Tableof December 31, 2019, 75 of our helicopters were located in the U.S. and 28 were located in foreign jurisdictions. We own and control all 103 of our helicopters. Contents
The following table identifies the types of helicoptersaircraft that comprise our fleet and the number of those helicoptersaircraft in our fleet as of DecemberMarch 31, 2019.2022.
| Number of Aircraft | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Type | Owned Aircraft | Leased Aircraft | Aircraft Held For Sale | Consolidated Aircraft | Maximum Passenger Capacity | Average Age (years)(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Heavy Helicopters: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| S-92 | 39 | 27 | — | 66 | 19 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||
| H225 | — | — | 2 | 2 | 19 | 11 | |||||||||||||||||||||||||||||||||||||||||||||||
| AW189 | 17 | 1 | — | 18 | 16 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
| 56 | 28 | 2 | 86 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Medium Helicopters: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AW139 | 51 | 6 | — | 57 | 12 | 11 | |||||||||||||||||||||||||||||||||||||||||||||||
| S-76 C+/C++ | 16 | — | — | 16 | 12 | 14 | |||||||||||||||||||||||||||||||||||||||||||||||
| S-76D | 8 | — | — | 8 | 12 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||
| B212 | 2 | — | — | 2 | 12 | 40 | |||||||||||||||||||||||||||||||||||||||||||||||
| 77 | 6 | — | 83 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Light—Twin Engine Helicopters: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AW109 | 4 | — | — | 4 | 7 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||
| EC135 | 10 | — | — | 10 | 6 | 13 | |||||||||||||||||||||||||||||||||||||||||||||||
| 14 | — | — | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Light—Single Engine Helicopters: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AS350 | 17 | — | — | 17 | 4 | 24 | |||||||||||||||||||||||||||||||||||||||||||||||
| AW119 | 13 | — | — | 13 | 7 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||
| 30 | — | — | 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Helicopters | 177 | 34 | 2 | 213 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed wing | 6 | 8 | — | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||
| UAV | — | 2 | — | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total Fleet | 183 | 44 | 2 | 229 | |||||||||||||||||||||||||||||||||||||||||||||||||
______________________
(1)Reflects the average age of helicopters that are owned.
| Helicopters | Max. Pass.(1) | Cruise Speed | Approx. Range | Average Age | ||||||||||
| (mph) | (miles) | (years) | ||||||||||||
| Heavy: | ||||||||||||||
| S92 | 4 | 19 | 175 | 620 | 4 | |||||||||
| H225 | 1 | 19 | 162 | 582 | 12 | |||||||||
| AW189 | 4 | 16 | 173 | 490 | 3 | |||||||||
| 9 | ||||||||||||||
| Medium: | ||||||||||||||
| AW139 | 36 | 12 | 173 | 426 | 10 | |||||||||
| S76 C+/C++ | 5 | 12 | 161 | 348 | 13 | |||||||||
| B212 | 3 | 11 | 115 | 299 | 38 | |||||||||
| 44 | ||||||||||||||
| Light—twin engine: | ||||||||||||||
| A109 | 7 | 7 | 161 | 405 | 14 | |||||||||
| EC135 | 10 | 7 | 138 | 288 | 10 | |||||||||
| BO105 | 3 | 4 | 138 | 276 | 30 | |||||||||
| 20 | ||||||||||||||
| Light—single engine: | ||||||||||||||
| A119 | 13 | 7 | 161 | 270 | 13 | |||||||||
| AS350 | 17 | 5 | 138 | 361 | 22 | |||||||||
| 30 | ||||||||||||||
| Total Fleet | 103 | 14 | ||||||||||||
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The chart below presents the number of aircraft in our fleet and their distribution among the regions in which we operate, the number of helicopters we had on order and the percentage of operating revenues each of our regions provided as of March 31, 2022.
| Percentage of Fiscal Year 2022 Operating Revenues | Helicopters | UAV | Fixed Wing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Heavy | Medium | Light Twin | Light Single | Total (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | 56 | % | 62 | 12 | — | 3 | 2 | — | 79 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas | 32 | % | 20 | 56 | 14 | 27 | — | — | 117 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | 6 | % | — | 1 | — | — | — | 12 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Africa | 6 | % | 4 | 14 | — | — | — | 2 | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 100 | % | 86 | 83 | 14 | 30 | 2 | 14 | 229 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Aircraft not currently in fleet: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| On order | 3 | — | 5 | — | — | — | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
_____________
(1)Includes 44 leased aircraft as follows:
| Leased Aircraft in Consolidated Fleet | |||||||||||||||||||||||||||||||||||||||||
| Helicopters | UAV | Fixed Wing | |||||||||||||||||||||||||||||||||||||||
| Heavy | Medium | Light Twin | Light Single | Total | |||||||||||||||||||||||||||||||||||||
| Europe | 26 | 2 | — | — | 2 | — | 30 | ||||||||||||||||||||||||||||||||||
| Americas | 2 | 2 | — | — | — | — | 4 | ||||||||||||||||||||||||||||||||||
| Asia Pacific | — | 1 | — | — | — | 6 | 7 | ||||||||||||||||||||||||||||||||||
| Africa | — | 1 | — | — | — | 2 | 3 | ||||||||||||||||||||||||||||||||||
| Total | 28 | 6 | — | — | 2 | 8 | 44 | ||||||||||||||||||||||||||||||||||
The management of our fleet involves a careful evaluation of the expected demand for helicopter services across global markets and the types of helicopters needed to meet this demand. As offshore oil and gas exploration, development and production moves to deeper water, more heavy and medium helicopters and newer technology helicopters may be required. Our orders and options to purchase helicopters are primarily for heavy helicopters. These capital commitments reflect our effort to meet customer demand for helicopters suitable for the deepwater market.
Heavy and medium helicopters fly longer distances at higher speeds and can carry heavier payloads than light helicopters and are usually equipped with sophisticated avionics permitting them to operate in more demanding weather conditions and difficult climates. Heavy and medium helicopters are most commonly used for crew changes on large offshore production facilities and drilling rigs servicing the oil and gas industry.industry and for SAR operations. See “Item 2. Properties” in this Annual Report on Form 10-K for discussion on our bases and operating facilities.
Aviation Operating Certificates
As of March 31, 2022, we maintained 9 AOC’s in 10 different countries to facilitate our operations.
Customers and Contractual Arrangements
Our principal customers in the markets in which we operate are international, independent and major integrated oilenergy companies and gas exploration, development and production companies. In the U.S. Gulf of Mexico, we also provide helicopter transportation services to BSEE. Our leasing customers are typically other helicopter operators that operate our leased helicopters under their AOCs and retain the operating risk. These companies in turn provide helicopter transportation services primarily to oil and gas companies. As of December 31, 2019, approximately 12% of our helicopters were utilized in support of these leasing activities.
government agencies. During the fiscal year ended DecemberMarch 31, 2019,2022, our top ten customers accounted for approximately 92%66% of total revenues. During each ofoperating revenues, and the years ended December 31, 2019, 2018combined revenues from DfT, Equinor ASA and 2017, each of Anadarko, Petrobras and BSEEConocoPhillips Co. accounted for 10% or more 38%of our totaloperating revenues.
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We chartercontract the majority of our helicopters primarily through master service agreements, subscription agreements, day-to-day chartercontract arrangements, fixed-term noncancelablenoncancellable contracts and dry-leases. Master service agreements and subscription agreements typically require a fixed monthly fee plus incremental payments based on flight hours flown. These agreements have fixed terms ranging from one month to fiveten years and generally may be canceled without penalty upon 30-12030-365 days’ notice.notice and may also include escalation provisions allowing annual rate increases. Customarily, these contracts do not commit our customers to acquire specific amounts of services or minimum flight hours and permit our customers to decrease the number of helicopters under contract with a corresponding decrease in the fixed monthly payments without penalty. Day-to-day charter arrangements require either a rate for each hour flown with a minimum number of hours to be charged or a daily fixed fee plus an hourly rate based on hours flown. The rate structure, as it applies
Our fixed wing services are generally provided through scheduled charter service or regular public transport service. We also provide services to customers on an “ad hoc” basis, which usually entails a shorter notice period and shorter contract duration. Regular public transport service is provided through established daily or weekly flight schedules and is based upon individual ticket sales to customers.
Our leasing customers are typically other helicopter operators that operate our contracts with oilhelicopters under their AOCs and gas customers, typically contains terms that limit our exposure to changes in fuel costs.retain the operating risk. Leases generally run from one to five years and may contain early cancellation provisions. Under these leases, we may provide only the equipment or provide additional services such as logistical and maintenance support, training services and flight and maintenance crews.
Competitive Conditions
The helicopteraviation services industry is highly competitive.competitive throughout the world. Customers tend to rely heavily on existing relationships and seek operators with established safety records and knowledge of the operating environment. In most instances, customers charter aircraft on the basis of competitive bidding, and typically an operator must have an acceptable safety record, demonstrated reliability and suitable equipment to bid for work. Upon bidders meeting these criteria, customers typically make their final choice based on operational experience, helicopter preference, aircraft availability, the quality and location of operating bases, customer service, professional reputation and price. CustomersIncumbent operators typically have a competitive advantage in the bidding process based on their relationship with the customer, knowledge of the site characteristics and existing facilities to support the operations. In addition, while not the predominant practice, customers may also fulfill their needs by establishing their own flight departments or by facilitating the entry of a new operator in the regions where we operate.
Globally, our primary competitors are CHC Group LLC, NHV Group, Omni Helicopters International, S.A. and PHI, Inc. (“PHI”). We may also face competition from a number of smaller operators which vary by region.
Environmental, Social and Governance
Bristow’s vision is to lead the world in innovative and sustainable vertical flight solutions and we are committed to leading responsibly. Along with our commitment to safe and reliable operations, we have a corporate social responsibility program and focus on environmental responsibility through daily practices as further described in the following sections. Our Environmental, Social, and Governance Committee of the Board of Directors (the “ESG Committee”) oversees our sustainability initiatives, which include, but are not limited to, prioritizing efforts to reduce our environmental footprint, increasing transparency for our stakeholders, and ensuring our social responsibility program continues to provide value for our employees and the community.
Environmental and Social Initiatives
Bristow seeks to play a positive role in the communities where we operate by conducting our operations in a way that respects the environment and surrounding communities. Additionally, through Bristow Uplift, our social responsibility program, we align our business practices with social investments and work to build strong community relationships that will have a positive impact on our communities and create long-term value for our business.
Environmental Initiatives— In fiscal year 2021, Bristow was one of the first vertical lift operators in the U.K. to obtain International Organization for Standards (ISO) 14001 certification, which certifies that our U.K. operations have an environmental management system in place that monitors, manages, and delivers continuous improvement at our bases of
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operations. In fiscal year 2022, Brazil passed an ISO 14001 audit continuing their certification that was obtained in 2018, and we began working to obtain ISO 14001 certification for other operating bases throughout our global footprint. We also have undertaken proactive measures to reduce aircraft emissions and reduce the environmental impact of our operations by monitoring operational practices to reduce our time running the aircraft on the ground, utilizing a fleet of modern and regularly maintained aircraft supported by the latest technologies, such as flight planning software for payload management, and by partnering with our customers to maximize seat utilization, thus reducing the number of flights required. Additionally, we encourage and assist our engine manufacturers, aircraft manufacturers, our customers and other stakeholders to be early and leading adopters of sustainable aviation fuels as we encourage wider availability by our fuel suppliers. We are also transitioning to using more electric ground support vehicles in our operations and have partnered with manufacturers to assist with the development of electric vertical takeoff and landing and short takeoff and landing aircraft.
Bristow Uplift — The five pillars of this program: Education, the Underserved, Health and Wellness, Diversity, and Sustainability; outline areas that we can align all of our social investment initiatives to. Bristow also matches certain employee donations to philanthropic organizations around the world. Through these efforts, we support building strong community relationships through the causes that are most important to our employees, ultimately creating long-term value for our business.
Human Rights — Through our Code of Business Integrity (“COBI”), we have committed to upholding the principles of the United Nations Universal Declaration of Human Rights and standards such as nondiscriminatory treatment, voluntary employment, freedom of association, minimum wage, anti-harassment, prohibiting forced or child labor, and maintaining a healthy and safe work environment. We have adopted an Antislavery and Human Trafficking Policy that is applicable to our employees. The policy prohibits any use of slavery or human trafficking in Bristow’s supply chain, and as a condition of doing business with Bristow, we require all suppliers of aircraft, parts, and components to agree to comply with our COBI.
Safety, Industry Hazards and Insurance
The safety of our passengers and the maintenance of a safe working environment for our employees is our number one core value and highest operational priority. We have a strong safety culture committed to zero accidents and zero harm. It is owned by each employee and led by our President and Chief Executive Officer, who is responsible for setting the tone at the top. This culture is exemplified by our status as a founding member of HeliOffshore. Aviation services are potentially hazardous and may result in incidents or accidents. Challenges to safe operations include unanticipated adverse weather conditions, fires, human factors, and mechanical failures that may result in death or injury to personnel, damage to equipment, and other environmental or property damage. We are also subject to regulation by OSHA and comparable state agencies, whose purpose is to protect the health and safety of workers. Failure to comply with these agencies’ requirements can lead to the imposition of penalties.
Technology and Standards — Bristow’s fleet is configured with the latest safety equipment, including Traffic Collision Avoidance Systems (TCAS), Enhanced Ground Proximity Warning Systems (EGPWS) or Helicopter Terrain Awareness and Warning Systems (HTAWS), Automatic Dependent Surveillance- Broadcast (ABS-B), Helicopter Flight Data Monitoring Systems (HFDM), Health and Usage Monitoring Systems (HUMS), satellite communication and flight following systems, and forward facing tail cameras. During the fiscal year 2022, we also enhanced our mass emergency communication system, which we expect will allow for digital incident management to be adopted in fiscal year 2023, and completed the integration of the company safety information system (BeSAFE) in Brazil, Suriname and the U.S. Gulf of Mexico,Mexico.
Systems and Processes — Our safety, legal, and compliance departments oversee our adherence with government regulations, customer safety requirements and safety standards within our organization, the standardization of our base operating procedures and the proper training of our employees. A key to maintaining our strong safety record is developing and retaining highly qualified, experienced, and well-trained employees. We conduct extensive safety training on an ongoing basis and develop, implement, monitor, and continuously improve our safety management system to proactively manage risk and support the physical safety and mental wellness of our employees. Additionally, we have implemented supporting safety programs that include, among many competitors, including, among others, PHI, Inc.other features, (i) transition and recurrent training using full-motion flight simulators and other flight training devices, (ii) a FAA approved flight data monitoring program (“PHI”FDM”) and (iii) health and usage monitoring systems (“HUMS”), Bristow, Rotorcraft Leasing Company LLCwhich automatically monitor and Westwind Helicopters. Some oilreport on vibrations and gas customersother anomalies on key components of certain helicopters in our fleet.
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Culture — Our safety culture and the implementation of the Target Zero program is modeled by each employee and led by our President and Chief Executive Officer, who is responsible for setting the tone at the top. Under COBI, all employees are empowered, and actively encouraged by management, to challenge unsafe acts and conditions, including by exercising his or her “STOP WORK” authority, and participate in safety improvements by the Company. Our strong safety culture is further exemplified by our status as a founding member of HeliOffshore, an organization dedicated to collaboration across the offshore helicopter industry to improve safety around the world.
Human Capital Management
With over seven decades of operations, we are one of the largest and longest-serving helicopter operators in the world, with a reputation for operational excellence. Our employees are some of the most highly regarded experts in vertical flight solutions. We prepare our employees for success through training, competitive benefits packages, and career development. We believe the best way to attract and retain top talent is to invest in our people through creating safe work environments, employee training and multi-level engagement to support their success. We seek qualified candidates who are aligned with our commitment to safety and other core values of integrity, passion, teamwork and progress. Our areas of focus for human capital management are:
Health and Safety —Safety is our number one core value and highest operational priority. Our pilots, maintenance technicians and support personnel are committed to our mission to provide safe, efficient and reliable aviation services. We initiated our industry-leading safety program, Target Zero, and are one of three founding members of HeliOffshore, an organization dedicated to collaboration across the offshore helicopter industry to improve safety around the world.
We believe in keeping everyone safe and well, which includes doing our part to safeguard our physical and mental well-being. We currently have global resources in place to support mental health including an employee well-being portal that provides information and support channels for navigating stress and access to counseling and mental health professionals for all our employees around the world. In response to the COVID-19 pandemic, we have taken a number of steps to help protect the health and well-being of our workforce and communities, including the implementation of flexible work schedules, incremental paid time off for employees experiencing symptoms and augmenting safety operational procedures to prevent workplace and passenger exposure.
Training and Development —We are committed to elevating our employees. All of our employees are required to take periodic trainings that promote the commitment to our core values. Our pilots and mechanics are required to take the latest trainings to ensure they are equipped to operate our aircraft with the best knowledge and experience. Our licensed professionals are afforded the opportunity for continuing education in their fields of expertise.
Diversity and Inclusion — We are committed to attracting and retaining high-performing employees through a diverse talent base and evaluating and promoting throughout our organization based on skills and performance. This is reinforced through our policy under our COBI to provide equal opportunity for everyone in recruiting, hiring, developing, promoting and compensating without regard to race, color, religion, sex, sexual orientation, national origin, citizenship, age, marital status, veteran status or disability. Our workforce is represented by 37 nationalities globally, approximately 25% of our U.S. Gulfemployees are veterans and approximately 18% of Mexico operateour workforce are women, with 38% serving in management level roles and with half of our executive management team represented by women. In addition, we have racial and ethnic diversity across our global operations.
Compensation and Benefits — We offer competitive market-based compensation and benefits for the markets in which we operate. Competitive programs are critical to the well-being of our employees and their own helicopter fleets,families, as well as secure the retention and business continuity. Global benefit offerings include major medical, life, retirement/pension, employee well-being support akin to employee assistance programs in addition to smaller companieslocal offerings that offer services similarvary by country market.
As of March 31, 2022, we employed 2,916 individuals, including 757 pilots and 773 mechanics. We consider our relations with our employees to ours. In international regions, we have several major competitors dependingbe good.
As of March 31, 2022, approximately 60% our employees were covered by union or other collective bargaining agreements. Negotiations over annual salary or other labor matters could result in higher personnel or other costs or increased operational restrictions or disruptions. Furthermore, a failure to reach an agreement on certain key issues could result in strikes, lockouts or other work stoppages.
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The following table sets forth our main employee groups and status of the region. Our primary competitors in Brazil, among others, include, Lider Aviação Holding S.A., OMNI Táxi Aéreo Ltda., and CHC Brazil.collective bargaining agreements:
| Country | Employee Group | Representatives | Status of Agreement | Approximate Number of Employees Covered by Agreement as of March 31, 2022 | |||||||||||||||||||
| Australia | Airnorth Pilots | Airnorth Pilots | Agreement expired in June 2006. Currently rolled over annually | 52 | |||||||||||||||||||
| Brazil | Brazil Pilots | National Aeronaut Union (SNA) | Agreement expires in November 2022 | 59 | |||||||||||||||||||
| Brazil | Brazil Engineers and Employees in Rio de Janeiro (administrative and management) | Employee’s Union of the Air Service of Rio de Janeiro (SIMARJ) | Agreement expires in November 2022 | 72 | |||||||||||||||||||
| Brazil | Brazil Employees Air Service in Cabo Frio Airport (admin, general maintenance, ground support, management) | National Union of Air Service Employees (SNAV) | Agreements expire in November 2022 | 67 | |||||||||||||||||||
| Nigeria | Nigeria Junior and Senior Staff | National Union of Air Transport Employee (NUATE)s; Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) | Agreements expired in March 2021 | 18 | |||||||||||||||||||
| Nigeria | Nigeria Pilots and Engineers | Nigerian Association of Airline Pilots and Engineers | Agreements expired in March 2021 | 72 | |||||||||||||||||||
| Norway | Bristow Norway Engineers | Bristow Norge Teknisk Forening (BNTF) | Agreement expires in September 2023 | 138 | |||||||||||||||||||
| Norway | Bristow Norway Pilots | Bristow Norway Rygerforening (BNF) | Agreement expired in March 2022 | 173 | |||||||||||||||||||
| Norway | Bristow Norway Administration, Rescuemen and Traffic Ops | Bristow Norway Teknisk Adminitrativ Forening (BNTAF), Bristow Norway Redningsmenn (BNR) Bristow Norway Operations Parat (BNOP) and Bristow Norway Operations (BNO) | Agreements expired in March 2022 | 94 | |||||||||||||||||||
| Trinidad | Trinidad Fitters and Handlers | Oilfield Workers’ Trade Union (OWTU) | Agreement expires in May 2022 | 31 | |||||||||||||||||||
| U.K. | U.K. Pilots, and Technical Crew | British Airline Pilots Association (BALPA) | Agreement expires in March 2023 | 337 | |||||||||||||||||||
| U.K. | U.K. Engineers and Staff | UNITE | Agreement expired in March 2022 | 500 | |||||||||||||||||||
| U.K. | Humberside Airport Staff | UNITE/Unison | No expiry date | 108 | |||||||||||||||||||
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Government Regulation
Regulatory Matters.OurGlobally our operations are subject to significant federal, state and local regulations in the U.S., as well as international treaties and conventions and the laws of foreign jurisdictions where we operate our equipment or where the equipment is registered or operated.operated and international treaties and conventions. Our results of operations and financial condition are dependent upon our ability to maintain compliance with all such applicable laws, regulations, treaties and conventions.
United Kingdom
Our operations in the jurisdictions in which we operate.
The CAA regulates our U.K. flight operations and exercises jurisdiction over personnel, aircraft, ground facilities and certain technical aspects of those operations. The CAA often imposes improved safety standards. Under the Licensing of Air Carriers Regulations 1992, it is unlawful to operate any aircraft for hire within the U.K. unless such aircraft are approved by the CAA. Changes in U.K. statutes or regulations, administrative requirements or their interpretation may have a material adverse effect on our business or financial condition or on our ability to continue operations in the U.K.
We are subject to the U.K. Bribery Act, which creates criminal offenses for bribery and failing to prevent bribery. We are also subject to new U.K. corporate criminal offenses for failure to prevent the facilitation of tax evasion pursuant to the Criminal Finances Act 2017, which imposes criminal liability on a company where it has failed to prevent the criminal facilitation of tax evasion by a person associated with us.
We are obligated to comply with U.K. and Export Controls and Economic Sanctions regulations that may restrict the export of designated items to certain persons or destinations. A variety of penalties, both criminal and civil, may be imposed for breaches of these regulations.
Norway
Our operations in the Norway are subject to E.U. statutes and regulations as Norway is a member of the European Economic Area (EEA) and signatory to the European Common Aviation Area Agreement (ECAA). We carry persons and property in our aircraft pursuant to an operating license issued by the Norwegian Civil Aviation Authority. The holder of an operating license must meet the ownership and control requirements criteria of Regulation (EC) 1008/2008, as amended and incorporated into Norwegian law. The company through which we conduct operations in Norway must be majority owned and controlled by E.U. nationals.
United States
As a certified air carrier, our U.S. operations are subject to regulations under the Federal Aviation Act, regulations of the United States Department of Transportation (“DOT”), including Part 298 registration as an On-Demand Air Taxi Operator, and the regulations of the FAA applicable to an FAA Part 135 Air Taxi certificate holder. Among other things, the DOT regulateslaws. We carry persons and property in our status ashelicopters under an air carrier, including our U.S. citizenship.taxi Certificate granted by the FAA. The FAA regulates our U.S. flight operations and, in this respect, hasexercises jurisdiction over our personnel, helicopters,aircraft, ground facilities and certain technical aspects of our operations. In additionThe DOT can review our economic fitness to the FAA, thecontinue our operations at any time and if a substantial change occurs to our management, ownership or capital structure, among other things. The National Transportation Safety Board is authorized to investigate our helicopterany aircraft accidents (if any) and to recommend improved safety standards. WeOur U.S. operations are also subject to the Federal Communications Act of 1934 as amended, because of thewe use of radio facilities in our operations.
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be a citizen of which at leastthe U.S. if no less than 75% of its voting interests are owned or controlled by U.S. citizens, its president is a U.S. citizen, two-thirds or more of the directors are U.S. citizens and it is under the actual control of U.S. citizens. If persons whoother than U.S. citizens should come to own or control more than 25% of our voting interest or if any of the other requirements are “U.S. citizens” (as defined innot met, we have been advised that our aircraft could be subject to deregistration under the Federal Aviation Act, and regulations promulgated thereunder), and (iii)we might lose our ability to operate within the U.S. Deregistration of our aircraft for any reason, including foreign ownership in excess of permitted levels, would have a material adverse effect on our ability to conduct certain operations within our Americas region operations. Therefore, our organizational documents provide for the automatic reduction of voting rights of shares of our outstanding voting capital stock owned or controlled by non-U.S. citizens, to the extent necessary to comply with these requirements. As of March 31, 2022, we believe that non-U.S. citizens owned less than 25% of our outstanding common stock. Given the limited trading of our common stock, our foreign ownership may fluctuate on each trading day, which may result in the president and at least two-thirdsreduction of voting rights of shares held by non-U.S. citizens in excess of the board25% threshold pursuant to our organizational documents.
We are subject to the U.S. Foreign Corrupt Practices Act of directors1977 (the “FCPA”), which generally prohibits us and managing officersour intermediaries from making payments to foreign officials for the purpose of obtaining or keeping business or receiving preferential treatment.
We are subject to regulations imposed by the U.S. citizens. Treasury Department’s Office of Foreign Assets Control and other U.S. laws and regulations that prohibit dealings with sanctioned countries and certain other third parties.
We have adopted provisionsare subject to the International Traffic in our amendedArms Regulations (“ITAR”), which controls the export and restated Certificateimport of Incorporationdefense-related articles, services and technical data. ITAR dictates that information and material pertaining to ensure compliancedefense and military related technologies may only be shared with U.S. persons or organizations unless authorization from the regulationsU.S. State Department is received or a special exemption is used. We are also subject to the Export Administration Regulations (the “EAR”) that control the export of commercial and “dual use” goods. Persons or organizations subject to U.S. jurisdiction may incur heavy fines if they violate ITAR or the FAA.EAR.
Brazil
In Brazil, an operator must be licensed by the National Agency for Civil Aviation. Following recent changes in Brazilian law that eliminated the requirement that an operator be “controlled” by nationals of Brazil, the Company acquired the interests of its former partner in Aeróleo and now owns 100% of Aeróleo. Any change in the licensing requirements could affect the licenses of Aeróleo.Bristow Taxi Aéreo S.A (“Bristow Brazil”). Our ability to conduct our helicopter operating business in Brazil is dependent on our ability to maintain Aeróleo’sthe licenses and AOC.AOC of our operating entity, Bristow Brazil.
We are subject to state and local laws and regulations including, butgoverning our services. Our operations in Nigeria are also subject to the Nigerian Content Development Act, which requires that oil and gas contracts be awarded to a company that is seen or perceived to have more “local content” than a “Foreign” competitor. Additionally, the Nigerian Content Development Act allows the monitoring board to penalize companies that do not limitedmeet these local content requirements up to significant state regulations for our emergency response services. In addition, our international operations, primarily helicopter leasing and our joint ventures, are required to comply with5% of the laws and regulations invalue of the jurisdictions in which they conduct business.contract.
Environmental Compliance.
Our business is subject to international and U.S. federal, state and local laws and regulations relating to environmental protection and occupational safety and health includingand highly dependent on the offshore oil and gas industry which is also subject to such laws and regulations, including those that govern the discharge of oil and pollutants into navigable waters. IfCertain of our business operations, including the operation and maintenance of aircraft, require that we failuse, store and dispose of materials that are subject to environmental regulation. Failure to comply with these environmental laws and regulations may result in the imposition of administrative, civil and criminal penalties, may be imposed, and we may become subject to regulatory enforcement actions in the form of injunctions and cease and desist orders. We may also be subject to civil claims arising out of a pollution event. TheseCertain environmental laws and regulations may expose us to strict, joint and several liability for the conductrelating to releases of hazardous materials or contamination conditions caused by others or forregardless of whether we were responsible, and even if our own acts even though these actionsoperations were in compliance with all applicable laws and regulations at the time they were performed.conducted. In addition, the operations of our customers in the oil and gas exploration, development and production industry are regulated by environmental laws and regulations that may restrict their
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activities and may result in reduced demand for our services. To date, such laws and regulations have not had a material adverse effect on our business, financial condition and results of operations.
These laws include the federal Water Pollution Control Act, also known as the Clean Water Act, which imposes restrictions on the discharge of pollutants to the navigable waters of the U.S.In addition, because our operations generate and, in some cases, involve the transportation of hazardous wastes, we are subject to the federal Resource Conservation and Recovery Act, which regulates the use, generation, transportation, treatment, storage and disposal of certain hazardous and non-hazardous wastes. Under the Comprehensive Environmental Response, Compensation and Liability Act, referred to as CERCLA or the Superfund law, and certain comparable state laws, strict, joint and several liability can be imposed without regard to fault or the legality of the original conduct on certain classes of persons that contributed to the release of a hazardous substance into the environment. These persons include the current and former owner and operator of a contaminated site where a hazardous substance release occurred and any company that transported, disposed of or arranged for the transport or disposal of hazardous substances, even from inactive operations or closed facilities, that have been released into the environment.in connection with such contaminated sites. In addition, neighboring landowners or other third parties may file claims for personal injury, property damage and recovery of response cost. We own, lease, orand operate properties and facilities that, in some cases, have been used for industrial activities for many years. Hazardous substances, wastes, or hydrocarbons may have been released on or under the properties owned or leased by us, or on or under other locations where such substances have been taken for disposal. In addition, some of these properties have been operated by third parties or by previous owners whose treatment, storage and disposal or release of such substances was not under our control. These properties and the substances and wastes disposed or released on them may be subject to CERCLA and analogous state laws. Under such laws, we could be required to remove previously disposed substances and wastes, remediate contaminated property, or perform remedial activities to prevent future contamination.
We believe that our operations are currently in material compliance with all environmental laws and regulations.We do not expect that we will be required to make capital expenditures in the near future that are material to our financial position or operations to comply with environmental laws and regulations; however, because suchgiven the longer term trend of more expansive and stringent environmental laws and regulations, are frequently changing and may impose stricter requirements, we cannot predict the ultimate cost of complying with these laws and regulations.
Other
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Officers of Bristow Group serve at the pleasure of the Board of Directors. The name, age and offices held by each of the executive officers of Bristow Group as of May 24, 2022 were as follows:
| Name | Age | Position | ||||||||||||
| Christopher Bradshaw | 45 | President and Chief Executive Officer | ||||||||||||
| David Stepanek | 56 | Executive Vice President, Sales and Chief Transformation Officer | ||||||||||||
| Alan Corbett | 64 | Senior Vice President, Europe, Africa, Middle East, Asia & Australia & SAR | ||||||||||||
| Crystal Gordon | 43 | Senior Vice President, General Counsel, Head of Government Affairs, and Corporate Secretary | ||||||||||||
| Jennifer Whalen | 48 | Senior Vice President, Chief Financial Officer | ||||||||||||
| Richard Tatum | 44 | Vice President, Chief Accounting Officer | ||||||||||||
Christopher Bradshaw has served as a Director and our President and Chief Executive Officer whosince June 2020. He previously served as President and Chief Executive Officer of Era from November 2014 to June 2020 and Chief Financial Officer from October 2012 to September 2015. Mr. Bradshaw was appointed a director of Era in February 2015. He served as Era’s Acting Chief Executive Officer from August 2014 to November 2014. From 2009 until 2012, Mr. Bradshaw served as Managing Partner and Chief Financial Officer of U.S. Capital Advisors LLC, an independent financial advisory firm that he co-founded. Prior to co-founding U.S. Capital Advisors LLC, Mr. Bradshaw was an energy investment banker at UBS Securities LLC, Morgan Stanley & Co., and PaineWebber Incorporated. He received a degree in Economics and Government from Dartmouth College.
David Stepanek has served as our Executive Vice President, Sales and Chief Transformation Officer since April 2021. In this role, Mr. Stepanek has responsibility for the transformation of the Company’s business mix through strategic diversification into new markets. Mr. Stepanek served as our Executive Vice President, Chief Operating Officer from June 2020 until March 2021. He previously served as Senior Vice President, Business Development of Era when he joined Era in January 2020. From 2010 through 2019, Mr. Stepanek held positions within PHI, Inc., most recently having served as President, PHI Americas, responsible for the overall performance and direction of PHI’s U.S. and international operations in the Western Hemisphere. Before becoming President PHI Americas, he served as PHI, Inc. Chief Commercial Officer and led the company’s growth in the U.S. Gulf of Mexico and international expansion including the acquisition of HNZ Group’s offshore helicopter business. PHI filed for Chapter 11 bankruptcy protection in March 2019 in order to reorganize. PHI successfully emerged from bankruptcy in September 2019. Before joining PHI in 2010, Mr. Stepanek held a variety of leadership positions at Era. After four years’ service in the U.S. Marine Corps as a heavy lift helicopter avionics technician, Mr. Stepanek moved to Sikorsky as an avionics technician and field service representative; he was subsequently promoted and contributed to the sales and product development of the S-76 and S-92 aircraft, amongst many other roles.
Alan Corbett has served as our Senior Vice President for Europe, Africa, Middle East, Asia, Australia and Search and Rescue since June 2020. Mr. Corbett is responsible for setting the tone at the top. We strive to exceed the stringent safety and performance audit standards set by aviation regulatory bodies and our customers, and we are a founding member of HeliOffshore, a collective group of industry participants who seek to promote safer operations.
Crystal Gordon has served as our Senior Vice President, General Counsel, Head of Government Affairs, and Corporate Secretary since June 2020. In this role, Ms. Gordon is responsible for legal, compliance, government affairs, insurance risk management, and contract review and management. Previously, she served as Senior Vice President, General Counsel & Chief Administrative Officer for Era when she joined in incidents or accidents. Hazards suchJanuary 2019. From 2011 through 2018, Ms. Gordon served as adverse weather conditions, collisions, firesthe Executive Vice President, General Counsel and mechanical failures may resultCorporate Secretary of Air Methods Corporation, an emergency air medical company
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operating over 400 aircraft throughout the U.S. Prior to her appointment at Air Methods Corporation, Ms. Gordon worked in death or injuryprivate practice as a corporate and securities lawyer with Davis, Graham and Stubbs LLP, in Denver, Colorado. Ms. Gordon served in several compliance roles in the financial services industry prior to personnel, damage to equipmentattending law school. She attended the University of Denver for law school and received a bachelor’s degree in biology from Santa Clara University.
Jennifer Whalen has served as our Senior Vice President, Chief Financial Officer since June 2020. In this role, Ms. Whalen is responsible for company accounting, financial reporting, investor relations, strategy and M&A, tax, information technology (IT) and other environmental or property damage.financial aspects of the Company. Previously, she served as the Senior Vice President, Chief Financial Officer for Era since February 2018. Ms. Whalen served as Era’s Vice President and Chief Accounting Officer from August 2013 until her appointment as Vice President, Acting Chief Financial Officer in June 2017. Ms. Whalen joined Era as Controller in April 2012. From August 2007 to March 2012, she served in several capacities at nLIGHT Photonics Corporation, a supplier of high-performance lasers, including as Director of Accounting. Prior to these roles, she served as the Manager of Accounting at InFocus Corporation for over two years. After serving in the U.S. military, Ms. Whalen started her career in public accounting in the assurance practice group at PricewaterhouseCoopers for approximately five years. She received a B.S. in Accounting from Alabama A&M University and a master’s degree in Accounting from the University of Southern California.
Where You Can Find More Information
We are required to file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (“SEC”). Unless otherwise stated herein, these filings are not deemed to be incorporated by reference in this report. All of our filings with the SEC will be available once filed, free of charge, on our website, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Form DEF-14A and any amendments to those reports. These reports and amendments will be available on our website as soon as reasonably practicable after we electronically file the reports or amendments with the SEC. The reference to our website is not intended to incorporate the information on the website into this Annual Report on Form 10-K. These reports and filings are also available on the SEC's website at www.sec.gov. In addition, our Corporate Governance Guidelines and other policies, and the Board of Directors’ Audit Committee, Compensation Committee and NominatingEnvironmental, Social and Corporate Governance Committee charters are available, free of charge, on our website or in print for stockholders.
| ITEM 1A. | RISK FACTORS | ||||
Our business, results of operations, financial condition, liquidity, cash flow and prospects may be materially and adversely affected by numerous risks and uncertainties. Although it is not possible to predict or identify all such risks and uncertainties, they may include, but are not limited to, the risks and uncertainties described below. These risks and uncertainties represent some of the more critical risk factors that affect us, in addition to the other information that has been provided in this Annual Report on Form 10-K. Our business operations or actual results could also be similarly impacted by additional risks and uncertainties that are not currently known to us or that we currently deem immaterial to our operations.
Risks Related to Our Business
•failure to effectively manage acquisitions, divestitures, investments, joint ventures and other portfolio actions could adversely impact our operating results. In addition, any businesses or assets that we acquire in the future may underperform;
•inadequate or unfavorable sources of capital funding;
•inherent risks related to our operations, some of which may not be covered by our insurance;
•failure to maintain standards of acceptable safety performance;
•a concentration of certain helicopter models in our fleet could materially adversely affect our business, financial condition and results of operations should any problems specific to these particular models occur;
•the market value of our helicopter fleet is dependent on a number of external factors;
•the level of activity in the North Sea and the U.S. Gulf of Mexico;
•failure to dispose of aircraft through sales into the aftermarket;
•dependence on a small number of helicopter manufacturers and lessors;
•a shortfall in availability of aircraft components and parts required for maintenance and repairs of our helicopter and fixed wing aircraft and supplier cost increases;
•ability to grow in core markets and expand into new business lines and international markets;
•our operations are subject to weather-related and seasonal fluctuations;
•significant operations in the U.S. Gulf of Mexico may be adversely impacted by hurricanes and other adverse weather conditions;
•failure to effectively and timely address the energy transition; and
•failure to attract, train and retain skilled personnel.
Risks Related to Our Customers and Contracts
•our industry is highly competitive and cyclical, with intense price competition;
•we depend on a small number of customers for manya significant portion of our revenues;
•our contracts often can be terminated or downsized by our customers without penalty;
•our U.K. SAR contract can be terminated and is subject to certain other rights of the DfT;
•reductions in spending on aviation services by governmental agencies could lead to modifications of contract terms or delays in receiving payments;
•our fixed operating expenses and long-term contracts with customers could adversely affect our business under certain circumstances; and
•consolidation of and asset sales by, our customer base could materially adversely affect demand for our services and reduce our revenues.
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Risks Related to the Oil and Gas Industry
•the demand for our services is impacted bysubstantially dependent on the level of activity in the offshore oil and gas exploration, development and production industry.activity;
•any significant development impacting deepwater drilling in the U.S. Gulf of Mexico.
Risks Related to Legal, Tax and Regulatory Matters
•we operate in many international areas through entities that we do not control and are subject to government regulation that limits foreign ownership of aircraft companies in favor of domestic ownership;
•increasing complexity and costs incurred to comply with new local content regulation;
•environmental regulations and liabilities;
•U.S. and foreign social, political, regulatory and economic conditions as well as changes in tariffs, trade agreements or other trade restrictions imposed by the U.S. government;
•legal compliance risks, including anti-corruption statutes;
•impact of increasing privacy and data obligations;
•actions taken by governmental agencies, such as the Department of Commerce, the Department of Transportation and the FAA, and similar agencies in the other jurisdictions in which we operate; and
•changes in effective tax rates, taxation of our foreign subsidiaries or adverse outcomes resulting from examination of our tax returns.
Risks Related to Our Common Stock and Corporate Structure
•our stock price may fluctuate significantly;
•securities analyst coverage or lack of coverage may have a negative impact on our stock price;
•provisions in our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law may discourage, delay or prevent a change of control of our business or changes in our management;
•regulations limit foreign ownership of our business, which could reduce the price of our common stock and cause owners of our common stock who are not U.S. persons to lose their voting rights; and
•our certificate of incorporation includes a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
General Risks
•failure to attract and retain qualified personnel;
•adverse results of legal proceedings;
•service interruptions, data corruption, cyberattacks or network security breaches;
•material weaknesses in or failure to maintain an effective system of internal controls;
•failure to develop or implement new technologies; and
•increasing attention to environmental, social and governance matters.
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Risks Related to Our Business
In order to support our business, we may require additional capital in the future that may not be available to us.
Our business is capital intensive, and to the extent we do not generate sufficient cash from operations, we will need to raise additional funds to, among other things, purchase new equipment and maintain currently owned equipment. Adequate sources of capital funding may not be available when needed, or may not be available on favorable terms. If we raise additional debt financing, we will incur additional interest expense and the terms of such debt may be at less favorable rates than existing debt and could require the pledge of additional assets as security or subject us to financial and/or operating covenants that affect our ability to conduct our business. The issuance of additional equity or equity-linked capital could have the effect of diluting current stockholders. If funding is insufficient at any time in the future, we may be unable to acquire additional aircraft, take advantage of business opportunities, fund operating losses or respond to competitive pressures, any of which could harm our business, financial condition and results of operations. See discussion of our capital commitments in “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources—Contractual Obligations and Capital Commitments.”
We may undertake one or more significant corporate transactions that may not achieve their intended results, may adversely affect our financial condition and our results of operations or result in unforeseeable risks to our business.
We continuously evaluate the acquisition or disposition of operating businesses and assets and may in the future undertake one or more of such transactions. Any such transaction could be material to our business and could take any number of forms, including mergers, joint ventures and the purchase of equity interests. The consideration for such acquisitive transactions may include, among other things, cash, common stock or equity interests in us or our subsidiaries, or a contribution of equipment to obtain equity interests, and in conjunction with a transaction we might incur additional indebtedness. We also routinely evaluate the benefits of disposing of certain of our assets.
These transactions may present significant risks such as insufficient revenues to offset liabilities assumed, potential loss of significant revenues and income streams, increased or unexpected expenses, inadequate return of capital, costs associated with additional regulatory or compliance issues, risks relating to retaining key employees, customers and supply and vendor relationships of acquired businesses, the triggering of certain covenants in our debt agreements (including accelerated repayment), risks relating to the integration of operations, workforce and technology, managing tax and foreign exchange exposure, transaction-related litigation and unidentified issues not discovered in due diligence. Further, as we look to diversify into new markets, such as offshore wind and advanced air mobility, acquisitions of assets operating in such sectors could present risks related to operating new lines of business or in new geographies. In addition, such transactions could distract management from current operations. As a result of the risks inherent in such transactions, we cannot guarantee that any such transaction will ultimately result in the realization of its anticipated benefits or that it will not have a material adverse effect on our business, financial condition and results of operations. If we were to complete such an acquisition, disposition, investment or other strategic transaction, we may require additional debt or equity financing that could result in a significant increase in our amount of debt and our debt service obligations or the number of outstanding shares of our common stock, thereby diluting holders of our common stock outstanding prior to such acquisition.
The proposed cessation or loss of representativeness of the LIBOR benchmark may adversely affect financial markets and our ability to raise future indebtedness in a cost effective manner.
On March 5, 2021, the Financial Conduct Authority in the U.K. issued an announcement on the future cessation or loss of representativeness of the London Interbank Offered Rate (“LIBOR”) benchmark settings published by ICE Benchmark Administration. That announcement confirmed that LIBOR will either cease to be provided by any administrator or will no longer be representative after December 31, 2021 for all non-USD LIBOR reference rates, and for certain short-term USD LIBOR reference rates, and after June 30, 2023 for other reference rates. We replaced LIBOR as the benchmark for the secured equipment term loans with Lombard North Central Plc, a part of the Royal Bank of Scotland (the “Lombard Debt”) with a new reference rate, the Sterling Overnight Interbank Average Rate (“SONIA”). In connection with the amendment and restatement of our ABL Facility on May 20, 2022, we replaced LIBOR as the benchmark rate for borrowings in applicable currencies: SONIA for borrowings denominated in Sterling; the euro interbank offering rate for borrowings denominated in Euros and the term overnight secured financing rate for borrowings denominated in Dollars. The overall financial market and the ability to
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raise future indebtedness in a cost-effective manner may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market could have an adverse effect on our results of operations and liquidity.
Our operations involve a degree of inherent risk, some of which may not be covered by our insurance and may increase our operating costs or adversely affect our liquidity.
The operation of helicopters and fixed wing aircraft inherently involves a substantial degree of risk. Hazards such as harsh weather and marine conditions, mechanical failures, facility fires, spare parts damage, pandemic outbreaks, human error, crashes and collisions are inherent risks in our business and may result in personal injury, loss of life, damage to property and equipment, suspension or reduction of operations, reduced number of flight hours, the grounding of the aircraft involved in the incident or an entire fleet of the same aircraft type, or insufficient ground facilities or spare parts to support operations. In addition to any loss of property or life, our revenues, profitability and margins could be materially affected by an accident or asset damage.
We, or third parties operating our aircraft, may experience accidents or damage to our assets in the future. These risks could endanger the safety of both our own and our customers’ personnel, equipment, cargo and other property, as well as the environment. If any of these incidents were to occur with equipment or other assets that we need to operate or lease to third parties, we could experience loss of revenues, termination of charter contracts, higher insurance rates and damage to our reputation and customer relationships. In addition, to the extent an accident occurs with aircraft we operate or to assets supporting operations, we could be held liable for resulting damages.
Certain models of aircraft that we operate, or have operated in the past, such as the Eurocopter H225, have also experienced accidents while operated by third parties. If other operators experience accidents with aircraft models that we operate or lease, obligating us to take such aircraft out of service until the cause of the accident is rectified, we could lose revenues and customers. In addition, safety issues experienced by a particular model of aircraft could result in customers refusing to use that particular aircraft model or a regulatory body grounding that particular aircraft model. The value of the aircraft model might also be permanently reduced in the market if the model were to be considered less desirable for future service and the inventory for such aircraft may be impaired, leading to impairment and similar changes.
We attempt to protect ourselves against financial losses and damage by carrying insurance, including hull and liability, general liability, workers’ compensation, employers’ liability, auto liability and property and casualty insurance. Our insurance coverage is subject to deductibles and maximum coverage amounts, and we do not carry insurance against all types of losses, including business interruption. We cannot assure you that our existing coverage will be sufficient to protect against all losses, that we will be able to maintain our existing coverage in the future or that the premiums will not increase substantially. We also carry insurance for war risk, expropriation and confiscation of the aircraft we use in certain of our international operations. Future terrorist activity, risks of war, accidents, extreme weather events, or other events could increase our insurance premiums. The loss of any insurance coverage, inadequate coverage from our liability insurance, the payment of significant deductibles or substantial increases in future premiums could have a material adverse effect on our business, financial condition and results of operations.
Failure to maintain standards of acceptable safety performance may have an adverse impact on our ability to attract and retain customers and could adversely impact our reputation, operations and financial performance.
Our customers consider safety and reliability as two of the primary attributes when selecting a provider of air transportation services. If we fail to maintain standards of safety and reliability that are satisfactory to our customers, our ability to retain current customers and attract new customers may be adversely affected.
Accidents or disasters could impact customer or passenger confidence in a particular fleet type, we or the air transportation services industry as a whole and could lead to a reduction in customer contracts, particularly if such accidents or disasters were due to a safety fault in a type of aircraft used in our fleet. In addition, the loss of aircraft as a result of accidents could cause significant adverse publicity and the interruption of air services to our customers, which could adversely impact our reputation, operations and financial results.
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Our diversification efforts into other aviation services may prove unsuccessful.
Our business has traditionally been significantly dependent upon the level of activity in offshore oil and gas exploration, development and production activity. Although we, through the Merger and organic growth initiatives, continue to diversify into other aviation services, including SAR services, and we believe that additional government services contracts, prospective offshore wind projects and advanced air mobility present attractive growth and diversification opportunities, the effect of any downturn in the oil and gas industry would nevertheless negatively impact our financial results in future periods. While diversification into other aviation services is intended over the long term to grow the business, offset the cyclical nature of the underlying oil and gas business and transition our customer base away from traditional oil and gas activities, we cannot be certain that benefits associated with those other lines of business will be realized at any point or that the costs of entry into such other lines of business, including non-economic costs such as management focus on such new lines of business instead of or in addition to our core business, won’t ultimately exceed the benefit derived from these businesses.
Failure to effectively and timely address the energy transition or adequately implement and communicate our environmental, social and governance initiatives could adversely affect our business, results of operations and cash flows.
Our long-term success depends on our ability to effectively address the energy transition and adequately implement our environmental, social and governance initiatives, which will require, among other things, reducing emissions and the environmental impact of our existing operations, integrating electric aircraft and ground support vehicles, adapting to potentially changing government requirements and customer preferences, as well as engaging with our customers to develop solutions to decarbonize oil and gas operations. If the energy transition landscape changes faster than anticipated or in a manner that we do not anticipate, demand for our services could be adversely affected. Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy or our environmental, social and governance initiatives, or if investors or financial institutions shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted. Additionally, we may experience diminished reputation or sentiment, an inability to attract and retain talent and/or a loss of customers or vendors.
A decline in market demand for specific helicopter models in our fleet could materially adversely affect our business, financial condition and results of operations should any problems specific to these particular models occur.
If the market demand for helicopter models in our fleet declines, if such models experience technical difficulties or if such models are involved in operational incidents, it could cause a diminution in value of the affected models or the inability to provide services with such model without significant expense or at all. In addition, the bankruptcy or shutdown of a helicopter operator or lessor with a large fleet of such helicopter models may result in an oversupply of such models being made available to the market, which could reduce the rates earned by, and/or the relative economicsvalue of, such helicopter models. A significant decline in value of such models that is other than temporary could result in an impairment to the carrying value of our helicopter fleet. The occurrence of any of these events could materially adversely affect our business, financial condition or results of operations.
The market value of our helicopter fleet is dependent on a number of external factors.
The fair market value of each of our helicopters is dependent upon a variety of factors, including:
•general economic and resultantmarket conditions and, in particular, those affecting the oil and gas industry, including the price of oil and gas and the level of activity in land-based oil and gas exploration, development and production. In recent years, there has been a significant focus onproduction;
•the number of comparable helicopters servicing the market;
•the types and increasesizes of comparable helicopters available for sale or lease;
•historical issues with helicopters of the same model;
•the specific age and attributes of the helicopter;
•demand for the helicopter in productiondifferent industries;
•the level of support provided by manufacturers; and
•changes in regulation or competition from land-based North American shale reservoirs, which has been facilitated by hydraulic fracturingother air transport companies and other technologies. The availabilitymodes of more economical oiltransportation.
Due to the surplus of particular models of aircraft in the market, such as the S-92, the fair market value of certain of our helicopters has declined in recent periods and gas reserves, including, if applicable, land-based North American shale reservoirs,may decline further in the future. A decline in helicopter values could result in
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asset impairment charges, breaches of loan covenants or lower proceeds upon helicopter sales, any of which could have a material adverse effect on our business, financial condition and results of operations.
The COVID-19 pandemic and related economic repercussions may in the future result in a decrease in the price of and demand for oil, which may cause a decrease in the demand for our services.
The COVID-19 pandemic caused a significant and swift reduction in global economic activity during 2020, which significantly weakened demand for oil and gas, and in turn, the demand for our services. Other effects of the pandemic included, and may continue to include, significant volatility and disruption of the global financial markets; supply chain disruptions and inflationary pressure; employee impacts from illness; community response measures; and temporary closures of the facilities of our customers and suppliers. While the prices of and demand for crude oil have recovered from the lows seen in the initial stages of the pandemic, the pandemic is continuously evolving, and the extent to which our operating and financial results will continue to be affected will depend on various factors beyond our control, such as the ultimate duration, severity and sustained geographic resurgence of the virus; the emergence of new variants and strains of the virus; and the success of actions to contain the virus and its variants, or treat its impact, such as the availability and acceptance of vaccines. COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate our other risk factors described in this Form 10-K. Although we have not experienced any significant disruptions as a result of any new COVID-19 variants, the COVID-19 pandemic may materially adversely affect our operating and financial results in a manner that is not currently known to us or that we do not currently consider to present significant risks to our operations.
We face risks related to actual or threatened health epidemics, pandemics or other major health crises, which could significantly disrupt our business.
Our business could be impacted adversely by the effects of public health epidemics, pandemics or other major heath crises (which are referred to collectively for purposes of this paragraph as public health crises). Actual or threatened public health crises may have a number of adverse impacts, including volatility in the global economy, impacts to our customers’ business operations, or significant disruptions in the markets we serve, caused by a variety of factors such as quarantines, closures, or other government-imposed restrictions, any of which could adversely impact our business, operations, financial condition and operating results.
Disruptions in the political, regulatory, economic, and social environments of the countries in which we operate could adversely affect our financial condition, results of operations and cash flows.
We generate revenues in 14 countries across the world. Our non-U.S. operations accounted for approximately 82% and 84% of our consolidated operating revenues in fiscal years ended March 31, 2022 and 2021, respectively. Instability and unforeseen changes in any of the markets in which we operate could result in business disruptions that may have an adverse effect on the demand for our products and services or our financial condition, results of operations or cash flows.
These factors include, but are not limited to, the following:
•uncertain or volatile political, social and economic conditions;
•exposure to expropriation, nationalization, deprivation or confiscation of our assets or the assets of our customers, or other governmental actions;
•social unrest, acts of terrorism, war or other armed conflict;
•public health crises and other catastrophic events, such as the COVID-19 pandemic;
•confiscatory taxation or other adverse tax policies;
•theft of, or lack of sufficient legal protection for, proprietary technology and other intellectual property;
•deprivation of contract rights;
•trade and economic sanctions or other restrictions imposed by the U.K. the United States or other regions or countries that could restrict or curtail our ability to operate in certain markets;
•unexpected changes in legal and regulatory requirements, including changes in interpretation or enforcement of existing laws;
•restrictions on the repatriation of income or capital;
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•currency exchange controls;
•inflation; and
•currency exchange, rate fluctuations and devaluations.
For example, there has been continuing political and social unrest in Nigeria, where we derived 6% and 9% of our gross revenues during the fiscal years ended March 31, 2022 and 2021, respectively. Future unrest or legislation in Nigeria or our other operating regions could adversely affect our business, financial condition and results of operations in those regions. We cannot predict whether any of these events will continue to occur in Nigeria or occur elsewhere in the future.
In addition, our operations in Nigeria and Guyana are subject to the Nigerian Oil and Gas Industry Content Development Act, 2010 (the “Nigerian Content Development Act”) and the recently enacted Guyana Local Content Act 2021, respectively.Both the Nigerian Content Development Act and the Guyana Local Content Act 2021 (together, the “Local Content Acts”) require that our customers select service providers having greater “local content” in the respective region.Further, the local authorities in both jurisdictions monitor compliance with the Local Content Acts and can penalize companies that do not meet local content requirements. Finally, we are required under the Guyana Local Content Act 2021 to procure a certain percentage of our services from local Guyanese companies and submit compliance reports evidencing compliance with such procurement obligations.
Additionally, due to the Covid-19 pandemic, markets in regions of the world where we operate, such as Nigeria, contracted significantly and such markets have generally rebounded and may continue to rebound at a slower pace than the United States.
We are highly dependent upon the level of activity in the North Sea and the U.S. Gulf of Mexico, which are mature exploration and production regions.
For the fiscal years ended March 31, 2022 and 2021 approximately 47% and 47% respectively, of our gross revenues were derived from aviation services provided to oil and gas customers operating in the North Sea and the U.S. Gulf of Mexico. The North Sea and the U.S. Gulf of Mexico are mature exploration and production regions that have undergone substantial seismic survey, exploration and production activity for many years. Because a large number of oil and gas properties in these regions have already been drilled, additional prospects of sufficient size and quality that make economic sense especially in a depressed commodity price environment, could be more difficult to identify. The ability of our customers to produce sufficient quantities to support the costs of exploration in different basins could impact the level of future activity in these regions. In the future, production may decline to the point that such properties are no longer economic to operate, in which case, our services with respect to such properties will no longer be needed. Oil and gas companies may not identify sufficient additional drilling sites to replace those that become depleted. In addition, the U.S. government’s exercise of authority under the Outer Continental Shelf Lands Act, as amended, to restrict the availability of offshore oil and gas leases together with the U.K. government’s exercise of authority could adversely impact exploration and production activity in the U.S. Gulf of Mexico and the North Sea, respectively. Further, actions of the Biden administration could negatively impact oil and gas operations in the U.S. in and favor of renewable energy projects.
If activity in oil and gas exploration, development and production in either the U.S. Gulf of Mexico or the North Sea materially declines, our business, financial condition and results of operations could be materially and adversely affected. We cannot predict the levels of activity in these areas.
We are exposed to credit risk of our counterparties.
We are exposed to credit risk, which depends on the ability of our counterparties to fulfill their obligations to us. We manage credit risk by entering into arrangements with established counterparties and through the establishment of credit policies and limits, which are applied in the selection of counterparties.
Credit risk arises from the potential for counterparties to default on their contractual obligations. We monitor our concentration risk with counterparties on an ongoing basis. The carrying amount of financial assets represents the maximum credit exposure for financial assets.
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Credit risk also arises on our trade receivables when a customer cannot meet its obligation to us. To mitigate trade credit risk, we have developed credit policies that include the review, approval and monitoring of new customers, annual credit evaluations and credit limits. There can be no assurance that our risk mitigation strategies will be effective and that credit risk will not adversely affect our financial condition and results of operations.
In addition, the majority of our customers are engaged in oil and gas production, exploration and development. For the fiscal year ended March 31, 2022, we generated approximately 67% of our consolidated operating revenues from oil and gas operations. This concentration could impact our overall exposure to credit risk because changes in economic and industry conditions that adversely affect the oil and gas industry could affect the credit worthiness of many of our customers. We generally do not require and do not have the leverage to obtain letters of credit or other collateral to support our trade receivables. Accordingly, a continued or additional downturn in the economic condition of the oil and gas industry could adversely impact our ability to collect our receivables and thus impact our business, financial condition and results of operations.
Our failure to dispose of aircraft through sales into the aftermarket could continue to adversely affect us.
The management of our global aircraft fleet involves a careful evaluation of the expected demand for our services across global markets, including the type of aircraft needed to meet this demand. As offshore oil and gas drilling and production globally moves to deeper water, more medium and heavy aircraft and newer technology aircraft may be required. As older aircraft models come off of current contracts and are replaced by new aircraft, our management evaluates our future needs for these aircraft models and ultimately the ability to recover our remaining investments in these aircraft through sales into the aftermarket. We depreciate our aircraft over their expected useful life to the expected salvage value to be received for the aircraft at the end of that life. However, depending on the market for an aircraft type when we seek to sell an aircraft or anticipate disposing of an aircraft, we may record gains or losses on aircraft sales or impairment. In certain instances where a cash return can be made on newer aircraft in excess of the expected return available through the provision of our services, we may sell newer aircraft. The number of aircraft sales and the amount of gains and losses recorded on these sales depends on a wide variety of factors and is inherently unpredictable. A significant return of aircraft to leasing companies by us or our competitors into an already oversupplied market could undermine our ability to dispose of our aircraft and could have a material adverse effect on our business, financial condition and results of operations.
Inflation may adversely affect us by increasing costs beyond what we can recover through price increases and limit our ability to enter into future traditional debt financing.
Inflation has adversely affected us by increasing costs of critical components, aircraft and equipment, labor, and other services we may rely on, and continued inflationary pressures could prevent us from operating at capacity, decreasing our revenues or having an adverse effect on our profitability. In addition, inflation is often accompanied by higher interest rates. Such higher interest rates may affect our ability to enter into future traditional debt financing, as high inflation may result in an increase in cost to borrow.
Foreign exchange risks and controls may affect our financial position and results of operations.
Through our operations outside the U.S., we are exposed to foreign currency fluctuations and exchange rate risks. As a result, a strong U.S. dollar may increase the local cost of our services that are provided under U.S. dollar-denominated contracts, which may reduce the demand for our services in foreign countries.
Because we maintain our financial statements in U.S. dollars, our financial results are vulnerable to fluctuations in the exchange rate between the U.S. dollar and foreign currencies, such as the British pound sterling, Australian dollar, euro, Norwegian krone and Nigerian naira. In preparing our financial statements, we must convert all non-U.S. dollar results to U.S. dollars. The effect of foreign currency translation impacts our results of operations as a result of the translation of non-U.S. dollar results and is reflected as a component of stockholders’ investment, while the revaluation of certain monetary foreign currency transactions is credited or charged to income and reflected in other income (expense), net.
We operate in countries with foreign exchange controls including Brazil and Nigeria. These controls may limit our ability to repatriate funds from our international operations and unconsolidated affiliates or otherwise convert local currencies into U.S. dollars. These limitations could adversely affect our ability to access cash from these operations. As of March 31, 2022, approximately 54% of our total cash balance was held outside the U.S.
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Our dependence on a small number of helicopter manufacturers and lessors poses a significant risk to our business and prospects, including when we seek to grow our business.
We contract with a small number of manufacturers and lessors for most of our aircraft expansion, replacement and leasing needs. If any of the manufacturers face production delays due to, for example, natural disasters, pandemics, labor strikes or availability of skilled labor, we may experience a significant delay in the delivery of previously ordered aircraft. During these periods, we may not be able to obtain orders for additional aircraft with acceptable pricing, delivery dates or other terms. Also, we have operating leases for a portion of our helicopters. The number of companies that provide leasing for helicopters is limited. If any of these leasing companies face financial setbacks, we may experience delays or restrictions in our ability to lease aircraft.
Delivery delays or our inability to obtain acceptable aircraft orders or lease aircraft have from time to time adversely affected, and could adversely affect in the future, our revenues and profitability and could jeopardize our ability to meet the demands of our customers and grow our business.
A shortfall in availability of aircraft components and parts required for maintenance and repairs of our helicopter and fixed wing aircraft and supplier cost increases, particularly as a result of supply chain and logistics disruptions that began during the COVID-19 pandemic and the resulting inflationary environment, has adversely affected us and could continue to adversely affect us.
In connection with the required maintenance and repairs performed on our aircraft in order for them to stay fully operational and available for use in our operations, there are a limited number of suppliers, vendors and OEMs we are able to fly on (such as Sikorsky Commercial Inc., Milestone Aviation Group, General Electric Aviation Inc. and Leonardo Spa) for the supply and overhaul of components fitted to our aircraft. These vendors have historically worked at or near full capacity supporting the aircraft production lines and the maintenance requirements of various government and civilian aircraft operators that may also operate at or near capacity in certain industries, including operators such as us who support the energy industry. Such conditions can result in backlogs in manufacturing schedules and some parts being in limited supply from time to time, which could have an adverse impact upon our ability to maintain and repair our aircraft. Additionally, such suppliers have been and may continue to be impacted by supply chain and logistics disruptions that began during the COVID-19 pandemic, which disruptions have resulted in delays in parts delivery for our aircraft and increased costs for such parts. To the extent that these suppliers also supply parts for aircraft used by governments in military operations, parts delivery for our aircraft may be further delayed in favor of those deliveries. Because of the limited number of alternative suppliers, vendors and OEMs (and in certain cases, the lack thereof), any such supply chain disruptions could adversely impact our ability to perform timely maintenance and repairs or perform such maintenance and repairs economically. Our inability to perform timely maintenance and repairs, or perform such maintenance and repairs economically, has resulted and may continue to result in our aircraft being underutilized, which could have an adverse impact on our operating results and financial condition. Furthermore, our operations in remote locations, where delivery of these components and parts could take a significant period of time, may also impact our ability to maintain and repair our aircraft. While every effort is made to mitigate such impact, we expect this to pose a risk to our operating results. Additionally, supplier cost increases for critical aircraft components and parts as a result of the current inflationary environment also pose a risk to our operating results. As certain of our contracts are long-term in nature, cost increases may not be able to be passed on to our customers until the contracts are up for renewal.
Additionally, operation of a global fleet of aircraft requires us to carry spare parts inventory across our global operations to perform scheduled and unscheduled maintenance activity. Changes in the aircraft model types of our fleet or the timing of exits from model types can result in inventory levels in excess of those required to support the fleet over the remaining life of the fleet. Additionally, other parts may become obsolete or dormant given changes in use of parts on aircraft and maintenance needs. These fleet changes or other external factors can result in impairment of inventory balances where we expect that excess, dormant or obsolete inventory will not recover its carrying value through sales to third parties or disposal.
Our future growth depends on our ability to grow in core markets and expand into new business lines and international markets.
Our future growth will depend on our ability to grow in our core markets and expand into new business lines, such as offshore wind and advanced air mobility, and new international markets. Expansion of our business depends on our ability to operate in these other regions.
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Expansion of our business may be adversely affected by:
•localregulationsrestrictingforeignownership of helicopteroperators;
•requirementsto award contractsto localoperators;
•the numberand locationof newdrillingconcessionsgrantedby foreigngovernments; and
•our ability to integrate new models of aircraft into our fleet and operate new lines of business to support our diversification initiatives.
If we are unable to continue to operate, establish new lines of business, or retain contracts in international markets, our operations may not grow, and our future business, financial condition and results of operations may be adversely affected.
Labor problems, including our inability to negotiate acceptable collective bargaining or union agreements with certain of our employees could adversely affect us.
Many of our employees are represented under collective bargaining or union agreements, some of which have expired or will expire in one year or less. During fiscal year ended 2023, we expect to enter renegotiation discussions relating to a majority of expiring collective bargaining or union agreements covering approximately 60% of our employees. There can be no assurance that we will be able to negotiate the terms of any expired or expiring agreement on terms that are acceptable to us. Although we consider our relations with our employees to be generally satisfactory, we may experience strikes, work stoppages or other slowdowns by the affected workers. Furthermore, our employees who are not covered under a collective bargaining agreement may become subject to labor organizing efforts. If our unionized workers engage in an extended strike, work stoppage or other slowdown, other employees elect to become unionized, existing labor agreements are renegotiated or future labor agreements contain terms that are unfavorable to us, we could experience a significant disruption of our operations or higher ongoing labor costs, which could adversely affect our business, financial condition and results of operations.
Our business requires employees with significant technical skills; therefore, we would be adversely affected if it were unable to employ sufficient numbers of qualified employees to maintain its operations.
Our success depends on our ability to attract and retain skilled personnel, specifically our pilots and mechanics. The competition for pilots and mechanics is fiercely competitive, and we compete with major Part 121 air carriers and the emergency air medical industry to attract and retain such talent.
Additionally, many of our customers require pilots with very high levels of flight experience. The market for these experienced and highly-trained personnel is competitive and may become more competitive. Accordingly, we cannot assure you that we will be successful in our efforts to attract and retain such personnel. Some of our pilots, mechanics and other personnel, as well as those of our competitors, are members of military reserves who have been, or could be, called to active duty. If significant numbers of such personnel are called to active duty, it could reduce the supply of such workers and likely increase our labor costs. Further, the addition of new aircraft types to our fleet or a sudden change in demand for a specific aircraft type, as happened with the Sikorsky S-92 aircraft type in response to the H225 grounding, may require us to retain additional pilots, mechanics and other flight-related personnel.
Our operations are subject to weather-related and seasonal fluctuations. In particular, our operations in the Gulf of Mexico have experienced an increase in frequency and severity of hurricanes, which may continue to adversely affect our costs, the well-being of our employees and ability to operate.
Certain of our operations are subject to harsh weather conditions and seasonal factors. Poor visibility, high wind, heavy precipitation, sandstorms, hurricanes and volcanic ash can affect the operation of helicopters and fixed wing aircraft and result in a reduced number of flight hours. A significant portion of our operating revenues and profits related to oil and gas exploration, development and production activity is dependent on actual flight hours, and a substantial portion of our operating expenses is fixed. Thus, prolonged periods of harsh weather can have a material adverse effect on our business, financial condition and results of operations. In addition, severe weather patterns, including those resulting from climate change, could affect the operation of helicopters and fixed wing aircraft and result in a reduced number of flight hours, which may have a material adverse effect on our business, financial condition and results of operations.
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The fall and winter months in the Northern hemisphere have fewer hours of daylight, particularly in the North Sea, and flight hours are generally lower at these times, typically resulting in a reduction in operating revenues during those months. Although some of our helicopters are equipped to fly at night, we generally do not do so except in SAR operations. In addition, drilling activity in the North Sea is less active during the winter months than the rest of the year. Anticipation of harsh weather during this period causes many oil and gas companies to limit activity during the winter months. Accordingly, our reduced ability to operate in harsh weather conditions and darkness may have a material adverse effect on our business, financial condition and results of operations.
The Harmattan, a dry and dusty West African trade wind, blows in Nigeria between the end of December and the middle of February. The heavy amount of dust in the air can severely limit visibility and block the sun for several days, similar to a heavy fog. We are unable to operate aircraft during these harsh conditions.
In the U.S. Gulf of Mexico, the months of December through March typically have more days of harsh weather conditions than the other months of the year. Heavy fog during those months often limits visibility and flight activity. In addition, in the U.S. Gulf of Mexico, operations may continue to be impacted by hurricanes and tropical storms from June through November. The U.S. Gulf of Mexico experienced several significant hurricanes in 2021, 2020 and 2019, which some weather analysts believe is consistent with a period of greater hurricane activity. During a tropical storm, hurricane or cyclone, we are unable to operate in the area of the storm. However, flight activity may increase immediately before and after a storm due to the evacuation and return of offshore workers. In addition, as a significant portion of our facilities are located along the coast of these regions, extreme weather may continue to cause substantial damage to our property in these locations, including possibly aircraft. For example, in August 2021, we experienced a prolonged displacement of operations and incurred costs related to the temporary relocation of our operations in Louisiana following damage to our aircraft and facilities as a result of Hurricane Ida. Additionally, we incur costs in evacuating our aircraft, personnel and equipment prior to tropical storms, hurricanes and cyclones.
Consequently, flight hours may be lower during these periods, resulting in reduced operating revenues, which may have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Our Customers and Contracts
A focus by our customers on cost-saving measures rather than quality of service, which is how we differentiate ourselves from competition, could reduce the demand for our services.
Historically, we had the ability to secure profitable contracts by providing superior quality as compared to our competitors. However, offshore energy companies are continually seeking to implement measures aimed at greater cost savings, including efforts to accept lesser quality services, otherwise improve cost efficiencies with respect to air transportation services, or to provide other alternatives for transportation, such as boats. For example, these companies may reduce staffing levels on both old and new installations by using new technology to permit unmanned installations, may reduce the frequency of transportation of employees by increasing the length of shifts offshore, may change other aspects of how our services are scheduled and may consider other alternatives to our services to achieve cost savings. In addition, these companies could initiate their own helicopter, airplane or other transportation alternatives. The continued implementation of these kinds of measures could reduce the demand or pricing for our services and have a material adverse effect on our business, financial condition and results of operations.
Our industry is cyclical.highly competitive and cyclical, with intense price competition.
The offshore helicopter servicesand fixed wing businesses are highly competitive throughout the world. Chartering of such aircraft is often done on the basis of competitive bidding among those providers having the necessary equipment, operational experience and resources. Factors that affect competition in our industry include price, quality of service, operational experience, record of safety, quality and type of equipment, aircraft availability, customer relationship and professional reputation. Additionally, certain of our competitors have undercut us by reducing rates to levels not acceptable to us.
Our industry has historically been cyclical and is affected by the volatility of oil and gas price levels, fluctuations in government programs, regulatory initiatives and spending and general economic conditions.levels. There have been and in the future may continue to be, periods of high demand for our services, followed by periods of low demand for our services. Changes in commodity prices can have a significant effect on demand for our services, and periods of low activity intensify price competition
in the industry and couldoften result in lower utilization rates for our helicoptersaircraft, including potentially being idle or operating at reduced margins, for long periods of time. A further downturn
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We have several significant competitors in oilthe North Sea, Nigeria, the U.S. Gulf of Mexico and natural gas prices,Brazil, and a number of smaller local competitors in other markets. Certain of our customers have the capability to perform their own air transportation operations or increased regulation containing onerous compliance requirements is likelygive business to causeour competitors should they elect to do so, which has a substantial decline in expenditures for exploration, developmentlimiting effect on our rates.
As a result of significant competition, we must continue to provide safe, reliable and production activity,efficient service and we must continue to evolve our technology or we will lose market share, which could result inhave a decline in demand and lower rates for our services. Similarly, the government agencies with which we do business could face budget cuts, funding deficits or limitsmaterial adverse effect on spending, which would also result in a decline in demand and lower rates for our services. These changes could materially adversely affect our business, financial condition and results of operations.operations due to the loss of a significant number of our customers or termination of a significant number of our contracts.
We relydepend on a limitedsmall number of customers for a significant shareportion of our revenues, the loss of any of which could materially adversely affect our business, financial condition and results of operations.revenues.
We derive a significant portionamount of our revenues from our U.K. SAR contract, as well as from a limitedsmall number of oil and gas exploration, development and production companies and government agencies. Specifically, services provided to Anadarko, Petrobras and U.S. government agencies accounted for approximately 28%, 21% and 14%offshore energy companies. Our loss of our revenues, respectively, for the year ended December 31, 2019. The portionone of our revenues attributable to any single customer may change over time, depending on the level of activity by any such customer, our ability to meet the customer’s needs and other factors, many of which are beyond our control. The loss or reduction of business from any of ourthese significant customers, if not offset by sales to new or other existing customers, could have a material adverse effect on our business, financial condition and results of operations.
Our contracts often can be terminated or downsized by our customers without penalty.
Many of our fixed-term contracts contain provisions permitting early termination by the customer at their convenience, generally without penalty, and with limited notice requirements. In addition, many of our contracts permit our customers to decrease the number of aircraft under contract with a corresponding decrease in the fixed monthly payments without penalty. As a result, you should not place undue reliance on the strength of our customer contracts or the customersterms of companiesthose contracts.
Our U.K. SAR contract can be terminated and is subject to whomcertain other rights of the DfT.
Our U.K. SAR contract, which accounted for approximately 21% of our revenues for the fiscal year ended March 31, 2022, allows the DfT to cancel the contract for any reason upon notice and payment of a specified cancellation fee based on the number of bases reduced as a result of the exercise and the timing of the exercise. Prior to any cancellation or termination of the contract, the DfT may also invite tenders to award a contract for the SAR services we provide to a replacement contractor. The DfT has invited tenders due in the summer of 2021 for these services following the expiration of our current U.K. SAR contract in 2026.
Additionally, the U.K. SAR contract grants the DfT the option to require us to transfer to the DfT, at termination or expiration, either the lease or the ownership of some or all of the helicopters experienceand ground facilities that service the U.K. SAR contract. The DfT may alternatively require that we or the owner, as the case may be, transfer the lease or ownership of the helicopters and ground facilities to any replacement service provider. If the DfT wishes to transfer ownership, it must pay a specified option exercise fee based on the value of the helicopters. If the DfT wishes to transfer the lease, it does not have to pay an extended periodoption exercise fee. We currently lease a significant number of operationalthe aircraft that service the U.K. SAR contract. Although we are entitled to some compensation for termination or financial difficulty,early expiration if we are not at fault, termination or early expiration of the U.K. SAR contract would result in a significant loss of expected revenues. Additionally, we do not have the right to cause the transfer of the ground facilities supporting the U.K. SAR contract to the replacement service provider. If alternative long-term uses were not identified for these facilities, we could face significant counterparty creditincur recurring fixed expenses for these non-revenues producing assets if we were unable to sell them to a replacement contractor or other party in the event the U.K. SAR contract is terminated.
Our customers may shift risk to us.
We give to and receive from our customers indemnities relating to damages caused or sustained by us in connection with our operations. Our customers often seek to capitalize on their market leverage to shift responsibility for risk. In difficult markets, we may be obliged to accept greater risk to win new business, retain renewing business or could result in us losing business if we are not prepared to take such customersrisks. To the extent that we accept such additional risk, and seek to insure against it, if possible, our insurance premiums could terminate ourrise. If we cannot insure against such risks or otherwise choose not to do so, we could be exposed to catastrophic losses in the event such risks are realized.
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Reductions in spending on aviation services generally with the requirementby governmental agencies could lead to pay littlemodifications of contract terms or no liquidating damages. The occurrence of either of these eventsdelays in receiving payments, which could materially adversely affectimpact our business, financial condition and results of operations.
Governmental agencies receive funding through budget appropriations, which are determined through the political process, and as a result, funding for the agencies with which we do business may fluctuate. In recent years, there has been increased Congressional scrutiny of discretionary program spending by the U.S. government in light of concerns over the size of the national debt and lawmakers have discussed the need to cut or impose caps on discretionary spending, which could result in budget cuts to federal agencies to which we provide services. If any of these agencies and in particular BSEE, experience reductions in itstheir budgets or if it changethe a government changes its spending priorities, its ability or willingness to spend on helicopter services may decline, andservice priorities, it may substantially reduce or cease using our services, which could have a material adverse effect on our business, financial condition and results of operations. In addition, a prolonged shutdown of the federal government would, in turn, cause a shutdown of these agencies which could have an adverse effect on our business and results of operations.
Our fixed operating expenses and long-term customer contracts with customers could adversely affect our business financial condition and results of operations under certain circumstances.
Our profitability is directly related to demand for our services. ABecause of the significant expenses related to aircraft financing and leasing, crew wages and benefits and insurance and maintenance programs, a substantial portion of our operating expenses that are related to crew wages and benefits, insurance and maintenance programs are fixed and must be paid even when our helicoptersaircraft are not actively servicing customers and thereby generating income.revenues. A decrease in our revenues could therefore result in a disproportionate decrease in our earnings, as a substantial portion of our operating expensesexpense would remain unchanged. Similarly, the discontinuation of any rebates, discounts or preferential financing terms offered to us by manufacturers, lenders or suppliers wouldlessors could have the effect of increasing our fixedrelated expenses, and without a corresponding increase in our revenues, could have a material adverse effect onnegatively impact our business, financial condition and results of operations.
Aircraft fuel is critical to our operations and is one of our largest operating expenses. During the year ended March 31, 2022, our fuel expense was $74.2 million. The timely and adequate supply of fuel to meet operational demand depends on the Combined Company followingcontinued availability of reliable fuel supply sources as well as related service and delivery infrastructure. Although we have some ability to cover short-term fuel supply and infrastructure disruptions at some major demand locations, it depends
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significantly on the Merger.continued performance of our vendors and service providers to maintain supply integrity. Consequently, we can neither predict nor guarantee the continued timely availability of aircraft fuel throughout our operations.
Given the highly competitive nature of our industry, we may not be consummated until notifications underable to in the HSR Actfuture, increase our rates sufficiently to offset the full impact of increases in fuel prices, especially if these increases are submittedsignificant, rapid and sustained. Further, any such rate increase may not be sustainable, may reduce the general demand for our services and may also eventually impact our operations, strategic growth and investment plans for the future.
We may not be able to the Antitrust Division of the Department of Justice (the “DOJ”)renew or replace expiring contracts or obtain new contracts on terms that are as favorable to us.
Our ability to renew or replace expiring contracts or obtain new contracts, and the Federal Trade Commission (the “FTC”)terms of any such contracts will depend on various factors, including market conditions and the required waiting period has expired or been terminated. Wespecific needs of our customers. Given the highly competitive and Bristow submittedhistorically cyclical nature of our respective Notification and Report forms under the HSR Act on February 6, 2020. If the DOJ issues a request for additional information and documentary material (a “Second Request”) prior to the expiration of the initial waiting period, the parties would be required to observe a second 30-day waiting period after they have substantially complied with the Second Request, unless the DOJ or the FTC terminates the waiting period or the parties otherwise agree with the DOJ or FTC to extend the waiting period.
Consolidation of and asset sales by our customer base could materially adversely affect demand for our services and reduce our revenues.
Many of our customers are international, independent and major integrated oil and gas exploration, development and production companies and offshore energy companies. In recent years, these companies have undergone substantial consolidation and engaged in sales of specific assets. Additional consolidation and asset sales are possible. Consolidation shrinks our customer base. In the event one of our customers combines with, conditions, terms, obligations or restrictions imposed by governmental entities under any antitrust law, including divestitures,sells assets to, a company that is using the services of one of our competitors, the combined or successor company could decide to use the services of that competitor or another provider. Further, merger activity among both major and such conditions, terms, obligationsindependent oil and natural gas companies affects exploration, development and production activity as the consolidated companies often put projects on hold while integrating operations or restrictions may have the effectcancel projects deemed too small in context of delaying consummationa larger business or use cost savings to reduce debts.
Consumer preferences for alternative fuels, as part of the Merger, imposing additional material costs on or materially limitingglobal energy transition, may lead to reduced demand for our services.
The increasing penetration of renewable energy into the revenueenergy supply mix, the increased production of electric-powered vehicles and improvements in energy storage, as well as changes in consumer preferences, including increased consumer demand for alternative fuels, energy sources and electric-powered vehicles may affect the demand for oil and natural gas and drilling services. This evolving transition of the Combined Company afterglobal energy system from fossil-based systems of energy production and consumption to more renewable energy sources, commonly referred to as the consummation of the Merger, or otherwise reducing the anticipated benefits to the Combined Company of the Merger. Such conditions, terms, obligations or restrictions may result in the delay or abandonment of the Merger. We and Bristow will not be obligated to negotiate, commit to or effect any action that would result in the sale, divestiture, disposal, holding separate, or other disposition of assets, contracts, our businesses or product lines and Bristow’s businesses or product lines, or the respective subsidiaries generating, in the aggregate, Revenues in an aggregate amount in excess of $10.0 million. “Revenues” as used in the immediately preceding sentence means, with respect to any asset, contract, business or product line, gross revenues associated therewith for the twelve months ended December 31, 2019.
cash flows. As a result of changes in consumer preferences and uncertainty regarding the uncertainty surrounding the conduct of our business while the Merger is pending, our relationships with customers, suppliers and other parties may be adversely affected. Due to uncertainty about our future while the Merger is pending, we may lose customers or suppliers, or customers, suppliers and other parties may alter their business relationships with us.
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Risks Related to retain them or to hire new employees. While the Merger is pending, the potential disruption of plans or diversion of management’s attention from our ongoing business operations could adversely affect our business, financial conditionOil and results of operations.Gas Industry
The integration of Bristow with us following the Merger may present significant challenges. We cannot be sure that we will be able to realize the anticipated benefits of the Merger in the anticipated time frame or at all.
We provide helicopter and fixed wing services to companies engaged in offshore oil and gas exploration, development and production activities. As a result, demand for our services, as well as our revenues and our profitability, are substantially dependent on the worldwide levels of activity in offshore oil and gas exploration, development and production. These activity levels are principally affected by trends in, and expectations regarding, oil and natural gas prices, as well as the capital expenditure budgets of offshore energy companies and shifts in technology for energy exploration, development and production.We cannot predict future exploration, development and production activity or oil and gas price movements. Historically, the prices for oil and gas and activity levels have been volatile and are subject to factors beyond our control, such as:
•the supply of and demand for oil and gas and market expectations for such supply and demand;
•actions of OPEC+ to control prices or change production levels;
•increased supply of oil and gas resulting from onshore hydraulic fracturing activity and shale development;
•general economic conditions, both worldwide and in particular regions;
•governmental regulation;
•the price and availability of alternative fuels;
•weather conditions, including the impact of hurricanes and other weather-related phenomena;
•advances in exploration, development and production technology, including in connection with the extraction of unconventional oil and natural gas resources;
•technology developments impacting energy consumption;
•the changing environmental and social landscape, including in respect of the energy transition;
•the policies of various governments regarding exploration and development of their oil and gas reserves; and
•the worldwide political environment, including the armed conflict in Ukraine and associated economic sanctions on Russia, Nigeria or other geographic areas, or further acts of terrorism in the U.K., U.S. or elsewhere.
So far in 2022, although oil and gas prices have recovered, there remains uncertainty regarding the long-term outlook for the U.S. Gulf of Mexico, even though lease sales commenced again with respect to new oil and gas leasing on U.S. federal lands.
The continued threat of terrorism and the impact of military and other action, including escalating tensions between Russia and Ukraine and the potential destabilizing effect such conflict may pose for the European continent or the global oil and natural gas markets could materially declines,adversely affect us.
The occurrence or threat of terrorist attacks in the countries in which we operate, anti-terrorist efforts and other armed conflicts involving the United States or other countries in which we operate. For example, on February 24, 2022, Russia launched a large-scale invasion of Ukraine that has led to significant armed hostilities. As a result, the United States, the United Kingdom, the member states of the European Union and other public and private actors have levied severe sanctions on Russia. The geopolitical and macroeconomic consequences of this invasion and associated sanctions cannot be predicted, and such events, or any further hostilities in Ukraine or elsewhere, could severely impact the world economy. If any of these events occur, the resulting political instability and societal disruption could reduce overall demand for oil and natural gas, potentially putting downward pressure on demand for our business, financial conditionservices and resultscausing a reduction in our revenues. Oil and natural gas‑related facilities could be direct targets of terrorist attacks, and our operations could be materiallyadversely impacted if infrastructure integral to our customers’ operations is destroyed or damaged. Costs for insurance and adversely affected.other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.
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Any significant development impacting deepwater drilling in the U.S. Gulf of Mexico could materially adversely affect us.
We are highly dependent on offshore oil and gas activities in the U.S. Gulf of Mexico. As a resultMexico, which is subject to stringent regulation, particularly in the aftermath of the well-publicized sinking of the Deepwater Horizon, a semi-submersible deepwater drilling rig operating inincluding with respect to financial assurance requirements, inspection programs, environmental protection and workplace health safety by BSEE, the U.S. GulfBureau of Mexico after an apparent blowoutOcean Energy Management, and fire resulting in a significant flow of hydrocarbons from the BP Plc. Macondo well, the U.S. Department of Interior temporarily imposed a moratorium on offshore drilling operationsOccupational Safety and issued new rules designed to improve drilling and workplace safety in the U.S. Gulf of Mexico. While the moratorium was quickly lifted, BSEE, the Office of National Resources RevenueHealth Administration and other regulatory agencies. These agencies may issuerevise existing, or impose new, safety and environmental guidelines and regulations for drilling in the U.S. Gulf of Mexico and other geographic regions, the result of which may increase the costs and regulatory burden of exploration, development and production, reduce the area of operations for offshore oil and gas activities and result in permitting delays. If new regulations or guidelines are implemented, itIt is difficult to predict the likelihood, nature or extent, or ultimate impact of any new or revised guidelines, regulations or legislation.legislation that may be implemented, including in response to the Biden administration’s executive orders and policies. A prolonged suspension of drilling activity or permitting delays in the U.S. Gulf of Mexico and other geographic locations in which we operate, new regulations and/or increased liability for companies operating in the offshore oil and gas sector, whether or not caused by a
new incident in any region, could result in reduced demand for our services and could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Legal, Tax and Regulatory Matters
We operate in many international areas through entities that we do not control and are subject to political, economic and regulatory risks associated withgovernment regulation that limits foreign ownership of aircraft companies in favor of domestic ownership.
We conduct many of our international operations through entities in which we have a noncontrolling investment or through strategic alliances with foreign partners. For example, we have acquired interests in, or in some cases have lease and service agreements with, entities that operate aircraft in Canada and Egypt. We provide engineering and administrative support to certain of these entities. We derive lease revenues, service revenues, equity earnings and dividend income from these entities. For the expansion thereof.
additional information. If we are unable to adequately addressmaintain our relationships with our partners in these risks, it may impactentities, we could lose our ability to operate in certain international markets andthese areas, potentially resulting in a material adverse effect on our business, financial condition and results of operations. Additionally, an operational incident involving one of the entities over which we do not have operational control may nevertheless cause us reputational harm.
We are subject to governmental regulation that limits foreign ownership of aircraft companies in favor of domestic ownership. Based on regulations in various markets in which we operate, the use of our local Air Operator’s Certificates (“AOCs”) may be halted and we may lose our ability to operate within these countries if certain levels of local ownership are not maintained. The inability to utilize our local AOCs for any reason, including foreign ownership in excess of permitted levels, could have a material adverse effect on our ability to conduct operations within these markets. We cannot assure you that there will be no changes in aviation laws, regulations or administrative requirements or the interpretations or applications thereof that could restrict or prohibit our ability to operate in certain regions or that would cause the cost of operating in the region uneconomical. Any such restriction or prohibition on our ability to operate in non-US jurisdictions or any significant increase in cost operating in such jurisdictions as a result of changes in law and regulation or otherwise may have a material adverse effect on our business, financial condition and results of operations.
Environmental regulations and liabilities may increase our costs and adversely affect our business.
Our operations are subject to U.S. federal, state and local and foreign environmental laws and regulations governing the protection of the environment and health and safety that impose limitations on the discharge of pollutants into the environment and establish standards for the treatment, storage, recycling and disposal of toxic and hazardous wastes. The nature of our business requires that we use, store and dispose of materials that are subject to environmental regulation. The longer term trend of more expansive and stringent environmental legislation and regulations is expected to continue, which makes it challenging to predict the cost or impact on our future operations. Liabilities associated with environmental matters could have a material
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adverse effect on our business, financial condition and results of operations. Under certain environmental laws, we could be materiallyexposed to strict, joint and several liability for cleanup costs and other damages relating to releases of hazardous materials or contamination,regardless of whether we were responsible for the release or contamination, and even if our operationswere lawful at the time or in accordance with industry standards. Additionally, any failure by us to comply with applicable environmental laws and regulations may result in governmental authorities taking action against us that could adversely affected.impact our operations and financial condition, including the:
•issuance of administrative, civil and criminal penalties;
•denial or revocation of permits or other authorizations;
•imposition of limitations on our operations; and
•performance of site investigatory, remedial or other corrective actions.
In certain instances, citizen groups also have the ability to bring legal proceedings against us regarding our compliance with certain environmental laws, or to challenge our ability to receive permits that we need to operate.
In January 2021, the Biden administration issued an executive order directing all federal agencies to review and take action to address any federal regulations, orders, guidance documents, policies and any similar agency actions promulgated during the prior administration that may be inconsistent with the current administration’s policies, as well as an executive order focused on addressing climate change Among other things, the climate executive order called for the elimination of certain subsidies provided to the fossil fuel industry, increased emphasis on climate-related risk across governmental agencies and economic sectors and directed the Secretary of the Interior to pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices. The Biden administration also rejoined the Paris Agreement. In addition, in September 2021, President Biden publicly announced the Global Methane Pledge, a pact that aims to reduce global methane emissions at least 30% below 2020 levels by 2030.Since its formal launch at the United Nations Climate Change Conference (COP26), over 100 countries have joined the pledge. While Congress has from time to time considered legislation to reduce emissions of greenhouse gases, there has not been significant activity in the form of federal legislation in recent years. However, the United States House of Representatives passed H.R. 5376, known as the Build Back Better Act on November 3, 2021.The House version of the bill targets methane from oil and gas sources by proposing to implement fees for excess methane leaking from wells, storage sites and pipelines as well as fees for new producing and non-producing oil and gases leases and off-shore pipelines. It is unclear whether the Build Back Better Act would be passed in its current form by the United States Senate. While the pause on new oil and natural gas leases on public lands and offshore waters has been lifted subject to certain limitations, the impacts of these and other future orders or legislation or regulation remain unclear at this time and could have a material adverse effect on our business, financial conditions, results of operations, and cash flows.
Additional changes in environmental laws or regulations, including laws relating to the emission of carbon dioxide and other greenhouse gases or other climate change concerns, could require us to devote capital or other resources to comply with those laws and regulations. These changes could also subject us to additional costs and restrictions, including increased fuel costs. In addition, such changes in laws or regulations could increase costs of compliance and doing business for our customers and thereby decrease the demand for our services. Because our business depends on the level of activity in the offshore oil and gas industry, existing or future laws, regulations, treaties or international agreements related to greenhouse gases and climate change, including incentives to conserve energy or use alternative energy sources, could have a negative impact on our business if such laws, regulations, treaties or international agreements reduce the worldwide demand for oil and gas or limit drilling opportunities.
Our results could be impacted by U.S. and foreign social, political, regulatory and economic conditions as well as by changes in tariffs, trade agreements or other trade restrictions imposed by the U.S. government.
Changes in U.S. political, regulatory and economic conditions or in laws and policies governing foreign trade (including the U.S. trade agreements and U.S. tariff policies), travel to and from the United States,U.S., immigration, manufacturing, development and investment in the territories and countries in which we operate, and any negative sentiments or retaliatory actions towards the United StatesU.S. as a result of such changes, could adversely affect the industry, which could adversely affect our business, financial position, results of operations, cash flows and growth prospects.
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The currentpresidential administration under former President Trump, along with Congress, has created significant uncertainty about the future relationship between the United StatesU.S. and other countries with respect to the trade policies, treaties, taxes, government regulations and tariffs that would be applicable. It is unclear what changes, if any, might be considered or implemented and what response to any such changes may be by the governments of other countries. These changes have created significant uncertainty about the future relationship between the United StatesU.S. and China, as well as other countries, including with respect to the trade policies, treaties, government regulations and tariffs that could apply to trade between the United StatesU.S. and other nations. Changes in these policies may have a material adverse effect on our business, financial position, results of operations, cash flows and growth prospects.
We are subject to and may in the future be subject to a variety of legal proceedings and claims that arise out of the ordinary conduct of our business. Results of legal proceedings cannot be predicted with certainty. Irrespective of their merits, legal proceedings may be both lengthy and disruptive to our operations and may cause significant expenditure and diversion of management attention. We may face significant monetary damages or injunctive relief that could have a material adverse effect on our business, financial condition and results of operations should we not prevail in certain matters.
As a global business, we are subject to complex laws and regulations in the U.S. and other countries in which we operate. These laws and regulations relate to a number of aspects of our business, including import and export controls, the payment of taxes, employment and labor relations, fair competition, data privacy protections, securities regulation, anti-money laundering, anti-corruption, economic sanctions and other regulatory requirements affecting trade and investment. The application of these laws and regulations to our business is often unclear and may sometimes conflict. Compliance with these laws and regulations may involve significant costs or require changes in our business practices that result in reduced revenuerevenues and profitability. A failure to comply could also result in significant fines, damages and other criminal sanctions against us, our officers, employees, joint venture partners or strategic partners, prohibitions or additional requirements on the conduct of our business and damage to our reputation. Further, we could be charged with wrongdoing for any violation of such laws and regulations by our agents, local partners or joint ventures, even though such parties may not be subject to the applicable statutes or may not operate under our control. Failure by us or one of our agents, joint ventures or strategic partners to comply with applicable export and trade practice laws could result in civil or criminal penalties and suspension or termination of export privileges. Certain violations of law could also result in suspension or debarment from government contracts. We incur additional legal compliance costs associated with our global regulations and the changes in laws or regulations and related interpretations and other guidance could result in higher expenses and payments. Uncertainty relating to such laws or regulations, including how they affect a business or how we are required to comply with the laws, may also affect how we conduct our operations and structure our investments and could limit our ability to enforce our rights.
In many foreign countries, particularly those with developing economies, it may be customary for others to engage in business practices that are prohibited by laws such as the FCPA, the U.K. Bribery Act and the BCCA in Brazil, an anti-bribery law that is similar to the FCPA and the U.K. Bribery Act. Although we have implemented policies and procedures designed to ensure compliance with these laws, there can be no assurance that all of our employees, contractors, agents and business partners will not take action in violation of our internal policies and applicable law and any such violation could have a material adverse effect on our business, financial condition and results of operations.
Actions taken by governmentgovernmental agencies, such as the Department of Commerce, the Department of Transportation and the FAA, and similar agencies in the other jurisdictions in which we operate, could increase our costs and prohibit or reduce our ability to operate successfully.
Our industry is regulated by various laws and regulations in the jurisdictions in which we operate. The scope of such regulation includes infrastructure and operational issues relating to helicopters, maintenance, spare parts and route flying rights as well as safety and security requirements. We cannot fully anticipate all changes that might be made to the laws and regulations to which we are subject or the possible impact of such changes. These changes could subject us to additional costs and restrictions.
U.S.Our operations are highly regulated by several U.S. government regulatory agencies. For example, as a certified air carrier, we are subject to regulations promulgated by the DOT and the FAA. The FAA regulates our flight operations and imposes requirements with respect to personnel, aircraft, ground facilities and other aspects of our operations, including:
•certification and reporting requirements;
•inspections;
•maintenance standards;
•permitted areas of operation;
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•aircraft equipment and modification requirements;
•personnel training standards; and
•maintenance of personnel and aircraft records.
The Department of TransportationDOT can review our economic fitness to continue our operations, both presently and if a substantial change occurs to our management, ownership or capital structure, among other things. The Department of Commerce, through its International Traffic in Arms Regulations (“ITAR”), regulates our imports and exports of aircraft (through leases and sales) as well as parts sales to international customers and the use of certain regulated technology in domestic and international airspace. If we fail to comply with these laws and regulations, or if these agencies develop concerns over our operations, we could face administrative, civil and/or criminal penalties. In addition, we may become subject to regulatory actions that could suspend, curtail or significantly modify our operations. A suspension or substantial curtailment of our operations or any substantial modification of our current operations may have a material adverse effect on our business, financial condition and results of operations.
Other Countries and Regulations.Regulations. Our operations in other jurisdictions, including the U.K., Nigeria and Brazil, are regulated to various degrees by the governments of such jurisdictions and must be conducted in compliance with those regulations and, where applicable, in accordance with our air service licenses and AOC.AOCs. Such regulations may require us to obtain a license to operate in that country, favor local companies or require operating permits that can only be obtained by locally registered companies and mayoften impose other nationality requirements. In such cases, we partner with local persons, but there is no assurance regarding which foreign governmental regulations may be applicable in the future to our helicopter operations and whether we would be able to comply with them.
The revocation of any of the licenses discussed above or the termination of any of our relationships with local parties could have a material adverse effect on our business, financial condition and results of operations.
Changes in effective tax rates, taxation of our foreign subsidiaries or adverse outcomes resulting from examination of our tax returns could adversely affect our business, financial condition and results of operations.
Our future effective tax rates could be adversely affected by changes in tax laws, both domestically and internationally, or the interpretation or application thereof. From time to time, the U.S. Congress and foreign, state and local governments consider legislation that could increase our effective tax rate or the effective tax rates of our consolidated affiliates. President Biden previously provided informal guidance on certain tax law changes that he would support. Among other things, his proposals would raise the rate on both domestic and foreign income and impose a new alternative minimum tax on book income. We cannot determine whether, or in what form, legislation will ultimately be enacted or what the impact of any such legislation wouldcould have on our profitability. If these or other changes to tax laws are enacted, that increase our effective tax rate, such changesprofitability could have a material adverse effect on our business, financial condition and results of operation.be negatively impacted.
Our future effective tax rates could also be materially adversely affected by changes in the valuation of our deferred tax assets and liabilities, changes in the mix of earnings in countries with differing statutory tax rates, the ultimate repatriation of earnings from foreign subsidiaries to the U.S., or by changes in tax treaties, regulations, accounting principles or interpretations thereof in one or more countries in which we operate. In addition, we are subject to the potential examination of our income tax returns by the Internal Revenue Service (the “IRS”) and other tax authorities where we file tax returns. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that such examinations will not have a material adverse effect on our business, financial condition and results of operations.
Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy and data protection.
The regulatory environment surrounding data privacy and protection is constantly evolving and can be subject to significant change. New lawsLaws and regulations governing data privacy and the unauthorized disclosure of confidential information, including the European Union General Data Protection Regulation (the “GDPR”), pose increasingly complex compliance challenges and potentially elevate our costs. The U.K. may enact data privacy laws similar to the GDPR following Brexit, in order to maintain harmony with GDPR requirements, but this is not yet settled. Any failure, or perceived failure, by us to comply with applicable data protection laws could result in proceedings or actions against us by governmental entities or others,
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subject us to significant fines, penalties, judgments and negative publicity, require us to change our business practices, increase the costs and complexity of compliance and adversely affect our business. As noted above,
We have experienced cybersecurity incidents in the past, and cybersecurity breaches or business system disruptions may adversely affect our business in the future.
We rely on our information technology infrastructure and management information systems to operate and record almost every aspect of our business. This may include confidential or personal information belonging to us, our employees, customers, suppliers, or others. Similar to other companies, our systems and networks, and those of third parties with whom we are alsodo business, may be subject to cybersecurity breaches caused by, among other things, illegal hacking, insider threats, computer viruses, phishing, malware, ransomware, or acts of vandalism or terrorism, or those perpetrated by criminals or nation-state actors. Furthermore, we may also experience increased cybersecurity risk as some of our personnel continue to work remotely as a result of the possibility ofongoing COVID-19 pandemic. We have experienced cyber incidents in the past, although none have been material or attacks, which themselveshad a material adverse effect on our business or financial condition. We may experience additional cybersecurity incidents and security breaches in the future. In addition to our own systems and networks, we use third-party service providers to process certain data or information on our behalf. Due to applicable laws and regulations, we may be held responsible for cybersecurity incidents attributed to our service providers to the extent it relates to information we share with them. Although we seek to require that these service providers implement and maintain reasonable security measures, we cannot control third parties and cannot guarantee that a security breach will not occur in their systems or networks.
Despite our efforts to continually refine our procedures, educate our employees, and implement tools and security measures to protect against such cybersecurity risks, there can be no assurance that these measures will prevent unauthorized access or detect every type of attempt or attack. Our potential future upgrades, refinements, tools and measures may not be completely effective or result in the anticipated improvements, if at all, and may cause disruptions in our business operations. In addition, a cyberattack or security breach could go undetected for an extended period of time, and the ensuing investigation of the incident would take time to complete. During that period, we would not necessarily know the impact to our systems or networks, costs and actions required to fully remediate and our initial remediation efforts may not be successful, and the errors or actions could be repeated before they are fully contained and remediated. A breach or failure of our systems or networks, critical third-party systems on which we rely, or those of our customers or vendors, could result in an interruption in our operations, disruption to certain systems that are used to operate our aircraft or other assets, unplanned capital expenditures, unauthorized publication of our confidential business or proprietary information, unauthorized release of customer, employee or third party data, theft or misappropriation of funds, violation of these laws.privacy or other laws, and exposure to litigation or indemnity claims including resulting from customer-imposed cybersecurity controls or other related contractual obligations. There could also be increased costs to detect, prevent, respond, or recover from cybersecurity incidents. Any such breach, or our delay or failure to make adequate or timely disclosures to the public, regulatory or law enforcement agencies or affected individuals following such an event, could have a material adverse effect on our business, reputation, financial position, results of operations and cash flows, and cause reputational damage.
Risks Related to Our Common Stock and Corporate Structure
Our stock price may fluctuate significantly.
The trading price of our Common Stockcommon stock may be volatile and subject to wide price fluctuations in response to various factors, including:
•market conditions in the broader stock market;
•commodity prices, including oil and gas prices and the perceived level of off-shoreoffshore oil and gas activities;
•actual or anticipated fluctuations in our and our competitors’ quarterly financial condition and results of operations;
•introduction of new equipment or services by us or our competitors;
•grounding of all or a portion of our fleet;
•issuance of new or changed securities analysts’ reports or recommendations;recommendations or a lack of coverage by securities analysts;
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•policies of investors, including pension funds, to divest investments in the oil and gas sector based on their environmental and social considerations;
•sales, or anticipated sales, of large blocks of our common stock;
•business or asset acquisitions or dispositions;
•additions or departures of key personnel;
•regulatory or political developments, including those related to budget appropriations;
•litigation and governmental investigations;
•a negative shift in sentiment toward the oil and gas industry;
•technical factors in the public trading market for our stock that may produce price movements that may or may not comport with macro, industry or company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock and any related hedging and other technical trading factors; and
•changing economic conditions.
The market for our Common Stockcommon stock has historically experienced and may continue to experience significant price and volume fluctuations similar to those experienced by the broader stock market in recent years.
Generally, the fluctuations experienced by the broader stock market have affected the market prices of securities issued by many companies for reasons unrelated to their operating performance and may adversely affect the price of our Common Stock.common stock. In addition, our announcements of our quarterly operating results, changes in general conditions in the economy or the financial markets and other developments affecting us, our affiliates or our competitors could cause the market price of our Common Stockcommon stock to fluctuate substantially.
Securities analyst coverage or lack of coverage may have a negative impact on our stock price. If securities analysts or industry analysts downgrade our Common Stock,common stock, publish negative research or reports or fail to publish reports about our business, the price and trading volume of our Common Stockcommon stock could decline.
The trading market for our Common Stockcommon stock will be influenced by the research and reports that industry or securities analysts publish about us, our business and our market. If one or more analysts adversely change their recommendation regarding our Common Stockcommon stock or our competitors’ stock, our share price would likely decline. If one or more analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets which in turn could cause our share price or trading volume to decline. Moreover, if one or more of the analysts who cover our business downgrades our common stock, or if our operating results do not meet their expectations, our stock price could decline.
Provisions in our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law may discourage, delay or prevent a change of control of our business or changes in our management.
Our amended and restated certificate of incorporation (“certificate of incorporation”) and amended and restated bylaws (“bylaws”) include certain provisions that could have the effect of discouraging, delaying or preventing a change of control of our business or changes in our management. Such provisions include, among other things:
•restrictions related to the ability of non-U.S. citizens owning our common stock;
•our ability to issue preferred stock with terms that the Board may determine, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
•the absence of cumulative voting in the election of directors, which may limit the ability of minority stockholders to elect directors; and
•advance notice requirements for stockholder proposals and nominations, which may discourage or deter a potential acquirer from soliciting proxies to elect a particular slate of directors or otherwise attempting to obtain control of us.
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These provisions in our certificate of incorporation and bylaws may discourage, delay or prevent a transaction involving a change in control of our business that is in the best interest of our stockholders. Even in the absence of a takeover attempt, the existence of these provisions may materially adversely affect the prevailing market price of our common stock if they are viewed as discouraging future takeover attempts.
Regulations limit foreign ownership of our company,business, which could reduce the price of our Common Stockcommon stock and cause owners of our Common Stockcommon stock who are not U.S. persons to lose their voting rights.
Our amended and restated certificate of incorporation provides that persons or entities that are not “citizens of the U.S.” (as defined in the Federal Aviation Act of 1958)1958, as amended (the “Federal Aviation Act”)) shall not collectively own or control more than 24.9%25% of the voting power of our outstanding capital stock (the “Permitted Foreign Ownership Percentage”) and that, if at any time persons that are not citizens of the U.S. nevertheless collectively own or control more than the Permitted Foreign Ownership Percentage, the voting rights of our outstanding voting capital stock in excess of the Permitted Foreign Ownership Percentage owned by stockholders who are not citizens of the U.S. shall automatically be reduced. These voting rights will be reduced pro rata among the holders of voting shares who are not citizens of the U.S. to equal the Permitted Foreign Ownership Percentage based on the number of votes to which the underlying voting securities are entitled. Shares held by persons who are not citizens of the U.S. may lose their associated voting rights and be redeemed as a result of these provisions. Accordingly, in the event of any vote by our stockholders, the voting rights of shares held by non-U.S. citizens would be reduced pursuant to our organizational documents if such ownership remains above 25% of our total outstanding common stock at the time of such vote. These restrictions may also have a material adverse impact on the liquidity or market value of our Common Stockcommon stock because stockholders may be unable to transfer our Common Stockcommon stock to persons who are not citizens of the U.S.
Our Amended and Restated Certificatecertificate of Incorporationincorporation includes a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
Our Amended and Restated Certificatecertificate of Incorporationincorporation requires that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation,our business, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officerof our directors, officers or other employee of the Corporationours to the Corporationus or the Corporation'sour stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCLDelaware General Corporation Law or (iv) any action asserting a claim governed by the internal affairs doctrine.
Covenants in our debt agreements may restrict the manner in which we can operate our business.
The indenture governing the 6.875% Senior Notes limits, among other things, our ability and the ability of our restricted subsidiaries to:
•borrow money or issue guarantees;
•pay dividends, redeem capital stock or make certain other restricted payments;
•incur liens to secure indebtedness;
•make certain investments;
•sell certain assets;
•enter into transactions with our affiliates; or
•merge with another entity or sell substantially all of our assets.
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If we fail to comply with these and other covenants, we would be in default under the Lombard Debt and the ABL Facility (together, our “Credit Facilities”) and the indenture governing the 6.875% Senior Notes, and the principal and accrued interest on our outstanding indebtedness may become due and payable. In addition, our Credit Facilities and other debt agreements contain, and our future debt agreements may contain, similar and additional affirmative and negative covenants. Our Credit Facilities and the 6.875% Senior Notes are secured by many of our assets (including most of our helicopters), and such assets may not be available to secure additional financings. As a result, our ability to respond to changes in business and economic conditions and to obtain additional financing, if needed, may be significantly restricted, and we may be prevented from engaging in transactions that might otherwise be considered beneficial to us.
Our debt agreements, including our Credit Facilities and the indentures governing the 6.875% Senior Notes, also require us or certain of our subsidiaries, and our future credit facilities may require us or certain of our subsidiaries, to observe certain covenants. Our ability to observe certain of those covenants can be affected by events beyond our control, and we cannot assure you that we will be able to observe these covenants in the future. The breach of any of these covenants could result in a default under our other debt agreements. Upon the occurrence of an event of default under our Credit Facilities, any future credit facilities or the indenture governing the 6.875% Senior Notes, our creditors could elect to declare some or all amounts outstanding thereunder, including accrued interest or other obligations, to be immediately due and payable. There can be no assurance that our assets would be sufficient to repay all of our indebtedness in full.
The agreements governing certain of our indebtedness, including our Credit Facilities and the indenture governing the 6.875% Senior Notes contain cross-default provisions. Under these provisions, a default under one agreement governing our indebtedness may constitute a default under our other debt agreements.
Our failure to attract and retain qualified personnel could have an adverse effect on us.
Loss of the services of key management personnel at our corporate and regional headquarters without being able to attract personnel of equal ability could have a material adverse effect upon us. Further, Title 49—Transportation of the United States Code of Federal Regulations and other statutes require our President and two-thirds of the Board and other managing officers be U.S. citizens. Our failure to attract and retain qualified executive personnel or for such executive personnel to work well together or as effective leaders in their respective areas of responsibility could have a material adverse effect on our current business and future growth.
Adverse results of legal proceedings could materially and adversely affect our business, financial condition and results of operations.
We are currently subject to and may in the future be subject to legal proceedings and claims that arise out of the ordinary conduct of our business. Results of legal proceedings cannot be predicted with certainty. Irrespective of merit, litigation may be both lengthy and disruptive to our operations and could cause significant expenditure and diversion of management attention. We may face significant monetary damages or injunctive relief against us that could materially adversely affect a portion of our business operations or materially and adversely affect our business, financial condition and results of operations should we not prevail in certain matters.
We are increasingly dependent on information technology, and if we are unable to protect against service interruptions, data corruption, cyberattacks or network security breaches, our operations could be disrupted and our business could be negatively impacted.
Our business is increasingly dependent upon information technology networks and systems to process, transmit and store electronic and financial information, to capture knowledge of our business, and to communicate within our business and with customers, suppliers, partners and other stakeholders. These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, computer viruses, cyberattacks, telecommunication failures, user errors or catastrophic events. Our information technology systems are becoming increasingly integrated on a global basis, so damage, disruption or shutdown to the system could result in a more widespread impact. If our information technology systems suffer severe damage, disruption or shutdown, and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions and transaction errors causing a material adverse effect on our business, financial condition and results of operations.
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In addition, a breach or failure of our information technology systems could lead to potential unauthorized access and disclosure of confidential information, including the personally identifiable information of our customers and employees, or violations of privacy or other laws. Any such breach could also lead to data loss, data corruption, communication interruption or other operational disruptions within our business. There is no assurance that we will not experience cyberattacks or security breaches and suffer losses in the future. As the methods of cyberattacks or security breaches continue to evolve and become more sophisticated, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any such event. Furthermore, the continuing and evolving threat of cyberattacks and security breaches has resulted in increased regulatory focus on prevention. To the extent we are subject to increased regulatory requirements, we may be required to expend additional resources to meet such requirements.
If we identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
Failure to develop or implement new technologies could affect our results of operations.
Many of the aircraft that we operate are characterized by changing technology, introductions and enhancements of models of aircraft and services and shifting customer demands, including technology preferences. Our future growth and financial performance will depend in part upon our ability to develop, market and integrate new services and to accommodate the latest technological advances and customer preferences. In addition, the introduction of new technologies or services that compete with our services could result in our revenues decreasing over time. If we are unable to upgrade our operations or fleet with the latest technological advances in a timely manner, or at all, our business, financial condition and results of operations could suffer.
Increasing attention to environmental, social and governance matters may impact our business, financial results or stock price.
In recent years, increasing attention has been given to corporate activities related to environmental, social and governance (“ESG”) matters in public discourse and the investment community. A number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to promote change at public companies related to ESG matters, including through the investment and voting practices of investment advisers, proxy advisory firms, public pension funds, universities and other members of the investing community. These activities include increasing attention and demands for action related to climate change, promoting the use of substitutes to fossil fuel products and encouraging the divestment of companies in the oil and gas industry. These activities are especially relevant to us in light of our participation in the energy industry and therefore could reduce demand for our services, reduce our profits, increase the potential for investigations and litigation, impair our brand and have negative impacts on the price of our common stock and access to capital markets.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings systems for evaluating companies on their approach to ESG matters. These ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings may lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.
Negative publicity may adversely impact us.
Media coverage and public statements that insinuate improper actions by us, our unconsolidated affiliates or other companies in our industry, regardless of their factual accuracy or truthfulness, may result in negative publicity, litigation or governmental investigations by regulators. Specifically, accidents involving any aircraft operated by us or a third-party operator could cause substantial adverse publicity affecting us specifically or our industry generally and could lead to the perception that our aircraft are not safe or reliable.
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Addressing negative publicity and any resulting litigation or investigations may distract management, increase costs and divert resources. Negative publicity may have an adverse impact on our reputation, the morale of our employees and the willingness of passengers to fly on our aircraft and those of our competitors, which could adversely affect our business, financial condition and results of operations.
| ITEM 1B. | UNRESOLVED STAFF COMMENTS | ||||
None.
| ITEM 2. | PROPERTIES | ||||
Our executive offices are located in Houston, Texas,Texas. We also maintain offices and we maintainoperating facilities in all operating regions and residential locations near our U.S. Gulf of Mexico regional headquarters in Lake Charles, Louisiana, where we coordinate operations for the entire U.S. Gulf of Mexico, manage the support of our worldwide operations, and house our primary maintenance facility and training center. We maintain additional bases in the U.S. Gulf of Mexico near key offshore development sites as well. Additionally, we maintain a regional headquarters in Rio de Janeiro and multiple operating bases in Brazilwhich are primarily used for housing pilots and a regional headquarters in Bogotá and multiple operating bases in Colombia.staff supporting those operations. The majority of the bases from which we operate are leased, with remaining terms of between one and fifty nineseven years.
Our principal physical properties are helicopters,aircraft, which are more fully described in Item 1, - “Business - Equipment and Services” above.in this Annual Report.
Bristow maintains operating bases strategically located across all regions allowing us to provide point to point transportation and operational support services to our customers. As of March 31, 2022, we operated out of 39 bases globally.
| Number of Bases | |||||||||||||||||
| Europe: | |||||||||||||||||
| Norway | 5 | ||||||||||||||||
| U.K. | 3 | ||||||||||||||||
| U.K. SAR | 10 | ||||||||||||||||
| Americas | |||||||||||||||||
| Brazil | 4 | ||||||||||||||||
Latin America - Other(1) | 3 | ||||||||||||||||
| U.S. Gulf of Mexico | 10 | ||||||||||||||||
| Africa | |||||||||||||||||
| Nigeria | 3 | ||||||||||||||||
| Asia Pacific | |||||||||||||||||
| Australia | 1 | ||||||||||||||||
| Total | 39 | ||||||||||||||||
(1) Includes bases in Guyana, Suriname and Trinidad.
| ITEM 3. | LEGAL PROCEEDINGS | ||||
In the normal course of our business, we become involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining our potential exposure to these matters and has recorded reserves in our financial statements related thereto as appropriate. It is possible that a change in our estimates related to these exposures could occur, but we do not expect any such changes in estimated costs would have a material effect on our consolidated financial position or results of operations. See Item 7, Management’s Discussion
Other Matters
Although infrequent, aircraft accidents have occurred in the past, and Analysisthe related losses and liability claims have been covered by insurance subject to various risk retention factors. Bristow is also a defendant in certain claims and litigation arising out of Financial Condition and Resultsoperations in the normal course of Operations - Contingencies for a discussionbusiness. In the opinion of certain legal proceedings that we are partymanagement, uninsured losses, if any, will not be material to and Note 8Bristow’s financial position, results of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.operations or cash flows.
| ITEM 4. | MINE SAFETY DISCLOSURES | ||||
Not applicable.
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PART II
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | ||||
Market Information for Common Stock
Our Common Stock is listed on the NYSE under the trading symbol “ERA.“VTOL.” On March 2, 2020,May 24, 2022, the closing price per share of our Common Stock as reported on the NYSE was $10.13.$29.76.
Holders of Record
As of March 2, 2020,May 24, 2022, there were 160132 holders of record of our Common Stock.
Dividend Policy
We have not declared or paid any cash dividenddividends on our Common Stock since our spin-off from SEACOR Holdings Inc.Stock. We do not expect to pay any cash dividends in the foreseeable future.
Company Purchases of Equity Securities
The following table presents information regarding our repurchases of shares of our Common Stock on a monthly basis during the fourth quarter of 2019:fiscal year ended 2022:
Total Number of Shares Repurchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||||||||||
| January 1, 2022 - January 31, 2022 | — | $ | — | — | $ | 24,999,300 | |||||||||||||||||
| February 1, 2022 - February 28, 2022 | — | $ | — | — | $ | 24,999,300 | |||||||||||||||||
| March 1, 2022 - March 31, 2022 | 15,496 | $ | 37.10 | — | $ | 24,999,300 | |||||||||||||||||
| Total Number of Shares Repurchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs(1) | |||||||||||
| October 1, 2019 - October 31, 2019 | — | $ | — | — | $ | 15,298,578 | ||||||||
| November 1, 2019 - November 30, 2019 | — | $ | — | — | $ | 15,298,578 | ||||||||
December 1, 2019 - December 31, 2019 (2) | 3,006 | $ | 10.57 | — | $ | 15,298,578 | ||||||||
program.
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Performance Graph
The following graph shows a comparison from DecemberMarch 31, 20142017 through DecemberMarch 31, 20192022 of the cumulative total return for our Common Stock, the Standard & Poor’s 500 Stock Index (“S&P 500 Index”), the Standard & Poor’s Oil & Gas Equipment Select Industry Index and our peer group(1).group. The graph assumes that $100 was invested at the market close on DecemberMarch 31, 2014.2017.
Our former peer group included Air Transport Services Group Inc., Allegiant Travel Company, Atlas Air Worldwide Holdings Inc., Basic Energy Services Inc., CARBO Ceramics Inc., Hornbeck Offshore Services Inc., Key Energy Services Inc., Newpark Resources, Inc., SEACOR Holdings Inc. and Tidewater Inc. The decision to change our peer group was primarily due to the delisting of certain companies that made up our former peer group as a result of Chapter 11 proceedings, private equity purchases, the Merger and market consolidations involving some of the former peer group companies.
This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of EraBristow Group under
44
the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| ITEM 6. | |||||
| Years Ended December 31, | ||||||||||||||||||||
| 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
| Statements of Operations Data: | ||||||||||||||||||||
| Revenues | $ | 226,059 | $ | 221,676 | $ | 231,321 | $ | 247,228 | $ | 281,837 | ||||||||||
| Operating income (loss) | (3,278 | ) | 28,070 | (136,464 | ) | (3,369 | ) | 24,294 | ||||||||||||
| Net income (loss) attributable to Era Group Inc. | (3,593 | ) | 13,922 | (28,161 | ) | (7,978 | ) | 8,705 | ||||||||||||
| Earnings (Loss) Per Common Share: | ||||||||||||||||||||
| Basic | $ | (0.17 | ) | $ | 0.64 | $ | (1.36 | ) | $ | (0.39 | ) | $ | 0.42 | |||||||
| Diluted | $ | (0.17 | ) | $ | 0.64 | $ | (1.36 | ) | $ | (0.39 | ) | $ | 0.42 | |||||||
| Statement of Cash Flows Data – provided by (used in): | ||||||||||||||||||||
| Operating activities | $ | 27,551 | $ | 54,354 | $ | 20,096 | $ | 58,504 | $ | 44,456 | ||||||||||
| Investing activities | 48,617 | 22,826 | (6,574 | ) | (9,116 | ) | (22,616 | ) | ||||||||||||
| Financing activities | (9,425 | ) | (43,509 | ) | (27,497 | ) | (32,986 | ) | (46,026 | ) | ||||||||||
Effects of exchange rate changes on cash, cash equivalents and restricted cash | (130 | ) | 249 | 81 | (236 | ) | (2,120 | ) | ||||||||||||
| Capital expenditures | (6,558 | ) | (9,216 | ) | (16,770 | ) | (39,200 | ) | (60,050 | ) | ||||||||||
| Balance Sheet Data (at period end): | ||||||||||||||||||||
| Cash and cash equivalents | $ | 117,366 | $ | 50,753 | $ | 13,583 | $ | 26,950 | $ | 14,370 | ||||||||||
| Total assets | 764,515 | 764,863 | 792,097 | 955,173 | 1,004,351 | |||||||||||||||
| Long-term debt, less current portion | 141,832 | 160,217 | 202,174 | 230,139 | 264,479 | |||||||||||||||
| Total equity | 456,742 | 463,436 | 445,681 | 468,417 | 471,303 | |||||||||||||||
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | ||||
The following is a discussion and analysis of our financial condition and results of operations for the fiscal years ended DecemberMarch 31, 2019, 20182022 and 2017. You should read this2021. This discussion and analysis togethershould be read in conjunction with our Consolidated Financial Statements and related notes and the other financial information included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under “Item 1.A. Risk Factors” and elsewhere in this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.
A discussion of the financial condition and results of operations for the fiscal year ended March 31, 2020 can be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K, filed with the SEC on May 27, 2021.
Overview
We are onethe leading global provider of the largest helicopter operators in the worldinnovative and the longest serving helicopter transport operator in the U.S., which is our primary areasustainable vertical flight solutions, primarily providing aviation services to a broad base of operations.major integrated, national and independent energy companies and government agencies. Our helicopters are primarily used to transport personnel to, from and between offshore oil and gas production platforms, drilling rigs and otherenergy installations. In the fiscal years ended DecemberMarch 31, 2019, 20182022 and 2017,2021, approximately 66%, 71%67% and 66%69%, respectively, of our total operating revenues were earned in the U.S. In the years ended December 31, 2019, 2018 and 2017, approximately 34%, 29% and 34%, respectively, of total operating revenues were earned in international locations. In addition to the U.S., we currently have customers in Brazil, Chile, Colombia, India, Mexico, Spain and Suriname.
We conduct our business out of one segment, aviation services, and serve customers in Australia, Brazil, Canada, Chile, the Dutch Caribbean, Guyana, India, Mexico, the Netherlands, Nigeria, Norway, Spain, Suriname, Trinidad, the U.K. and U.S.
Recent Developments
ABL Amendment
On May 20, 2022, the Company entered into a Deed of Amendment, Restatement and Confirmation (the “ABL Amendment”) relating to the ABL Facility, to among other things, (i) extend the maturity to 2027, subject to certain early maturity triggers related to maturity of other material debt or a change of control of the Company; (ii) provide for replacement of LIBOR (x) for certain loans denominated in British pound sterling with SONIA, (y) for certain loans denominated in euro with EURIBOR and (z) for certain loans denominated in U.S. dollars with Term SOFR; and (iii) include the ability of the Company to adopt one or more environmental, social and governance-related pricing adjustments based on specified metrics and performance targets at a date after closing of the ABL Amendment, subject to certain conditions. The Amended ABL provides for commitments in an aggregate amount of $85.0 million. The Company has the ability under the Amended ABL to increase the total commitments by up to $35.0 million, which would result in an aggregate amount of $120.0 million subject to the terms and conditions therein.
Announcement of Acquisition of British International Helicopter Services Limited
In April 2022, Bristow announced its plans to acquire British International Helicopter Services Limited ("BIH"), further enhancing its leading global government services business. BIH will add to Bristow's operations in the UK and adopt the Bristow name and brand throughout its operations. BIH currently operates a fleet of two AW189 SAR-configured helicopters, three S61 helicopters, and one AS365 helicopter, performing various passenger and freight transport as well as hoist operations for the British Armed Forces. The transaction remains subject to regulatory approvals and customary closing conditions.
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COVID-19
The COVID-19 pandemic has had a significant influence on economic activity and global supply chains and likely will continue to have a significant impact on the global economy in the near-to-medium-term, which in turn can cause volatility in global markets, generally, and in oil and natural gas prices, more specifically. While demand and oil and natural gas prices have largely recovered, demand is still not back to pre-pandemic levels. There continues to be uncertainty and unpredictability around the extent to which COVID-19 may adversely affect demand for our services. The speed and extent of this recovery will be influenced by whether and at what pace the COVID-19 restrictions that have reduced economic activity and depressed demand globally are eased. Additionally, supply chain and logistics disruptions that began during the COVID-19 pandemic and the resulting inflationary environment have affected us by increasing the costs, and delaying the deliveries of, critical components for aircraft maintenance, equipment, labor and other services including emergency responserequired in our business.
The availability of vaccines around the world improved and business activity increased. Nevertheless, some countries face a resurgence of the virus and its variants that could impact logistics and materials movement and pose a risk to our business. We continue to take precautionary measures to reduce the risk of exposure to and spread of the COVID-19 virus in our operations through screening, testing and, when appropriate, quarantining personnel upon arrival to our facilities.
Lines of Service
Beginning in fiscal year 2022, the revenues by line of service tables have been modified to more accurately reflect how management views the Company’s lines of service. These changes include the addition of a government services providedline of service which includes revenues from U.K. SAR, BSEE, and other government contracts. In addition, our other activities and services (“other” services) will now reflect revenues derived from leasing aircraft to customers primarily engaged in offshorenon-governmental third party operators, oil and gas exploration, development and production activities or regulatory agenciescontracts that monitor such activities. Additionally, our leasing customers typically provide services todo not materially fit into one of the three major oil and gas companies in their respective local markets.operating regions and other services as they arise. As such, our results are tied to the level of activity in the offshoreoperating revenues from Asia Pacific oil and gas industry. In addition to servingservices are now shown under other services following the oil and gas industry, we provide emergency response services and utility services, among other activities.
Government Services.Since 2015, we have been providing SAR services in this market throughthe U.K. on behalf of the MCA. Additionally, we provide aviation services to various government agencies globally.
Fixed Wing Services.Our fixed wing services are currently operating in Australia and Nigeria, providing regular passenger transport (scheduled airline service with individual ticket sales) and charter services.
Other Activities and Services.In order to diversify sources of our wholly-owned subsidiary, Aeróleo.
46
Market Outlook
Government services, especially the public SAR market, is continuing to evolve, and we believe further outsourcing of public SAR services and other government contract work will become available to the private sector in the future, although the timing of these opportunities is uncertain. The duration of these contracts generally lasts for ten or more years with options for renewal. Privatization of aviation services historically operated by the public sector depend heavily on governmental agencies receiving funding through budget appropriations, and the desire to outsource such services. As government agencies in various countries begin to see the advantages of outsourcing public SAR services, other opportunities such as firefighting, surveying, training, maintenance and emergency response services could become available. In the past year, we have secured two new SAR contracts and entered into an agreement to purchase BIH to enhance our SAR services. Therefore, we believe that we are well positioned to continue to serve the market as more opportunities arise.
The offshore oil and gas market is highly cyclical with demand linked to the price of oil and gas. The prices of oil and gas are critical factors in our customers’ investment and spending decisions. The price of crude oil hashad been depressedrange-bound for a number of years and then the COVID-19 pandemic further devastated the global oil and gas industry, which negatively impacted the cash flowflows of our customers and has led them to reduce capital and operational expenditures from prior levels, including reductions related to offshore exploration, development and production activities. We experienced customer contract cancellations and decreased fleet utilization as some of our customers decreased the number of helicopters on contract or canceled their contract upon limited notice. While the price of crude oil has now recovered to more favorable levels, our customers’ spending on offshore exploration, development and production activities remains depressed.
Components of Revenues and Expenses
We derive our revenues primarily from operating and leasing our equipment, and our profits depend on our cost of capital, the acquisition costs of assets, our operating costs and our reputation. A majority of our revenues are generated through two types of contracts: helicopter services and fixed wing services. Revenues are recognized when control of the identified distinct goods or services has been transferred to the customer, the transaction price is determined and allocated to the satisfied performance obligations and we have determined that collection has occurred or is probable of occurring. Cost reimbursements from customers are recorded as reimbursable revenues with the related reimbursed cost recorded as reimbursable expense on our consolidated statements of operations.
Operating revenues recorded under U.S. Gulf of Mexico and Internationalour oil and gas line of service are primarily generated from offshore oil and gas exploration, development and production activities. These revenuesactivities with fixed-term contracts generally ranging between one to five years, subject to provisions permitting early termination by customers. Customers are invoiced on a monthly basis with payment terms of 30 to 60 days. Revenues are typically earned through a combination of fixed monthly fees plus an incremental charge based on flight hours flown. CharterAd hoc revenues are typically earned through either a combination of a daily fixed fee plus a charge based on hours flown or an hourly rate with a minimum number of hours to be charged daily.
enter into long-term contracts. Operating revenues for these emergency response services are earned through a fixed monthly fee plus an incremental charge for flight hours flown, and charter revenues are typically earned through an hourly rate with a minimum number of hours to be charged daily.
Our policy of expensing all repair costs as incurred may result in operating expenses varying substantially when compared with a prior year or prior quarter if a disproportionate number of repairs, refurbishments or overhauls are undertaken. This variation can be exacerbated by the timing of entering or exiting third-party PBHpower-by-the-hour (“PBH”) programs and the timing of vendor credits.
47
For helicopters that we lease to third parties under arrangements whereby the customer assumes operational responsibility, we often provide technical parts support, but generally we incur no other material operating costs. In most instances, our leases require clientscustomers to procure adequate insurance, but we purchase contingent hull and liability coverage to mitigate the risk of a client’scustomer’s coverage failing to respond. In some instances, we provide training and other services to support our lease customers.
The aggregate cost of our operations depends primarily on the size and asset mix of the fleet. Our operating expenses are grouped into the following categories:
•personnel (includes wages, benefits, payroll taxes and savings plans);
•repairs and maintenance (primarily routine activities and hourly charges for PBH maintenance contracts that cover helicopter refurbishments and engine and major component overhauls that are performed in accordance with planned maintenance programs);
•insurance (including the cost of hull and liability insurance premiums and loss deductibles);
•fuel;
•leased-in equipment (includes the cost of leasing helicopters and equipment); and
•other (primarily base expenses, property, sales and use taxes, communication costs, freight expenses, and other).
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Results of Operations
The following table providespresents our operating results of operations for the fiscal years ended DecemberMarch 31, 2019, 20182022 and 2017.2021, (in thousands, except percentages):
| Fiscal Year Ending March 31, | Favorable (Unfavorable) | ||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Operating revenues | $ | 1,139,063 | $ | 1,139,024 | $ | 39 | — | % | |||||||||||||||
| Reimbursable revenues | 46,141 | 39,038 | 7,103 | 18.2 | % | ||||||||||||||||||
| Total revenues | 1,185,204 | 1,178,062 | 7,142 | 0.6 | % | ||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Personnel | 304,045 | 313,561 | 9,516 | 3.0 | % | ||||||||||||||||||
| Repairs and maintenance | 248,509 | 233,468 | (15,041) | (6.4) | % | ||||||||||||||||||
| Insurance | 24,492 | 21,422 | (3,070) | (14.3) | % | ||||||||||||||||||
| Fuel | 74,165 | 45,206 | (28,959) | (64.1) | % | ||||||||||||||||||
| Leased-in equipment | 102,725 | 116,642 | 13,917 | 11.9 | % | ||||||||||||||||||
| Other | 118,921 | 120,874 | 1,953 | 1.6 | % | ||||||||||||||||||
| Total operating expenses | 872,857 | 851,173 | (21,684) | (2.5) | % | ||||||||||||||||||
| Reimbursable expenses | 45,557 | 38,789 | (6,768) | (17.4) | % | ||||||||||||||||||
| General and administrative expenses | 159,062 | 153,270 | (5,792) | (3.8) | % | ||||||||||||||||||
| Merger and integration costs | 3,240 | 42,842 | 39,602 | 92.4 | % | ||||||||||||||||||
| Restructuring costs | 3,098 | 25,773 | 22,675 | 88.0 | % | ||||||||||||||||||
| Depreciation and amortization expense | 74,981 | 70,078 | (4,903) | (7.0) | % | ||||||||||||||||||
| Total costs and expenses | 1,158,795 | 1,181,925 | 23,130 | 2.0 | % | ||||||||||||||||||
| Loss on impairment | (24,835) | (91,260) | 66,425 | 72.8 | % | ||||||||||||||||||
| Gain (loss) on disposal of assets | 1,347 | (8,199) | 9,546 | nm | |||||||||||||||||||
| Earnings (losses) from unconsolidated affiliates, net | (1,738) | 426 | (2,164) | nm | |||||||||||||||||||
| Operating income (loss) | 1,183 | (102,896) | 104,079 | nm | |||||||||||||||||||
| Interest income | 161 | 1,293 | (1,132) | nm | |||||||||||||||||||
| Interest expense | (41,521) | (51,259) | 9,738 | 19.0 | % | ||||||||||||||||||
| Loss on extinguishment of debt | (124) | (29,359) | 29,235 | nm | |||||||||||||||||||
| Reorganization items, net | (621) | 1,577 | (2,198) | nm | |||||||||||||||||||
| Loss on sale of subsidiaries | (2,002) | — | (2,002) | nm | |||||||||||||||||||
| Change in fair value of preferred stock derivative liability | — | 15,416 | (15,416) | nm | |||||||||||||||||||
| Gain on bargain purchase | — | 81,093 | (81,093) | nm | |||||||||||||||||||
| Other, net | 38,505 | 27,495 | 11,010 | 40.0 | % | ||||||||||||||||||
| Total other income (expense), net | (5,602) | 46,256 | (51,858) | nm | |||||||||||||||||||
| Loss before income taxes | (4,419) | (56,640) | 52,221 | nm | |||||||||||||||||||
| Income tax benefit (expense) | (11,294) | 355 | (11,649) | nm | |||||||||||||||||||
| Net loss | (15,713) | (56,285) | 40,572 | 72.1 | % | ||||||||||||||||||
| Net loss (income) attributable to noncontrolling interests | (78) | 191 | (269) | nm | |||||||||||||||||||
| Net loss attributable to Bristow Group Inc. | $ | (15,791) | $ | (56,094) | $ | 40,303 | 71.8 | % | |||||||||||||||
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| 2019 | 2018 | 2017 | |||||||||||||||||||
| (in thousands) | % | (in thousands) | % | (in thousands) | % | ||||||||||||||||
| Revenues: | |||||||||||||||||||||
| United States | $ | 149,514 | 66 | $ | 157,267 | 71 | $ | 152,187 | 66 | ||||||||||||
| Foreign | 76,545 | 34 | 64,409 | 29 | 79,134 | 34 | |||||||||||||||
| Total revenues | 226,059 | 100 | 221,676 | 100 | 231,321 | 100 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||
| Operating: | |||||||||||||||||||||
| Personnel | 57,051 | 25 | 55,304 | 25 | 62,380 | 27 | |||||||||||||||
| Repairs and maintenance | 50,756 | 22 | 48,604 | 22 | 54,325 | 23 | |||||||||||||||
| Insurance and loss reserves | 4,702 | 2 | 5,018 | 2 | 4,594 | 2 | |||||||||||||||
| Fuel | 14,591 | 7 | 14,720 | 7 | 12,386 | 5 | |||||||||||||||
| Leased-in equipment | 211 | — | 627 | — | 1,107 | 1 | |||||||||||||||
| Other | 27,235 | 12 | 27,250 | 12 | 32,654 | 14 | |||||||||||||||
| Total operating expenses | 154,546 | 68 | 151,523 | 68 | 167,446 | 72 | |||||||||||||||
| Administrative and general | 38,278 | 17 | 45,126 | 21 | 42,092 | 18 | |||||||||||||||
| Depreciation and amortization | 37,619 | 17 | 39,541 | 18 | 45,736 | 20 | |||||||||||||||
| Total costs and expenses | 230,443 | 102 | 236,190 | 107 | 255,274 | 110 | |||||||||||||||
| Gains on asset dispositions | 3,657 | 2 | 1,575 | 1 | 4,507 | 2 | |||||||||||||||
| Litigation settlement proceeds | — | — | 42,000 | 19 | — | — | |||||||||||||||
| Loss on impairment | (2,551 | ) | (1 | ) | (991 | ) | — | (117,018 | ) | (51 | ) | ||||||||||
| Operating income (loss) | (3,278 | ) | (1 | ) | 28,070 | 13 | (136,464 | ) | (59 | ) | |||||||||||
| Other income (expense): | |||||||||||||||||||||
| Interest income | 3,487 | 2 | 2,042 | 1 | 760 | — | |||||||||||||||
| Interest expense | (13,874 | ) | (7 | ) | (15,131 | ) | (7 | ) | (16,763 | ) | (7 | ) | |||||||||
Loss on sale investments | (569 | ) | — | — | — | — | — | ||||||||||||||
| Foreign currency losses, net | (472 | ) | — | (1,018 | ) | (1 | ) | (226 | ) | — | |||||||||||
| Gains (losses) on debt extinguishment | (13 | ) | — | 175 | — | — | — | ||||||||||||||
| Other, net | (28 | ) | — | 54 | — | (12 | ) | — | |||||||||||||
| Total other income (expense) | (11,469 | ) | (5 | ) | (13,878 | ) | (7 | ) | (16,241 | ) | (7 | ) | |||||||||
| Income (loss) before income tax expense and equity earnings | (14,747 | ) | (6 | ) | 14,192 | 6 | (152,705 | ) | (66 | ) | |||||||||||
| Income tax expense (benefit), net | (731 | ) | — | 2,940 | 1 | (122,665 | ) | (53 | ) | ||||||||||||
| Income (loss) before equity earnings | (14,016 | ) | (6 | ) | 11,252 | 5 | (30,040 | ) | (13 | ) | |||||||||||
| Equity earnings, net of tax | 9,935 | 4 | 2,206 | 1 | 1,425 | 1 | |||||||||||||||
| Net income (loss) | (4,081 | ) | (2 | ) | 13,458 | 6 | (28,615 | ) | (12 | ) | |||||||||||
| Net loss attributable to noncontrolling interest in subsidiary | 488 | — | 464 | — | 454 | — | |||||||||||||||
| Net income (loss) attributable to Era Group Inc. | $ | (3,593 | ) | (2 | ) | $ | 13,922 | 6 | $ | (28,161 | ) | (12 | ) | ||||||||
| Fiscal Year Ending March 31, | Favorable (Unfavorable) | ||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Oil and gas: | |||||||||||||||||||||||
| Europe | $ | 370,833 | $ | 390,305 | $ | (19,472) | (5.0) | % | |||||||||||||||
| Americas | 337,482 | 304,434 | 33,048 | 10.9 | % | ||||||||||||||||||
| Africa | 59,405 | 93,285 | (33,880) | (36.3) | % | ||||||||||||||||||
| Total oil and gas services | 767,720 | 788,024 | (20,304) | (2.6) | % | ||||||||||||||||||
Government services (1) | 272,859 | 252,131 | 20,728 | 8.2 | % | ||||||||||||||||||
| Fixed wing services | 85,372 | 73,751 | 11,621 | 15.8 | % | ||||||||||||||||||
Other services (2) | 13,112 | 25,118 | (12,006) | (47.8) | % | ||||||||||||||||||
| $ | 1,139,063 | $ | 1,139,024 | $ | 39 | — | % | ||||||||||||||||
(1)Includes revenues of approximately $26.8 million related to government services that were previously included in the oil and gas and other service lines for the fiscal year ended DecemberMarch 31, 2019, 20182021.
(2)Includes Asia Pacific and 2017.certain Europe revenues of approximately $12.7 million that were previously included in the oil and gas service line for the fiscal year ended March 31, 2021.
Current Fiscal Year compared to Prior Fiscal Year
| 2019 | 2018 | 2017 | ||||||||||||||||
| (in thousands) | �� | % | (in thousands) | % | (in thousands) | % | ||||||||||||
| Revenues | ||||||||||||||||||
Oil and gas:(1) | ||||||||||||||||||
| U.S. | $ | 139,312 | 62 | $ | 143,654 | 65 | $ | 134,010 | 58 | |||||||||
| International | 56,510 | 25 | 56,800 | 25 | 64,344 | 28 | ||||||||||||
| Total oil and gas | 195,822 | 87 | 200,454 | 90 | 198,354 | 86 | ||||||||||||
Dry-leasing(2) | 16,024 | 7 | 11,482 | 6 | 16,394 | 7 | ||||||||||||
Emergency response(3) | 14,213 | 6 | 9,740 | 4 | 11,502 | 5 | ||||||||||||
| Flightseeing | — | — | — | — | 5,071 | 2 | ||||||||||||
| Total revenues | $ | 226,059 | 100 | $ | 221,676 | 100 | $ | 231,321 | 100 | |||||||||
Operating Revenues. Operating revenues were $4.4 million higherconsistent in the twelve monthsfiscal year ended DecemberMarch 31, 20192022 (the “Current Year”) compared to the twelve monthsfiscal year ended DecemberMarch 31, 20182021 (the “Prior Year”).
Operating revenues from oil and gas operations in the U.S.services were $4.3$20.3 million lower in the Current Year. Operating revenues from medium, single engine and light twin helicopters were $3.9 million, $2.1 million, and $0.2 million lower, respectively, primarily due to lower utilization. These decreases were partially offset by increased revenues of $1.6 million from heavy helicopters primarily due to higher utilization. Other operating revenues were $0.4 million higher.
Operating revenues from international oil and gas operationsservices in the Africa region were $0.3$33.9 million lower in the Current Year primarily due to fewer helicopters on contract.
Operating revenues from oil and gas services in the Europe region were $19.5 million lower in the Current Year. Operating revenuesRevenues in Colombiathe U.K were $0.8$22.7 million lower primarily due to decreased utilization. lower utilization of $29.4 million, partially offset by the strengthening of the British pound sterling relative to the U.S. dollar of $6.7 million. Revenues in Norway were $3.2 million higher primarily due to the strengthening of the Norwegian krone relative to the U.S. dollar of $5.9 million, partially offset by lower utilization of $2.7 million.
Operating revenues from oil and gas services in Surinamethe Americas region were $0.4$33.0 million higher duein the Current Year primarily due to higher utilization.utilization and the benefit of the Merger with Era Group Inc. (“the Merger”) in June 2020. These increases were partially offset by lower revenues in Canada.
Operating revenues from dry-leasing activitiesgovernment services were $4.5$20.7 million higher in the Current Year primarily due to the commencementstrengthening of new contracts subsequentthe British pound sterling relative to the Prior Year.U.S. dollar, the benefit of the Merger and higher utilization.
Operating revenues from emergency responsefixed wing services were $4.5$11.6 million higher primarily due to the commencement of new contracts subsequent to the Prior Year.
Operating revenues from other services fees primarily related to litigation that has now been settled. These decreases were partially offset by an increase of $2.9 million in personnel costs primarily due to an increase in headcount.
Operating Expenses. Operating expenses were $21.7 million higher in the Current Year. Fuel expense was $29.0 million higher primarily due to increased global fuel prices and flight hours. Repairs and maintenance costs were $15.0 million higher primarily due to the Prior Year.
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associated with the Prior Year.end of a contract, partially offset by higher accommodation expense related to Hurricane Ida and training costs.
Merger and Integration Costs. Merger and integration costs, primarilyconsisting of professional services fees and severance costs related to the Merger, were$3.2 million in the Current Year compared to $42.8 million in the Prior Year.
Restructuring Costs. Restructuring costs, primarily related to severance costs not related to the Merger, were $3.1 million in the Current Year compared to $25.8 million in the Prior Year.
Depreciation and Amortization. Depreciation and amortization expenses were $4.9 million higher primarily due to the addition of existing assets to the depreciation and amortization calculation in the Current Year.
Loss on our higherImpairment. During the Current Year, the Company recognized losses on impairment of $24.8 million consisting of $16.0 million related to Petroleum Air Services (“PAS”), $5.9 million related to certain helicopters held for sale and $2.9 million related to H225 helicopter parts inventory. During the Prior Year, the Company recognized a loss on impairment of $91.3 million consisting of $51.9 million related to its investment in Cougar, $18.7 million related to its investment in Líder Táxi Aéreo S.A. (“Lider”), $12.9 million related to the write down of inventory and $7.8 million related to helicopters that were held for sale.
Gain (Loss) on Disposal of Assets. During the Current Year, the Company sold 10 aircraft and other equipment resulting in a net gain of $1.3 million. During the Prior Year, the Company sold 54 aircraft, five of which were via sales-type leases, and other equipment resulting in cash balancesproceeds of $67.9 million and sales-type leases.losses of $8.2 million.
Earnings (Losses) from Unconsolidated Affiliates, net. During the Current Year, the Company recognized losses of $1.7 million from its equity method investments compared to earnings of $0.4 million in the Prior Year.
Interest Expense. Interest expense was $1.3$9.7 million lower in the Current Year primarily due to lower debt balancesbalances.
Loss on Extinguishment of Debt. During the Prior Year, in connection with refinancing, the Company repaid existing term loans and the write-offredeemed its 7.750% senior unsecured notes due December 15, 2022 (the “7.750% Senior Notes”) and recognized a loss on extinguishment of deferred debt issuance costsof $28.5 million related to the amendmentwrite off of our Amendedassociated discount balances and Restated Senior Secured Revolving Credit Facility inearly repayment fees.
Reorganization Items, net. During the Current Year, the Company recognized losses of $0.6 million related to reorganization items. During the Prior Year.Year, the Company recognized a gain of $1.6 million related to the release of the rabbi trust which held investments for the Company’s non-qualified deferred compensation plan for the Company’s former executives.
Loss on Sale of Investment.Subsidiaries. During the Current Year, we disposed of corporate securities resulting inthe Company recognized a loss of $0.6 million.$2.0 million on the sale of its subsidiary in Colombia.
Gain on Bargain Purchase. During the Prior Year, the Company recognized a bargain purchase gain of $81.1 million related to the Merger.
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Other Income, net. Foreign currency losses were $0.5 Other income, net was $38.5 million in the Current Year compared to $1.0$27.5 million in the Prior Year. Other income in the Current Year primarily consisted of government grants to fixed wing services of $12.4 million, a bankruptcy-related legal settlement of $9.0 million, net foreign exchange gains of $7.0 million, insurance gains of $5.2 million, a favorable interest adjustment to the Company’s pension liability of $2.5 million and a gain on sale of inventory of $1.9 million. Other income, net in the Prior Year was primarily due to the strengtheninggovernment grants to fixed wing services of the U.S. dollar relative$11.5 million, net foreign exchange gains of $7.5 million, a favorable interest adjustment to the Brazilian real.Company’s pension liability of $3.8 million and insurance proceeds of $2.6 million.
| Fiscal Year Ending March 31, | Favorable (Unfavorable) | |||||||||||||
| 2022 | 2021 | |||||||||||||
| Foreign currency gains (losses) | 7,036 | 7,475 | (439) | |||||||||||
| Pension-related costs | 2,537 | 3,837 | (1,300) | |||||||||||
| Other | 28,932 | 16,183 | 12,749 | |||||||||||
| Other income (expense), net | $ | 38,505 | $ | 27,495 | $ | 11,010 | ||||||||
Income Tax Benefit (Expense).Income tax benefitexpense was $0.7$11.3 million in the Current Year primarily duecompared to pre-tax losses. Income tax expense was $2.9a benefit of $0.4 million in the Prior Year primarily due to the recognition of litigation settlement proceeds.
Liquidity and Capital Resources
General
Our ongoing liquidity requirements arise primarily from working capital needs, meeting our capital commitments (including the purchase of helicopters and other equipment) and the repayment of debt obligations. In addition, we may use our liquidity to fund acquisitions, repay debt, repurchase shares or todebt securities or make other investments. Our primary sources of liquidity are cash balances and cash flows from operations and borrowings under our Revolving Credit Facility, and, from time to time, we may secureobtain additional liquidity through the issuance of equity or debt as well as the sale of assets.or other financing options or through asset sales.
Summary of Cash Flows
| Fiscal Year Ending March 31, | ||||||||||||||||||||||||||
| 2019 | 2018 | 2017 | 2022 | 2021 | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Cash provided by (used in): | ||||||||||||||||||||||||||
| Cash flows provided by or (used in): | Cash flows provided by or (used in): | |||||||||||||||||||||||||
| Operating activities | $ | 27,551 | $ | 54,354 | $ | 20,096 | Operating activities | $ | 123,854 | $ | 96,845 | |||||||||||||||
| Investing activities | 48,617 | 22,826 | (6,574 | ) | Investing activities | (17,370) | 173,274 | |||||||||||||||||||
| Financing activities | (9,425 | ) | (43,509 | ) | (27,497 | ) | Financing activities | (63,483) | (245,617) | |||||||||||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (130 | ) | 249 | 81 | ||||||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 66,613 | $ | 33,920 | $ | (13,894 | ) | |||||||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | Effect of exchange rate changes on cash, cash equivalents and restricted cash | (8,066) | 7,456 | |||||||||||||||||||||||
| Net increase in cash, cash equivalents and restricted cash | Net increase in cash, cash equivalents and restricted cash | $ | 34,935 | $ | 31,958 | |||||||||||||||||||||
Operating Activities
| 2019 | 2018 | 2017 | ||||||||||
| (in thousands) | ||||||||||||
| Operating income before depreciation, gains on asset dispositions and impairments, net | $ | 33,235 | $ | 67,027 | $ | 21,493 | ||||||
| Changes in operating assets and liabilities before interest and income taxes | 1,185 | (3,630 | ) | 8,795 | ||||||||
| Interest paid, excluding capitalized interest of $0, $97 and $497 in 2019, 2018 and 2017, respectively | (12,693 | ) | (13,581 | ) | (15,315 | ) | ||||||
Interest received | 3,374 | 1,099 | 760 | |||||||||
| Income taxes paid | (1,255 | ) | (283 | ) | (426 | ) | ||||||
| Other | 3,705 | 3,722 | 4,789 | |||||||||
| Total cash flows provided by operating activities | $ | 27,551 | $ | 54,354 | $ | 20,096 | ||||||
Current Year. Operating income before depreciation and amortization, impairment charges, gains or losses on asset dispositions, net and impairments,earnings or losses from unconsolidated affiliates, net, was $33.8$27.0 million lower for the year ended December 31, 2019 compared to the year ended December 31, 2018, primarily due to the recognition of $42.0 million of litigation settlement proceeds in the Prior Year and a $3.0 million increase in operating expenses related to higher repairs and maintenance expenses and personnel costs in the Current Year partially offset by a $6.8 million decrease in administrative and general expenses and a $4.4 million increase in revenues in the Current Year.
During the recognitionCurrent Year, changes in working capital provided cash flows of $42.0$5.7 million of litigation settlement proceeds in 2018 and a $15.9 million decrease in operating expenses related to personnel reductions, decreased repairs and maintenance expenses and the absence of certain other operating expenses incurred in 2017. The litigation settlement proceeds and the decrease in operating expenses were partially offset by a $9.6 million decrease in revenues and a $3.0 million increase in administrative and general expenses in 2018.
Cash paid for interest expense and income taxes was $32.0 million and $12.0 million, respectively, in the Current Year.
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Investing Activities
During the year ended December 31, 2019,Current Year, net cash used in investing activities was $17.4 million primarily consisting of:
•Capital expenditures of $31.1 million,
•Cash transferred in the sale of subsidiary of $0.9 million, partially offset by
•Proceeds of $14.5 million from the sale or disposal of aircraft and certain other equipment.
During the Prior Year, net cash provided by investing activities was $48.6$173.3 million primarily consisting of:
•Proceeds of $67.9 million from the sale or disposal of equity investees were $34.7 million.aircraft and certain other equipment, partially offset by
•Capital expenditures were $6.6 million, which consisted primarily of spare helicopter parts and leasehold improvements.
Financing Activities
During the year ended December 31, 2019,Current Year, net cash used in financing activities was $9.4$63.5 million primarily consisting of:
•Net repayments of debt and redemption premiums of $19.2 million, and
•Payment on debt issuance of $3.1 million.
During the year ended December 31, 2018,Prior Year, net cash used in financing activities was $43.5$245.6 million primarily consisting of:
•Net repayments of debt including our Revolving Credit Facility were $41.9 million.and redemption premiums of $623.9 million,
•Debt issuance costs of $6.4 million related to the amendment to our Revolving Credit Facility were $1.3 million.6.875% Senior Notes.
As of DecemberMarch 31, 2019,2022, approximately 54% of our total cash balance was held outside the U.S. and is generally used to meet the liquidity needs of our non-U.S. operations. Most of our cash held outside the U.S. could be repatriated to the U.S., and any such repatriation could be subject to additional taxes. If cash held by non-U.S. operations is required for funding operations in the U.S., we had standby lettersmay make a provision for additional taxes in connection with repatriating this cash, which is not expected to have a significant impact on our results of operations.
The significant factors that affect our overall liquidity include cash from or used to fund operations, capital expenditure commitments, debt service, pension funding, adequacy of bank lines of credit totaling $0.7 million.and the Company’s ability to attract capital on satisfactory terms.
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Property and Equipment Acquisitions
The Company made capital expenditures as follows (in thousands, except number of aircraft):
___________________
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | |||||||||||||||||||||||||
| Number of aircraft delivered: | ||||||||||||||||||||||||||
Heavy aircraft(1) | 1 | — | ||||||||||||||||||||||||
| Total aircraft | 1 | — | ||||||||||||||||||||||||
| Capital expenditures: | ||||||||||||||||||||||||||
| Aircraft and equipment | $ | 28,832 | $ | 14,173 | ||||||||||||||||||||||
| Land and buildings | 2,236 | 671 | ||||||||||||||||||||||||
| Total capital expenditures | $ | 31,068 | $ | 14,844 | ||||||||||||||||||||||
(1)Previously leased S92 heavy helicopter acquired during the fiscal year ended March 31, 2022, pursuant to a contractual obligation in the lease.
Property and Equipment Dispositions
The following table presents details on the aircraft sold or disposed of (in thousands, except for number of aircraft):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | |||||||||||||||||||||||||
| Number of aircraft sold or disposed of | 10 | 54 | ||||||||||||||||||||||||
| Proceeds from sale or disposal of assets | $ | 14,549 | $ | 67,882 | ||||||||||||||||||||||
Debt Obligations
Total principal debt balance as of March 31, 2022 was $547.1 million primarily comprised of the 6.875% Senior Notes due in March 2028 and two tranches of the Lombard Debt due December 29, 2023 and January 30, 2024, respectively.
We believe our cash flows from operations and other sources of liquidity will be sufficient to meet our working capital needs and fulfill our debt obligations.
Contractual Obligations and Commercial Commitments
As of March 31, 2022, we had unfunded capital commitments of $84.7 million, consisting primarily of agreements to purchase helicopters, including three AW189 heavy helicopters and theirfive AW169 light twin helicopters. The AW189 helicopters are scheduled for delivery in fiscal years 2023 through 2025. Delivery dates for the AW169 helicopters have yet to be determined. In addition, we had outstanding options to purchase up to ten additional AW189 helicopters. If these options are exercised, the helicopters would be scheduled for delivery in fiscal years 2024 through 2026.
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As of March 31, 2022, $67.4 million of our capital commitments (inclusive of deposits paid on options not yet exercised) may be terminated without further liability other than aggregate maturitiesliquidated damages of approximately $1.9 million. If we do not exercise our rights to cancel these capital commitments, we expect to finance the remaining acquisition costs for these helicopters through a combination of cash on hand, cash provided by operating activities, asset sales and financing options.
Lease Obligations
We have non-cancelable operating leases in connection with the lease of certain equipment, including leases for aircraft, and land and facilities used in our operations. The related lease agreements, which range from non-cancelable and month-to-month terms, generally provide for fixed monthly rentals and can also include renewal options. As of March 31, 2022, aggregate future payments under all non-cancelable operating leases that have initial or remaining terms in excess of one year, including leases for 44 aircraft, were as of December 31, 2019follows (in thousands):
| Aircraft | Other | Total | |||||||||||||||
| Fiscal year ending March 31, | |||||||||||||||||
| 2023 | $ | 65,593 | $ | 12,840 | $ | 78,433 | |||||||||||
| 2024 | 51,781 | 10,358 | 62,139 | ||||||||||||||
| 2025 | 33,014 | 8,307 | 41,321 | ||||||||||||||
| 2026 | 6,814 | 7,104 | 13,918 | ||||||||||||||
| 2027 | 1,161 | 5,472 | 6,633 | ||||||||||||||
| Thereafter | — | 15,298 | 15,298 | ||||||||||||||
| $ | 158,363 | $ | 59,379 | $ | 217,742 | ||||||||||||
| Payments Due By Period | ||||||||||||||||||||
| Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | ||||||||||||||||
| Contractual obligations: | ||||||||||||||||||||
Long-term debt(1) | $ | 196,981 | $ | 30,719 | $ | 166,262 | $ | — | $ | — | ||||||||||
Capital purchase obligations(2) | 80,468 | 69,530 | 10,938 | — | — | |||||||||||||||
Operating leases(3) | 16,138 | 2,273 | 3,168 | 2,327 | 8,370 | |||||||||||||||
Purchase obligations(4) | 7,040 | 7,040 | — | — | — | |||||||||||||||
| $ | 300,627 | $ | 109,562 | $ | 180,368 | $ | 2,327 | $ | 8,370 | |||||||||||
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Selected Financial Information on Guarantors of Securities
On February 25, 2021, Bristow Group Inc. (“the Parent”) issued its 6.875% Senior Notes due 2028 (the “Senior Notes”). The Senior Notes, issued under an indenture, are fully and unconditionally guaranteed as to payment by a number of subsidiaries of the Parent (collectively, the “Guarantors”). The Parent is a holding company with no significant assets other than the stock of its subsidiaries. In order to meet its financial needs and obligations, the Parent relies exclusively on income from dividends and other cash flow from such subsidiaries. The subsidiary guarantees provide that, in Brazil.the event of a default on the Senior Notes, the holders of the Senior Notes may institute legal proceedings directly against the Guarantors to enforce the guarantees without first proceeding against the Parent.
None of the non-Guarantor subsidiaries of the Parent are under any direct obligation to pay or otherwise fund amounts due on the Senior Notes or the guarantees, whether in the form of dividends, distributions, loans or other payments. If such subsidiaries are unable to transfer funds to the Parent or Guarantors and sufficient cash or liquidity is not otherwise available, the Parent or Guarantors may not be able to make principal and interest payments on their outstanding debt, including the Senior Notes or the guarantees. The legal disputes are related to: (i) municipal tax assessments arisingfollowing selected financial information of the Guarantors presents a sufficient financial position of the Parent to continue to fulfill its obligations under the authoritiesrequirements of the Senior Notes. This selected financial information should be read in Rio de Janeiro (for the period between 2000 and 2005) and Macaé (for the period between 2001 to 2006) (collectively, the “Municipal Tax Disputes”); (ii) social security contributions that one of our customers was required to remit from 1995 to 1998; (iii) penalties assessed due to our alleged failure to comply with certain deadlines related to the helicopters we import and export in and out of Brazil; and (iv) fines sought by taxing authorities in Brazil related to our use of certain tax credits used to offset certain social tax liabilities (collectively, the “Tax Disputes”).
| March 31, 2022 | March 31, 2021 | ||||||||||||||||
| Current assets | $ | 825,344 | $ | 798,189 | |||||||||||||
| Non-current assets | $ | 2,048,480 | $ | 1,686,646 | |||||||||||||
| Current liabilities | $ | 536,662 | $ | 224,078 | |||||||||||||
| Non-current liabilities | $ | 784,466 | $ | 1,112,490 | |||||||||||||
| Fiscal Year Ended March 31, 2022 | |||||||||||||||||
| Total revenues | $ | 432,935 | |||||||||||||||
| Operating income | $ | 44,454 | |||||||||||||||
| Net income | $ | 35,772 | |||||||||||||||
| Net income attributable to Bristow Group Inc. | $ | 35,706 | |||||||||||||||
Contingencies
In the normal course of our business, we becomethe Company is involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. In addition, from time to time, we arethe Company is involved in tax and other disputes with various government agencies. Management has used estimates in determining ourthe Company’s potential exposure to these matters and has recorded reserves in ourits condensed consolidated financial statements related thereto as appropriate. It is possible that a change in ourits estimates related to these exposures could occur, but we dothe Company does not expect such changes in estimated costs or uninsured losses, if any, would have a material effect on ourits business, consolidated financial position or results of operations.
Critical Accounting Policies and Estimates
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positions involves the interpretation of the tax laws in the various jurisdictions in which we operate and requires significant judgment and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of income, deductions and tax credits. Changes in tax laws, regulations, agreements, tax treaties and foreign currency exchange restrictions or our level of operations or profitability in each jurisdiction would impact our tax liability in any given year.
We may recognize foreign tax credits available to occur. In establishingus to offset the U.S. income taxes due on income earned from foreign sources. These credits are limited by the total income tax on the U.S. income tax return as well as by the ratio of foreign source income in each statutory category to total income. These estimates are subject to change based on changes in the market conditions in each statutory category and the timing of certain deductions available to us in each statutory category.
We maintain reserves for estimated income tax exposures in jurisdictions of operation. The expenses reported for these allowances,taxes, including our annual tax provision, include the effect of reserve provisions and changes to reserves that we consider a numberappropriate, as well as related interest. We believe that an appropriate liability has been established for estimated exposures. However, actual results may differ materially from these estimates.
As of factors, includingMarch 31, 2022, we have established deferred tax assets for certain attributes we expect to be realizable. Our ability to realize the benefit of our historical experiencedeferred tax assets requires us to achieve certain future earnings levels. If we are unable to benefit from our deferred tax assets, valuation allowances will be established following the “more-likely-than-not” criteria. We periodically evaluate our ability to utilize our deferred tax assets and, changes in our client’s financial position. Such estimates involve significant judgment by management.
accordance with accounting guidance related to accounting for income taxes, will record any resulting adjustments that may be required to deferred income tax expense in the period for which an existing estimate changes.
We deriveconsider the earnings of certain foreign subsidiaries to be indefinitely invested outside the U.S. on the basis of estimates that future cash generation will be sufficient to meet future U.S. cash needs and specific plans for foreign reinvestment of those earnings. As such, as of March 31, 2022, we have not provided for deferred taxes on the unremitted earnings of certain foreign subsidiaries that are indefinitely invested abroad. Should our expectations were to change regarding the expected future tax consequences, we may be required to record additional U.S. federal deferred income taxes that could have a significant portionmaterial adverse effect on our consolidated financial position, result of operations and cash flows.
Should our expectations change regarding the expected future tax consequences, we may be required to record additional U.S. federal deferred income taxes that could have a material adverse effect on our consolidated financial position, result of operations and cash flows.
Property and Equipment. Our property and equipment, net of accumulated depreciation, represents 52% of our revenue from services to international, independent and major integrated oil and gas companies and government agencies. Our receivables are concentrated primarily intotal assets as of March 31, 2022. We determine the Gulf of Mexico. We generally do not require collateral or other security to support client receivables.
Asset impairment evaluations for held for use asset groups are based on estimated undiscounted cash flows over the remaining useful life for the assetsasset group being evaluated. If the sum of the expected future cash flows is less than the carrying amount of the asset group, we would be required to recognize an impairment loss. When determining fair value, we utilize various assumptions, including projections of future cash flows. An impairment loss is recorded in the period in which it is determined that the aggregate carrying amount of assets within an asset group is not recoverable. This requires us to make judgments regarding long-term forecasts of future revenues and cost related to the assets subject to review. In turn, these forecasts are uncertain in that they require assumptions about demand for our services, future market conditions and technological developments. A change in these underlying assumptions couldwill cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts. In such event, we would then be required to record a corresponding charge, which would reduce our earnings. We continueGiven the nature of these evaluations and their application to evaluate our estimatesspecific asset groups and assumptions and believe that our assumptions, which include an estimate of future cash flows based upon the anticipated performance of the underlying assets, are appropriate.
Pension Benefits. Pension obligations are actuarially determined and are affected by assumptions including discount rates, compensation increases and employee turnover rates. The recognition of these obligations through the statement of
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operations is also affected by assumptions about expected returns on plan assets. We evaluate our assumptions periodically and adjust these assumptions as necessary.
Three critical assumptions are the expected long-term rate of return on plan assets, the assumed discount rate and the mortality rate. We evaluate our assumptions regarding the estimated long-term rate of return on plan assets based on historical experience and future expectations on investment returns, which are calculated by our third-party investment advisor utilizing the asset allocation classes held by the plans’ portfolios. We utilize a British pound sterling denominated AA corporate bond index as a basis for usdetermining the discount rate for our U.K. plans. We base mortality rates utilized on actuarial research on these rates, which are adjusted to have helicopters idledallow for extended periodsexpected mortality within our industry segment and, where available, individual plan experience data. Changes in these and other assumptions used in the actuarial computations could impact our projected benefit obligations, pension liabilities, pension expense and other comprehensive income. We base our determination of time, which could be an indication that an asset group may be impaired. In most instances, and over their useful lives, our helicopters could be used interchangeably. Due to the mobilitypension expense on a fair value valuation of helicopters, we may move them from a weak geographic market to a stronger geographic market if an adequate opportunity arises to do so.
We own a 25% economic interest in PAS, an unconsolidated affiliate that we account for under the cost method, as we are unable to exert significant influence over its operations. During the fiscal year ended March 31, 2022, upon evaluating our investment in PAS, we identified an indicator for impairment due to a decline in PAS’s performance. As a result, we performed a fair valuation of our investment in PAS using a market approach that relied on significant Level III inputs due to the nature of unobservable inputs that required significant judgment and assumptions. The market approach utilized two methods, each yielding similar valuation outcomes through the use of a multiple relevant to each method, derived from select guideline public companies, and an expected dividend rate or earnings of PAS. This resulted in a $16.0 million loss on impairment recorded during the fiscal year ended March 31, 2022. As of the presentfiscal year ended March 31, 2022, our investment in PAS was $17.0 million.
Business Combinations - Purchase-Price Allocation. Accounting for business combinations requires the allocation of a company’s purchase price to the various assets and liabilities of the acquired business at their respective fair values. We use all available information to make these fair value determinations. Determining the fair values of assets acquired and liabilities assumed generally involves assumptions regarding the amounts and timing of future revenues and expenditures, as well as discount rates.
During the fiscal year ended 2021, in connection with the purchase price allocation for the Merger, we derived the fair value of the lease receivable and any prepaid lease payments by lessee, if lower) less any deferred initial direct costs incurred by us. Sales-type leases are subsequently analyzed for impairment purposes. If anyEra fleet of aircraft from the estimated enterprise value of Era, using the discounted cash flow method of the lessees involved in these transactions encounter credit difficulties we will evaluate for impairment.income approach. The lessee’s credit risk relating to its ability to pay cash flows, pay lessee-provided
Recent Accounting Pronouncements
For a description of recent accounting pronouncements that will, or could possibly, have an effect on our financial condition and results of operations, see Note 1 to our Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.
| Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | ||||
Foreign Currency Risk
Through our foreign operations we are exposed to currency fluctuations and exchange rate wouldrisks. Some of our contracts to provide services internationally provide for payment in foreign currencies. For example, the majority of our revenues and expenses from our North Sea operations are in British pound sterling. Our foreign exchange rate risk may increase if our revenues are denominated in a currency different from the associated costs. We attempt to minimize our exposure to this risk by contracting the majority of our services, other than North Sea operations, in U.S. dollars.
From time to time, we enter into forward exchange contracts as a hedge against foreign currency asset and liability commitments and anticipated transaction exposures, however, these financial instruments are not used for trading or speculative purposes. All derivatives are recognized as assets or liabilities and measured at fair value. To mitigate our foreign currency exposure, we enter into annual rolling forward contracts, with a tiered structure. As of March 31, 2022, our contracts averaged £2.5 million monthly through the end of fiscal year 2023. We designate these derivatives as cash flow hedges.
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 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 equivalentversus those other currencies. Other income (expense), net, in the Company’s consolidated statements of operations includes foreign currency transaction gains and losses. 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 the non-hedged purchase commitment by $8.0 million.Company’s unconsolidated affiliates.
59
Our primary foreign currency exposure is to the British pound sterling, the euro, the Australian dollar, the Norwegian kroner, the Nigerian naira and the Brazilian real. The value of December 31, 2019, we had $18.3 million of variable rate debt outstanding. These instrumentsthese currencies has fluctuated relative to the U.S. dollar for the periods reflected in the table as follows:
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| One British pound sterling into U.S. dollars | ||||||||||||||||||||||||||
| High | 1.42 | 1.41 | 1.33 | 1.32 | ||||||||||||||||||||||
| Average | 1.37 | 1.31 | 1.30 | 1.26 | ||||||||||||||||||||||
| Low | 1.30 | 1.21 | 1.28 | 1.21 | ||||||||||||||||||||||
| At period-end | 1.32 | 1.38 | 1.32 | 1.29 | ||||||||||||||||||||||
| One euro into U.S. dollars | ||||||||||||||||||||||||||
| High | 1.22 | 1.23 | 1.12 | 1.14 | ||||||||||||||||||||||
| Average | 1.16 | 1.17 | 1.11 | 1.12 | ||||||||||||||||||||||
| Low | 1.09 | 1.08 | 1.10 | 1.09 | ||||||||||||||||||||||
| At period-end | 1.11 | 1.18 | 1.12 | 1.12 | ||||||||||||||||||||||
| One Australian dollar into U.S. dollars | ||||||||||||||||||||||||||
| High | 0.79 | 0.80 | 0.70 | 0.72 | ||||||||||||||||||||||
| Average | 0.74 | 0.72 | 0.69 | 0.69 | ||||||||||||||||||||||
| Low | 0.70 | 0.60 | 0.68 | 0.67 | ||||||||||||||||||||||
| At period-end | 0.75 | 0.76 | 0.70 | 0.69 | ||||||||||||||||||||||
| One Norwegian kroner into U.S. dollars | ||||||||||||||||||||||||||
| High | 0.1219 | 0.1193 | 0.1139 | 0.1179 | ||||||||||||||||||||||
| Average | 0.1153 | 0.1094 | 0.1101 | 0.1135 | ||||||||||||||||||||||
| Low | 0.1089 | 0.0928 | 0.1086 | 0.1083 | ||||||||||||||||||||||
| At period-end | 0.1144 | 0.1172 | 0.1138 | 0.1089 | ||||||||||||||||||||||
| One Nigerian naira into U.S. dollars | ||||||||||||||||||||||||||
| High | 0.0025 | 0.0026 | 0.0028 | 0.0028 | ||||||||||||||||||||||
| Average | 0.0024 | 0.0026 | 0.0028 | 0.0028 | ||||||||||||||||||||||
| Low | 0.0024 | 0.0024 | 0.0028 | 0.0027 | ||||||||||||||||||||||
| At period-end | 0.0024 | 0.0024 | 0.0028 | 0.0028 | ||||||||||||||||||||||
| One Brazilian real into U.S. dollars | ||||||||||||||||||||||||||
| High | 0.2106 | 0.2043 | 0.2515 | 0.2675 | ||||||||||||||||||||||
| Average | 0.1877 | 0.1852 | 0.2324 | 0.2525 | ||||||||||||||||||||||
| Low | 0.1741 | 0.1688 | 0.1928 | 0.2393 | ||||||||||||||||||||||
| At period-end | 0.2102 | 0.1772 | 0.1928 | 0.2491 | ||||||||||||||||||||||
______________________
Source: FactSet
Interest Rate Risk
We are subject to market risk from exposure to changes in interest rates on borrowings under the Company’s long-term debts. Borrowings under our Lombard Debt bear ainterest at 2.25% plus SONIA per annum and our Amended ABL Facility at the applicable margin plus Secured Overnight Financing Rate (“SOFR”). Fluctuations in our variable interest rate that resets monthly and are computedon our current or future borrowings could affect our financial condition, results of operations, or liquidity. Based on borrowings outstanding as the one-month LIBOR rate at the date of each reset plus 181 basis points. As of DecemberMarch 31, 2019, the weighted average2022, a 10% change interest rate on these borrowings was 3.50%. A 10% increase in the underlying LIBORrates would raise the rate to 3.67%, resulting in additional annual interest expense of less than $0.1 million, net of tax.have a minimal financial impact.
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | ||||
The consolidated financial statements and related notes required by this item are included in Part IV Item 15 of this Annual Report on Form 10-K and are presented beginning on page 87 of this Annual Report on Form 10-K.
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | ||||
None.
60
| ITEM 9A. | CONTROLS AND PROCEDURES | ||||
Evaluation of Disclosure Controls and Procedures
With the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management evaluated, with reasonable assurance, the effectiveness of ourthe disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act)Act of 1934, as amended (the “Exchange Act”) as of December 31, 2019. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, withinend of the time periods specified under Securities Exchange Commission (“SEC”) rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.
period covered by this Annual Report on Form 10-K. Based on thethis evaluation, of our disclosure controlsprincipal executive officer and procedures, our Chief Executive Officer and Chief Financial Officerprincipal financial officer concluded that ourthe Company’s disclosure controls and procedures were effective at the reasonable assurance level as of DecemberMarch 31, 2019.2022.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, (asas such term is defined in Exchange Act Rule 13a-15(f) under. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the Exchange Act).reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluationassessment of the effectiveness of our internal control over financial reporting as of DecemberMarch 31, 20192022. The assessment was based on criteria established in the updated framework in Internal Control -– Integrated Framework, (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included a review of the documentation surrounding our financial controls, an evaluation of the design effectiveness of these controls, testing of the operating effectiveness of these controls and a conclusionCommission in 2013. Based on this evaluation. There are inherent limitations in the effectiveness of any system ofassessment, management concluded that our internal control over financial reporting including the possibilitywas effective as of March 31, 2022.
The effectiveness of the circumvention or overriding of controls.
Changes in Internal Control Over Financial Reporting
During the year ended DecemberMarch 31, 2019,2022, there were no changes in our internal control over financial reporting that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Remediation of Previously Reported Material Weaknesses
None.
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | Total | |||||||||
| Charles Fabrikant | $ | 230,000 | $ | 60,000 | $ | 290,000 | ||||||
Ann Fairbanks(2)(3) | 85,000 | 60,000 | 145,000 | |||||||||
Blaine Fogg(5) | 26,044 | 60,000 | 86,044 | |||||||||
Christopher Papouras(3)(4) | 105,000 | 60,000 | 165,000 | |||||||||
Yueping Sun(2)(4) | 75,000 | 60,000 | 135,000 | |||||||||
Steven Webster(3)(4) | 96,000 | 60,000 | 156,000 | |||||||||
| Threshold | Target | Stretch | Actual | |||||
| Financial Performance (40%) | 155% | |||||||
Adjusted EBITDA (millions) | $25.0 | $32.0 | $42.0 | $37.0 | ||||
| Safety Performance (25%) | 200% | |||||||
| AAR (17%) | 2.50 | 2.00 | 0.00 | 0.00 | ||||
| TRIR (8%) | 0.74 | 0.37 | 0.00 | 0.00 | ||||
| Named Executive Officer | 2019 Base Salary | Target Bonus (%) | Target Bonus ($) | Stretch Bonus | |||||||||||
Christopher Bradshaw President, Chief Executive Officer | $ | 695,000 | 150 | % | $ | 1,042,500 | $ | 2,085,000 | |||||||
Crystal Gordon Senior Vice President, General Counsel and Chief Administrative Officer | 375,000 | 100 | % | 375,000 | 750,000 | ||||||||||
Jennifer Whalen Senior Vice President, Chief Financial Officer | 310,000 | 75 | % | 232,500 | 465,000 | ||||||||||
Stuart Stavley Senior Vice President, Operations and Fleet Management | 275,000 | 75 | % | 206,250 | 412,500 | ||||||||||
Paul White Senior Vice President, Commercial | 275,000 | 75 | % | 206,250 | 412,500 | ||||||||||
Grant Newman Senior Vice President, Strategy & Corporate Development | 275,000 | 75 | % | 206,250 | 412,500 | ||||||||||
| Annual Restricted Stock Grant | |||||||||||||||||
| Named Executive Officers | 2019 Salary | Value as Percentage of Salary | Grant Date Fair Value | Shares Granted(1) | One-Time Shares Granted | ||||||||||||
Christopher Bradshaw President, Chief Executive Officer | $ | 695,000 | 175 | % | $ | 1,216,250 | 116,500 | — | |||||||||
Crystal Gordon Senior Vice President, General Counsel and Chief Administrative Officer | 375,000 | 125 | % | 468,750 | 44,900 | 25,000(2) | |||||||||||
Jennifer Whalen Senior Vice President, Chief Financial Officer | 310,000 | 105 | % | 325,500 | 31,179 | — | |||||||||||
Stuart Stavley Senior Vice President, Operations and Fleet Management | 275,000 | 105 | % | 288,750 | 27,659 | — | |||||||||||
Paul White Senior Vice President, Commercial | 275,000 | 105 | % | 288,750 | 27,659 | — | |||||||||||
Grant Newman Senior Vice President, Strategy & Corporate Development | 275,000 | 105 | % | 288,750 | 27,659 | — | |||||||||||
PART III
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | ||||
The information required by this Item will be presented in our 2022 Proxy Statement, which will be filed with the ownership thresholdSEC no later than 120 days after our fiscal year ended March 31, 2022 and which is achieved, non-management directors andincorporated herein by reference. Information about our executive officers may only sell up to 50%can be found in Part I of the shares of vested stock received after any selling or withholding of stock to pay taxes associated with vesting. In general, once a covered person achieves initial compliance with his or her ownership threshold guideline, such covered person must at all times retain ownership of at least the minimum amount of shares that such person was required to hold to be in compliance with the ownership guidelines on the first test date on which such person attained compliance. The Compensation Committee is responsible for the administration of the Stock Ownership Guidelines, including granting any exception waivers, and addressing any executive officer noncompliance during annual performance reviews.
| Year | Salary | Bonus(1) | Stock Awards(2) | Option Awards | All Other Compensation(3) | Total | ||||||||||||||||||||
| Christopher Bradshaw | 2019 | $ | 695,000 | $ | 1,838,970 | $ | 1,216,250 | $ | — | $ | 16,800 | $ | 3,767,020 | |||||||||||||
| President, Chief Executive Officer and Director | 2018 | 625,000 | 1,421,250 | 937,503 | — | 16,500 | 3,000,253 | |||||||||||||||||||
| 2017 | 595,000 | 703,112 | 892,510 | — | 16,200 | 2,206,822 | ||||||||||||||||||||
| Crystal Gordon | 2019 | 375,000 | 864,125 | 692,756 | — | 66,519 | 1,998,400 | |||||||||||||||||||
| Senior Vice President, General Counsel, Chief Administrative Officer and Secretary | 2018 | — | — | — | — | — | — | |||||||||||||||||||
| 2017 | — | — | — | — | — | — | ||||||||||||||||||||
Jennifer Whalen(4) | 2019 | 310,000 | 415,013 | 325,500 | — | 16,800 | 1,067,313 | |||||||||||||||||||
| Senior Vice President, Chief Financial Officer | 2018 | 262,500 | 296,395 | 441,781 | — | 15,239 | 1,015,915 | |||||||||||||||||||
| 2017 | 231,667 | 117,924 | 190,323 | — | 14,874 | 554,788 | ||||||||||||||||||||
| Stuart Stavley | 2019 | 275,000 | 358,050 | 288,750 | — | 16,800 | 938,600 | |||||||||||||||||||
| Senior Vice President, Operations and Fleet Management | 2018 | 262,500 | 290,194 | 275,629 | — | 16,281 | 844,604 | |||||||||||||||||||
| 2017 | 250,000 | 144,431 | 262,505 | — | 16,200 | 673,136 | ||||||||||||||||||||
| Paul White | 2019 | 275,000 | 356,606 | 288,750 | — | 11,461 | 931,817 | |||||||||||||||||||
| Senior Vice President, Commercial | 2018 | 262,500 | 290,194 | 275,629 | 11,094 | 839,417 | ||||||||||||||||||||
| 2017 | 250,000 | 144,431 | 262,505 | — | 11,417 | 668,353 | ||||||||||||||||||||
| Grant Newman | 2019 | 275,000 | 359,494 | 288,750 | 78,941 | 1,002,185 | ||||||||||||||||||||
| Senior Vice President, Strategy & Corporate Development | 2018 | 86,436 | 100,406 | 262,350 | — | 3,281 | 452,473 | |||||||||||||||||||
| 2017 | — | — | — | — | — | — | ||||||||||||||||||||
The information required by this Item will be presented in our 2022 Proxy Statement, which will be filed with the SEC no later than 120 days after our fiscal year ended March 31, 2022 and which is incorporated herein by reference.
61
| Named Executive Officers | Approval Date | Grant Date | Number of Shares(1) | Grant Date Fair Value(2) | ||||||
Christopher Bradshaw President and Chief Executive Officer | 2/21/2019 | 3/11/2019 | 116,500 | $ | 1,216,250 | |||||
Crystal Gordon Senior Vice President, General Counsel and Chief Administrative Officer | 1/3/2019 2/21/2019 | 1/3/2019 3/11/2019 | 25,000(3) 44,900 | 224,000 468,750 | ||||||
Jennifer Whalen Senior Vice President, Chief Financial Officer | 2/21/2019 | 3/11/2019 | 31,179 | 325,500 | ||||||
Stuart Stavley Senior Vice President, Operations & Fleet Management | 2/21/2019 | 3/11/2019 | 27,659 | 288,750 | ||||||
Paul White Senior Vice President, Commercial | 2/21/2019 | 3/11/2019 | 27,659 | 288,750 | ||||||
Grant Newman Senior Vice President, Strategy & Corporate Development | 2/21/2019 | 3/11/2019 | 27,659 | 288,750 | ||||||
| Option Awards | Stock Awards | |||||||||||||||||||||
| Named Executive Officers | Number of Securities Underlying Unexercised Options (Exercisable) | Number of Securities Underlying Unexercised Options (Unexercisable) | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested | Market Value of Shares or Units that Have Not Vested | ||||||||||||||||
Christopher Bradshaw President, Chief Executive Officer and Director | 40,000 | — | $ | 20.48 | 3/19/2023 | 25,493 | (1) | $ | 259,264 | (2) | ||||||||||||
| 60,000 | — | 21.26 | 3/19/2025 | 64,700 | (3) | 657,999 | (2) | |||||||||||||||
| 116,500 | (4) | 1,184,805 | (2) | |||||||||||||||||||
Crystal Gordon Senior Vice President, General Counsel and Chief Administrative Officer | 16,667 | (7) | 169,503 | (2) | ||||||||||||||||||
| 44,900 | (4) | 456,633 | (2) | |||||||||||||||||||
Jennifer Whalen Senior Vice President, Chief Financial Officer | 2,999 | (1) | 30,500 | (2) | ||||||||||||||||||
| 30,489 | (3) | 310,073 | (2) | |||||||||||||||||||
| 3,232 | (5) | 32,869 | (2) | |||||||||||||||||||
| 31,179 | (4) | 317,090 | (2) | |||||||||||||||||||
Stuart Stavley Senior Vice President, Operations & Fleet Management | 15,000 | — | 20.48 | 3/19/2023 | 7,498 | (1) | 76,255 | (2) | ||||||||||||||
| 19,022 | (3) | 193,454 | (2) | |||||||||||||||||||
| 27,659 | (4) | 281,292 | (2) | |||||||||||||||||||
Paul White Senior Vice President, Commercial | 15,000 | — | 20.48 | 3/19/2023 | 7,498 | (1) | 76,255 | (2) | ||||||||||||||
| 19,022 | (3) | 193,454 | (2) | |||||||||||||||||||
| 27,659 | (4) | 281,292 | (2) | |||||||||||||||||||
Grant Newman Senior Vice President, Strategy & Corporate Development | 15,000 | (6) | 152,550 | (2) | ||||||||||||||||||
| 27,659 | (4) | 281,292 | (2) | |||||||||||||||||||
| Named Executive Officers | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | |||||
Christopher Bradshaw President and Chief Executive Officer | 78,476 | $ | 829,080 | ||||
Crystal Gordon Senior Vice President, General Counsel and Chief Administrative Officer | 8,333 | 88,083 | |||||
Jennifer Whalen Senior Vice President, Chief Financial Officer | 25,159 | 265,515 | |||||
Stuart Stavley Senior Vice President, Operations & Fleet Management | 26,266 | 278,311 | |||||
Paul White Senior Vice President, Commercial | 26,266 | 278,311 | |||||
Grant Newman Senior Vice President, Strategy & Corporate Development | 7,500 | 73,350 | |||||
| Named Executive Officers | Stock Awards(1) | |||
Christopher Bradshaw President and Chief Executive Officer | $ | 2,102,068 | ||
Crystal Gordon Senior Vice President, General Counsel and Chief Administrative Officer | 626,133 | |||
Jennifer Whalen Senior Vice President, Chief Financial Officer | 690,529 | |||
Stuart Stavley Senior Vice President, Operations & Fleet Management | 551,000 | |||
Paul White Senior Vice President, Commercial | 551,000 | |||
Grant Newman Senior Vice President, Strategy & Corporate Development | 433,842 | |||
| Named Executive Officers | Salary | Target Bonus | Cash Payment Basis | Cash Payment Multiple | Total Cash Payment(1) | |||||||||||||
Christopher Bradshaw President and Chief Executive Officer | $ | 695,000 | $ | 1,042,500 | $ | 1,737,500 | 3x | $ | 5,212,500 | |||||||||
Crystal Gordon Senior Vice President, General Counsel and Chief Administrative Officer | 375,000 | 375,000 | 750,000 | 2x | 1,500,000 | |||||||||||||
Jennifer Whalen Senior Vice President, Chief Financial Officer | 310,000 | 232,500 | 542,500 | 2x | 1,085,000 | |||||||||||||
Stuart Stavley Senior Vice President, Operations & Fleet Management | 275,000 | 206,250 | 481,250 | 2x | 962,500 | |||||||||||||
Paul White Senior Vice President, Commercial | 275,000 | 206,250 | 481,250 | 2x | 962,500 | |||||||||||||
Grant Newman Senior Vice President, Strategy & Corporate Development | 275,000 | 206,250 | 481,250 | 2x | 962,500 | |||||||||||||
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | ||
The following table provides information with respect to the beneficial ownership of the Common Stock as of March 2, 2020 by:
| Name | Beneficial Ownership | Percentage of Class | ||||
| Directors and Named Executive Officers: | ||||||
Charles Fabrikant(1) | 670,223 | 3.12 | % | |||
Christopher Bradshaw(2) | 541,877 | 2.52 | % | |||
Stuart Stavley(3) | 163,036 | * | ||||
Steven Webster(4) | 99,638 | * | ||||
Jennifer Whalen(5) | 112,653 | * | ||||
Paul White(6) | 89,964 | * | ||||
Crystal Gordon(7) | 66,894 | * | ||||
Grant Newman(8) | 51,814 | * | ||||
Ann Fairbanks(9) | 37,156 | * | ||||
Christopher Papouras(10) | 35,517 | * | ||||
Yueping Sun(11) | 35,281 | * | ||||
All current directors and executive officers as a group (11 individuals)(12) | 1,904,053 | 8.86 | % | |||
| Principal Stockholders: | ||||||
BlackRock, Inc.(13) 55 East 52nd Street New York, NY 10055 | 3,128,435 | 14.56 | % | |||
Wellington Management Company LLP(14) 280 Congress Street Boston, MA 02110 | 1,974,803 | 9.19 | % | |||
Dimensional Fund Advisors LP(15) Building One 6300 Bee Cave Road Austin, TX 78746 | 1,777,106 | 8.27 | % | |||
Royce & Associates, LP(16) 745 Fifth Avenue New York, NY 10151 | 1,675,447 | 7.80 | % | |||
Van Den Berg Management I, Inc.(17) 805 Las Cimas Parkway, Suite 430 Austin, TX 78746 | 1,495,363 | 6.96 | % | |||
The Vanguard Group(18) 100 Vanguard Blvd. Malvern, PA 19355 | 1,402,170 | 6.52 | % | |||
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (2) | ||||||||
Equity compensation plans approved by security holders(1) | 203,612 | $ | 19.62 | 1,941,459 | ||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
| Total | 203,612 | — | 1,941,459 | |||||||
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | ||
The Company established a written policy for the review and approval or ratification of transactions with related persons (the “Related Person Transactions Policy”) to assist the Companyinformation required by this Item will be presented in reviewing transactions in excess of $120,000 (“Transactions”) involving the Company and its subsidiaries and Related Persons (as defined below). Examples include, among other things, sales, purchases or transfers of real or personal property, use of property or equipment by lease or otherwise, services received or furnished, borrowing or lending (including guarantees), employment by the Company of an immediate family member of a Related Person or a change in the material terms or conditions of employment of such an individual and charitable contributions in accordanceour 2022 Proxy Statement, which will be filed with the Company’s policies related thereto.
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | ||||
| Fees | 2019 | 2018 | ||||||
| Audit Fees | $ | 1,001,406 | $ | 1,024,663 | ||||
| Audit-Related Fees | — | — | ||||||
| Tax Fees | — | — | ||||||
| All Other Fees | — | — | ||||||
| Total | $ | 1,001,406 | $ | 1,024,663 | ||||
62
| 2019 | ||||
| Net loss | $ | (4,081 | ) | |
| Depreciation and amortization | 37,619 | |||
| Interest income | (3,487 | ) | ||
| Interest expense | 13,874 | |||
| Income tax benefit | (731 | ) | ||
| Foreign currency losses | 472 | |||
| Loss on debt extinguishment | 13 | |||
| Other, net | 28 | |||
| Equity earnings | (9,935 | ) | ||
Special items (1) | 3,260 | |||
| Adjusted EBITDA | $ | 37,032 | ||
PART IV
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | ||||
(a)Documents filed as part of this report:
1. Financial Statements
The consolidated financial statements filed as part of this report are listed on the Index to Consolidated Financial Statements of this Annual Report on Form 10-K.
2. Financial Statement Schedules
All financial statement schedules have been omitted here because they are not applicable, not required, or the information is shown in the consolidated financial statements or notes thereto.
3. Exhibits
| Exhibit Index | Exhibit Description | ||||||||||
| 2.1 | ** | ||||||||||
| * | |||||||||||
| 3.1 | * | ||||||||||
| 3.2 | * | ||||||||||
| 3.3 | * | ||||||||||
| * | |||||||||||
| 4.1 | * | ||||||||||
| 4.2 | * | ||||||||||
| 4.3 | * | ||||||||||
| * + | |||||||||||
| 10.2 | * + | ||||||||||
| 10.3 | * + | ||||||||||
| 10.4 | * + | ||||||||||
63
| * + | |||||||||||
| * | |||||||||||
| * | |||||||||||
| 21.1 | |||||||||||
| 23.1 | |||||||||||
| 31.1 | |||||||||||
| 31.2 | |||||||||||
| 32.1 | |||||||||||
| 32.2 | |||||||||||
| 101.INS | XBRL Instance Document | ||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema | ||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | ||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | ||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | ||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | ||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||||||||||
| * | Incorporated herein by reference as indicated. | ||||
| ** | Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the U.S. Securities and Exchange Commission. | ||||
| + | Management contracts or compensatory plans or arrangements required to be filed as an Exhibit pursuant to Item 15 (b) of the rules governing the preparation of this Annual Report on Form 10-K. | ||||
| ITEM 16. | FORM 10-K SUMMARY | ||||
None.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, and in the capacities indicated, thereunto duly authorized.
| Bristow Group Inc. | ||||||||||||||
| By: | ||||||||||||||
| /s/ Jennifer D. Whalen | ||||||||||||||
Jennifer D. Whalen, SeniorVice President, Chief Financial Officer | ||||||||||||||
| May 31, 2022 | ||||||||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | ||||||||||||||
| Title | Date | |||||||||||||
| /s/ Christopher S. Bradshaw | President, Chief Executive Officer and Director | |||||||||||||
| Christopher S. Bradshaw | (Principal Executive Officer) | |||||||||||||
| /s/ Jennifer D. Whalen | Senior Vice President and Chief Financial Officer | |||||||||||||
| Jennifer D. Whalen | (Principal Financial Officer) | |||||||||||||
| /s/ Richard Tatum | Vice President and Chief Accounting Officer | May 31, 2022 | ||||||||||||
| Richard Tatum | (Principal Accounting | |||||||||||||
| /s/ | Chairman of the Board and Director | |||||||||||||
| G. Mark Mickelson | ||||||||||||||
| /s/ | Director | |||||||||||||
| Lorin L. Brass | ||||||||||||||
| Director | May 31, 2022 | |||||||||||||
| Charles Fabrikant | ||||||||||||||
| /s/ Wesley E. Kern | Director | May 31, 2022 | ||||||||||||
| Wesley E. Kern | ||||||||||||||
| /s/ Robert J. Manzo | Director | May 31, 2022 | ||||||||||||
| Robert J. Manzo | ||||||||||||||
| /s/ Maryanne Miller | Director | May 31, 2022 | ||||||||||||
| Gen. Maryanne Miller | ||||||||||||||
| /s/ Christopher | Director | |||||||||||||
| Christopher | ||||||||||||||
| /s/ | Director | |||||||||||||
| Brian D. Truelove | ||||||||||||||
| *By | /s/ Crystal Gordon | May 31, 2022 | ||||||||||||
| Crystal Gordon, Senior Vice President, General Counsel, Head of Government Affairs, and Corporate Secretary, as Attorney-In-Fact for each of the Persons indicated | ||||||||||||||
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||||
Reports of Independent Registered Public Accounting | ||||||
| Consolidated Financial Statements: | ||||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the ShareholdersStockholders and the Board of Directors of Era
Bristow Group Inc.
:
Opinion on the financial statementsConsolidated Financial Statements
We have audited the accompanying consolidated balance sheets of EraBristow Group Inc. (a Delaware corporation) and subsidiaries (the “Company”)Company) as of DecemberMarch 31, 20192022 and 2018,2021, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ investment and mezzanine equity, and cash flows for each of the two years in the two-year period ended DecemberMarch 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audits and the report of other auditors, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of DecemberMarch 31, 20182022 and 2021, and the results of its operations and its cash flows for the year then ended,Successor and Predecessor periods, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated May 31, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis of Presentation
As discussed in Note 1 to the consolidated financial statements, on October 8, 2019, the United States Bankruptcy Court for the Southern District of Texas entered an order confirming the Company’s amended plan for reorganization under Chapter 11 of the Bankruptcy Code, which became effective on October 31, 2019. Accordingly, the accompanying consolidated financial statements have been prepared in conformity with Accounting Standards Codification 852, Reorganizations, with the Company’s assets, liabilities and a capital structure having carrying amounts not comparable with prior periods as Described in Note 1.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sthese consolidated financial statements based on our audit.
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditaudits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our auditaudits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our auditaudits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of investment in equity securities
As disclosed in Note 5 to the consolidated financial statements, the Company has a 25% interest in the equity securities of Petroleum Air Services (PAS). PAS is accounted for as a cost method investment and had a carrying amount of $17.0 million as of March 31, 2022. The Company accounts for this investment at cost less impairment, with the investment’s carrying amount adjusted to fair value at the time of the next observable price change for the identical or a similar investment of the
67
same issuer or when an impairment is recognized. During the fiscal year ended March 31, 2022, upon evaluating its investment in PAS, the Company identified an indicator of impairment due to a decline in PAS’s performance. As a result, the Company performed a fair valuation of its investment in PAS.
We identified the assessment of the Company’s valuation of its investment in PAS as a critical audit matter due to significant measurement uncertainty. Specifically, a high degree of subjective auditor judgment and specialized skills and knowledge were required to evaluate the selection of the valuation multiples used in the determination of the fair value of PAS.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the estimate of the fair value of PAS, including a control related to the selection of valuation multiples. We involved valuation professionals with specialized skills and knowledge, who assisted in assessing the reasonableness of the valuation multiples used by comparing the valuation multiples to publicly traded comparable companies.
/s/ KPMG LLP
We have served as the Company’s auditor since 2011.2003.
68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the ShareholdersStockholders and the Board of Directors of Era
Bristow Group Inc.:
Opinion on theInternal Control Over Financial StatementsReporting
We have audited Bristow Group Inc. and subsidiaries' (the Company) internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the accompanyingCommittee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ investment and mezzanine equity, and cash flows for each of Era Group Inc. (the Company)the years in the two-year period ended March 31, 2022 and for the yearfive months ended DecemberMarch 31, 2017,2020 (Successor periods) and the seven months ended October 31, 2019 (Predecessor period), and the related notes (collectively, referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the consolidated results of its operationsfinancial statements), and its cash flows for the year ended Decemberour report dated May 31, 2017, in conformity with U.S. generally accepted accounting principles.2022 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of itseffective internal control over financial reporting. As partreporting was maintained in all material respects. Our audit of our audit we are required to obtaininternal control over financial reporting included obtaining an understanding of internal control over financial reporting, but not forassessing the purposerisk that a material weakness exists, and testing and evaluating the design and operating effectiveness of expressing an opinioninternal control based on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/Ernst & Young KPMG LLP
Houston, Texas
69
(In thousands, except per share amounts)
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Operating revenues | $ | 1,139,063 | $ | 1,139,024 | $ | 467,725 | $ | 722,919 | ||||||||||||||||||
| Reimbursable revenues | 46,141 | 39,038 | 18,038 | 34,304 | ||||||||||||||||||||||
| Total revenues | 1,185,204 | 1,178,062 | 485,763 | 757,223 | ||||||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Operating expenses | 872,857 | 851,173 | 370,637 | 569,840 | ||||||||||||||||||||||
| Reimbursable expenses | 45,557 | 38,789 | 17,683 | 33,023 | ||||||||||||||||||||||
| General and administrative expenses | 159,062 | 153,270 | 64,960 | 88,392 | ||||||||||||||||||||||
| Merger and integration costs | 3,240 | 42,842 | 6,330 | — | ||||||||||||||||||||||
| Restructuring costs | 3,098 | 25,773 | 227 | 4,539 | ||||||||||||||||||||||
| Prepetition restructuring charges | — | — | — | 13,476 | ||||||||||||||||||||||
| Depreciation and amortization expense | 74,981 | 70,078 | 28,238 | 70,864 | ||||||||||||||||||||||
| Total costs and expenses | 1,158,795 | 1,181,925 | 488,075 | 780,134 | ||||||||||||||||||||||
| Loss on impairment | (24,835) | (91,260) | (9,591) | (62,101) | ||||||||||||||||||||||
| Gain (loss) on disposal of assets | 1,347 | (8,199) | (451) | (3,768) | ||||||||||||||||||||||
| Earnings (losses) from unconsolidated affiliates, net | (1,738) | 426 | 7,262 | 6,589 | ||||||||||||||||||||||
| Operating income (loss) | 1,183 | (102,896) | (5,092) | (82,191) | ||||||||||||||||||||||
| Interest income | 161 | 1,293 | 662 | 822 | ||||||||||||||||||||||
| Interest expense | (41,521) | (51,259) | (22,964) | (128,658) | ||||||||||||||||||||||
| Loss on extinguishment of debt | (124) | (29,359) | — | — | ||||||||||||||||||||||
| Reorganization items, net | (621) | 1,577 | (7,232) | (617,973) | ||||||||||||||||||||||
| Loss on sale of subsidiaries | (2,002) | — | — | (55,883) | ||||||||||||||||||||||
| Change in fair value of preferred stock derivative liability | — | 15,416 | 184,140 | — | ||||||||||||||||||||||
| Gain on bargain purchase | — | 81,093 | — | — | ||||||||||||||||||||||
| Other, net | 38,505 | 27,495 | (9,956) | (3,501) | ||||||||||||||||||||||
| Total other income (expense), net | (5,602) | 46,256 | 144,650 | (805,193) | ||||||||||||||||||||||
| Income (loss) before income taxes | (4,419) | (56,640) | 139,558 | (887,384) | ||||||||||||||||||||||
| Income tax benefit (expense) | (11,294) | 355 | (482) | 51,178 | ||||||||||||||||||||||
| Net income (loss) | (15,713) | (56,285) | 139,076 | (836,206) | ||||||||||||||||||||||
| Net loss (income) attributable to noncontrolling interests | (78) | 191 | 152 | (208) | ||||||||||||||||||||||
| Net income (loss) attributable to Bristow Group Inc. | $ | (15,791) | $ | (56,094) | $ | 139,228 | $ | (836,414) | ||||||||||||||||||
Income (loss) per common share(1): | ||||||||||||||||||||||||||
| Basic | $ | (0.55) | $ | 3.12 | $ | 20.11 | $ | (23.29) | ||||||||||||||||||
| Diluted | $ | (0.55) | $ | 2.32 | $ | (1.51) | $ | (23.29) | ||||||||||||||||||
Weighted average common shares outstanding(1): | ||||||||||||||||||||||||||
| Basic | 28,533 | 24,601 | 5,641 | 35,919 | ||||||||||||||||||||||
| Diluted | 28,533 | 31,676 | 29,806 | 35,919 | ||||||||||||||||||||||
(1) See Note 15 to the consolidated financial statements for details on income (loss) per share and weighted average common shares outstanding.
See accompanying notes to consolidated financial statements.
70
BRISTOW GROUP INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except share amounts)thousands)
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Net income (loss) | $ | (15,713) | $ | (56,285) | $ | 139,076 | $ | (836,206) | ||||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||||||||||||
| Currency translation adjustments | (25,274) | 49,803 | (16,440) | 23,004 | ||||||||||||||||||||||
| Pension liability adjustment | 5,962 | (45,071) | 6,389 | — | ||||||||||||||||||||||
| Unrealized gain (loss) on cash flow hedges, net of tax | 2,777 | (3,006) | 1,410 | (682) | ||||||||||||||||||||||
| Total other comprehensive income (loss) | (16,535) | 1,726 | (8,641) | 22,322 | ||||||||||||||||||||||
| Total comprehensive income (loss) | (32,248) | (54,559) | 130,435 | (813,884) | ||||||||||||||||||||||
| Net comprehensive (income) loss attributable to noncontrolling interests | (78) | 191 | 152 | (208) | ||||||||||||||||||||||
| Total comprehensive income (loss) attributable to Bristow Group Inc. | $ | (32,326) | $ | (54,368) | $ | 130,587 | $ | (814,092) | ||||||||||||||||||
See accompanying notes to consolidated financial statements.
| December 31, | ||||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
Cash and cash equivalents (including $1,745 from VIEs in 2018)(1) | $ | 117,366 | $ | 50,753 | ||||
| Receivables: | ||||||||
| Trade, operating, net of allowance for doubtful accounts of $261 in 2018 (including $5,565 from VIEs in 2018) | 32,730 | 33,306 | ||||||
| Trade, dry-leasing | 5,234 | 3,803 | ||||||
| Tax receivables (including $3,187 from VIEs in 2018) | 2,860 | 3,187 | ||||||
| Other (including $340 from VIEs in 2018) | 15,421 | 2,343 | ||||||
| Inventories, net (including $40 from VIEs in 2018) | 20,066 | 20,673 | ||||||
| Prepaid expenses (including $10 from VIEs in 2018) | 2,184 | 1,807 | ||||||
| Total current assets | 195,861 | 115,872 | ||||||
| Property and equipment: | ||||||||
| Helicopters | 788,623 | 805,453 | ||||||
| Machinery, equipment and spares (including $750 from VIEs in 2018) | 38,057 | 37,487 | ||||||
| Construction in progress | 6,970 | 7,086 | ||||||
| Buildings and leasehold improvements (including $154 from VIEs in 2018) | 39,112 | 45,303 | ||||||
| Furniture, fixtures, vehicles and other (including $471 from VIEs in 2018) | 22,301 | 21,832 | ||||||
| Property and equipment, at cost | 895,063 | 917,161 | ||||||
| Accumulated depreciation (including $485 from VIEs in 2018) | (338,164 | ) | (317,967 | ) | ||||
| Property and equipment, net | 556,899 | 599,194 | ||||||
| Operating lease right-of-use | 9,468 | — | ||||||
| Equity investments and advances | — | 27,112 | ||||||
| Intangible assets | 96 | 1,107 | ||||||
| Other assets (including $96 from VIEs in 2018) | 2,191 | 21,578 | ||||||
| Total assets | $ | 764,515 | $ | 764,863 | ||||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses (including $1,522 from VIEs in 2018) | $ | 12,923 | $ | 13,161 | ||||
| Accrued wages and benefits (including $1,429 from VIEs in 2018) | 10,554 | 9,267 | ||||||
| Accrued interest | 520 | 569 | ||||||
| Accrued income taxes | 3,612 | 973 | ||||||
| Accrued other taxes (including $500 from VIEs in 2018) | 937 | 1,268 | ||||||
| Accrued contingencies (including $630 from VIEs in 2018) | 598 | 630 | ||||||
| Current portion of long-term debt (including $395 from VIEs in 2018) | 18,317 | 2,058 | ||||||
| Other current liabilities | 3,315 | 878 | ||||||
| Total current liabilities | 50,776 | 28,804 | ||||||
| Long-term debt | 141,832 | 160,217 | ||||||
| Deferred income taxes | 103,793 | 108,357 | ||||||
| Operating lease liabilities | 7,815 | — | ||||||
| Deferred gains and other liabilities | 745 | 747 | ||||||
| Total liabilities | 304,961 | 298,125 | ||||||
| Commitments and contingencies (see Note 8) | ||||||||
| Redeemable noncontrolling interest | 2,812 | 3,302 | ||||||
| Equity: | ||||||||
| Common stock, $0.01 par value, 60,000,000 shares authorized; 21,285,613 and 21,765,404 outstanding in 2019 and 2018, respectively, exclusive of treasury shares | 224 | 219 | ||||||
| Additional paid-in capital | 452,009 | 447,298 | ||||||
| Retained earnings | 14,692 | 18,285 | ||||||
| Treasury shares, at cost, 1,152,826 and 156,737 shares in 2019 and 2018, respectively | (10,183 | ) | (2,476 | ) | ||||
| Accumulated other comprehensive income, net of tax | — | 110 | ||||||
| Total equity | 456,742 | 463,436 | ||||||
| Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ | 764,515 | $ | 764,863 | ||||
71
BRISTOW GROUP INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
| March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 263,769 | $ | 228,010 | |||||||
| Restricted cash | 2,245 | 3,069 | |||||||||
| Accounts receivables, net | 203,771 | 215,620 | |||||||||
| Inventories | 81,674 | 92,180 | |||||||||
| Assets held for sale | 59 | 14,750 | |||||||||
| Prepaid expenses and other current assets | 28,367 | 32,119 | |||||||||
| Total current assets | 579,885 | 585,748 | |||||||||
| Property and equipment | 1,092,140 | 1,090,094 | |||||||||
| Accumulated depreciation and amortization | (149,532) | (85,535) | |||||||||
| Property and equipment, net | 942,608 | 1,004,559 | |||||||||
| Investment in unconsolidated affiliates | 17,585 | 37,530 | |||||||||
| Right-of-use assets | 193,505 | 246,667 | |||||||||
| Other assets | 90,696 | 117,766 | |||||||||
| Total assets | $ | 1,824,279 | $ | 1,992,270 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 63,497 | $ | 69,542 | |||||||
| Accrued wages, benefits and related taxes | 53,424 | 58,595 | |||||||||
| Income taxes payable and other accrued taxes | 13,410 | 19,972 | |||||||||
| Deferred revenue | 15,161 | 13,598 | |||||||||
| Accrued maintenance and repairs | 38,354 | 26,907 | |||||||||
| Current portion of operating lease liabilities | 69,866 | 77,909 | |||||||||
| Accrued interest and other accrued liabilities | 21,284 | 22,632 | |||||||||
| Short-term borrowings and current maturities of long-term debt | 12,759 | 15,965 | |||||||||
| Total current liabilities | 287,755 | 305,120 | |||||||||
| Long-term debt, less current maturities | 512,909 | 527,528 | |||||||||
| Accrued pension liabilities | 18,170 | 44,150 | |||||||||
| Other liabilities and deferred credits | 4,825 | 6,681 | |||||||||
| Deferred taxes | 39,811 | 42,430 | |||||||||
| Long-term operating lease liabilities | 125,441 | 167,718 | |||||||||
| Total liabilities | 988,911 | 1,093,627 | |||||||||
| Commitments and contingencies (Note 9) | 0 | 0 | |||||||||
| Redeemable noncontrolling interests | — | 1,572 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock, $0.01 par value, 110,000 authorized; 28,287 and 29,694 outstanding as of March 31, 2022 and 2021, respectively | 303 | 303 | |||||||||
| Additional paid-in capital | 699,401 | 687,715 | |||||||||
| Retained earnings | 211,220 | 227,011 | |||||||||
| Treasury shares, at cost; 1,983 and 467 shares as of March 31, 2022 and 2021, respectively | (51,659) | (10,501) | |||||||||
| Accumulated other comprehensive loss | (23,450) | (6,915) | |||||||||
| Total Bristow Group Inc. stockholders’equity | 835,815 | 897,613 | |||||||||
| Noncontrolling interests | (447) | (542) | |||||||||
| Total stockholders’ equity | 835,368 | 897,071 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,824,279 | $ | 1,992,270 | |||||||
See accompanying notes to footnote 5 for more detail on variable interest entities (“VIE”)consolidated financial statements.
72
BRISTOW GROUP INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Investment and Mezzanine Equity
(In thousands)
| Total Bristow Group Inc. 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, 2019 (Predecessor) | 386 | 35,919 | 862,020 | 455,598 | (327,989) | (184,796) | 7,148 | 812,367 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | 1,871 | — | — | — | — | 1,871 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Beneficial conversion feature on DIP Loan | — | — | 56,870 | — | — | — | — | 56,870 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of subsidiaries | — | — | — | — | — | — | (5,612) | (5,612) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions paid to noncontrolling interests | — | — | — | — | — | — | (1,323) | (1,323) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | — | — | — | — | — | — | 52 | 52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | (836,414) | — | — | 208 | (836,206) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 22,322 | — | — | 22,322 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of Predecessor equity | (386) | (35,919) | (920,761) | 380,816 | 305,667 | 184,796 | — | (49,868) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| October 31, 2019 (Predecessor) | $ | — | — | $ | — | $ | — | $ | — | $ | — | $ | 473 | $ | 473 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
73
BRISTOW GROUP INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Investment and Mezzanine Equity
(In thousands)
| Total Bristow Group Inc. Stockholders’ Investment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Noncontrolling Interest | Mezzanine equity preferred stock | Common Stock | Common Stock (Shares) | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Interests | Total Stockholders’ Investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Successor common and preferred stock | $ | — | $ | 618,921 | $ | 1 | 11,236 | $ | 294,670 | $ | — | $ | — | $ | — | $ | — | $ | 294,671 | ||||||||||||||||||||||||||||||||||||||||
| October 31, 2019 (Successor) | — | 618,921 | 1 | 11,236 | 294,670 | — | — | — | (105) | 294,566 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock | — | 1,186 | — | — | 1,227 | — | — | — | — | 1,227 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Initial reclassification of embedded derivative to long-term liability | — | (470,322) | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | — | — | — | — | — | — | — | — | (12) | (12) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | 139,228 | — | — | (152) | 139,076 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | (8,641) | — | — | (8,641) | |||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2020 (Successor) | $ | — | $ | 149,785 | $ | 1 | 11,236 | $ | 295,897 | $ | 139,228 | $ | (8,641) | $ | — | $ | (269) | $ | 426,216 | ||||||||||||||||||||||||||||||||||||||||
| Share repurchases | — | (2,151) | — | (143) | — | 1,263 | — | — | — | 1,263 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock share conversion | — | (146,448) | 4 | 34,837 | 270,678 | 142,614 | — | — | — | 413,296 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Elimination of Old Bristow stock | — | — | (5) | (45,930) | 5 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange of common stock | — | — | 231 | 23,027 | (231) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Era purchase price | — | — | 72 | 7,175 | 108,268 | — | — | — | — | 108,340 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock compensation activity and conversion | — | (1,186) | — | — | 6,370 | — | — | — | — | 6,370 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock | — | — | — | 1 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Share award amortization | — | — | — | — | 6,333 | — | — | — | — | 6,333 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury shares | — | — | — | (467) | — | — | — | (10,501) | — | (10,501) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Era purchase price adjustment | 1,501 | — | — | — | 395 | — | — | — | — | 395 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of Company common stock (tax withholding) | — | — | — | (42) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | — | — | — | — | — | — | — | — | (11) | (11) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | 71 | — | — | — | (56,094) | — | — | (262) | (56,356) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | 1,726 | — | — | 1,726 | |||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2021 (Successor) | $ | 1,572 | $ | — | $ | 303 | 29,694 | $ | 687,715 | $ | 227,011 | $ | (6,915) | $ | (10,501) | $ | (542) | $ | 897,071 | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | $ | — | $ | — | $ | — | 110 | $ | 11,686 | $ | — | $ | — | $ | — | $ | — | $ | 11,686 | ||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury shares | — | — | — | (1,517) | — | — | — | (41,158) | — | (41,158) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of noncontrolling interest | (1,572) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | — | — | — | — | — | — | — | — | 17 | 17 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | (15,791) | — | — | 78 | (15,713) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | (16,535) | — | — | (16,535) | |||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 (Successor) | $ | — | $ | — | $ | 303 | 28,287 | $ | 699,401 | $ | 211,220 | $ | (23,450) | $ | (51,659) | $ | (447) | $ | 835,368 | ||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
74
| Year Ended December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Revenues: | ||||||||||||
| Operating revenues | $ | 210,035 | $ | 210,194 | $ | 214,927 | ||||||
| Dry-leasing revenues | 16,024 | 11,482 | 16,394 | |||||||||
| Total revenues | 226,059 | 221,676 | 231,321 | |||||||||
| Costs and expenses: | ||||||||||||
| Operating | 154,546 | 151,523 | 167,446 | |||||||||
| Administrative and general | 38,278 | 45,126 | 42,092 | |||||||||
| Depreciation and amortization | 37,619 | 39,541 | 45,736 | |||||||||
| Total costs and expenses | 230,443 | 236,190 | 255,274 | |||||||||
| Gains on asset dispositions | 3,657 | 1,575 | 4,507 | |||||||||
| Litigation settlement proceeds | — | 42,000 | — | |||||||||
| Loss on impairment | (2,551 | ) | (991 | ) | (117,018 | ) | ||||||
| Operating income (loss) | (3,278 | ) | 28,070 | (136,464 | ) | |||||||
| Other income (expense): | ||||||||||||
| Interest income | 3,487 | 2,042 | 760 | |||||||||
| Interest expense | (13,874 | ) | (15,131 | ) | (16,763 | ) | ||||||
| Loss on sale of investments | (569 | ) | — | — | ||||||||
| Foreign currency losses, net | (472 | ) | (1,018 | ) | (226 | ) | ||||||
| Gains (losses) on debt extinguishment | (13 | ) | 175 | — | ||||||||
| Other, net | (28 | ) | 54 | (12 | ) | |||||||
| Total other income (expense) | (11,469 | ) | (13,878 | ) | (16,241 | ) | ||||||
| Income (loss) before income tax expense and equity earnings | (14,747 | ) | 14,192 | (152,705 | ) | |||||||
| Income tax expense (benefit): | ||||||||||||
| Current | 3,803 | 1,181 | (3,523 | ) | ||||||||
| Deferred | (4,534 | ) | 1,759 | (119,142 | ) | |||||||
| Total income tax expense (benefit) | (731 | ) | 2,940 | (122,665 | ) | |||||||
| Income (loss) before equity earnings | (14,016 | ) | 11,252 | (30,040 | ) | |||||||
| Equity earnings, net of tax | 9,935 | 2,206 | 1,425 | |||||||||
| Net income (loss) | (4,081 | ) | 13,458 | (28,615 | ) | |||||||
| Net loss attributable to noncontrolling interest in subsidiaries | 488 | 464 | 454 | |||||||||
| Net income (loss) attributable to Era Group Inc. | $ | (3,593 | ) | $ | 13,922 | $ | (28,161 | ) | ||||
| Earnings (loss) per common share: | ||||||||||||
| Basic | $ | (0.17 | ) | $ | 0.64 | $ | (1.36 | ) | ||||
| Diluted | $ | (0.17 | ) | $ | 0.64 | $ | (1.36 | ) | ||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 21,009,362 | 21,167,550 | 20,760,530 | |||||||||
| Diluted | 21,010,715 | 21,180,490 | 20,760,530 | |||||||||
(in thousands)
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||||||
| Net income (loss) | $ | (15,713) | $ | (56,285) | $ | 139,076 | $ | (836,206) | ||||||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||||||||
| Depreciation and amortization expense | 87,236 | 90,464 | 43,741 | 70,864 | ||||||||||||||||||||||
| Deferred income taxes | (1,744) | (15,468) | (4,866) | (62,476) | ||||||||||||||||||||||
| Loss on extinguishment of debt | 124 | 29,359 | — | — | ||||||||||||||||||||||
| Write-off of deferred financing fees | — | 117 | — | 4,038 | ||||||||||||||||||||||
| Bad debt expense | 309 | 1,766 | — | — | ||||||||||||||||||||||
| Amortization of deferred financing fees | 1,323 | — | — | — | ||||||||||||||||||||||
| Discount amortization on long-term debt | 7,710 | 16,146 | 5,890 | 1,563 | ||||||||||||||||||||||
| Reorganization items, net | — | (1,577) | (16,254) | 552,304 | ||||||||||||||||||||||
| Loss (gain) on disposal of assets | (1,347) | 8,199 | 451 | 3,768 | ||||||||||||||||||||||
| Loss on impairment | 24,835 | 91,260 | 9,591 | 62,101 | ||||||||||||||||||||||
| Loss on sale of subsidiaries | 2,002 | — | — | 55,883 | ||||||||||||||||||||||
| Deferral of lease payments | — | — | — | 285 | ||||||||||||||||||||||
| Beneficial conversion feature on DIP Loan | — | — | — | 56,870 | ||||||||||||||||||||||
| Gain on insurance receivable | — | (2,614) | — | — | ||||||||||||||||||||||
| DIP Claim Liability | — | — | — | 15,000 | ||||||||||||||||||||||
| Gain on bargain purchase | — | (81,093) | — | — | ||||||||||||||||||||||
| Change in fair value of preferred stock derivative liability | — | (15,416) | (184,140) | — | ||||||||||||||||||||||
| Share-based compensation expense | 11,686 | 11,518 | 2,412 | 1,871 | ||||||||||||||||||||||
| Equity in earnings from unconsolidated affiliates less than dividends received | 1,738 | 3,549 | (1,184) | (1,776) | ||||||||||||||||||||||
| Increase (decrease) in cash resulting from changes in: | ||||||||||||||||||||||||||
| Accounts receivable | 10,584 | 39,857 | 24,097 | (10,247) | ||||||||||||||||||||||
| Inventory, prepaid expenses and other assets | 15,916 | 13,502 | (3,339) | (1,831) | ||||||||||||||||||||||
| Accounts payable, accrued expenses and other liabilities | (20,805) | (36,439) | (24,988) | (10,877) | ||||||||||||||||||||||
| Net cash provided by (used in) operating activities | 123,854 | 96,845 | (9,513) | (98,866) | ||||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||
| Capital expenditures | (31,068) | (14,844) | (36,115) | (41,574) | ||||||||||||||||||||||
| Proceeds from asset dispositions | 14,549 | 67,882 | 13,845 | 5,314 | ||||||||||||||||||||||
| Deposits on assets held for sale | — | — | 4,500 | — | ||||||||||||||||||||||
| Cash transferred in sale of subsidiaries, net of cash received | (851) | — | — | (22,458) | ||||||||||||||||||||||
| Increase in cash from Era merger | — | 120,236 | — | — | ||||||||||||||||||||||
| Net cash provided by (used in) investing activities | (17,370) | 173,274 | (17,770) | (58,718) | ||||||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||
| Proceeds from borrowings | — | 400,000 | — | 225,585 | ||||||||||||||||||||||
| Debt issuance costs | (3,112) | (6,391) | — | (14,863) | ||||||||||||||||||||||
| Repayment of debt and debt redemption premiums | (19,213) | (618,140) | (25,132) | (366,750) | ||||||||||||||||||||||
| Prepayment premium fees | — | (5,778) | — | — | ||||||||||||||||||||||
| Partial prepayment of put/call obligation | — | — | — | (1,323) | ||||||||||||||||||||||
| Issuance of common and preferred stock | — | — | — | 385,000 | ||||||||||||||||||||||
| Purchase of treasury shares | (41,158) | (10,501) | — | — | ||||||||||||||||||||||
| Old Bristow share repurchases | — | (4,807) | — | — | ||||||||||||||||||||||
| Net cash provided by (used in) financing activities | (63,483) | (245,617) | (25,132) | 227,649 | ||||||||||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (8,066) | 7,456 | 1,010 | 2,406 | ||||||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 34,935 | 31,958 | (51,405) | 72,471 | ||||||||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 231,079 | 199,121 | 250,526 | 178,055 | ||||||||||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 266,014 | $ | 231,079 | $ | 199,121 | $ | 250,526 | ||||||||||||||||||
| Year Ended December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Net income (loss) | $ | (4,081 | ) | $ | 13,458 | $ | (28,615 | ) | ||||
| Other comprehensive income: | ||||||||||||
| Foreign currency translation adjustments | — | — | 18 | |||||||||
| Total other comprehensive income | — | — | 18 | |||||||||
| Comprehensive income (loss) | (4,081 | ) | 13,458 | (28,597 | ) | |||||||
| Comprehensive loss attributable to noncontrolling interest in subsidiaries | 488 | 464 | 454 | |||||||||
| Comprehensive income (loss) attributable to Era Group Inc. | $ | (3,593 | ) | $ | 13,922 | $ | (28,143 | ) | ||||
75
| Era Group Inc. Stockholders’ Equity | |||||||||||||||||||||||||||||
| Redeemable Noncontrolling Interest | Common Stock | Additional Paid-in Capital | Retained Earnings | Shares Held In Treasury | Accumulated Other Comprehensive Income (Loss) | Total Equity | |||||||||||||||||||||||
| December 31, 2016 | $ | 4,221 | $ | 211 | $ | 438,489 | $ | 32,524 | $ | (2,899 | ) | $ | 92 | $ | 468,417 | ||||||||||||||
| Issuance of common stock: | |||||||||||||||||||||||||||||
| Restricted stock grants | — | 3 | (3 | ) | — | — | — | — | |||||||||||||||||||||
| Employee Stock Purchase Plan | — | 1 | 835 | — | — | — | 836 | ||||||||||||||||||||||
| Share award amortization | — | — | 4,671 | — | — | — | 4,671 | ||||||||||||||||||||||
| Cancellation of restricted stock | — | — | (48 | ) | — | — | — | (48 | ) | ||||||||||||||||||||
| Purchase of treasury shares | — | — | — | — | (52 | ) | — | (52 | ) | ||||||||||||||||||||
| Net loss | (454 | ) | — | — | (28,161 | ) | — | — | (28,161 | ) | |||||||||||||||||||
| Currency translation adjustments, net of tax | — | — | — | — | — | 18 | 18 | ||||||||||||||||||||||
| December 31, 2017 | 3,766 | 215 | 443,944 | 4,363 | (2,951 | ) | 110 | 445,681 | |||||||||||||||||||||
| Issuance of common stock: | |||||||||||||||||||||||||||||
| Restricted stock grants | — | 3 | (3 | ) | — | — | — | — | |||||||||||||||||||||
| Employee Stock Purchase Plan | — | 1 | 892 | — | — | — | 893 | ||||||||||||||||||||||
| Share award amortization | — | — | 2,940 | — | — | — | 2,940 | ||||||||||||||||||||||
| Cancellation of stock options | — | — | (475 | ) | — | 475 | — | — | |||||||||||||||||||||
| Net income (loss) | (464 | ) | — | — | 13,922 | — | — | 13,922 | |||||||||||||||||||||
| December 31, 2018 | 3,302 | 219 | 447,298 | 18,285 | (2,476 | ) | 110 | 463,436 | |||||||||||||||||||||
| Issuance of common stock: | |||||||||||||||||||||||||||||
| Restricted stock grants | — | 4 | (4 | ) | — | — | — | — | |||||||||||||||||||||
| Employee Stock Purchase Plan | — | 1 | 1,076 | — | — | — | 1,077 | ||||||||||||||||||||||
| Share award amortization | — | — | 3,641 | — | — | — | 3,641 | ||||||||||||||||||||||
| Purchase of treasury shares | — | — | — | — | (7,707 | ) | — | (7,707 | ) | ||||||||||||||||||||
| Exercise of call option | (2 | ) | — | (2 | ) | — | — | — | (2 | ) | |||||||||||||||||||
| Net loss | (488 | ) | — | — | (3,593 | ) | — | — | (3,593 | ) | |||||||||||||||||||
| Currency translation adjustments, net of tax | — | — | — | — | — | (110 | ) | (110 | ) | ||||||||||||||||||||
| December 31, 2019 | $ | 2,812 | $ | 224 | $ | 452,009 | $ | 14,692 | $ | (10,183 | ) | $ | — | $ | 456,742 | ||||||||||||||
| For the years ended December 31, | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | (4,081 | ) | $ | 13,458 | $ | (28,615 | ) | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 37,619 | 39,541 | 45,736 | |||||||||
| Share-based compensation | 3,641 | 2,940 | 4,623 | |||||||||
| Bad debt expense, net | 41 | 82 | 144 | |||||||||
| Interest income | (113 | ) | (943 | ) | — | |||||||
| Non-cash penalty and interest expenses | — | 607 | — | |||||||||
| Gains on asset dispositions, net | (3,657 | ) | (1,575 | ) | (4,507 | ) | ||||||
| Debt discount amortization | 274 | 253 | 234 | |||||||||
| Amortization of deferred financing costs | 966 | 1,410 | 1,136 | |||||||||
Loss on sale of investment | 569 | — | — | |||||||||
| Foreign currency losses, net | 481 | 1,027 | 190 | |||||||||
| Losses (gains) on debt extinguishment | 13 | (175 | ) | — | ||||||||
| Loss on impairment | 2,551 | 991 | 117,018 | |||||||||
| Deferred income tax expense (benefit) | (4,534 | ) | 1,759 | (119,142 | ) | |||||||
| Equity earnings, net of tax | (9,935 | ) | (2,206 | ) | (1,425 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Decrease (increase) in receivables | (1,140 | ) | 501 | (4,889 | ) | |||||||
| Decrease in prepaid expenses and other assets | 1,234 | 278 | 3,320 | |||||||||
| Increase (decrease) in accounts payable, accrued expenses and other liabilities | 3,622 | (3,594 | ) | 6,273 | ||||||||
| Net cash provided by operating activities | 27,551 | 54,354 | 20,096 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property and equipment | (6,558 | ) | (9,216 | ) | (16,770 | ) | ||||||
| Proceeds from disposition of property and equipment | 13,252 | 29,590 | 9,392 | |||||||||
| Purchase of investments | (5,000 | ) | — | — | ||||||||
| Proceeds from sale of investments | 4,430 | — | — | |||||||||
| Investments in and advances to equity investees | — | — | (126 | ) | ||||||||
| Dividends received from equity investees | — | 1,000 | — | |||||||||
| Proceeds from sale of equity investees, net | 34,712 | — | — | |||||||||
| Principal payments on notes due from equity investees | 2,334 | 518 | 761 | |||||||||
| Principal payments on third party notes receivable | 5,447 | 934 | 169 | |||||||||
| Net cash provided by (used in) investing activities | 48,617 | 22,826 | (6,574 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from Revolving Credit Facility | — | — | 17,000 | |||||||||
| Long-term debt issuance costs | — | (1,295 | ) | — | ||||||||
| Payments on long-term debt | (2,055 | ) | (41,886 | ) | (45,281 | ) | ||||||
| Extinguishment of long-term debt | (740 | ) | (1,221 | ) | — | |||||||
| Proceeds from share award plans | 1,077 | 893 | 836 | |||||||||
| Purchase of treasury shares | (7,707 | ) | — | (52 | ) | |||||||
| Net cash used in financing activities | (9,425 | ) | (43,509 | ) | (27,497 | ) | ||||||
| Effects of exchange rate changes on cash, cash equivalents and restricted cash | (130 | ) | 249 | 81 | ||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 66,613 | 33,920 | (13,894 | ) | ||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 50,753 | 16,833 | 30,727 | |||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 117,366 | $ | 50,753 | $ | 16,833 | ||||||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation. Presentation
The consolidated financial statements include the accounts of Bristow Group Inc. and its consolidated entities. On January 23, 2020, Era Group Inc. (“Era”), Ruby Redux Merger Sub, Inc., a wholly owned subsidiary of Era (“Merger Sub”) and Bristow Group Inc. (“Old Bristow”) entered into an Agreement and Plan of Merger, as amended on April 22, 2020 (the “Merger Agreement”). On June 11, 2020, the merger (the “Merger”) contemplated by the Merger Agreement was consummated and Merger Sub merged with and into Old Bristow, with Old Bristow continuing as the surviving corporation and as a direct wholly owned subsidiary of Era. Following the Merger, Era changed its name to Bristow Group Inc., and Old Bristow changed its name to Bristow Holdings U.S. Inc. Unless the context otherwise indicates, in this Annual Report on Form 10-K, references to:
•the “Company”, “Combined Company,” “Bristow”, “we”, “us” and “our” refer to the entity currently known as Bristow Group Inc. and formerly known as Era Group Inc., together with all of its wholly-ownedcurrent subsidiaries;
•“Old Bristow” refers to the entity formerly known as Bristow Group Inc. and now known as Bristow Holdings U.S. Inc., together with its subsidiaries prior to the consummation of the Merger; and
•“Era” refers to Era Group Inc. (currently known as Bristow Group Inc., the parent of the Combined Company) and its subsidiaries prior to consummation of the Merger.
Pursuant to the United States (“U.S.”) generally accepted accounting principles (“GAAP”), the Merger was accounted for as an acquisition by Old Bristow of Era even though Era was the legal acquirer and remained the ultimate parent of the Combined Company. As a result, upon the closing of the Merger, Old Bristow’s historical financial statements replaced Era’s historical financial statements for all periods prior to the completion of the Merger, and the financial condition, results of operations, comprehensive income and cash flows of Era have been included in those financial statements since June 12, 2020. Any reference to comparative period disclosures in this Annual Report on Form 10-K refers to Old Bristow.
As more fully described below under “Emergence from Voluntary Reorganization under Chapter 11”, in May 2019 Old Bristow and a number of its subsidiaries filed for bankruptcy protection in the US Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) and emerged from bankruptcy proceedings on October 31, 2019. Upon emergence Old Bristow adopted fresh start accounting, which resulted in Old Bristow becoming a new entity for financial reporting purposes. In this Annual Report on Form 10-K, references to:
•“Predecessor” refer to Old Bristow on and prior to October 31, 2019; and
•“Successor” refer to the reorganized Old Bristow on and after November 1, 2019 until completion of the Merger and after completion of the Merger refer to the Combined Company.
The consolidated financial information for the fiscal year ended March 31, 2022 (Successor) (“fiscal year 2022”), the fiscal year ended March 31, 2021 (Successor) (“fiscal year 2021”), five months ended March 31, 2021 (Successor) and seven months ended October 31, 2020 (Predecessor) has been prepared by the Company in accordance with GAAP and pursuant to the rules and regulations of the SEC on this Annual Report on Form 10-K.
Emergence from Voluntary Reorganization under Chapter 11
On May 11, 2019 (the “Petition Date”), Old Bristow and certain of its subsidiaries (collectively the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) in the Bankruptcy Court seeking relief under Chapter 11 of Title 11 of the U.S. Code (the “Bankruptcy Code”). The Debtors’ Chapter 11 Cases were jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. During the pendency of the Chapter 11 Cases, the Debtors continued 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 August 1, 2019, the Debtors filed with the Bankruptcy Court their Joint Chapter 11 Plan of Reorganization, and on August 20, 2019, the Debtors filed their Amended Joint Chapter 11 Plan of Reorganization (as further modified on August 22, 2019, the “Amended Plan”) and the related Disclosure Statement (as further modified on August 22, 2019, the “Amended Disclosure Statement”). On
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
October 8, 2019, the Bankruptcy Court entered an order approving the Amended Disclosure Statement and confirming the Amended Plan. The effective date of the Amended Plan (the “Effective Date”) occurred on October 31, 2019 at which point the Debtors emerged from the Chapter 11 Cases. Claims under the Bankruptcy Court approved debtor in possession (DIP) financing Old Bristow obtained while in bankruptcy were settled with the issuance of new common stock (the “Old Bristow Common Stock”) and new preferred stock (the “Old Bristow Preferred Stock”), both at a par of $0.0001, pursuant to the Amended Plan.
Upon Old Bristow’s emergence from bankruptcy, Old Bristow adopted fresh-start accounting in accordance with provisions of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) No. 852, “Reorganizations” (“ASC 852”), which resulted in Old Bristow becoming a new entity for financial reporting purposes on the Effective Date. Upon the adoption of fresh-start accounting, the Company’s assets and liabilities were recorded at their fair values as of the fresh-start reporting date, October 31, 2019. As a result of the adoption of fresh-start accounting, Old Bristow’s consolidated financial statements subsequent to October 31, 2019 may not be comparable to the consolidated financial statements prior to October 31, 2019.
Summary of Significant Accounting Policies
Basis of Consolidation —The consolidated financial statements include the accounts of Bristow Group, Inc., its wholly and majority-owned subsidiaries and entities that meet the criteria of VIEsvariable entities (“VIEs”) of which the Company is the primary beneficiary. All significant intercompanyinter-company accounts and transactions are eliminated in consolidation.
Maintenance and Repairs — The Company generally charges maintenance and repair costs, including major aircraft component overhaul costs, to earnings as the costs are incurred. However, certain major aircraft components, such as engines and transmissions, are maintained by third-party vendors under contractual agreements also referred to as power-by-the-hour (“PBH”) maintenance agreements. Under these agreements, the Company is charged an agreed amount per hour of flying time related to maintenance, repair and overhaul of the parts and components covered. The costs charged under these contractual agreements are recognized in the period in which the flight hours occur. To the extent that the Company has not yet been billed for costs incurred under these arrangements, these costs are included in accrued maintenance and repairs on its consolidated financial statements have been reclassifiedbalance sheets. From time to conform withtime, the current period’s presentation.Company receives credits from its original equipment manufacturers. The Company records these credits as a reduction in maintenance expense when the credits are utilized in lieu of cash payments for purchases or services.
Cash Equivalents. — The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents consist of overnight investments.
| 2019 | 2018 | 2017 | |||||||||
| Cash and cash equivalents | $ | 117,366 | $ | 50,753 | $ | 13,583 | |||||
Restricted cash (1) | — | — | 3,250 | ||||||||
| Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows | $ | 117,366 | $ | 50,753 | $ | 16,833 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
When collection efforts have been exhausted, trade receivables and the associated allowance for doubtful accounts are removed from accounts receivable.
The Company routinely reviews its trade receivables and makes provisions for probable doubtful accounts; however, those provisions are estimates and actual results could differ from those estimates and those differences may be material. Trade receivables are deemed uncollectible and removed from accounts receivable and the allowance for doubtful accounts when collection efforts have been exhausted. AllowanceAs of March 31, 2022 and 2021, the allowance for doubtful accounts related to non-affiliates accounts receivables was $1.9 million and $2.3 million, respectively.
The allowance for doubtful accounts from non-affiliates for the years ended December 31, 2019, 2018 and 2017periods reflected below were as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | |||||||||||||||||||||||||
| Balance – beginning of period | $ | 2,303 | $ | 368 | ||||||||||||||||||||||
| Additional allowances | 32 | 1,935 | ||||||||||||||||||||||||
| Write-offs and collections | (448) | — | ||||||||||||||||||||||||
| Balance – end of period | $ | 1,887 | $ | 2,303 | ||||||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Balance at beginning of period | $ | 261 | $ | 1,196 | $ | 1,219 | ||||||
| Additional allowances charged to expense | 41 | 82 | 144 | |||||||||
| Recovery of previously reserved accounts | (100 | ) | (127 | ) | (82 | ) | ||||||
| Write-offs | (145 | ) | (760 | ) | (68 | ) | ||||||
| Foreign currency adjustments | (2 | ) | (130 | ) | (17 | ) | ||||||
| Balance at end of period | $ | 55 | $ | 261 | $ | 1,196 | ||||||
Inventories. — Inventories are stated at the lower of average cost or net realizable value and consist primarily of spare parts utilized for maintaining the Company’s global fleet of aircraft and fuel.are stated at average cost, net of allowances for excess and obsolete inventory. The Company establishes an allowance to accrue for the retirement of the cost of spare parts expected to be on hand at the end of a fleet’s life over the service lives of the related equipment, taking into account the estimated salvage value of the parts.
As of March 31, 2022 and 2021, the inventory allowances for the periods reflected below were as follows:
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | |||||||||||||||||||||||||
| Balance – beginning of period | $ | 261 | $ | 62 | ||||||||||||||||||||||
| Additional allowances, net | 2,898 | 191 | ||||||||||||||||||||||||
| Foreign currency effects | (8) | 8 | ||||||||||||||||||||||||
| Balance – end of period | $ | 3,151 | $ | 261 | ||||||||||||||||||||||
Intangible Assets — Intangible assets with finite useful lives are amortized over their estimated useful lives to their estimated residual values. The following tableresidual value of an intangible asset is a roll forwardgenerally assumed to be zero, with certain limited exceptions. Finite lived intangible assets are reviewed for impairment when indicators of impairment are present. Indicators of impairment for finite lived intangible assets are the same as those for impairment of long-lived assets. For finite lived intangible assets, an impairment loss is recognized if the carrying amount of the allowance relatedasset exceeds the undiscounted cash flows projected to obsolete andbe generated by the asset. If the finite lived intangible asset is impaired, then the amount of the impairment is calculated as the excess inventoryof the asset’s carrying amount over its fair value. After an impairment loss is recognized, the adjusted carrying amount of the intangible asset will be its new accounting basis. After adjusting the carrying amount for impairment loss, the Company’s policy requires the reevaluation of the useful life of that asset.
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BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Intangible assets by type for the years ended December 31, 2019, 2018 and 2017periods reflected below were as follows (in thousands):
| U.K. SAR customer contract | PBH | Total | |||||||||||||||
| Gross Carrying Amount | |||||||||||||||||
| March 31, 2020 | $ | 55,706 | $ | 74,321 | $ | 130,027 | |||||||||||
Additions(1) | — | 14,423 | 14,423 | ||||||||||||||
| Translation | 5,542 | 5,689 | 11,231 | ||||||||||||||
| March 31, 2021 | $ | 61,248 | $ | 94,433 | $ | 155,681 | |||||||||||
| Additions | — | 233 | 233 | ||||||||||||||
| Translation | (2,008) | (2,585) | (4,593) | ||||||||||||||
| March 31, 2022 | $ | 59,240 | $ | 92,081 | $ | 151,321 | |||||||||||
| Accumulated Amortization | |||||||||||||||||
| March 31, 2020 | $ | (3,251) | $ | (15,503) | $ | (18,754) | |||||||||||
| Amortization expense | (7,969) | (20,172) | (28,141) | ||||||||||||||
| March 31, 2021 | (11,220) | (35,675) | (46,895) | ||||||||||||||
| Amortization expense | (8,235) | (12,270) | (20,505) | ||||||||||||||
| March 31, 2022 | $ | (19,455) | $ | (47,945) | $ | (67,400) | |||||||||||
| Weighted average remaining contractual life, in years | 5.0 | 9.6 | 6.7 | ||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Balance at beginning of period | $ | 3,246 | $ | 3,739 | $ | 4,012 | ||||||
Increase (decrease) in allowances, net (1) | 15 | (493 | ) | (273 | ) | |||||||
| Balance at end of period | $ | 3,261 | $ | 3,246 | $ | 3,739 | ||||||
(1) Includes $0.1 million eliminationRelated to Era’s PBH contracts added as a result of H225 inventory reservethe Merger.
Future amortization expense of intangible assets for 2017.periods ending March 31 is as follows (in thousands):
| U.K. SAR customer contract | PBH(2) | Total | |||||||||||||||
| 2023 | $ | 7,957 | $ | 12,008 | $ | 19,965 | |||||||||||
| 2024 | 7,957 | 11,022 | 18,979 | ||||||||||||||
| 2025 | 7,957 | 10,808 | 18,765 | ||||||||||||||
| 2026 | 7,957 | 7,957 | 15,914 | ||||||||||||||
| 2027 | 7,957 | 233 | 8,190 | ||||||||||||||
| Thereafter | — | 2,108 | 2,108 | ||||||||||||||
| $ | 39,785 | $ | 44,136 | $ | 83,921 | ||||||||||||
___________________
(2) The future amortization expense for PBH will be included in maintenance expense.
Property and Equipment.equipment — Property and equipment, is stated at cost, isand depreciated using the straight-line method over the estimated useful life of the asset to an estimated salvage value. With respect to helicopters, the estimated useful life is typically based upon a newly built asset being placed into service and represents the point at which it is typically not justifiable for the Company to continue to operate the asset in the same or similar manner. From time to time, the Company may acquire older assets that have already exceeded the Company’s useful life policy, in which case the Company depreciates such assets based on its best estimate of remaining useful life. The Company reviews the estimated useful lives and salvage values of its property and equipment on an ongoing basis for any changes in estimates. There were no such changes during the years ended December 31, 2019, 2018 and 2017.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
As of DecemberMarch 31, 2019,2022, the estimated useful life (in years) of the Company’s categories of new property and equipment was as follows:
30 | |||||||
| 5 | - 7 | ||||||
| Buildings | 30 | ||||||
| Lease term or 10 | |||||||
| Other property and | 3-15 | ||||||
For aircraft types that are still operating where management has made the decision to sell or abandon the aircraft type at a fixed date, an analysis is completed to determine whether depreciation needs to be accelerated or additional depreciation recorded for an expected reduction in residual value at the planned disposal date.
Leases— The Company concluded thatrecognizes a right-of-use (“ROU”) asset and a lease liability on its consolidated balance sheets for leases under which it is the cash flows associatedlessee, after applying the short-term lease exemption. Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. For discount rate, we use our incremental borrowing rate based on information available at commencement date if the rate implicit in the lease cannot be readily determined.
Investment in Unconsolidated Affiliates — Unconsolidated affiliates are measured at fair value with its H225 heavy helicopters are largely independentchanges in fair value recognized in net income. The Company uses a measurement alternative approach for equity investments without readily determinable fair values. The alternative method measures equity investments at cost minus impairment, if any, plus or minus changes resulting from the cash flows associated with the remainderobservable price changes in orderly transactions in a similar investment of the fleet and should be evaluated separately for impairment.same issuer. The Company performed an impairment analysis on the H225 helicopters, capital parts and related inventory and determined that the projected undiscounted cash flows over the remaining useful life were less than the carrying amount. In determining the fair value, the Company used a cost approach, which begins with the replacement cost of a new asset and adjusts for age and functional and economic obsolescence. The inputs used in the Company’s fair value estimate were from Level 3 of the fair value hierarchy discussed in Note 2. As of December 31, 2019, the Company recorded a $1.6 million impairment charge on its last remaining H225 helicopter. In 2018 and 2017, the Company recorded a $1.0 million and $117.0 million impairment charge on its H225 helicopters, respectively.
Contingencies — The Company establishes reserves for estimated loss contingencies when it believes a loss is probable and the amount of the loss can be reasonably estimated. The Company’s contingent liability reserves relate primarily to potential tax assessments, litigation, personal injury claims and environmental liabilities and are adjusted as a result of changes in facts or circumstances that become known or changes in previous assumptions with respect to the uncertainty regardinglikelihood or amount of loss. Such revisions are based on information that becomes known or circumstances that change after the projected financial performance of investees,reporting date for the severity and expected duration of declines in value andprevious period through the available liquidity in the capital markets to support the continuing operationsreporting date of the investees in whichcurrent period. Should the Company has investments. Foroutcome differ from the years ended December 31, 2019, 2018Company’s assumptions and 2017, the Company did not recognize any impairment charges. During the year ended December 31, 2019, the Company sold its equity investment in Dart Holding Company Ltd. (“Dart”) joint venture, see note 5 for details on sale of the joint venture. As of December 31, 2019, the Company did not have any equity investees.
Deferred Financing Costs. Costs— Deferred financing costs incurred in connection with the issuance of debt are amortized over the life of the related debt using either the straight line method or effective interest rate method for term loans and straight line method for revolving credit facilities. Amortization expense for deferred financing costs totaled $1.0 million, $1.4 million and $1.1 million duringmethod.
Proceeds from casualty insurance settlements in excess of the years ended December 31, 2019, 2018 and 2017, respectively, including the write-offcarrying value of $0.4 milliondamaged assets are recognized as a gain on disposal of debt issuance costs in 2018, in connection with an amendment to the Company’s amended and restated senior secured revolving credit facility (the “Revolving Credit Facility”). Such amortization expense is included in interest expense in the consolidated statements of operations.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Share-Based Compensation— The grant date fair value of share-based awards granted to employees is recognized as an employee compensation expense over the requisite service period on a straight-line basis. The amount of compensation expense ultimately recognized is based on the number of awards that corresponds directly withmeet the value tovesting conditions at the vesting date.
Pension Benefits — See Note 13 for a discussion of the Company’s customeraccounting for the performance completed to date. Therefore, the Company has elected to exercise the right to invoice practical expedient in its adoption of ASC 606. The right to invoice represents a method for recognizing revenue over time using the output measure of “value to the customer” which is an objective measure of an entity’s performance in a contract. The Company typically invoices its customers on a monthly basis for revenues earned during the prior month with payment terms of 30 days. The Company’s customer arrangements do not contain any significant financing component for its customers.pension benefits.
Foreign Currency Transactions. —The functional currency for each of the Company’s foreign entities is the U.S. dollar. From time to time, the Company enters into transactions denominated in currencies other than its functional currency. Gains and losses resulting from changes in currency exchange rates between the functional currency and the currency in which a transaction is denominated are included in foreign currency gains (losses)other income (expense), net in the accompanying consolidated statements of operations in the period which the currency exchange rates change.
Earnings (Loss) Per Common Share. Share —Basic earnings (loss) per common share of the Company are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings (loss) per common share of the Company are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the if-convertedtreasury method and/or treasury method.if-converted method .
Reclassifications — Certain amounts reported for prior periods in the consolidated financial statements have been reclassified to annual review byconform with the Board of Directorscurrent period’s presentation.
Recent Accounting Pronouncements. - Adopted.Pronouncements
The Company considers 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 the Company’s consolidated financial position or results of operations.
Adopted
In February 2016,March 2020, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (ASU No. 2016-02), which establishes comprehensive accounting2020-04, “Reference Rate Reform” (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard is intended to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions to ease the financial reporting requirements for leasing arrangements.burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This ASU supersedes the existing requirements in FASB ASC Topic 840, “Leases,” and requires lessees to recognize substantially all lease assets and lease liabilities on the balance sheet. The provisions of this ASU also modified the definition of a lease and outline requirements for recognition, measurement, presentation and disclosure of leasing arrangements by both lessees and lessors. The ASU was effective beginning in fiscal year 2022 for interim and annual periods beginning after December 15, 2018, and early adoption of the standard was permitted. Entities were required to adopt the ASU using a modified retrospective approach, subject to certain optional practical expedients, and apply the provisionsCompany. Adoption of this ASU to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. In July 2018 this ASU was further amended by the provisions of ASU No. 2018-11, “Targeted Improvements” to Topic 842 whereby the FASB decided to provide an alternate transition method by allowing entities to initially apply the new leases standard at the adoption date (such as January 1, 2019, for calendar year-end public business entities) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests. The Company adopted the amended ASU No. 2018-11 effective January 1, 2019 using the current-period adjustment method, however upon adoption of the standard the Company determined that a cumulative-effect adjustment to the opening balance of retained earnings in that period was not required. The Company also elected an optional practical expedient to retain its former classification of leases, and as a result, the initial impact of adopting this new standard did not have a material impact to its consolidatedthe Company’s financial statements. Additionally, the Company elected not to bifurcate and separately account for non lease components contained in a single contract.
In August 2018,December 2019, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill2019-12, “Simplifying the Accounting for Income Taxes.” This standard eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and Other-Internal-Use Software” (Subtopic 350-40), providingcalculating income taxes in interim periods. This ASU also included guidance addressingto reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a customer's accounting for implementation costs incurredconsolidated group. The standard was effective beginning in a cloud computing arrangement (“CCA”) that is considered a service contract. Under the new guidance, implementation costs for a CCA are evaluated for capitalization using the same approach as implementation costs associated with internal-use software and should be expensed over the term of the hosting arrangement, which includes any reasonably certain renewal periods. The new guidance is effective for fiscal years beginning after December 15, 2019 for calendar year-end public business entities. Early adoption is permitted, including adoption in any interim period. The Company will not take possession of implemented software and will rely on vendors to host the software, thus determining the cloud computing arrangements are service contracts. The Company adopted ASU No. 2016-13, effective January 1, 2019, and has appropriately accountedyear 2022 for the implementation costsCompany. Adoption of the cloud computing arrangements entered into in the first half of 2019. The adoption of ASU-2018-15this standard did not have a material impact onto the Company’s consolidated financial statements.
In January 2020,October 2021, the FASB issued ASU Update No. 2020-01, “Investments-Equity Securities” Topic 321, “Investments-Equity Method2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Joint Ventures” Topic 323Contract Liabilities from Contracts with Customers. The amendment in this update provides specific guidance on how to recognize and “Derivativesmeasure acquired contract assets and Hedging” Topic 815 (ASU No. 2020-01) as an update to ASU No. 2016-01 “Financial Instruments-Overall”, further clarifying the interaction between the accounting for equity securities, equity method investments, and certain derivative instruments. This ASU clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity methodcontract liabilities from revenue contracts in business
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
combinations. The standard will be effective for the purposes of applying the measurement alternativeCompany beginning in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. With this update, the FASB aims to clarify that, when determining the accounting for certain forward contractsfiscal year 2023 and purchased options a company should now consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. The FASB expects this ASU to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASUearly adoption is effective for interim and annual periods beginning after December 15, 2020.permitted. The Company is currently evaluating the potential impact of adoptingeffect this ASU but does not expect such adoption toaccounting guidance will have a material impact on its consolidated financial statements.
In August 2018,May 2021, the FASB issued ASU-2018-13, “Fair Value Measurements” (ASUASU Update No. 2018-13,2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The purpose of this update is to topic ASC-820), providing guidanceclarify and reduce diversity in practice for the changes in unrealized gains and lossesaccounting of certain modifications or exchanges of equity written call options. Under the guidance, an issuer determines the accounting for the modification or exchange based on whether the transaction was executed to issue equity, to issue or modify debt, or for other reasons. The standard will be effective for the Company beginning in fiscal year 2023 and early adoption is permitted. The Company is currently evaluating the effect this accounting guidance will have on its consolidated financial statements.
Note 2 — BUSINESS COMBINATIONS
Era Group Inc.
On June 11, 2020, the combination of Old Bristow with Era was successfully completed in an all-stock transaction with Era having issued shares of common stock (“Combined Company Common Stock”) to Old Bristow’s stockholders in exchange for such holders shares of common stock in Old Bristow. The transaction was accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). In the Merger, Old Bristow merged with and into Merger Sub, a subsidiary of Era, with Old Bristow remaining as the surviving company and as a subsidiary of Era, the ultimate parent of the Combined Company. Era was one of the largest helicopter operators in the world and the longest serving helicopter transport operator in the U.S., primarily servicing offshore energy installations. The transaction was structured as an all-stock, reverse-triangular merger, whereby Era issued shares of Combined Company Common Stock to Old Bristow stockholders, allowing it to qualify as a tax free reorganization for U.S. federal income tax purposes. Following the Merger, Era changed its name to Bristow Group Inc., and the Combined Company Common Stock continued to trade on the NYSE under the new ticker symbol VTOL.
While Era was the legal acquirer in the Merger, Old Bristow was determined to be the accounting acquirer, based upon the terms of the Merger and other considerations including that: (i) immediately following completion of the Merger, Old Bristow stockholders owned approximately 77% of the outstanding shares of Combined Company Common Stock and pre-Merger holders of Era common stock (“Era Common Stockholders”) owned approximately 23% of the outstanding shares of Combined Company Common Stock and (ii) the board of directors of the Company consisted of 8 directors, including 6 Old Bristow designees. The Merger was accounted for under the acquisition method of accounting under ASC 805, Business Combinations. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company completed its assessment of the fair value of assets acquired and liabilities assumed within the required one-year period from the date of acquisition. Management recorded the acquired aircraft at an aggregate fair value of $179.9 million. Based upon the illiquid state of the secondary market, relevant and reliable market data for the Era fleet was not readily available. As a result, the Company derived the fair value of the Era fleet of aircraft from the estimated enterprise value of Era, using the discounted cash flow method of the income approach. The estimated enterprise value of Era was made using principal assumptions such as forecasted revenues and discount rate. All non-aircraft acquired assets and assumed liabilities were valued at fair value, which based upon their nature were more readily determinable. After allocating fair values to all the non-aircraft acquired assets and assumed liabilities, the remaining value was attributed to the aircraft.
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BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The acquisition date fair value of the consideration transferred consisted of the following (in thousands):
Fair value of Combined Company Common Stock issued (1) | $ | 106,440 | |||
Fair value of accelerated stock awards (2) | 2,067 | ||||
Fair value of exchanged stock awards (3) | 228 | ||||
| Total consideration transferred | $ | 108,735 | |||
| Fair value of redeemable noncontrolling interest | 1,501 | ||||
| Total fair value of Era | $ | 110,236 | |||
___________________________
(1)Represents the fair value of Combined Company Common Stock retained by Era Common Stockholders based on the closing market price of Era shares on June 11, 2020, the acquisition date.
(2)Represents the fair value of restricted share awards of Combined Company Common Stock held by Era employees that were accelerated upon consummation of the Merger.
(3)Represents the fair value of restricted share awards of Combined Company Common Stock held by Era employees relating to the pre-Merger vesting period.
The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition, June 11, 2020 (in thousands):
| Assets acquired: | |||||
| Cash and cash equivalents | $ | 120,236 | |||
| Accounts receivable from non-affiliates | 35,079 | ||||
| Prepaid expenses and other current assets | 17,598 | ||||
| Inventories | 8,826 | ||||
| Property and equipment | 223,256 | ||||
| Right-of-use assets | 8,395 | ||||
| Other assets | 14,792 | ||||
| Total assets acquired | $ | 428,182 | |||
| Liabilities assumed: | |||||
| Accounts payable | $ | 9,686 | |||
| Accrued wages, benefits and related taxes | 8,319 | ||||
| Income taxes payable | 1,791 | ||||
| Deferred revenue | 236 | ||||
| Current portion of operating lease liabilities | 1,711 | ||||
| Other accrued liabilities | 18,474 | ||||
| Short-term borrowings and current maturities of long-term debt | 17,485 | ||||
| Long-term debt, less current maturities | 136,704 | ||||
| Other liabilities and deferred credits | 1,404 | ||||
| Deferred taxes | 34,198 | ||||
| Long-term operating lease liabilities | 6,845 | ||||
| Total liabilities and redeemable noncontrolling interest assumed | $ | 236,853 | |||
| Net assets acquired | $ | 191,329 | |||
The Merger resulted in a gain on bargain purchase due to the estimated fair value of the identifiable net assets acquired exceeding the purchase consideration transferred by $81.1 million shown as a gain on bargain purchase on the consolidated statements of operations. The bargain purchase was a result of a combination of factors including depressed oil and gas prices and market volatility linked to the COVID-19 pandemic between the initial announcement and consummation of the Merger.
Specifically, the Era share price declined from $8.59 to $5.16 between the last trading day prior to the announcement of the Merger and the date the Merger closed. The aggregate Merger consideration was based on an exchange ratio that was fixed
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and did not fluctuate in the event that the value of Old Bristow’s common stock increased or Era’s common stock decreased, between the date of entry into the Merger agreement and consummation of the Merger.
The following unaudited supplemental pro forma combined financial information presents the Company’s results of operations for the fiscal year ended March 31, 2021, and for the five months ended March 31, 2020, as though the Merger had occurred on November 1, 2019, the effective date of Old Bristow’s emergence from the Chapter 11 Cases. The unaudited pro forma financial information is as follows (in thousands)(1):
| Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | |||||||||||||
| Total revenues | $ | 1,213,552 | $ | 582,803 | ||||||||||
| Net income (loss) | $ | (100,436) | $ | 153,106 | ||||||||||
| Net income (loss) attributable to Bristow Group Inc. | $ | (100,222) | $ | 153,415 | ||||||||||
(1)As a result of the Merger, the Company was required to dispose of its investment in Líder which occurred in August 2020. The Company recorded an impairment in June 2020 of $18.7 million related to the future disposition of the investment. This impairment has been excluded from the pro forma combined Net loss and Net loss attributable to Bristow Group Inc. for the fiscal year ended March 31, 2021 due to its nonrecurring nature and has been included in other comprehensive incomepro forma combined Net loss and Net loss attributable to Bristow Group Inc. for recurring Levelthe fiscal year ended March 31, 2021 due to its connection with the Merger.
Note 3 — PROPERTY AND EQUIPMENT
The following table presents details on the major classes of property and equipment (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | ||||||||||
| Aircraft | $ | 802,913 | $ | 805,649 | |||||||
| Land and buildings | 180,188 | 191,246 | |||||||||
| Other property and equipment | 109,039 | 93,199 | |||||||||
| $ | 1,092,140 | $ | 1,090,094 | ||||||||
During the fiscal years ended March 31, 2022 and 2021, five months ended March 31, 2020 and seven months ended October 31, 2019, the Company recognized depreciation expense of $66.7 million, $62.1 million, $25.0 million and $112.8 million, respectively.
Other Property, Equipment and Inventory Considerations
During the fiscal years ended March 31, 2022 and 2021, the Company recognized $11.8 million and $12.4 million, respectively, in loss on impairment related to certain aircraft, equipment and inventory.
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Impairment on aircraft for the periods reflected in the table below were as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Number of aircraft impaired | 5 | 8 | — | 14 | ||||||||||||||||||||||
| Impairment charges on assets held for sale | $ | 5,934 | $ | 7,792 | $ | — | $ | — | ||||||||||||||||||
Impairment charges on property and equipment(1) | $ | — | $ | — | $ | — | $ | 42,022 | ||||||||||||||||||
Fresh-start accounting adjustment(2) | $ | — | $ | — | $ | — | $ | 768,630 | ||||||||||||||||||
___________________________
(1)Includes $42.0 million impairment related to H225s for the seven months ended October 31, 2019 (Predecessor).
(2)In connection with Old Bristow’s emergence from bankruptcy and the application of ASC 852, Old Bristow adjusted property and equipment by $768.6 million to its respective fair value measurements heldof $931.7 million at the Effective Date.
Note 4 — REVENUES
Revenue Recognition
The Company derives its revenues primarily from aviation services. A majority of the Company’s revenues are generated through 2 types of contracts: helicopter services and fixed wing services. Revenues are recognized when control of the identified distinct goods or services has been transferred to the customer, the transaction price is determined and allocated to the satisfied performance obligations and the Company has determined that collection has occurred or is probable of occurring.
The Company determines revenue recognition by applying the following steps:
1.Identify the contract with a customer;
2.Identify the performance obligations in the contract;
3.Determine the transaction price;
4.Allocate the transaction price to the performance obligations; and
5.Recognize revenues as the performance obligations are satisfied.
Helicopter services — The Company’s principal customers — international, independent and major integrated energy companies and government agencies— charter its helicopters primarily to transport personnel to, from and between onshore bases and offshore production platforms, drilling rigs and other installations. Revenues 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. Operating revenues is derived mainly from fixed-term contracts with the Company’s customers. A small portion of the Company’s oil and gas customer revenues is derived from providing services on an “ad-hoc” basis. The Company’s fixed-term contracts typically have original terms of one year to five years (subject to provisions permitting early termination by its customers). The Company accounts 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 is allocated to each distinct performance obligation and recognized as revenues when, or as, the performance obligation is satisfied. Within this contract type for helicopter services, the Company determined that each contract has a single distinct performance obligation. These contracts include a fixed monthly rate for a particular model of aircraft plus an incremental charge based on flight hours flown, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. The variable component of a contract is not effective until a customer-initiated flight order is
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received, and the actual hours flown are determined; variable consideration is recognized when the services are rendered pursuant to the variable allocation exception.
Revenue is recognized as performance obligations are satisfied over time, by measuring progress towards satisfying the contracted services in a manner that best depicts the transfer of services to the customer, which is generally represented by a period of 30 days or less. The Company typically invoices customers on a monthly basis and the term between invoicing and when the payment is due is typically between 30 and 60 days.
Cost reimbursements from customers are recorded as reimbursable revenues with the related reimbursed costs recorded as reimbursable expense on the Company’s consolidated statements of operations.
Fixed wing services — Airnorth provides 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. Within fixed wing services, the Company 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.
Total revenues for the periods reflected in the table below were as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Revenues from contracts with customers | $ | 1,151,035 | $ | 1,139,638 | $ | 470,167 | $ | 737,679 | ||||||||||||||||||
| Total other revenues | 34,169 | 38,424 | 15,596 | 19,544 | ||||||||||||||||||||||
| Total revenues | $ | 1,185,204 | $ | 1,178,062 | $ | 485,763 | $ | 757,223 | ||||||||||||||||||
Revenues by Service Line. Operating revenues earned by service line for the periods reflected in the table below were as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Oil and gas services | $ | 767,720 | $ | 788,024 | $ | 336,073 | $ | 500,872 | ||||||||||||||||||
Government services(1) | 272,859 | 252,131 | 91,019 | 129,376 | ||||||||||||||||||||||
| Fixed wing services | 85,372 | 73,751 | 35,579 | 70,755 | ||||||||||||||||||||||
Other services(2) | 13,112 | 25,118 | 5,054 | 21,916 | ||||||||||||||||||||||
| Total operating revenues | $ | 1,139,063 | $ | 1,139,024 | $ | 467,725 | $ | 722,919 | ||||||||||||||||||
_____________________
(1)Includes revenues of approximately $26.8 million, $0.4 million and $0.9 million related to government services that were previously included in the oil and gas and other service lines for the fiscal year ended March 31, 2021, five months ended March 31, 2020 and seven months ended October 31, 2019 (Predecessor), respectively.
(2)Includes Asia Pacific and certain Europe revenues of approximately $12.7 million, $4.7 million, $21.5 million that were previously included in the oil and gas service line for the fiscal year ended March 31, 2021, five months ended March 31, 2020 and seven months ended October 31, 2019 (Predecessor), respectively.
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Contract Assets, Liabilities and Receivables
The Company generally satisfies performance of contract obligations by providing helicopter and fixed wing services to its 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 the Company has a contract with a customer for which revenues 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 revenues in which advance consideration is received from customers for contracts where revenues are recognized based on future performance of services.
As of March 31, 2022 and 2021, receivables related to services performed under contracts with customers were $165.2 million and $167.3 million, respectively. During the fiscal years ended March 31, 2022 and 2021, five months ended March 31, 2020 and seven months ended October 31, 2019, the Company recognized $7.3 million, $3.5 million, $4.9 million and $8.5 million of revenues from outstanding contract liabilities, respectively. Contract liabilities related to services performed under contracts with customers were $13.3 million and $13.3 million as of March 31, 2022 and 2021, respectively. Contract liabilities are generated by fixed wing services where customers pay for tickets in advance of receiving the Company’s services and advanced payments from helicopter services customers. There were no contract assets as of March 31, 2022 and 2021.
Remaining Performance Obligations
Remaining performance obligations represent firm contracts for which work has not been performed and future revenue recognition is expected. The table below discloses (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period and (2) the rangeexpected timing to recognize these revenues (in thousands):
| Remaining Performance Obligations | |||||||||||||||||||||||||||||||||||
| Fiscal Year Ending March 31, | Total | ||||||||||||||||||||||||||||||||||
| 2023 | 2024 | 2025 | 2026 | 2027 and thereafter | |||||||||||||||||||||||||||||||
| Helicopter contracts | $ | 410,036 | $ | 238,396 | $ | 183,032 | $ | 109,369 | $ | 128,029 | $ | 1,068,862 | |||||||||||||||||||||||
| Fixed wing contracts | 589 | — | — | — | — | 589 | |||||||||||||||||||||||||||||
| Total remaining performance obligation revenues | $ | 410,625 | $ | 238,396 | $ | 183,032 | $ | 109,369 | $ | 128,029 | $ | 1,069,451 | |||||||||||||||||||||||
Although substantially all of the Company’s revenues are derived under contract, due to the nature of the business, the Company does not have significant remaining performance obligations as its contracts typically include unilateral termination clauses that allow its customers to terminate existing contracts with a notice period of 30 to 365 days. The table above includes performance obligations up to the point where the parties can cancel existing contracts. Any applicable cancellation penalties have been excluded. As such, the Company’s actual remaining performance obligation revenues are expected to be greater than what is reflected in the table above. In addition, the remaining performance obligation disclosure does not include expected consideration related to performance obligations of a variable nature (i.e., flight services) as they cannot be reasonably and weighted averagereliably estimated.
Note 5 — VARIABLE INTEREST ENTITIES AND OTHER INVESTMENTS IN SIGNIFICANT AFFILIATES.
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 unobservable inputs used to develop Level 3the VIE. If the Company determines that it has operating power and the obligation to absorb losses or receive benefits, it will consolidate the VIE as the primary beneficiary, and if not, the Company does not consolidate.
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As of March 31, 2022 and 2021, the Company had interests in 6 VIEs(as described below) of which the Company was the primary beneficiary. The Company had no interests in VIEs of which the Company was not the primary beneficiary.
BNAS Holdings Company Limited (“BNAS”) — BNAS is a legal entity in the Republic of Ireland owned 49% by Bristow Helicopters Limited (“BHL”) as a 49% shareholder and 51% by a European Union national. BHL provided a loan to BNAS Holdings, which in turn acquired 100%of the share capital of Bristow Norway A/S, a company that provides aviation services to the offshore energy industry in Norway. The financial information for this VIE is aggregated within the summary financial information table below.
Bristow Aviation Holdings Limited (“Bristow Aviation”) — The Company owns 49% of Bristow Aviation’s common stock and a significant amount of its subordinated debt. Bristow Aviation is incorporated in England and, through its subsidiaries, holds all the outstanding shares in BHL. As of March 31, 2022, the Company and Impigra (as defined below) owned 49% and 51%, respectively, of Bristow Aviation. The subsidiaries of Bristow Aviation provide aviation services to customers primarily in Australia, Nigeria, Norway, Trinidad and U.K.
Bristow Helicopters (Nigeria) Limited (“BHNL”) — BHNL is a joint venture that provides aviation services to customers in Nigeria, in which BHL owns a 48% interest. YII Energy (as defined below), a Nigerian company owned 100% by Nigerian citizens, owns a 50% interest and an employee trust fund owns the remaining 2% interest. The financial information for this VIE is aggregated within the summary financial information table below.
Impigra Aviation Holdings Limited (“Impigra”) — Impigra is a British company owned 100% by U.K. Bristow employees and owns 51% of the ordinary shares of Bristow Aviation. The assets and liabilities of Impigra consist primarily of intercompany balances, including loans, which are eliminated in consolidation.
Pan African Airlines (Nigeria) Limited (“PAAN”) — PAAN is a joint venture in Nigeria with local partners in which the Company owns an interest of 50.17%. PAAN provides industrial aviation services to customers in Nigeria. The Company has also historically provided subordinated financial support to PAAN. As the Company has the power to direct the most significant activities affecting the economic performance and ongoing success of PAAN and holds a variable interest in the form of the Company’s equity investment and working capital infusions, the Company consolidates PAAN as the primary beneficiary. The financial information for this VIE is aggregated within the summary financial information table below.
YII 5668 Energy (“YII Energy”) — YII Energy is dormant entity domiciled in Nigeria and owns a 50% interest in BHNL. This entity is deemed a VIE due to insufficient equity and the Company is the primary beneficiary because it has both the power to direct the most significant activities of the entity. The financial information for this VIE is aggregated within the summary financial information table below.
The following table shows summarized financial information for Bristow Aviation and subsidiaries, which includes BNAS Holdings, BHNL, PAAN and YII Energy (in thousands):
| March 31, 2022 | March 31, 2021 | ||||||||||
| Total assets | $ | 933,478 | $ | 1,163,052 | |||||||
Total liabilities(1) | $ | 4,203,107 | $ | 4,021,334 | |||||||
(1)The Company eliminates all transactions among and between the VIEs listed above within its consolidated financial statements and as presented in the summary financial information table above. Bristow Aviation has subordinated unsecured loan stock (debt) bearing interest at an annual rate of 13.5% and payable semi-annually to the Company that is not eliminated at the Bristow Aviation and subsidiaries summarized financial information level, but is eliminated at Bristow Group Inc. and subsidiaries. Payment of interest on such debt has been deferred since its incurrence in 1996 at an annual rate of 13.5% and aggregated $3.4 billion as of March 31, 2022.
Eastern Airways — On May 10, 2019 BHL completed the sale of all of the shares of Eastern Airways while retaining its ownership of the shares in Humberside International Airport Limited (“Humberside”) previously held through Eastern Airways. BHL has a controlling interest in the Humberside Airport from which Bristow provides U.K. SAR services. As part of the sale, BHL contributed approximately £17.1 million to Eastern Airways as working capital. The loss on the sale of Eastern Airways for the seven months ended October 31, 2019 (Predecessor) was $46.9 million, which included the write-off of net assets of
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$35.0 million and write-off of cumulative translation adjustment of $11.9 million. Certain intercompany balances between BHL and Eastern Airways were also written off.
Aviashelf and Bristow Helicopters Leasing Limited — In April 2019, Old Bristow sold its 60% ownership interest in Bristow Helicopters Leasing Limited, a U.K. joint venture company, for $1.4 million. In June 2019 (Predecessor), Old Bristow sold its 48.5% ownership interest in Aviashelf Aviation Co. (“Aviashelf”), a Russian helicopter company, for $2.6 million. The loss on the sale of Aviashelf for the seven months ended October 31, 2019 (Predecessor) was $9.0 million.
Hauser Investments Limited and Sicher Helicopters SAS —
During the fiscal year ended March 31, 2022, the Company sold its 75% interest in Hauser Investments Limited (“Hauser”), which owns 100% of Sicher Helicopters SAS (“Sicher”), a provider of helicopter services to Colombia’s oil and gas market. The sale resulted in a $2.0 million loss included in sale of subsidiaries on the consolidated statements of operations. As of March 31, 2022, the Company no longer owned or consolidated this entities financials.
Other Significant Affiliates — Unconsolidated
The Company evaluates its unconsolidated affiliates for indicators of impairment in light of current market conditions. Changes in market conditions or contractual relationships in future periods could result in the identification of additional other-than-temporary impairment.
Cougar — The Company owns a 25% voting interest and a 40% economic interest in Cougar Helicopters Inc. (“Cougar”), a major aviation services provider in Canada. Cougar’s operations are primarily focused on serving the offshore oil and gas industry off Canada’s Atlantic coast and in the Arctic. Cougar is accounted for as an equity method investment.
During the fiscal year ended March 31, 2021, upon evaluating its investment in Cougar, the Company determined the investment to be other-than-temporarily impaired based on the change in facts and circumstances from the prior reporting period, which included the loss of a significant customer contract and further deterioration of the future sentiment for the Eastern Canadian oil and gas market. As a result, the Company performed a fair valuation of its investment in Cougar, and based on a discounted cash flows model, concluded a fair value measurements. For certain unobservableof $4.7 million. This compared to a carrying value of $56.6 million, resulting in a $51.9 million loss on impairment from our investment in Cougar, recorded during the fiscal year ended March 31, 2021. In January 2021, the Company concluded that it was no longer probable that it would collect substantially all consideration for lease agreements when due. As such the Company transitioned to the cash basis of accounting for lease payments to be received from Cougar under the current aircraft and facilities leasing arrangements in place. The Company continues to recognize revenues associated with the Maintenance Services and Support Agreement (the “MSSA”) on an accrual basis as it expects to receive full compensation for services under the MSSA agreement.
PAS— The Company has a 25% economic interest in Petroleum Air Services (“PAS”), an Egyptian corporation that provides helicopter and fixed wing transportation to the offshore energy industry and other general aviation services in Egypt. PAS is accounted for as a cost method investment. During the fiscal year ended March 31, 2022, upon evaluating its investment in PAS, the Company identified an indicator for impairment due to a decline in PAS’s performance. As a result, the Company performed a fair valuation of its investment in PAS using a market approach that relied on significant Level III inputs an entity may disclose other quantitative information (such asdue to the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distributionnature of unobservable inputs that required significant judgment and assumptions. The market approach utilized two methods, each yielding similar valuation outcomes through the use of a multiple relevant to each method, derived from select guideline public companies, and an expected dividend rate or earnings of PAS. This resulted in a $16.0 million loss on impairment recorded during the fiscal year ended March 31, 2022. As of March 31, 2022 and 2021, the investment in PAS is included on the consolidated balance sheets in investment in unconsolidated affiliates at $17.0 million and $33.0 million, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Líder — During the fiscal year ended March 31, 2021, the Company recorded an $18.7 million non-cash impairment charge to its investment in Líder Táxi Aéreo S.A. (“Líder”), a previously unconsolidated affiliate in Brazil, upon evaluating its equity investment in the company. Old Bristow had previously recorded a $9.6 million impairment to its investment in Líder during the five months ended March 31, 2020 due to an expected decline in future business opportunities in its market as a result of the decline in oil prices leading to an evaluation of the investment for other-than-temporary impairment. The Company initiated a partial dissolution process to exit its equity investment in Líder in July 2020. As a result of this process, the Company was no longer a shareholder of Líder as of August 2020.
Note 6 — RELATED PARTY TRANSACTIONS
Due to common ownership of Cougar, the Company considers VIH Aviation Group Ltd. and its subsidiaries (“VIH”) as a related party.
The Company leases 6 aircraft from VIH and paid lease fees of $9.8 million, $12.9 million, $5.5 million and $8.6 million for the fiscal years ended March 31, 2022 and 2021, five months ended March 31, 2020 and seven months ended October 31, 2019 (Predecessor), respectively. The Company leases a facility in Galliano, Louisiana from VIH and paid lease fees of $0.2 million, $0.2 million, $0.1 million and $0.1 million during the fiscal years ended March 31, 2022 and 2021, five months ended March 31, 2020 and seven months ended October 31, 2019, respectively. As of March 31, 2022 and 2021, $1.8 million and $2.6 million, respectively, of accounts receivables from related party affiliates were included in accounts receivables on the consolidated balance sheets. As of March 31, 2022 and 2021, the allowances for doubtful accounts related to accounts receivable due from affiliates was $1.3 million.
Revenues from related parties for the periods reflected in the table below were as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Revenues from contracts with related parties | $ | 8,303 | $ | 12,108 | $ | 8,413 | $ | 12,015 | ||||||||||||||||||
| Other revenues from related parties | 22,565 | 30,339 | 14,910 | 18,599 | ||||||||||||||||||||||
| Total revenues from related parties | $ | 30,868 | $ | 42,447 | $ | 23,323 | $ | 30,614 | ||||||||||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 7 — DEBT
Debt as of March 31, 2022 and 2021 consisted of the following (in thousands):
| March 31, 2022 | March 31, 2021 | ||||||||||
| 6.875% Senior Notes | $ | 391,690 | $ | 391,550 | |||||||
| Lombard Debt | 133,978 | 146,006 | |||||||||
| Airnorth Debt | — | 5,631 | |||||||||
| Humberside Debt | — | 306 | |||||||||
| Total debt | 525,668 | 543,493 | |||||||||
| Less short-term borrowings and current maturities of long-term debt | (12,759) | (15,965) | |||||||||
| Total long-term debt | $ | 512,909 | $ | 527,528 | |||||||
The Company’s scheduled long-term maturities as of March 31, 2022, which excludes unamortized discount of $13.1 million and unamortized deferred financing fees of $8.3 million, were as follows (in thousands):
| Total Due | |||||
| 2023 | $ | 12,759 | |||
| 2024 | 134,332 | ||||
| 2025 | — | ||||
| 2026 | — | ||||
| 2027 | — | ||||
| Thereafter | 400,000 | ||||
| $ | 547,091 | ||||
Cash paid for interest expense during the fiscal years ended March 31, 2022 and 2021, was $32.0 million and $32.3 million, respectively.
6.875% Senior Notes— In February 2021, the Company issued $400.0 million aggregate principal amount of its 6.875% senior secured notes due March 2028 (the “6.875% Senior Notes”) and received net proceeds of $395.0 million. The 6.875% Senior Notes are fully and unconditionally guaranteed as to payment by a number of subsidiaries. Interest on the 6.875% Senior Notes is payable semi-annually in arrears on March 1st and September 1st of each year. The 6.875% Senior Notes may be redeemed at any time and from time to time, with sufficient notice and at the applicable redemption prices set forth in the indenture governing the 6.875% Senior Notes, inclusive of any accrued and unpaid interest leading up to the redemption date. The indenture governing the 6.875% Senior Notes contains covenants that restrict the Company’s ability to, among other things, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem the Company’s capital stock, prepay, redeem or repurchase certain debt, make loans and investments, sell assets, incur liens, enter into transactions with affiliates, enter into agreements restricting its subsidiaries’ ability to pay dividends, and consolidate, merge or sell all or substantially all of its assets. In addition, upon a specified change of control trigger event or specified asset sale, the Company may be required to repurchase the outstanding balance of the 6.875% Senior Notes.
The net proceeds from the offering, together with cash on hand, were used to develop Level 3 fair value measurements. ASU-2018-13 will be effective for interimrepay approximately $484.7 million in debt, with respect to the Company's secured equipment term loan with Macquarie Bank Limited (“Macquarie Debt”), and annual
During the fiscal year ended March 31, 2022, the Company made its first interest payment of $28.0 million. As of March 31, 2022 and 2021, the Company had $8.3 million and $8.5 million of unamortized deferred financing fees associated with the 6.875% Senior Notes.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Lombard Debt — On November 11, 2016, certain of Old Bristow’s subsidiaries entered into 2, seven-year British pound sterling funded secured equipment term loans for an aggregate $200.0 million U.S. dollar equivalent with Lombard North Central Plc, a part of NatWest Group (the “Lombard Debt”). Borrowings under the financings previously bore interest at an interest rate equal to the GBP ICE Benchmark Administration’s Limited LIBOR, plus 2.25% per annum. The financing which was funded in December 2016 matures in December 2023 and the financing which funded in January 2017 matures in January 2024. During the fiscal year ended March 31, 2022, the Company replaced LIBOR as the benchmark for the Lombard Debt with a new reference rate, the Sterling Overnight Interbank Average Rate (“SONIA”).
During the fiscal year ended March 31, 2022, the Company made principal and interest payments of $13.1 million and $3.8 million, respectively. During the fiscal year ended March 31, 2021, the Company made principal and interest payments of $12.8 million and $4.1 million, respectively.
ABL Facility — The Company’s asset-backed revolving credit facility (the “ABL Facility”) was entered into on April 17, 2018, and provides that amounts borrowed under the ABL Facility (i) are secured by certain accounts receivable owing to the borrower subsidiaries and the deposit accounts into which payments on such adoption will not haveaccounts receivable are deposited, and (ii) are fully and unconditionally guaranteed as to payment by the Company, as a material impactparent guarantor, and each of Bristow Norway AS, BHL, Bristow U.S. LLC and Era Helicopters, LLC (collectively, the “ABL Borrowers”). As of March 31, 2022, ABL Facility provided for commitments in an aggregate amount of $85.0 million with the ability to increase the total commitments up to a maximum aggregate amount of $120.0 million, subject to the terms and conditions therein.
As of March 31, 2022 and 2021, there were no outstanding borrowings under the ABL Facility nor had the Company made any draws during the year ended March 31, 2022. Letters of credit issued under the ABL Facility in the aggregate face amount of $20.5 million were outstanding on its consolidated financial statements.March 31, 2022.
Note 8 — FAIR VALUE DISCLOSURES
The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. The fair values of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these items.
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 arethat reflect quoted prices in active markets(unadjusted) for identical assets or liabilities. liabilities in active markets.
•Level 2 – inputs are inputs other thanthat reflect quoted prices includedfor identical assets or liabilities in Level 1 thatmarkets which are observable for the asset or liability either directly or indirectly, includingnot active; quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active,markets; inputs other than quoted prices that are observable for the asset or liability,liability; or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supportedderived principally from or corroborated by littleobservable 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.
92
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Old Bristow Preferred Stock Embedded Derivative
The fair value of the Old Bristow Preferred Stock embedded derivative is estimated on the pre-merger basis, using the income approach, namely a “with” and “without” analysis. The difference between the value of the Old Bristow Preferred Stock in the “with” and “without” analyses represents the value of the embedded derivative. Old Bristow was private on the pre-merger basis and hence, the Old Bristow Preferred Stock value was estimated based on the expected exchange ratio upon the merger. As there was no trading price or any directly observable market activity and are significant toinformation for the embedded derivative itself or Old Bristow’s preferred stock price the fair value of the assets or liabilities.embedded derivative represents a model value. Due to these facts and circumstances, the fair value of Old Bristow’s Preferred Stock embedded derivative was derived from Level 3 inputs, due to the nature of unobservable inputs that required significant estimates, judgments and assumptions. The Old Bristow Preferred Stock was converted into Old Bristow Common Stock immediately prior to consummation of the Merger.
The estimated fair valuesOld Bristow Preferred stock embedded derivative considered settlement scenarios which are further defined in Note 14 to the consolidated financial statements. A number of the Company’s other financial assetssettlement scenarios required a settlement premium. The specified premium depended on the timing of the liquidity event, ranging from a minimum of (a) 17% Internal Rate of Return (the “IRR”) (b) 2.1x Multiple of Invested Capital (the “MOIC”) and liabilities(c) 14% Internal Rate of Return (the “IRR”) if the liquidity event is prior to 3 years, to (y) a 2.1x MOIC and (z) 17% IRR if the liquidity event is in 5 years or more. The fair value for the embedded derivative was determined using a “with” and “without” approach, first determining the fair value of the Old Bristow Preferred Stock (inclusive of all bifurcated features) with the features and comparing it with the fair value of an instrument with identical terms to the Old Bristow Preferred Stock without any of the bifurcated features (i.e., the preferred stock host).
The fair value of the Old Bristow Preferred Stock was estimated using an option pricing method (“OPM”) allocating the total equity value to the various classes of equity. As of June 11, 2020, Old Bristow assumed an expected term of 6 years, a risk-free rate of 0.38% and volatility of 85%. Without the redemption or conversion features, the holders of the Old Bristow Preferred Stock would have had right to perpetual preferred with 10% paid-in-kind (“PIK”) dividends, or the right to any upside value from conversion into common stock if the value exceeded the minimum return provided for under the COD (as defined herein). The value of converting to common stock on the upside would be measured as the residual upon a liquidity event. Therefore, the fair value of the host was estimated as the value of the upside conversion into common shares, which was also estimated using the OPM. The valuation as of DecemberJune 11, 2020 resulted in a decline in fair value of the Old Bristow Preferred Stock embedded derivative of $15.4 million from March 31, 2019 and 2018 were as follows (in thousands):2020.
| Carrying Amount | Level 1 | Level 2 | Level 3 | |||||||||||||
| December 31, 2019 | ||||||||||||||||
| LIABILITIES | ||||||||||||||||
| Long-term debt, including current portion | $ | 160,149 | $ | — | $ | 166,691 | $ | — | ||||||||
| December 31, 2018 | ||||||||||||||||
| LIABILITIES | ||||||||||||||||
| Long-term debt, including current portion | $ | 162,275 | $ | — | $ | 159,367 | $ | — | ||||||||
The carrying values of cashthe Old Bristow Preferred Stock were derecognized, including the Old Bristow Preferred Stock embedded derivative, and cash equivalents, receivablesOld Bristow recognized the Old Bristow Common Stock issued to the holders of the Old Bristow Preferred Stock at its fair value. The difference between (a) the carrying value of the Old Bristow Preferred Stock embedded derivative plus the carrying value of the Old Bristow Preferred Stock host and accounts payable approximate(b) the fair value of the Old Bristow Common Stock paid as consideration for the Old Bristow Preferred Stock was recognized in retained earnings because the fair value of the Old Bristow Common Stock was less than the combined carrying values of the Old Bristow Preferred Stock host and embedded derivative. In addition, immediately prior to the Merger, Old Bristow repurchased 98,784 shares of the Old Bristow
93
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Preferred Stock and 142,721 shares of Old Bristow Common Stock. The repurchase of the Old Bristow Preferred Stock was accounted for in the same manner as the share-settled redemption described above in connection with the Merger.
Fair Value of Debt
The fair value of the Company’s debt has been estimated in accordance with the accounting standard regarding fair value. The fair value of the Company’s long-term debt was estimated using discounted cash flow analysis based on estimated current rates for similar types of arrangements. Considerable judgment was required in developing certain of the estimates of fair value, and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
| Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| March 31, 2022 | |||||||||||||||||||||||
| LIABILITIES | |||||||||||||||||||||||
6.875% Senior Notes(1) | $ | 391,690 | $ | — | $ | 407,436 | $ | — | |||||||||||||||
Lombard Debt(2) | 133,978 | 0 | 138,328 | 0 | |||||||||||||||||||
| $ | 525,668 | $ | — | $ | 545,764 | $ | — | ||||||||||||||||
| March 31, 2021 | |||||||||||||||||||||||
| LIABILITIES | |||||||||||||||||||||||
6.875% Senior Notes(1) | $ | 391,550 | $ | — | $ | 398,870 | $ | — | |||||||||||||||
Lombard Debt(2) | 146,006 | — | 155,270 | — | |||||||||||||||||||
Airnorth Debt(2) | 5,631 | — | 5,656 | — | |||||||||||||||||||
| Humberside Debt | 306 | — | 306 | — | |||||||||||||||||||
| $ | 543,493 | $ | — | $ | 560,102 | $ | — | ||||||||||||||||
(1)The carrying value is net of unamortized deferred financing fees of $8.3 million and $8.5 million for the fiscal years ended March 31, 2022 and 2021, respectively.
(2) The carrying value is net of corporate securities and later in 2019, the Company sold these corporate securities for cash proceeds of $4.4 million resulting in a net loss of $0.6 million.unamortized discount as follows (in thousands):
| Successor | |||||||||||
| March 31, 2022 | March 31, 2021 | ||||||||||
| Lombard Debt | $ | 13,112 | $ | 21,495 | |||||||
| Airnorth Debt | — | 154 | |||||||||
| Total unamortized debt discount | $ | 13,112 | $ | 21,649 | |||||||
Note 9 — COMMITMENTS AND CONTINGENCIES
Fleet — The Company’s unfunded capital expenditures were $6.6 million, $9.2 million and $16.8 million in 2019, 2018 and 2017, respectively, andcommitments as of March 31, 2022 consisted primarily of spare helicopter partsagreements to purchase helicopters and leasehold improvements.totaled $84.7 million, payable beginning in fiscal year 2023. The Company records helicopter acquisitionsalso had $1.3 million of deposits paid on options not yet exercised.
Included in propertythese commitments are orders to purchase 3 AW189 heavy helicopters and equipment and places5 AW169 light twin helicopters. The AW189 helicopters are scheduled to be delivered in service once completion work has been finalized andfiscal years 2023 through 2025. Delivery dates for the AW169 helicopters have yet to be determined. In addition, the Company had outstanding options to purchase up to 10 additional AW189 helicopters. If these options are exercised, the helicopters are readywould be scheduled for use.delivery in fiscal years 2024 through 2026. The Company sold or otherwise disposedmay, from time to time, purchase aircraft for which it has no orders.
The Company may terminate $67.4 million of propertyits capital commitments (inclusive of deposits paid on options not yet exercised) without further liability other than aggregate liquidated damages of approximately $1.9 million.
94
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
General Litigation and equipment forDisputes
In July 2021, the Company settled a bankruptcy preference claim related to amounts paid under a termination agreement between Old Bristow and Columbia Helicopters, Inc. The settlement was considered a gain contingency and resulted in a $9.0 million cash proceedsreceipt.
The Company operates in jurisdictions internationally where it is subject to risks that include government action to obtain additional tax revenues. In a number of $13.3 million, $29.6 millionthese jurisdictions, political unrest, the lack of well-developed legal systems and $9.4 millionlegislation that is not clear enough in 2019, 2018 and 2017, respectively.
| Equipment Additions | 2019 | 2018 | 2017 | ||||||
| Heavy helicopters | — | 1 | 1 | ||||||
| — | 1 | 1 | |||||||
| Equipment Dispositions | 2019 | 2018 (1) | 2017 | ||||||
| Light helicopters - single engine | — | 10 | 1 | ||||||
| Light helicopters - twin engine | 3 | 2 | 1 | ||||||
| Medium helicopters | 2 | 1 | 1 | ||||||
| Heavy helicopters | — | 8 | — | ||||||
| 5 | 21 | 3 | |||||||
In the normal course of business, the Company is involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its flightseeing assetsconsolidated financial statements related thereto as appropriate. It is possible that a change in Alaska, which consistedits estimates related to these exposures could occur, but the Company does not expect such changes in estimated costs or uninsured losses, if any, would have a material effect on its business, consolidated financial position or results of eight light single engine helicopters, two operating facilities, and related property and equipment for cash proceeds of $10.0 million.operations.
Note 10 — LEASES
The Company leases aircraft, land, hangars, buildings, fuel tanks and tower sites under operating lease agreements. The Company determines if an arrangement is a lease at inception, and many of these leases offer an option for renewal or extension. The adoption of ASC 842 allows the Company to retain its current classification of leases, and the optional practical expedience rule has allowed the use of the current-period adjustment method to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the current period rather than the restatement of prior year lease amounts.
The majority of the bases from which the Company currently operates are leased with current remaining terms between one year and fifty-ninefifty-seven years. Our lease agreements are month-to-month or non-cancelable and generally provide for fixed monthly rent payments. The Company also generally pays for insurance, taxes and maintenance expenses associated with these leases which is excluded from our lease expense on those contracts with initialliability and recognized as incurred.
Operating leases as of March 31, 2022 and 2021 were as follows (in thousands):
| March 31, 2022 | March 31, 2021 | ||||||||||
| Operating lease right-of-use assets | $ | 193,505 | $ | 246,667 | |||||||
| Current portion of operating lease liabilities | 69,866 | 77,909 | |||||||||
| Operating lease liabilities | 125,441 | 167,718 | |||||||||
| Total operating lease liabilities | $ | 195,307 | $ | 245,627 | |||||||
Operating leases for the periods reflected in the table below were as follows (in thousands, except years and percentages):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Cash paid for operating leases | $ | 100,339 | $ | 112,590 | $ | 48,967 | $ | 95,601 | ||||||||||||||||||
| ROU assets obtained in exchange for lease obligations | $ | 34,185 | $ | 21,923 | $ | 338,257 | $ | 256,242 | ||||||||||||||||||
| Weighted average remaining lease term | 4 years | 4 years | 4 years | 5 years | ||||||||||||||||||||||
| Weighted average discount rate | 6.13 | % | 6.23 | % | 6.27 | % | 7.14 | % | ||||||||||||||||||
95
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Our leases for aircraft range up to base terms of twelve180 months or less are recognizedwith renewal options of up to 60 months. In some cases, our leases for aircraft include early purchase options and purchase options upon expiration. The leases contain terms customary in transactions of this type, including provisions that allow the lessor to repossess the aircraft and require the Company to pay a stipulated amount if the Company defaults on its obligations under the agreements. The following is a straight-line basis oversummary of the lease term and are not recorded on the balance sheet. The Company does not currently maintain any finance leases and has only operating lease agreements.
| End of Lease Term | Number of Aircraft | |||||||||||||
| Fiscal year 2023 to fiscal year 2024 | 31 | |||||||||||||
| Fiscal year 2025 to fiscal year 2026 | 10 | |||||||||||||
| Fiscal year 2027 to fiscal year 2028 | 3 | |||||||||||||
| 44 | ||||||||||||||
Rent expense for the periods reflected in the table below is as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Rent expense under all operating leases | 106,180 | 120,309 | $ | 50,061 | $ | 101,543 | ||||||||||||||||||||
| Rent expense under operating leases for aircraft | 83,788 | 97,919 | $ | 43,044 | $ | 88,599 | ||||||||||||||||||||
| Minimum Payments | ||||
| 2019 | $ | 1,573 | ||
| 2020 | 1,530 | |||
| 2021 | 987 | |||
| 2022 | 562 | |||
| 2023 | 495 | |||
| Years subsequent to 2023 | 7,952 | |||
| Total future minimum lease payments | $ | 13,099 | ||
| Aircraft | Other | Total | |||||||||||||||
| Fiscal year ending March 31, | |||||||||||||||||
| 2023 | $ | 65,593 | $ | 12,840 | $ | 78,433 | |||||||||||
| 2024 | 51,781 | 10,358 | 62,139 | ||||||||||||||
| 2025 | 33,014 | 8,307 | 41,321 | ||||||||||||||
| 2026 | 6,814 | 7,104 | 13,918 | ||||||||||||||
| 2027 | 1,161 | 5,472 | 6,633 | ||||||||||||||
| Thereafter | — | 15,298 | 15,298 | ||||||||||||||
| $ | 158,363 | $ | 59,379 | $ | 217,742 | ||||||||||||
96
| Minimum Payments | ||||
| 2020 | $ | 2,273 | ||
| 2021 | 1,801 | |||
| 2022 | 1,367 | |||
| 2023 | 1,314 | |||
| 2024 | 1,013 | |||
| Years subsequent to 2024 | 8,370 | |||
| Total future minimum lease payments | 16,138 | |||
| Less: imputed interest | 6,550 | |||
| Present value of lease liabilities | $ | 9,588 | ||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| Reported balances: | ||||
| Other current liabilities | $ | 1,773 | ||
| Long-term lease liabilities | 7,815 | |||
| Total operating lease liabilities | $ | 9,588 | ||
| Weighted average remaining lease term | 16 years | |||
| Weighted average discount rate | 6.11 | % | ||
| Cash paid for amounts included in the measurement of lease liabilities during the year ended December 31, 2019 (in thousands) | $ | 2,296 | ||
The Company generates revenues as a lessor from its dry-leasing linecomponents of service that require a fixed monthly fee for the customer’s right to use the helicopter and, where applicable, additional charges as compensation for any support the Company may provide to the customer. Revenues from dry-leasing contracts are shown on the face of the statement of operations.
| Successor | Predecessor | |||||||||||||
| March 31, 2022 | March 31, 2021 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Foreign tax credits | $ | 29,624 | $ | 33,576 | ||||||||||
| State net operating losses | 42,526 | 41,929 | ||||||||||||
| Net operating losses | 124,976 | 122,376 | ||||||||||||
| Accrued pension liability | 3,720 | 8,408 | ||||||||||||
| Accrued equity compensation | 3,994 | 2,913 | ||||||||||||
| Interest expense limitation | 39,919 | 37,546 | ||||||||||||
| Deferred revenue | 375 | 375 | ||||||||||||
| Employee award programs | 792 | 586 | ||||||||||||
| Employee payroll accruals | 1,386 | 2,470 | ||||||||||||
| Capitalized start-up costs | 5,762 | 6,025 | ||||||||||||
| Accrued expenses not currently deductible | 12,871 | 10,354 | ||||||||||||
| Lease liabilities | 66,853 | 67,312 | ||||||||||||
| Other | 4,431 | 6,599 | ||||||||||||
| Valuation allowance - foreign tax credits | (29,624) | (33,576) | ||||||||||||
| Valuation allowance - state | (39,873) | (39,276) | ||||||||||||
| Valuation allowance - interest expense limitation | (15,276) | (11,288) | ||||||||||||
| Valuation allowance | (88,359) | (91,764) | ||||||||||||
| Total deferred tax assets | $ | 164,097 | $ | 164,565 | ||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Property and equipment | $ | (96,734) | $ | (87,252) | ||||||||||
| Inventories | (762) | (4,160) | ||||||||||||
| Investment in foreign subsidiaries and unconsolidated affiliates | (15,588) | (21,071) | ||||||||||||
| ROU asset | (67,433) | (67,439) | ||||||||||||
| Intangibles | (19,663) | (20,363) | ||||||||||||
| Other | (3,728) | (6,710) | ||||||||||||
| Total deferred tax liabilities | $ | (203,908) | $ | (206,995) | ||||||||||
| Net deferred tax liabilities | $ | (39,811) | $ | (42,430) | ||||||||||
| 2018 | ||||||
| Current assets | $ | 31,332 | ||||
| Non-current assets | 30,613 | |||||
| Current liabilities | 7,007 | |||||
| Non-current liabilities | 5,558 | |||||
| 2018 | 2017 | |||||||
| Operating revenues | $ | 45,602 | $ | 42,891 | ||||
| Costs and expenses: | ||||||||
| Operating and administrative | 36,592 | 35,983 | ||||||
| Depreciation and amortization | 1,754 | 1,603 | ||||||
| Total costs and expenses | 38,346 | 37,586 | ||||||
| Operating income | $ | 7,256 | $ | 5,305 | ||||
| Net income | $ | 4,912 | $ | 3,603 | ||||
Certain limitations on the deductibility of interest expense pursuant to the Tax Cuts and Jobs Act (the “Act”) became effective on April 1, 2018. As of March 31, 2022 and 2021, the Company had $190.1 million and $178.8 million gross disallowed U.S. interest expense carryforward, respectively. The disallowed interest expense can be carried forward indefinitely. As of March 31, 2022, a valuation allowance of $72.7 million has been recorded for a portion of the deferred tax asset related to interest expense limitations.
The realization of deferred income tax assets is dependent upon the generation of sufficient taxable income during future periods in which the temporary differences are expected to reverse. The valuation allowance is adjusted if the assessment of the
97
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
“more likely than not” criteria changes. The valuation allowance continues to be applied against certain deferred income tax assets where the Company has assessed that the realization of such assets does not meet the “more likely than not” criteria. As of March 31, 2022, valuation allowances were $88.3 million for foreign operating loss carryforwards, $39.9 million for state operating loss carryforwards, $15.3 million for interest expense limitation carryforwards and $29.6 million for foreign tax credits. As of March 31, 2021, valuation allowances were $91.7 million for foreign operating loss carryforwards, $39.3 million for state operating loss carryforwards, $11.3 million for interest expense limitation carryforwards and $33.6 million for foreign tax credits
The following table is a rollforward of the valuation allowance against the Company’s equity investments and advances in all other investeesdeferred tax assets (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Balance – beginning of fiscal year | $ | (175,903) | $ | (118,561) | $ | (124,700) | $ | (128,214) | ||||||||||||||||||
| Adjustment due to Merger | — | (52,553) | — | — | ||||||||||||||||||||||
| Additional allowances | (16,701) | (14,360) | (19,434) | (5,381) | ||||||||||||||||||||||
| Reversals and other changes | 19,472 | 9,571 | 25,573 | 8,895 | ||||||||||||||||||||||
| Balance – end of fiscal year | $ | (173,132) | $ | (175,903) | $ | (118,561) | $ | (124,700) | ||||||||||||||||||
The components of loss before benefit (expense) for income taxes for the years ended December 31, 2018 and 2017 wasperiods reflected in the table below is as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Domestic | $ | (23,346) | $ | (14,314) | $ | 163,866 | $ | (568,781) | ||||||||||||||||||
| Foreign | 18,927 | (42,326) | (24,308) | (318,603) | ||||||||||||||||||||||
| Total | $ | (4,419) | $ | (56,640) | $ | 139,558 | $ | (887,384) | ||||||||||||||||||
The expense (benefit) for income taxes consisted of the following for the periods reflected in the table below is as follows (in thousands):
| 2018 | 2017 | |||||||
| Operating revenues | $ | 170 | $ | 581 | ||||
| Costs and expenses: | ||||||||
| Operating and administrative | 63 | 367 | ||||||
| Depreciation and amortization | 377 | 503 | ||||||
| Total costs and expenses | 440 | 870 | ||||||
| Operating income | $ | (270 | ) | $ | (289 | ) | ||
| Net income (loss) | $ | (442 | ) | $ | (527 | ) | ||
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Current: | ||||||||||||||||||||||||||
| Domestic | $ | 5,971 | $ | 719 | $ | (1,542) | $ | 2,516 | ||||||||||||||||||
| Foreign | 7,068 | 14,387 | 6,572 | 9,178 | ||||||||||||||||||||||
| $ | 13,039 | $ | 15,106 | $ | 5,030 | $ | 11,694 | |||||||||||||||||||
| Deferred: | ||||||||||||||||||||||||||
| Domestic | $ | (5,945) | $ | (11,894) | $ | (5,072) | $ | (49,634) | ||||||||||||||||||
| Foreign | 4,200 | (3,567) | 524 | (13,238) | ||||||||||||||||||||||
| $ | (1,745) | $ | (15,461) | $ | (4,548) | $ | (62,872) | |||||||||||||||||||
| Total | $ | 11,294 | $ | (355) | $ | 482 | $ | (51,178) | ||||||||||||||||||
98
| 2019 | 2018 | 2017 | ||||||||||
| U.S. | $ | (13,317 | ) | $ | 12,633 | $ | (148,248 | ) | ||||
| Foreign | (1,430 | ) | 1,559 | (4,457 | ) | |||||||
| Total | $ | (14,747 | ) | $ | 14,192 | $ | (152,705 | ) | ||||
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The componentsreconciliation of income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands):
| 2019 | 2018 | 2017 | ||||||||||
| Current: | ||||||||||||
| Federal | $ | 2,935 | $ | 924 | $ | — | ||||||
| State | (69 | ) | 219 | 7 | ||||||||
| Foreign | 937 | 38 | (3,530 | ) | ||||||||
| Total current | 3,803 | 1,181 | (3,523 | ) | ||||||||
| Deferred: | ||||||||||||
| Federal | (4,266 | ) | 2,154 | (121,359 | ) | |||||||
| State | 70 | (390 | ) | 1,923 | ||||||||
| Foreign | (338 | ) | (5 | ) | 294 | |||||||
| Total deferred | (4,534 | ) | 1,759 | (119,142 | ) | |||||||
| Income tax (benefit) expense | $ | (731 | ) | $ | 2,940 | $ | (122,665 | ) | ||||
| Provision (benefit): | 2019 | 2018 | 2017 | ||||||
| Statutory rate | 21.0 | % | 21.0 | % | 35.0 | % | |||
| State taxes, net of federal tax benefit | 10.9 | % | (1.9 | )% | 5.3 | % | |||
| State valuation allowance | (11.0 | )% | 0.4 | % | (6.6 | )% | |||
| Sale of investment in JV | (8.7 | )% | — | % | — | % | |||
| Foreign tax credit valuation allowance | (4.2 | )% | — | % | — | % | |||
| Foreign valuation allowance | 0.3 | % | (2.3 | )% | (1.0 | )% | |||
| Brazilian PERT Program | — | % | — | % | 2.2 | % | |||
| Other | (3.3 | )% | 3.5 | % | (0.6 | )% | |||
| Tax Act | — | % | — | % | 46.0 | % | |||
| 5.0 | % | 20.7 | % | 80.3 | % | ||||
| 2019 | 2018 | |||||||
| Deferred tax liabilities: | ||||||||
| Property and equipment | $ | 111,411 | $ | 116,178 | ||||
| Buy-in on maintenance contracts | 223 | 423 | ||||||
| Total deferred tax liabilities | 111,634 | 116,601 | ||||||
| Deferred tax assets: | ||||||||
| Tax loss carryforwards | 47,243 | 44,919 | ||||||
| Stock compensation | 690 | 691 | ||||||
| Reserves | 742 | 788 | ||||||
| Other | 658 | (285 | ) | |||||
| Valuation allowance | (41,492 | ) | (37,869 | ) | ||||
| Total deferred tax assets | 7,841 | 8,244 | ||||||
| Net deferred tax liabilities | $ | 103,793 | $ | 108,357 | ||||
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Statutory rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||||||
| Effect of U.S. tax reform | — | % | — | % | — | % | — | % | ||||||||||||||||||
| Net foreign tax on non-U.S. earnings | (348.2) | % | (25.2) | % | (4.2) | % | (0.7) | % | ||||||||||||||||||
| Benefit of foreign tax deduction in the U.S. | 25.2 | % | 2.3 | % | (0.2) | % | — | % | ||||||||||||||||||
| Foreign earnings indefinitely reinvested abroad | 44.8 | % | 5.8 | % | 2.2 | % | (5.9) | % | ||||||||||||||||||
| Change in valuation allowance | 16.7 | % | — | % | (0.4) | % | (0.6) | % | ||||||||||||||||||
| Foreign earnings that are currently taxed in the U.S. | (40.5) | % | (5.6) | % | 0.8 | % | — | % | ||||||||||||||||||
| Bargain purchase gain | — | % | 30.1 | % | — | % | — | % | ||||||||||||||||||
| Sales of subsidiaries | 22.0 | % | — | % | — | % | (1.1) | % | ||||||||||||||||||
| Effect of change in foreign statutory corporate income tax rates | — | % | 1.7 | % | — | % | — | % | ||||||||||||||||||
| Preferred stock embedded derivative | — | % | 5.7 | % | (27.7) | % | — | % | ||||||||||||||||||
| Contingent beneficial conversion feature | — | % | — | % | — | % | (1.0) | % | ||||||||||||||||||
| Impairment of foreign investments | 62.4 | % | (26.2) | % | 1.4 | % | (0.6) | % | ||||||||||||||||||
| Fresh start accounting and reorganization | — | % | — | % | 6.7 | % | (3.6) | % | ||||||||||||||||||
| Professional fees to be capitalized for tax | — | % | (2.9) | % | 1.3 | % | (1.3) | % | ||||||||||||||||||
| Changes in tax reserves | (3.8) | % | — | % | 0.1 | % | — | % | ||||||||||||||||||
| Impact of U.S. withholding tax | (10.1) | % | (1.3) | % | (0.3) | % | (0.1) | % | ||||||||||||||||||
| Nondeductible employee separation payments | — | % | (1.0) | % | — | % | — | % | ||||||||||||||||||
| Other, net | (45.2) | % | (3.8) | % | (0.4) | % | (0.3) | % | ||||||||||||||||||
| Effective tax rate | (255.7) | % | 0.6 | % | 0.3 | % | 5.8 | % | ||||||||||||||||||
During the fiscal year ended March 31, 2022, the Company’s effective tax rate was (255.7)%. The Company’s effective income tax rate for the fiscal year ended March 31, 2022 is primarily impacted by income tax from non-US earnings in certain profitable jurisdictions, the Company’s impairment of $19.9 million relatedforeign investments that do not generate an income tax benefit, adjustments to Aeróleo, $1.3 million relatedvaluation allowances against future realization of deductible business interest expense and adjustments to Sicher,valuation allowances against net operating losses. During the fiscal year ended March 31, 2022, the Company’s expense for income taxes was $11.3 million.
For the Predecessor periods, Old Bristow prepared the provision for income taxes using a discrete effective tax rate method due to small changes in estimated annual pre-tax income or loss potentially resulting in significant changes in the estimated annual effective tax rate. For the five months ended March 31, 2020 (Successor), Old Bristow estimated the post-emergence annual effective tax rate from continuing operations and $0.6 million relatedapplied this rate to foreign tax credits. If the assumptions change and the Company determines it will be able to realize those deferred tax assets,two-month post-emergence losses from continuing operations. In addition, Old Bristow separately calculated the tax benefits relating to any reversalimpact of the valuation allowance on deferredunusual or infrequent items. The tax assets would be recordedimpacts of such unusual or infrequent items were treated discretely in the income tax provision in the periodquarter in which such adjustments are identified.they occurred.
During the five months ended March 31, 2020 and seven months ended October 31, 2019, Old Bristow’s effective tax rates were 0.3% and 5.8% percent, respectively.
99
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company’s operations are subject to the jurisdiction of multiple tax authorities, which impose various types of taxes on itthe Company, including income, value added, sales and payroll taxes. DeterminingDetermination of taxes owed in any jurisdiction requires the interpretation of relevantrelated tax laws, regulations, judicial decisions and administrative interpretationinterpretations of the local tax authority. As a result, the Company is subject to tax assessments in such jurisdictions including the re-determination of taxable amounts by tax authorities that may not agree with the Company’sits interpretations and positions taken. The examinationfollowing table summarizes the years open by jurisdiction as of the Company’s 2015 federal income tax return concluded with no adjustments during 2019.March 31, 2022:
| Years Open | |||||
| U.S. | 2019 to present | ||||
| U.K. | 2021 to present | ||||
| Guyana | 2013 to present | ||||
| Nigeria | 2012 to present | ||||
| Trinidad | 2010 to present | ||||
| Australia | 2018 to present | ||||
| Norway | 2018 to present | ||||
| Suriname | 2017 to present | ||||
| Brazil | 2017 to present | ||||
The effects of a tax position are recognized in the period in which it is determinedthe Company determines that it is more-likely-than-not (defined as a more likely than not50% likelihood) that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company remains subject to examination for U.S. federalA tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that is greater than 50% likely of being recognized upon ultimate settlement.
As of March 31, 2022 and multiple state tax jurisdictions for tax years after 2015 and in Brazil for 2015 and subsequent years.
The activity associated with unrecognized tax benefit for the periods reflected in the table below is as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Unrecognized tax benefits – beginning of period | $ | 4,258 | $ | 4,252 | $ | 4,060 | $ | 4,337 | ||||||||||||||||||
| Increases for tax positions taken in prior periods | 147 | 30 | 213 | 170 | ||||||||||||||||||||||
| Decreases for tax positions taken in prior periods | (420) | — | (21) | (442) | ||||||||||||||||||||||
| Decrease related to statute of limitation expirations | (43) | (24) | — | (5) | ||||||||||||||||||||||
| Unrecognized tax benefits – end of period | $ | 3,942 | $ | 4,258 | $ | 4,252 | $ | 4,060 | ||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||
| Unrecognized tax benefits at the beginning of the year | $ | 11 | $ | 11 | $ | 261 | ||||
| Reductions due to settlements with taxing authorities | — | — | (250 | ) | ||||||
| Unrecognized tax benefits at the end of the year | $ | 11 | $ | 11 | $ | 11 | ||||
| 2019 | 2018 | 2017 | ||||||||
| Valuation allowance at the beginning of the year | $ | 37,869 | $ | 34,967 | $ | 21,575 | ||||
| Increases to state valuation allowance | 1,616 | 50 | 10,010 | |||||||
| Increases due to foreign valuation allowances | 2,007 | 2,852 | 7,578 | |||||||
| Decrease due to Brazilian PERT Program | — | — | (4,196 | ) | ||||||
| Valuation allowance at the end of the period | $ | 41,492 | $ | 37,869 | $ | 34,967 | ||||
| 2019 | 2018 | |||||||
| 7.750% Senior Notes (excluding unamortized discount) | $ | 144,088 | $ | 144,828 | ||||
| Senior secured revolving credit facility | — | — | ||||||
| Promissory notes | 18,317 | 19,980 | ||||||
| Other | — | 395 | ||||||
| Total principal balance on borrowings | 162,405 | 165,203 | ||||||
| Portion due with one year | (18,317 | ) | (2,058 | ) | ||||
| Unamortized debt issuance costs | (1,320 | ) | (1,712 | ) | ||||
| Unamortized discount | (936 | ) | (1,216 | ) | ||||
| Long-term debt | $ | 141,832 | $ | 160,217 | ||||
| Total Due | ||||
| 2020 | $ | 18,317 | ||
| 2021 | — | |||
| 2022 | 144,088 | |||
| 2023 | — | |||
| 2024 | — | |||
| Years subsequent to 2024 | — | |||
| $ | 162,405 | |||
100
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 12 — SHARE-BASED COMPENSATION
Management Incentive Plan —On the normal courseEffective Date, the Compensation Committee of business,Old Bristow’s Board adopted the Company is involved in various litigation matters including, among other things, claims by third parties2019 Management Incentive Plan (the “MIP”). At the time of its adoption, the MIP served as an equity-based compensation plan for alleged property damagesdirectors, officers and personal injuries. In addition, from time to time, the Company is involved in taxparticipating employees and other disputes with various government agencies. Management has used estimates in determining the Company’s potential exposureservice providers of Old Bristow and its affiliates, pursuant to these matters and has recorded reserves in its financial statements related thereto as appropriate. It is possible that a change in its estimates relatedwhich Old Bristow was permitted to these exposures could occur, but the Company does not expect such changes in estimated costs would have a material effect on its business, consolidated financial position or results of operations.
| 2019 | 2018 | 2017 | ||||||||||
| Net income (loss) attributable to Era Group Inc. | $ | (3,593 | ) | $ | 13,922 | $ | (28,161 | ) | ||||
| Less: Net income attributable to participating securities | — | 307 | — | |||||||||
| Net income (loss) attributable to fully vested common stock | $ | (3,593 | ) | $ | 13,615 | $ | (28,161 | ) | ||||
| Shares: | ||||||||||||
| Weighted average number of common shares outstanding—basic | 21,009,362 | 21,167,550 | 20,760,530 | |||||||||
Net effect of dilutive stock options and restricted stock awards based on the treasury stock method(1) | 1,353 | 12,940 | — | |||||||||
| Weighted average number of common shares outstanding—diluted | 21,010,715 | 21,180,490 | 20,760,530 | |||||||||
| Earnings (loss) per common share: | ||||||||||||
| Basic | $ | (0.17 | ) | $ | 0.64 | $ | (1.36 | ) | ||||
| Diluted | $ | (0.17 | ) | $ | 0.64 | $ | (1.36 | ) | ||||
| 2019 | 2018 | 2017 | |||||||||
| Operating revenues: | |||||||||||
| United States | $ | 146,952 | $ | 153,394 | $ | 150,583 | |||||
| Foreign | 63,083 | 56,800 | 64,344 | ||||||||
| Total operating revenues | $ | 210,035 | $ | 210,194 | $ | 214,927 | |||||
| 2019 | 2018 | 2017 | |||||||||
| Revenues: | |||||||||||
| Oil and gas flight services: | |||||||||||
| U.S. | $ | 139,312 | $ | 143,654 | $ | 134,010 | |||||
| International | 56,510 | 56,800 | 64,344 | ||||||||
| Total oil and gas | 195,822 | 200,454 | 198,354 | ||||||||
| Emergency response services | 14,213 | 9,740 | 11,502 | ||||||||
| Flightseeing | — | — | 5,071 | ||||||||
| Total operating revenues | $ | 210,035 | $ | 210,194 | $ | 214,927 | |||||
| Dry-leasing revenues: | |||||||||||
| U.S. | 2,562 | 3,873 | 1,604 | ||||||||
| International | 13,462 | 7,609 | 14,790 | ||||||||
| Total revenues | $ | 226,059 | $ | 221,676 | $ | 231,321 | |||||
2021 Equity Incentive Plan —In 2013,August 2021, the Company adopted the Era Group Inc. 2013 Employee Stock Purchase2021 Equity Incentive Plan (“ESPP”(the “LTIP”) under which. Upon adoption, the Company may offer up to a maximumLTIP replaced the 2012 Incentive Plan and MIP (collectively the “Pre-existing Plans”). The aggregate number of 300,000 shares of Common Stockcommon stock reserved and available for purchase by eligible employees at a price perissuance pursuant to awards granted under the LTIP are (a) 1,640,000 Shares minus (b) one share equal to 85%for each share issued under awards granted under the Pre-existing Plans on or after June 1, 2021, through the adoption date of the lesser of (i) the fair market value per share of Common Stock on the first day of the offering period or (ii) the fair market value per share of Common Stock on the last day of the offering period. Common Stock is made available for purchase under the ESPP for six-month offering periods. The ESPP is intended to comply with Section 423 of the Code but is not intended to be subject to Section 401(a) of the Code or the Employee Retirement Income Security Act of 1974. The Board of Directors may amend or terminate the ESPP at any time; however, no increase inLTIP, and plus (c) the number of shares of Common Stock reserved for issuancesubject to awards under the ESPP may be made without stockholder approval. In 2016, the Board of Directors authorized an additional 400,000 to be reserved for issuance under the ESPP, which was approved by the stockholders of the Company at the Company’s annual meeting in 2017. The ESPP has a term of ten years. During the year ended December 31, 2019, the Company issued 120,754 shares under the ESPP. As of December 31, 2019Pre-existing Plans that are forfeited or expire and 2018, 101,624 and 222,378 shares, respectively, remainedbecome available for issuance under the ESPP. Interms of the first quarterLTIP. The LTIP allows for awards to be granted in the form of 2020,stock options, stock appreciation rights, shares of restricted stock, other share-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. Shares underlying awards that expire, terminate, are cancelled, or forfeited to the Company, or are settled in connection with its entry into a definitive agreementcash may be reused for subsequent awards. As of March 31, 2022, 1,230,296 shares remained available to merge with Bristow, suspendinggrant under the ESPP.2012 Incentive Plan.
| Number of Shares | Weighted Average Grant Price | |||||||||||||
| Non-vested as of April 1, 2021: | 894,505 | $ | 25.28 | |||||||||||
| Granted | 502,191 | $ | 28.83 | |||||||||||
| Vested/released | (162,032) | $ | 17.20 | |||||||||||
| Cancelled/forfeited | (73,056) | $ | 27.96 | |||||||||||
| Non-vested outstanding as of March 31, 2022 | 1,161,608 | $ | 27.77 | |||||||||||
As of DecemberMarch 31, 2019,2022, the Company had approximately $4.2$15.9 million in total unrecognized compensation costs associated with these awards, and the weighted average period over which it is expected to be recognized is 1.8 years.
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BRISTOW GROUP INC. AND SUBSIDIARIES
Stock Awards.Options. During the fiscal year ended DecemberMarch 31, 2019,2022, the numberstock options transactions were as follows:
| Number of Shares | Weighted Average Grant Price | ||||||||||
| Non-vested as of April 1, 2021: | 452,639 | $ | 19.95 | ||||||||
| Granted | — | $ | — | ||||||||
| Exercised/Released | (64) | $ | 30.16 | ||||||||
| Cancelled/Forfeited | (16,246) | $ | 24.65 | ||||||||
| Expired | (11,378) | $ | 20.81 | ||||||||
| Non-vested outstanding as of March 31, 2022 | 424,951 | $ | 19.75 | ||||||||
| Vested and exercisable | 180,110 | $ | 24.77 | ||||||||
As of sharesMarch 31, 2022, the Company had approximately $2.3 million in total unrecognized compensation costs associated with these awards, and the weighted average grant price of restricted stock award transactions were as follows:
| 2019 | |||||||
| Number of Shares | Weighted Average Grant Price | ||||||
| Non-vested as of December 31, 2018 | 513,766 | $ | 10.28 | ||||
| Restricted stock awards granted: | |||||||
| Non-employee directors | 34,488 | $ | 10.35 | ||||
| Employees | 361,056 | $ | 10.35 | ||||
| Vested | (282,911 | ) | $ | 10.31 | |||
| Forfeited | — | $ | — | ||||
| Non-vested as of December 31, 2019 | 626,399 | $ | 10.31 | ||||
The Company utilizes the Black-Scholes option valuation model for estimating the fair value of its stock options and awards granted after the Merger vest on a cliff-basis after three years. The Company grants non-performance based restricted stock units that vest over a three year period and Cash Return on Invested Capital (“ROIC”) awards at grant date fair values derived using the Company’s closing stock price on the day the awards are granted and also vest over a three year period. The grant date fair values on performance-based restricted stock units (“PSUs”) and Total Stock Return (“TSR”) awards are determined under a Monte Carlo Simulation in a risk-neutral framework using Geometric Brownian Motion and will vest on a cliff-basis, after three years, subject to certain stock price performance targets.
Note 13 — DEFINED CONTRIBUTION AND PENSION PLANS
Defined Contribution Plans
The Bristow Group Inc. Employee Savings and Retirement Plan (the “Bristow Plan”) covers certain of the Company’s U.S. employees. Under the Bristow Plan, the Company matches each participant’s contributions up to 3% of the employee’s compensation. In addition, under the Bristow Plan, the Company contributes an additional 3% of the employee’s compensation.
BHL and Bristow International Aviation (Guernsey) Limited (“BIAGL”) each have a defined contribution plan. These defined contribution plans were put in place for new hires following the closure of the defined benefit pension plans described below. There are defined contribution sections within the closed defined benefit plans which were established for those defined benefit members who were in active service when the schemes closed to new benefit accrual.
The Company’s contributions to its defined contribution plans were $21.4 million, $21.9 million, $8.5 million and $13.6 million for the fiscal years ended 2022 and 2021, five months ended March 31, 2020 and seven months ended October 31, 2019 (Predecessor), respectively.
102
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Defined Benefit Plans
The defined benefit pension plans of BHL and BIAGL (the “Defined Benefit Pension Plans”) were replaced by the defined contribution plans described above and closed to future accrual as of February 1, 2004. Prior to replacement, the Defined Benefit Pension Plans covered all full-time employees of Bristow Aviation and BIAGL employed on or before December 31, 1997. The defined benefits for participants in the Defined Benefit Pension Plans were based on the employee’s annualized average last three years’ pensionable salaries up to February 1, 2004, increasing thereafter in line with retail price inflation (prior to 2011) and consumer price inflation (from 2011 onwards), and subject to maximum increases of 5% per year over the period to retirement. Any valuation deficits are funded by contributions by BHL and BIAGL. Plan assets are held in separate funds administered by the plans’ trustee (the “Plan Trustee”), which are primarily invested in equities, credit debt securities and cash.
The following table provides a rollforward of the projected benefit obligation and the fair value of plan assets, sets forth the defined benefit retirement plans’ funded status and provides detail of the components of net periodic pension cost calculated for the Defined Benefit Pension Plans. The measurement date adopted is March 31 and resulting gains or losses are amortized over the average remaining life expectancy of the plan members.
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Change in benefit obligation: | ||||||||||||||||||||||||||
| Projected benefit obligation (PBO) at beginning of period | $ | 578,918 | $ | 494,992 | $ | 528,858 | $ | 504,076 | ||||||||||||||||||
| Service cost | 732 | 743 | 594 | 29 | ||||||||||||||||||||||
| Interest cost | 9,757 | 9,449 | 4,109 | 6,705 | ||||||||||||||||||||||
| Actuarial loss (gain) | (9,592) | 41,343 | (5,545) | 34,618 | ||||||||||||||||||||||
| Benefit payments and expenses | (23,418) | (24,854) | (11,394) | (13,882) | ||||||||||||||||||||||
| Effect of exchange rate changes | (26,441) | 57,245 | (21,630) | (2,688) | ||||||||||||||||||||||
| Projected benefit obligation (PBO) at end of period | $ | 529,956 | $ | 578,918 | $ | 494,992 | $ | 528,858 | ||||||||||||||||||
| Change in plan assets: | ||||||||||||||||||||||||||
| Fair value of assets at beginning of period | $ | 534,768 | $ | 477,137 | $ | 495,343 | $ | 478,350 | ||||||||||||||||||
| Actual return on assets | 8,633 | 11,738 | 6,827 | 24,633 | ||||||||||||||||||||||
| Employer contributions | 16,234 | 16,778 | 7,144 | 9,032 | ||||||||||||||||||||||
| Benefit payments and expenses | (23,418) | (24,854) | (11,394) | (13,882) | ||||||||||||||||||||||
| Effect of exchange rate changes | (24,431) | 53,969 | (20,783) | (2,790) | ||||||||||||||||||||||
| Fair value of assets at end of period | $ | 511,786 | $ | 534,768 | $ | 477,137 | $ | 495,343 | ||||||||||||||||||
| Reconciliation of funded status: | ||||||||||||||||||||||||||
| Accumulated benefit obligation (ABO) | $ | 529,956 | $ | 578,918 | $ | 494,992 | $ | 528,858 | ||||||||||||||||||
| Projected benefit obligation (PBO) | $ | 529,956 | $ | 578,918 | $ | 494,992 | $ | 528,858 | ||||||||||||||||||
| Fair value of assets | (511,786) | (534,768) | (477,137) | (495,343) | ||||||||||||||||||||||
| Net recognized pension liability | $ | 18,170 | $ | 44,150 | $ | 17,855 | $ | 33,515 | ||||||||||||||||||
| Amounts recognized in accumulated other comprehensive loss | $ | (5,962) | $ | 45,071 | $ | (6,389) | $ | — | ||||||||||||||||||
103
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table provides a detail of the components of net periodic pension cost (benefit) for the periods reflected in the table below were as follows (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Service cost for benefits earned during the period | $ | 732 | $ | 743 | $ | 594 | $ | 29 | ||||||||||||||||||
| Interest cost on pension benefit obligation | 9,757 | 9,449 | 4,109 | 6,705 | ||||||||||||||||||||||
| Expected return on assets | (12,290) | (13,090) | (5,735) | (5,610) | ||||||||||||||||||||||
| Net periodic pension cost (benefit) | $ | (1,801) | $ | (2,898) | $ | (1,032) | $ | 1,124 | ||||||||||||||||||
The service cost component is reported in the Company’s statement of operations in total costs and expenses. All other components of net periodic pension cost are reported in the other expenses, net.
The amount in accumulated other comprehensive loss as of March 31, 2022 expected to be recognized as a component of net periodic pension cost in fiscal year 2023 is 0, net of tax, and represents amortization of the net actuarial losses.
Actuarial assumptions used to develop the components of the Defined Benefit Pension Plans for the periods reflected in the table below were as follows:
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||||||||
| Discount rate | 2.00 | % | 2.30 | % | 1.90 | % | 1.90 | % | ||||||||||||||||||||||||
| Expected long-term rate of return on assets | 2.42 | % | 2.62 | % | 2.80 | % | 2.80 | % | ||||||||||||||||||||||||
| Pension increase rate | 3.00 | % | 2.60 | % | 2.80 | % | 2.80 | % | ||||||||||||||||||||||||
The Company utilizes a British pound sterling denominated AA corporate bond index as a basis for determining the discount rate for its Defined Benefit Pension Plans. The expected rate of return assumptions have been determined following consultation with the Company’s actuarial advisors. In the case of bond investments, the rates assumed have been directly based on market redemption yields at the measurement date, and those on other asset classes represent forward-looking rates that have typically been based on other independent research by investment specialists.
Under U.K. and Guernsey legislation, it is the Plan Trustee who is responsible for the investment strategy of the plans, although day-to-day management of the assets is delegated to a team of regulated investment fund managers. The Plan Trustee of the Bristow Staff Pension Scheme (the “Scheme”) aims to invest the assets of the Scheme prudently so that the benefits promised to members are provided. In setting the investment strategy, the Trustee first considered the lowest risk asset allocation that it could adopt in relation to the Scheme’s liabilities.
The types of investments are held, and the relative allocation of assets to investments is selected, in light of the liability profile of the Scheme, its cash flow requirements, the funding level and the Plan Trustee’s stated objectives. In addition, in order to avoid an undue concentration of risk, assets are diversified within and across asset classes.
104
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The market value of the plan’s assets as of March 31, 2022 and March 31, 2021 was allocated between asset classes. Details of target allocation percentages under the Plan Trustee’s investment strategies as of the same dates are also included as follows:
| Target Allocation as of March 31, | Actual Allocation as of March 31, | ||||||||||||||||||||||
| Asset Category | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Equity securities | 14.0 | % | 14.1 | % | 16.4 | % | 15.1 | % | |||||||||||||||
| Debt securities | 19.0 | % | 19.0 | % | 19.8 | % | 16.4 | % | |||||||||||||||
| Property | 6.7 | % | 6.7 | % | 5.8 | % | 6.4 | % | |||||||||||||||
| Other assets | 60.3 | % | 60.2 | % | 58.0 | % | 62.1 | % | |||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
The following table summarizes, by level within the fair value hierarchy, the plan assets as of March 31, 2022, which are valued at fair value (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, 2022 | ||||||||||||||||||||
| Cash and cash equivalents | $ | 3,591 | $ | 18,661 | $ | — | $ | 22,252 | |||||||||||||||
| Equity investments- UK | 1,053 | — | — | 1,053 | |||||||||||||||||||
| Equity investments- non UK | 2,897 | — | — | 2,897 | |||||||||||||||||||
| Insurance linked securities | — | 27,386 | — | 27,386 | |||||||||||||||||||
| Liquid credit | — | 98,130 | — | 98,130 | |||||||||||||||||||
| Alternatives | — | 51,801 | — | 51,801 | |||||||||||||||||||
| Diversified growth (absolute return) funds | 790 | — | — | 790 | |||||||||||||||||||
| Government debt securities | — | 99,157 | — | 99,157 | |||||||||||||||||||
| Corporate debt securities | 1,712 | — | — | 1,712 | |||||||||||||||||||
| Insurance policy | — | — | 154,345 | 154,345 | |||||||||||||||||||
| Total fair value investments | $ | 10,043 | $ | 295,135 | $ | 154,345 | $ | 459,523 | |||||||||||||||
Net asset value(1) | — | — | — | 52,263 | |||||||||||||||||||
| Total investments | $ | 10,043 | $ | 295,135 | $ | 154,345 | $ | 511,786 | |||||||||||||||
____________________
(1)Includes illiquid credit and property debt amounts held at net asset values.
105
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes, by level within the fair value hierarchy, the plan assets as of March 31, 2021, which are valued at fair value (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, 2021 | ||||||||||||||||||||
| Cash and cash equivalents | $ | 5,933 | $ | 26,628 | $ | — | $ | 32,561 | |||||||||||||||
| Equity investments - U.K. | 1,518 | — | — | 1,518 | |||||||||||||||||||
| Equity investments - Non-U.K. | 2,345 | — | — | 2,345 | |||||||||||||||||||
| Insurance Linked Securities | — | 27,870 | — | 27,870 | |||||||||||||||||||
| Illiquid credit | — | — | 25,938 | 25,938 | |||||||||||||||||||
| Liquid credit | — | 102,373 | — | 102,373 | |||||||||||||||||||
| Property debt | — | — | 34,078 | 34,078 | |||||||||||||||||||
| Alternatives | — | 48,013 | — | 48,013 | |||||||||||||||||||
| Diversified growth (absolute return) funds | 1,242 | — | — | 1,242 | |||||||||||||||||||
| Government debt securities | 414 | 85,403 | — | 85,817 | |||||||||||||||||||
| Corporate debt securities | 1,656 | — | — | 1,656 | |||||||||||||||||||
| Insurance policies | — | — | 171,357 | 171,357 | |||||||||||||||||||
| Total investments | $ | 13,108 | $ | 290,287 | $ | 231,373 | $ | 534,768 | |||||||||||||||
The investments’ fair value measurement level within the fair value hierarchy is classified in its entirety based on the lowest level of input that is significant to the measurement. The fair value of assets using Level 2 inputs is determined based on the fair value of the underlying investment using quoted prices in active markets or other significant inputs that are deemed observable.
Estimated future benefit payments for each of the years ending March 31 is as follows (in thousands):
| Fiscal Years Ending March 31, | Payments | ||||
| 2023 | $ | 23,963 | |||
| 2024 | 24,358 | ||||
| 2025 | 25,017 | ||||
| 2026 | 25,543 | ||||
| 2027 | 25,938 | ||||
| Thereafter | 132,061 | ||||
The Company expects to fund these payments with cash contributions to the plans, plan assets and earnings on plan assets. The current estimates of cash contributions for the Company’s pension plans required for fiscal year 2023 are expected to be $16.9 million.
Note 14 — STOCKHOLDERS’ EQUITY, PREFERRED STOCK AND ACCUMULATED OTHER COMPREHENSIVE INCOME
Stockholders’ Equity and Preferred Stock
In connection with the Merger, the Old Bristow Preferred Stock was converted into Old Bristow Common Stock and then all Old Bristow Common Stock was converted into the Combined Company Common Stock.
106
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Because the Old Bristow Preferred Stock could be redeemed in certain circumstances outside of the sole control of Old Bristow (including at the option of the holder), but was not mandatorily redeemable, the Old Bristow Preferred Stock was classified as mezzanine equity and initially recognized at fair value of $618.9 million as of October 31, 2019 (Successor). This amount was reduced by the fair value of the bifurcated derivative liability as of October 31, 2019 (Successor) of $470.3 million, resulting in an initial value of $148.6 million. The difference between (a) the carrying value of the embedded derivative of $270.8 million plus the carrying value of the Preferred Stock Host of $148.6 million and (b) the fair value of the Old Bristow Common Stock of $270.7 million paid as consideration for the Old Bristow Preferred Stock was recognized in retained earnings because the fair value of the Old Bristow Common Stock was less than the combined carrying values of the Old Bristow Preferred Stock Host and embedded derivative.
Prior to the Merger, there were 11,092,845 shares of Old Bristow Common Stock and 6,725,798 shares of Old Bristow Preferred Stock issued and outstanding. As described in Note 8 to the consolidated financial statements, Old Bristow repurchased certain shares of Old Bristow Common Stock and shares of Old Bristow Preferred Stock immediately prior to the conversion of the Old Bristow Preferred Stock into Old Bristow Common Stock. The repurchase was accounted for in the same manner as the share conversion and included in the calculation described above. The Old Bristow Preferred Stock was converted into Old Bristow Common Stock at a rate of 5.179562 shares of Old Bristow Common Stock for each share of Old Bristow Preferred Stock.
The Old Bristow Common Stock was then subsequently exchanged for the Combined Company Common Stock, resulting in a total of 24,195,693 shares of Combined Company Common Stock issued to legacy Old Bristow stockholders. This resulted in a total of 30,882,471 shares of Combined Company Common Stock issued and outstanding immediately after consummation of the Merger. Upon the closing of the Merger, 217,899 shares of restricted stock awards and 145,263 stock options to purchase common stock for certain employees, related to Old Bristow employees, were canceled as a result of separation from the Combined Company. Upon the closing of the Merger, vesting of 145,604 shares of restricted stock awards, related to the Combined Company’s employees were also accelerated.
Share Repurchases
On September 16, 2020, the Board authorized a stock repurchase plan providing for the repurchase of up to $75.0 million of the Company's common stock. Repurchases under the program may be made in the open market, including pursuant to a Rule 10b5-1 plan, by block repurchases, in private transactions (including with related parties) or otherwise, from time to time, depending on market conditions. The share repurchase program has determined that its operations comprise a single segment. Helicopters are highly mobileno expiration date and may be utilizedsuspended or discontinued at any time without notice.
During the fiscal year ended March 31, 2022, the Company repurchased 1,480,804 shares of common stock for gross consideration of $40.0 million, which is an average cost per share of $27.02. After these repurchases, as of March 31, 2022, $25.0 million remained available of the authorized $75.0 million share repurchase program.
During the fiscal year ended March 31, 2021, the Company repurchased 448,252 shares of common stock in anyopen market transactions for gross consideration of $10.0 million, equal to an average purchase price per share of $22.29.
107
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Accumulated Other Comprehensive Income (Loss)
The following table shows the changes in balances for accumulated other comprehensive income (loss) (in thousands):
| Currency Translation Adjustments | Pension Liability Adjustments (1) | Unrealized gain (loss) on cash flow hedges (2) | Total | ||||||||||||||||||||
| Balance as of October 31, 2019 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Net current period other comprehensive income (loss) | (16,440) | 6,389 | 1,410 | (8,641) | |||||||||||||||||||
| Balance as of March 31, 2020 | $ | (16,440) | $ | 6,389 | $ | 1,410 | $ | (8,641) | |||||||||||||||
| Other comprehensive income (loss) before reclassification | 49,803 | — | (4,677) | 45,126 | |||||||||||||||||||
| Reclassified from accumulated other comprehensive income | — | (45,071) | 1,671 | (43,400) | |||||||||||||||||||
| Net current period other comprehensive income (loss) | 49,803 | (45,071) | (3,006) | 1,726 | |||||||||||||||||||
| Foreign exchange rate impact | (717) | 717 | — | — | |||||||||||||||||||
| Balance as of March 31, 2021 | $ | 32,646 | $ | (37,965) | $ | (1,596) | $ | (6,915) | |||||||||||||||
| Other comprehensive income (loss) before reclassification | (25,274) | — | — | (25,274) | |||||||||||||||||||
| Reclassified from accumulated other comprehensive income | — | 5,962 | 2,777 | 8,739 | |||||||||||||||||||
| Net current period other comprehensive income (loss) | (25,274) | 5,962 | 2,777 | (16,535) | |||||||||||||||||||
| Foreign exchange rate impact | (1,729) | 1,729 | — | — | |||||||||||||||||||
| Balance as of March 31, 2022 | $ | 5,643 | $ | (30,274) | $ | 1,181 | $ | (23,450) | |||||||||||||||
__________________________
(1)Reclassification of amounts related to pension liability adjustments are included as a component of net periodic pension cost.
(2)Reclassification of amounts related to cash flow hedges were included as operating expenses.
108
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 15 - 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 common shares and restricted stock units and awards which were outstanding during the period but were anti-dilutive. The following table shows the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | ||||||||||||||||||||||||||
| Successor | Predecessor | ||||||||||||||||||||||||||||
| Income (loss): | |||||||||||||||||||||||||||||
| Net income (loss) attributable to Bristow Group Inc. | $ | (15,791) | $ | (56,094) | $ | 139,228 | $ | (836,414) | |||||||||||||||||||||
Less: PIK dividends(1) | — | (12,039) | (25,788) | — | |||||||||||||||||||||||||
| Plus: Deemed contribution from conversion of preferred stock | — | 144,986 | — | — | |||||||||||||||||||||||||
| Income (loss) available to common stockholders – basic | (15,791) | 76,853 | 113,440 | (836,414) | |||||||||||||||||||||||||
| Add: PIK dividends | — | 12,039 | 25,788 | — | |||||||||||||||||||||||||
| Less: Changes in fair value of preferred stock derivative liability | — | (15,416) | (184,140) | — | |||||||||||||||||||||||||
| Income (loss) available to common stockholders – diluted | $ | (15,791) | $ | 73,476 | $ | (44,912) | $ | (836,414) | |||||||||||||||||||||
| Shares: | |||||||||||||||||||||||||||||
Weighted average number of common shares outstanding – basic(2) | 28,533 | 24,601 | 5,641 | 35,919 | |||||||||||||||||||||||||
| Effect of dilutive stock options and restricted stock | — | 180 | — | — | |||||||||||||||||||||||||
Preferred shares as converted basis(2) | — | 6,895 | 24,165 | — | |||||||||||||||||||||||||
Weighted average number of common shares outstanding – diluted (3)(4) | 28,533 | 31,676 | 29,806 | 35,919 | |||||||||||||||||||||||||
| Earnings (loss) per common share - basic | $ | (0.55) | $ | 3.12 | $ | 20.11 | $ | (23.29) | |||||||||||||||||||||
| Earnings (loss) per common share - diluted | $ | (0.55) | $ | 2.32 | $ | (1.51) | $ | (23.29) | |||||||||||||||||||||
(1)See Note 8 for further discussion on PIK dividends.
(2)For the five months ended March 31, 2020 the weighted average number of common shares outstanding, basic and diluted, take into account the conversion ratio applied to Old Bristow shares upon close of the Merger.
(3)Excludes weighted average common shares of 1,573,745 for the fiscal year ended March 31, 2022 (Successor), 135,882 for the fiscal year ended March 31, 2021 (Successor) and 3,175,849 for the seven months ended October 31, 2019 (Predecessor), respectively, for certain share awards as the effect of their inclusion would have been antidilutive. The Old Bristow Preferred Stock is not included on an if-converted basis under diluted earnings per common share as the conversion of the shares would have been anti-dilutive.
(4)Potentially dilutive shares issuable pursuant to the warrant transactions entered into concurrently with the issuance of the Old Bristow’s 4½% Convertible Senior Notes (the “Warrant Transactions”) were not included in the computation of diluted income per share for the 2019 period reflected, because to do so would have been anti-dilutive.
109
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 16 — SEGMENT AND GEOGRAPHIC AREA INFORMATION
The Company conducts business in 1 segment: aviation services. The aviation services global operations include 4 regions as follows: Europe, Africa, the Americas and Asia Pacific. The Europe region comprises all of the Company’s service lines as business needs dictate.
The percentage of the Company’s operating revenues were derived from foreign operations. The Company’s foreign revenues are primarily derived from oil and gas operationsthe following major customers for the periods reflected in Brazil, Colombia and Surinamethe table below were as well as leasing activities in other jurisdictions.follows:
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Customer A | 20.3 | % | 19.0 | % | 18.7 | % | 17.0 | % | ||||||||||||||||||
| Customer B | 11.1 | % | 10.0 | % | 9.6 | % | 9.4 | % | ||||||||||||||||||
| Customer C | 6.3 | % | 6.0 | % | 6.2 | % | 5.6 | % | ||||||||||||||||||
| Total percentage of operating revenues | 37.7 | % | 35.0 | % | 34.5 | % | 32.0 | % | ||||||||||||||||||
The following representstables show region information reconciled to consolidated totals, and prepared on the same basis as the Company’s operating revenues by geographical region in which services are provided for the years ended December 31, 2019, 2018 and 2017consolidated financial statements (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Region revenues from external customers: | ||||||||||||||||||||||||||
| Europe | $ | 662,421 | $ | 656,769 | $ | 284,844 | $ | 428,660 | ||||||||||||||||||
| Americas | 379,623 | 337,527 | 99,634 | 140,551 | ||||||||||||||||||||||
| Asia Pacific | 72,035 | 76,644 | 30,605 | 75,722 | ||||||||||||||||||||||
| Africa | 69,663 | 101,649 | 70,305 | 111,896 | ||||||||||||||||||||||
| Corporate and other | 1,462 | 5,473 | 375 | 394 | ||||||||||||||||||||||
Total region revenues (1) | $ | 1,185,204 | $ | 1,178,062 | $ | 485,763 | $ | 757,223 | ||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Revenues: | ||||||||||||
| United States | $ | 149,514 | $ | 157,267 | $ | 152,187 | ||||||
| Latin America and the Caribbean | 68,802 | 58,037 | 68,936 | |||||||||
| Europe | 384 | 608 | 5,029 | |||||||||
| Asia | 7,359 | 5,764 | 5,169 | |||||||||
| $ | 226,059 | $ | 221,676 | $ | 231,321 | |||||||
(1)The Company’s long-lived assets are primarily its property and equipment employed in various geographical regions ofabove table represents disaggregated revenues from contracts with customers except for the world. The following represents the Company’s property and equipment, net of accumulated depreciation, based upon the assets’ physical locations as of December 31, 2019 and 2018 (in thousands):
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Revenues not from contracts with customers: | ||||||||||||||||||||||||||
| Europe | $ | 2,017 | $ | 1,224 | $ | 535 | $ | 726 | ||||||||||||||||||
| Americas | 31,052 | 33,919 | 14,971 | 18,627 | ||||||||||||||||||||||
| Asia Pacific | 523 | 329 | 20 | 191 | ||||||||||||||||||||||
| Corporate and other | 577 | 2,952 | 70 | — | ||||||||||||||||||||||
| Total region revenues not from contracts with customers | $ | 34,169 | $ | 38,424 | $ | 15,596 | $ | 19,544 | ||||||||||||||||||
110
BRISTOW GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| 2019 | 2018 | |||||||
| Property and equipment, net: | ||||||||
| United States | $ | 433,096 | $ | 472,838 | ||||
| Latin America and the Caribbean | 96,225 | 105,519 | ||||||
| Europe | 6,363 | 8,049 | ||||||
| Asia | 21,215 | 12,788 | ||||||
| $ | 556,899 | $ | 599,194 | |||||
| Fiscal Year Ended March 31, 2022 | Fiscal Year Ended March 31, 2021 | Five Months Ended March 31, 2020 | Seven Months Ended October 31, 2019 | |||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||
| Earnings from unconsolidated affiliates, net of losses — equity method investments: | ||||||||||||||||||||||||||
| Europe | $ | — | $ | (19) | $ | 248 | $ | 168 | ||||||||||||||||||
| Americas | (1,738) | 402 | 4,046 | 6,100 | ||||||||||||||||||||||
| Corporate and other | — | — | — | 321 | ||||||||||||||||||||||
| Total earnings from unconsolidated affiliates, net of losses — equity method investments | $ | (1,738) | $ | 383 | $ | 4,294 | $ | 6,589 | ||||||||||||||||||
| Consolidated operating income (loss): | ||||||||||||||||||||||||||
| Europe | $ | 62,082 | $ | 72,199 | $ | 19,334 | $ | 26,143 | ||||||||||||||||||
| Americas | 71,571 | (24,204) | 9,762 | 13,391 | ||||||||||||||||||||||
| Asia Pacific | (13,454) | (1,047) | (6,921) | (33,653) | ||||||||||||||||||||||
| Africa | (27,848) | (19,892) | 10,154 | 17,255 | ||||||||||||||||||||||
| Corporate and other | (92,515) | (121,753) | (36,970) | (101,559) | ||||||||||||||||||||||
| Gain (loss) on disposal of assets | 1,347 | (8,199) | (451) | (3,768) | ||||||||||||||||||||||
| Total consolidated operating income (loss) | $ | 1,183 | $ | (102,896) | $ | (5,092) | $ | (82,191) | ||||||||||||||||||
| Depreciation and amortization: | ||||||||||||||||||||||||||
| Europe | $ | 34,411 | $ | 32,241 | $ | 14,898 | $ | 28,155 | ||||||||||||||||||
| Americas | 17,160 | 16,847 | 4,168 | 16,654 | ||||||||||||||||||||||
| Asia Pacific | 7,219 | 7,831 | 3,836 | 7,463 | ||||||||||||||||||||||
| Africa | 6,460 | 4,994 | 2,274 | 10,829 | ||||||||||||||||||||||
| Corporate and other | 9,731 | 8,165 | 3,062 | 7,763 | ||||||||||||||||||||||
| Total depreciation and amortization | $ | 74,981 | $ | 70,078 | $ | 28,238 | $ | 70,864 | ||||||||||||||||||
| March 31, 2022 | March 31, 2021 | ||||||||||
| Identifiable assets: | |||||||||||
| Europe | $ | 917,656 | $ | 1,026,042 | |||||||
| Americas | 500,219 | 579,169 | |||||||||
| Asia Pacific | 50,335 | 102,169 | |||||||||
| Africa | 92,582 | 179,445 | |||||||||
| Corporate and other | 263,487 | 105,445 | |||||||||
| Total identifiable assets | $ | 1,824,279 | $ | 1,992,270 | |||||||
| Investments in unconsolidated affiliates - equity method investments: | |||||||||||
| Europe | $ | — | $ | 679 | |||||||
| Americas | 585 | 3,851 | |||||||||
| Total investments in unconsolidated affiliates - equity method investments | $ | 585 | $ | 4,530 | |||||||
111
| 2019 | 2018 | 2017 | ||||||||||
| Income taxes paid, net of refunds | $ | 1,255 | $ | 283 | $ | 426 | ||||||
| Interest paid to others, excluding capitalized interest | 12,693 | 13,581 | 15,315 | |||||||||
| Interest received | (3,374 | ) | (1,099 | ) | (760 | ) | ||||||
| Schedule of non-cash investing and financing activities: | ||||||||||||
| Settlement of accrued contingent liabilities through installment obligations | — | — | 386 | |||||||||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| Three Months Ended | ||||||||||||||||
| 2019 | Mar. 31 | Jun. 30 | Sep. 30 | Dec. 31 | ||||||||||||
| Revenues | $ | 51,293 | $ | 55,480 | $ | 58,909 | $ | 60,377 | ||||||||
| Operating income (loss) | $ | (3,852 | ) | $ | (1,823 | ) | $ | 1,687 | $ | 710 | ||||||
| Net income (loss) | $ | (6,085 | ) | $ | 4,874 | $ | (2,059 | ) | $ | (811 | ) | |||||
| Net income (loss) attributable to common shares | $ | (5,943 | ) | $ | 4,940 | $ | (1,910 | ) | $ | (680 | ) | |||||
| Earnings (loss) per common share - basic | $ | (0.28 | ) | $ | 0.22 | $ | (0.09 | ) | $ | (0.03 | ) | |||||
| Earnings (loss) per common share - diluted | $ | (0.28 | ) | $ | 0.22 | $ | (0.09 | ) | $ | (0.03 | ) | |||||
| Three Months Ended | ||||||||||||||||
| 2018 | Mar. 31 | Jun. 30 | Sep. 30 | Dec. 31 | ||||||||||||
| Revenues | $ | 57,322 | $ | 57,728 | $ | 54,610 | $ | 52,016 | ||||||||
| Operating income (loss) | $ | 1,651 | $ | (9,523 | ) | $ | 41,571 | $ | (5,629 | ) | ||||||
| Net income (loss) | $ | (1,357 | ) | $ | (10,516 | ) | $ | 31,279 | $ | (5,948 | ) | |||||
| Net income (loss) attributable to common shares | $ | (1,194 | ) | $ | (10,379 | ) | $ | 31,289 | $ | (5,794 | ) | |||||
| Earnings (loss) per common share - basic | $ | (0.06 | ) | $ | (0.49 | ) | $ | 1.44 | $ | (0.27 | ) | |||||
| Earnings (loss) per common share - diluted | $ | (0.06 | ) | $ | (0.49 | ) | $ | 1.44 | $ | (0.27 | ) | |||||
Note 17 — SUBSEQUENT EVENTS
ABL Amendment
On January 23, 2020,May 20, 2022, the Company entered into a definitive agreementDeed of Amendment, Restatement and Confirmation (the “ABL Amendment”) relating to the ABL Facility (as amended by the ABL Amendment, the “Amended ABL”), by and among the ABL Borrowers, as borrowers, and the Company and the ABL Borrowers, as guarantors, the financial institutions from time to time party thereto as lenders and Barclays Bank PLC, in its capacity as agent and security trustee. The ABL Amendment amended the ABL Facility to, among other things, (i) extend the maturity to 2027, subject to certain early maturity triggers related to maturity of other material debt or a change of control of the Company; (ii) provide for replacement of LIBOR (x) for certain loans denominated in British pound sterling with BristowSONIA, (y) for certain loans denominated in euro with EURIBOR and (z) for certain loans denominated in U.S. dollars with Term SOFR; and (iii) include the ability of the Company to combineadopt one or more environmental, social and governance-related pricing adjustments based on specified metrics and performance targets at a date after closing of the two companiesABL Amendment, subject to certain conditions. The Amended ABL provides for commitments in an all stock transaction, structured as a reverse triangular merger, wherebyaggregate amount of $85.0 million. The Company has the Company will issue shares to Bristow stockholders, while the Company continues to trade on the New York Stock Exchange (“NYSE”).
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands, except share data) | |||||||||||||||||||
| ASSETS | |||||||||||||||||||
| Current assets: | |||||||||||||||||||
| Cash and cash equivalents | $ | 114,965 | $ | — | $ | 2,401 | $ | — | $ | 117,366 | |||||||||
| Receivables: | |||||||||||||||||||
| Trade, operating, net of allowance for doubtful accounts | — | 27,230 | 5,500 | — | 32,730 | ||||||||||||||
| Trade, dry leasing | — | 5,234 | — | — | 5,234 | ||||||||||||||
| Tax receivables | — | 2 | 2,858 | — | 2,860 | ||||||||||||||
| Other | — | 15,136 | 285 | — | 15,421 | ||||||||||||||
| Inventories, net | — | 20,019 | 47 | — | 20,066 | ||||||||||||||
| Prepaid expenses | 488 | 1,480 | 216 | — | 2,184 | ||||||||||||||
| Total current assets | 115,453 | 69,101 | 11,307 | — | 195,861 | ||||||||||||||
| Property and equipment | — | 878,281 | 16,782 | — | 895,063 | ||||||||||||||
| Accumulated depreciation | — | (333,788 | ) | (4,376 | ) | — | (338,164 | ) | |||||||||||
| Property and equipment, net | — | 544,493 | 12,406 | — | 556,899 | ||||||||||||||
| Operating lease right-of-use | — | 7,694 | 1,774 | — | 9,468 | ||||||||||||||
| Investments in consolidated subsidiaries | 190,142 | — | — | (190,142 | ) | — | |||||||||||||
| Intangible assets | — | — | 96 | — | 96 | ||||||||||||||
| Deferred income taxes | 9,909 | — | — | (9,909 | ) | — | |||||||||||||
| Intercompany receivables | 288,023 | — | — | (288,023 | ) | — | |||||||||||||
| Other assets | 670 | 1,082 | 439 | — | 2,191 | ||||||||||||||
| Total assets | $ | 604,197 | $ | 622,370 | $ | 26,022 | $ | (488,074 | ) | $ | 764,515 | ||||||||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
| Current liabilities: | |||||||||||||||||||
| Accounts payable and accrued expenses | $ | 405 | $ | 10,937 | $ | 1,581 | $ | — | $ | 12,923 | |||||||||
| Accrued wages and benefits | 122 | 9,065 | 1,367 | — | 10,554 | ||||||||||||||
| Accrued interest | 468 | 52 | — | — | 520 | ||||||||||||||
| Accrued income taxes | 3,595 | 1 | 16 | — | 3,612 | ||||||||||||||
| Accrued other taxes | — | 487 | 450 | — | 937 | ||||||||||||||
| Accrued contingencies | — | — | 598 | — | 598 | ||||||||||||||
| Current portion of long-term debt | — | 18,317 | — | — | 18,317 | ||||||||||||||
| Other current liabilities | 1,053 | 1,866 | 396 | — | 3,315 | ||||||||||||||
| Total current liabilities | 5,643 | 40,725 | 4,408 | — | 50,776 | ||||||||||||||
| Long-term debt | 141,832 | — | — | — | 141,832 | ||||||||||||||
| Deferred income taxes | — | 112,795 | 907 | (9,909 | ) | 103,793 | |||||||||||||
| Intercompany payables | — | 225,341 | 62,702 | (288,043 | ) | — | |||||||||||||
| Operating lease liabilities | — | 6,434 | 1,381 | — | 7,815 | ||||||||||||||
| Deferred gains and other liabilities | — | 745 | — | — | 745 | ||||||||||||||
| Total liabilities | 147,475 | 386,040 | 69,398 | (297,952 | ) | 304,961 | |||||||||||||
| Redeemable noncontrolling interest | — | — | 2,812 | — | 2,812 | ||||||||||||||
| Equity: | |||||||||||||||||||
| Common stock, $0.01 par value, 60,000,000 shares authorized; 21,285,613 outstanding, exclusive of treasury shares | 224 | ��� | — | — | 224 | ||||||||||||||
| Additional paid-in capital | 452,010 | 100,307 | 4,562 | (104,870 | ) | 452,009 | |||||||||||||
| Retained earnings | 14,671 | 136,023 | (50,750 | ) | (85,252 | ) | 14,692 | ||||||||||||
| Treasury shares, at cost, 1,152,826 shares | (10,183 | ) | — | — | — | (10,183 | ) | ||||||||||||
| Total equity | 456,722 | 236,330 | (46,188 | ) | (190,122 | ) | 456,742 | ||||||||||||
| Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ | 604,197 | $ | 622,370 | $ | 26,022 | $ | (488,074 | ) | $ | 764,515 | ||||||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands, except share data) | |||||||||||||||||||
| ASSETS | |||||||||||||||||||
| Current assets: | |||||||||||||||||||
| Cash and cash equivalents | $ | 48,396 | $ | — | $ | 2,357 | $ | — | $ | 50,753 | |||||||||
| Receivables: | |||||||||||||||||||
| Trade, operating, net of allowance for doubtful accounts of $261 | — | 27,509 | 5,797 | $ | — | 33,306 | |||||||||||||
| Trade, dry leasing | — | 3,803 | — | — | 3,803 | ||||||||||||||
| Tax receivables | — | 6 | 3,181 | — | 3,187 | ||||||||||||||
| Other | — | 1,949 | 394 | — | 2,343 | ||||||||||||||
| Inventories, net | — | 20,633 | 40 | — | 20,673 | ||||||||||||||
| Prepaid expenses | 398 | 1,219 | 190 | — | 1,807 | ||||||||||||||
| Total current assets | 48,794 | 55,119 | 11,959 | — | 115,872 | ||||||||||||||
| Property and equipment | — | 900,611 | 16,550 | — | 917,161 | ||||||||||||||
| Accumulated depreciation | — | (314,567 | ) | (3,400 | ) | — | (317,967 | ) | |||||||||||
| Property and equipment, net | — | 586,044 | 13,150 | — | 599,194 | ||||||||||||||
| Equity investments and advances | — | 27,112 | — | — | 27,112 | ||||||||||||||
| Investments in consolidated subsidiaries | 172,950 | — | — | (172,950 | ) | — | |||||||||||||
| Intangible assets | — | — | 1,107 | — | 1,107 | ||||||||||||||
| Deferred income taxes | 9,904 | — | — | (9,904 | ) | — | |||||||||||||
| Intercompany receivables | 366,541 | — | — | (366,541 | ) | — | |||||||||||||
| Other assets | 1,251 | 20,231 | 96 | — | 21,578 | ||||||||||||||
| Total assets | $ | 599,440 | $ | 688,506 | $ | 26,312 | $ | (549,395 | ) | $ | 764,863 | ||||||||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
| Current liabilities: | |||||||||||||||||||
| Accounts payable and accrued expenses | $ | 136 | $ | 11,357 | $ | 1,668 | $ | — | $ | 13,161 | |||||||||
| Accrued wages and benefits | 43 | 7,743 | 1,481 | — | 9,267 | ||||||||||||||
| Accrued interest | 500 | 69 | — | — | 569 | ||||||||||||||
| Accrued income taxes | 918 | 6 | 49 | — | 973 | ||||||||||||||
| Accrued other taxes | — | 768 | 500 | — | 1,268 | ||||||||||||||
| Accrued contingencies | — | — | 630 | — | 630 | ||||||||||||||
| Current portion of long-term debt | — | 1,663 | 395 | — | 2,058 | ||||||||||||||
| Other current liabilities | 647 | 220 | 11 | — | 878 | ||||||||||||||
| Total current liabilities | 2,244 | 21,826 | 4,734 | — | 28,804 | ||||||||||||||
| Long-term debt | 133,900 | 26,317 | — | — | 160,217 | ||||||||||||||
| Deferred income taxes | — | 117,015 | 1,245 | (9,903 | ) | 108,357 | |||||||||||||
| Intercompany payables | — | 310,727 | 55,847 | (366,574 | ) | — | |||||||||||||
| Deferred gains and other liabilities | — | 720 | 27 | — | 747 | ||||||||||||||
| Total liabilities | 136,144 | 476,605 | 61,853 | (376,477 | ) | 298,125 | |||||||||||||
| Redeemable noncontrolling interest | — | 3 | 3,299 | — | 3,302 | ||||||||||||||
| Equity: | |||||||||||||||||||
| Era Group Inc. stockholders’ equity: | |||||||||||||||||||
| Common stock, $0.01 par value, 60,000,000 shares authorized; 21,765,404 outstanding, exclusive of treasury shares | 219 | — | — | — | 219 | ||||||||||||||
| Additional paid-in capital | 447,299 | 100,306 | 4,562 | (104,869 | ) | 447,298 | |||||||||||||
| Retained earnings | 18,254 | 111,482 | (43,402 | ) | (68,049 | ) | 18,285 | ||||||||||||
| Treasury shares, at cost, 156,737 shares | (2,476 | ) | — | — | — | (2,476 | ) | ||||||||||||
| Accumulated other comprehensive income, net of tax | — | 110 | — | — | 110 | ||||||||||||||
| Total equity | 463,296 | 211,898 | (38,840 | ) | (172,918 | ) | 463,436 | ||||||||||||
| Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ | 599,440 | $ | 688,506 | $ | 26,312 | $ | (549,395 | ) | $ | 764,863 | ||||||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Revenues | $ | — | $ | 202,653 | $ | 55,695 | $ | (32,289 | ) | $ | 226,059 | ||||||||
| Costs and expenses: | |||||||||||||||||||
| Operating | — | 128,928 | 57,896 | (32,278 | ) | 154,546 | |||||||||||||
| Administrative and general | 5,777 | 28,930 | 3,571 | — | 38,278 | ||||||||||||||
| Depreciation | — | 36,716 | 903 | — | 37,619 | ||||||||||||||
| Total costs and expenses | 5,777 | 194,574 | 62,370 | (32,278 | ) | 230,443 | |||||||||||||
| Gains on asset dispositions, net | — | 3,657 | — | — | 3,657 | ||||||||||||||
| Loss on impairment | — | (2,551 | ) | — | — | (2,551 | ) | ||||||||||||
| Operating income (loss) | (5,777 | ) | 9,185 | (6,675 | ) | (11 | ) | (3,278 | ) | ||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest income | 1,617 | 1,761 | 109 | — | 3,487 | ||||||||||||||
| Interest expense | (13,007 | ) | (790 | ) | (77 | ) | — | (13,874 | ) | ||||||||||
| Loss on sale of investments | (569 | ) | — | — | — | (569 | ) | ||||||||||||
| Foreign currency gains (losses), net | (40 | ) | 81 | (513 | ) | — | (472 | ) | |||||||||||
| Loss on debt extinguishment | (13 | ) | — | — | — | (13 | ) | ||||||||||||
| Other, net | (20 | ) | 1,010 | (1,018 | ) | — | (28 | ) | |||||||||||
| Total other income (expense) | (12,032 | ) | 2,062 | (1,499 | ) | — | (11,469 | ) | |||||||||||
| Income (loss) before income taxes and equity earnings | (17,809 | ) | 11,247 | (8,174 | ) | (11 | ) | (14,747 | ) | ||||||||||
| Income tax expense (benefit) | 2,964 | (3,357 | ) | (338 | ) | — | (731 | ) | |||||||||||
| Income (loss) before equity earnings | (20,773 | ) | 14,604 | (7,836 | ) | (11 | ) | (14,016 | ) | ||||||||||
| Equity in earnings (losses) of subsidiaries | 17,191 | 9,935 | — | (17,191 | ) | 9,935 | |||||||||||||
| Net income (loss) | (3,582 | ) | 24,539 | (7,836 | ) | (17,202 | ) | (4,081 | ) | ||||||||||
| Net loss attributable to non-controlling interest in subsidiary | — | — | 488 | — | 488 | ||||||||||||||
| Net income (loss) attributable to Era Group Inc. | $ | (3,582 | ) | $ | 24,539 | $ | (7,348 | ) | $ | (17,202 | ) | $ | (3,593 | ) | |||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Revenues | $ | — | $ | 194,932 | $ | 55,625 | $ | (28,881 | ) | $ | 221,676 | ||||||||
| Costs and expenses: | |||||||||||||||||||
| Operating | — | 122,490 | 57,947 | (28,914 | ) | 151,523 | |||||||||||||
| Administrative and general | 15,017 | 25,597 | 4,512 | — | 45,126 | ||||||||||||||
| Depreciation | — | 38,553 | 988 | — | 39,541 | ||||||||||||||
| Total costs and expenses | 15,017 | 186,640 | 63,447 | (28,914 | ) | 236,190 | |||||||||||||
| Gains on asset dispositions, net | — | 1,618 | (43 | ) | — | 1,575 | |||||||||||||
| Litigation settlement proceeds | 42,000 | — | — | — | 42,000 | ||||||||||||||
| Loss on impairment | — | (991 | ) | — | — | (991 | ) | ||||||||||||
| Operating income (loss) | 26,983 | 8,919 | (7,865 | ) | 33 | 28,070 | |||||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest income | 395 | 1,371 | 276 | — | 2,042 | ||||||||||||||
| Interest expense | (14,149 | ) | (802 | ) | (180 | ) | — | (15,131 | ) | ||||||||||
| Foreign currency gains, net | (95 | ) | (178 | ) | (745 | ) | — | (1,018 | ) | ||||||||||
| Gain on debt extinguishment | — | — | 175 | — | 175 | ||||||||||||||
| Other, net | — | 34 | 20 | — | 54 | ||||||||||||||
| Total other income (expense) | (13,849 | ) | 425 | (454 | ) | — | (13,878 | ) | |||||||||||
| Income (loss) before income taxes and equity earnings | 13,134 | 9,344 | (8,319 | ) | 33 | 14,192 | |||||||||||||
| Income tax expense (benefit) | 10,845 | (7,900 | ) | (5 | ) | — | 2,940 | ||||||||||||
| Income (loss) before equity earnings | 2,289 | 17,244 | (8,314 | ) | 33 | 11,252 | |||||||||||||
| Equity in earnings (losses) of subsidiaries | 11,601 | 2,206 | — | (11,601 | ) | 2,206 | |||||||||||||
| Net income (loss) | 13,890 | 19,450 | (8,314 | ) | (11,568 | ) | 13,458 | ||||||||||||
| Net loss attributable to non-controlling interest in subsidiary | — | — | 464 | — | 464 | ||||||||||||||
| Net income (loss) attributable to Era Group Inc. | $ | 13,890 | $ | 19,450 | $ | (7,850 | ) | $ | (11,568 | ) | $ | 13,922 | |||||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Revenues | $ | — | $ | 201,653 | $ | 60,466 | $ | (30,798 | ) | $ | 231,321 | ||||||||
| Costs and expenses: | |||||||||||||||||||
| Operating | — | 133,077 | 65,167 | (30,798 | ) | 167,446 | |||||||||||||
| Administrative and general | 7,887 | 28,451 | 5,754 | — | 42,092 | ||||||||||||||
| Depreciation | — | 44,756 | 980 | — | 45,736 | ||||||||||||||
| Total costs and expenses | 7,887 | 206,284 | 71,901 | (30,798 | ) | 255,274 | |||||||||||||
| Gains on asset dispositions, net | — | 4,364 | 143 | — | 4,507 | ||||||||||||||
| Loss on impairment | — | (116,586 | ) | (432 | ) | — | (117,018 | ) | |||||||||||
| Operating loss | (7,887 | ) | (116,853 | ) | (11,724 | ) | — | (136,464 | ) | ||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest income | 108 | 419 | 233 | — | 760 | ||||||||||||||
| Interest expense | (14,495 | ) | (800 | ) | (1,468 | ) | — | (16,763 | ) | ||||||||||
| Foreign currency gains, net | 256 | 330 | (812 | ) | — | (226 | ) | ||||||||||||
| Other, net | — | 143 | (155 | ) | — | (12 | ) | ||||||||||||
| Total other income (expense) | (14,131 | ) | 92 | (2,202 | ) | — | (16,241 | ) | |||||||||||
| Income (loss) before income taxes and equity earnings | (22,018 | ) | (116,761 | ) | (13,926 | ) | — | (152,705 | ) | ||||||||||
| Income tax expense (benefit) | (7,338 | ) | (112,295 | ) | (3,032 | ) | — | (122,665 | ) | ||||||||||
| Income (loss) before equity earnings | (14,680 | ) | (4,466 | ) | (10,894 | ) | — | (30,040 | ) | ||||||||||
| Equity earnings, net of tax | — | 1,425 | — | — | 1,425 | ||||||||||||||
| Equity in earnings (losses) of subsidiaries | (13,481 | ) | — | — | 13,481 | — | |||||||||||||
| Net income (loss) | (28,161 | ) | (3,041 | ) | (10,894 | ) | 13,481 | (28,615 | ) | ||||||||||
| Net income attributable to non-controlling interest in subsidiary | — | — | 454 | — | 454 | ||||||||||||||
| Net income (loss) attributable to Era Group Inc. | $ | (28,161 | ) | $ | (3,041 | ) | $ | (10,440 | ) | $ | 13,481 | $ | (28,161 | ) | |||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Net income (loss) | $ | (3,582 | ) | $ | 24,539 | $ | (7,836 | ) | $ | (17,202 | ) | $ | (4,081 | ) | |||||
| Comprehensive income (loss) | (3,582 | ) | 24,539 | (7,836 | ) | (17,202 | ) | (4,081 | ) | ||||||||||
| Comprehensive loss attributable to non-controlling interest in subsidiary | — | — | 488 | — | 488 | ||||||||||||||
| Comprehensive income (loss) attributable to Era Group Inc. | $ | (3,582 | ) | $ | 24,539 | $ | (7,348 | ) | $ | (17,202 | ) | $ | (3,593 | ) | |||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Net income (loss) | $ | 13,890 | $ | 19,450 | $ | (8,314 | ) | $ | (11,568 | ) | $ | 13,458 | |||||||
| Comprehensive income (loss) | 13,890 | 19,450 | (8,314 | ) | (11,568 | ) | 13,458 | ||||||||||||
| Comprehensive loss attributable to non-controlling interest in subsidiary | — | — | 464 | — | 464 | ||||||||||||||
| Comprehensive income (loss) attributable to Era Group Inc. | $ | 13,890 | $ | 19,450 | $ | (7,850 | ) | $ | (11,568 | ) | $ | 13,922 | |||||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Net income (loss) | $ | (28,161 | ) | $ | (3,041 | ) | $ | (10,894 | ) | $ | 13,481 | $ | (28,615 | ) | |||||
| Other comprehensive income (loss): | |||||||||||||||||||
| Foreign currency translation adjustments | — | 18 | — | — | 18 | ||||||||||||||
| Total other comprehensive income (loss) | — | 18 | — | — | 18 | ||||||||||||||
| Comprehensive income (loss) | (28,161 | ) | (3,023 | ) | (10,894 | ) | 13,481 | (28,597 | ) | ||||||||||
| Comprehensive loss attributable to non-controlling interest in subsidiary | — | — | 454 | — | 454 | ||||||||||||||
| Comprehensive income (loss) attributable to Era Group Inc. | $ | (28,161 | ) | $ | (3,023 | ) | $ | (10,440 | ) | $ | 13,481 | $ | (28,143 | ) | |||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 75,592 | $ | (48,747 | ) | $ | 706 | $ | — | $ | 27,551 | ||||||||
| Cash flows from investing activities: | |||||||||||||||||||
| Purchases of property and equipment | — | (6,413 | ) | (145 | ) | — | (6,558 | ) | |||||||||||
| Proceeds from disposition of property and equipment | — | 13,252 | — | — | 13,252 | ||||||||||||||
| Purchase of investments | (5,000 | ) | — | — | — | (5,000 | ) | ||||||||||||
| Proceeds from sale of investments | 4,430 | — | — | — | 4,430 | ||||||||||||||
| Proceeds from sale of equity investees | — | 34,712 | — | — | 34,712 | ||||||||||||||
| Principal payments on notes due from equity investees | — | 2,334 | — | — | 2,334 | ||||||||||||||
| Principal payments on third party notes receivable | — | 5,447 | — | — | 5,447 | ||||||||||||||
| Net cash provided by (used in) investing activities | (570 | ) | 49,332 | (145 | ) | — | 48,617 | ||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||
| Payments on long-term debt | — | (1,662 | ) | (393 | ) | — | (2,055 | ) | |||||||||||
| Extinguishment of long-term debt | (740 | ) | — | — | — | (740 | ) | ||||||||||||
| Proceeds from share award plans | — | — | — | 1,077 | 1,077 | ||||||||||||||
| Purchase of treasury shares | (7,707 | ) | — | — | — | (7,707 | ) | ||||||||||||
| Borrowings and repayments of intercompany debt | — | 1,077 | — | (1,077 | ) | — | |||||||||||||
| Net cash used in financing activities | (8,447 | ) | (585 | ) | (393 | ) | — | (9,425 | ) | ||||||||||
| Effects of exchange rate changes on cash, cash equivalents and restricted cash | — | — | (130 | ) | — | (130 | ) | ||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 66,575 | — | 38 | — | 66,613 | ||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 48,396 | — | 2,357 | — | 50,753 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 114,971 | $ | — | $ | 2,395 | $ | — | $ | 117,366 | |||||||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Net cash provided by operating activities | $ | 37,596 | $ | 14,639 | $ | 2,119 | $ | — | $ | 54,354 | |||||||||
| Cash flows from investing activities: | |||||||||||||||||||
| Purchases of property and equipment | — | (8,867 | ) | (349 | ) | — | (9,216 | ) | |||||||||||
| Proceeds from disposition of property and equipment | — | 29,590 | — | — | 29,590 | ||||||||||||||
Dividends received from equity investees | — | 1,000 | — | — | 1,000 | ||||||||||||||
| Principal payments on notes due from equity investees | — | 518 | — | — | 518 | ||||||||||||||
| Principal payments on third party notes receivable | — | 934 | — | — | 934 | ||||||||||||||
| Net cash provided by (used in) investing activities | — | 23,175 | (349 | ) | — | 22,826 | |||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||
Long-term debt issuance costs | — | — | — | (1,295 | ) | (1,295 | ) | ||||||||||||
| Payments on long-term debt | — | (1,662 | ) | (1,224 | ) | (39,000 | ) | (41,886 | ) | ||||||||||
| Proceeds from share award plans | — | — | — | 893 | 893 | ||||||||||||||
Extinguishment of long-term debt | — | — | (1,221 | ) | — | (1,221 | ) | ||||||||||||
| Borrowings and repayments of intercompany debt | — | (39,402 | ) | — | 39,402 | — | |||||||||||||
| Net cash used in financing activities | — | (41,064 | ) | (2,445 | ) | — | (43,509 | ) | |||||||||||
| Effects of exchange rate changes on cash, cash equivalents and restricted cash | — | — | 249 | — | 249 | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 37,596 | (3,250 | ) | (426 | ) | — | 33,920 | ||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 10,800 | 3,250 | 2,783 | — | 16,833 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 48,396 | $ | — | $ | 2,357 | $ | — | $ | 50,753 | |||||||||
| Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | (14,706 | ) | $ | 32,601 | $ | 2,201 | $ | — | $ | 20,096 | ||||||||
| Cash flows from investing activities: | |||||||||||||||||||
| Purchases of property and equipment | — | (16,600 | ) | (170 | ) | — | (16,770 | ) | |||||||||||
| Proceeds from disposition of property and equipment | — | 9,392 | — | — | 9,392 | ||||||||||||||
| Principal payments on notes due from equity investees | — | 761 | — | — | 761 | ||||||||||||||
| Investments in and advances to equity investees | — | (126 | ) | — | — | (126 | ) | ||||||||||||
| Principal payments on third party notes receivable | — | 169 | — | — | 169 | ||||||||||||||
| Escrow deposits on like-kind exchanges, net | — | — | — | — | — | ||||||||||||||
| Net cash used in investing activities | — | (6,404 | ) | (170 | ) | — | (6,574 | ) | |||||||||||
| Cash flows from financing activities: | |||||||||||||||||||
| Proceeds from Revolving Credit Facility | — | 8,000 | — | 9,000 | 17,000 | ||||||||||||||
| Payments on long-term debt | — | (1,526 | ) | (755 | ) | (43,000 | ) | (45,281 | ) | ||||||||||
| Proceeds from share award plans | — | — | — | 836 | 836 | ||||||||||||||
| Purchase of treasury shares | — | — | — | (52 | ) | (52 | ) | ||||||||||||
| Borrowings and repayments of intercompany debt | — | (33,216 | ) | — | 33,216 | — | |||||||||||||
| Net cash used in financing activities | — | (26,742 | ) | (755 | ) | — | (27,497 | ) | |||||||||||
| Effects of exchange rate changes on cash, cash equivalents and restricted cash | 32 | 18 | 31 | — | 81 | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (14,674 | ) | (527 | ) | 1,307 | — | (13,894 | ) | |||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 25,474 | 3,777 | 1,476 | — | 30,727 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 10,800 | $ | 3,250 | $ | 2,783 | $ | — | $ | 16,833 | |||||||||