Company Quick10K Filing
Quick10K
Bristow Group
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.32 36 $11
10-Q 2018-12-31 Quarter: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-K 2018-03-31 Annual: 2018-03-31
10-Q 2017-12-31 Quarter: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-K 2017-03-31 Annual: 2017-03-31
10-Q 2016-12-31 Quarter: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-K 2016-03-31 Annual: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-K 2015-03-31 Annual: 2015-03-31
10-Q 2014-12-31 Quarter: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-K 2014-03-31 Annual: 2014-03-31
10-Q 2013-12-31 Quarter: 2013-12-31
8-K 2019-05-13 Regulation FD, Exhibits
8-K 2019-05-10 Enter Agreement, Bankruptcy, Off-BS Arrangement, Off-BS Arrangement, Regulation FD, Other Events, Exhibits
8-K 2019-05-01 Officers, Regulation FD, Other Events, Exhibits
8-K 2019-04-15 Other Events, Exhibits
8-K 2019-04-10 Officers
8-K 2019-03-14 Other Events, Exhibits
8-K 2019-02-20
8-K 2019-02-18 Officers, Other Events, Exhibits
8-K 2019-02-11 Enter Agreement, Leave Agreement, Officers, Other Events, Exhibits
8-K 2019-02-11 Earnings, Other Events, Exhibits
8-K 2018-12-19 Officers, Exhibits
8-K 2018-12-17 Other Events
8-K 2018-12-10 Regulation FD
8-K 2018-11-27 Enter Agreement, Exhibits
8-K 2018-11-21 Enter Agreement, Exhibits
8-K 2018-11-09 Officers, Regulation FD, Exhibits
8-K 2018-11-09 Enter Agreement, Sale of Shares, Exhibits
8-K 2018-11-09 Regulation FD
8-K 2018-11-09 Earnings, Exhibits
8-K 2018-11-08 Regulation FD, Other Events, Exhibits
8-K 2018-09-12 Regulation FD, Exhibits
8-K 2018-08-03 Regulation FD, Exhibits
8-K 2018-08-02 Earnings, Exhibits
8-K 2018-07-31 Shareholder Vote
8-K 2018-06-05 Officers, Exhibits
8-K 2018-05-24 Regulation FD, Exhibits
8-K 2018-04-17 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-06 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-02-09 Regulation FD, Exhibits
THS Treehouse Foods 3,230
GDOT Green Dot 2,470
USNA Usana Health Sciences 1,980
PCMI PCM 354
CDXC Chromadex 263
SNCR Synchronoss 227
SELB Selecta Biosciences 107
HOTH Hoth Therapeutics 51
SNOA Sonoma Pharmaceuticals 10
EFSH 1847 Holdings 0
BRS 2018-12-31
Part I - Financial Information
Item 1. Financial Statements.
Note 1 - Basis of Presentation, Consolidation and Summary of Significant Accounting Policies
Note 2 - Acquisition and Disposition
Note 3 - Revenue Recognition
Note 4 - Variable Interest Entities
Note 5 - Debt
Note 6 - Fair Value Disclosures
Note 7 - Derivative Financial Instruments and Hedging Activities
Note 8 - Commitments and Contingencies
Note 9 - Taxes
Note 10 - Employee Benefit Plans
Note 11 - Earnings per Share and Accumulated Other Comprehensive Income
Note 12 - Segment Information
Note 13 - Supplemental Condensed Consolidating Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-4.2 fy2019q310-q12312018ex42.htm
EX-31.1 fy2019q310-q12312018ex311.htm
EX-31.2 fy2019q310-q12312018ex312.htm
EX-32.1 fy2019q310-q12312018ex321.htm
EX-32.2 fy2019q310-q12312018ex322.htm

Bristow Group Earnings 2018-12-31

BRS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 fy2019q310-q12312018.htm 10-Q Document


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form 10-Q
 
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2018
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from              to      
 
Commission File Number 001-31617
 
 
Bristow Group Inc.
 
 
(Exact name of registrant as specified in its charter)
 
Delaware
 
72-0679819
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification Number)
 
 
2103 City West Blvd.,
4th Floor
Houston, Texas
 
77042
(Zip Code)
(Address of principal executive offices)
 
 
Registrant’s telephone number, including area code:
(713) 267-7600
 
 
 
None 
 
 
 
 
 
 
 
 
 
 
 
 
(Former name, former address and former fiscal year, if changed since last report)
 
 
 
 
 
 
 
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading symbol(s)
Name of each exchange on which registered
 
 
Common Stock ($.01 par value)
N/A
None (1)
 
 
_______
 
 
 
 
 
 
(1) Prior to May 13, 2019, the registrant’s common stock was traded on the New York Stock Exchange.

 
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  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ    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 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 o
Accelerated filer þ
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o
 
 
 
 
 
 
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).
o  Yes    þ  No
Indicate the number shares outstanding of each of the issuer’s classes of Common Stock, as of June 14, 2019.
35,918,916 shares of Common Stock, $.01 par value
 




BRISTOW GROUP INC.
INDEX — FORM 10-Q
 



PART I — FINANCIAL INFORMATION
 
Item 1.     Financial Statements.

BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
  
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
(In thousands, except per share amounts)
Revenue:
 
 
 
 
 
 
 
 
Operating revenue from non-affiliates
 
$
303,206

 
$
328,944

 
$
963,252

 
$
991,655

Operating revenue from affiliates
 
13,885

 
16,584

 
39,537

 
51,594

Reimbursable revenue from non-affiliates
 
14,238

 
15,207

 
47,091

 
43,271

 
 
331,329

 
360,735

 
1,049,880

 
1,086,520

Operating expense:
 
 
 
 
 
 
 
 
Direct cost
 
262,039

 
271,894

 
819,307

 
842,216

Reimbursable expense
 
13,862

 
14,725

 
44,960

 
42,365

Depreciation and amortization
 
30,615

 
31,682

 
92,045

 
94,119

General and administrative
 
40,742

 
43,366

 
119,682

 
138,695

 
 
347,258

 
361,667

 
1,075,994

 
1,117,395

 
 
 
 
 
 
 
 
 
Loss on impairment
 

 

 
(117,220
)
 
(1,192
)
Loss on disposal of assets
 
(16,015
)
 
(4,591
)
 
(18,986
)
 
(12,418
)
Earnings (losses) from unconsolidated affiliates, net
 
780

 
1,996

 
(2,333
)
 
3,394

Operating loss
 
(31,164
)
 
(3,527
)
 
(164,653
)
 
(41,091
)
 
 
 
 
 
 
 
 
 
Interest expense, net
 
(27,113
)
 
(19,093
)
 
(80,690
)
 
(53,677
)
Other income (expense), net
 
(3,660
)
 
(736
)
 
(10,814
)
 
235

Loss before benefit (provision) for income taxes
 
(61,937
)
 
(23,356
)
 
(256,157
)
 
(94,533
)
Benefit (provision) for income taxes
 
(23,764
)
 
13,419

 
(5,258
)
 
(2,546
)
Net loss
 
(85,701
)
 
(9,937
)
 
(261,415
)
 
(97,079
)
Net (income) loss attributable to noncontrolling interests
 
(243
)
 
1,664

 
(827
)
 
2,322

Net loss attributable to Bristow Group
 
$
(85,944
)
 
$
(8,273
)
 
$
(262,242
)
 
$
(94,757
)
 
 
 
 
 
 
 
 
 
Loss per common share:
 
 
 
 
 
 
 
 
Basic
 
$
(2.40
)
 
$
(0.23
)
 
$
(7.34
)
 
$
(2.69
)
Diluted
 
$
(2.40
)
 
$
(0.23
)
 
$
(7.34
)
 
$
(2.69
)
The accompanying notes are an integral part of these condensed consolidated financial statements.

1


BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
  
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
(In thousands)
Net loss
 
$
(85,701
)
 
$
(9,937
)
 
$
(261,415
)
 
$
(97,079
)
Other comprehensive loss:
 
 
 
 
 
 
 
 
Currency translation adjustments
 
(6,462
)
 
(57
)
 
(43,462
)
 
20,394

Pension liability adjustment, net of tax benefit of $0.5 million, zero, $0.5 million, and zero, respectively
 
(2,410
)
 

 
(2,410
)
 

Unrealized gain (loss) on cash flow hedges, net of tax benefit (provision) of zero, zero, $0.2 million and zero, respectively
 
(5
)
 

 
1,245

 

Total comprehensive loss
 
(94,578
)
 
(9,994
)
 
(306,042
)
 
(76,685
)
 
 
 
 
 
 
 
 
 
Net (income) loss attributable to noncontrolling interests
 
(243
)
 
1,664

 
(827
)
 
2,322

Currency translation adjustments attributable to noncontrolling interests
 
(52
)
 
(17
)
 
(223
)
 
530

Total comprehensive (income) loss attributable to noncontrolling interests
 
(295
)
 
1,647

 
(1,050
)
 
2,852

Total comprehensive loss attributable to Bristow Group
 
$
(94,873
)
 
$
(8,347
)
 
$
(307,092
)
 
$
(73,833
)
The accompanying notes are an integral part of these condensed consolidated financial statements.

2


BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
 
 
December 31, 
 2018
 
March 31,  
 2018
 
 
(Unaudited)
 
 
 
 
(In thousands)
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
231,326

 
$
380,223

Accounts receivable from non-affiliates
 
204,641

 
233,386

Accounts receivable from affiliates
 
13,186

 
13,594

Inventories
 
115,254

 
129,614

Assets held for sale
 
22,485

 
30,348

Prepaid expenses and other current assets
 
48,646

 
47,234

Total current assets
 
635,538

 
834,399

Investment in unconsolidated affiliates
 
113,974

 
126,170

Property and equipment – at cost:
 
 
 
 
Land and buildings
 
240,201

 
250,040

Aircraft and equipment
 
2,479,543

 
2,511,131

 
 
2,719,744

 
2,761,171

Less – Accumulated depreciation and amortization
 
(872,201
)
 
(693,151
)
 
 
1,847,543

 
2,068,020

Goodwill
 
18,271

 
19,907

Other assets
 
116,418

 
116,506

Total assets
 
$
2,731,744

 
$
3,165,002

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
 
 
 
 
Accounts payable
 
$
91,916

 
$
101,270

Accrued wages, benefits and related taxes
 
52,073

 
67,334

Income taxes payable
 
5,169

 
8,453

Other accrued taxes
 
5,628

 
7,378

Deferred revenue
 
9,966

 
15,833

Accrued maintenance and repairs
 
26,620

 
28,555

Accrued interest
 
18,317

 
16,345

Other accrued liabilities
 
38,692

 
65,978

Short-term borrowings and current maturities of long-term debt
 
1,421,050

 
1,475,438

Total current liabilities
 
1,669,431

 
1,786,584

Long-term debt, less current maturities
 
9,174

 
11,096

Accrued pension liabilities
 
28,036

 
37,034

Other liabilities and deferred credits
 
28,573

 
36,952

Deferred taxes
 
119,057

 
115,192

Commitments and contingencies (Note 8)
 


 

Stockholders’ investment:
 
 
 
 
Common stock, $.01 par value, authorized 90,000,000; outstanding: 35,798,185 as of December 31, 2018 and 35,526,625 as of March 31, 2018 (exclusive of 1,291,441 treasury shares)
 
385

 
382

Additional paid-in capital
 
860,745

 
852,565

Retained earnings
 
524,846

 
788,834

Accumulated other comprehensive loss
 
(330,944
)
 
(286,094
)
Treasury shares, at cost (2,756,419 shares)
 
(184,796
)
 
(184,796
)
Total Bristow Group stockholders’ investment
 
870,236

 
1,170,891

Noncontrolling interests
 
7,237

 
7,253

Total stockholders’ investment
 
877,473

 
1,178,144

Total liabilities and stockholders’ investment
 
$
2,731,744

 
$
3,165,002

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

3


BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
  
 
Nine Months Ended 
 December 31,
 
 
2018
 
2017
 
 
 
 
 
 
 
(Unaudited)
(In thousands)
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(261,415
)
 
$
(97,079
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
92,045

 
94,119

Deferred income taxes
 
(5,848
)
 
(14,665
)
Write-off of deferred financing fees
 

 
1,138

Discount amortization on long-term debt
 
4,713

 
343

Loss on disposal of assets
 
18,986

 
12,418

Loss on impairment
 
117,220

 
1,192

Deferral of lease payments
 
3,967

 
2,423

Stock-based compensation
 
5,651

 
8,776

Equity in earnings from unconsolidated affiliates less than (in excess of) dividends received
 
2,518

 
(3,185
)
Increase (decrease) in cash resulting from changes in:
 
 
 
 
Accounts receivable
 
16,063

 
(3,785
)
Inventories
 
(3,065
)
 
(4,618
)
Prepaid expenses and other assets
 
(1,571
)
 
10,250

Accounts payable
 
(1,956
)
 
(14,540
)
Accrued liabilities
 
(47,390
)
 
(5,528
)
Other liabilities and deferred credits
 
(8,820
)
 
3,434

Net cash used in operating activities
 
(68,902
)
 
(9,307
)
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(33,711
)
 
(36,441
)
Proceeds from asset dispositions
 
9,093

 
48,547

Proceeds from OEM cost recoveries
 

 
94,463

Net cash provided by (used in) investing activities
 
(24,618
)
 
106,569

Cash flows from financing activities:
 
 
 
 
Proceeds from borrowings
 
387

 
548,768

Debt issuance costs
 
(2,599
)
 
(11,653
)
Repayment of debt
 
(49,116
)
 
(609,667
)
Purchase of 4½% Convertible Senior Notes call option
 

 
(40,393
)
Proceeds from issuance of warrants
 

 
30,259

Partial prepayment of put/call obligation
 
(40
)
 
(36
)
Dividends paid to noncontrolling interest
 
(580
)
 

Common stock dividends paid
 

 
(2,465
)
Issuance of common stock
 
2,830

 

Repurchases for tax withholdings on vesting of equity awards
 
(1,505
)
 
(591
)
Net cash used in financing activities
 
(50,623
)
 
(85,778
)
Effect of exchange rate changes on cash and cash equivalents
 
(4,754
)
 
9,708

Net increase (decrease) in cash and cash equivalents
 
(148,897
)
 
21,192

Cash and cash equivalents at beginning of period
 
380,223

 
96,656

Cash and cash equivalents at end of period
 
$
231,326

 
$
117,848

Cash paid during the period for:
 
 
 
 
Interest
 
$
73,604

 
$
69,896

Income taxes
 
$
13,500

 
$
20,440

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

4


BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Investment
(Unaudited)
(In thousands, except share amounts)
 
Total Bristow Group Stockholders’ Investment
 
 
 
 
 
Common
Stock
 
Common
Stock
(Shares)
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
 
Noncontrolling
Interests
 
Total
Stockholders’
Investment
March 31, 2018
$
382

 
35,526,625

 
$
852,565

 
$
788,834

 
$
(286,094
)
 
$
(184,796
)
 
$
7,253

 
$
1,178,144

Adoption of new accounting guidance (1)

 

 

 
(1,746
)
 

 

 

 
(1,746
)
Issuance of common stock
3

 
238,650

 
4,261

 

 

 

 

 
4,264

Distributions paid to noncontrolling interests

 

 

 

 

 

 
(14
)
 
(14
)
Currency translation adjustments

 

 

 

 

 

 
(139
)
 
(139
)
Net income (loss)

 

 

 
(32,108
)
 

 

 
67

 
(32,041
)
Other comprehensive loss

 

 

 

 
(27,824
)
 

 

 
(27,824
)
June 30, 2018
385

 
35,765,275

 
856,826

 
754,980

 
(313,918
)
 
(184,796
)
 
7,167

 
1,120,644

Issuance of common stock

 
32,910

 
1,983

 

 

 

 

 
1,983

Distributions paid to noncontrolling interests

 

 

 

 

 

 
(13
)
 
(13
)
Dividends paid to noncontrolling interest

 

 

 

 

 

 
(580
)
 
(580
)
Currency translation adjustments

 

 

 

 

 

 
(32
)
 
(32
)
Net income (loss)

 

 

 
(144,190
)
 

 

 
517

 
(143,673
)
Other comprehensive loss

 

 

 

 
(8,097
)
 

 

 
(8,097
)
September 30, 2018
385

 
35,798,185

 
858,809

 
610,790

 
(322,015
)
 
(184,796
)
 
7,059

 
970,232

Issuance of common stock

 

 
1,936

 

 

 

 

 
1,936

Distributions paid to noncontrolling interests

 

 

 

 

 

 
(13
)
 
(13
)
Currency translation adjustments

 

 

 

 

 

 
(52
)
 
(52
)
Net income (loss)

 

 

 
(85,944
)
 

 

 
243

 
(85,701
)
Other comprehensive loss

 

 

 

 
(8,929
)
 

 

 
(8,929
)
December 31, 2018
$
385

 
35,798,185

 
$
860,745

 
$
524,846

 
$
(330,944
)
 
$
(184,796
)
 
$
7,237

 
$
877,473

_____________ 
(1) 
Cumulative-effect adjustment upon the adoption of new accounting guidance related to current and deferred income taxes for intra-entity transfer of assets other than inventory. For further details, see Note 1.


5


BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Investment— (Continued)
(Unaudited)
(In thousands, except share amounts)
 
 
 
Total Bristow Group Stockholders’ Investment
 
 
 
 
 
Redeemable Noncontrolling Interest
 
Common
Stock
 
Common
Stock
(Shares)
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
 
Noncontrolling
Interests
 
Total
Stockholders’
Investment
March 31, 2017
$
6,886

 
$
379

 
35,213,991

 
$
809,995

 
$
986,957

 
$
(328,277
)
 
$
(184,796
)
 
$
5,025

 
$
1,289,283

Issuance of common stock

 
1

 
89,849

 
3,862

 

 

 

 

 
3,863

Distributions paid to noncontrolling interests

 

 

 

 

 

 

 
(12
)
 
(12
)
Common stock dividends ($0.07 per share)

 

 

 

 
(2,465
)
 

 

 

 
(2,465
)
Currency translation adjustments
258

 

 

 

 

 

 

 
52

 
52

Net income (loss)
(795
)
 

 

 

 
(55,275
)
 

 

 
325

 
(54,950
)
Other comprehensive income

 

 

 

 

 
10,070

 

 

 
10,070

June 30, 2017
6,349

 
380

 
35,303,840

 
813,857

 
929,217

 
(318,207
)
 
(184,796
)
 
5,390

 
1,245,841

Issuance of common stock

 
1

 
57,696

 
2,133

 

 

 

 

 
2,134

Distributions paid to noncontrolling interests

 

 

 

 

 

 

 
(11
)
 
(11
)
Currency translation adjustments
194

 

 

 

 

 

 

 
43

 
43

Net income (loss)
(541
)
 

 

 

 
(31,209
)
 

 

 
353

 
(30,856
)
Other comprehensive income

 

 

 

 

 
10,928

 

 

 
10,928

September 30, 2017
6,002

 
381

 
35,361,536

 
815,990

 
898,008

 
(307,279
)
 
(184,796
)
 
5,775

 
1,228,079

Issuance of common stock

 

 
13,844

 
2,191

 

 

 

 

 
2,191

Equity component 4½% Convertible Senior Notes issued

 

 

 
36,778

 

 

 

 

 
36,778

Purchase of 4½% Convertible Senior Notes call option

 

 

 
(40,393
)
 

 

 

 

 
(40,393
)
Proceeds from issuance of warrants

 

 

 
30,259

 

 

 

 

 
30,259

Distributions paid to noncontrolling interests

 

 

 

 

 

 

 
(13
)
 
(13
)
Currency translation adjustments
37

 

 

 

 

 

 

 
(54
)
 
(54
)
Net income (loss)
(2,180
)
 

 

 

 
(8,273
)
 

 

 
516

 
(7,757
)
Other comprehensive loss

 

 

 

 

 
(74
)
 

 

 
(74
)
December 31, 2017
$
3,859

 
$
381


35,375,380

 
$
844,825

 
$
889,735

 
$
(307,353
)
 
$
(184,796
)
 
$
6,224

 
$
1,249,016


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

6

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 1 — BASIS OF PRESENTATION, CONSOLIDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements include the accounts of Bristow Group Inc. and its consolidated entities (“Bristow Group”, the “Company”, “we”, “us”, or “our”) after elimination of all significant intercompany accounts and transactions. Our fiscal year ends March 31, and we refer to fiscal years based on the end of such period. Therefore, the fiscal year ending March 31, 2019 is referred to as “fiscal year 2019”. Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the information contained in the following notes to condensed consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and related notes thereto contained in our fiscal year 2018 Annual Report (the “fiscal year 2018 Financial Statements”). Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the entire fiscal year.
The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair presentation of the consolidated balance sheet of the Company as of December 31, 2018, the consolidated statements of operations and comprehensive loss for the three and nine months ended December 31, 2018 and 2017, the consolidated cash flows for the nine months ended December 31, 2018 and 2017, and the consolidated statements of changes in stockholders’ investment for the three and nine months ended December 31, 2018.
Bankruptcy, Restructuring Support Agreement and Going Concern
The Company’s liquidity outlook has recently changed resulting in substantial doubt about the Company’s ability to continue as a going concern. On May 11, 2019 (the “Petition Date”), Bristow Group Inc. and its subsidiaries BHNA Holdings Inc., Bristow Alaska Inc., Bristow Helicopters Inc., Bristow U.S. Leasing LLC, Bristow U.S. LLC, BriLog Leasing Ltd. and Bristow Equipment Leasing Ltd. (together, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). The Debtors’ Chapter 11 Cases are jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. The Debtors continue to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
On May 10, 2019, we entered into a restructuring support agreement (the “RSA”) with (i) certain holders (the “Supporting Secured Noteholders”) of the Company’s 8.75% Senior Secured Notes due 2023 (the “8.75% Senior Secured Notes”) and (ii) the guarantors of the 8.75% Senior Secured Notes, to support a restructuring of the Company (the “Restructuring”) on the terms set forth in the term sheet contained in an exhibit to the RSA (the “Restructuring Term Sheet”). The RSA contemplates the filing of the Chapter 11 Cases to implement the Restructuring pursuant to a Chapter 11 plan of reorganization (the “Plan”) and the various related transactions set forth in or contemplated by the Restructuring Term Sheet, the DIP Term Sheet (as defined herein) and the other restructuring documents attached to the RSA.
The RSA contains certain covenants on the part of each of the Company and the Supporting Secured Noteholders, including limitations on the Supporting Secured Noteholders’ ability to pursue alternative transactions, commitments by the Supporting Secured Noteholders to vote in favor of the Plan and commitments of the Company and the Supporting Secured Noteholders to negotiate in good faith to finalize the documents and agreements governing the Plan. The RSA also provides for certain conditions to the obligations of the parties and for termination upon the occurrence of certain events, including without limitation, the failure to achieve certain milestones and certain breaches by the parties under the RSA.
The Company expects to continue operations in the normal course during the pendency of the Chapter 11 Cases.
The condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of substantial doubt as to the Company’s ability to continue as a going concern.

7

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


Loss on Impairment
Loss on impairment includes the following (in thousands):
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Impairment of inventories
$

 
$

 
$
9,276

 
$
1,192

Impairment of property and equipment (1)

 

 
104,939

 

Impairment of intangible assets

 

 
3,005

 

 
$

 
$

 
$
117,220

 
$
1,192

_____________ 
(1) 
Includes impairment of $87.5 million for H225 aircraft and $17.5 million for Eastern Airways International Limited (“Eastern Airways”) aircraft and equipment.
Prior to the three months ended September 30, 2018, we had been actively marketing our H225 aircraft with the expectation of a substantial return of the aircraft to oil and gas service. However, market conditions and more significantly, the recent development of alternative opportunities outside of our traditional oil and gas service for our H225 aircraft and our decision to pursue those opportunities during the three months ended September 30, 2018, indicated a substantial return to oil and gas service within our operations was not likely. Therefore, during the three months ended September 30, 2018, we concluded that cash flows associated with our H225 helicopters were largely independent from the cash flows associated with the remainder of our oil and gas related property and equipment (“oil and gas asset group”) and should be tested for impairment as a stand-alone asset group. In accordance with Accounting Standard Codification (“ASC”) 360-10, we performed an impairment analysis for our stand-alone H225 asset group and determined that the forecasted cash flows over the remaining useful life of the asset group were insufficient to recover the carrying value of the asset group. We determined the fair value of the H225 asset group to be $116.4 million and recorded an impairment charge of $87.5 million. In addition, we performed a review of our H225 aircraft related inventory and recorded an impairment charge of $8.9 million to record the inventory at the lower of cost or net realizable value. These impairments are included in our Corporate and other region in Note 12. The inputs used in our fair value estimates were from Level 3 of the fair value hierarchy discussed in Note 6.
  The removal of the H225 aircraft from our oil and gas asset group and changes in our forecasted cash flows for that asset group during the three months ended September 30, 2018 indicated the need for the performance of a recoverability analysis of the oil and gas asset group. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of our oil and gas asset group, which largely consists of our oil and gas related held for use aircraft. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs, including assumptions related to projected demand for services, rates and anticipated aircraft disposal values. We determined that the estimated future undiscounted cash flows exceeded the carrying value for our oil and gas asset group as of September 30, 2018, and no impairment was recorded on these assets. Future declines in operating performance, aircraft disposal values, anticipated business outlook, or projected aircraft deliveries currently accounted for as construction in progress may reduce our estimated future undiscounted cash flows and result in impairment of our oil and gas asset group.
  In addition, changes in our forecasted cash flows during the three months ended September 30, 2018 indicated the need for the performance of a recoverability analysis for the airline related assets of Eastern Airways. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of the airline related assets of Eastern Airways for potential impairment. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs, including assumptions related to projected demand for services and rates. We determined that the estimated future undiscounted cash flows were below the carrying value for our airline related assets of Eastern Airways as of September 30, 2018.  We determined the fair value of the asset group to be $20.5 million and recorded an impairment charge of $17.5 million.  As part of our impairment review of the airline assets of Eastern Airways, we also recorded impairments of $3.0 million related to the remaining intangible assets and $0.3 million related to inventory. These impairments are included in our Europe and Caspian region in Note 12. The inputs used in our fair value estimates were from Level 3 of the fair value hierarchy discussed in Note 6.
No further triggers to review our assets for impairment exist as of December 31, 2018.
During the nine months ended December 31, 2017, as a result of changes in expected future utilization of aircraft within our training fleet we recorded a $1.2 million charge to impair inventory used on our training fleet, which is included in loss on

8

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


impairment on our condensed consolidated statement of operations. This impairment is included in our Corporate and other region in Note 12.
Foreign Currency
During the three and nine months ended December 31, 2018 and 2017, our primary foreign currency exposure was to the British pound sterling, the euro, the Australian dollar, the Norwegian kroner and the Nigerian naira. The value of these currencies has fluctuated relative to the U.S. dollar as indicated in the following table:
 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2018
 
2017
 
2018
 
2017
One British pound sterling into U.S. dollars
 
 
 
 
 
 
 
 
High
 
1.32

 
1.35

 
1.43

 
1.36

Average
 
1.29

 
1.33

 
1.32

 
1.31

Low
 
1.25

 
1.31

 
1.25

 
1.24

At period-end
 
1.27

 
1.35

 
1.27

 
1.35

One euro into U.S. dollars
 
 
 
 
 
 
 
 
High
 
1.16

 
1.20

 
1.24

 
1.20

Average
 
1.14

 
1.18

 
1.17

 
1.15

Low
 
1.13

 
1.16

 
1.13

 
1.06

At period-end
 
1.14

 
1.20

 
1.14

 
1.20

One Australian dollar into U.S. dollars
 
 
 
 
 
 
 
 
High
 
0.74

 
0.79

 
0.78

 
0.81

Average
 
0.72

 
0.77

 
0.74

 
0.77

Low
 
0.70

 
0.75

 
0.70

 
0.74

At period-end
 
0.70

 
0.78

 
0.70

 
0.78

One Norwegian kroner into U.S. dollars
 
 
 
 
 
 
 
 
High
 
0.1227

 
0.1269

 
0.1290

 
0.1294

Average
 
0.1183

 
0.1225

 
0.1215

 
0.1219

Low
 
0.1136

 
0.1193

 
0.1136

 
0.1152

At period-end
 
0.1155

 
0.1223

 
0.1155

 
0.1223

One Nigerian naira into U.S. dollars
 
 
 
 
 
 
 
 
High
 
0.0028

 
0.0028

 
0.0028

 
0.0033

Average
 
0.0027

 
0.0028

 
0.0028

 
0.0030

Low
 
0.0027

 
0.0028

 
0.0027

 
0.0027

At period-end
 
0.0028

 
0.0028

 
0.0028

 
0.0028

_____________ 
Source: FactSet
Other income (expense), net, in our condensed consolidated statements of operations includes foreign currency transaction losses of $2.8 million and gains of $0.4 million for the three months ended December 31, 2018 and 2017, respectively, and foreign currency transaction losses of $8.1 million and gains of $1.2 million for the nine months ended December 31, 2018 and 2017, respectively. Transaction gains and losses represent the revaluation of monetary assets and liabilities from the currency that will ultimately be settled into the functional currency of the legal entity holding the asset or liability. The most significant items revalued are denominated in U.S. dollars on entities with British pound sterling, Australian dollar and Nigerian naira functional currencies and denominated in British pound sterling on entities with U.S. dollar functional currencies, with transaction gains or losses primarily resulting from the strengthening or weakening of the U.S. dollar versus those other currencies.

9

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


Our earnings (losses) from unconsolidated affiliates, net are also affected by the impact of changes in foreign currency exchange rates on the reported results of our unconsolidated affiliates. During the three months ended December 31, 2018 and 2017, earnings (losses) from unconsolidated affiliates, net decreased by $0.2 million and $0.8 million, respectively, and during the nine months ended December 31, 2018 and 2017, earnings (losses) from unconsolidated affiliates, net decreased by $3.8 million and $1.6 million, respectively, as a result of the impact of changes in foreign currency exchange rates on the earnings of our unconsolidated affiliates, primarily the impact of changes in the Brazilian real to U.S. dollar exchange rate on earnings for our affiliate in Brazil. The value of the Brazilian real has fluctuated relative to the U.S. dollar as indicated in the following table:
 
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
 
2018
 
2017
 
2018
 
2017
One Brazilian real into U.S. dollars
 
 
 
 
 
 
 
 
High
 
0.2726

 
0.3198

 
0.3020

 
0.3244

Average
 
0.2628

 
0.3076

 
0.2647

 
0.3117

Low
 
0.2482

 
0.3004

 
0.2390

 
0.2995

At period-end
 
0.2580

 
0.3015

 
0.2580

 
0.3015

_____________ 
Source: FactSet
We estimate that the fluctuation of currencies versus the same period in the prior fiscal year had the following effect on our financial condition and results of operations (in thousands):
 
 
Three Months Ended 
 December 31, 2018
 
Nine Months Ended 
 December 31, 2018
Revenue
 
$
(7,844
)
 
$
(2,652
)
Operating expense
 
10,452

 
10,178

Earnings (losses) from unconsolidated affiliates, net
 
555

 
(2,163
)
Non-operating expense
 
(3,153
)
 
(9,335
)
Loss before provision for income taxes
 
10

 
(3,972
)
Benefit for income taxes
 
144

 
1,338

Net loss
 
154

 
(2,634
)
Cumulative translation adjustment
 
(6,514
)
 
(43,685
)
Total stockholders’ investment
 
$
(6,360
)
 
$
(46,319
)
Interest Expense, Net
During the three and nine months ended December 31, 2018 and 2017, interest expense, net consisted of the following (in thousands):
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Interest income
$
2,269

 
$
144

 
$
3,677

 
$
512

Interest expense
(29,382
)
 
(19,237
)
 
(84,367
)
 
(54,189
)
Interest expense, net
$
(27,113
)
 
$
(19,093
)
 
$
(80,690
)
 
$
(53,677
)
Accounts Receivable
As of December 31 and March 31, 2018, the allowance for doubtful accounts for non-affiliates was $0.6 million and $3.3 million, respectively. There were no allowances for doubtful accounts related to accounts receivable due from affiliates as of December 31 and March 31, 2018. The allowance for doubtful accounts for non-affiliates as of December 31, 2018 primarily relates to various customers of Eastern Airways. The allowance for doubtful accounts for non-affiliates as of March 31, 2018 primarily relates to amounts due from a customer in Nigeria for which we no longer believed collection was probable. During the nine months ended December 31, 2018, we wrote-off $2.3 million of accounts receivable previously reserved for from this customer as no collection is expected.

10

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


Inventories
As of December 31 and March 31, 2018, inventories were net of allowances of $21.1 million and $26.0 million, respectively. As discussed above in Loss on Impairment, we performed a review of our H225 aircraft related inventory and Eastern Airways inventory and recorded impairment charges of $8.9 million and $0.3 million, respectively, to record the inventories at the lower of cost or net realizable value during the nine months ended December 31, 2018. During the nine months ended December 31, 2017, as a result of changes in expected future utilization of aircraft within our training fleet, we recorded a $1.2 million charge to impair inventory used on our training fleet, which is included in loss on impairment on our condensed consolidated statement of operations. These impairment charges are not reflected in the allowances above.
Prepaid Expenses and Other Current Assets
As of December 31 and March 31, 2018, prepaid expenses and other current assets included the short-term portion of contract acquisition and pre-operating costs totaling $9.6 million and $10.8 million, respectively, related to the search and rescue (“SAR”) contracts in the U.K. and two customer contracts in Norway, which are recoverable under the contracts and will be expensed over the terms of the contracts. For the three months ended December 31, 2018 and 2017, we expensed $2.4 million and $2.8 million, respectively, and for the nine months ended December 31, 2018 and 2017, we expensed $7.6 million and $8.5 million, respectively, related to these contracts.
Goodwill
Goodwill is recorded when the cost of acquired businesses exceeds the fair value of the identifiable net assets acquired. Goodwill has an indefinite useful life and is not amortized, but is assessed for impairment annually or when events or changes in circumstances indicate that a potential impairment exists.
Goodwill of $18.3 million and $19.9 million as of December 31 and March 31, 2018, respectively, related to our Asia Pacific reporting unit was as follows (in thousands):
March 31, 2018
 
$
19,907

Foreign currency translation
 
(1,636
)
December 31, 2018
 
$
18,271

Accumulated goodwill impairment of $50.9 million as of both December 31 and March 31, 2018 related to our reporting units were as follows (in thousands):
Europe Caspian
$
(33,883
)
Africa
(6,179
)
Americas
(576
)
Corporate and other
(10,223
)
Total accumulated goodwill impairment
$
(50,861
)



11

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


Other Intangible Assets
Intangible assets with finite useful lives are amortized over their respective estimated useful lives to their estimated residual values. Intangible assets by type were as follows (in thousands):
 
Customer
relationships
 
Trade name and trademarks
 
Internally developed software
 
Licenses
 
Total
 
 
 
 
 
 
 
 
 
 
 
Gross Carrying Amount
March 31, 2018
$
12,777

 
$
4,878

 
$
1,107

 
$
755

 
$
19,517

Foreign currency translation
(213
)
 
(263
)
 
(13
)
 
(2
)
 
(491
)
December 31, 2018
$
12,564

 
$
4,615

 
$
1,094

 
$
753

 
$
19,026

 
 
 
 
 
 
 
 
 
 
 
Accumulated Amortization
March 31, 2018
$
(11,372
)
 
$
(1,213
)
 
$
(915
)
 
$
(719
)
 
$
(14,219
)
Impairments

 
(2,933
)
 
(72
)
 

 
(3,005
)
Amortization expense
(89
)
 
(142
)
 
(107
)
 
(34
)
 
(372
)
December 31, 2018
$
(11,461
)
 
$
(4,288
)
 
$
(1,094
)
 
$
(753
)
 
$
(17,596
)
 
 
 
 
 
 
 
 
 
 
Weighted average remaining contractual life, in years
7.0

 
*

 
0.0

 
0.0

 
7.0

_____________ 
*
Trade name and trademarks relating to Airnorth were determined to have indefinite useful lives and therefore were not amortized, but instead are tested for impairment on an annual basis.
Future amortization expense of intangible assets for each of the years ending March 31 is as follows (in thousands):
                 
2019
$
39

2020
157

2021
157

2022
157

2023
157

Thereafter
436

 
$
1,103

The Bristow Norway AS and Eastern Airways acquisitions, included in our Europe Caspian region, resulted in intangible assets for customer contracts, customer relationships, trade names and trademarks, internally developed software and licenses. On May 10, 2019, we sold Eastern Airways. The Capiteq Limited, operating under the name Airnorth, acquisition included in our Asia Pacific region, resulted in intangible assets for customer contracts, customer relationships and trade name and trademarks. As discussed above in Loss on Impairment, during the nine months ended December 31, 2018, we recorded an impairment of $3.0 million related to Eastern Airways intangible assets. As of December 31, 2018, Eastern Airways has no remaining intangible assets.
Other Assets
In addition to the other intangible assets described above, other assets included the long-term portion of contract acquisition and pre-operating costs totaling $38.7 million and $50.6 million, respectively, as of December 31 and March 31, 2018, related to the SAR contracts in the U.K. and two customer contracts in Norway, which are recoverable under the contracts and will be expensed over the terms of the contracts.

12

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


Property and Equipment, Assets Held for Sale and OEM Cost Recoveries
During the three and nine months ended December 31, 2018 and 2017, we took delivery of aircraft and made capital expenditures as follows:
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
2018

2017
 
2018

2017
 
(In thousands, except for number of aircraft)
Number of aircraft delivered:
 
 
 
 
 
 
 
Medium (1)
1

 

 
1

 
5

Total aircraft
1

 

 
1

 
5

Capital expenditures (in thousands):
 
 
 
 
 
 
 
Aircraft and equipment (1)(2)
$
15,839

 
$
10,311

 
$
28,570

 
$
26,800

Land and buildings
570

 
1,813

 
5,141

 
9,641

Total capital expenditures
$
16,409

 
$
12,124

 
$
33,711

 
$
36,441

_____________ 
(1)
During the three and nine months ended December 31, 2018, we purchased an aircraft that was not on order that was previously leased.
(2) 
During the nine months ended December 31, 2017, we spent $2.3 million on progress payments for aircraft to be delivered in future periods. During the three months ended December 31, 2017 and the three and nine months ended December 31, 2018, we made no progress payments for aircraft to be delivered in future periods.
The following table presents details on the aircraft sold or disposed of and impairment charges on assets held for sale and property and equipment during the three and nine months ended December 31, 2018 and 2017:
 
Three Months Ended 
 December 31,
 
Nine Months Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
(In thousands, except for number of aircraft)
Number of aircraft sold or disposed of

 
5

 
3

 
11
Proceeds from sale or disposal of assets
$
631

 
$
6,303

 
$
9,093

 
$
48,547

Loss from sale or disposal of assets (1)
$
694

 
$
3,031

 
$
3,665

 
$
1,111

 
 
 
 
 
 
 
 
Number of held for sale aircraft impaired
2

 
1

 
2

 
5
Impairment charges on assets held for sale (1)(2)
$
1,350

 
$
1,560

 
$
1,350

 
$
11,307

Impairment charges on property and equipment (3)
$

 
$

 
$
104,939

 
$

Contract termination costs(1)(4)
$
13,971

 
$

 
$
13,971

 
$

_____________ 
(1) 
Included in loss on disposal of assets on our condensed consolidated statements of operations.
(2) 
Includes a $6.5 million impairment of the Bristow Academy disposal group for the nine months ended December 31, 2017.
(3) 
Includes an $87.5 million impairment related to H225s and a $17.5 million impairment related to Eastern Airways assets for the nine months ended December 31, 2018, included in loss on impairment on our condensed consolidated statement of operations. See Loss on Impairment above for further details.
(4) 
Includes $11.7 million of progress payments and $2.3 million of capitalized interest for an aircraft purchase contract that was terminated in December 2018. For further details, see Note 8.
During fiscal year 2018, we reached agreements with original equipment manufacturers (“OEM”) to recover approximately $136.0 million related to ongoing aircraft issues, of which $125.0 million was realized during fiscal year 2018 and $11.0 million was recovered during the nine months ended December 31, 2018. To reflect the amount realized from these OEM cost recoveries during fiscal year 2018, we recorded a $94.5 million decrease in the carrying value of certain aircraft in our fleet through a decrease in property and equipment – at cost, reduced rent expense by $16.6 million and recorded a deferred liability of $13.9 million,

13

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


included in other accrued liabilities and other liabilities and deferred credits, related to a reduction in rent expense to be recorded in future periods, of which $1.0 million and $6.9 million was recognized during the three and nine months ended December 31, 2018, respectively. We determined the realized portion of the cost recoveries related to a long-term performance issue with the aircraft, requiring a reduction of carrying value for owned aircraft and a reduction in rent expense for leased aircraft. For the owned aircraft, we allocated the $94.5 million as a reduction in carrying value by reducing the historical acquisition value of each affected aircraft on a pro-rata basis utilizing the historical acquisition value of the aircraft. For the leased aircraft, we will recognize the remaining deferred liability of $7.0 million as a reduction in rent expense prospectively on a straight-line basis over the remaining lease terms. This will result in a reduction to rent expense of $1.0 million during the three months ending March 31, 2019, $4.0 million during fiscal year 2020 and $2.0 million during fiscal year 2021.
During the nine months ended December 31, 2018, we recovered the remaining $11.0 million in OEM cost recoveries by agreeing to net certain amounts previously accrued for aircraft leases and capital expenditures against those recoveries. During the nine months ended December 31, 2018, we recorded a $7.6 million increase in revenue and a $3.1 million decrease in direct cost. We expect to realize the remaining $0.3 million as a decrease in direct cost in the three months ending March 31, 2019. The increase in revenue relates to compensation for lost revenue in prior periods from the late delivery of aircraft and the decreases in direct cost over fiscal year 2019 relate to prior costs we have incurred and future costs we expect to incur.
In connection with the $87.5 million impairment of our H225 aircraft, we revised our salvage values for each H225 aircraft.  In accordance with accounting standards, we will recognize the change in depreciation due to the reduction in carrying value and revision of salvage values on a prospective basis over the remaining life of the aircraft. This resulted in an additional $1.5 million of depreciation expense during the three and nine months ended December 31, 2018 and will result in an increase of depreciation expense of $1.5 million during the remainder of fiscal year 2019, $5.9 million during fiscal year 2020, $1.9 million during fiscal year 2021 and a reduction of $10.3 million during fiscal year 2022 and beyond.
As of December 31, 2018, we revised the salvage values of certain aircraft to reflect our expectation of future sales values given our disposal plans for those aircraft. We expect to record additional depreciation expense of $1.4 million during the remainder of fiscal year 2019 and $2.8 million during fiscal year 2020.
On November 1, 2017, we sold our 100% interest in Bristow Academy. As of September 30, 2017, we concluded the disposal group, comprised of the Bristow Academy assets and liabilities met the assets held for sale criteria under ASC 360, but did not meet the requirements for classification as discontinued operations. We evaluated the carrying value of the Bristow Academy disposal group and determined an impairment of $6.5 million, recorded within loss on disposal of assets on our condensed consolidated statement of operations, was necessary to record the disposal group at fair value based on the terms of the sale. The Bristow Academy disposal group is included in Corporate and other in Note 12 — Segment Information.
Other Accrued Liabilities
Other accrued liabilities of $38.7 million and $66.0 million as of December 31 and March 31, 2018, respectively, includes the following:
 
December 31, 
 2018
 
March 31,  
 2018
 
 
 
 
 
(In thousands)
Accrued lease costs
$
9,028

 
$
11,708

Deferred OEM cost recovery
3,997

 
8,082

Eastern Airways overdraft liability (1)

 
8,989

Accrued property and equipment
490

 
4,874

Deferred gain on sale leasebacks
1,305

 
1,305

Other operating accruals
23,872

 
31,020

 
$
38,692

 
$
65,978

_____________ 
(1) 
Eastern Airways overdraft liability related to its revolving credit facility, which matured on December 31, 2018.

14

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


Recent Accounting Pronouncements
We consider the applicability and impact of all accounting standard updates (“ASUs”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued accounting guidance on revenue recognition 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. This new standard is effective for annual reporting periods beginning after December 15, 2017. We adopted the standard as of April 1, 2018 using the modified retrospective method applied to open contracts and only to the version of the contracts in effect as of April 1, 2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with our historical accounting policy. There was no impact on our condensed consolidated financial statements and no cumulative effect adjustment was recognized. For further details, see Note 3.
In February 2016, the FASB issued accounting guidance which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Additionally, this accounting guidance requires a modified retrospective transition approach for all leases existing at, or entered into after the date of initial application, with an option to use certain transition relief. In July 2018, the FASB issued a practical expedient that would allow entities the option to apply the provisions of the new lease guidance at the effective date of adoption without adjusting the comparative periods presented. In December 2018, the FASB provided certain improvements to this topic that are narrow in scope. We have not yet adopted this standard and are currently evaluating the effect this standard will have on our financial statements.
In October 2016, the FASB issued accounting guidance related to current and deferred income taxes for intra-entity transfer of assets other than inventory. This accounting guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We adopted this accounting guidance effective April 1, 2018 using the modified retrospective method, through a cumulative-effect adjustment directly to retained earnings. Upon adoption, we increased deferred tax liabilities by approximately $1.7 million and recognized an offsetting decrease to retained earnings.
In January 2017, the FASB issued accounting guidance which clarifies the definition of a business with the objective of adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendment provides criteria for determining when a transaction involves the acquisition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the transaction does not involve the acquisition of a business. If the criteria are not met, then the amendment requires that to be considered a business, the operation must include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The guidance may reduce the number of transactions accounted for as business acquisitions. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The amendments should be applied prospectively, and no disclosures are required at the effective date. We adopted this accounting guidance effective April 1, 2018. This accounting guidance has had no impact on our financial statements since adoption as we have not entered into any transactions during this period.
In March 2017, the FASB issued accounting guidance related to the presentation of net periodic pension cost and net periodic post-retirement benefit cost. The accounting guidance requires employers to disaggregate the service cost component from the other components of net benefit cost and disclose the amount of net benefit cost that is included in the statement of operations or capitalized in assets, by line item. The accounting guidance requires employers to report the service cost component in the same line item(s) as other compensation costs and to report other pension-related costs (which include interest costs, amortization of pension-related costs from prior periods, and the gains or losses on plan assets) separately and exclude them from the subtotal of operating income. The accounting guidance also allows only the service cost component to be eligible for capitalization when applicable. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted as of the first interim period of an annual period for which interim or annual financial statements have not been issued. The accounting guidance requires application on a retrospective basis for the presentation of the service cost component and the other components of net periodic pension cost and net periodic post-retirement benefit cost in the statement of operations and on a prospective basis for the capitalization of the service cost component of net periodic pension cost

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BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


and net periodic post-retirement benefit in assets. We adopted this accounting guidance effective April 1, 2018, and our statement of operations was retrospectively adjusted by $0.1 million and $0.1 million with an increase in direct cost and a corresponding credit in other income (expense), net for the three and nine months ended December 31, 2017, respectively.
In May 2017, the FASB issued accounting guidance on determining which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We have adopted this accounting guidance effective April 1, 2018, with no impact on our financial statements as there were no changes to the terms or conditions of share-based payment awards.
In February 2018, the FASB issued new accounting guidance on income statement reporting of comprehensive income, specifically pertaining to reclassification of certain tax effects from accumulated other comprehensive income. This pronouncement is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2018, with early adoption permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.
In June 2018, the FASB issued an amendment to the accounting guidance related to accounting for employee share-based payments which clarifies that an entity should recognize excess tax benefits in the period in which the amount of the deduction is determined. This amendment is effective for annual periods beginning after December 15, 2018. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.
In August 2018, the FASB modified the disclosure requirements on fair value measurements. The amendment modifies, removes, and adds several disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The amendment is effective for fiscal years ending after December 15, 2021 for public business entities and early adoption is permitted. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our disclosure requirements.    
In August 2018, the FASB modified disclosure requirements for employers that sponsor defined benefit pension plans. Certain disclosure requirements were removed and certain disclosure requirements were added. The amendment also clarifies disclosure requirements for projected benefit obligation (“PBO”) and accumulated benefit obligation (“ABO”) in excess of respective plan assets. The amendment is effective for fiscal years ending after December 15, 2020 for public business entities and early adoption is permitted. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our disclosure requirements.
In August 2018, the FASB issued new accounting guidance that addresses the accounting for implementation costs associated with a hosted service. The guidance provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance will be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.
In October 2018, the FASB amended the guidance for determining whether a decision-making fee is a variable interest. The amendments require organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in generally accepted accounting principles). Therefore, these amendments likely will result in more decision makers not consolidating variable interest entities (“VIEs”). This amendment is effective beginning in our fiscal year 2021 financial statements. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our disclosure requirements.

16

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


Note 2 — ACQUISITION AND DISPOSITION
Columbia Helicopters — On February 11, 2019, we announced that our agreement to acquire Columbia Helicopters, Inc. (“Columbia”) had been terminated by mutual agreement of the parties. In connection with the termination, we paid $20 million to Columbia, which will be included as expense in our condensed consolidated statements of operations for the three months ended March 31, 2019. Upon termination of the acquisition agreement, the financing agreements related to the acquisition also terminated pursuant to their respective terms. Due to the termination of the acquisition agreement, the amendment to the indenture for the 8.75% Senior Secured Notes, for which the Company obtained the requisite consent of holders of such notes in connection with the planned acquisition financing, did not become operative, and the related consent fees did not become payable.
Eastern Airways and Humberside Airport — Bristow Helicopters Limited, an indirect consolidated affiliate of the Company (“Bristow Helicopters”), together with its legal and financial advisors, pursued various transactions to exit the Eastern Airways business, which made negative contributions to our Adjusted EBITDA in each of the last three fiscal years, including pursuing a sales process with several third parties over an extended period. On May 10, 2019, Bristow Helicopters completed the sale of all of the shares of Eastern Airways to Orient Industrial Holdings Limited (“OIHL”), an entity affiliated with Mr. Richard Lake, pursuant to a Sale and Purchase Agreement (the “EAIL Purchase Agreement”). Pursuant to the EAIL Purchase Agreement and related agreements, Bristow Helicopters contributed approximately £17.1 million to Eastern Airways as working capital, OIHL acquired Eastern Airways, Bristow Helicopters retained its controlling ownership of the shares in Humberside International Airport Limited that it previously held through Eastern Airways and certain intercompany balances between Bristow Helicopters and Eastern Airways were written off. As a result of the transaction, OIHL now owns and operates Eastern Airways, which had previously operated as a separate unit within Bristow Group, and Bristow Helicopters maintains its controlling interest in Humberside Airport, from which Bristow Helicopters provides U.K. SAR services.
The EAIL Purchase Agreement contained customary representations and warranties. OIHL agreed to certain covenants with respect to non-solicitation of directors, officers or employees of Bristow Helicopters for a period of 12 months. Pursuant to the terms of the EAIL Purchase Agreement, Bristow Helicopters has the right to appoint an observer to the board of directors of Eastern Airways for an initial period of 12 months following the sale. Eastern Airways also agreed to provide certain transition services for a minimum of 12 months from the date of the completion of the transaction.
Note 3 — REVENUE RECOGNITION
Revenue Recognition
In general, we recognize revenue when a service is provided or a 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 have been transferred to the customer, the transaction price is determined and allocated to the performed performance obligations and we have determined that collection has occurred or is probable of occurring.
A majority of our revenue from contracts with customers is currently generated through two types of contracts: helicopter services and fixed wing services. Each contract type has a single distinct performance obligation as described below.
Helicopter services Our customers major integrated, national and independent offshore energy companies charter our helicopters primarily to transport personnel between onshore bases and offshore production platforms, drilling rigs and other installations. To a lesser extent, our customers also charter our helicopters to transport time-sensitive equipment to these offshore locations. The customers for SAR services include both the oil and gas industry and governmental agencies. Revenue from helicopter services is recognized when the performance obligation is satisfied over time based on contractual rates as the related services are performed.
A performance obligation arises under contracts with customers to render services and is the unit of account under the accounting guidance for revenue. Operating revenue from our oil and gas segment is derived mainly from fixed-term contracts with our customers, a substantial portion of which is competitively bid. A small portion of our oil and gas customer 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 our customers). We account for services rendered separately if they are distinct and the service is 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

17

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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. Variable charges within our flight services contracts are not effective until a customer-initiated flight order is received and the actual hours flown are determined; therefore, the associated flight revenue generally cannot be reasonably and reliably estimated beforehand. A contract’s standalone selling prices are determined based upon the prices that we charge for our services rendered. 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. We typically invoice customers on a monthly basis and the term between invoicing and when the payment is due is typically between 30 and 60 days. In order to offset potential increases in operating costs, our long-term contracts may provide for periodic increases in the contractual rates charged for our services. We recognize the impact of these rates when estimable and applicable, which generally includes written acknowledgment from the customers that they are in agreement with the amount of the rate escalation. Cost reimbursements from customers are recorded as reimbursable revenue with the related reimbursed costs recorded as reimbursable expense on our condensed consolidated statements of operations.
Taxes collected from customers and remitted to governmental authorities and revenue are reported on a net basis in our financial statements. Thus, we exclude 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.
Fixed wing services Eastern Airways and Airnorth provide fixed wing transportation services through regular passenger transport (scheduled airline service with individual ticket sales) and charter services. A performance obligation arises under contracts with customers to render services and is the unit of account under the new accounting guidance for revenue. Within fixed wing services, we determined that each contract has a single distinct performance obligation. Revenue is recognized over time at the earlier of the period in which the service is provided or the period in which the right to travel expires, which is determined by the terms and conditions of the ticket. Ticket sales are recorded within deferred revenue in accordance with the above policy. Both chartered and scheduled airline service revenue is recognized net of passenger taxes and discounts. Eastern Airways was sold on May 10, 2019.
Contract Assets, Liabilities and Receivables
We generally satisfy performance of contract obligations by providing helicopter and fixed wing services to our customers in exchange for consideration. The timing of performance may differ from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liability. A contract asset exists when we have a contract with a customer for which revenue has been recognized (i.e. services have been performed), but customer payment is contingent on a future event (i.e. satisfaction of additional performance obligations). These contract assets are transferred to receivables when the right to consideration becomes unconditional. Contract liabilities relate to deferred revenue in which advance consideration is received from customers for contracts where revenue is recognized on future performance of services.
As of December 31 and March 31, 2018, receivables related to services performed under contracts with customers were $160.5 million and $176.5 million, respectively. All receivables from non-affiliates and affiliates are broken out further in our condensed consolidated balance sheets. During the nine months ended December 31, 2018, we recognized $9.6 million of revenue from outstanding contract liabilities as of March 31, 2018. Contract liabilities related to services performed under contracts with customers was $7.9 million and $13.3 million as of December 31 and March 31, 2018, respectively. Contract liabilities are primarily generated by our fixed wing services where customers pay for tickets in advance of receiving our services and advanced payments from helicopter services customers. There were no contract assets as of December 31 and March 31, 2018.
For the three and nine months ended December 31, 2018, there was $1.9 million and $1.9 million, respectively, of revenue recognized from satisfied performance obligations related to prior periods (for example, due to changes in transaction price).

18

BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Adoption Impact
In accordance with the new revenue standard requirements discussed in Note 1, the disclosure of the impact of adoption on our condensed consolidated financial statements for the three and nine months ended December 31, 2018 follows (in thousands):
 
 
Three Months Ended 
 December 31, 2018
 
Nine Months Ended 
 December 31, 2018
 
 
Balances After Adoption
 
Balances without Adoption
 
Effect of change
 
Balances After Adoption
 
Balances without Adoption
 
Effect of change
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenue from non-affiliates
 
$
301,439

 
$
303,206

 
$
(1,767
)
 
$
944,164

 
$
963,252

 
$
(19,088
)
Operating revenue from affiliates
 
5,895