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SEC Filings

10-Q
BRISTOW GROUP INC filed this Form 10-Q on 08/03/2017
Entire Document
 
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 June 30, 2017
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)
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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
 
 
(Do not check if a smaller reporting company)
 
 
 
 
 
 
 
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
 
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 the number shares outstanding of each of the issuer’s classes of Common Stock, as of July 28, 2017.
35,327,801 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 
 June 30,
 
 
2017
 
2016
 
 
 
 
 
 
 
(Unaudited)
(In thousands, except per share amounts)
Gross revenue:
 
 
 
 
Operating revenue from non-affiliates
 
$
322,118

 
$
338,675

Operating revenue from affiliates
 
17,611

 
17,509

Reimbursable revenue from non-affiliates
 
12,380

 
13,214

 
 
352,109

 
369,398

Operating expense:
 
 
 
 
Direct cost
 
285,551

 
289,543

Reimbursable expense
 
12,226

 
12,614

Depreciation and amortization
 
31,056

 
34,694

General and administrative
 
46,707

 
52,595

 
 
375,540

 
389,446

 
 
 
 
 
Loss on impairment
 
(1,192
)
 

Gain (loss) on disposal of assets
 
699

 
(10,017
)
Earnings from unconsolidated affiliates, net of losses
 
(665
)
 
3,830

Operating loss
 
(24,589
)
 
(26,235
)
 
 
 
 
 
Interest expense, net
 
(16,021
)
 
(10,886
)
Other income (expense), net
 
(1,645
)
 
(6,189
)
Loss before provision for income taxes
 
(42,255
)
 
(43,310
)
Benefit (provision) for income taxes
 
(13,491
)
 
2,238

Net loss
 
(55,746
)
 
(41,072
)
Net loss attributable to noncontrolling interests
 
471

 
300

Net loss attributable to Bristow Group
 
$
(55,275
)
 
$
(40,772
)
 
 
 
 
 
Loss per common share:
 
 
 
 
Basic
 
$
(1.57
)
 
$
(1.17
)
Diluted
 
$
(1.57
)
 
$
(1.17
)
 
 
 
 
 
Cash dividends declared per common share
 
$
0.07

 
$
0.07


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 
 June 30,
 
 
2017
 
2016
 
 
 
 
 
 
 
 
Net loss
 
$
(55,746
)
 
$
(41,072
)
Other comprehensive income:
 
 
 
 
Currency translation adjustments
 
9,760

 
(7,135
)
Total comprehensive loss
 
(45,986
)
 
(48,207
)
 
 
 
 
 
Net loss attributable to noncontrolling interests
 
471

 
300

Currency translation adjustments attributable to noncontrolling interests
 
310

 
(4,442
)
Total comprehensive (income) loss attributable to noncontrolling interests
 
781

 
(4,142
)
Total comprehensive loss attributable to Bristow Group
 
$
(45,205
)
 
$
(52,349
)
The accompanying notes are an integral part of these condensed consolidated financial statements.

2


BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
 
 
June 30, 
 2017
 
March 31,  
 2017
 
 
(Unaudited)
 
 
 
 
(In thousands)
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
78,879

 
$
96,656

Accounts receivable from non-affiliates
 
218,413

 
198,129

Accounts receivable from affiliates
 
13,302

 
8,786

Inventories
 
130,479

 
124,911

Assets held for sale
 
34,585

 
38,246

Prepaid expenses and other current assets
 
43,145

 
41,143

Total current assets
 
518,803

 
507,871

Investment in unconsolidated affiliates
 
205,174

 
210,162

Property and equipment – at cost:
 
 
 
 
Land and buildings
 
235,270

 
231,448

Aircraft and equipment
 
2,605,978

 
2,622,701

 
 
2,841,248

 
2,854,149

Less – Accumulated depreciation and amortization
 
(630,223
)
 
(599,785
)
 
 
2,211,025

 
2,254,364

Goodwill
 
19,907

 
19,798

Other assets
 
115,921

 
121,652

Total assets
 
$
3,070,830

 
$
3,113,847

 
 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
 
 
 
 
Accounts payable
 
$
96,498

 
$
98,215

Accrued wages, benefits and related taxes
 
53,288

 
59,077

Income taxes payable
 
15,802

 
15,145

Other accrued taxes
 
8,383

 
9,611

Deferred revenue
 
22,318

 
19,911

Accrued maintenance and repairs
 
25,628

 
22,914

Accrued interest
 
5,702

 
12,909

Other accrued liabilities
 
48,376

 
46,679

Deferred taxes
 

 
830

Short-term borrowings and current maturities of long-term debt
 
117,817

 
131,063

Total current liabilities
 
393,812

 
416,354

Long-term debt, less current maturities
 
1,174,749

 
1,150,956

Accrued pension liabilities
 
60,057

 
61,647

Other liabilities and deferred credits
 
25,634

 
28,899

Deferred taxes
 
159,439

 
154,873

Commitments and contingencies (Note 5)
 


 

Redeemable noncontrolling interest
 
6,349

 
6,886

Stockholders’ investment:
 
 
 
 
Common stock, $.01 par value, authorized 90,000,000; outstanding: 35,303,840 as of June 30 and 35,213,991 as of March 31 (exclusive of 1,291,441 treasury shares)
 
380

 
379

Additional paid-in capital
 
813,857

 
809,995

Retained earnings
 
934,166

 
991,906

Accumulated other comprehensive loss
 
(318,207
)
 
(328,277
)
Treasury shares, at cost (2,756,419 shares)
 
(184,796
)
 
(184,796
)
Total Bristow Group stockholders’ investment
 
1,245,400

 
1,289,207

Noncontrolling interests
 
5,390

 
5,025

Total stockholders’ investment
 
1,250,790

 
1,294,232

Total liabilities, redeemable noncontrolling interest and stockholders’ investment
 
$
3,070,830

 
$
3,113,847

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
  
 
Three Months Ended 
 June 30,
 
 
2017
 
2016
 
 
 
 
 
 
 
(Unaudited)
(In thousands)
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(55,746
)
 
$
(41,072
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
31,056

 
34,694

Deferred income taxes
 
6,651

 
(7,216
)
Discount amortization on long-term debt
 
23

 
27

(Gain) loss on disposal of assets
 
(699
)
 
10,017

Loss on impairment
 
1,192

 

Stock-based compensation
 
4,136

 
4,200

Equity in earnings from unconsolidated affiliates less than (in excess of) dividends received
 
665

 
(3,587
)
Increase (decrease) in cash resulting from changes in:
 
 
 
 
Accounts receivable
 
(21,541
)
 
(18,391
)
Inventories
 
(3,551
)
 
(2,000
)
Prepaid expenses and other assets
 
5,106

 
(2,390
)
Accounts payable
 
(3,288
)
 
5,328

Accrued liabilities
 
(8,807
)
 
10,904

Other liabilities and deferred credits
 
(6,376
)
 
(5,342
)
Net cash used in operating activities
 
(51,179
)
 
(14,828
)
Cash flows from investing activities:
 
 
 
 
Capital expenditures
 
(12,553
)
 
(21,063
)
Proceeds from asset dispositions
 
41,975

 
11,500

Net cash provided by (used in) investing activities
 
29,422

 
(9,563
)
Cash flows from financing activities:
 
 
 
 
Proceeds from borrowings
 
69,018

 
74,408

Debt issuance costs
 
(493
)
 
(2,925
)
Repayment of debt
 
(66,947
)
 
(18,035
)
Partial prepayment of put/call obligation
 
(12
)
 
(13
)
Payment of contingent consideration
 

 
(10,000
)
Common stock dividends paid
 
(2,465
)
 
(2,453
)
Repurchases for tax withholdings on vesting of equity awards
 
(274
)
 
(570
)
Net cash provided by (used in) financing activities
 
(1,173
)
 
40,412

Effect of exchange rate changes on cash and cash equivalents
 
5,153

 
2,380

Net increase (decrease) in cash and cash equivalents
 
(17,777
)
 
18,401

Cash and cash equivalents at beginning of period
 
96,656

 
104,310

Cash and cash equivalents at end of period
 
$
78,879

 
$
122,711

Cash paid during the period for:
 
 
 
 
Interest
 
$
22,093

 
$
18,114

Income taxes
 
$
4,543

 
$
4,058

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 Equity and Redeemable Noncontrolling Interest
(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

 
$
991,906

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

 
$
1,294,232

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 loss

 

 

 

 

 
10,070

 

 

 
10,070

June 30, 2017
$
6,349

 
$
380

 
35,303,840

 
$
813,857

 
$
934,166

 
$
(318,207
)
 
$
(184,796
)
 
$
5,390

 
$
1,250,790


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

5

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, 2018 is referred to as “fiscal year 2018”. Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission, 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 2017 Annual Report (the “fiscal year 2017 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 June 30, 2017 and the consolidated statements of operations, comprehensive loss and cash flows for the three months ended June 30, 2017 and 2016.
Foreign Currency
During the three months ended June 30, 2017 and 2016, 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 
 June 30,
 
 
2017
 
2016
One British pound sterling into U.S. dollars
 
 
 
 
High
 
1.30

 
1.48

Average
 
1.28

 
1.43

Low
 
1.24

 
1.31

At period-end
 
1.30

 
1.34

One euro into U.S. dollars
 
 
 
 
High
 
1.14

 
1.15

Average
 
1.10

 
1.13

Low
 
1.06

 
1.10

At period-end
 
1.14

 
1.11

One Australian dollar into U.S. dollars
 
 
 
 
High
 
0.77

 
0.78

Average
 
0.75

 
0.75

Low
 
0.74

 
0.72

At period-end
 
0.77

 
0.74

One Norwegian kroner into U.S. dollars
 
 
 
 
High
 
0.1199

 
0.1245

Average
 
0.1174

 
0.1212

Low
 
0.1152

 
0.1163

At period-end
 
0.1194

 
0.1195

One Nigerian naira into U.S. dollars
 
 
 
 
High
 
0.0033

 
0.0050

Average
 
0.0032

 
0.0048

Low
 
0.0032

 
0.0035

At period-end
 
0.0032

 
0.0035

_____________ 
Source: FactSet

6

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

Other income (expense), net, in our condensed consolidated statements of operations includes foreign currency transaction losses of $1.7 million and $6.3 million for the three months ended June 30, 2017 and 2016, 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 losses for the three months ended June 30, 2017 and 2016 were primarily driven by a combination of currencies depreciating against the U.S. dollar as presented in the table above while various foreign currency denominated legal entities held U.S. dollar liability positions.
Our earnings from unconsolidated affiliates, net of losses, 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 June 30, 2017 and 2016, earnings from unconsolidated affiliates, net of losses, decreased $1.1 million and $48,000, 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 
 June 30,
 
 
2017
 
2016
One Brazilian real into U.S. dollars
 
 
 
 
High
 
0.3233

 
0.3121

Average
 
0.3113

 
0.2849

Low
 
0.2995

 
0.2702

At period-end
 
0.3018

 
0.3121

_____________ 
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 
 June 30, 2017
Revenue
 
$
(18,804
)
Operating expense
 
13,710

Earnings from unconsolidated affiliates, net of losses
 
(1,090
)
Non-operating expense
 
4,579

Income before provision for income taxes
 
(1,605
)
Provision for income taxes
 
1,202

Net income
 
(403
)
Cumulative translation adjustment
 
10,070

Total stockholders’ investment
 
$
9,667

Revenue Recognition
In general, we recognize revenue when it is both realized or realizable and earned. We consider revenue to be realized or realizable and earned when the following conditions exist: there is persuasive evidence of an arrangement (generally a client contract exists); the services or products have been performed or delivered to the client; the sales price is fixed or determinable; and collection has occurred or is probable.
Revenue from helicopter services, including search and rescue (“SAR”) services, is recognized based on contractual rates as the related services are performed. The charges under these contracts are generally based on a two-tier rate structure consisting of a daily or monthly fixed fee plus additional fees for each hour flown. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term. 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. 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 rate increases when the criteria outlined above have been met. This generally includes written recognition from the clients that they are in agreement with the amount of the rate escalation. Cost reimbursements from clients are recorded as reimbursable revenue with the related reimbursed costs recorded as reimbursable expense on our condensed consolidated statements of operations.

7

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

Eastern Airways International Limited (“Eastern Airways”) and Capiteq Limited, operating under the name Airnorth, primarily earn revenue through charter and scheduled airline services and provision of airport services (Eastern Airways only). Both chartered and scheduled airline service revenue is recognized net of passenger taxes and discounts. Revenue is recognized 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. Airport services revenue is recognized when earned.
Bristow Academy, our helicopter training unit, primarily earns revenue from military training, flight training provided to individual students and ground school courses. We recognize revenue from these sources using the same revenue recognition principles described above as services are provided.
Interest Expense, Net
During the three months ended June 30, 2017 and 2016, interest expense, net consisted of the following (in thousands):
 
Three Months Ended 
 June 30,
 
2017
 
2016
Interest income
$
214

 
$
234

Interest expense
(16,235
)
 
(11,120
)
Interest expense, net
$
(16,021
)
 
$
(10,886
)
Accounts Receivable
As of June 30 and March 31, 2017, the allowance for doubtful accounts for non-affiliates was $3.5 million and $4.5 million, respectively. There were no allowances for doubtful accounts related to accounts receivable due from affiliates as of June 30 and March 31, 2017. The allowance for doubtful accounts for non-affiliates as of June 30 and March 31, 2017 primarily related to amounts due from a client in Nigeria for which we no longer believe collection is probable.
Inventories
As of June 30 and March 31, 2017, inventories were net of allowances of $22.7 million and $21.5 million, respectively. During the three months ended June 30, 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.
Prepaid Expenses and Other Current Assets
As of June 30 and March 31, 2017, prepaid expenses and other current assets included the short-term portion of contract acquisition and pre-operating costs totaling $9.8 million and $9.7 million, respectively, related to the SAR contracts in the U.K. and two client contracts in Norway, which are recoverable under the contracts and will be expensed over the terms of the contracts. For the three months ended June 30, 2017 and 2016, we expensed $2.9 million and $2.2 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 $19.9 million and $19.8 million as of June 30 and March 31, 2017, respectively, related to our reporting units were as follows (in thousands):
 
 
Asia Pacific
 
Total
March 31, 2017
 
$
19,798

 
$
19,798

Foreign currency translation
 
109

 
109

June 30, 2017
 
$
19,907

 
$
19,907


8

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

Accumulated goodwill impairment of $50.9 million as of both June 30 and March 31, 2017 related to our reporting units were as follows (in thousands):
 
Europe Caspian
 
Africa
 
Americas
 
Corporate and other
 
Total
March 31, 2017
$
(33,883
)
 
$
(6,179
)
 
$
(576
)
 
$
(10,223
)
 
$
(50,861
)
Impairments

 

 

 

 

June 30, 2017
$
(33,883
)
 
$
(6,179
)
 
$
(576
)
 
$
(10,223
)
 
$
(50,861
)
Other Intangible Assets
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):
 
Client
contracts
 
Client
relationships
 
Trade name and trademarks
 
Internally developed software
 
Licenses
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Carrying Amount
March 31, 2017
$
8,169

 
$
12,752

 
$
4,483

 
$
1,062

 
$
746

 
$
27,212

Foreign currency translation

 
13

 
127

 
15

 
2

 
157

June 30, 2017
$
8,169

 
$
12,765

 
$
4,610

 
$
1,077

 
$
748

 
$
27,369

 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated Amortization
March 31, 2017
$
(8,155
)
 
$
(11,071
)
 
$
(908
)
 
$
(685
)
 
$
(657
)
 
$
(21,476
)
Amortization expense
(6
)
 
(71
)
 
(71
)
 
(53
)
 
(14
)
 
(215
)
June 30, 2017
$
(8,161
)
 
$
(11,142
)
 
$
(979
)
 
$
(738
)
 
$
(671
)
 
$
(21,691
)
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average remaining contractual life, in years
0.1

 
3.6

 
13.1

 
1.8

 
1.6

 
5.2

Future amortization expense of intangible assets for each of the years ending March 31 is as follows (in thousands):
                 
2018
$
688

2019
623

2020
383

2021
383

2022
383

Thereafter
3,218

 
$
5,678

The Bristow Norway AS and Eastern Airways acquisitions, included in our Europe Caspian region, resulted in intangible assets for client contracts, client relationships, trade names and trademarks, internally developed software and licenses. The Airnorth acquisition, included in our Asia Pacific region, resulted in intangible assets for client contracts, client relationships and trade name and trademarks.

9

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

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 $52.2 million and $51.1 million, respectively, as of June 30 and March 31, 2017, related to the SAR contracts in the U.K. and two client contracts in Norway, which are recoverable under the contract and will be expensed over the terms of the contracts.
Property and Equipment and Assets Held for Sale
During the three months ended June 30, 2017 and 2016, we made capital expenditures as follows:
 
Three Months Ended 
 June 30,
 
2017

2016
Number of aircraft delivered:
 
 
 
Medium
3

 

Total aircraft
3

 

Capital expenditures (in thousands):
 
 
 
Aircraft and equipment (1)
$
10,810

 
$
17,487

Land and buildings
1,743

 
3,576

Total capital expenditures
$
12,553

 
$
21,063

_____________ 
(1)
During the three months ended June 30, 2017 and 2016, we spent $1.3 million and $3.1 million, respectively, on progress payments for aircraft to be delivered in future periods.
The following table presents details on the aircraft sold or disposed of and impairments on assets held for sale during the three months ended June 30, 2017 and 2016:
 
Three Months Ended 
 June 30,
 
2017
 
2016
 
 
 
 
 
(In thousands, except for number of aircraft)
 
 
 
 
Number of aircraft sold or disposed of
6

 
6

Proceeds from sale or disposal of assets
$
41,975

 
$
11,500

Gain from sale or disposal of assets (1)
$
2,263

 
$
132

 
 
 
 
Number of aircraft impaired
2

 
11

Impairment charges on aircraft held for sale (1)
$
1,564

 
$
10,149

_____________ 
(1) 
Included in gain (loss) on disposal of assets on our condensed consolidated statements of operations.
During the three months ended June 30, 2016, we recorded accelerated depreciation of $6.9 million on 11 aircraft as our management decided to exit these model types earlier than originally anticipated.

10

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 for revenue from contracts with customers. This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and will replace most existing revenue recognition guidance when it becomes effective. This new standard is effective for annual reporting periods beginning after December 15, 2016. However, in July 2015, the FASB approved the deferral of the effective date of the revenue recognition standard permitting public entities to apply the new revenue standard to annual reporting periods beginning after December 15, 2017. Early application is permitted, but not before the original effective date of December 15, 2016. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the balance sheet. We have not adopted this standard yet but expect to adopt the new revenue standard using the modified retrospective transition method. We are continuing to evaluate the effect this accounting guidance will have on our related disclosures and are still assessing the differences between the new revenue standard and current accounting practices.
In November 2015, the FASB issued accounting guidance that changed how deferred taxes are classified on an entity’s balance sheet. The guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and early adoption is permitted. The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively. If applied prospectively, entities are required to include a statement that prior periods were not retrospectively adjusted. If applied retrospectively, entities are also required to include quantitative information about the effects of the change on prior periods. We adopted this accounting guidance using the prospective adjustment option effective April 1, 2017 and prior periods were not retrospectively adjusted. As of March 31, 2017, we had $0.1 million in current deferred tax assets and $0.8 million in current deferred tax liabilities. As a result of this adoption, as of April 1, 2017 and going forward we will classify all current deferred taxes as non-current.
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. We have not yet adopted this standard and are currently evaluating the effect this standard will have on our financial statements.
In March 2016, the FASB issued accounting guidance related to accounting for employee share-based payments. The accounting guidance is intended to simplify several aspects of accounting for share-based payment award transactions including income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and early adoption is permitted. We adopted this standard effective April 1, 2017. The requirements related to the tax consequences of share-based payments were applied prospectively and resulted in $1.6 million recorded as an increase to the income tax provision during the three months ended June 30, 2017. We elected to record forfeitures of share-based awards based on actual forfeitures which did not have a material effect on our financial statements. The provisions related to the presentation of excess tax benefits on the condensed consolidated statements of cash flows did not impact our financial statements as there was no excess tax benefit recorded for the periods presented. The provisions related to employee taxes paid for withheld shares are presented as a cash flow financing activity required us to revise our prior period condensed consolidated statement of cash flows by $0.6 million as a decrease in net cash used in operating activities and a corresponding decrease in net cash provided by financing activities for the three months ended June 30, 2016. None of the other provisions of the pronouncement had a material effect on our consolidated financial statements.
In August 2016, the FASB issued accounting guidance to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This 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 standard on April 1, 2017 and there was no impact on our financial statements.

11

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

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 have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.
In October 2016, the FASB issued accounting guidance related to interest held through related parties that are under common control. This accounting guidance affects reporting entities that are required to evaluate whether they should consolidate a variable interest entity in certain situations involving entities under common control. Specifically, the guidance changes the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The accounting guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, and early adoption is permitted. We adopted this standard effective April 1, 2017 and there was no impact on our financial statements.
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 have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.
In March 2017, the FASB issued accounting guidance related to the presentation of net periodic pension cost and net periodic postretirement benefit cost. The 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 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 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 postretirement 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 and net periodic postretirement benefit in assets. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.
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 not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.


12

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

Note 2 — VARIABLE INTEREST ENTITIES
A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. If we determine that we have operating power and the obligation to absorb losses or receive benefits, we consolidate the VIE as the primary beneficiary, and if not, we do not consolidate.
As of June 30, 2017, we had interests in four VIEs of which we were the primary beneficiary, which are described below, and had no interests in VIEs of which we were not the primary beneficiary. See Note 3 to the fiscal year 2017 Financial Statements for a description of other investments in significant affiliates.
Bristow Aviation Holdings Limited — We own 49% of Bristow Aviation Holdings Limited’s (“Bristow Aviation”) common stock and a significant amount of its subordinated debt. Bristow Aviation is incorporated in England and holds all of the outstanding shares in Bristow Helicopters Limited (“Bristow Helicopters”). Bristow Aviation's subsidiaries provide industrial aviation services to clients primarily in the U.K, Norway, Australia, Nigeria and Trinidad and fixed wing services primarily in the U.K and Australia. Bristow Aviation is organized with three different classes of ordinary shares having disproportionate voting rights. The Company, Caledonia Investments plc (“Caledonia”) and a European Union investor (the “E.U. Investor”) own 49%, 46% and 5%, respectively, of Bristow Aviation’s total outstanding ordinary shares, although Caledonia has voting control over the E.U. Investor’s shares.
In addition to our ownership of 49% of Bristow Aviation’s outstanding ordinary shares, in May 2004, we acquired eight million shares of deferred stock, essentially a subordinated class of stock with no voting rights, from Bristow Aviation for £1 per share ($14.4 million in total). We also have £91.0 million ($118.2 million) principal amount of subordinated unsecured loan stock (debt) of Bristow Aviation bearing interest at an annual rate of 13.5% and payable semi-annually. Payment of interest on such debt has been deferred since its incurrence in 1996. Deferred interest accrues at an annual rate of 13.5% and aggregated $1.9 billion as of June 30, 2017.
The Company, Caledonia, the E.U. Investor and Bristow Aviation have entered into a shareholder agreement respecting, among other things, the composition of the board of directors of Bristow Aviation. On matters coming before Bristow Aviation’s board, Caledonia’s representatives have a total of three votes and the two other directors have one vote each. In addition, Caledonia has the right to nominate two persons to our board of directors and to replace any such directors so nominated.
Caledonia, the Company and the E.U. Investor also have entered into a put/call agreement under which, upon giving specified prior notice, we have the right to buy all the Bristow Aviation shares held by Caledonia and the E.U. Investor, who, in turn, each have the right to require us to purchase such shares. Under current English law, we would be required, in order for Bristow Aviation to retain its operating license, to find a qualified E.U. investor to own any Bristow Aviation shares we have the right to acquire under the put/call agreement. The only restriction under the put/call agreement limiting our ability to exercise the put/call option is a requirement to consult with the Civil Aviation Authority (the “CAA”) in the U.K. regarding the suitability of the new holder of the Bristow Aviation shares. The put/call agreement does not contain any provisions should the CAA not approve the new E.U. investor. However, we would work diligently to find an E.U. investor suitable to the CAA. The amount by which we could purchase the shares of the other investors holding 51% of the equity of Bristow Aviation is fixed under the terms of the call option, and we have reflected this amount on our condensed consolidated balance sheets as noncontrolling interest.
Furthermore, the call option provides a mechanism whereby the economic risk for the other investors is limited should the financial condition of Bristow Aviation deteriorate. The call option price is the nominal value of the ordinary shares held by the noncontrolling shareholders (£1.0 million as of June 30, 2017) plus an annual guaranteed rate of return less any prepayments of such call option price and any dividends paid on the shares concerned. We can elect to pre-pay the guaranteed return element of the call option price wholly or in part without exercising the call option. No dividends have been paid by Bristow Aviation. We have accrued the annual return due to the other shareholders at a rate of sterling LIBOR plus 3% (prior to May 2004, the rate was fixed at 12%) by recognizing noncontrolling interest expense on our condensed consolidated statements of operations, with a corresponding increase in noncontrolling interest on our condensed consolidated balance sheets. Prepayments of the guaranteed return element of the call option are reflected as a reduction in noncontrolling interest on our condensed consolidated balance sheets. The other investors have an option to put their shares in Bristow Aviation to us. The put option price is calculated in the same way as the call option price except that the guaranteed rate for the period to April 2004 was 10% per annum. If the put option is exercised, any pre-payments of the call option price are set off against the put option price.

13

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

Bristow Aviation and its subsidiaries are exposed to similar operational risks and are therefore monitored and evaluated on a similar basis by management. Accordingly, the financial information reflected on our condensed consolidated balance sheets and statements of operations for Bristow Aviation and subsidiaries is presented in the aggregate, including intercompany amounts with other consolidated entities, as follows (in thousands):
 
 
 
June 30, 
 2017
 
March 31,  
 2017
 
Assets
 
 
 
 
 
Cash and cash equivalents
 
$
71,364

 
$
92,409

 
Accounts receivable
 
233,627

 
222,560

 
Inventories
 
96,646

 
90,190

 
Prepaid expenses and other current assets
 
42,548

 
50,016

 
Total current assets
 
444,185

 
455,175

 
Investment in unconsolidated affiliates
 
3,531

 
3,513

 
Property and equipment, net
 
315,403

 
306,831

 
Goodwill
 
19,907

 
19,798

 
Other assets
 
207,268

 
203,228

 
Total assets
 
$
990,294

 
$
988,545

 
Liabilities
 
 
 
 
 
Accounts payable
 
$
184,308

 
$
146,841

 
Accrued liabilities
 
129,699

 
122,130

 
Accrued interest
 
1,945,668

 
1,891,305

 
Current maturities of long-term debt
 
18,821

 
18,578

 
Total current liabilities
 
2,278,496

 
2,178,854

 
Long-term debt, less current maturities
 
477,781

 
501,782

 
Accrued pension liabilities
 
60,057

 
61,647

 
Other liabilities and deferred credits
 
8,005

 
8,138

 
Deferred taxes
 
15,767

 
20,264

 
Redeemable noncontrolling interest
 
6,349

 
6,886

 
Total liabilities
 
$
2,846,455

 
$
2,777,571

 
 
 
 
Three Months Ended 
 June 30,
 
 
 
2017
 
2016
 
Revenue
 
$
301,970

 
$
318,454

 
Operating loss
 
(19,654
)
 
(19,743
)
 
Net loss
 
(79,169
)
 
(88,543
)

14

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

Bristow Helicopters Nigeria Ltd. — Bristow Helicopters Nigeria Ltd. (“BHNL”) is a joint venture in Nigeria in which Bristow Helicopters owned a 48% interest, a Nigerian company owned 100% by Nigerian employees owned a 50% interest and an employee trust fund owned the remaining 2% interest as of June 30, 2017. BHNL provides industrial aviation services to clients in Nigeria.
In order to be able to bid competitively for our services in the Nigerian market, we were required to identify local citizens to participate in the ownership of entities domiciled in the region. However, these owners do not have extensive knowledge of the aviation industry and have historically deferred to our expertise in the overall management and day-to-day operation of BHNL (including the establishment of operating and capital budgets and strategic decisions regarding the potential expansion of BHNL’s operations). We have also historically provided subordinated financial support to BHNL and will need to continue to do so unless and until BHNL acquires sufficient equity to permit itself to finance its activities without that additional support from us. As we have the power to direct the most significant activities affecting the economic performance and ongoing success of BHNL and hold a variable interest in the entity in the form of our equity investment and working capital infusions, we consolidate BHNL as the primary beneficiary. The employee-owned Nigerian entity referenced above purchased a 19% interest in BHNL in December 2013 with proceeds from a loan received from BGI Aviation Technical Services Nigeria Limited (“BATS”). In July 2014, the employee-owned Nigerian entity purchased an additional 29% interest with proceeds from a loan received from Bristow Helicopters (International) Limited (“BHIL”). In April 2015, Bristow Helicopters purchased an additional 8% interest in BHNL and the employee-owned Nigerian entity purchased an additional 2% interest with proceeds from a loan received from BHIL. Both BATS and BHIL are wholly-owned subsidiaries of Bristow Aviation. The employee-owned Nigerian entity is also a VIE that we consolidate as the primary beneficiary and we eliminate the loans discussed above in consolidation.
BHNL is an indirect subsidiary of Bristow Aviation; therefore, financial information for this entity is included within the amounts for Bristow Aviation and its subsidiaries presented above.
Pan African Airlines Nigeria Ltd. — Pan African Airlines Nigeria Ltd. (“PAAN”) is a joint venture in Nigeria with local partners in which we own a 50.17% interest. PAAN provides industrial aviation services to clients in Nigeria.
The activities that most significantly impact PAAN’s economic performance relate to the day-to-day operation of PAAN, setting the operating and capital budgets and strategic decisions regarding the potential expansion of PAAN’s operations. Throughout the history of PAAN, our representation on the board and our secondment to PAAN of its managing director has enabled us to direct the key operational decisions of PAAN (without objection from the other board members). We have also historically provided subordinated financial support to PAAN. As we have the power to direct the most significant activities affecting the economic performance and ongoing success of PAAN and hold a variable interest in the form of our equity investment and working capital infusions, we consolidate PAAN as the primary beneficiary. However, as long as we own a majority interest in PAAN, the separate presentation of financial information in a tabular format for PAAN is not required.


15

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

Note 3 — DEBT
Debt as of June 30 and March 31, 2017 consisted of the following (in thousands):
 
 
June 30, 
 2017
 
March 31,  
 2017
6¼% Senior Notes due 2022
 
$
401,535

 
$
401,535

Term Loan
 
253,180

 
261,907

Term Loan Credit Facility
 
45,900

 
45,900

Revolving Credit Facility
 
174,500

 
139,100

Lombard Debt
 
202,514

 
196,832

Macquarie Debt
 
195,528

 
200,000

Airnorth Debt
 
15,826

 
16,471

Eastern Airways Debt
 
14,701

 
15,326

Other Debt
 

 
16,293

Unamortized debt issuance costs
 
(11,118
)
 
(11,345
)
Total debt
 
1,292,566

 
1,282,019

Less short-term borrowings and current maturities of long-term debt
 
(117,817
)
 
(131,063
)
Total long-term debt
 
$
1,174,749

 
$
1,150,956

Revolving Credit Facility — During the three months ended June 30, 2017, we had borrowings of $68.8 million and made payments of $33.4 million under our $400 million revolving credit facility (the “Revolving Credit Facility”). As of June 30, 2017, we had $11.4 million in letters of credit outstanding under the Revolving Credit Facility.
Other Debt — Other Debt as of March 31, 2017 primarily included amounts payable relating to the third year earn-out payment of $16.0 million for our investment in Cougar Helicopters Inc. (“Cougar”), which was paid in April 2017.
July 2017 Credit Agreement — On July 17, 2017, one of our wholly-owned subsidiaries entered into a multiple advance term loan credit agreement with PK Transportation Finance Ireland Limited and the several banks, other financial institutions and other lenders from time to time party thereto, which provides for commitments in an aggregate amount of up to $230 million to make up to 24 term loans, each of which term loans shall be made in respect of an aircraft to be pledged as collateral for all of the term loans. The term loans also will be secured by a pledge of all shares of the borrower and any other assets of the borrower, and will be guaranteed by the Company.
Each term loan will bear interest at an interest rate equal to, at the borrower’s option, a floating rate of one-month LIBOR plus a margin of 5% per annum (the “Margin”), subject to certain costs of funds adjustments, determined two business days before the borrowing date of each term loan, or a fixed rate based on a notional interest rate swap of twelve 30-day months in respect of such term loan with a floating rate of interest based on one-month LIBOR, plus the Margin.
The borrower is required to repay each term loan on an annuity basis, payable monthly in arrears starting on the seventh month following the date of the borrowing of such term loan, with a final payment of 53% of the initial amount of such term loan due on the 70th month following the date of the borrowing of such term loan.
In connection with the credit agreement, the borrower will guarantee certain of its direct parent’s obligations under existing aircraft operating leases up to a capped amount.
The proceeds of the term loans, which are expected to fund on or before August 30, 2017 unless otherwise extended, are expected to be used to, among other things, repay portions of the outstanding term loan indebtedness of the Company and for general corporate purposes. The lenders are not obligated to fund any of the term loans until the satisfaction of certain conditions to funding, as specified in the credit agreement.


16

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

Note 4 — FAIR VALUE DISCLOSURES
Assets and liabilities subject to fair value measurement are categorized into one of three different levels depending on the observability of the inputs employed in the measurement, as follows:
Level 1 – observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – inputs that reflect quoted prices for identical assets or liabilities in markets which are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 – unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
Non-recurring Fair Value Measurements
The majority of our non-financial assets, which include inventories, property and equipment, assets held for sale, goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur such that a non-financial asset is required to be evaluated for impairment and deemed to be impaired, the impaired non-financial asset is recorded at its fair value.
The following table summarizes the assets as of June 30, 2017, valued at fair value on a non-recurring basis (in thousands): 
 
 
Quoted Prices in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Balance as of
June 30,
2017
 
Total
Loss for the
Three Months
Ended
June 30,
2017
Inventories
 
$

 
$
1,252

 
$

 
$
1,252

 
$
(1,192
)
Assets held for sale
 

 
34,585

 

 
34,585

 
(1,564
)
Total assets
 
$

 
$
35,837

 
$

 
$
35,837

 
$
(2,756
)
The following table summarizes the assets as of June 30, 2016, valued at fair value on a non-recurring basis (in thousands): 
 
 
Quoted Prices in Active
Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Balance as of
June 30,
2016
 
Total
Loss for the
Three Months
Ended
June 30,
2016
Assets held for sale
 
$

 
$
40,572

 
$

 
$
40,572

 
$
(10,149
)
Total assets
 
$

 
$
40,572

 
$

 
$
40,572

 
$
(10,149
)
The fair value of inventories using Level 2 inputs is determined by evaluating the current economic conditions for sale and disposal of spare parts, which includes estimates as to the recoverability of the carrying value of the parts based on historical experience with sales and disposal of similar spare parts, the expected timeframe of sales or disposals, the location of the spare parts to be sold and the condition of the spare parts to be sold or otherwise disposed of.
The fair value of assets held for sale using Level 2 inputs is determined through evaluation of expected sales proceeds for aircraft. This analysis includes estimates based on historical experience with sales, recent transactions involving similar assets, quoted market prices for similar assets and condition and location of aircraft to be sold or otherwise disposed of. The loss for the three months ended June 30, 2017 related to 2 aircraft held for sale and the loss for the three months ended June 30, 2016 related to 11 aircraft held for sale.

17

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

Recurring Fair Value Measurements
The following table summarizes the financial instruments we had as of June 30, 2017, valued at fair value on a recurring basis (in thousands):
 
 
 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Balance as of
June 30,
2017
 
Balance  Sheet
Classification
Rabbi Trust investments
 
$
2,201

 
$

 
$

 
$
2,201

 
Other assets
Total assets
 
$
2,201

 
$

 
$

 
$
2,201

 
 
The following table summarizes the financial instruments we had as of March 31, 2017, valued at fair value on a recurring basis (in thousands):
 
 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Balance as of
March 31,
2017
 
Balance  Sheet
Classification
Rabbi Trust investments
 
$
3,075

 
$

 
$

 
$
3,075

 
Other assets
Total assets
 
$
3,075

 
$

 
$

 
$
3,075

 
 
The rabbi trust investments consist of cash and mutual funds whose fair value are based on quoted prices in active markets for identical assets, and are designated as Level 1 within the valuation hierarchy. The rabbi trust holds investments related to our non-qualified deferred compensation plan for our senior executives.
Fair Value of Debt
The fair value of our debt has been estimated in accordance with the accounting standard regarding fair value. The fair value of our fixed rate long-term debt is estimated based on quoted market prices. The carrying and fair value of our long-term debt, including the current portion and excluding unamortized debt issuance costs, are as follows (in thousands):
 
 
June 30, 2017
 
March 31, 2017
 
 
Carrying
Value
 
Fair Value
 
Carrying
Value
 
Fair Value
6¼% Senior Notes
 
$
401,535

 
$
252,967

 
$
401,535

 
$
323,236

Term Loan
 
253,180

 
253,180

 
261,907

 
261,907

Term Loan Credit Facility
 
45,900

 
45,900

 
45,900

 
45,900

Revolving Credit Facility
 
174,500

 
174,500

 
139,100

 
139,100

Lombard Debt
 
202,514

 
202,514

 
196,832

 
196,832

Macquarie Debt
 
195,528

 
195,528

 
200,000

 
200,000

Airnorth Debt
 
15,826

 
15,826

 
16,471

 
16,471

Eastern Airways Debt
 
14,701

 
14,701

 
15,326

 
15,326

Other Debt
 

 

 
16,293

 
16,293

 
 
$
1,303,684

 
$
1,155,116

 
$
1,293,364

 
$
1,215,065

Other
The fair values of our cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these items.


18

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

Note 5 — COMMITMENTS AND CONTINGENCIES
Aircraft Purchase Contracts — As shown in the table below, we expect to make additional capital expenditures over the next six fiscal years to purchase additional aircraft. As of June 30, 2017, we had 29 aircraft on order and options to acquire an additional four aircraft. Although a similar number of our existing aircraft may be sold during the same period, the additional aircraft on order will provide incremental fleet capacity in terms of revenue and operating income.
 
 
Nine Months Ending March 31, 2018
 
Fiscal Year Ending March 31,
 
 
 
 
2019
 
2020
 
2021
 
2022 and thereafter(1)
 
Total
Commitments as of June 30, 2017: (2)
 
 
 
 
 
 
 
 
 
 
 
 
Number of aircraft:
 
 
 
 
 
 
 
 
 
 
 
 
Medium
 
2

 

 

 

 

 
2

Large
 

 
5

 
4

 
4

 
10

 
23

U.K. SAR
 
4

 

 

 

 

 
4

 
 
6

 
5

 
4

 
4

 
10

 
29

Related commitment expenditures (in thousands) (3)
 
 
 
 
 
 
 
 
 
 
 
 
Medium and large
 
$
995

 
$
94,804

 
$
74,118

 
$
71,124

 
$
128,857

 
$
369,898

U.K. SAR
 
62,889

 

 

 

 

 
62,889

 
 
$
63,884

 
$
94,804

 
$
74,118

 
$
71,124

 
$
128,857

 
$
432,787

Options as of June 30, 2017:
 
 
 
 
 
 
 
 
 
 
 
 
Number of aircraft:
 
 
 
 
 
 
 
 
 
 
 
 
Large
 

 
2

 
2

 

 

 
4

 
 

 
2

 
2

 

 

 
4

 
 
 
 
 
 
 
 
 
 
 
 
 
Related option expenditures (in thousands) (3)
 
$

 
$
44,181

 
$
31,536

 
$

 
$

 
$
75,717

_____________ 
(1) 
Includes $86.0 million for five aircraft orders that can be cancelled prior to delivery dates. As of June 30, 2017, we made non-refundable deposits of $4.5 million related to these aircraft.
(2) 
Signed client contracts are currently in place that will utilize four of these aircraft.
(3) 
Includes progress payments on aircraft scheduled to be delivered in future periods only if options are exercised.
The following chart presents an analysis of our aircraft orders and options during the three months ended June 30, 2017:
     
 
 
 
Orders
 
Options
 
Beginning of period
 
32

 
4

 
Aircraft delivered
 
(3
)
 

 
End of period
 
29

 
4

We periodically purchase aircraft for which we have no orders.
Operating Leases — We have non-cancelable operating leases in connection with the lease of certain equipment, land and facilities, including leases for aircraft. Rental expense incurred under all operating leases was $58.7 million and $51.3 million for the three months ended June 30, 2017 and 2016, respectively, which includes rental expense incurred under operating leases for aircraft of $51.7 million and $44.7 million, respectively.

19

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

The aircraft leases range from base terms of up to 180 months with renewal options of up to 240 months in some cases, include purchase options upon expiration and some include early purchase options. The leases contain terms customary in transactions of this type, including provisions that allow the lessor to repossess the aircraft and require us to pay a stipulated amount if we default on our obligations under the agreements. The following is a summary of the terms related to aircraft leased under operating leases with original or remaining terms in excess of one year as of June 30, 2017:
 
End of Lease Term
 
Number of Aircraft
 
Nine months ending March 31, 2018 to fiscal year 2019
 
29

 
Fiscal year 2020 to fiscal year 2022
 
48

 
Fiscal year 2023 to fiscal year 2024
 
14

 
 
 
91

 
We lease six S-92 model aircraft and one AW139 model aircraft from VIH Aviation Group, which is a related party due to common ownership of Cougar; we paid lease fees of $4.5 million for the three months ended June 30, 2017. Additionally, in July 2016, we began leasing a facility in Galliano, Louisiana from VIH Helicopters USA, Inc., another related party due to common ownership of Cougar; we paid $0.1 million in lease fees during three months ended June 30, 2017.
Employee Agreements — Approximately 53% of our employees are represented by collective bargaining agreements and/or unions with 84% of these employees being represented by collective bargaining agreements and/or unions that have expired or will expire in one year. These agreements generally include annual escalations of up to 3%. Periodically, certain groups of our employees who are not covered by a collective bargaining agreement consider entering into such an agreement. We also have employment agreements with members of senior management.
Separation Programs — In March 2015 and May 2016, we offered voluntary separation programs (“VSPs”) to certain employees as part of our ongoing efforts to improve efficiencies and reduce costs. Additionally, beginning in March 2015, we initiated involuntary separation programs (“ISPs”) in certain regions. Also, during June 2017, two named executive officers and the principal operating officer, along with other employees across various regions, departed from the Company as part of an organizational restructuring. In April 2016, one named executive officer, along with other employees across various regions, departed from the Company as part of a previous restructuring. We recognized compensation expense related to the departure of these officers and other employees included in the table below. The expense related to the VSPs and ISPs for the three months ended June 30, 2017 and 2016 is as follows (in thousands):
 
Three Months Ended 
 June 30,
 
2017
 
2016
VSP:
 
 
 
Direct cost
$

 
$
855

General and administrative

 
23

Total
$

 
$
878

ISP:
 
 
 
Direct cost
$
1,070

 
$
498

General and administrative
7,609

 
4,030

Total
$
8,679

 
$
4,528

Environmental Contingencies — The U.S. Environmental Protection Agency (the “EPA”), has in the past notified us that we are a potential responsible party (“PRP”) at three former waste disposal facilities that are on the National Priorities List of contaminated sites. Under the federal Comprehensive Environmental Response, Compensation and Liability Act, also known as the Superfund law, persons who are identified as PRPs may be subject to strict, joint and several liability for the costs of cleaning up environmental contamination resulting from releases of hazardous substances at National Priorities List sites. Although we have not yet obtained a formal release of liability from the EPA with respect to any of the sites, we believe that our potential liability in connection with the sites is not likely to have a material adverse effect on our business, financial condition or results of operations.
Other Purchase Obligations — As of June 30, 2017, we had $65.2 million of other purchase obligations representing unfilled purchase orders for aircraft parts, commitments associated with upgrading facilities at our bases and non-cancelable power-by-the-hour maintenance commitments.

20

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

Other Matters — Although infrequent, aircraft accidents have occurred in the past, and the related losses and liability claims have been covered by insurance subject to deductible, self-insured retention and loss sensitive factors.
As previously reported, on April 29, 2016, another company’s EC 225LP (also known as a H225LP) model helicopter crashed near Turøy outside of Bergen, Norway. The aircraft was carrying eleven passengers and two crew members at the time of the accident. Thirteen fatalities were reported. The Accident Investigation Board Norway (“AIBN”) issued a report confirming its initial findings that the accident was caused by the fatigue fracture of a component within the aircraft's gearbox. The AIBN continues to investigate.
Prior to the accident, we operated a total of 27 H225LP model aircraft (including 16 owned and 11 leased) worldwide as follows:
Five H225LP model aircraft registered in Norway;
Thirteen H225LP model aircraft registered in the United Kingdom; and
Nine H225LP model aircraft registered in Australia.
On June 2, 2016, the European Aviation Safety Agency (“EASA”) issued an emergency airworthiness directive, which was subsequently amended on June 3, 2016 and June 9, 2016 (collectively, the “June 2016 EASA Airworthiness Directive”), prohibiting flight of H225LP and AS332L2 model aircraft. The June 2016 EASA Airworthiness Directive by its terms did not apply to military, customs, police, search and rescue, firefighting, coastguard or similar activities or services as those types of services are governed by the member states of EASA directly.
On October 7, 2016, EASA subsequently issued a new airworthiness directive effective October 13, 2016 (the “October EASA Airworthiness Directive”) which expressly supersedes the June 2016 Airworthiness Directive and details the mandatory actions necessary to permit a return to service of the H225LP and AS332L2 model aircraft. However, the safety directives issued in June 2016 by the Norway Civil Aviation Agency (“NCAA”) and the U.K. Civil Aviation Authority (“U.K. CAA”) prohibiting commercial operation of the H225LP and AS332L2 model aircraft remained in effect.
On July 7, 2017, the U.K. CAA announced its intention and the intention of the NCAA to remove the restrictions on commercial operations of the H225LP and AS332L2 model aircraft and to establish conditions for return to flight of such aircraft model types. The U.K. CAA stated that the manufacturer of such aircraft model types has developed certain specified modifications and enhanced safety measures and that a plan of checks, modifications and inspections will be undertaken before any flights take place.
On July 20, 2017, the U.K. CAA and NCAA issued safety and operational directives which detail the conditions to apply for safe return to service of H225LP and AS332L2 model aircraft, where operators wish to do so. We do not currently have any AS332L2 model aircraft in our fleet. We continue not to operate for commercial purposes our sole H225LP model aircraft in Norway, our thirteen H225LP model aircraft in the United Kingdom or our six H225LP model aircraft in Australia, or for search and rescue purposes, including training and missions, any of our other four H225LP model aircraft in Norway or our other three H225LP model aircraft in Australia. Our other aircraft, including SAR, continue to operate globally.
We are working with local regulators, Airbus, HeliOffshore and clients, to carefully evaluate next steps and demand for the H225LP model aircraft in our oil and gas and search and rescue operations worldwide. In compliance with the updated safety directives, we are continuing redelivery work on four H225LP aircraft for their planned return to the leasing company over the course of this fiscal year as per the lease redelivery requirements. This redelivery work includes required flight testing as a final part of returning the aircraft to full serviceability. We continue to monitor the situation closely, with the safety of passengers and crews remaining our highest priority.
It is too early to determine whether the H225LP accident that occurred in Norway in April 2016 will have a material impact on us as we are in the process of quantifying the impact and investigating potential claims against Airbus.
We operate in jurisdictions internationally where we are subject to risks that include government action to obtain additional tax revenue. In a number of these jurisdictions, political unrest, the lack of well-developed legal systems and legislation that is not clear enough in its wording to determine the ultimate application, can make it difficult to determine whether legislation may impact our earnings until such time as a clear court or other ruling exists. We operate in jurisdictions currently where amounts may be due to governmental bodies that we are not currently recording liabilities for as it is unclear how broad or narrow legislation may ultimately be interpreted. We believe that payment of amounts in these instances is not probable at this time, but is reasonably possible.

21

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

A loss contingency is reasonably possible if the contingency has a more than remote but less than probable chance of occurring. Although management believes that there is no clear requirement to pay amounts at this time and that positions exist suggesting that no further amounts are currently due, it is reasonably possible that a loss could occur for which we have estimated a maximum loss at June 30, 2017 to be approximately $4 million to $6 million.
We are a defendant in certain claims and litigation arising out of operations in the normal course of business. In the opinion of management, uninsured losses, if any, will not be material to our financial position, results of operations or cash flows.
Note 6 — TAXES
In accordance with GAAP, we estimate the full-year effective tax rate from continuing operations and apply this rate to our year-to-date income from continuing operations. In addition, we separately calculate the tax impact of unusual or infrequent items, if any. The tax impacts of such unusual or infrequent items are treated discretely in the quarter in which they occur. Our effective tax rate was (31.9)% and 5.2% during the three months ended June 30, 2017 and 2016, respectively. The effective tax rate for the three months ended June 30, 2017 and 2016 were both impacted by valuation allowances against future realization of foreign tax credits. Additionally, we continue to value against net operating losses in certain foreign jurisdictions.
The relationship between our provision for or benefit from income taxes and our pre-tax book income can vary significantly from period to period considering, among other factors, (a) the overall level of pre-tax book income, (b) changes in the blend of income that is taxed based on gross revenues or at high effective tax rates versus pre-tax book income or at low effective tax rates and (c) our geographical blend of pre-tax book income. Consequently, our income tax expense does not change proportionally with our pre-tax book income. Significant decreases in our pre-tax book income typically result in higher effective tax rates, while significant increases in pre-tax book income can lead to lower effective tax rates, subject to the other factors impacting income tax expense noted above. The increase in our effective tax rate excluding discrete items for the three months ended June 30, 2017 compared to the three months ended June 30, 2016 primarily related to an increase in the blend of earnings taxed in relatively high taxed jurisdictions versus low taxed jurisdictions. Additionally, we increased our valuation allowance by $11.2 million and $13.2 million during the three months ended June 30, 2017 and 2016, respectively, which also increased our effective tax rate.
As of June 30, 2017, there were $1.3 million of unrecognized tax benefits, all of which would have an impact on our effective tax rate if recognized.
Note 7 — EMPLOYEE BENEFIT PLANS
Pension Plans
The following table provides a detail of the components of net periodic pension cost (in thousands):
 
 
Three Months Ended 
 June 30,
 
 
2017
 
2016
Service cost for benefits earned during the period
 
$
154

 
$
1,960

Interest cost on pension benefit obligation
 
3,751

 
4,782

Expected return on assets
 
(5,309
)
 
(6,471
)
Amortization of unrecognized losses
 
1,778

 
1,961

Net periodic pension cost
 
$
374

 
$
2,232

The current estimates of our cash contributions required for fiscal year 2018 for our pension plans to be paid in fiscal year 2018 are $15.3 million, of which $4.0 million was paid during the three months ended June 30, 2017. The weighted-average expected long-term rate of return on assets for our U.K. pension plans as of March 31, 2017 was 4.4%.
Incentive Compensation
Stock-based awards are currently made under the Bristow Group Inc. 2007 Long-Term Incentive Plan (the “2007 Plan”). A maximum of 10,646,729 shares of common stock, par value $0.01 per share (“Common Stock”), are reserved. Awards granted under the 2007 Plan may be in the form of stock options, stock appreciation rights, shares of restricted stock, other stock-based awards (payable in cash or Common Stock) or performance awards, or any combination thereof, and may be made to outside directors, employees or consultants. As of June 30, 2017, 2,409,092 shares remained available for grant under the 2007 Plan.
We have a number of other incentive and stock option plans which are described in Note 9 to our fiscal year 2017 Financial Statements.

22

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

Total stock-based compensation expense, which includes stock options and restricted stock, totaled $4.1 million and $4.2 million for the three months ended June 30, 2017 and 2016, respectively. Stock-based compensation expense has been allocated to our various regions.
During the three months ended June 30, 2017, we awarded 457,858 shares of restricted stock at an average grant date fair value of $7.03 per share. Also during the three months ended June 30, 2017, 1,256,043 stock options were granted. The following table shows the assumptions used to compute the stock-based compensation expense for stock options granted during the three months ended June 30, 2017:
Risk free interest rate
1.78
%
Expected life (years)
5

Volatility
56.1
%
Dividend yield
3.98
%
Weighted average exercise price of options granted
$7.03 per option

Weighted average grant-date fair value of options granted
$2.53 per option

During June 2017, we awarded certain members of management phantom restricted stock which will be paid out in cash after three years. We will account for these awards as liability awards. As of June 30, 2017, we had $0.1 million included in other liabilities and deferred credits on our condensed consolidated balance sheet and recognized $0.1 million in general and administrative expense during the three months ended June 30, 2017 related to these awards.
Performance cash awards granted in June 2017 have two components. One half of each performance cash award vest and pay out in cash three years after the date of grant at varying levels depending on our performance in Total Shareholder Return against a peer group of companies. The other half of each performance cash award will be earned based on absolute performance in respect of improved average adjusted earnings per share for the Company over the three-year performance period beginning on April 1, 2017. Performance cash awards granted in June 2015 and June 2016 vest and pay out in cash three years after the date of grant at varying levels depending on our performance in Total Shareholder Return against a peer group of companies. These awards were designed to tie a significant portion of total compensation to performance. One of the effects of this type of compensation is that it requires liability accounting which can result in volatility in earnings. The liability recorded for these awards as of June 30 and March 31, 2017 was $3.2 million and $14.2 million, respectively, and represents an accrual based on the fair value of the awards on those dates. The decrease in the liability during the three months ended June 30, 2017 resulted from the payout in June 2017 of the awards granted in June 2014, partially offset by the value of the new awards granted in June 2017. Any changes in fair value of the awards in future quarters will increase or decrease the liability and impact results in those periods. The effect, either positive or negative, on future period earnings can vary based on factors including changes in our stock price or the stock prices of the peer group companies, as well as changes in other market and company-specific assumptions that are factored into the calculation of fair value of the performance cash awards.
Compensation expense related to the performance cash awards recorded during the three months ended June 30, 2017 and 2016 was a reduction in expense of $3.0 million and $1.1 million, respectively, due to the decrease in the fair value of the awards.


23

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

Note 8 — EARNINGS PER SHARE AND ACCUMULATED OTHER COMPREHENSIVE INCOME
Earnings per Share
Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings per common share excludes options to purchase shares and restricted stock awards, which were outstanding during the period but were anti-dilutive, as follows:
 
 
Three Months Ended 
 June 30,
 
 
2017
 
2016
Options:
 
 
 
 
Outstanding
 
3,040,278

 
1,127,883

Weighted average exercise price
 
$
39.69

 
$
44.35

Restricted stock awards:
 
 
 
 
Outstanding
 
481,451

 
462,358

Weighted average price
 
$
23.40

 
$
31.43


The following table sets forth the computation of basic and diluted earnings per share:
 
 
Three Months Ended 
 June 30,
 
 
2017
 
2016
Earnings (in thousands):
 
 
 
 
Loss available to common stockholders
 
$
(55,275
)
 
$
(40,772
)
Shares:
 
 
 
 
Weighted average number of common shares outstanding – basic
 
35,227,434

 
34,990,136

Net effect of dilutive stock options and restricted stock awards based on the treasury stock method
 

 

Weighted average number of common shares outstanding – diluted
 
35,227,434

 
34,990,136

 
 
 
 
 
Basic loss per common share
 
$
(1.57
)
 
$
(1.17
)
Diluted loss per common share
 
$
(1.57
)
 
$
(1.17
)
 
Accumulated Other Comprehensive Income
The following table sets forth the changes in the balances of each component of accumulated other comprehensive income:
 
 
Currency Translation Adjustments
 
Pension Liability Adjustments (1)
 
Total
Balance as of March 31, 2017
 
$
(149,721
)
 
$
(178,556
)
 
$
(328,277
)
Other comprehensive income before reclassification
 
10,070

 

 
10,070

Reclassified from accumulated other comprehensive income
 

 

 

Net current period other comprehensive income
 
10,070

 

 
10,070

Foreign exchange rate impact
 
8,954

 
(8,954
)
 

Balance as of June 30, 2017
 
$
(130,697
)
 
$
(187,510
)
 
$
(318,207
)
_____________ 
(1) 
Reclassification of amounts related to pension liability adjustments are included as a component of net periodic pension cost.


24

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


Note 9 — SEGMENT INFORMATION
We conduct our business in one segment: industrial aviation services. The industrial aviation services global operations are conducted primarily through four regions as follows: Europe Caspian, Africa, Americas and Asia Pacific. The Europe Caspian region comprises all our operations and affiliates in Europe and Central Asia, including Norway, the U.K. and Turkmenistan. The Africa region comprises all our operations and affiliates on the African continent, including Nigeria and Egypt. The Americas region comprises all our operations and affiliates in North America and South America, including Brazil, Canada, Guyana, Suriname, Trinidad and the U.S. Gulf of Mexico. The Asia Pacific region comprises all our operations and affiliates in Australia and Southeast Asia, including Malaysia and Sakhalin. Additionally, we operate a training unit, Bristow Academy, which is included in Corporate and other.
The following tables show region information for the three months ended June 30, 2017 and 2016 and as of June 30 and March 31, 2017, where applicable, reconciled to consolidated totals, and prepared on the same basis as our condensed consolidated financial statements (in thousands):
 
 
Three Months Ended 
 June 30,
 
 
2017
 
2016
Region gross revenue from external clients:
 
 
 
 
Europe Caspian
 
$
191,399

 
$
194,824

Africa
 
50,790

 
54,262

Americas
 
55,762

 
58,197

Asia Pacific
 
52,446

 
59,144

Corporate and other
 
1,712

 
2,971

Total region gross revenue
 
$
352,109

 
$
369,398

Intra-region gross revenue:
 
 
 
 
Europe Caspian
 
$
1,036

 
$
2,139

Africa
 

 

Americas
 
2,294

 
847

Asia Pacific
 

 

Corporate and other
 
22

 
245

Total intra-region gross revenue
 
$
3,352

 
$
3,231

Consolidated gross revenue reconciliation:
 
 
 
 
Europe Caspian
 
$
192,435

 
$
196,963

Africa
 
50,790

 
54,262

Americas
 
58,056

 
59,044

Asia Pacific
 
52,446

 
59,144

Corporate and other
 
1,734

 
3,216

Intra-region eliminations
 
(3,352
)
 
(3,231
)
Total consolidated gross revenue
 
$
352,109

 
$
369,398




25

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

 
 
Three Months Ended 
 June 30,
 
 
2017
 
2016
Earnings from unconsolidated affiliates, net of losses – equity method investments:
 
 
 
 
Europe Caspian
 
$
30

 
$
51

Americas
 
(535
)
 
3,863

Corporate and other
 
(160
)
 
(84
)
Total earnings from unconsolidated affiliates, net of losses – equity method investments
 
$
(665
)
 
$
3,830

 
 
 
 
 
Consolidated operating income (loss) reconciliation:
 
 
 
 
Europe Caspian
 
$
4,407

 
$
13,030

Africa
 
10,048

 
1,571

Americas
 
(1,256
)
 
921

Asia Pacific
 
(12,530
)
 
(5,893
)
Corporate and other
 
(25,957
)
 
(25,847
)
Gain (loss) on disposal of assets