings	$	(24,075	)	$	7,376	$	787		$	(8,163	)	$	(24,075	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	149,329		$	126,330		$	8,202		$	(2,819	)	$	281,042
Expenses:
Direct expenses	154,942			104,187			7,154			(2,819		)	263,464
Selling, general and administrative expenses	21,024			6,155			120			(9		)	27,290
Total operating expenses	175,966			110,342			7,274			(2,828		)	290,754
Loss (gain) on disposal of assets, net	8			(1		)	—			—			7
Equity in loss of unconsolidated affiliate	928			—			1,066			—			1,994
Operating (loss) income	(27,573		)	15,989			(138		)	9			(11,713		)
Equity in net income of consolidated subsidiaries	(17,243		)	—			—			17,243			—
Interest expense	16,256			22			—			—			16,278
Other income, net	(1,776		)	(1		)	—			9			(1,768		)
	(2,763		)	21			—			17,252			14,510
(Loss) earnings before income taxes	(24,810		)	15,968			(138		)	(17,243		)	(26,223		)
Income tax (benefit) expense	(6,289		)	(1,413		)	—			—			(7,702		)
Net (loss) earnings	$	(18,521	)	$	17,381		$	(138	)	$	(17,243	)	$	(18,521	)

29

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Quarter Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(7,093	)	$	7,198	$	(1,134	)	$	(6,064	)	$	(7,093	)
Unrealized gain on short-term investments	(107		)	—		—			—			(107		)
Currency translation adjustments	—			—		160			—			160
Changes in pension plan asset and benefit obligation	7			—		—			—			7
Tax effect of the above-listed adjustments	100			—		—			—			100
Total comprehensive (loss) income	$	(7,093	)	$	7,198	$	(974	)	$	(6,064	)	$	(6,933	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

	For the Quarter Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(3,273	)	$	15,770	$	(1,157	)	$	(14,613	)	$	(3,273	)
Unrealized gain on short-term investments	167			—		—			—			167
Changes in pension plan asset and benefit obligations	23			—		—			—			23
Tax effect of the above-listed adjustments	(68		)	—		—			—			(68		)
Total comprehensive (loss) income	$	(3,151	)	$	15,770	$	(1,157	)	$	(14,613	)	$	(3,151	)

30

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net (loss) earnings	$	(24,075	)	$	7,376	$	787	$	(8,163	)	(24,075		)
Unrealized gain on short-term investments	363			—		—		—			363
Currency translation adjustment	—			—		627		—			627
Changes in pension plan asset and benefit obligation	(1		)	—		—		—			(1		)
Tax effect of the above-listed adjustments	(85		)	—		—		—			(85		)
Total comprehensive (loss) income	$	(23,798	)	$	7,376	$	1,414	$	(8,163	)	$	(23,171	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(18,521	)	$	17,381	$	(138	)	$	(17,243	)	(18,521		)
Unrealized gain on short-term investments	329			—		—			—			329
Changes in pension plan asset and benefit obligations	22			—		—			—			22
Tax effect of the above-listed adjustments	(127		)	—		—			—			(127		)
Total comprehensive (loss) income	$	(18,297	)	$	17,381	$	(138	)	$	(17,243	)	$	(18,297	)

31

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(506	)	$	3,306		$	2,610		$	—	$	5,410
Investing activities:
Purchase of property and equipment	(16,768		)	—			(1,330		)	—		(18,098		)
Proceeds from asset dispositions	1,453			—			—			—		1,453
Purchase of short-term investments	(260,996		)	—			—			—		(260,996		)
Proceeds from sale of short-term investments	264,918			—			—			—		264,918
Loan to unconsolidated affiliate	(274		)	—			—			—		(274		)
Net cash used in investing activities	(11,667		)	—			(1,330		)	—		(12,997		)
Financing activities:
Debt issuance costs	—			—			—			—		—
Proceeds from line of credit	34,295			—			—			—		34,295
Payments on line of credit	(29,575		)	—			—			—		(29,575		)
Due to/from affiliate, net	7,510			(3,073		)	(4,437		)	—		—
Repurchase of common stock	(51		)	—			—			—		(51		)
Net cash provided by (used in) financing activities	12,179			(3,073		)	(4,437		)	—		4,669
Increase (decrease) in cash	6			233			(3,157		)	—		(2,918		)
Cash, beginning of period	47			1,072			7,651			—		8,770
Cash, end of period	$	53		$	1,305		$	4,494		$	—	$	5,852

32

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Thousands of dollars)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(34,236	)	$	18,916		$	7,371		$	—	$	(7,949	)
Investing activities:
Purchase of property and equipment	(43,892		)	—			—			—		(43,892		)
Proceeds from asset dispositions	17			—			—			—		17
Purchase of short-term investments	(134,518		)	—						—		(134,518		)
Proceeds from sale of short-term investments	187,217			—						—		187,217
Payments of deposits on aircraft	(110		)	—						—		(110		)
Net cash provided by investing activities	8,714			—			—			—		8,714
Financing activities:
Proceeds from line of credit	66,525			—			—			—		66,525
Payments on line of credit	(67,300		)	—			—			—		(67,300		)
Repurchase of common stock	(263		)	—			—			—		(263		)
Due to/from affiliate, net	26,572			(19,688		)	(6,884		)	—		—
Net cash provided by (used in) financing activities	25,534			(19,688		)	(6,884		)	—		(1,038		)
Increase in cash	12			(772		)	487			—		(273		)
Cash, beginning of period	36			2,100			460			—		2,596
Cash, end of period	$	48		$	1,328		$	947		$	—	$	2,323

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Item 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis should be read in conjunction with (i) the accompanying unaudited condensed consolidated financial statements and the notes thereto (the “Notes”) and (ii) our Annual Report on Form 10-K for the year ended December 31, 2017, including the audited consolidated financial statements and notes thereto, management’s discussion and analysis, and the risk factor disclosures contained therein.

Overview

As described further in Note 12, we are primarily a provider of helicopter transport services and derive most of our revenue from providing these services to the energy and medical industries. Our consolidated results of operations are principally driven by the following factors:

• The level of offshore oil and gas exploration and production activities in the areas in which we operate. Operating revenues from our Oil and Gas segment relate substantially to operations in the Gulf of Mexico and a couple of our other key offshore markets. Many of the helicopters we have purchased recently are larger aircraft intended to service deepwater activities and the margins we earn on these aircraft are generally higher than on smaller aircraft. During periods when the level of offshore activity increases, demand for our offshore flight services typically increases, directly affecting our revenue and profitability. Also, during periods when deepwater offshore activity increases, the demand for our medium and heavy aircraft usually increases, creating a positive impact on revenue and earnings. Conversely, a reduction in offshore oil and gas activities generally, or deepwater offshore activity particularly, typically negatively impacts our aircraft utilization, flight volumes, and overall demand for our aircraft, thereby creating a negative impact on our revenue and earnings.

• Our recent acquisition of the HNZ Offshore Business has increased the scope of our Oil and Gas segment. On December 29, 2017, we acquired the offshore helicopter services business formerly conducted in New Zealand, Australia, the Philippines and Papua New Guinea (the “HNZ Offshore Business”) by HNZ Group, Inc. (“HNZ”). Our consolidated financial statements include the accounts of the HNZ Offshore Business beginning on January 1, 2018. Accordingly, you should consider the impact of our acquisition of the HNZ Offshore Business when comparing our results of operations for periods ending June 30, 2018 to our results for any prior periods.

• Patient transports and flight volume in our Air Medical segment. In the independent provider programs under our Air Medical segment, our revenue is directly dependent upon the number and length of patient transports provided in a given period, which is impacted primarily by the number of bases operated by us, competitive factors and weather. The volume of flight utilization of our aircraft by our customers under our traditional provider Air Medical programs also has a direct impact on the amount of revenue earned in a given period, although to a lesser degree than under our independent provider programs. Independent provider programs generated approximately 83%, 81%, 81% and 74% of our Air Medical segment revenues for the six months ended June 30, 2018, and the years ended December 31, 2017, 2016 and 2015, respectively, with the balance of our Air Medical segment revenue attributable to our traditional provider programs.

• Payor mix and reimbursement rates in our Air Medical segment. Under our independent provider programs, our revenue recognition, net of allowances, during any particular period is dependent upon the rate at which our various types of customers reimburse us for our Air Medical services, which we refer to as our “payor mix.” Reimbursement rates vary among payor types and typically the reimbursement rate of commercial insurers is higher than Medicare, Medicaid, and self-pay reimbursement rates. Moreover, Medicare and Medicaid reimbursement rates have decreased in recent years and our receipt of payments from these programs is subject to various regulatory and appropriations risks discussed in our periodic reports filed with the SEC. Changes during any particular period in our payor mix, reimbursement rates, or uncompensated care rates will have a direct impact on our revenues.

• Direct expenses. Our business is capital-intensive and highly competitive. Salaries and aircraft maintenance comprise a large portion of our operating expenses. Our aircraft must be maintained to a high standard of quality and undergo periodic and routine maintenance procedures. Higher utilization of our aircraft will result in more frequent maintenance, resulting in higher maintenance costs. In periods of low flight activity, we continue to maintain our aircraft, consequently reducing our margins. In addition, we are also dependent upon pilots, mechanics, and medical crew to operate our business. To attract and retain qualified personnel, we must maintain competitive wages, which places downward pressure on our margins.

As noted above, the performance of our oil and gas operations is largely dependent upon the level of offshore oil and gas activities,

34

which in turn is based largely on volatile commodity prices. See “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017. Since mid-2014, prevailing oil prices have been substantially lower than prices for several years before then. Consequently, several of our oil and gas customers curtailed their exploration or production levels, lowered their capital expenditures, reduced their staffs or requested arrangements with vendors designed to reduce their operating costs, including flight sharing arrangements and alternative platform staffing rotations. As explained further below, these changes have negatively impacted our oil and gas operations since the first quarter of 2015. Over the course of the downturn, several of our offshore customers have requested reductions in the volume or pricing of our flight services or have re-bid existing contracts, all of which has further reduced our aircraft utilization rates and intensified pricing pressures. Although various experts believe the negative consequences of the market downturn have crested, we cannot assure you of this. For information on the adverse impact of the market downturn on our liquidity, see “- Liquidity and Capital Resources - Cash Flow - Liquidity” below.

35

Results of Operations

The following tables present operating revenues, expenses, and earnings, along with certain non-financial operational statistics, for the quarters ended June 30, 2018 and 2017. 

	Quarter Ended    June 30,						Favorable (Unfavorable)
	2018			2017
	(Thousands of dollars, except flight hours, patient transports, and aircraft)
Segment operating revenues
Oil and Gas	$	97,068		$	74,668		$	22,400
Air Medical	67,151			67,222			(71		)
Technical Services	5,024			4,534			490
Total operating revenues, net	169,243			146,424			22,819
Segment direct expenses
Oil and Gas (1)	94,442			73,681			(20,761		)
Air Medical	56,776			50,402			(6,374		)
Technical Services	3,784			3,858			74
Total direct expenses	155,002			127,941			(27,061		)
Segment selling, general and administrative expenses
Oil and Gas	4,400			1,635			(2,765		)
Air Medical	3,254			3,263			9
Technical Services	340			356			16
Total selling, general and administrative expenses	7,994			5,254			(2,740		)
Total segment direct and selling, general and administrative expenses	162,996			133,195			(29,801		)
Net segment (loss) profit
Oil and Gas	(1,774		)	(648		)	(1,126		)
Air Medical	7,121			13,557			(6,436		)
Technical Services	900			320			580
Total net segment profit (2)	6,247			13,229			(6,982		)
Other, net (3)	(193		)	697			(890		)
Unallocated selling, general and administrative costs (4)	(6,491		)	(8,993		)	2,502
Interest expense	(8,340		)	(8,083		)	(257		)
(Loss) earnings before income taxes	(8,777		)	(3,150		)	(5,627		)
Income tax (benefit) expense	(1,684		)	123			1,807
Net loss	$	(7,093	)	$	(3,273	)	$	(3,820	)
Flight hours:
Oil and Gas	22,089			19,683			2,406
Air Medical (5)	9,992			9,652			340
Technical Services	38			—			38
Total	32,119			29,335			2,784
Air Medical Transports (6)	4,925			5,121			(196		)

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(1) Includes Equity in gain/loss of unconsolidated affiliate.

(2) Total net segment profit has not been prepared in accordance with generally accepted accounting principles (“GAAP”). Management believes this non-GAAP financial measure provides meaningful supplemental information regarding our results of operations. A description of the adjustments to and reconciliations of total net segment profit to the most comparable GAAP financial measure is as follows:

	Quarter Ended    June 30,
	2018			2017
Total net segment profit	$	6,247		$	13,229
Other, net	(193		)	697
Unallocated selling, general and administrative costs	(6,491		)	(8,993		)
Interest expense	(8,340		)	(8,083		)
(Loss) before income taxes	$	(8,777	)	$	(3,150	)

(3) Includes gains on disposition of property and equipment, asset impairments, and other income.

(4) Represents corporate overhead expenses not allocable to segments.

(5) Flight hours include 2,479 flight hours associated with traditional provider contracts during the second quarter of 2018, compared to 2,298 flight hours in the prior year quarter.

(6) Represents individual patient transports for the period.

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The following tables present operating revenues, expenses, and earnings, along with certain non-financial operational statistics, for the six months ended June 30, 2018 and 2017. 

	Six Months Ended June 30,						Favorable (Unfavorable)
	2018			2017
	(Thousands of dollars, except flight hours, patient transports, and aircraft)
Segment operating revenues
Oil and Gas	$	192,702		$	146,399		$	46,303
Air Medical	124,139			122,559			1,580
Technical Services	12,766			12,084			682
Total operating revenues, net	329,607			281,042			48,565
Segment direct expenses
Oil and Gas (1)	190,985			155,410			(35,575		)
Air Medical	110,608			101,243			(9,365		)
Technical Services	9,671			8,804			(867		)
Total direct expenses	311,264			265,457			(45,807		)
Segment selling, general and administrative expenses
Oil and Gas	9,321			3,354			(5,967		)
Air Medical	6,421			6,144			(277		)
Technical Services	710			694			(16		)
Total selling, general and administrative expenses	16,452			10,192			(6,260		)
Total segment direct and selling, general and administrative expenses	327,716			275,649			(52,067		)
Net segment (loss) profit
Oil and Gas	(7,604		)	(12,365		)	4,761
Air Medical	7,110			15,172			(8,062		)
Technical Services	2,385			2,586			(201		)
Total net segment profit (2)	1,891			5,393			(3,502		)
Other, net (3)	(2,112		)	1,761			(3,873		)
Unallocated selling, general and administrative costs (4)	(13,492		)	(17,099		)	3,607
Interest expense	(16,537		)	(16,278		)	(259		)
(Loss) earnings before income taxes	(30,250		)	(26,223		)	(4,027		)
Income tax benefit	(6,175		)	(7,702		)	(1,527		)
Net loss	$	(24,075	)	$	(18,521	)	$	(5,554	)
Flight hours:
Oil and Gas	42,978			37,157			5,821
Air Medical (5)	18,822			18,045			777
Technical Services	479			511			(32		)
Total	62,279			55,713			6,566
Air Medical Transports (6)	9,324			9,418			(94		)
Aircraft operated at period end: (7)
Oil and Gas	125			128
Air Medical (8)	109			104
Technical Services	6			6
Total	240			238

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(1) Includes Equity in gain/loss of unconsolidated affiliate.

(2) Total net segment profit has not been prepared in accordance with generally accepted accounting principles (“GAAP”). Management believes this non-GAAP financial measure provides meaningful supplemental information regarding our results of operations. A description of the adjustments to and reconciliations of total net segment profit to the most comparable GAAP financial measure is as follows:

	Six Months Ended June 30,
	2018			2017
Total net segment profit	$	1,891		$	5,393
Other, net	(2,112		)	1,761
Unallocated selling, general and administrative costs	(13,492		)	(17,099		)
Interest expense	(16,537		)	(16,278		)
(Loss) before income taxes	$	(30,250	)	$	(26,223	)

(3) Includes gains on disposition of property and equipment, asset impairments, and other income.

(4) Represents corporate overhead expenses not allocable to segments.

(5) Flight hours include 4,701 flight hours associated with traditional provider contracts during the first half of 2018, compared to 4,594 flight hours in the first half of the prior year.

(6) Represents individual patient transports for the period.

(7) Represents the total number of aircraft available for use, not all of were deployed in service as of the date indicated.

(8) Includes six aircraft as of June 30, 2017 that were owned or leased by customers but operated by us.

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Quarter Ended June 30, 2018 compared with Quarter Ended June 30, 2017

Combined Operations

Operating Revenues - Operating revenues for the three months ended June 30, 2018 were $169.2 million, compared to $146.4 million for the three months ended June 30, 2017, an increase of $22.8 million. Oil and Gas segment operating revenues increased $22.4 million for the three months ended June 30, 2018. As discussed further below, this increase is attributable principally to revenue derived from our newly-acquired HNZ Offshore Business and secondarily from an increase in revenues from our legacy Oil and Gas operations. Air Medical segment operating revenues remained unchanged at $67.2 million for the three months ended June 30, 2018, and June 30, 2017. Technical Services segment operating revenues increased $0.5 million.

Total flight hours for the three months ended June 30, 2018 were 32,119 compared to 29,335 for the three months ended June 30, 2017. Oil and Gas segment flight hours increased 2,406 hours, due to the HNZ Offshore Business and an increase in flight hours for legacy light and heavy aircraft models. Air Medical segment flight hours increased 340 hours for the three months ended June 30, 2018, due to increased flight hours for both our independent provider and traditional provider programs. As discussed further below, individual patient transports in the Air Medical segment were 4,925 for the three months ended June 30, 2018, compared to transports of 5,121 for the three months ended June 30, 2017.

Direct Expenses -Direct operating expense was $155.0 million for the three months ended June 30, 2018, compared to $127.9 million for the three months ended June 30, 2017, an increase of $27.1 million, or 21.2%. Employee compensation expense increased $8.8 million primarily due to our recent acquisition of the HNZ Offshore Business. Employee compensation expense represented approximately 44% and 48% of total direct expense for the quarters ended June 30, 2018 and 2017, respectively. We experienced an increase in aircraft warranty costs of $15.6 million primarily as a result of the prior period containing a $9.8 million non-recurring credit due to the cancellation of a warranty program on some of our fleet of medium aircraft. The remainder of the $15.6 million increase was due to increased flight hours for our heavy aircraft in our international operations, and the addition of a new warranty program for our medium aircraft at the beginning of 2018. Spare parts and repair expense increased by $2.1 million, primarily due to increase in the Gulf of Mexico operations and our expanded international operations. Fuel expenses increased by $2.8 million, principally due to our expanded international operations. Property taxes decreased by $1.2 million, and other items decreased $1.0 million, net.

Selling, General and Administrative Expenses -Selling, general and administrative expenses were $14.5 million for the three months ended June 30, 2018, compared to $14.2 million for the three months ended June 30, 2017. The $0.3 million increase was principally attributable to a $2.8 million increase in salaries and services due to our recent HNZ acquisition, partially offset by a $1.3 million decrease in severance pay, a $0.7 million decrease in employee incentive expense, and a $0.3 million reduction in equity-based compensation expense. Other items decreased $0.2 million, net.

Loss/Gain on Disposal of Assets, Net -The loss on asset dispositions for the three months ended June 30, 2018 was $0.2 million. For the three months ended June 30, 2017, we recorded a loss that was less than $0.1 million. See Note 8.

Equity in (Gain) Loss of Unconsolidated Affiliate -Equity in the gain of our unconsolidated affiliates attributable to our investment in a Ghanaian entity was $0.1 million for each of the three months ended June 30, 2018 and 2017. See Note 13. We had equity in loss of our unconsolidated Australian affiliate of $1.1 million for the three months ended June 30, 2017. As a result of our acquisition of the HNZ Offshore Business in late 2017, this entity has been included in our consolidated operations for all of 2018.

Interest Expense -Interest expense was $8.3 million for the three months ended June 30, 2018 and $8.1 million the three months ended June 30, 2017, reflecting higher rates payable on our revolving credit facility borrowings.

Other Loss (Income) -Other loss, net was $0.4 million for the three months ended June 30, 2018 compared to other income, net of $0.7 million for the same period in 2017. Interest income decreased $0.7 million due to lower investment balances. Net exchange losses increased $0.8 million. Other items increased $0.4 million, net.

Income Tax benefit - Income tax benefit for the three months ended June 30, 2018 was $2.1 million compared to income tax expense of $0.1 million for the three months ended June 30, 2017. Our $1.7 million income tax benefit for the three months ended June 30, 2018 is attributable to our net loss from operations of $7.1 million. Our effective tax rate was 19.2% and 35.0% for the three months ended June 30, 2018 and June 30, 2017. The decrease in the effective rate for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 is primarily the result of the reduction in the federal corporate income tax rate from 35% to 21% that became effective January 1, 2018 pursuant to the Tax Cuts and Jobs Act that was enacted in December 2017.

40

Net Loss -Net loss for the three months ended June 30, 2018 was $7.1 million compared to net loss of $3.3 million for the three months ended June 30, 2017. Loss before income taxes for the three months ended June 30, 2018 was $8.8 million compared to loss before income taxes of $3.2 million for the same period in 2017. Loss per diluted share was $0.45 for the current quarter compared to loss per diluted share of $0.21 for the prior year quarter. The increase in loss before income taxes for the quarter ended June 30, 2018 is attributable principally to increase in expenses and a reduction in revenues in our Air Medical Segment, and a reduction in revenues in our Oil & Gas operations in the Gulf of Mexico, as discussed further below. We had $15.8 million and 15.7 million weighted average diluted common shares outstanding for the quarters ended June 30, 2018 and 2017, respectively.

Segment Discussion

Oil and Gas -Oil and Gas segment revenues were $97.1 million for the three months ended June 30, 2018, compared to $74.7 million for the three months ended June 30, 2017. Of this $22.4 million increase, $14.6 million was attributable to revenues derived from our newly-acquired HNZ Offshore Business, and the remainder was attributable to an increase in revenues from our legacy international aircraft, partially offset by a decrease in revenues from our legacy Gulf of Mexico aircraft. Our Oil and Gas segment revenues are primarily driven by the amount of contracted aircraft flight hours and prevailing rates. Costs are primarily fixed based on the number of aircraft operated, with a variable portion that is driven by flight hours.

Oil and Gas segment flight hours were 22,089 for the most recently completed quarter compared to 19,683 the same quarter in the prior year. Of this increase of 2,406 flight hours, 2,312 hours were attributable to our newly-acquired HNZ operations and the reminder to higher utilization rates of our light and heavy legacy aircraft.

The number of aircraft available for use in the segment was 125 at June 30, 2018, compared to 128 at June 30, 2017. We terminated leases on two heavy aircraft and disposed of one light and two medium aircraft in the Oil and Gas segment since June 30, 2017. We added 9 medium aircraft in the Oil and Gas segment since June 30, 2017, as a result of our acquisition of the HNZ Offshore Business. Transfers between segments account for the remainder.

Direct expense in our Oil and Gas segment was $94.4 million for the three months ended June 30, 2018, compared to $73.7 million for the three months ended June 30, 2017, an increase of $20.7 million. We experienced an increase in aircraft warranty costs of $14.2 million partly as a result of the prior period containing an $8.9 million non-recurring credit due to the cancellation of a warranty program on some of our medium aircraft. The remainder of the $14.2 million increase was due to increased flight hours for our heavy aircraft and the addition of a new warranty program for our medium aircraft. Salaries and wages increased by $5.9 million, primarily due to our recent HNZ acquisition. Fuel expense increased $2.5 million, principally due to our expanded international operations. Repair expenses decreased $1.0 million and other items, net decreased $0.9 million.

Selling, general and administrative segment expenses were $4.4 million for the three months ended June 30, 2018 and $1.6 million for the three months ended June 30, 2017. The $2.8 million increase is mainly attributable to an increase in salaries and wages and other administrative costs due to our newly-acquired HNZ international operations.

Oil and Gas segment loss was $1.7 million for the three months ended June 30, 2018, compared to a loss of $0.6 million for the three months ended June 30, 2017. The $1.1 million increase in segment loss is attributable to the $23.5 million increase in segment expenses, partially offset by the $22.4 million increase in segment revenues. Excluding the above-described non-recurring 2017 credit related to the cancellation of the warranty program mentioned above, the Oil & Gas segment loss decreased $7.8 million.

Air Medical -Air Medical segment revenues were $67.1 million for the three months ended June 30, 2018, compared to $67.2 million for the three months ended June 30, 2017. This decrease of $0.1 million is primarily attributable to a small decrease in revenues in both the independent provider and traditional provider programs. Patient transports were 4,925 for the three months ended June 30, 2018, compared to 5,121 for the same period in the prior year.

The number of aircraft available for use in the segment was 109 at June 30, 2018 compared to 104 at June 30, 2017. Since June 30, 2017, our Air Medical segment disposed of one light aircraft. Transfers between segments account for the remainder.

Direct expense in our Air Medical segment was $56.8 million for the three months ended June 30, 2018, compared to $50.4 million for the three months ended June 30, 2017, an increase of $6.4 million. Employee compensation costs increased $3.9 million due to increased labor costs period over period. Spare parts, repairs, and warranty costs increased $1.8 million, and fuel cost increased $0.3 million all primarily due to increased flight volume. Other items increased $0.4 million, net.

Selling, general and administrative segment expenses were $3.3 million for the three months ended June 30, 2018 and June 30, 2017.

41

Air Medical segment profit was $7.1 million for the three months ended June 30, 2018, compared to a segment profit of $13.6 million for the three months ended June 30, 2017. The $6.5 million decrease in profit is primarily attributable to the increased expenses described above.

Technical Services -Technical Services segment revenues were $5.0 million for the three months ended June 30, 2018, compared to $4.5 million for the three months ended June 30, 2017. The $0.5 million increase in revenue is due primarily to an increase in revenue from our Helipass operations and a new government contract that began in 2018, partially offset by a decrease in revenue provided to a third party customer whose service requirements typically vary from period to period. Direct expenses decreased $0.1 million compared to the prior year three month period, principally due to the decrease the third party customer service requirements operations described above, partially offset by an increase in costs associated with the new government contract. Technical Services segment earnings was $0.9 million for the three months ended June 30, 2018, compared to segment earnings of $0.3 million for the three months ended June 30, 2017.

For additional information on our segments, see Note 12.

Six Months Ended June 30, 2018 compared with Six Months Ended June 30, 2017

Combined Operations

Operating Revenues -Operating revenues for the six months ended June 30, 2018 were $329.6 million, compared to $281.0 million for the six months ended June 30, 2017, an increase of $48.6 million. Oil and Gas segment operating revenues increased $46.3 million for the six months ended June 30, 2018. As discussed further below, this increase is attributable principally to revenue derived from our newly-acquired HNZ Offshore Business and secondarily from an increase in revenues from our legacy Oil and Gas operations, partially offset by a decrease in revenues from our Gulf of Mexico operations. Air Medical segment operating revenues increased $1.6 million due principally to an increase in revenues from both our independent provider operations and traditional provider programs. Technical Services segment operating revenues increased $0.7 million.

Total flight hours for the six months ended June 30, 2018 were 62,279 compared to 55,713 for the six months ended June 30, 2017. Oil and Gas segment flight hours increased 5,821 hours, due to the HNZ Offshore Business and an increase in flight hours for legacy light and heavy aircraft models. Air Medical segment flight hours increased 777 hours for the six months ended June 30, 2018, due to increased flight hours for both our independent provider and traditional provider programs. As discussed further below, individual patient transports in the Air Medical segment were 9,324 for the six months ended June 30, 2018, compared to transports of 9,418 for the six months ended June 30, 2017.

Direct Expenses -Direct operating expense was $311.2 million for the six months ended June 30, 2018, compared to $265.5 million for the six months ended June 30, 2017, an increase of $45.7 million, or 17.3%. Employee compensation expense increased $16.2 million primarily due to our recent acquisition of the HNZ Offshore Business. Employee compensation expense represented approximately 45% and 47% of total direct expense for the six-month periods ended June 30, 2018 and 2017, respectively. We experienced an increase in aircraft warranty costs of $21.0 million partly as a result of the prior period $9.8 million non-recurring credit due to the cancellation of a warranty program on some of our medium aircraft. The remainder of the $21.0 million increase was due to increased flight hours for our heavy aircraft in our international operations, and the addition of a new warranty program for our medium aircraft at the beginning of 2018. Spare parts and repair expense increased by $4.5 million and fuel expenses increased by $4.8 million, in each case principally due to our expanded international operations. Other items decreased $0.8 million, net.

Selling, General and Administrative Expenses -Selling, general and administrative expenses were $29.9 million for the six months ended June 30, 2018, compared to $27.3 million for the six months ended June 30, 2017. The $2.6 million increase was principally attributable to a $6.0 million increase in salaries and services due to our recent HNZ acquisition, partially offset by a $2.9 million decrease in severance pay, and a $0.6 million decrease in employee incentive expense. Other items increased $0.1 million, net.

Loss/Gain on Disposal of Assets, Net -The loss on asset dispositions for the six months ended June 30, 2018 was $0.7 million, For the six months ended June 30, 2017, we recorded a loss on assets dispositions of less than $0.1 million. See Note 8.

Equity in (Gain) Loss of Unconsolidated Affiliate -Equity in the gain of our unconsolidated affiliates attributable to our investment in a Ghanaian entity was less than $0.1 million for the six months ended June 30, 2018 and a loss of $2.0 million for the six months ended June 30, 2017. See Note 13. We had equity in the loss of our unconsolidated Australian affiliate of $1.1 million for the six months ended June 30, 2017. As a result of our acquisition of the HNZ Offshore Business in late 2017, this entity has been included in our consolidated operations in 2018.

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Interest Expense -Interest expense was $16.5 million for the six months ended June 30, 2018 compared to $16.3 million for the six months ended June 30, 2017, reflecting higher rates payable on our revolving credit facility borrowings.

Other Loss (Income) -Other loss, net was $1.4 million for the six months ended June 30, 2018 compared to other income, net of $1.8 million for the same period in 2017. Interest income decreased $1.5 million due to lower investment balances. Exchange losses increased $1.6 million. Losses on sales of investments during the first half of 2018 were $0.6 million. Other items increased $0.5 million, net.

Income Tax benefit - Income tax benefit for the six months ended June 30, 2018 was $6.2 million compared to income tax benefit of $7.7 million for the six months ended June 30, 2017. Our $6.2 million income tax benefit for the six months ended June 30, 2018 is attributable to our loss before income taxes of $30.3 million. Our effective tax rate was 20.4% and 29.4% for the six months ended June 30, 2018 and June 30, 2017. The decrease in the effective rate for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 is primarily the result of the reduction in the federal corporate income tax rate from 35% to 21% that became effective January 1, 2018 pursuant to the Tax Cuts and Jobs Act that was enacted in December 2017.

Net Loss -Net loss for the six months ended June 30, 2018 was $24.1 million compared to net loss of $18.5 million for the six months ended June 30, 2017. Loss before income taxes for the six months ended June 30, 2018 was $30.3 million compared to loss before income taxes of $26.2 million for the same period in 2017. Loss per diluted share was $1.52 for the six months ended June 30, 2018 compared to loss per diluted share of $1.18 for the prior year six months. The increase in loss before income taxes for the six months ended June 30, 2018 is attributable to an increase in expenses in our Air Medical Segment, and a reduction in revenues for our Gulf of Mexico Oil and Gas Operations, as discussed further below. We had $15.8 million and 15.7 million weighted average diluted common shares outstanding for the six months ended June 30, 2018 and 2017, respectively.

Segment Discussion

Oil and Gas -Oil and Gas segment revenues were $192.7 million for the six months ended June 30, 2018, compared to $146.4 million for the six months ended June 30, 2017. Of this $46.3 million increase, $23.2 million was attributable to an increase in revenues derived from our newly-acquired HNZ Offshore Business, and the remainder was attributable to an increase in revenues from our legacy international aircraft, partially offset by a decrease in revenues from our legacy Gulf of Mexico offshore aircraft. Our Oil and Gas segment revenues are primarily driven by the amount of contracted aircraft flight hours and prevailing rates. Costs are primarily fixed based on the number of aircraft operated, with a variable portion that is driven by flight hours.

Oil and Gas segment flight hours were 42,978 for the current six months compared to 37,157 for the same six months in the prior year. Of this increase of 5,821 flight hours, 5,713 hours were attributable to our newly-acquired HNZ operations and the reminder to higher utilization rates of our light and heavy legacy aircraft.

The number of aircraft available for use in the segment was 125 at June 30, 2018, compared to 128 at June 30, 2017. We terminated leases on two heavy aircraft and disposed of one light and two medium aircraft in the Oil and Gas segment since June 30, 2017. We added 9 medium aircraft in the Oil and Gas segment since June 30, 2017, as a result of our acquisition of the HNZ Offshore Business. Transfers between segments account for the remainder.

Direct expense in our Oil and Gas segment was $191 million for the six months ended June 30, 2018, compared to $155.4 million for the six months ended June 30, 2017, an increase of $35.6 million. We experienced an increase in aircraft warranty costs of $19.5 million partly as a result of a prior period $8.9 million non-recurring credit due to the cancellation of a warranty program on some of our medium aircraft fleet. The remainder of the $19.5 million increase was due to increased flight hours for our heavy aircraft in our international operations, and the addition of a new warranty program for our medium aircraft at the beginning of 2018. Salaries and wages increased by $12.1 million due to our recent HNZ acquisition. Fuel expense increased $4.2 million and other items decreased $0.2 million, net.

Selling, general and administrative segment expenses were $9.3 million for the six months ended June 30, 2018 and $3.4 million for the six months ended June 30, 2017. The $5.9 million increase is mainly attributable to an increase in salaries and wages and other administrative costs due to our newly-acquired HNZ international operations.

Oil and Gas segment loss was $7.6 million for the six months ended June 30, 2018, compared to a loss of $12.4 million for the six months ended June 30, 2017. The $4.8 million decrease in segment loss is attributable to a $46.3 million increase in segment revenues, partially offset by $41.5 million increase in aggregate segment expenses.

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Air Medical -Air Medical segment revenues were $124.1 million for the six months ended June 30, 2018, compared to $122.6 million for the six months ended June 30, 2017. This increase of $1.5 million is attributable to a $1.2 million increase in independent provider program revenue and a $0.3 million increase in traditional provider program revenue. Patient transports were 9,324 for the six months ended June 30, 2018, compared to 9,418 for the same period in the prior year.

The number of aircraft available for use in the segment was 109 at June 30, 2018 compared to 104 at June 30, 2017. Since June 30, 2017, our Air Medical segment disposed of two light aircraft. Transfers between segments account for the remainder.

Direct expense in our Air Medical segment was $110.6 million for the six months ended June 30, 2018, compared to $101.2 million for the six months ended June 30, 2017, an increase of $9.4 million. Employee compensation costs increased $6.1 million due to increased labor costs period over period. Fuel cost increased $0.6 million, and repair cost increased $1.3 million, primarily due to increased flight volume. Other items increased $1.4 million, net.

Selling, general and administrative segment expenses were $6.4 million for the six months ended June 30, 2018 and $6.1 million for the six months ended June 30, 2017. The increase is associated with increased contracted labor costs and other administrative costs.

Air Medical segment profit was $7.1 million for the six months ended June 30, 2018, compared to a segment profit of $15.2 million for the six months ended June 30, 2017. The $8.1 million decrease in profit is primarily attributable to the increased expenses described above.

Technical Services - Technical Services segment revenues were $12.8 million for the six months ended June 30, 2018, compared to $12.1 million for the six months ended June 30, 2017. The $0.7 million increase in revenue is due primarily to an increase in revenue from our (i) Antarctica and Helipass operations, (ii) parts sales and (iii) new government contract that began in 2018. These increases were partially offset by a decrease in revenue derived from a third party customer whose service requirements typically vary from period to period. Direct expenses increased $0.9 million compared to the prior year six month period, principally due to the increase in our Antarctica operations and the new government contract, partially offset by a decrease in expenses related to the third party customer mentioned above. Technical Services segment profit was $2.4 million for the six months ended June 30, 2018, compared to segment profit of $2.6 million for the six months ended June 30, 2017.

For additional information on our segments, see Note 12

Liquidity and Capital Resources

General

Our ongoing liquidity requirements arise primarily from the purchase or leasing of aircraft, the maintenance and refurbishment of aircraft, the opening of new aircraft bases, the expansion or improvement of facilities, the acquisition of equipment and inventory, and other working capital needs. Our principal sources of liquidity historically have been net cash provided by our operations, borrowings under our revolving credit facility, and proceeds from periodic senior note offerings. To the extent we do not use cash, short-term investments or borrowings to finance our aircraft acquisitions, we frequently enter into sale-leaseback transactions to fund these acquisitions.

Liquidity

Recently, our liquidity and ability to comply with our debt covenants have been negatively impacted by several factors, including:

• the prolonged slowdown in exploration and production activity by the customers in our Oil and Gas segment;

• our leverage; and

• our use of over $130 million of our short-term investments to fund our acquisition of the HNZ Offshore Business in late 2017.

As discussed further below under “Short-Term Debt,” beginning in the third quarter of 2016, we have on several occasions sought and received concessions from our revolving credit facility lenders to enable us to remain in compliance with various financial covenants. The most recent of these concessions was granted with respect to the second quarter of 2018, when these lenders granted us a waiver for the period ending June 30, 2018 from the requirement to maintain a 2 to 1 ratio of current assets to current liabilities.

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Our revolving credit facility indebtedness matures on March 7, 2019 and our outstanding senior notes mature on March 15, 2019. As such, all of our outstanding revolving credit and senior note indebtedness is now due within less than one year. Beginning with our consolidated financial statements as of and for the quarter ended March 31, 2018, we have been required to classify under GAAP all such indebtedness as current liabilities on our consolidated balance sheets. As of June 30, 2018, we had (i) total current liabilities of $712.3 million, of which $620.5 million was indebtedness classified as long-term debt at December 31, 2017, and (ii) total current assets of $352.0 million.

In late 2017, we retained advisors to begin assisting us in evaluating alternatives to refinance our outstanding indebtedness. In February 2018, following the completion of our acquisition of the HNZ Offshore Business in December 2017, we continued our exploration of refinancing alternatives, including a broad assessment of interest rates and other prevailing conditions in the capital markets. During the first quarter of 2018, we explored several alternatives but deferred taking action until management could more fully evaluate additional potential refinancing opportunities. In June 2018, we sought to refinance all of our outstanding short-term indebtedness with the net proceeds from a senior secured note offering and two new secured credit facilities. Although several lenders expressed a willingness to loan us money under the newly-proposed credit facilities, we have thus far been unable to raise funds that, in our judgement, are sufficient in amount and contain terms that are fiscally prudent. As of the date of the filing of this report, we are continuing to explore a variety of options for refinancing our short-term indebtedness.

Based on our discussions to date with our advisors and current market conditions, we believe there are several alternatives that we can pursue to refinance our short-term indebtedness. Nonetheless, because our plans to refinance our debt have not been finalized, and therefore are not within our control, these plans cannot be considered probable. As such, these plans cannot be considered to be probable of occurring within the meaning of ASU 2014-15 discussed in Note 5 (the "Standard"). Consequently, in accordance with the Standard, these conditions in the aggregate continue to raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements included herein are filed.

For additional information about ASU 2014-15, see Note 5. For additional information about the uncertainties and risks of our refinancing plans, see Item 1A of Part II of this report.

Historical Cash and Cash Flow Information

Cash and Short-Term Investments - Our cash position was $5.9 million at June 30, 2018, compared to $8.8 million at December 31, 2017. Short-term investments were $60.3 million at June 30, 2018, compared to $64.2 million at December 31, 2017. We also had $12.1 million and $12.4 million in restricted investments at June 30, 2018 and December 31, 2017, respectively, securing outstanding letters of credit.

Operating Activities -Net cash provided by operating activities was $5.4 million for the six months ended June 30, 2018, compared to net cash used of $7.9 million for the same period in 2017, an increase of $13.3 million. This increase is attributable to a $14.2 million increase relating to changes in operating assets and liabilities. This favorable variance was offset by a $0.9 million decrease in net loss, as adjusted for the non-cash items specified in our accompanying condensed consolidated statements of cash flows.

Investing Activities -Net cash used in investing activities was $13.0 million for the six months ended June 30, 2018, compared to cash provided by investing activities of $8.7 million for the same period in 2017. Net sales of short-term investments provided by $3.9 million of cash during the six months ended June 30, 2018, compared to $52.7 million provided by net sales in the comparable prior year period. Gross proceeds from asset dispositions were $1.5 million during the six months of 2018, compared to proceeds of less than $0.1 million for the same period in 2017. Capital expenditures were $18.1 million for the six months ended June 30, 2018, compared to $43.9 million for the same period in 2017.

Financing Activities -Financing activities during the six months ended June 30, 2018 included net borrowings of $4.7 million on our revolving credit facility, and less than $0.1 million used to repurchase shares of our non-voting common stock to satisfy withholding tax obligations of our employees. Financing activities during the six months of 2017 included net payments of $0.8 million on our revolving credit facility and $0.3 million used to repurchase share of our non-voting common stock to satisfy withholding tax obligations of employees.

For additional information on our cash flows, see our condensed consolidated statements of cash flows included in Item 1 of Part I of this report.

Debt - As of June 30, 2018, we owed $622.2 million under our total long-term debt, consisting of $500.0 million principal amount of 5.25% Senior Secured Notes due March 15, 2019 (excluding debt issuance costs) and $122.2 million borrowed under our revolving credit facility.

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Revolving Credit Facility - Our amended and restated revolving credit facility (our “revolving credit facility”) matures on March 7, 2019. Under our revolving credit facility, we can borrow up to $130.0 million at floating interest rates based on the London Interbank Offered Rate (as defined in our revolving credit facility), plus 275 basis points. Our revolving credit facility includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under the revolving credit facility is conditioned upon our continued compliance with such covenants, including, among others, (i) covenants that restrict our ability to engage in certain asset sales, mergers or other fundamental changes, to incur liens or to engage in certain other transactions or activities and (ii) financial covenants that stipulate that PHI will maintain a consolidated working capital ratio of at least 2 to 1, a net funded debt to consolidated net worth ratio not greater than 1.5 to 1, a fixed charge coverage ratio of at least 1 to 1 if our short-term investments fall below $150.0 million, and consolidated net worth of at least $500.0 million (with all such terms or amounts as defined in or determined under the revolving credit facility). Borrowings under our revolving credit facility are secured on a first-priority basis by our inventory, spare parts and accounts receivable.

During the fourth quarter of 2017, we amended our revolving credit facility to (i) extend the maturity date of the line of credit from October 1, 2018 to March 7, 2019, (ii) decrease the revolving line of credit from $150.0 million to $130.0 million, (iii) limit extensions of credit under the revolving line of credit to a borrowing base calculated periodically based on specified percentages of the value of eligible accounts and eligible inventory and the value of certain short-term investments, and (iv) effect the fixed-charge coverage ratio waiver noted in the next paragraph. The amendment also amended certain specified interest rates and various covenants, including amendments that changed the fixed charge coverage ratio from 1.10 to 1.00 to 1.00 to 1.00, calculated on a quarterly basis, changed the Company’s required consolidated net worth from $450.0 million to $500.0 million, and permitted debt in an aggregate principal amount not to exceed $5.0 million to accommodate an international working capital line of credit.

During the third quarter of 2016, our revolving credit facility lenders agreed to amend our financial covenants to alleviate concerns about our future ability to remain in compliance with a requirement to maintain a fixed charge coverage ratio of 1 to 1. Specifically, the lenders agreed to test compliance with this ratio requirement only if at the end of any quarter our short-term investments were below $150 million. In the fourth quarter of 2017, these lenders waived our obligation to comply with our amended fixed charge coverage requirement for the fiscal quarters ending on December 31, 2017 and March 31, 2018. As of June 30, 2018, our short-term investments were $60.3 million. Although our short-term investments were less than $150.0 million as of June 30, 2018, we were in compliance with this fixed charge coverage ratio covenant for the second quarter of 2018.

As noted above under “—Liquidity,” our revolving credit facility lenders waived our obligation to comply with our working capital ratio covenant as of March 31, 2018 and June 30, 2018. Although we hope to refinance our revolving credit facility before it matures, we cannot assure you of this.

Accordingly, we cannot assure you that we will be able to comply in future quarters with all of the financial covenants in our revolving credit facility or any other of our then-existing debt agreements. For additional information, see Item 1A of Part II of this report.

At June 30, 2018, we had $122.2 million in borrowings under our revolving credit facility. At the same date in 2017, we had $117.5 million in borrowings under our revolving credit facility. We also have outstanding letters of credit for $7.7 million issued under our revolving credit facility that reduces the amount we can borrow under that facility.

Other -We maintain a separate letter of credit facility described in Note 5 that had $12.1 and $12.4 million letters of credit outstanding at June 30, 2018 and December 31, 2017, respectively.

For additional information on our senior notes and letters of credit, see Note 5.

Contractual Obligations

The table below sets out our contractual obligations as of June 30, 2018, related to our aircraft and other operating lease obligations, revolving credit facility, and 5.25% Senior Notes due 2019. Our obligations under the operating leases are not recorded as liabilities on our balance sheets included in this report. Each contractual obligation included in the table contains various terms, conditions, and covenants that, if violated, accelerate the payment of that obligation under certain specified circumstances. As noted in Note 5, we believe we were in compliance with the covenants applicable to these contractual obligations as of June 30, 2018. As of June 30, 2018, we leased 19 aircraft included in the lease obligations data below.

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			Payment Due by Year
	Total		2018 (1)		2019		2020		2021		2022		Beyond 2022
			Thousands of dollars
Aircraft lease obligations	$	163,430	$	18,111	$	32,264	$	28,425	$	28,290	$	27,262	$	29,078
Other lease obligations	26,359		4,174		5,058		4,195		2,799		1,194		8,940
Debt (2)	622,220		—		622,220		—		—		—		—
Senior notes interest (2)	26,250		13,125		13,125		—		—		—		—
	$	838,259	$	35,410	$	672,667	$	32,620	$	31,089	$	28,456	$	38,018

(1) Payments due during the last six months of 2018 only.

(2) “Debt” reflects the principal amount of debt due under our outstanding senior notes and our revolving credit facility, whereas “senior notes interest” reflects interest accrued under our fixed-rate senior notes only. The actual amount of principal and interest paid in all years may differ from the amounts presented above due to the possible future payment or refinancing of outstanding debt or the issuance of new debt.

The table above reflects only contractual obligations as of June 30, 2018 and excludes, among other things, (i) commitments made thereafter, (ii) options to purchase assets, including those described in the next paragraph, (iii) contingent liabilities, (iv) capital expenditures that we plan, but are not committed, to make, (v) open purchase orders and (vi) other long-term liabilities, such as accruals for litigation or taxes, that are not contractual in nature.

As of June 30, 2018, we had options to purchase aircraft under leases becoming exercisable in 2018 through 2020. The aggregate option purchase prices are $105.9 million in 2018, $129.0 million in 2019, and $22.7 million in 2020. Under current conditions, we believe it is unlikely that we will exercise the 2018 purchase options, unless opportunistic conditions arise.

We plan to fund the above-described contractual obligations and any exercised purchase options through a combination of cash on hand, cash flow from operations, sale-leaseback transactions, refinancing transactions permitted borrowings under any lines of credit then available. See "Liquidity" above.

For additional information on our contemplated capital expenditures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Capital Expenditures” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2017.

We have not paid dividends on either class of our common stock since 1999 and do not expect to pay dividends in the foreseeable future.

Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of changes in the value of financial instruments, or in future net income or cash flows, in response to changing market conditions. 

Our earnings are subject to changes in short-term interest rates due to the variable interest rate payable under our credit facility debt. Based on the $118.2 million weighted average loan balance of our variable-rate debt during the six months ended June 30, 2018, a 10% increase (0.4436%) in interest rates would have reduced our annual pre-tax earnings approximately $0.5 million, but would not have changed the fair market value of this debt.

Our $500.0 million principal amount of outstanding 5.25% Senior Notes due 2019 bear interest at a fixed rate of 5.25% and therefore changes in market interest rates do not affect our interest payment obligations on the notes. The fair market value of our 5.25% Senior Notes will vary as changes occur to general market interest rates, the remaining maturity of the notes, and our creditworthiness. At June 30, 2018, the market value of the notes was approximately $490.6 million, based on quoted market prices. See Note 4.

The interest and other payments we earn and recognize on our investments in money market funds, U.S. Government agencies debt, commercial paper, and corporate bonds and notes are subject to the risk of declines in general market interest rates. 

See Note 4 for additional information.

Item 4.    CONTROLS AND PROCEDURES

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The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed by us in the reports that we file or furnish under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, including to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As previously disclosed, we still intend to extend our above-described internal control oversight and monitoring processes to cover our newly-acquired HNZ operations by the end of 2018.

The effectiveness of our or any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events and the inability to eliminate misconduct completely. As a result, we cannot assure you that our disclosure controls and procedures will detect all errors or fraud.

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PART II – OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

For information regarding legal proceedings, see “Legal Matters” in Note 9 to our financial statements included in this report, incorporated herein by reference.

Item 1A. RISK FACTORS

For information regarding certain risks relating to our operations, any of which could negatively affect our business, financial condition, operating results or prospects, see (i) Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2017 and (ii) the supplemental disclosure below:

The consolidated financial statements included herein contain disclosures that express substantial doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to operate in the future.

The consolidated financial statements included herein have been prepared on a going concern basis, which assumes that we will continue to operate in the future in the normal course of business. Recently, our liquidity and ability to maintain compliance with debt covenants have been negatively impacted by several factors, including the prolonged slowdown in exploration and production activity by the customers in our Oil and Gas segment, by our leverage and by our use of cash equivalents to fund our acquisition of the HNZ Offshore Business in late 2017. As of June 30, 2018, all of our revolving credit indebtedness (which matures on March 7, 2019) and all of our senior note indebtedness (which matures on March 15, 2019) was due within less than one year, which under GAAP necessitated classifying all such indebtedness as current liabilities on our accompanying balance sheet as of such date. Consequently, as of June 30, 2018, we had (i) total current liabilities of $712.3 million, of which $352.0 million was indebtedness classified as long-term debt at December 31, 2017, and (ii) total current assets of $346.3 million. As discussed elsewhere herein, we have also been required on several occasions since 2016 to receive concessions from our revolving credit facility lenders to enable us to remain in compliance with various financial covenants.

As noted elsewhere herein, we believe there are several alternatives we can pursue to refinance our outstanding short-term indebtedness before it becomes due. For a variety of reasons, however, we cannot provide you with any assurances that these efforts will be successful in the near term or at all. Failure to satisfy any of the financial covenants in our revolving credit facility could cause us to suffer an event of default, which could under certain circumstances, among other things, accelerate our obligations under such facility or preclude us from making future borrowings thereunder. Moreover, in some cases a breach of these covenants or any other default under our revolving credit facility may create an event of default under our outstanding senior notes, resulting in the acceleration of our obligation to pay principal, interest and potential penalties under such notes (even though we may otherwise be in compliance with our obligations under those notes and the associated indenture). Our revolving credit facility includes a similar cross-default provision. Thus, an event of default under either our revolving credit facility or senior notes, including one that is technical in nature or otherwise not material, could result in the acceleration of significant indebtedness under the other. If we were to default under our debt obligations, we cannot assure you that we would be able to borrow or otherwise obtain enough cash to repay the accelerated indebtedness. In accordance with applicable accounting standards, these conditions in the aggregate raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements included herein are filed.

For additional information on the above-referenced accounting standards and our plans to refinance our debt, see Note 5 of the financial statements included under Item 1 of Part I of this report and the discussion included in Item 2 of Part I of this report, respectively.

Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the second quarter of 2018, we withheld from employees and canceled 392 shares of our non-voting common stock in connection with the vesting of their stock-based awards to satisfy the related minimum tax withholding obligation. The following table provides additional information about these transactions.

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	Total Number of	Average Price
Period	Shares Purchased	Paid per Share
May 1, 2018 - May 31, 2018	392	$13.14

Item 3.    DEFAULTS UPON SENIOR SECURITIES

None.

Item 4.    MINE SAFETY DISCLOSURES

None.

Item 5.    OTHER INFORMATION

None.

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Item 6.    EXHIBITS

(a)Exhibits

2.1	Arrangement Agreement dated as of October 30, 2017 by and among HNZ Group Inc., the Company, 2075568 Alberta ULC and Don E. Wall (incorporated by reference to Exhibit 2.1 to PHI’s Report on Form 10-Q for the quarter ended September 30, 2017, and filed November 3, 2017).
3.1	(i)	Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3(i) to PHI’s Report on Form 10-Q for the quarterly period ended March 31, 2017, filed May 9, 2017).
	(ii)	Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3(ii) to PHI’s Report on Form 10-Q for the quarterly period ended September 30, 2015, filed November 6, 2015).
4.1	Second Amended and Restated Loan Agreement dated as of September 18, 2013, by and among PHI, Inc., PHI Air Medical, L.L.C, successor to Air Evac Services, Inc., PHI Tech Services, Inc. (formerly Evangeline Airmotive, Inc.), International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 4.1 to PHI’s Report on Form 10-Q for the quarterly period ended September 30, 2013, filed on November 8, 2013).
4.2	First Amendment to Second Amended and Restated Loan Agreement, dated as of March 5, 2014, by and among PHI, Inc., PHI Air Medical, L.L.C., PHI Tech Services, Inc., International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 4.1 to PHI’s Report on Form 8-K filed March 6, 2014).
4.3	Second Amendment to Second Amended and Restated Loan Agreement, dated as of September 26, 2014, by and among PHI, Inc., PHI Air Medical, L.L.C., PHI Tech Services, Inc., International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 4.3 to PHI’s Report on Form 10-Q for the quarterly period ended September 30, 2014, filed November 7, 2014).
4.4	Third Amendment to Second Amended and Restated Loan Agreement, dated as of September 25, 2015, by and among PHI, Inc., PHI Air Medical, L.L.C., PHI Tech Services, Inc., International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 4.4 to PHI’s Report on Form 10-Q for the quarterly period ended September 30, 2015, filed November 6, 2015).
4.5	Fourth Amendment to Second Amended and Restated Loan Agreement, dated as of September 30, 2016, by and among PHI, Inc., PHI Air Medical, L.L.C., PHI Tech Services, Inc., International Helicopter Transport, Inc. and Whitney National Bank. (incorporated by reference to Exhibit 4.5 to PHI’s Report on Form 10-Q for the quarterly period ended September 30, 2016, filed November 7, 2016).
4.6	Fifth Amendment to Second Amended and Restated Loan Agreement, dated as of December 26, 2017, by and among PHI, Inc., PHI Air Medical, L.L.C., PHI Tech Services, Inc., International Helicopter Transport, Inc. and Whitney National Bank (incorporated by reference to Exhibit 4.1 to PHI’s Current Report on Form  8-K filed December 29, 2017).
4.7	Indenture, dated as of March 17, 2014, by and among PHI, Inc., the subsidiary guarantors and U.S. Bank National Association, relating to the issuance by PHI, Inc. of its 5.25% Senior Notes due 2019 (incorporated by reference to Exhibit 4.2 to PHI’s Report on Form 8-K filed March 17, 2014).
4.8	Form of 5.25% Senior Note due 2019 (incorporated by reference to Exhibit 4.2 to PHI’s Report on Form 8-K filed on March 17, 2014).
10.1†	Second Amended and Restated PHI Inc. Long-Term Incentive Plan (incorporated by reference to Appendix A to PHI’s Information Statement on Schedule 14C filed April 12, 2017).
10.2	PHI Commitment Letter by and between the Company and Alberta ULC 2075568

51

31.1*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Al A. Gonsoulin, Chairman and Chief Executive Officer.
31.2*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Trudy P. McConnaughhay, Chief Financial Officer.
32.1*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Al A. Gonsoulin, Chairman and Chief Executive Officer.
32.2*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Trudy P. McConnaughhay, Chief Financial Officer.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith

† Indicates management contract or compensatory plan or arrangement

52

SIGNATURES

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

	PHI, Inc.
August 9, 2018	By:	/s/ Al A. Gonsoulin
		Al A. Gonsoulin
		Chairman and Chief Executive Officer
August 9, 2018	By:	/s/ Trudy P. McConnaughhay
		Trudy P. McConnaughhay
		Chief Financial Officer

53

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER’S

CERTIFICATION UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Al A. Gonsoulin, Chairman and Chief Executive Officer, certify that:

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

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

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2018

By: /s/ Al A. Gonsoulin

Al A. Gonsoulin

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER’S

CERTIFICATION UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Trudy McConnaughhay, Chief Financial Officer, certify that:

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

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

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2018

By: /s/ Trudy McConnaughhay

Trudy McConnaughhay

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

Al A. Gonsoulin, Chairman and Chief Executive Officer of PHI, Inc. (the “Company”), hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. the Quarterly Report on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2018

By:/s/ Al A. Gonsoulin

Al A. Gonsoulin

Chairman and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

Trudy McConnaughhay, Chief Financial Officer of PHI, Inc. (the “Company”), hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of her knowledge:

1. the Quarterly Report on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2018

By:/s/ Trudy McConnaughhay

Trudy McConnaughhay

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 06, 2018
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Trading Symbol	PHII
Entity Registrant Name	PHI INC
Entity Central Index Key	0000350403
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Voting Common Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		2,905,757
Non-Voting Common Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		12,905,525

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets:
Cash	$ 5,852	$ 8,770
Short-term investments	60,317	64,237
Accounts receivable – net
Trade	173,324	168,153
Other	21,008	17,826
Inventories of spare parts – net	77,747	80,881
Prepaid expenses	13,150	11,475
Income taxes receivable	623	1,271
Total current assets	352,021	352,613
Property and equipment – net	933,583	946,765
Restricted cash and investments	12,076	12,396
Other assets	9,605	8,741
Deferred income taxes	3,237	3,309
Goodwill	61,299	61,299
Intangibles	15,946	16,723
Total assets	1,387,767	1,401,846
Current Liabilities:
Revolving Credit Facility	122,220	0
Senior Notes issued March 17, 2014, net of debt issuance costs of $1,229	498,771	0
Accounts payable	50,645	37,186
Accrued and other current liabilities	40,626	41,850
Total current liabilities	712,262	79,036
Long-term debt:
Revolving credit facility	0	117,500
Senior Notes issued March 17, 2014, net of debt issuance costs of $1,506	0	498,494
Deferred income taxes	78,605	86,005
Other long-term liabilities	5,335	8,157
Commitments and contingencies (Note 9)
Shareholders’ Equity:
Additional paid-in capital	310,433	308,353
Accumulated other comprehensive income (loss)	624	(280)
Retained earnings	278,926	303,001
Total shareholders’ equity	591,565	612,654
Total liabilities and shareholders’ equity	1,387,767	1,401,846
Voting Common Stock [Member]
Shareholders’ Equity:
Common stock	291	291
Non-Voting Common Stock [Member]
Shareholders’ Equity:
Common stock	1,291	1,289
Total shareholders’ equity	$ 1,291	$ 1,289

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Debt issuance costs	$ 1,229	$ 1,506
Voting Common Stock [Member]
Common stock, par value (in USD per share)	$ 0.10	$ 0.10
Common stock, shares authorized (shares)	12,500,000	12,500,000
Common stock, shares issued (shares)	2,905,757	2,905,757
Common stock, shares outstanding (shares)	2,905,757	2,905,757
Non-Voting Common Stock [Member]
Common stock, par value (in USD per share)	$ 0.10	$ 0.10
Common stock, shares authorized (shares)	37,500,000	37,500,000
Common stock, shares issued (shares)	12,905,525	12,897,614
Common stock, shares outstanding (shares)	12,905,525	12,897,614

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Operating revenues, net	$ 169,243	$ 146,424	$ 329,607	$ 281,042
Expenses:
Direct expenses	155,083	126,951	311,309	263,464
Selling, general and administrative expenses	14,485	14,247	29,944	27,290
Total operating expenses	169,568	141,198	341,253	290,754
(Gain) loss on disposal of assets	(171)	7	708	7
Equity in (gain) loss of unconsolidated affiliate, net	(81)	991	(45)	1,994
Operating (loss) income	(73)	4,228	(12,309)	(11,713)
Interest expense	8,340	8,083	16,537	16,278
Other loss (income) – net	364	(705)	1,404	(1,768)
Total expenses	8,704	7,378	17,941	14,510
Loss before income taxes	(8,777)	(3,150)	(30,250)	(26,223)
Income tax (benefit) expense	(1,684)	123	(6,175)	(7,702)
Net loss	$ (7,093)	$ (3,273)	$ (24,075)	$ (18,521)
Weighted average shares outstanding:
Basic (shares)	15,806	15,716	15,806	15,716
Diluted (shares)	15,806	15,716	15,806	15,716
Net loss per share:
Basic (in USD per share)	$ (0.45)	$ (0.21)	$ (1.52)	$ (1.18)
Diluted (in USD per share)	$ (0.45)	$ (0.21)	$ (1.52)	$ (1.18)

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net loss	$ (7,093)	$ (3,273)	$ (24,075)	$ (18,521)
Unrealized gain on short-term investments	(107)	167	363	329
Currency translation adjustments	160	0	627	0
Changes in pension plan assets and benefit obligations	7	23	(1)	22
Tax effect of the above-listed adjustments	100	(68)	(85)	(127)
Total comprehensive loss	$ (6,933)	$ (3,151)	$ (23,171)	$ (18,297)

XML

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Non-Voting Common Stock [Member]	Voting Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Retained Earnings [Member]
Balance at Dec. 31, 2016	$ 599,778	$ 1,278	$ 291	$ 304,246	$ (478)	$ 294,441
Balance, Shares at Dec. 31, 2016		12,779	2,906
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(18,521)					(18,521)
Unrealized gain on short-term investments	210				210
Changes in pension plan assets and benefit obligations	14				14
Amortization of unearned stock-based compensation	1,816			1,816
Issuance of non-voting common stock (upon vesting of restricted stock units)	13	$ 13
Issuance of non-voting common stock (upon vesting of restricted stock units), shares		134
Cancellation of restricted non-voting stock units for tax withholdings on vested shares	(277)	$ (2)		(275)
Cancellation of restricted non-voting stock units for tax withholdings on vested shares, Shares		(21)
Retirement of treasury stock	1,028					1,028
Balance at Jun. 30, 2017	584,061	$ 1,289	$ 291	305,787	(254)	276,948
Balance, Shares at Jun. 30, 2017		12,892	2,906
Balance at Dec. 31, 2017	612,654	$ 1,289	$ 291	308,353	(280)	303,001
Balance, Shares at Dec. 31, 2017		12,897	2,906
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(24,075)					(24,075)
Unrealized gain on short-term investments	278				278
Changes in pension plan assets and benefit obligations	(1)				(1)
Amortization of unearned stock-based compensation	2,132			2,132
Currency translation adjustment	627				627
Issuance of non-voting common stock (upon vesting of restricted stock units)	0	$ 2		(2)
Issuance of non-voting common stock (upon vesting of restricted stock units), shares		9
Cancellation of restricted non-voting stock units for tax withholdings on vested shares	(50)			(50)
Balance at Jun. 30, 2018	$ 591,565	$ 1,291	$ 291	$ 310,433	$ 624	$ 278,926
Balance, Shares at Jun. 30, 2018		12,906	2,906

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities:
Net loss	$ (24,075)	$ (18,521)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	38,598	34,011
Deferred income taxes	(7,446)	(7,791)
Loss (gain) on asset dispositions	708	7
Equity in loss of unconsolidated affiliate, net	(45)	1,994
Inventory valuation reserves	3,308	2,214
Changes in operating assets and liabilities	(5,638)	(19,863)
Net cash provided by (used in) operating activities	5,410	(7,949)
Investing activities:
Purchase of property and equipment	(18,098)	(43,892)
Proceeds from asset dispositions	1,453	17
Purchase of short-term investments	(260,996)	(134,518)
Proceeds from sale of short-term investments	264,918	187,217
Payment of deposits on aircraft	0	(110)
Loan to unconsolidated affiliate	(274)	0
Net cash (used in) provided by investing activities	(12,997)	8,714
Financing activities:
Proceeds from line of credit	34,295	66,525
Payments on line of credit	(29,575)	(67,300)
Repurchase of common stock	(51)	(263)
Net cash provided by (used in) financing activities	4,669	(1,038)
Decrease in cash	(2,918)	(273)
Cash, beginning of period	8,770	2,596
Cash, end of period	5,852	2,323
Cash paid during the period for:
Interest	15,755	15,250
Income taxes	813	1,131
Noncash investing activities:
Other current liabilities and accrued payables related to purchase of property and equipment	$ 272	$ 15

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of PHI, Inc. and its subsidiaries (“PHI” or the “Company” or “we” or “our”). In the opinion of management, these condensed consolidated financial statements reflect all adjustments, consisting of only normal, recurring adjustments, necessary to present fairly the financial results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Our financial results, particularly as they relate to our Oil and Gas segment, are influenced by seasonal fluctuations as discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. For this and other reasons, the results of operations for interim periods are not necessarily indicative of the operating results that may be expected for a full fiscal year.

Going Concern - The financial statements accompanying this Quarterly Report have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), which contemplates our continuation as a going concern. For the reasons described in Note 5, the classification of our indebtedness as current liabilities due within one year and other conditions raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements accompanying this Quarterly Report are filed.

Recently Adopted Accounting Pronouncements

In 2014, Financial Accounting Standard Board ("the FASB") issued ASC 606, Revenue from Contracts with Customers (“ASC 606”), replacing the existing accounting standard and industry specific guidance for revenue recognition with a five-step model for recognizing and measuring revenue from contracts with customers. The underlying principle of the new standard is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 became effective on January 1, 2018 and the Company adopted it using the modified retrospective method applied to open contracts and only to the version of the contracts in effect as of January 1, 2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with the Company’s historical accounting.  There was no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized.

In general, we recognize revenue when a service or good is sold to a customer and there is a contract. At contract inception, we assess the goods and services promised in our contracts with customers and identify all performance obligations for each distinct promise that transfers a good or service (or bundle of goods or services) to the customer. To identify the performance obligations, we consider all goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. Revenue is recognized when control of the identified distinct goods or services has been transferred to the customer, the transaction price has been determined and allocated to the performed performance obligations and we have determined that collection has occurred or is probable of occurring.

The Company measures revenue as the amount of consideration we expect to receive in exchange of the services provided. Taxes collected from customers and remitted to governmental authorities and revenues are reported on a net basis in the Company’s financial statements. Thus, the Company excludes taxes imposed on the customer and collected on behalf of governmental agencies to be remitted to these agencies from the transaction price in determining the revenue related to contracts with a customer.

Revenue Recognition Oil & Gas - The Company provides helicopter services to oil and gas customers operating in the Gulf of Mexico and a number of foreign countries. Revenues are recognized when performance obligations are satisfied over time in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered.  

Revenue Recognition Air Medical - The Company provides helicopter services to hospitals and emergency service providers in several U.S. states, and individuals, in which case the Company is paid by either a commercial insurance company, federal or state agency, or the patient. Our Air Medical segment operates primarily under the independent provider model and, to a lesser extent, under the traditional provider model. Revenues related to the independent provider model services are recorded in the period in which we satisfy our performance obligations under contracts by providing our services to our customers based upon established billing rates net of contractual allowances under agreements with third party payors and net of uncompensated care allowances. These amounts are due from patients, third-party payors (including health insurers and government programs), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. Generally, the Company bills the patients and third-party payors several days after the services are performed. Revenues generated under the traditional provider model are recognized as performance obligations are satisfied over time in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled in exchange for services rendered.

Performance Obligations Oil & Gas - A performance obligation arises under contracts with customers to render services and is the unit of account under ASC 606.  Operating revenue from our Oil and Gas segment is derived mainly from fixed-term contracts with our customers, a substantial portion of which are competitively bid. A small portion of our Oil and Gas segment revenue is derived from providing services on an "ad-hoc" basis. Our fixed-term contracts typically have original terms of one year to seven years (subject to provisions permitting early termination by the customers), with payment in U.S. dollars. The Company accounts for services rendered separately if they are distinct and the services are separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered on its own or with other resources that are readily available to the customer.  A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.  Within this contract type for helicopter services, we determined that each contract has a single distinct performance obligation. These services include a fixed monthly rate for a particular model of aircraft, and flight hour services, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. We also provide services to clients on an “ad hoc” basis, which usually entails a shorter contract notice period and duration. The charges for ad hoc services are based on an hourly rate or a daily or monthly fixed fee plus additional fees for each hour flown. The nature of our variable charges within our flight services contracts are not effective until a customer-initiated flight order and the actual hours flown are determined; therefore, the associated flight revenue generally cannot be reasonably and reliably estimated before hand. A contract’s standalone selling prices are determined based upon the prices that the Company charges for its services rendered.  The majority of the Company’s revenue is recognized as performance obligations are satisfied over time, by measuring progress towards satisfying the contracted services in a manner that best depicts the transfer of services to the customer, which is generally represented by a period of 30 days or less.  The Company typically invoices customers on a monthly basis with the term between invoicing and when the payment is due typically between 30 and 60 days.

Performance Obligations Air Medical - Performance obligations are determined based upon the nature of the services provided. Under the independent provider model, we measure the performance obligation from the moment the patient is loaded into the aircraft until it reaches its destination. Under this model, we have no fixed revenue stream and compete for transport referrals on a daily basis with other independent operators in the area. As an independent provider, we bill for our services on the basis of a flat rate plus a variable charge per patient-loaded mile, regardless of aircraft model, and are typically compensated by private insurance, Medicaid or Medicare, or directly by transported patients who self-pay. We recognize revenues for performance obligations satisfied at a point in time, which generally relate to patients receiving air medical services when: (1) services are provided; and (2) we do not believe the patient requires additional services. For the independent provider model, we determine the transaction price based upon gross charges for services provided reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients in accordance with Company policy, and/or implicit price concessions provided to uninsured patients. We determine estimates of contractual adjustments and discounts based upon contractual agreements, our discount policy, and historical experience. We determine our estimate of implicit price concessions based upon our historical collection experience with these classes of patients using a portfolio approach as a practical expedient to account for patient contracts as collective groups, rather than individually. The financial statement effects of using this practical expedient are not materially different from an individual contract approach.

Under the traditional provider model, we contract directly with the customer to provide their transportation services, with the contracts typically awarded or renewed through competitive bidding. As a traditional provider, we typically bill a fixed monthly rate for aircraft availability and an hourly rate for flight time. For each of these types of helicopter services, we have determined that each has a single distinct performance obligation. Traditional provider models services include fixed monthly rate for a particular model of aircraft, and flight hour services, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. The variable charges within the contracts are not effective until the customer initiates a flight order and the actual hours flown are determined; therefore, the associated revenue generally cannot be reasonably and reliably estimated beforehand. For the traditional provider model, we determine the transaction price based upon standard charges for goods and services provided.

As further described in Note 3, independent provider revenues are recorded net of contractual allowances under agreements with third party payors and estimated uncompensated care at the time the services are provided. Contractual allowances and uncompensated care are estimated based on historical collection experience by payor category (consisting mainly of private insurance, Medicaid, Medicare, and self-pay). The allowance percentages calculated are applied to the payor categories, and the necessary adjustments are made to the revenue allowance. Agreements with third-party payors typically provide for payments at amounts less than established charges.

As of June 30, 3018 and December 31, 2017, receivables related to Oil and Gas segment were $110.1 million and $106.8 million, Air Medical segment were $82.7 million and $74.4 million and Technical Services segment were $1.5 million and $4.8 million, respectively. Contract assets and contract liabilities were immaterial as of June 30, 2018. Our contracts typically include termination clauses that allow both parties to terminate existing contracts with a 30 to 180 day notice period.

The Company generally has a right to consideration in an amount that corresponds directly with the value to the customer of the entity's performance completed to date and may recognize revenue in the amount to which the entity has a right to invoice. We have elected to use the invoice practical expedient for revenue recognized when performance obligations are satisfied over time. In addition, payment for goods and services rendered is typically due in the subsequent month following satisfaction of the Company’s performance obligation.

The Technical Services segment provides helicopter flight services and helicopter repair and overhaul services for existing flight operations customers that own their own aircraft. Under this segment, the Company periodically provides certain services to governmental customers, including the Company’s agreement to operate six aircraft for the National Science Foundation in Antarctica. Under this segment, we also offer certain software as a service to our Oil and Gas customers. Revenues are recognized when performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered.   For these helicopter services, we determined that each has a single distinct performance obligation.

The following table presents the Company’s revenues by segment disaggregated by type (in thousands):

	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Service Revenue
Oil & Gas	$	97,068	$	74,668	$	192,702	$	146,399
Air Medical	67,151		67,222		124,139		122,559
Technical Services	5,024		4,534		12,766		12,084
Total Services	$	169,243	$	146,424	$	329,607	$	281,042
Air Medical Revenue
Traditional provider model	$	12,085	$	12,140	$	23,956	$	23,610
Independent provider model	55,066		55,082		100,183		98,949
Total Air Medicals Revenues	$	67,151	$	67,222	$	124,139	$	122,559

On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with the carrying amount as part of Step 2 of the goodwill impairment test. Under the new standard, the goodwill impairment loss will be measured as the excess of a reporting unit's carrying amount over its fair value, not exceeding the total amount of goodwill allocated to that reporting unit, which may increase the frequency of goodwill impairment charges if a future goodwill impairment test does not pass the Step 1 evaluation. ASU 2017-04 is effective prospectively for periods beginning on or after December 15, 2019, with early adoption permitted. The Company adopted ASU 2017-04 effective January 1, 2018. The Company will perform goodwill impairment testing under the new standard annually as of October 1st or when events or changes in circumstances indicate that a potential impairment exist.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent in a classified balance sheet. PHI, Inc. adopted this ASU in the fourth quarter of 2017 on a prospective basis. Beginning with the December 31, 2017 balances, all deferred taxes were classified as non-current. Periods prior to December 31, 2017 were not retrospectively adjusted.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which will require an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company adopted ASU 2016-16 effective January 1, 2018 with no material impact to the condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business and requires that an entity apply certain criteria in order to determine when a set of assets and activities qualifies as a business. The adoption of this standard is expected to result in fewer acquisitions of properties qualifying as acquisitions of businesses and, accordingly, acquisition costs for those acquisitions that do not qualify as businesses will be capitalized rather than expensed. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and should be applied on a prospective basis. The Company adopted ASU 2017-01 effective January 1, 2018 with no material impact to the condensed consolidated financial statements.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted which significantly reformed the U.S. Internal Revenue Code (the “Code”). The Tax Act, among other things, reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. Following the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin 118 - "Income Tax Accounting Implications of the Tax Cuts and Jobs Act" (SAB 118), which provides for a measurement period of up to one year from the enactment date to complete accounting under GAAP for the tax effects of the legislation. As of December 31, 2017, the Company had not completed its accounting for the tax effects of the Tax Act. However, the Company remeasured its net deferred tax liability at December 31, 2017 and provisionally recognized a net benefit of $49.2 million in its consolidated statement of operations for the year ended December 31, 2017.  As of June 30, 2018, the Company has not completed its accounting for the tax effects of the Tax Act. The Company is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to changes to its current provisional estimates.  The Company’s estimates may be affected by a wide variety of factors, including additional regulatory guidance issued with respect to the Tax Act.  Any adjustments to the provisional amounts will be recognized as a component of income tax in the period in which the adjustments are determined. We expect to complete the accounting by the time we file our 2017 U.S. corporate income tax return in the 3rd quarter of 2018.

New Accounting Pronouncements - In February 2016, the FASB issued ASU 2016-02, Leases, which replaces the existing guidance on leasing transactions in ASC 840 to require recognition of the assets and liabilities for the rights and obligations created by those leases on the balance sheet. The Company has formed an implementation team that is inventorying leases under ASC 840 and contracts which may be leases under ASC 842, and evaluating the impact that adoption of this guidance will have on the Company’s financial statements, which includes monitoring industry specific developments including recent exposure drafts issued by the FASB. Based on our lease portfolio as of June 30, 2018, we expect the adoption of this standard will result in a material change to our consolidated assets and liabilities. We plan to adopt this standard beginning January 1, 2019.

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Investments

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Investments

INVESTMENTS

We classify all of our short-term investments as available-for-sale. We carry these at fair value and report unrealized gains and losses, net of taxes, in Accumulated other comprehensive loss, which is a separate component of shareholders’ equity in our Condensed Consolidated Balance Sheets. These unrealized gains and losses are also reflected in our Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Shareholders’ Equity. We determine cost, gains, and losses using the specific identification method.

Investments consisted of the following as of June 30, 2018:

	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
	(Thousands of dollars)
Investments:
Money market mutual funds	$	72,393	$	—	$	—	$	72,393
Deferred compensation plan assets included in other assets	823		—		—		823
Total	$	73,216	$	—	$	—	$	73,216

Investments consisted of the following as of December 31, 2017:

	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
	(Thousands of dollars)
Investments:
Money market mutual funds	$	5,601	$	—	$	—		$	5,601
U.S. government agencies	7,501		—		(34		)	7,467
Corporate bonds and notes	63,880		—		(330		)	63,550
Subtotal	76,982		—		(364		)	76,618
Deferred compensation plan assets included in other assets	2,685		—		—			2,685
Total	$	79,667	$	—	$	(364	)	$	79,303

At June 30, 2018 and December 31, 2017, we classified $12.1 million and $12.4 million of our aggregate investments as long-term investments and recorded them in our Condensed Consolidated Balance Sheets as restricted cash and investments, as they are securing outstanding letters of credit and a bond relating to foreign operations with maturities beyond one year.

The following table presents the cost and fair value of our debt investments based on maturities as of:

	June 30, 2018				December 31, 2017
	Amortized Costs		Fair Value		Amortized Costs		Fair Value
	(Thousands of dollars)
Due in one year or less	$	—	$	—	$	31,348	$	31,254
Due within two years	—		—		40,032		39,763
Total	$	—	$	—	$	71,380	$	71,017

The following table presents the average coupon rate percentage and the average days to maturity of our debt investments as of:

	June 30, 2018		December 31, 2017
	Average Coupon Rate (%)	Average Days To Maturity	Average Coupon Rate (%)	Average Days To Maturity
U.S. Government agencies	—	0	1.370	370
Corporate bonds and notes	—	0	1.766	392

The following table presents the fair value and unrealized losses related to our investments that have been in a continuous unrealized loss position for less than twelve months as of:

	June 30, 2018				December 31, 2017
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Thousands of dollars)
U.S. Government agencies	$	—	$	—	$	5,472	$	(28	)
Corporate bonds and notes	—		—		44,069		(271		)
Total	$	—	$	—	$	49,541	$	(299	)

The following table presents the fair value and unrealized losses related to our investments that have been in a continuous unrealized loss position for more than twelve months as of: 

	June 30, 2018				December 31, 2017
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Thousands of dollars)
U.S. Government agencies	$	—	$	—	$	1,994	$	(6	)
Corporate bonds and notes	—		—		19,482		(59		)
Total	$	—	$	—	$	21,476	$	(65	)

From time to time over the periods covered in our financial statements included herein (and as illustrated in the foregoing tables), our investments have experienced net unrealized losses. We consider these declines in market value to be due to customary market fluctuations, and we typically do not plan to sell these investments prior to maturity. For these reasons, we do not consider any of our investments to be other than temporarily impaired at June 30, 2018 or December 31, 2017. For additional information regarding our criteria for making these assessments, see Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017.

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Valuation Accounts

6 Months Ended

Jun. 30, 2018

Revenue Recognition And Valuation Accounts [Abstract]

Revenue Recognition and Valuation Accounts

VALUATION ACCOUNTS

We establish the amount of our allowance for doubtful accounts based upon factors relating to the credit risk of specific customers, current market conditions, and other information. Our allowance for doubtful accounts was approximately $7.3 million and $7.2 million at June 30, 2018, and December 31, 2017, respectively.

Revenues related to flights generated by our Air Medical segment are recorded net of contractual allowances under agreements with third party payors and estimated uncompensated care when the services are provided. The allowance for contractual discounts was $118.4 million and $117.8 million as of June 30, 2018 and December 31, 2017, respectively. The allowance for uncompensated care was $59.6 million and $52.5 million as of June 30, 2018 and December 31, 2017, respectively.

Included in the allowance for uncompensated care listed above is the value of services to patients who are unable to pay when it is determined that they qualify for charity care. The value of these services was $1.7 million and $2.0 million for the quarters ended June 30, 2018 and 2017, respectively. The value of these services was $3.3 million and $4.4 million for the six months ended June 30, 2018 and 2017, respectively. The estimated cost of providing charity services was $0.4 million for the quarters ended June 30, 2018 and 2017. The estimated cost of providing charity services was $0.8 million and $1.0 million for the six months ended June 30, 2018 and 2017, respectively. The estimated costs of providing charity services are based on a calculation that applies a ratio of costs to the charges for uncompensated charity care. The ratio of costs to charges is based on our Air Medical segment’s total expenses divided by gross patient service revenue.

The allowance for contractual discounts and estimated uncompensated care (expressed as a percentage of gross segment accounts receivable) as of the dates listed below was as follows: 

	June 30, 2018	December 31, 2017
Allowance for Contractual Discounts	50%	53%
Allowance for Uncompensated Care	25%	24%

We have also established valuation reserves related to obsolete and slow-moving spare parts inventory. The inventory valuation reserves were $22.7 million and $20.9 million at June 30, 2018 and December 31, 2017, respectively.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Accounting standards require that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following table summarizes the valuation of our investments and financial instruments by the above pricing levels as of the valuation dates listed:

			June 30, 2018
	Total		(Level 1)		(Level 2)
	(Thousands of dollars)
Investments:
Money market mutual funds	$	72,393	$	72,393	$	—
Deferred compensation plan assets	823		823		—
Total	$	73,216	$	73,216	$	—
			December 31, 2017
	Total		(Level 1)		(Level 2)
	(Thousands of dollars)
Investments:
Money market mutual funds	$	5,601	$	5,601	$	—
U.S. government agencies	7,467		—		7,467
Corporate bonds and notes	63,550		—		63,550
	76,618		5,601		71,017
Deferred compensation plan assets	2,685		2,685		—
Total	$	79,303	$	8,286	$	71,017

We hold our short-term investments in an investment fund consisting of high quality money market instruments of governmental and private issuers, which is classified as a short-term investment. Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets. These items are traded with sufficient frequency and volume to provide pricing on an ongoing basis. The fair values of the investments in these funds are based on observable market prices, and therefore, have been categorized in Level 1 in the fair value hierarchy. Level 2 inputs reflect quoted prices for identical assets or liabilities that are not actively traded. These items may not be traded daily; examples include commercial paper, corporate bonds and U.S. government agencies debt. There have been no reclassifications of assets between Level 1 and Level 2 investments during the periods covered by the financial statements included in this report. We hold no Level 3 investments. Investments reflected on our balance sheets as Other Assets, which we hold to fund liabilities under our Officers’ Deferred Compensation Plan, consist mainly of multiple investment funds that are highly liquid and diversified.

Cash, accounts receivable, accounts payable and accrued liabilities, and our revolving credit facility debt all had fair values approximating their carrying amounts at June 30, 2018 and December 31, 2017. Our determination of the estimated fair value of our 5.25% Senior Notes due 2019 is derived using Level 2 inputs, including quoted market indications of similar publicly-traded debt. The fair value of our 5.25% Senior Notes due 2019, based on quoted market prices, was $490.0 million and $499.2 million at June 30, 2018 and December 31, 2017, respectively.

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Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

DEBT

Listed below is information regarding our indebtedness, all of which was classified as short-term debt on our balance sheet as of June 30, 2018 and as long-term debt on our balance sheet as of December 31, 2017:

	June 30, 2018				December 31, 2017
	Principal		Unamortized Debt Issuance Debt Cost		Principal		Unamortized Debt Issuance Debt Cost
	(Thousands of dollars)
Senior Notes issued March 17, 2014, interest only payable semi-annually at 5.25%, maturing March 15, 2019	$	500,000	$	1,229	$	500,000	$	1,506
Revolving Credit Facility due March 7, 2019 with a group of commercial banks, interest payable at variable rates	122,220		—		117,500		—
Total indebtedness	$	622,220	$	1,229	$	617,500	$	1,506

Senior Notes - Our 5.25% Senior Notes (the “2019 Notes”) will mature on March 15, 2019, are unconditionally guaranteed on a senior basis by each of PHI, Inc.’s wholly-owned domestic subsidiaries, and are the general, unsecured obligations of PHI, Inc. and the guarantors. Interest is payable semi-annually on March 15 and September 15 of each year. PHI has the option to redeem some or all of the 2019 Notes at any time on or after March 15, 2018 at par plus accrued interest. The indenture governing the 2019 Notes (the “2019 Indenture”) contains, among other things, certain restrictive covenants, including limitations on incurring indebtedness, creating liens, selling assets and entering into certain transactions with affiliates. The covenants also limit PHI’s ability to, among other things, pay cash dividends on common stock, repurchase or redeem common or preferred equity, prepay subordinated debt and make certain investments. Upon the occurrence of a “Change in Control Repurchase Event” (as defined in the 2019 Indenture), PHI will be required, unless it has previously elected to redeem the 2019 Notes as described above, to make an offer to purchase the 2019 Notes for a cash price equal to 101% of their principal amount.

Revolving Credit Facility – Our amended and restated revolving credit facility (our “revolving credit facility”) matures on March 7, 2019. Under this facility, we can borrow up to $130.0 million at floating interest rates based on either the London Interbank Offered Rate plus 275 basis points or the prime rate (each as defined in this facility), at our option. This facility includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under this facility is conditioned upon our continued compliance with such covenants, including, among others, (i) covenants that restrict our ability to engage in certain asset sales, mergers or other fundamental changes, to incur liens or to engage in certain other transactions or activities and (ii) financial covenants that stipulate that PHI will maintain a consolidated working capital ratio of at least 2 to 1, a net funded debt to consolidated net worth ratio not greater than 1.5 to 1, a fixed charge coverage ratio of at least 1 to 1 if our short term investments fall below $150.0 million, and consolidated net worth of at least $500.0 million (with all such terms or amounts as defined in or determined under this facility). Borrowings under our revolving credit facility are secured on a first-priority basis by our inventory, spare parts and accounts receivable.

Effective as of June 30, 2018, we once again received a waiver of our consolidated working capital ratio for the quarter then ended. As of June 30, 2018, we were in compliance with the remaining covenants. For information about other recent amendments or waivers relating to our revolving credit facility, see "Management Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

Letter of Credit Facility - We maintain a separate letter of credit facility that had $12.1 million in letters of credit outstanding at June 30, 2018 and $12.4 million at December 31, 2017. We have letters of credit securing our workers compensation policies and a traditional provider contract.

We also have outstanding a letters of credit for $7.7 million issued under our $130.0 million credit facility that reduces the amount we can borrow under that facility. The letters of credit were issued to guaranty our performance under an international contract that was awarded in late 2017 and an air medical license.

Other - PHI, Inc. has cash management arrangements with certain of its principal subsidiaries, in which substantial portions of the subsidiaries’ cash is regularly advanced to PHI, Inc. Although PHI, Inc. periodically repays these advances to fund the subsidiaries’ cash requirements throughout the year, at any given point in time PHI, Inc. may owe a substantial sum to its subsidiaries under these advances, which, in accordance with GAAP, are eliminated in consolidation and therefore not recognized on our consolidated balance sheets. For additional information, see Note 15.

Liquidity - Our revolving credit facility indebtedness matures on March 7, 2019 and our outstanding senior notes mature on March 15, 2019. As such, all of our outstanding revolving credit and senior note indebtedness is now due within less than one year. Beginning with our consolidated financial statements as of and for the quarter ended March 31, 2018, we have been required to classify under GAAP all such indebtedness as current liabilities on our consolidated balance sheets. This in turn has caused our current liabilities to exceed our current assets, and has necessitated us receiving two successive short-term waivers of the working capital ratio covenant in our revolving credit facility.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (the "Standard"). Under the Standard, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the entity’s financial statements are issued. Under the Standard, substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within this one year period. This evaluation initially must be undertaken without considering the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this initial determination, management must evaluate whether the mitigating effect of its plans sufficiently alleviates substantial doubt about an entity’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered under the Standard if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within the one year period. Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the financial statements are issued. PHI’s accompanying financial statements have been prepared in conformity with GAAP, which contemplates PHI’s continuation as a going concern.

Based on our discussions to date with our advisors and current market conditions, we plan to pursue several alternatives to refinance our short-term indebtedness. Nonetheless, because our plans to refinance our debt have not been finalized, and therefore not within our control, these plans cannot be considered probable. Consequently, in accordance with the Standard, these conditions in the aggregate raise substantial doubt about our ability to continue as a going concern within one year after the date the accompanying financial statements are filed. For additional information about our prior and current refinancing plans, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”

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Earnings Per Share

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

The components of basic and diluted earnings per share for the quarter and six months ended June 30, 2018 and 2017 are as follows: 

	Quarter Ended    June 30,		Six Months Ended   June 30,
	2018	2017	2018	2017
	(Thousands of dollars)
Weighted average outstanding shares of common stock, basic	15,806	15,716	15,806	15,716
Dilutive effect of unvested restricted stock units	—	—	—	—
Weighted average outstanding shares of common stock, diluted (1)	15,806	15,716	15,806	15,716

(1) For the quarter ended June 30, 2018 and 2017, 425,317 and 438,812 unvested restricted stock units were excluded from the weighted average outstanding shares of common stock, diluted, respectively, as they were anti-dilutive to earnings per share. For the six months ended June 30, 2018 and 2017, 14,258 and 438,812 unvested restricted stock units were excluded from the weighted average outstanding shares of common stock, diluted, respectively as they were anti-dilutive to earnings per share.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

We recognize the cost of employee compensation received in the form of equity instruments based on the grant date fair value of those awards. The table below sets forth the total amount of stock-based compensation expense for the quarter and six months ended June 30, 2018 and 2017. 

	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
	(Thousands of dollars)
Stock-based compensation expense:
Time-based restricted stock units	$	435	$	556	$	1,077	$	1,111
Performance-based restricted stock units	378		705		1,055		705
Total stock-based compensation expense	$	813	$	1,261	$	2,132	$	1,816

During the quarter and six months ended June 30, 2018, 321,831 time-based restricted units and 448,012 performance-based restricted units were awarded to managerial employees.

During the quarter and six months ended June 30, 2017, 417,266 and 447,477 time-based restricted units, respectively, were awarded to managerial employees and 365,539 performance-based restricted units were awarded to managerial employees.

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Asset Disposals

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Asset Disposals

ASSET DISPOSALS

During the first quarter of 2018, we disposed of one light aircraft previously utilized in the Air Medical segment and donated to a charitable organization one aircraft previously used in our Oil and Gas segment. During the second quarter of 2018, we disposed of one medium and one light aircraft previously utilized in the Oil & Gas segment. These aircraft no longer met our strategic needs. Cash proceeds totaled $1.5 million, resulting in a $0.7 million loss on the disposal of these assets.

There were no sales or disposals of aircraft during the first quarter of 2017. During the second quarter of 2017, we disposed of five medium aircraft and related parts inventory utilized in the Oil and Gas segment. These aircraft no longer met our strategic needs.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Commitments – We currently have no aircraft purchase commitments.

Total aircraft deposits of $0.5 million were included in Other Assets as of June 30, 2018. This amount represents a deposit on a future lease buyout option. In the event we do not exercise the buyout option, the deposit will be applied against lease payments.

As of June 30, 2018, we had options to purchase aircraft under leases, with such purchase options becoming exercisable in 2018 through 2020. The aggregate option purchase prices are $105.9 million in 2018, $129.0 million in 2019, and $22.7 million in 2020. Under current conditions, we believe it is unlikely that we will exercise the 2018 purchase options, unless opportunistic conditions arise.

Environmental Matters – We have recorded an estimated liability of $0.15 million as of June 30, 2018 for environmental response costs. Previously, we conducted environmental surveys of our former Lafayette Facility located at the Lafayette Regional Airport, which we vacated in 2001, and determined that limited soil and groundwater contamination exist at two parcels of land at the former facility. An Assessment Report for both parcels was submitted in 2003 (and updated in 2006) to the Louisiana Department of Environmental Quality (LDEQ) and the Louisiana Department of Natural Resources (LDNR). Approvals for the Assessment Report were received from the LDEQ and LDNR in 2010 and 2011, respectively. Since that time, we have performed groundwater sampling of the required groundwater monitor well installations at both parcels and submitted these sampling reports to the LDEQ. Pursuant to an agreement with the LDEQ, we provided groundwater sample results semi-annually to the LDEQ for both parcels from 2005 to 2015. LDEQ approved a reduction in the sampling program from semi-annual to annual groundwater monitoring in 2015. Based on our working relationship and agreements with the LDEQ, and the results of ongoing former facility parcel monitoring, we believe that ultimate remediation costs for the subject parcels will not be material to our consolidated financial position, operations or cash flows.

Legal Matters – From time to time, we are involved in various legal actions incidental to our business, including actions relating to employee claims, medical malpractice claims, tax issues, grievance hearings before labor regulatory agencies, and miscellaneous third party tort actions. The outcome of these proceedings is not predictable. However, based on current circumstances, we do not believe that the ultimate resolution of our presently pending proceedings, after considering available defenses and any insurance coverage or indemnification rights, will have a material adverse effect on our financial position, results of operations or cash flows.

Operating Leases – We lease certain aircraft, facilities, and equipment used in our operations. The related lease agreements, which include both non-cancelable and month-to-month terms, generally provide for fixed monthly rentals, and certain real estate leases also include renewal options. We generally pay all insurance, taxes, and maintenance expenses associated with these leases. All aircraft leases contain purchase options exercisable by us at certain dates specified in the lease agreements.

At June 30, 2018, we had approximately $189.8 million in aggregate commitments under operating leases of which approximately $22.3 million is payable through the fourth quarter of 2018. The total lease commitments include $163.4 million for aircraft and $26.4 million for facility lease commitments.

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Goodwill

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

GOODWILL

Our Goodwill represents the amount by which our purchase price for the HNZ Offshore Business exceeded the fair value of net assets acquired. Goodwill has an indefinite useful life and is not amortized. We test goodwill for impairment annually as of October 1st or when events or changes in circumstances indicate that a potential impairment exists.

Goodwill of $61.3 million as of June 30, 2018 and December 31, 2017 was as follow:

	Oil & Gas		Air Medical	Technical Services	Total
Balance December 31, 2017	$	61,299	—	—	$	61,299
Activity	—		—	—	—
Balance June 30, 2018	$	61,299	—	—	$	61,299

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Other Intangible Assets

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Other Intangible Assets

OTHER INTANGIBLE ASSETS

Intangible assets with finite useful lives are amortized over estimated useful lives on a straight-line basis. Our intangible assets, which arose in connection with our acquisition of the HNZ Offshore Business, consist of the following (in thousands):

	Estimated Useful Lives	Gross Amount at December 31, 2017		Accumulated Amortization			Net Balance at June 30, 2018
Customer Relationship	15	$	11,622	$	(387	)	$	11,235
Non-Compete Agreements	5	900		(90		)	810
Tradenames	7	4,201		(300		)	3,901
Total		$	16,723	$	(777	)	$	15,946

Based on the carrying values of our intangible assets at June 30, 2018, we estimate our amortization expense for the next five years (2018 through 2022) to be $1.6 million per year. For the quarter and six months ended June 30, 2018, amortization expense was $0.4 million and $0.8 million, respectively.

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Segment Information

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

PHI is primarily a provider of helicopter transport services, including helicopter maintenance and repair services. We report our financial results through the three reportable segments further described below.

A segment’s operating profit or loss is its operating revenues less its direct expenses and selling, general and administrative expenses. Each segment has a portion of selling, general and administrative expenses that is charged directly to the segment, and a small portion that is allocated. Direct charges represent the vast majority of segment selling, general and administrative expenses. Allocated selling, general and administrative expenses are based primarily on total segment costs as a percentage of total operating costs. A significant portion of our selling, general and administrative expenses are neither charged nor allocated to our segments.

Oil and Gas Segment - Our Oil and Gas segment, headquartered in Lafayette, Louisiana, provides helicopter services primarily for the major integrated and independent oil and gas production companies transporting personnel or equipment to offshore platforms in the Gulf of Mexico and a number of foreign countries. Our customers include Shell Oil Company, BP America Production Company, ExxonMobil Production Company, and ConocoPhillips Company, with whom we have worked for 35 or more years, and ENI Petroleum, with whom we have worked for more than 20 years. At June 30, 2018, we had available for use 125 aircraft in this segment.

Our fixed-term contracts typically have original terms of one year to seven years (subject to provisions permitting early termination upon short notice by the customers), with payment in U.S. dollars. For the quarters ended June 30, 2018 and 2017, respectively, approximately 57% and 51% of our total operating revenues were generated by our Oil and Gas segment, with approximately 87% and 88% of these revenues from fixed-term customer contracts. For the six months ended June 30, 2018 and 2017, respectively, approximately 58% and 52% of our total operating revenues were generated by our Oil and Gas segment, with approximately 87% and 88% of these revenues from fixed-term customer contracts. The remaining 13% and 12% of these revenues were attributable to work in the spot market and ad hoc flights for contracted customers.

Air Medical Segment - The operations of our Air Medical segment are headquartered in Phoenix, Arizona, where we maintain significant separate facilities and administrative staff dedicated to this segment.

We provide Air Medical transportation services for hospitals and emergency service agencies throughout the U.S. As of June 30, 2018, our Air Medical segment operated approximately 109 aircraft in 18 states at 74 separate locations.

For the quarters ended June 30, 2018 and 2017, approximately 40% and 46% of our total operating revenues were generated by our Air Medical segment, respectively. For the six months ended June 30, 2018 and 2017, approximately 38% and 44% of our total operating revenues were generated by our Air Medical segment.

Estimates regarding the payor mix and changes in reimbursement rates are the factors most subject to sensitivity and variability in calculating our allowances. We compute a historical payment analysis of accounts fully closed, by category.

Provisions for contractual discounts and estimated uncompensated care for our Air Medical segment (expressed as a percentage of gross segment billings) were as follows for the periods listed below:

	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
Provision for contractual discounts	67	%	63	%	66	%	66	%
Provision for uncompensated care	7	%	10	%	8	%	7	%

These percentages are affected by various factors, including rate increases and changes in the number of transports by payor mix.

Net reimbursement per transport from commercial payors generally increases when a rate increase is implemented. Net reimbursement from certain commercial payors, as well as Medicare and Medicaid, generally does not increase proportionately with rate increases.

Net revenue attributable to Insurance, Medicare, Medicaid, and Self-Pay (expressed as a percentage of net Air Medical revenues) were as follows for the periods listed below:

	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
Insurance	72	%	72	%	72	%	71	%
Medicare	19	%	18	%	20	%	18	%
Medicaid	8	%	8	%	8	%	9	%
Self-Pay	1	%	2	%	—	%	2	%

We also have a limited number of contracts with hospitals under which we receive a fixed fee component for aircraft availability and a variable fee component for flight time. Most of our contracts with hospitals contain provisions permitting early termination by the hospital, typically with 180 days’ notice for any reason and generally with penalty. Those contracts generated approximately 16% and 18% of the segment’s revenues for the quarters ended June 30, 2018 and 2017, respectively. For the six months ended June 30, 2018 and 2017, these contracts generated approximately 18% of the segment's revenues.

We also derive a small portion of the segment’s revenues from providing services under our patient navigation business.

Technical Services Segment - Our Technical Services segment provides helicopter repair and overhaul services for flight operations customers that own their aircraft. Costs associated with these services are primarily labor, and customers are generally billed at a percentage above our service costs. We also periodically provide flight services to governmental customers under this segment, including our current agreement to operate six aircraft for the National Science Foundation in Antarctica, typically in the first and fourth quarters each year. Also included in this segment are our proprietary Helipass operations, which provide software as a service to certain of our Oil and Gas customers for the purpose of passenger check-in and compliance verification.

For each of the quarters ended June 30, 2018 and 2017, approximately 3% of our total operating revenues were generated by our Technical Services segment. For each of the six month periods ended June 30, 2018 and 2017, approximately 4% of our total operating revenues were generated by our Technical Services segment.

Summarized financial information concerning our reportable operating segments for the quarters and six months ended June 30, 2018 and 2017 is as follows: 

	Quarter Ended    June 30,						Six Months Ended   June 30,
	2018			2017			2018			2017
	(Thousands of dollars)						(Thousands of dollars)
Segment operating revenues
Oil and Gas	$	97,068		$	74,668		$	192,702		$	146,399
Air Medical	67,151			67,222			124,139			122,559
Technical Services	5,024			4,534			12,766			12,084
Total operating revenues, net	169,243			146,424			329,607			281,042
Segment direct expenses
Oil and Gas (1)	94,442			73,681			190,985			155,410
Air Medical	56,776			50,402			110,608			101,243
Technical Services	3,784			3,858			9,671			8,804
Total direct expenses	155,002			127,941			311,264			265,457
Segment selling, general and administrative expenses
Oil and Gas	4,400			1,635			9,321			3,354
Air Medical	3,254			3,263			6,421			6,144
Technical Services	340			356			710			694
Total selling, general and administrative expenses	7,994			5,254			16,452			10,192
Total segment direct and selling, general and administrative expenses	162,996			133,195			327,716			275,649
Net segment (loss) profit
Oil and Gas	(1,774		)	(648		)	(7,604		)	(12,365		)
Air Medical	7,121			13,557			7,110			15,172
Technical Services	900			320			2,385			2,586
Total net segment profit	6,247			13,229			1,891			5,393
Other, net (3)	(193		)	697			(2,112		)	1,761
Unallocated selling, general and administrative costs (1) (4)	(6,491		)	(8,993		)	(13,492		)	(17,099		)
Interest expense	(8,340		)	(8,083		)	(16,537		)	(16,278		)
(Loss) earnings before income taxes	$	(8,777	)	$	(3,150	)	$	(30,250	)	$	(26,223	)

(1)  Included in direct expenses and unallocated selling, general, and administrative costs are the depreciation and amortization expense amounts below:

	Depreciation and Amortization Expense
	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
	(Thousands of dollars)
Segment Direct Expense:
Oil and Gas	$	11,486	$	9,824	$	23,269	$	19,686
Air Medical	6,091		5,219		11,715		10,696
Technical Services	142		148		287		294
Total	$	17,719	$	15,191	$	35,271	$	30,676
Unallocated SG&A	$	1,412	$	622	$	3,327	$	3,335

(2) Includes equity in (earnings) of unconsolidated affiliates, net.

(3) Consists of (gains) losses on disposition of property and equipment and other income.

(4) Represents corporate overhead expenses not allocable to segments.

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Investment in Variable Interest Entity

6 Months Ended

Jun. 30, 2018

Investment in Variable Interest Entity and Other Investments and Affiliates [Abstract]

Investment in Variable Interest Entity

INVESTMENT IN VARIABLE INTEREST ENTITY

We account for our investment in PHI Century Limited ("PHIC") as a variable interest entity, which is defined as an entity that either (a) has insufficient equity to permit the entity to finance its operations without additional subordinated financial support or (b) has equity investors who lack the characteristics of a controlling financial interest. As of June 30, 2018, we had a 49% investment in the common stock of PHIC, a Ghanaian entity. We acquired our 49% interest on May 26, 2011, PHIC’s date of incorporation. The purpose of PHIC is to provide oil and gas flight services in Ghana and the West African region. For the quarter ended June 30, 2018, we recorded income in equity of this unconsolidated affiliate of less than $0.1 million compared to loss in equity of $1.0 million for the quarter ended June 30, 2017 relative to our 49% equity ownership. For the six months ended June 30, 2018 and 2017, we recorded a gain in equity of this unconsolidated affiliate of less than $0.1 million and a loss of $2.0 million relative to our 49% equity ownership, respectively. We had $5.5 million and $4.0 million of trade receivables as of June 30, 2018 and December 31, 2017, respectively, from PHIC. During the six months ended June 30, 2018, we loaned PHIC $0.3 million for operating purposes. The $0.3 million loan balance is included in Accounts receivable - other on our Condensed Consolidated Balance Sheets at June 30, 2018. Our investment in the common stock of PHIC is included in Other Assets on our Condensed Consolidated Balance Sheets and was $0.4 million at June 30, 2018 and $0.3 million at December 31, 2017.

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Other Comprehensive Income

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Other Comprehensive Income

OTHER COMPREHENSIVE INCOME

Amounts reclassified from Accumulated other comprehensive income are not material and, therefore, not presented separately in the Condensed Consolidated Statements of Comprehensive Income.

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Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As discussed further in Note 5, on March 17, 2014, PHI, Inc. issued $500.0 million aggregate principal amount of 5.25% Senior Notes due 2019 that are fully and unconditionally guaranteed on a joint and several, senior basis by all of PHI, Inc.’s domestic subsidiaries. PHI, Inc. directly or indirectly owns 100% of all of its domestic subsidiaries.

The supplemental condensed financial information on the following pages sets forth, on a consolidated basis, the balance sheet, statement of operations, statement of comprehensive income, and statement of cash flows information for PHI, Inc. (“Parent Company”) the guarantor subsidiaries and the non-guarantor subsidiaries, each under separate headings. The eliminating entries eliminate investments in subsidiaries, intercompany balances, and intercompany revenues and expenses. The condensed consolidating financial statements have been prepared on the same basis as the consolidated financial statements of PHI, Inc. The equity method is followed by the Parent Company within the financial information presented below.

The transactions reflected in “Due to/from affiliates, net” in the following condensed consolidated statements of cash flows primarily consist of centralized cash management activities between PHI, Inc. and its subsidiaries, pursuant to which cash earned by the guarantor subsidiaries is regularly transferred to PHI, Inc. to be centrally managed. Because these balances are treated as short-term borrowings of the Parent Company, serve as a financing and cash management tool to meet our short-term operating needs, turn over quickly and are payable to the guarantor subsidiaries on demand, we present borrowings and repayments with our affiliates on a net basis within the condensed consolidating statement of cash flows. Net receivables from our affiliates are considered advances and net payables to our affiliates are considered borrowings, and both changes are presented as financing activities in the following condensed consolidating statements of cash flows.

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(Thousands of dollars)

(Unaudited)

	June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash	$	53		$	1,305	$	4,494		$	—		$	5,852
Short-term investments	60,317			—		—			—			60,317
Accounts receivable – net	76,291			84,882		35,346			(2,187		)	194,332
Intercompany receivable	—			119,963		—			(119,963		)	—
Inventories of spare parts – net	65,522			9,512		2,713			—			77,747
Prepaid expenses	9,494			2,715		941			—			13,150
Income taxes receivable	111			512		—			—			623
Total current assets	211,788			218,889		43,494			(122,150		)	352,021
Investment in subsidiaries	405,560			—		—			(405,560		)	—
Property and equipment – net	603,926			286,820		42,837			—			933,583
Restricted cash and investments	12,076			—		—			—			12,076
Other assets	140,158			794		(131,347		)	—			9,605
Deferred income tax	—			—		3,237			—			3,237
Goodwill	—			—		61,299			—			61,299
Intangible assets	—			—		15,946			—			15,946
Total assets	$	1,373,508		$	506,503	$	35,466		$	(527,710	)	$	1,387,767
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	620,991		$	—	$	—		$	—		$	620,991
Accounts payable	41,401			4,039		7,466			(2,261		)	50,645
Accrued and other current liabilities	23,230			10,891		6,505			—			40,626
Intercompany payable	100,982			—		18,907			(119,889		)	—
Total current liabilities	786,604			14,930		32,878			(122,150		)	712,262
Deferred income taxes and other long-term liabilities	(4,034		)	84,539		3,435			—			83,940
Shareholders’ Equity:
Common stock and paid-in capital	312,015			77,951		1,511			(79,462		)	312,015
Accumulated other comprehensive loss	(3		)	—		627			—			624
Retained earnings	278,926			329,083		(2,985		)	(326,098		)	278,926
Total shareholders’ equity	590,938			407,034		(847		)	(405,560		)	591,565
Total liabilities and shareholders’ equity	$	1,373,508		$	506,503	$	35,466		$	(527,710	)	$	1,387,767

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(Thousands of dollars)

	December 31, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash	$	47		$	1,072	$	7,651		$	—		$	8,770
Short-term investments	64,237			—		—			—			64,237
Accounts receivable – net	90,077			74,886		38,020			(17,004		)	185,979
Intercompany receivable	—			126,366		—			(126,366		)	—
Inventories of spare parts – net	68,737			9,049		3,095			—			80,881
Prepaid expenses	8,348			1,898		1,229			—			11,475
Income taxes receivable	345			9		917			—			1,271
Total current assets	231,791			213,280		50,912			(143,370		)	352,613
Investment in subsidiaries and others	397,301			—		—			(397,301		)	—
Property and equipment – net	617,488			284,984		44,293			—			946,765
Restricted investments	12,382			—		14			—			12,396
Other assets	139,754			908		(131,921		)	—			8,741
Deferred income tax	—			—		3,309			—			3,309
Goodwill	—			—		61,299			—			61,299
Intangible assets	—			—		16,723			—			16,723
Total assets	$	1,398,716		$	499,172	$	44,629		$	(540,671	)	$	1,401,846
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	28,130		$	4,636	$	21,425		$	(17,005	)	$	37,186
Accrued and other current liabilities	23,147			10,577		8,126			—			41,850
Intercompany payable	113,387			—		12,978			(126,365		)	—
Total current liabilities	164,664			15,213		42,529			(143,370		)	79,036
Long-term debt	615,994			—		—			—			615,994
Deferred income taxes and other long-term liabilities	5,404			84,300		4,458			—			94,162
Shareholders’ Equity:
Common stock and paid-in capital	309,933			77,951		1,375			(79,326		)	309,933
Accumulated other comprehensive loss	(280		)	—		—			—			(280		)
Retained earnings	303,001			321,708		(3,733		)	(317,975		)	303,001
Total shareholders’ equity	612,654			399,659		(2,358		)	(397,301		)	612,654
Total liabilities and shareholders’ equity	$	1,398,716		$	499,172	$	44,629		$	(540,671	)	$	1,401,846

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

(Unaudited)

	For the Quarter Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	79,857		$	68,717	$	51,404		$	(30,735	)	$	169,243
Expenses:
Direct expenses	78,955			58,263		48,658			(30,793		)	155,083
Selling, general and administrative expenses	8,395			3,256		2,838			(4		)	14,485
Total operating expenses	87,350			61,519		51,496			(30,797		)	169,568
Gain on disposal of assets, net	(150		)	—		(21		)	—			(171		)
Equity in income of unconsolidated affiliates, net	(81		)	—		—			—			(81		)
Operating (loss) income	(7,262		)	7,198		(71		)	62			(73		)
Equity in net income of consolidated subsidiaries	(6,064		)	—		—			6,064			—
Interest expense	8,337			—		542			(539		)	8,340
Other income, net	(365		)	—		128			601			364
	1,908			—		670			6,126			8,704
(Loss) earnings before income taxes	(9,170		)	7,198		(741		)	(6,064		)	(8,777		)
Income tax (benefit) expense	(2,077		)	—		393			—			(1,684		)
Net (loss) earnings	$	(7,093	)	$	7,198	$	(1,134	)	$	(6,064	)	$	(7,093	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

	For the Quarter Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	75,045		$	68,857		$	5,341		$	(2,819	)	$	146,424
Expenses:
Direct expenses	72,598			51,806			5,366			(2,819		)	126,951
Selling, general and administrative expenses	10,916			3,269			66			(4		)	14,247
Total operating expenses	83,514			55,075			5,432			(2,823		)	141,198
Loss (gain) on disposal of assets, net	8			(1		)	—			—			7
Equity in (income) loss of consolidated affiliate	(75		)	—			1,066			—			991
Operating (loss) income	(8,402		)	13,783			(1,157		)	4			4,228
Equity in net income of consolidated subsidiaries	(14,613		)	—			—			14,613			—
Interest expense	8,082			1			—			—			8,083
Other income, net	(708		)	(1		)	—			4			(705		)
	(7,239		)	—			—			14,617			7,378
(Loss) earnings before income taxes	(1,163		)	13,783			(1,157		)	(14,613		)	(3,150		)
Income tax (benefit) expense	2,110			(1,987		)	—			—			123
Net (loss) earnings	$	(3,273	)	$	15,770		$	(1,157	)	$	(14,613	)	$	(3,273	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	157,949		$	127,426	$	100,900		$	(56,668	)	$	329,607
Expenses:
Direct expenses	162,953			113,627		91,436			(56,707		)	311,309
Selling, general and administrative expenses	17,143			6,423		6,388			(10		)	29,944
Total operating expenses	180,096			120,050		97,824			(56,717		)	341,253
Loss (gain) on disposal of assets, net	729			—		(21		)	—			708
Equity in income of unconsolidated affiliates, net	(45		)	—		—			—			(45		)
Operating (loss) income	(22,831		)	7,376		3,097			49			(12,309		)
Equity in net income of consolidated subsidiaries	(8,163		)	—		—			8,163			—
Interest expense	16,533			—		1,085			(1,081		)	16,537
Other income, net	(63		)	—		337			1,130			1,404
	8,307			—		1,422			8,212			17,941
(Loss) earnings before income taxes	(31,138		)	7,376		1,675			(8,163		)	(30,250		)
Income tax (benefit) expense	(7,063		)	—		888			—			(6,175		)
Net (loss) earnings	$	(24,075	)	$	7,376	$	787		$	(8,163	)	$	(24,075	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	149,329		$	126,330		$	8,202		$	(2,819	)	$	281,042
Expenses:
Direct expenses	154,942			104,187			7,154			(2,819		)	263,464
Selling, general and administrative expenses	21,024			6,155			120			(9		)	27,290
Total operating expenses	175,966			110,342			7,274			(2,828		)	290,754
Loss (gain) on disposal of assets, net	8			(1		)	—			—			7
Equity in loss of unconsolidated affiliate	928			—			1,066			—			1,994
Operating (loss) income	(27,573		)	15,989			(138		)	9			(11,713		)
Equity in net income of consolidated subsidiaries	(17,243		)	—			—			17,243			—
Interest expense	16,256			22			—			—			16,278
Other income, net	(1,776		)	(1		)	—			9			(1,768		)
	(2,763		)	21			—			17,252			14,510
(Loss) earnings before income taxes	(24,810		)	15,968			(138		)	(17,243		)	(26,223		)
Income tax (benefit) expense	(6,289		)	(1,413		)	—			—			(7,702		)
Net (loss) earnings	$	(18,521	)	$	17,381		$	(138	)	$	(17,243	)	$	(18,521	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Quarter Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(7,093	)	$	7,198	$	(1,134	)	$	(6,064	)	$	(7,093	)
Unrealized gain on short-term investments	(107		)	—		—			—			(107		)
Currency translation adjustments	—			—		160			—			160
Changes in pension plan asset and benefit obligation	7			—		—			—			7
Tax effect of the above-listed adjustments	100			—		—			—			100
Total comprehensive (loss) income	$	(7,093	)	$	7,198	$	(974	)	$	(6,064	)	$	(6,933	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

	For the Quarter Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(3,273	)	$	15,770	$	(1,157	)	$	(14,613	)	$	(3,273	)
Unrealized gain on short-term investments	167			—		—			—			167
Changes in pension plan asset and benefit obligations	23			—		—			—			23
Tax effect of the above-listed adjustments	(68		)	—		—			—			(68		)
Total comprehensive (loss) income	$	(3,151	)	$	15,770	$	(1,157	)	$	(14,613	)	$	(3,151	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net (loss) earnings	$	(24,075	)	$	7,376	$	787	$	(8,163	)	(24,075		)
Unrealized gain on short-term investments	363			—		—		—			363
Currency translation adjustment	—			—		627		—			627
Changes in pension plan asset and benefit obligation	(1		)	—		—		—			(1		)
Tax effect of the above-listed adjustments	(85		)	—		—		—			(85		)
Total comprehensive (loss) income	$	(23,798	)	$	7,376	$	1,414	$	(8,163	)	$	(23,171	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(18,521	)	$	17,381	$	(138	)	$	(17,243	)	(18,521		)
Unrealized gain on short-term investments	329			—		—			—			329
Changes in pension plan asset and benefit obligations	22			—		—			—			22
Tax effect of the above-listed adjustments	(127		)	—		—			—			(127		)
Total comprehensive (loss) income	$	(18,297	)	$	17,381	$	(138	)	$	(17,243	)	$	(18,297	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(506	)	$	3,306		$	2,610		$	—	$	5,410
Investing activities:
Purchase of property and equipment	(16,768		)	—			(1,330		)	—		(18,098		)
Proceeds from asset dispositions	1,453			—			—			—		1,453
Purchase of short-term investments	(260,996		)	—			—			—		(260,996		)
Proceeds from sale of short-term investments	264,918			—			—			—		264,918
Loan	(274		)	—			—			—		(274		)
Net cash used in investing activities	(11,667		)	—			(1,330		)	—		(12,997		)
Financing activities:
Debt issuance costs	—			—			—			—		—
Proceeds from line of credit	34,295			—			—			—		34,295
Payments on line of credit	(29,575		)	—			—			—		(29,575		)
Due to/from affiliate, net	7,510			(3,073		)	(4,437		)	—		—
Repurchase of common stock	(51		)	—			—			—		(51		)
Net cash provided by (used in) financing activities	12,179			(3,073		)	(4,437		)	—		4,669
Increase (decrease) in cash	6			233			(3,157		)	—		(2,918		)
Cash, beginning of period	47			1,072			7,651			—		8,770
Cash, end of period	$	53		$	1,305		$	4,494		$	—	$	5,852

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Thousands of dollars)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(34,236	)	$	18,916		$	7,371		$	—	$	(7,949	)
Investing activities:
Purchase of property and equipment	(43,892		)	—			—			—		(43,892		)
Proceeds from asset dispositions	17			—			—			—		17
Purchase of short-term investments	(134,518		)	—						—		(134,518		)
Proceeds from sale of short-term investments	187,217			—						—		187,217
Payments of deposits on aircraft	(110		)	—						—		(110		)
Net cash provided by investing activities	8,714			—			—			—		8,714
Financing activities:
Proceeds from line of credit	66,525			—			—			—		66,525
Payments on line of credit	(67,300		)	—			—			—		(67,300		)
Repurchase of common stock	(263		)	—			—			—		(263		)
Due to/from affiliate, net	26,572			(19,688		)	(6,884		)	—		—
Net cash provided by (used in) financing activities	25,534			(19,688		)	(6,884		)	—		(1,038		)
Increase in cash	12			(772		)	487			—		(273		)
Cash, beginning of period	36			2,100			460			—		2,596
Cash, end of period	$	48		$	1,328		$	947		$	—	$	2,323

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In 2014, Financial Accounting Standard Board ("the FASB") issued ASC 606, Revenue from Contracts with Customers (“ASC 606”), replacing the existing accounting standard and industry specific guidance for revenue recognition with a five-step model for recognizing and measuring revenue from contracts with customers. The underlying principle of the new standard is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 became effective on January 1, 2018 and the Company adopted it using the modified retrospective method applied to open contracts and only to the version of the contracts in effect as of January 1, 2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with the Company’s historical accounting.  There was no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized.

In general, we recognize revenue when a service or good is sold to a customer and there is a contract. At contract inception, we assess the goods and services promised in our contracts with customers and identify all performance obligations for each distinct promise that transfers a good or service (or bundle of goods or services) to the customer. To identify the performance obligations, we consider all goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. Revenue is recognized when control of the identified distinct goods or services has been transferred to the customer, the transaction price has been determined and allocated to the performed performance obligations and we have determined that collection has occurred or is probable of occurring.

The Company measures revenue as the amount of consideration we expect to receive in exchange of the services provided. Taxes collected from customers and remitted to governmental authorities and revenues are reported on a net basis in the Company’s financial statements. Thus, the Company excludes taxes imposed on the customer and collected on behalf of governmental agencies to be remitted to these agencies from the transaction price in determining the revenue related to contracts with a customer.

Revenue Recognition Oil & Gas - The Company provides helicopter services to oil and gas customers operating in the Gulf of Mexico and a number of foreign countries. Revenues are recognized when performance obligations are satisfied over time in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered.  

Revenue Recognition Air Medical - The Company provides helicopter services to hospitals and emergency service providers in several U.S. states, and individuals, in which case the Company is paid by either a commercial insurance company, federal or state agency, or the patient. Our Air Medical segment operates primarily under the independent provider model and, to a lesser extent, under the traditional provider model. Revenues related to the independent provider model services are recorded in the period in which we satisfy our performance obligations under contracts by providing our services to our customers based upon established billing rates net of contractual allowances under agreements with third party payors and net of uncompensated care allowances. These amounts are due from patients, third-party payors (including health insurers and government programs), and others and includes variable consideration for retroactive revenue adjustments due to settlement of audits, reviews, and investigations. Generally, the Company bills the patients and third-party payors several days after the services are performed. Revenues generated under the traditional provider model are recognized as performance obligations are satisfied over time in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled in exchange for services rendered.

Performance Obligations Oil & Gas - A performance obligation arises under contracts with customers to render services and is the unit of account under ASC 606.  Operating revenue from our Oil and Gas segment is derived mainly from fixed-term contracts with our customers, a substantial portion of which are competitively bid. A small portion of our Oil and Gas segment revenue is derived from providing services on an "ad-hoc" basis. Our fixed-term contracts typically have original terms of one year to seven years (subject to provisions permitting early termination by the customers), with payment in U.S. dollars. The Company accounts for services rendered separately if they are distinct and the services are separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered on its own or with other resources that are readily available to the customer.  A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.  Within this contract type for helicopter services, we determined that each contract has a single distinct performance obligation. These services include a fixed monthly rate for a particular model of aircraft, and flight hour services, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. We also provide services to clients on an “ad hoc” basis, which usually entails a shorter contract notice period and duration. The charges for ad hoc services are based on an hourly rate or a daily or monthly fixed fee plus additional fees for each hour flown. The nature of our variable charges within our flight services contracts are not effective until a customer-initiated flight order and the actual hours flown are determined; therefore, the associated flight revenue generally cannot be reasonably and reliably estimated before hand. A contract’s standalone selling prices are determined based upon the prices that the Company charges for its services rendered.  The majority of the Company’s revenue is recognized as performance obligations are satisfied over time, by measuring progress towards satisfying the contracted services in a manner that best depicts the transfer of services to the customer, which is generally represented by a period of 30 days or less.  The Company typically invoices customers on a monthly basis with the term between invoicing and when the payment is due typically between 30 and 60 days.

Performance Obligations Air Medical - Performance obligations are determined based upon the nature of the services provided. Under the independent provider model, we measure the performance obligation from the moment the patient is loaded into the aircraft until it reaches its destination. Under this model, we have no fixed revenue stream and compete for transport referrals on a daily basis with other independent operators in the area. As an independent provider, we bill for our services on the basis of a flat rate plus a variable charge per patient-loaded mile, regardless of aircraft model, and are typically compensated by private insurance, Medicaid or Medicare, or directly by transported patients who self-pay. We recognize revenues for performance obligations satisfied at a point in time, which generally relate to patients receiving air medical services when: (1) services are provided; and (2) we do not believe the patient requires additional services. For the independent provider model, we determine the transaction price based upon gross charges for services provided reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients in accordance with Company policy, and/or implicit price concessions provided to uninsured patients. We determine estimates of contractual adjustments and discounts based upon contractual agreements, our discount policy, and historical experience. We determine our estimate of implicit price concessions based upon our historical collection experience with these classes of patients using a portfolio approach as a practical expedient to account for patient contracts as collective groups, rather than individually. The financial statement effects of using this practical expedient are not materially different from an individual contract approach.

Under the traditional provider model, we contract directly with the customer to provide their transportation services, with the contracts typically awarded or renewed through competitive bidding. As a traditional provider, we typically bill a fixed monthly rate for aircraft availability and an hourly rate for flight time. For each of these types of helicopter services, we have determined that each has a single distinct performance obligation. Traditional provider models services include fixed monthly rate for a particular model of aircraft, and flight hour services, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. The variable charges within the contracts are not effective until the customer initiates a flight order and the actual hours flown are determined; therefore, the associated revenue generally cannot be reasonably and reliably estimated beforehand. For the traditional provider model, we determine the transaction price based upon standard charges for goods and services provided.

As further described in Note 3, independent provider revenues are recorded net of contractual allowances under agreements with third party payors and estimated uncompensated care at the time the services are provided. Contractual allowances and uncompensated care are estimated based on historical collection experience by payor category (consisting mainly of private insurance, Medicaid, Medicare, and self-pay). The allowance percentages calculated are applied to the payor categories, and the necessary adjustments are made to the revenue allowance. Agreements with third-party payors typically provide for payments at amounts less than established charges.

As of June 30, 3018 and December 31, 2017, receivables related to Oil and Gas segment were $110.1 million and $106.8 million, Air Medical segment were $82.7 million and $74.4 million and Technical Services segment were $1.5 million and $4.8 million, respectively. Contract assets and contract liabilities were immaterial as of June 30, 2018. Our contracts typically include termination clauses that allow both parties to terminate existing contracts with a 30 to 180 day notice period.

The Company generally has a right to consideration in an amount that corresponds directly with the value to the customer of the entity's performance completed to date and may recognize revenue in the amount to which the entity has a right to invoice. We have elected to use the invoice practical expedient for revenue recognized when performance obligations are satisfied over time. In addition, payment for goods and services rendered is typically due in the subsequent month following satisfaction of the Company’s performance obligation.

The Technical Services segment provides helicopter flight services and helicopter repair and overhaul services for existing flight operations customers that own their own aircraft. Under this segment, the Company periodically provides certain services to governmental customers, including the Company’s agreement to operate six aircraft for the National Science Foundation in Antarctica. Under this segment, we also offer certain software as a service to our Oil and Gas customers. Revenues are recognized when performance obligations are satisfied in accordance with contractual terms, in an amount that reflects the consideration the Company expects to be entitled to in exchange for services rendered.   For these helicopter services, we determined that each has a single distinct performance obligation.

The following table presents the Company’s revenues by segment disaggregated by type (in thousands):

	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Service Revenue
Oil & Gas	$	97,068	$	74,668	$	192,702	$	146,399
Air Medical	67,151		67,222		124,139		122,559
Technical Services	5,024		4,534		12,766		12,084
Total Services	$	169,243	$	146,424	$	329,607	$	281,042
Air Medical Revenue
Traditional provider model	$	12,085	$	12,140	$	23,956	$	23,610
Independent provider model	55,066		55,082		100,183		98,949
Total Air Medicals Revenues	$	67,151	$	67,222	$	124,139	$	122,559

On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill with the carrying amount as part of Step 2 of the goodwill impairment test. Under the new standard, the goodwill impairment loss will be measured as the excess of a reporting unit's carrying amount over its fair value, not exceeding the total amount of goodwill allocated to that reporting unit, which may increase the frequency of goodwill impairment charges if a future goodwill impairment test does not pass the Step 1 evaluation. ASU 2017-04 is effective prospectively for periods beginning on or after December 15, 2019, with early adoption permitted. The Company adopted ASU 2017-04 effective January 1, 2018. The Company will perform goodwill impairment testing under the new standard annually as of October 1st or when events or changes in circumstances indicate that a potential impairment exist.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent in a classified balance sheet. PHI, Inc. adopted this ASU in the fourth quarter of 2017 on a prospective basis. Beginning with the December 31, 2017 balances, all deferred taxes were classified as non-current. Periods prior to December 31, 2017 were not retrospectively adjusted.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which will require an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company adopted ASU 2016-16 effective January 1, 2018 with no material impact to the condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business and requires that an entity apply certain criteria in order to determine when a set of assets and activities qualifies as a business. The adoption of this standard is expected to result in fewer acquisitions of properties qualifying as acquisitions of businesses and, accordingly, acquisition costs for those acquisitions that do not qualify as businesses will be capitalized rather than expensed. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and should be applied on a prospective basis. The Company adopted ASU 2017-01 effective January 1, 2018 with no material impact to the condensed consolidated financial statements.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted which significantly reformed the U.S. Internal Revenue Code (the “Code”). The Tax Act, among other things, reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. Following the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin 118 - "Income Tax Accounting Implications of the Tax Cuts and Jobs Act" (SAB 118), which provides for a measurement period of up to one year from the enactment date to complete accounting under GAAP for the tax effects of the legislation. As of December 31, 2017, the Company had not completed its accounting for the tax effects of the Tax Act. However, the Company remeasured its net deferred tax liability at December 31, 2017 and provisionally recognized a net benefit of $49.2 million in its consolidated statement of operations for the year ended December 31, 2017.  As of June 30, 2018, the Company has not completed its accounting for the tax effects of the Tax Act. The Company is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to changes to its current provisional estimates.  The Company’s estimates may be affected by a wide variety of factors, including additional regulatory guidance issued with respect to the Tax Act.  Any adjustments to the provisional amounts will be recognized as a component of income tax in the period in which the adjustments are determined. We expect to complete the accounting by the time we file our 2017 U.S. corporate income tax return in the 3rd quarter of 2018.

New Accounting Pronouncements - In February 2016, the FASB issued ASU 2016-02, Leases, which replaces the existing guidance on leasing transactions in ASC 840 to require recognition of the assets and liabilities for the rights and obligations created by those leases on the balance sheet. The Company has formed an implementation team that is inventorying leases under ASC 840 and contracts which may be leases under ASC 842, and evaluating the impact that adoption of this guidance will have on the Company’s financial statements, which includes monitoring industry specific developments including recent exposure drafts issued by the FASB. Based on our lease portfolio as of June 30, 2018, we expect the adoption of this standard will result in a material change to our consolidated assets and liabilities. We plan to adopt this standard beginning January 1, 2019.

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Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Disaggregated Revenues by Segment

The following table presents the Company’s revenues by segment disaggregated by type (in thousands):

	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Service Revenue
Oil & Gas	$	97,068	$	74,668	$	192,702	$	146,399
Air Medical	67,151		67,222		124,139		122,559
Technical Services	5,024		4,534		12,766		12,084
Total Services	$	169,243	$	146,424	$	329,607	$	281,042
Air Medical Revenue
Traditional provider model	$	12,085	$	12,140	$	23,956	$	23,610
Independent provider model	55,066		55,082		100,183		98,949
Total Air Medicals Revenues	$	67,151	$	67,222	$	124,139	$	122,559

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Investments (Tables)

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Components of Investments

Investments consisted of the following as of June 30, 2018:

	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
	(Thousands of dollars)
Investments:
Money market mutual funds	$	72,393	$	—	$	—	$	72,393
Deferred compensation plan assets included in other assets	823		—		—		823
Total	$	73,216	$	—	$	—	$	73,216

Investments consisted of the following as of December 31, 2017:

	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
	(Thousands of dollars)
Investments:
Money market mutual funds	$	5,601	$	—	$	—		$	5,601
U.S. government agencies	7,501		—		(34		)	7,467
Corporate bonds and notes	63,880		—		(330		)	63,550
Subtotal	76,982		—		(364		)	76,618
Deferred compensation plan assets included in other assets	2,685		—		—			2,685
Total	$	79,667	$	—	$	(364	)	$	79,303

Cost and Fair Value of Debt Investments Based on Maturities

The following table presents the cost and fair value of our debt investments based on maturities as of:

	June 30, 2018				December 31, 2017
	Amortized Costs		Fair Value		Amortized Costs		Fair Value
	(Thousands of dollars)
Due in one year or less	$	—	$	—	$	31,348	$	31,254
Due within two years	—		—		40,032		39,763
Total	$	—	$	—	$	71,380	$	71,017

Average Coupon Rate Percentage and Average Days to Maturity of Debt

The following table presents the average coupon rate percentage and the average days to maturity of our debt investments as of:

	June 30, 2018		December 31, 2017
	Average Coupon Rate (%)	Average Days To Maturity	Average Coupon Rate (%)	Average Days To Maturity
U.S. Government agencies	—	0	1.370	370
Corporate bonds and notes	—	0	1.766	392

Investments in Continuous Unrealized Loss Position for Less Than Twelve Months

The following table presents the fair value and unrealized losses related to our investments that have been in a continuous unrealized loss position for less than twelve months as of:

	June 30, 2018				December 31, 2017
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Thousands of dollars)
U.S. Government agencies	$	—	$	—	$	5,472	$	(28	)
Corporate bonds and notes	—		—		44,069		(271		)
Total	$	—	$	—	$	49,541	$	(299	)

Investments in Continuous Unrealized Loss Position for More Than Twelve Months

The following table presents the fair value and unrealized losses related to our investments that have been in a continuous unrealized loss position for more than twelve months as of: 

	June 30, 2018				December 31, 2017
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Thousands of dollars)
U.S. Government agencies	$	—	$	—	$	1,994	$	(6	)
Corporate bonds and notes	—		—		19,482		(59		)
Total	$	—	$	—	$	21,476	$	(65	)

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Valuation Accounts (Tables)

6 Months Ended

Jun. 30, 2018

Revenue Recognition And Valuation Accounts [Abstract]

Schedule of Allowance for Contractual Discounts and Estimated Uncompensated Care as a Percentage of Gross Segment Accounts Receivable

The allowance for contractual discounts and estimated uncompensated care (expressed as a percentage of gross segment accounts receivable) as of the dates listed below was as follows: 

	June 30, 2018	December 31, 2017
Allowance for Contractual Discounts	50%	53%
Allowance for Uncompensated Care	25%	24%

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Summary of Valuation of Investments and Financial Instruments Pricing Levels

The following table summarizes the valuation of our investments and financial instruments by the above pricing levels as of the valuation dates listed:

			June 30, 2018
	Total		(Level 1)		(Level 2)
	(Thousands of dollars)
Investments:
Money market mutual funds	$	72,393	$	72,393	$	—
Deferred compensation plan assets	823		823		—
Total	$	73,216	$	73,216	$	—
			December 31, 2017
	Total		(Level 1)		(Level 2)
	(Thousands of dollars)
Investments:
Money market mutual funds	$	5,601	$	5,601	$	—
U.S. government agencies	7,467		—		7,467
Corporate bonds and notes	63,550		—		63,550
	76,618		5,601		71,017
Deferred compensation plan assets	2,685		2,685		—
Total	$	79,303	$	8,286	$	71,017

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Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Components of Debt

Listed below is information regarding our indebtedness, all of which was classified as short-term debt on our balance sheet as of June 30, 2018 and as long-term debt on our balance sheet as of December 31, 2017:

	June 30, 2018				December 31, 2017
	Principal		Unamortized Debt Issuance Debt Cost		Principal		Unamortized Debt Issuance Debt Cost
	(Thousands of dollars)
Senior Notes issued March 17, 2014, interest only payable semi-annually at 5.25%, maturing March 15, 2019	$	500,000	$	1,229	$	500,000	$	1,506
Revolving Credit Facility due March 7, 2019 with a group of commercial banks, interest payable at variable rates	122,220		—		117,500		—
Total indebtedness	$	622,220	$	1,229	$	617,500	$	1,506

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Components of Basic and Diluted Earnings Per Share

The components of basic and diluted earnings per share for the quarter and six months ended June 30, 2018 and 2017 are as follows: 

	Quarter Ended    June 30,		Six Months Ended   June 30,
	2018	2017	2018	2017
	(Thousands of dollars)
Weighted average outstanding shares of common stock, basic	15,806	15,716	15,806	15,716
Dilutive effect of unvested restricted stock units	—	—	—	—
Weighted average outstanding shares of common stock, diluted (1)	15,806	15,716	15,806	15,716

(1) For the quarter ended June 30, 2018 and 2017, 425,317 and 438,812 unvested restricted stock units were excluded from the weighted average outstanding shares of common stock, diluted, respectively, as they were anti-dilutive to earnings per share. For the six months ended June 30, 2018 and 2017, 14,258 and 438,812 unvested restricted stock units were excluded from the weighted average outstanding shares of common stock, diluted, respectively as they were anti-dilutive to earnings per share.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Share Based Compensation Expense

The table below sets forth the total amount of stock-based compensation expense for the quarter and six months ended June 30, 2018 and 2017. 

	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
	(Thousands of dollars)
Stock-based compensation expense:
Time-based restricted stock units	$	435	$	556	$	1,077	$	1,111
Performance-based restricted stock units	378		705		1,055		705
Total stock-based compensation expense	$	813	$	1,261	$	2,132	$	1,816

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Goodwill (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Goodwill of $61.3 million as of June 30, 2018 and December 31, 2017 was as follow:

	Oil & Gas		Air Medical	Technical Services	Total
Balance December 31, 2017	$	61,299	—	—	$	61,299
Activity	—		—	—	—
Balance June 30, 2018	$	61,299	—	—	$	61,299

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Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Our intangible assets, which arose in connection with our acquisition of the HNZ Offshore Business, consist of the following (in thousands):

	Estimated Useful Lives	Gross Amount at December 31, 2017		Accumulated Amortization			Net Balance at June 30, 2018
Customer Relationship	15	$	11,622	$	(387	)	$	11,235
Non-Compete Agreements	5	900		(90		)	810
Tradenames	7	4,201		(300		)	3,901
Total		$	16,723	$	(777	)	$	15,946

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Schedule of Provisions for Contractual Discounts and Estimated Uncompensated Care as a Percentage of Gross Segment Billings

Provisions for contractual discounts and estimated uncompensated care for our Air Medical segment (expressed as a percentage of gross segment billings) were as follows for the periods listed below:

	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
Provision for contractual discounts	67	%	63	%	66	%	66	%
Provision for uncompensated care	7	%	10	%	8	%	7	%

Schedule of Net Revenue Attributable to Insurance, Medicare, Medicaid, and Self-Pay as Percentage of Net Air Medical Revenues

Net revenue attributable to Insurance, Medicare, Medicaid, and Self-Pay (expressed as a percentage of net Air Medical revenues) were as follows for the periods listed below:

	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
Insurance	72	%	72	%	72	%	71	%
Medicare	19	%	18	%	20	%	18	%
Medicaid	8	%	8	%	8	%	9	%
Self-Pay	1	%	2	%	—	%	2	%

Schedule of Financial Information Concerning Reportable Operating Segments

Summarized financial information concerning our reportable operating segments for the quarters and six months ended June 30, 2018 and 2017 is as follows: 

	Quarter Ended    June 30,						Six Months Ended   June 30,
	2018			2017			2018			2017
	(Thousands of dollars)						(Thousands of dollars)
Segment operating revenues
Oil and Gas	$	97,068		$	74,668		$	192,702		$	146,399
Air Medical	67,151			67,222			124,139			122,559
Technical Services	5,024			4,534			12,766			12,084
Total operating revenues, net	169,243			146,424			329,607			281,042
Segment direct expenses
Oil and Gas (1)	94,442			73,681			190,985			155,410
Air Medical	56,776			50,402			110,608			101,243
Technical Services	3,784			3,858			9,671			8,804
Total direct expenses	155,002			127,941			311,264			265,457
Segment selling, general and administrative expenses
Oil and Gas	4,400			1,635			9,321			3,354
Air Medical	3,254			3,263			6,421			6,144
Technical Services	340			356			710			694
Total selling, general and administrative expenses	7,994			5,254			16,452			10,192
Total segment direct and selling, general and administrative expenses	162,996			133,195			327,716			275,649
Net segment (loss) profit
Oil and Gas	(1,774		)	(648		)	(7,604		)	(12,365		)
Air Medical	7,121			13,557			7,110			15,172
Technical Services	900			320			2,385			2,586
Total net segment profit	6,247			13,229			1,891			5,393
Other, net (3)	(193		)	697			(2,112		)	1,761
Unallocated selling, general and administrative costs (1) (4)	(6,491		)	(8,993		)	(13,492		)	(17,099		)
Interest expense	(8,340		)	(8,083		)	(16,537		)	(16,278		)
(Loss) earnings before income taxes	$	(8,777	)	$	(3,150	)	$	(30,250	)	$	(26,223	)

(1)  Included in direct expenses and unallocated selling, general, and administrative costs are the depreciation and amortization expense amounts below:

Depreciation and Amortization Expense Included in Direct Expenses and Unallocated Selling, General, and Administrative Costs

	Depreciation and Amortization Expense
	Quarter Ended    June 30,				Six Months Ended   June 30,
	2018		2017		2018		2017
	(Thousands of dollars)
Segment Direct Expense:
Oil and Gas	$	11,486	$	9,824	$	23,269	$	19,686
Air Medical	6,091		5,219		11,715		10,696
Technical Services	142		148		287		294
Total	$	17,719	$	15,191	$	35,271	$	30,676
Unallocated SG&A	$	1,412	$	622	$	3,327	$	3,335

(2) Includes equity in (earnings) of unconsolidated affiliates, net.

(3) Consists of (gains) losses on disposition of property and equipment and other income.

(4) Represents corporate overhead expenses not allocable to segments.

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Condensed Consolidating Financial Information (Tables)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Balance Sheets

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(Thousands of dollars)

(Unaudited)

	June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash	$	53		$	1,305	$	4,494		$	—		$	5,852
Short-term investments	60,317			—		—			—			60,317
Accounts receivable – net	76,291			84,882		35,346			(2,187		)	194,332
Intercompany receivable	—			119,963		—			(119,963		)	—
Inventories of spare parts – net	65,522			9,512		2,713			—			77,747
Prepaid expenses	9,494			2,715		941			—			13,150
Income taxes receivable	111			512		—			—			623
Total current assets	211,788			218,889		43,494			(122,150		)	352,021
Investment in subsidiaries	405,560			—		—			(405,560		)	—
Property and equipment – net	603,926			286,820		42,837			—			933,583
Restricted cash and investments	12,076			—		—			—			12,076
Other assets	140,158			794		(131,347		)	—			9,605
Deferred income tax	—			—		3,237			—			3,237
Goodwill	—			—		61,299			—			61,299
Intangible assets	—			—		15,946			—			15,946
Total assets	$	1,373,508		$	506,503	$	35,466		$	(527,710	)	$	1,387,767
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	620,991		$	—	$	—		$	—		$	620,991
Accounts payable	41,401			4,039		7,466			(2,261		)	50,645
Accrued and other current liabilities	23,230			10,891		6,505			—			40,626
Intercompany payable	100,982			—		18,907			(119,889		)	—
Total current liabilities	786,604			14,930		32,878			(122,150		)	712,262
Deferred income taxes and other long-term liabilities	(4,034		)	84,539		3,435			—			83,940
Shareholders’ Equity:
Common stock and paid-in capital	312,015			77,951		1,511			(79,462		)	312,015
Accumulated other comprehensive loss	(3		)	—		627			—			624
Retained earnings	278,926			329,083		(2,985		)	(326,098		)	278,926
Total shareholders’ equity	590,938			407,034		(847		)	(405,560		)	591,565
Total liabilities and shareholders’ equity	$	1,373,508		$	506,503	$	35,466		$	(527,710	)	$	1,387,767

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(Thousands of dollars)

	December 31, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current Assets:
Cash	$	47		$	1,072	$	7,651		$	—		$	8,770
Short-term investments	64,237			—		—			—			64,237
Accounts receivable – net	90,077			74,886		38,020			(17,004		)	185,979
Intercompany receivable	—			126,366		—			(126,366		)	—
Inventories of spare parts – net	68,737			9,049		3,095			—			80,881
Prepaid expenses	8,348			1,898		1,229			—			11,475
Income taxes receivable	345			9		917			—			1,271
Total current assets	231,791			213,280		50,912			(143,370		)	352,613
Investment in subsidiaries and others	397,301			—		—			(397,301		)	—
Property and equipment – net	617,488			284,984		44,293			—			946,765
Restricted investments	12,382			—		14			—			12,396
Other assets	139,754			908		(131,921		)	—			8,741
Deferred income tax	—			—		3,309			—			3,309
Goodwill	—			—		61,299			—			61,299
Intangible assets	—			—		16,723			—			16,723
Total assets	$	1,398,716		$	499,172	$	44,629		$	(540,671	)	$	1,401,846
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	28,130		$	4,636	$	21,425		$	(17,005	)	$	37,186
Accrued and other current liabilities	23,147			10,577		8,126			—			41,850
Intercompany payable	113,387			—		12,978			(126,365		)	—
Total current liabilities	164,664			15,213		42,529			(143,370		)	79,036
Long-term debt	615,994			—		—			—			615,994
Deferred income taxes and other long-term liabilities	5,404			84,300		4,458			—			94,162
Shareholders’ Equity:
Common stock and paid-in capital	309,933			77,951		1,375			(79,326		)	309,933
Accumulated other comprehensive loss	(280		)	—		—			—			(280		)
Retained earnings	303,001			321,708		(3,733		)	(317,975		)	303,001
Total shareholders’ equity	612,654			399,659		(2,358		)	(397,301		)	612,654
Total liabilities and shareholders’ equity	$	1,398,716		$	499,172	$	44,629		$	(540,671	)	$	1,401,846

Condensed Consolidating Statements of Operations

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

(Unaudited)

	For the Quarter Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	79,857		$	68,717	$	51,404		$	(30,735	)	$	169,243
Expenses:
Direct expenses	78,955			58,263		48,658			(30,793		)	155,083
Selling, general and administrative expenses	8,395			3,256		2,838			(4		)	14,485
Total operating expenses	87,350			61,519		51,496			(30,797		)	169,568
Gain on disposal of assets, net	(150		)	—		(21		)	—			(171		)
Equity in income of unconsolidated affiliates, net	(81		)	—		—			—			(81		)
Operating (loss) income	(7,262		)	7,198		(71		)	62			(73		)
Equity in net income of consolidated subsidiaries	(6,064		)	—		—			6,064			—
Interest expense	8,337			—		542			(539		)	8,340
Other income, net	(365		)	—		128			601			364
	1,908			—		670			6,126			8,704
(Loss) earnings before income taxes	(9,170		)	7,198		(741		)	(6,064		)	(8,777		)
Income tax (benefit) expense	(2,077		)	—		393			—			(1,684		)
Net (loss) earnings	$	(7,093	)	$	7,198	$	(1,134	)	$	(6,064	)	$	(7,093	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

	For the Quarter Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	75,045		$	68,857		$	5,341		$	(2,819	)	$	146,424
Expenses:
Direct expenses	72,598			51,806			5,366			(2,819		)	126,951
Selling, general and administrative expenses	10,916			3,269			66			(4		)	14,247
Total operating expenses	83,514			55,075			5,432			(2,823		)	141,198
Loss (gain) on disposal of assets, net	8			(1		)	—			—			7
Equity in (income) loss of consolidated affiliate	(75		)	—			1,066			—			991
Operating (loss) income	(8,402		)	13,783			(1,157		)	4			4,228
Equity in net income of consolidated subsidiaries	(14,613		)	—			—			14,613			—
Interest expense	8,082			1			—			—			8,083
Other income, net	(708		)	(1		)	—			4			(705		)
	(7,239		)	—			—			14,617			7,378
(Loss) earnings before income taxes	(1,163		)	13,783			(1,157		)	(14,613		)	(3,150		)
Income tax (benefit) expense	2,110			(1,987		)	—			—			123
Net (loss) earnings	$	(3,273	)	$	15,770		$	(1,157	)	$	(14,613	)	$	(3,273	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	157,949		$	127,426	$	100,900		$	(56,668	)	$	329,607
Expenses:
Direct expenses	162,953			113,627		91,436			(56,707		)	311,309
Selling, general and administrative expenses	17,143			6,423		6,388			(10		)	29,944
Total operating expenses	180,096			120,050		97,824			(56,717		)	341,253
Loss (gain) on disposal of assets, net	729			—		(21		)	—			708
Equity in income of unconsolidated affiliates, net	(45		)	—		—			—			(45		)
Operating (loss) income	(22,831		)	7,376		3,097			49			(12,309		)
Equity in net income of consolidated subsidiaries	(8,163		)	—		—			8,163			—
Interest expense	16,533			—		1,085			(1,081		)	16,537
Other income, net	(63		)	—		337			1,130			1,404
	8,307			—		1,422			8,212			17,941
(Loss) earnings before income taxes	(31,138		)	7,376		1,675			(8,163		)	(30,250		)
Income tax (benefit) expense	(7,063		)	—		888			—			(6,175		)
Net (loss) earnings	$	(24,075	)	$	7,376	$	787		$	(8,163	)	$	(24,075	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Thousands of dollars)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues, net	$	149,329		$	126,330		$	8,202		$	(2,819	)	$	281,042
Expenses:
Direct expenses	154,942			104,187			7,154			(2,819		)	263,464
Selling, general and administrative expenses	21,024			6,155			120			(9		)	27,290
Total operating expenses	175,966			110,342			7,274			(2,828		)	290,754
Loss (gain) on disposal of assets, net	8			(1		)	—			—			7
Equity in loss of unconsolidated affiliate	928			—			1,066			—			1,994
Operating (loss) income	(27,573		)	15,989			(138		)	9			(11,713		)
Equity in net income of consolidated subsidiaries	(17,243		)	—			—			17,243			—
Interest expense	16,256			22			—			—			16,278
Other income, net	(1,776		)	(1		)	—			9			(1,768		)
	(2,763		)	21			—			17,252			14,510
(Loss) earnings before income taxes	(24,810		)	15,968			(138		)	(17,243		)	(26,223		)
Income tax (benefit) expense	(6,289		)	(1,413		)	—			—			(7,702		)
Net (loss) earnings	$	(18,521	)	$	17,381		$	(138	)	$	(17,243	)	$	(18,521	)

Condensed Consolidated Statements of Comprehensive Income (Loss)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Quarter Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(7,093	)	$	7,198	$	(1,134	)	$	(6,064	)	$	(7,093	)
Unrealized gain on short-term investments	(107		)	—		—			—			(107		)
Currency translation adjustments	—			—		160			—			160
Changes in pension plan asset and benefit obligation	7			—		—			—			7
Tax effect of the above-listed adjustments	100			—		—			—			100
Total comprehensive (loss) income	$	(7,093	)	$	7,198	$	(974	)	$	(6,064	)	$	(6,933	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

	For the Quarter Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(3,273	)	$	15,770	$	(1,157	)	$	(14,613	)	$	(3,273	)
Unrealized gain on short-term investments	167			—		—			—			167
Changes in pension plan asset and benefit obligations	23			—		—			—			23
Tax effect of the above-listed adjustments	(68		)	—		—			—			(68		)
Total comprehensive (loss) income	$	(3,151	)	$	15,770	$	(1,157	)	$	(14,613	)	$	(3,151	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net (loss) earnings	$	(24,075	)	$	7,376	$	787	$	(8,163	)	(24,075		)
Unrealized gain on short-term investments	363			—		—		—			363
Currency translation adjustment	—			—		627		—			627
Changes in pension plan asset and benefit obligation	(1		)	—		—		—			(1		)
Tax effect of the above-listed adjustments	(85		)	—		—		—			(85		)
Total comprehensive (loss) income	$	(23,798	)	$	7,376	$	1,414	$	(8,163	)	$	(23,171	)

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net (loss) earnings	$	(18,521	)	$	17,381	$	(138	)	$	(17,243	)	(18,521		)
Unrealized gain on short-term investments	329			—		—			—			329
Changes in pension plan asset and benefit obligations	22			—		—			—			22
Tax effect of the above-listed adjustments	(127		)	—		—			—			(127		)
Total comprehensive (loss) income	$	(18,297	)	$	17,381	$	(138	)	$	(17,243	)	$	(18,297	)

Condensed Consolidating Statements of Cash Flows

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Thousands of dollars)

(Unaudited)

	For the Six Months Ended June 30, 2018
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(506	)	$	3,306		$	2,610		$	—	$	5,410
Investing activities:
Purchase of property and equipment	(16,768		)	—			(1,330		)	—		(18,098		)
Proceeds from asset dispositions	1,453			—			—			—		1,453
Purchase of short-term investments	(260,996		)	—			—			—		(260,996		)
Proceeds from sale of short-term investments	264,918			—			—			—		264,918
Loan	(274		)	—			—			—		(274		)
Net cash used in investing activities	(11,667		)	—			(1,330		)	—		(12,997		)
Financing activities:
Debt issuance costs	—			—			—			—		—
Proceeds from line of credit	34,295			—			—			—		34,295
Payments on line of credit	(29,575		)	—			—			—		(29,575		)
Due to/from affiliate, net	7,510			(3,073		)	(4,437		)	—		—
Repurchase of common stock	(51		)	—			—			—		(51		)
Net cash provided by (used in) financing activities	12,179			(3,073		)	(4,437		)	—		4,669
Increase (decrease) in cash	6			233			(3,157		)	—		(2,918		)
Cash, beginning of period	47			1,072			7,651			—		8,770
Cash, end of period	$	53		$	1,305		$	4,494		$	—	$	5,852

PHI, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Thousands of dollars)

	For the Six Months Ended June 30, 2017
	Parent Company Only (issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(34,236	)	$	18,916		$	7,371		$	—	$	(7,949	)
Investing activities:
Purchase of property and equipment	(43,892		)	—			—			—		(43,892		)
Proceeds from asset dispositions	17			—			—			—		17
Purchase of short-term investments	(134,518		)	—						—		(134,518		)
Proceeds from sale of short-term investments	187,217			—						—		187,217
Payments of deposits on aircraft	(110		)	—						—		(110		)
Net cash provided by investing activities	8,714			—			—			—		8,714
Financing activities:
Proceeds from line of credit	66,525			—			—			—		66,525
Payments on line of credit	(67,300		)	—			—			—		(67,300		)
Repurchase of common stock	(263		)	—			—			—		(263		)
Due to/from affiliate, net	26,572			(19,688		)	(6,884		)	—		—
Net cash provided by (used in) financing activities	25,534			(19,688		)	(6,884		)	—		(1,038		)
Increase in cash	12			(772		)	487			—		(273		)
Cash, beginning of period	36			2,100			460			—		2,596
Cash, end of period	$	48		$	1,328		$	947		$	—	$	2,323

XML

Basis of Presentation - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Typical contract length	30 days
Provisional income tax benefit related to remeasurement of deferred tax balances		$ 49.2
Minimum [Member]
Disaggregation of Revenue [Line Items]
Typical contract length	1 year
Accounts receivable invoice term	30 days
Contract termination notice period	30 days
Maximum [Member]
Disaggregation of Revenue [Line Items]
Typical contract length	7 years
Accounts receivable invoice term	60 days
Contract termination notice period	180 days
Oil and Gas [Member]
Disaggregation of Revenue [Line Items]
Receivables	$ 110.1	106.8
Air Medical [Member]
Disaggregation of Revenue [Line Items]
Receivables	82.7	74.4
Technical Services [Member]
Disaggregation of Revenue [Line Items]
Receivables	$ 1.5	$ 4.8

XML

Basis of Presentation - Disaggregated Revenue by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation of Revenue [Line Items]
Operating revenues, net	$ 169,243	$ 146,424	$ 329,607	$ 281,042
Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Operating revenues, net	169,243	146,424	329,607	281,042
Oil and Gas [Member] | Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Operating revenues, net	97,068	74,668	192,702	146,399
Air Medical [Member] | Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Operating revenues, net	67,151	67,222	124,139	122,559
Technical Services [Member] | Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Operating revenues, net	5,024	4,534	12,766	12,084
Traditional Provider Model [Member] | Air Medical [Member] | Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Operating revenues, net	12,085	12,140	23,956	23,610
Independent Provider Model [Member] | Air Medical [Member] | Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Operating revenues, net	$ 55,066	$ 55,082	$ 100,183	$ 98,949

XML

Investments - Components of Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Cost Basis	$ 73,216	$ 79,667
Unrealized Gains	0	0
Unrealized Losses	0	(364)
Fair Value	73,216	79,303
Investment Type [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost Basis		76,982
Unrealized Gains		0
Unrealized Losses		(364)
Fair Value		76,618
Investment Type [Member] | Money Market Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost Basis	72,393	5,601
Fair Value	72,393	5,601
Investment Type [Member] | US Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost Basis		7,501
Unrealized Losses		(34)
Fair Value		7,467
Investment Type [Member] | Corporate Bonds and Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost Basis		63,880
Unrealized Gains		0
Unrealized Losses		(330)
Fair Value		63,550
Deferred Compensation Plan Assets [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost Basis	823	2,685
Fair Value	$ 823	$ 2,685

XML

Investments - Additional Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]
Restricted cash and investments	$ 12,076	$ 12,396

XML

Investments - Cost and Fair Value of Debt Investments Based on Maturities (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Available-for-sale Securities, Debt Maturities [Abstract]
Due in one year or less, Amortized Costs	$ 0	$ 31,348
Due within two years, Amortized Costs	0	40,032
Total, Amortized Costs	0	71,380
Due in one year or less, Fair Value	0	31,254
Due within two years, Fair Value	0	39,763
Total, Fair Value	$ 0	$ 71,017

XML

Investments - Average Coupon Rate Percentage and the Average Days to Maturity of Debt (Detail)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
US Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Average Coupon Rate	0.00%	1.37%
Average Days To Maturity	0 days	370 days
Corporate Bonds and Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Average Coupon Rate	0.00%	1.766%
Average Days To Maturity	0 days	392 days

XML

Investments - Investments in Continuous Unrealized Loss Position for Less Than Twelve Months (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Fair Value	$ 0	$ 49,541
Unrealized Losses	0	(299)
US Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value	0	5,472
Unrealized Losses	0	(28)
Corporate Bonds and Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value	0	44,069
Unrealized Losses	$ 0	$ (271)

XML

Investments - Investments in Continuous Unrealized Loss Position for More Than Twelve Months (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Fair Value	$ 0	$ 21,476
Unrealized Losses	0	(65)
US Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value	0	1,994
Unrealized Losses	0	(6)
Corporate Bonds and Notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value	0	19,482
Unrealized Losses	$ 0	$ (59)

XML

Valuation Accounts - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Valuation and Qualifying Accounts Disclosure [Line Items]
Allowance for doubtful accounts	$ 7.3		$ 7.3		$ 7.2
Value of services to patients who are unable to pay	1.7	$ 2.0	3.3	$ 4.4
Estimated cost of providing charity services	0.4	$ 0.4	0.8	$ 1.0
Valuation reserves related to obsolescence and slow moving inventory	22.7		22.7		20.9
Air Medical [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Allowance for contractual discounts against outstanding accounts receivable	118.4		118.4		117.8
Allowance for uncompensated care against outstanding accounts receivable	$ 59.6		$ 59.6		$ 52.5

XML

Valuation Accounts - Schedule of Allowance for Contractual Discounts and Estimated Uncompensated Care as a Percentage of Gross Segment Accounts Receivable (Detail) - Air Medical [Member] - Trade Accounts Receivable [Member]	Jun. 30, 2018	Dec. 31, 2017
Valuation and Qualifying Accounts Disclosure [Line Items]
Allowance for Contractual Discounts	50.00%	53.00%
Allowance for Uncompensated Care	25.00%	24.00%

XML

Fair Value Measurements - Summary of Valuation of Investments and Financial Instruments Pricing Levels (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	$ 73,216	$ 79,303
Investment Type [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total		76,618
Investment Type [Member] | Money Market Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	72,393	5,601
Investment Type [Member] | US Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total		7,467
Investment Type [Member] | Corporate Bonds and Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total		63,550
Deferred Compensation Plan Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	823	2,685
(Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	73,216	8,286
(Level 1) [Member] | Investment Type [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total		5,601
(Level 1) [Member] | Investment Type [Member] | Money Market Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	72,393	5,601
(Level 1) [Member] | Deferred Compensation Plan Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	823	2,685
(Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	$ 0	71,017
(Level 2) [Member] | Investment Type [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total		71,017
(Level 2) [Member] | Investment Type [Member] | US Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total		7,467
(Level 2) [Member] | Investment Type [Member] | Corporate Bonds and Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total		$ 63,550

XML

Fair Value Measurements - Additional Information (Detail) - USD ($)	Jun. 30, 2018	Dec. 31, 2017	Mar. 17, 2014
Fair Value Measurements Disclosure [Line Items]
The fair value investments reclassification of assets between level 1 and level 2	$ 0	$ 0
The fair value of Senior Notes, based on quoted market prices	490,000,000	499,200,000
Fair Value, Inputs, Level 3 [Member]
Fair Value Measurements Disclosure [Line Items]
Level 3 investments	$ 0	$ 0
5.25% Senior Notes due March 15, 2019 [Member] | Senior Notes [Member]
Fair Value Measurements Disclosure [Line Items]
Interest rate on Senior Notes	5.25%		5.25%

XML

Debt - Components of Long-term Debt (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Principal	$ 622,220	$ 617,500
Unamortized debt issuance debt costs	1,229	1,506
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Principal	122,220	117,500
5.25% Senior Notes due March 15, 2019 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Principal	500,000	500,000
Unamortized debt issuance debt costs	$ 1,229	$ 1,506

XML

Debt - Components of Long-term Debt (Additional Information) (Detail) - 5.25% Senior Notes due March 15, 2019 [Member] - Senior Notes [Member]	6 Months Ended
	Jun. 30, 2018	Mar. 17, 2014
Debt Instrument [Line Items]
Interest rate on Senior Notes	5.25%	5.25%
Senior Notes payable periods	Mar. 15, 2019

XML

Debt - Additional Information (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Mar. 17, 2014
Debt Instrument [Line Items]
Short-term Investment limit	$ 60,317,000	$ 64,237,000
Letters of credit outstanding under the facility	$ 12,100,000	$ 12,400,000
5.25% Senior Notes due March 15, 2019 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Interest rate on Senior Notes	5.25%		5.25%
Maturity date of Senior notes payable	Mar. 15, 2019
Debt instrument interest rate term	Interest is payable semi-annually on March 15 and September 15 of each year.
Debt instrument restrictive covenants	The indenture governing the 2019 Notes (the “2019 Indenture”) contains, among other things, certain restrictive covenants, including limitations on incurring indebtedness, creating liens, selling assets and entering into certain transactions with affiliates. The covenants also limit PHI’s ability to, among other things, pay cash dividends on common stock, repurchase or redeem common or preferred equity, prepay subordinated debt and make certain investments.
Percentage of principal amount redeemed	101.00%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility, maturity date	Mar. 07, 2019
Increased Borrowing capacity	$ 130,000,000
Revolving Credit facility, Covenants, consolidated working capital ratio	200.00%
Revolving Credit facility, Covenants, consolidated net worth ratio	150.00%
Revolving Credit facility, Covenants, fixed coverage ratio	100.00%
Revolving Credit facility, Covenants, consolidated net worth	$ 500,000,000
Letters of credit outstanding under the facility	$ 7,700,000
Revolving Credit Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
LIBOR plus interest rate on borrowed funds	2.75%
Minimum [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Short-term Investment limit	$ 150,000,000

XML

Earnings Per Share - Components of Basic and Diluted Earnings Per Share (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
Weighted average outstanding shares of common stock, basic	15,806	15,716	15,806	15,716
Dilutive effect of unvested restricted stock units	0	0	0	0
Weighted average outstanding shares of common stock, diluted	15,806	15,716	15,806	15,716

XML

Earnings Per Share - Components of Basic and Diluted Earnings Per Share (Additional Information) (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
Anti-dilutive securities (in shares)	425,317	438,812	14,258	438,812

XML

Stock-Based Compensation - Summary of Share Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Stock-based compensation expense:
Total stock-based compensation expense	$ 813	$ 1,261	$ 2,132	$ 1,816
Time-based Restricted Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	321,831	417,266	321,831	447,477
Stock-based compensation expense:
Total stock-based compensation expense	$ 435	$ 556	$ 1,077	$ 1,111
Performance-based Restricted Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	448,012	365,539	448,012	365,539
Stock-based compensation expense:
Total stock-based compensation expense	$ 378	$ 705	$ 1,055	$ 705

XML

Asset Disposals - Additional Information (Detail) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2018 Aircraft	Mar. 31, 2018 Aircraft	Jun. 30, 2017 Aircraft	Jun. 30, 2018 USD ($)
Assets Held For Sale And Impairments [Line Items]
Cash realized from sale of assets | $				$ 1.5
Gain (loss) on disposal of assets | $				$ 0.7
Air Medical [Member] | Light Aircraft [Member]
Assets Held For Sale And Impairments [Line Items]
Number of aircraft sold	1	1
Oil and Gas [Member]
Assets Held For Sale And Impairments [Line Items]
Number of aircraft sold	1
Number of aircraft donated		1
Oil and Gas [Member] | Medium Aircraft [Member]
Assets Held For Sale And Impairments [Line Items]
Number of aircraft sold			5

XML

Commitments and Contingencies - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2018 USD ($) Land_Parcel
Long-term Purchase Commitment [Line Items]
Purchase commitment for aircraft	$ 0
Total aircraft deposits	500,000
Aggregate estimated probable liability environmental matters	$ 150,000
Number of parcels of land exists | Land_Parcel	2
Aggregate commitments under operating leases	$ 189,800,000
Operational lease payable	22,300,000
Lease commitment for aircraft	163,400,000
Facility lease commitments	26,400,000
2018 [Member]
Long-term Purchase Commitment [Line Items]
Aggregate purchase price for aircraft	105,900,000
2019 [Member]
Long-term Purchase Commitment [Line Items]
Aggregate purchase price for aircraft	129,000,000
2020 [Member]
Long-term Purchase Commitment [Line Items]
Aggregate purchase price for aircraft	$ 22,700,000

XML

Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning	$ 61,299
Activity	0
Goodwill, ending	61,299
Oil and Gas [Member]
Goodwill [Roll Forward]
Goodwill, beginning	61,299
Activity	0
Goodwill, ending	61,299
Air Medical [Member]
Goodwill [Roll Forward]
Goodwill, beginning	0
Activity	0
Goodwill, ending	0
Technical Services [Member]
Goodwill [Roll Forward]
Goodwill, beginning	0
Activity	0
Goodwill, ending	$ 0

XML

Other Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Gross Amount at December 31, 2017	$ 16,723
Accumulated Amortization	(777)
Net Balance at June 30, 2018	$ 15,946	$ 16,723
Customer Relationship [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	15 years
Gross Amount at December 31, 2017	$ 11,622
Accumulated Amortization	(387)
Net Balance at June 30, 2018	$ 11,235
Non-Compete Agreements
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	5 years
Gross Amount at December 31, 2017	$ 900
Accumulated Amortization	(90)
Net Balance at June 30, 2018	$ 810
Tradenames [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Lives	7 years
Gross Amount at December 31, 2017	$ 4,201
Accumulated Amortization	(300)
Net Balance at June 30, 2018	$ 3,901

XML

Other Intangible Assets - Future Amortization of Intangible Assets (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2018	$ 1.6	$ 1.6
2019	1.6	1.6
2020	1.6	1.6
2021	1.6	1.6
2022	1.6	1.6
Amortization expense	$ 0.4	$ 0.8

XML

Segment Information - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018 States Aircraft Location Segment	Jun. 30, 2017
Segment Reporting Information [Line Items]
Number of reportable segments | Segment			3
National Science Foundation [Member]
Segment Reporting Information [Line Items]
Number of aircraft assigned			6
Hospitals Contracts [Member]
Segment Reporting Information [Line Items]
Segment revenue	16.00%	18.00%	18.00%	18.00%
Fixed Term Customer Contract [Member]
Segment Reporting Information [Line Items]
Segment revenue	87.00%	88.00%	87.00%	88.00%
Contracted Customers [Member]
Segment Reporting Information [Line Items]
Segment revenue			13.00%	12.00%
Minimum [Member]
Segment Reporting Information [Line Items]
Term of contract			1 year
Maximum [Member]
Segment Reporting Information [Line Items]
Term of contract			7 years
Oil and Gas [Member]
Segment Reporting Information [Line Items]
Number of aircraft available for use			125
Segment revenue	57.00%	51.00%	58.00%	52.00%
Oil and Gas [Member] | Minimum [Member] | Major Customer [Member]
Segment Reporting Information [Line Items]
Working period with major customers			35 years
Oil and Gas [Member] | Minimum [Member] | ENI Petroleum [Member]
Segment Reporting Information [Line Items]
Working period with major customers			20 years
Air Medical [Member]
Segment Reporting Information [Line Items]
Segment revenue	40.00%	46.00%	38.00%	44.00%
Number of aircraft assigned			109
Number of states in which company operates aircrafts | States			18
Locations in which company operates Aircrafts | Location			74
Technical Services [Member]
Segment Reporting Information [Line Items]
Segment revenue	3.00%	3.00%	4.00%	4.00%

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Segment Information - Schedule of Provisions for Contractual Discounts and Estimated Uncompensated Care as a Percentage of Gross Segment Billings (Detail) - Air Medical [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Provisions For Contractual Discounts And Estimated Uncompensated Care [Line Items]
Provision for contractual discounts	67.00%	63.00%	66.00%	66.00%
Provision for uncompensated care	7.00%	10.00%	8.00%	7.00%

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Segment Information - Schedule of Net Revenue Attributable to Insurance, Medicare, Medicaid, and Self-Pay as Percentage of Net Air Medical Revenues (Detail) - Air Medical [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Insurance [Member]
Segment Reporting Information [Line Items]
Percentage of net Air Medical revenues	72.00%	72.00%	72.00%	71.00%
Medicare [Member]
Segment Reporting Information [Line Items]
Percentage of net Air Medical revenues	19.00%	18.00%	20.00%	18.00%
Medicaid [Member]
Segment Reporting Information [Line Items]
Percentage of net Air Medical revenues	8.00%	8.00%	8.00%	9.00%
Self Pay [Member]
Segment Reporting Information [Line Items]
Percentage of net Air Medical revenues	1.00%	2.00%	0.00%	2.00%

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Segment Information - Schedule of Financial Information Concerning Reportable Operating Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting Information [Line Items]
Total operating revenues, net	$ 169,243	$ 146,424	$ 329,607	$ 281,042
Total direct expenses	155,083	126,951	311,309	263,464
Total selling, general and administrative expenses	14,485	14,247	29,944	27,290
Total net segment profit	(73)	4,228	(12,309)	(11,713)
Interest expense	(8,340)	(8,083)	(16,537)	(16,278)
Loss before income taxes	(8,777)	(3,150)	(30,250)	(26,223)
Reportable Operating Segments [Member]
Segment Reporting Information [Line Items]
Total operating revenues, net	169,243	146,424	329,607	281,042
Total direct expenses	155,002	127,941	311,264	265,457
Total selling, general and administrative expenses	7,994	5,254	16,452	10,192
Total segment direct and selling, general and administrative expenses	162,996	133,195	327,716	275,649
Total net segment profit	6,247	13,229	1,891	5,393
Reportable Operating Segments [Member] | Oil and Gas [Member]
Segment Reporting Information [Line Items]
Total operating revenues, net	97,068	74,668	192,702	146,399
Total direct expenses	94,442	73,681	190,985	155,410
Total selling, general and administrative expenses	4,400	1,635	9,321	3,354
Total net segment profit	(1,774)	(648)	(7,604)	(12,365)
Reportable Operating Segments [Member] | Air Medical [Member]
Segment Reporting Information [Line Items]
Total operating revenues, net	67,151	67,222	124,139	122,559
Total direct expenses	56,776	50,402	110,608	101,243
Total selling, general and administrative expenses	3,254	3,263	6,421	6,144
Total net segment profit	7,121	13,557	7,110	15,172
Reportable Operating Segments [Member] | Technical Services [Member]
Segment Reporting Information [Line Items]
Total operating revenues, net	5,024	4,534	12,766	12,084
Total direct expenses	3,784	3,858	9,671	8,804
Total selling, general and administrative expenses	340	356	710	694
Total net segment profit	900	320	2,385	2,586
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Other, net	(193)	697	(2,112)	1,761
Interest expense	(8,340)	(8,083)	(16,537)	(16,278)
Corporate [Member]
Segment Reporting Information [Line Items]
Unallocated selling, general and administrative costs	$ (6,491)	$ (8,993)	$ (13,492)	$ (17,099)

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Segment Information - Depreciation and Amortization Expense Included in Direct Expenses and Unallocated Selling, General, and Administrative Costs (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Reportable Operating Segments [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Depreciation and Amortization Expenses	$ 17,719	$ 15,191	$ 35,271	$ 30,676
Reportable Operating Segments [Member] | Oil and Gas [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Depreciation and Amortization Expenses	11,486	9,824	23,269	19,686
Reportable Operating Segments [Member] | Air Medical [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Depreciation and Amortization Expenses	6,091	5,219	11,715	10,696
Reportable Operating Segments [Member] | Technical Services [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Depreciation and Amortization Expenses	142	148	287	294
Corporate [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Depreciation and Amortization Expenses	$ 1,412	$ 622	$ 3,327	$ 3,335

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Investment in Variable Interest Entity and Other Investments and Affiliates - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Variable Interest Entity [Line Items]
Loan to affiliate for operating purposes			$ 274	$ 0
PHI Century Limited [Member]
Variable Interest Entity [Line Items]
Investment in the common stock			49.00%	49.00%
PHIC's date of incorporation			May 26, 2011
Earnings (loss) in equity of unconsolidated affiliate	$ (100)	$ (1,000)	$ 100	$ (2,000)
Trade receivables	5,500		5,500		$ 4,000
Loan to affiliate for operating purposes			300
Other assets	400		400		$ 300
Accounts Receivable - Other [Member] | PHI Century Limited [Member]
Variable Interest Entity [Line Items]
Loan to affiliate	$ 300		$ 300

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Condensed Consolidating Financial Information - Additional Information (Detail) - USD ($)	Jun. 30, 2018	Mar. 17, 2014
Supplemental Guarantor Financial Information [Line Items]
Ownership percentage in domestic subsidiaries	100.00%
5.25% Senior Notes due March 15, 2019 [Member] | Senior Notes [Member]
Supplemental Guarantor Financial Information [Line Items]
Senior notes, amount issued		$ 500,000,000
Interest rate on Senior Notes	5.25%	5.25%

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Condensed Consolidating Financial Information - Guarantor Subsidiaries - Condensed Consolidating Balance Sheets (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Current Assets:
Cash	$ 5,852	$ 8,770	$ 2,323	$ 2,596
Short-term investments	60,317	64,237
Accounts receivable - net	194,332	185,979
Inventories of spare parts – net	77,747	80,881
Prepaid expenses	13,150	11,475
Income taxes receivable	623	1,271
Total current assets	352,021	352,613
Investment in subsidiaries and others		0
Property and equipment – net	933,583	946,765
Restricted cash and investments	12,076	12,396
Other assets	9,605	8,741
Deferred income taxes	3,237	3,309
Goodwill	61,299	61,299
Intangibles	15,946	16,723
Total assets	1,387,767	1,401,846
Current Liabilities:
Short-term debt	620,991
Accounts payable	50,645	37,186
Accrued and other current liabilities	40,626	41,850
Total current liabilities	712,262	79,036
Long-term debt		615,994
Deferred income taxes and other long-term liabilities	83,940	94,162
Shareholders’ Equity:
Common stock and paid-in capital	312,015	309,933
Accumulated other comprehensive income (loss)	624	(280)
Retained earnings	278,926	303,001
Total shareholders’ equity	591,565	612,654	584,061	599,778
Total liabilities and shareholders’ equity	1,387,767	1,401,846
Eliminations [Member]
Current Assets:
Accounts receivable - net	(2,187)	(17,004)
Intercompany receivable	(119,963)	(126,366)
Total current assets	(122,150)	(143,370)
Investment in subsidiaries and others	(405,560)	(397,301)
Total assets	(527,710)	(540,671)
Current Liabilities:
Short-term debt	0
Accounts payable	(2,261)	(17,005)
Accrued and other current liabilities		0
Intercompany payable	(119,889)	(126,365)
Total current liabilities	(122,150)	(143,370)
Shareholders’ Equity:
Common stock and paid-in capital	(79,462)	(79,326)
Retained earnings	(326,098)	(317,975)
Total shareholders’ equity	(405,560)	(397,301)
Total liabilities and shareholders’ equity	(527,710)	(540,671)
Parent Company Only (issuer) [Member]
Current Assets:
Cash	53	47	48	36
Short-term investments	60,317	64,237
Accounts receivable - net	76,291	90,077
Inventories of spare parts – net	65,522	68,737
Prepaid expenses	9,494	8,348
Income taxes receivable	111	345
Total current assets	211,788	231,791
Investment in subsidiaries and others	405,560	397,301
Property and equipment – net	603,926	617,488
Restricted cash and investments	12,076	12,382
Other assets	140,158	139,754
Total assets	1,373,508	1,398,716
Current Liabilities:
Short-term debt	620,991
Accounts payable	41,401	28,130
Accrued and other current liabilities	23,230	23,147
Intercompany payable	100,982	113,387
Total current liabilities	786,604	164,664
Long-term debt		615,994
Deferred income taxes and other long-term liabilities	(4,034)	5,404
Shareholders’ Equity:
Common stock and paid-in capital	312,015	309,933
Accumulated other comprehensive income (loss)	(3)	(280)
Retained earnings	278,926	303,001
Total shareholders’ equity	590,938	612,654
Total liabilities and shareholders’ equity	1,373,508	1,398,716
Guarantor Subsidiaries [Member]
Current Assets:
Cash	1,305	1,072	1,328	2,100
Accounts receivable - net	84,882	74,886
Intercompany receivable	119,963	126,366
Inventories of spare parts – net	9,512	9,049
Prepaid expenses	2,715	1,898
Income taxes receivable	512	9
Total current assets	218,889	213,280
Property and equipment – net	286,820	284,984
Other assets	794	908
Total assets	506,503	499,172
Current Liabilities:
Short-term debt	0
Accounts payable	4,039	4,636
Accrued and other current liabilities	10,891	10,577
Total current liabilities	14,930	15,213
Deferred income taxes and other long-term liabilities	84,539	84,300
Shareholders’ Equity:
Common stock and paid-in capital	77,951	77,951
Retained earnings	329,083	321,708
Total shareholders’ equity	407,034	399,659
Total liabilities and shareholders’ equity	506,503	499,172
Non-Guarantor Subsidiaries [Member]
Current Assets:
Cash	4,494	7,651	$ 947	$ 460
Accounts receivable - net	35,346	38,020
Inventories of spare parts – net	2,713	3,095
Prepaid expenses	941	1,229
Income taxes receivable	0	917
Total current assets	43,494	50,912
Property and equipment – net	42,837	44,293
Restricted cash and investments	0	14
Other assets	(131,347)	(131,921)
Deferred income taxes	3,237	3,309
Goodwill	61,299	61,299
Intangibles	15,946	16,723
Total assets	35,466	44,629
Current Liabilities:
Short-term debt	0
Accounts payable	7,466	21,425
Accrued and other current liabilities	6,505	8,126
Intercompany payable	18,907	12,978
Total current liabilities	32,878	42,529
Deferred income taxes and other long-term liabilities	3,435	4,458
Shareholders’ Equity:
Common stock and paid-in capital	1,511	1,375
Accumulated other comprehensive income (loss)	627
Retained earnings	(2,985)	(3,733)
Total shareholders’ equity	(847)	(2,358)
Total liabilities and shareholders’ equity	$ 35,466	$ 44,629

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Condensed Consolidating Financial Information - Guarantor Subsidiaries - Condensed Consolidating Statements of Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Income Statements, Captions [Line Items]
Operating revenues, net	$ 169,243	$ 146,424	$ 329,607	$ 281,042
Expenses:
Direct expenses	155,083	126,951	311,309	263,464
Selling, general and administrative expenses	14,485	14,247	29,944	27,290
Total operating expenses	169,568	141,198	341,253	290,754
(Gain) loss on disposal of assets	(171)	7	708	7
Equity in loss of unconsolidated affiliate, net	(81)	991	(45)	1,994
Operating (loss) income	(73)	4,228	(12,309)	(11,713)
Interest expense	8,340	8,083	16,537	16,278
Other income, net	364	(705)	1,404	(1,768)
Total expenses	8,704	7,378	17,941	14,510
(Loss) earnings before income taxes	(8,777)	(3,150)	(30,250)	(26,223)
Income tax (benefit) expense	(1,684)	123	(6,175)	(7,702)
Net loss	(7,093)	(3,273)	(24,075)	(18,521)
Eliminations [Member]
Condensed Income Statements, Captions [Line Items]
Operating revenues, net	(30,735)	(2,819)	(56,668)	(2,819)
Expenses:
Direct expenses	(30,793)	(2,819)	(56,707)	(2,819)
Selling, general and administrative expenses	(4)	(4)	(10)	(9)
Total operating expenses	(30,797)	(2,823)	(56,717)	(2,828)
Operating (loss) income	62	4	49	9
Equity in net income of consolidated subsidiaries	6,064	14,613	8,163	17,243
Interest expense	(539)		(1,081)	0
Other income, net	601	4	1,130	9
Total expenses	6,126	14,617	8,212	17,252
(Loss) earnings before income taxes	(6,064)	(14,613)	(8,163)	(17,243)
Net loss	(6,064)	(14,613)	(8,163)	(17,243)
Parent Company Only (issuer) [Member]
Condensed Income Statements, Captions [Line Items]
Operating revenues, net	79,857	75,045	157,949	149,329
Expenses:
Direct expenses	78,955	72,598	162,953	154,942
Selling, general and administrative expenses	8,395	10,916	17,143	21,024
Total operating expenses	87,350	83,514	180,096	175,966
(Gain) loss on disposal of assets	(150)	8	729	8
Equity in loss of unconsolidated affiliate, net	(81)	(75)	(45)	928
Operating (loss) income	(7,262)	(8,402)	(22,831)	(27,573)
Equity in net income of consolidated subsidiaries	(6,064)	(14,613)	(8,163)	(17,243)
Interest expense	8,337	8,082	16,533	16,256
Other income, net	(365)	(708)	(63)	(1,776)
Total expenses	1,908	(7,239)	8,307	(2,763)
(Loss) earnings before income taxes	(9,170)	(1,163)	(31,138)	(24,810)
Income tax (benefit) expense	(2,077)	2,110	(7,063)	(6,289)
Net loss	(7,093)	(3,273)	(24,075)	(18,521)
Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Operating revenues, net	68,717	68,857	127,426	126,330
Expenses:
Direct expenses	58,263	51,806	113,627	104,187
Selling, general and administrative expenses	3,256	3,269	6,423	6,155
Total operating expenses	61,519	55,075	120,050	110,342
(Gain) loss on disposal of assets		(1)		(1)
Operating (loss) income	7,198	13,783	7,376	15,989
Interest expense	0	1	0	22
Other income, net		(1)		(1)
Total expenses	0	0	0	21
(Loss) earnings before income taxes	7,198	13,783	7,376	15,968
Income tax (benefit) expense		(1,987)		(1,413)
Net loss	7,198	15,770	7,376	17,381
Non-Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Operating revenues, net	51,404	5,341	100,900	8,202
Expenses:
Direct expenses	48,658	5,366	91,436	7,154
Selling, general and administrative expenses	2,838	66	6,388	120
Total operating expenses	51,496	5,432	97,824	7,274
(Gain) loss on disposal of assets	(21)		(21)	0
Equity in loss of unconsolidated affiliate, net		1,066		1,066
Operating (loss) income	(71)	(1,157)	3,097	(138)
Interest expense	542		1,085	0
Other income, net	128		337	0
Total expenses	670		1,422	0
(Loss) earnings before income taxes	(741)	(1,157)	1,675	(138)
Income tax (benefit) expense	393		888	0
Net loss	$ (1,134)	$ (1,157)	$ 787	$ (138)

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Condensed Consolidating Financial Information - Guarantor Subsidiaries - Condensed Consolidated Statements of Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Financial Statements, Captions [Line Items]
Net loss	$ (7,093)	$ (3,273)	$ (24,075)	$ (18,521)
Unrealized gain (loss) on short-term investments	(107)	167	363	329
Currency translation adjustments	160	0	627	0
Changes in pension plan asset and benefit obligation	7	23	(1)	22
Tax effect of the above-listed adjustments	100	(68)	(85)	(127)
Total comprehensive (loss) income	(6,933)	(3,151)	(23,171)	(18,297)
Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Net loss	(6,064)	(14,613)	(8,163)	(17,243)
Total comprehensive (loss) income	(6,064)	(14,613)	(8,163)	(17,243)
Parent Company Only (issuer) [Member]
Condensed Financial Statements, Captions [Line Items]
Net loss	(7,093)	(3,273)	(24,075)	(18,521)
Unrealized gain (loss) on short-term investments	(107)	167	363	329
Currency translation adjustments	0		0
Changes in pension plan asset and benefit obligation	7	23	(1)	22
Tax effect of the above-listed adjustments	100	(68)	(85)	(127)
Total comprehensive (loss) income	(7,093)	(3,151)	(23,798)	(18,297)
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net loss	7,198	15,770	7,376	17,381
Total comprehensive (loss) income	7,198	15,770	7,376	17,381
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net loss	(1,134)	(1,157)	787	(138)
Currency translation adjustments	160		627
Total comprehensive (loss) income	$ (974)	$ (1,157)	$ 1,414	$ (138)

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Condensed Consolidating Financial Information - Guarantor Subsidiaries - Condensed Consolidating Statements of Cash Flows (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Cash Flow Statements, Captions [Line Items]
Net cash (used in) provided by operating activities		$ 5,410	$ (7,949)
Investing activities:
Purchase of property and equipment		(18,098)	(43,892)
Proceeds from asset dispositions		1,453	17
Purchase of short-term investments		(260,996)	(134,518)
Proceeds from sale of short-term investments		264,918	187,217
Payments of deposits on aircraft		0	(110)
Loan to unconsolidated affiliate		(274)	0
Net cash provided by (used in) investing activities		(12,997)	8,714
Debt issuance cost		0
Financing activities:
Proceeds from line of credit		34,295	66,525
Payments on line of credit		(29,575)	(67,300)
Repurchase of common stock		(51)	(263)
Net cash provided by (used in) financing activities		4,669	(1,038)
Increase (decrease) in cash		(2,918)	(273)
Cash, beginning of period		8,770	2,596
Cash, end of period	$ 2,323	5,852	2,323
Parent Company Only (issuer) [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash (used in) provided by operating activities		(506)	(34,236)
Investing activities:
Purchase of property and equipment		(16,768)	(43,892)
Proceeds from asset dispositions		1,453	17
Purchase of short-term investments		(260,996)	(134,518)
Proceeds from sale of short-term investments		264,918	187,217
Payments of deposits on aircraft			(110)
Loan to unconsolidated affiliate		(274)
Net cash provided by (used in) investing activities		(11,667)	8,714
Debt issuance cost		0
Financing activities:
Proceeds from line of credit		34,295	66,525
Payments on line of credit		(29,575)	(67,300)
Repurchase of common stock		(51)	(263)
Due to/from affiliate, net		7,510	26,572
Net cash provided by (used in) financing activities		12,179	25,534
Increase (decrease) in cash		6	12
Cash, beginning of period		47	36
Cash, end of period	48	53	48
Guarantor Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash (used in) provided by operating activities		3,306	18,916
Investing activities:
Purchase of property and equipment			0
Net cash provided by (used in) investing activities		0	0
Financing activities:
Due to/from affiliate, net		(3,073)	(19,688)
Net cash provided by (used in) financing activities		(3,073)	(19,688)
Increase (decrease) in cash		233	(772)
Cash, beginning of period		1,072	2,100
Cash, end of period	1,328	1,305	1,328
Non-Guarantor Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash (used in) provided by operating activities	7,371	2,610
Investing activities:
Purchase of property and equipment	0	(1,330)
Net cash provided by (used in) investing activities	0	(1,330)
Financing activities:
Due to/from affiliate, net	(6,884)	(4,437)
Net cash provided by (used in) financing activities	(6,884)	(4,437)
Increase (decrease) in cash	487	(3,157)
Cash, beginning of period		7,651	460
Cash, end of period	$ 947	$ 4,494	$ 947