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Bristow Group Inc – ‘10-K’ for 3/31/16

On:  Friday, 5/27/16, at 3:31pm ET   ·   For:  3/31/16   ·   Accession #:  73887-16-40   ·   File #:  1-31617

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  As Of                Filer                Filing    For·On·As Docs:Size

 5/27/16  Bristow Group Inc                 10-K        3/31/16   73:29M

Annual Report   —   Form 10-K
Filing Table of Contents

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10-K   —   Annual Report
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
"Table of Contents
"Introduction
"Forward-Looking Statements
"Part I
"Business
"Risk Factors
"Unresolved Staff Comments
"Properties
"Legal Proceedings
"Mine Safety Disclosures
"Part Ii
"Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
"Selected Financial Data
"Management's Discussion and Analysis of Financial Condition and Results of Operations
"Quantitative and Qualitative Disclosures about Market Risk
"Consolidated Financial Statements and Supplementary Data
"Report of Independent Registered Public Accounting Firm
"Notes to Consolidated Financial Statements
"Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
"139
"Controls and Procedures
"Other Information
"141
"Part Iii
"Directors, Executive Officers and Corporate Governance
"Executive Compensation
"Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
"Certain Relationships and Related Transactions, and Director Independence
"Principal Accounting Fees and Services
"Part Iv
"Exhibits, Financial Statement Schedules
"142
"Consolidated Statements of Operations for fiscal years 2016, 2015 and 2014
"Consolidated Statements of Comprehensive Income (Loss) for fiscal years 2016, 2015 and 2014
"Consolidated Balance Sheets as of March 31, 2016 and 2015
"Consolidated Statements of Cash Flows for fiscal years 2016, 2015 and 2014
"Consolidated Statements of Stockholders' Investment and Redeemable Noncontrolling Interests for fiscal years 2016, 2015 and 2014
"Signatures
"146

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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 2016
 
 
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
 
Commission File Number 001-31617
Bristow Group Inc.
(Exact name of registrant as specified in its charter) 
Delaware
 
72-0679819
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification Number)
 
 
2103 City West Blvd.,
4thFloor
 
(Zip Code)
(Address of principal executive offices)
 
 
Registrant’s telephone number, including area code: (713) 267-7600
Securities registered pursuant to Section 12(b) of the Act: 
Title of each Class
 
Name of each exchange on which registered
Common Stock ($.01 par value)
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE  
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    
YES  þ    NO  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    
YES  ¨    NO  þ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                        YES  þ NO  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                   YES  þ NO  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
þ
Accelerated filer
  ¨
Non-accelerated filer
¨
Smaller reporting company
¨
 
 
 
 
(Do not check if a smaller reporting company)
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
YES  ¨    NO  þ
The aggregate market value of the voting Common Stock held by non-affiliates of the registrant, based upon the closing price on the New York Stock Exchange, as of September 30, 2015 was $867,807,223.
The number of shares outstanding of the registrant’s Common Stock as of May 20, 2016 was 34,978,397.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Registrant’s Definitive Proxy Statement, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the close of the Registrant’s fiscal year, are incorporated by reference under Part III of this Form 10-K.


Table of Contents

BRISTOW GROUP INC.
INDEX — ANNUAL REPORT (FORM 10-K)
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
 
 
 
 
 
 
 
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
 
 
 
 
 
 
Item 15.


Table of Contents

BRISTOW GROUP INC.
ANNUAL REPORT (FORM 10-K)
INTRODUCTION
This Annual Report on Form 10-K is filed by Bristow Group Inc., which we refer to as Bristow Group or the Company.
We use the pronouns “we”, “our” and “us” and the term “Bristow Group” to refer collectively to Bristow Group and its consolidated subsidiaries and affiliates, unless the context indicates otherwise. We also own interests in other entities that we do not consolidate for financial reporting purposes, which we refer to as unconsolidated affiliates, unless the context indicates otherwise. Bristow Group, Bristow Aviation Holdings Limited (“Bristow Aviation”), our consolidated subsidiaries and affiliates, and the unconsolidated affiliates are each separate corporations, limited liability companies or other legal entities, and our use of the terms “we”, “our” and “us” does not suggest that we have abandoned their separate identities or the legal protections given to them as separate legal entities. Our fiscal year ends March 31, and we refer to fiscal years based on the end of such period. Therefore, the fiscal year ended March 31, 2016 is referred to as “fiscal year 2016”.
We are a Delaware corporation incorporated in 1969. Our executive offices are located at 2103 City West Blvd., 4th Floor, Houston, Texas 77042. Our telephone number is (713) 267-7600.
Our website address is http://www.bristowgroup.com. We make our website content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference in this Annual Report. All of our periodic report filings with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) for fiscal periods ended on or after December 15, 2002 are made available, free of charge, through our website, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports. These reports are available through our website as soon as reasonably practicable after we electronically file or furnish such material to the SEC. In addition, the public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or on the SEC’s Internet website located at http://www.sec.gov. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
FORWARD-LOOKING STATEMENTS
This Annual Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements are statements about our future business, strategy, operations, capabilities and results; financial projections; plans and objectives of our management; expected actions by us and by third parties, including our clients, competitors, vendors and regulators; and other matters. Some of the forward-looking statements can be identified by the use of words such as “believes”, “belief”, “expects”, “plans”, “anticipates”, “intends”, “projects”, “estimates”, “may”, “might”, “would”, “could” or other similar words; however, all statements in this Annual Report, other than statements of historical fact or historical financial results are forward-looking statements.
Our forward-looking statements reflect our views and assumptions on the date we are filing this Annual Report regarding future events and operating performance. We believe they are reasonable, but they involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Accordingly, you should not put undue reliance on any forward-looking statements.
You should consider the following key factors when evaluating these forward-looking statements:
the possibility of political instability, war or acts of terrorism in any of the countries where we operate;
fluctuations in worldwide prices of and demand for oil and natural gas;
fluctuations in levels of oil and natural gas exploration, development and production activities;
fluctuations in the demand for our services;
the existence of competitors;
the existence of operating risks inherent in our business, including the possibility of declining safety performance;
the possibility of changes in tax and other laws and regulations;
the possibility that the major oil companies do not continue to expand internationally and offshore;

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the possibility of significant changes in foreign exchange rates and controls;
general economic conditions including the capital and credit markets;
the possibility that we may impair our long-lived assets, including goodwill, property and equipment and investments in unconsolidated affiliates;
the possibility that we may be unable to defer payment on certain aircraft into future fiscal years or take delivery of certain aircraft later than initially scheduled;
the possibility that we may be unable to acquire additional aircraft due to limited availability or unable to exercise aircraft purchase options;
the possibility that we may be unable to dispose of older aircraft through sales into the aftermarket;
the possibility that we or our suppliers may be unable to deliver new aircraft on time or on budget;
the possibility that we may be unable to obtain financing or we may be unable to draw on our credit facilities;
the possibility that we may lack sufficient liquidity to continue to pay a quarterly dividend or finance contractual commitments;
the possibility that we may be unable to maintain compliance with debt covenants;
the possibility that segments of our fleet may be grounded for extended periods of time or indefinitely;
the possibility that we may be unable to re-deploy our aircraft to regions with greater demand;
the possibility that reductions in spending on aviation services by governmental agencies could lead to modifications of search and rescue (“SAR”) contract terms or delays in receiving payments;
the possibility that clients may reject our aircraft due to late delivery or unacceptable aircraft design or operability; and
the possibility that we do not achieve the anticipated benefits from the addition of new-technology aircraft to our fleet.
The above description of risks and uncertainties is by no means all-inclusive, but is designed to highlight what we believe are important factors to consider. For a more detailed description of risk factors, please see the risks and uncertainties described under Item 1A. “Risk Factors” included elsewhere in this Annual Report.
All forward-looking statements in this Annual Report are qualified by these cautionary statements and are only made as of the date of this Annual Report. We do not undertake any obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

2

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PART I
 
Item 1.    Business
Overview
We are the leading global industrial aviation services provider based on the number of aircraft operated and one of two helicopter service providers to the offshore energy industry with global operations. We have a long history in industrial aviation services through Bristow Helicopters Ltd. (“Bristow Helicopters”) and Offshore Logistics, Inc., which were founded in 1955 and 1969, respectively. We have major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore energy producing regions of the world, including Australia, Brazil, Canada, Russia and Trinidad. We provide private sector SAR services in Australia, Canada, Norway, Russia, Trinidad and the United States. We provide public sector SAR services in the U.K. on behalf of the Maritime & Coastguard Agency. We also provide regional fixed wing scheduled and charter services in the U.K., Nigeria and Australia through our consolidated affiliates, Eastern Airways International Limited (“Eastern Airways”) and Capiteq Limited, operating under the name of Airnorth, respectively. These operations support our primary industrial aviation services operations in those markets, creating a more integrated logistics solution for our clients.
In fiscal year 2013, Bristow Helicopters was awarded a contract with the U.K. Department for Transport (“DfT”) to provide public sector SAR services for all of the U.K. (the “U.K. SAR contract). The U.K. SAR contract has a phased-in transition period that began in April 2015 and continues to July 2017 and a contract length of approximately ten years. Under the terms of this contract, Bristow Helicopters has agreed to provide helicopters that will be located at ten bases across the U.K. with two aircraft operating at each base. In addition to the ten bases with 20 aircraft, the contract provides for two fully SAR-equipped training aircraft that can be deployed to any base as needed. We are currently operational at nine bases as follows: Humberside and Inverness (April 2015), Caernarfon (July 2015), Lydd (August 2015), St. Athan (October 2015), Prestwick and Newquay (January 2016) and two Gap SAR bases of Sumburgh (June 2013) and Stornoway (July 2013). Operation is expected to commence at one additional base in fiscal year 2018. The last two bases are expected to transition from our existing Gap SAR contract in fiscal year 2018.
During fiscal year 2016, we generated approximately 75% of our consolidated operating revenue from external clients from oil and gas operations, approximately 11% from SAR and approximately 13% from fixed wing services that support our global helicopter operations.
We conduct our business in one segment: Industrial Aviation Services. The Industrial Aviation Services segment operations are conducted primarily through four regions:
Europe Caspian,
Africa,
Americas, and
Asia Pacific.
We primarily provide industrial aviation services to a broad base of major integrated, national and independent offshore energy companies. Our clients charter our helicopters primarily to transport personnel between onshore bases and offshore production platforms, drilling rigs and other installations. To a lesser extent, our clients also charter our helicopters to transport time-sensitive equipment to these offshore locations. These clients’ operating expenditures in the production sector are the principal source of our revenue, while their exploration and development capital expenditures provide a lesser portion of our revenue. The clients for SAR services include both the oil and gas industry, where our revenue is primarily dependent on our clients’ operating expenditures, and governmental agencies, where our revenue is dependent on a country’s desire to privatize SAR and enter into long-term contracts.
Helicopters are generally classified as small (four to eight passenger capacity), medium (12 to 16 passenger capacity) and large (18 to 25 passenger capacity), each of which serves a different transportation need of the offshore energy industry. Medium and large helicopters, which can fly in a wider variety of operating conditions, over longer distances, at higher speeds and carry larger payloads than small helicopters, are most commonly used for crew changes on large offshore production facilities and drilling rigs. With these enhanced capabilities, medium and large helicopters have historically been preferred in international markets, where the offshore facilities tend to be larger, the drilling locations tend to be more remote and the onshore infrastructure tends to be more limited. Additionally, local governmental regulations in certain international markets require us to operate twin-engine medium and large aircraft in those markets. Global demand for medium and large helicopters is driven by drilling, development and production activity levels in deepwater locations throughout the world, as the medium and large aircraft are able

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to travel to these deepwater locations. Small helicopters are generally used for shorter routes and to reach production facilities that cannot accommodate medium and large helicopters. Our small helicopters operate primarily over the shallow waters offshore in the U.S. Gulf of Mexico and Nigeria. We are able to deploy our aircraft to the regions with the greatest demand, subject to the satisfaction of local governmental regulations. SAR operations utilize medium and large aircraft that are specially configured to conduct these types of operations in environments around the world. The commercial aircraft in our consolidated fleet are our primary source of revenue. To normalize the consolidated operating revenue of our commercial helicopter fleet for the different revenue productivity and cost, we developed a common weighted factor that combines large, medium and small commercial helicopters into a combined standardized number of revenue producing commercial aircraft assets. We call this measure Large AirCraft Equivalent (“LACE”). Our commercial large, medium and small helicopters, including owned and leased helicopters, are weighted as 100%, 50%, and 25%, respectively, to arrive at a single LACE number, which excludes Bristow Academy aircraft, fixed wing aircraft, unconsolidated affiliate aircraft, aircraft held for sale and aircraft construction in process. We divide our operating revenue from commercial contracts relating to LACE aircraft, which excludes operating revenue from affiliates and reimbursable revenue, by LACE to develop a LACE rate, which is a standardized rate. 
The SAR market is continuing to evolve and we believe further outsourcing of public SAR services to the private sector will continue in the future, although the timing of these opportunities is uncertain. The clients for our SAR services include both the oil and gas industry and governmental agencies. We are also pursuing other public and oil and gas SAR opportunities for multiple aircraft in various jurisdictions around the globe. In addition, we are pursuing other non-SAR government aircraft logistics opportunities.
Our business has traditionally been significantly dependent upon the level of offshore oil and gas exploration, development and production activity. We have begun diversification with recent investments into other new business growth areas within the industrial aviation services to lessen the cyclical effects of a downturn in any one industry or economy. There are also additional markets for aviation services beyond the offshore energy industry and SAR, including agricultural support, air medical, tourism, firefighting, corporate transportation, traffic monitoring, police and military. The existence of these alternative markets enables us to better manage our helicopter fleet by providing potential purchasers for older aircraft and for our excess aircraft during times of reduced demand in the offshore energy industry. As part of an ongoing process to rationalize and simplify our global fleet of commercial helicopters, during fiscal year 2014 we implemented a plan to reduce the number of aircraft types in our fleet to eight model types in approximately five years and six model types in approximately ten years. During fiscal year 2014, we completed our exit from five model types, in fiscal year 2015 we completed our exit from four model types while adding two model types and in fiscal year 2016 we completed our exit from two model types resulting in 11 model types in our fleet as of March 31, 2016. As we modernize our fleet, the introduction of new technology aircraft types temporarily slows fleet type reduction.
We position our business to be the preferred industrial aviation services provider by maintaining strong relationships with our clients and providing a high level of safety and operating reliably. This differentiation is maintained because of our focus on our cornerstone philosophy of “Target Zero Accidents”, “Target Zero Downtime” and “Target Zero Complaints”, allowing us to achieve “Operational Excellence”. Operational Excellence means we maintain close relationships with field operations, corporate management and contacts at our oil and gas clients and governmental agencies which we believe help us better anticipate client needs and provide them with reliable service. We provide our clients operational predictability by positioning the right assets in the right place at the right time. This in turn allows us to better manage our fleet utilization and capital investment program and achieve internal efficiencies. By better understanding and delivering on our clients’ needs, we effectively compete against other helicopter service providers with better aircraft optionality, client service and reliability, and not just price and safety. In October 2014, we, along with four major helicopter operators, formally launched HeliOffshore. HeliOffshore is an industry organization with the primary goal of enhancing the already strong safety record of the offshore helicopter industry by sharing best practices in automation, performance monitoring, operating procedures and advanced technology to encourage common global flight standards.
In addition to our primary Industrial Aviation Services operations, we also operate a training unit, Bristow Academy. See “— Bristow Academy” below for further discussion of these operations. Additionally, we have invested in fixed-wing operators in the U.K. and Australia to create a more integrated logistics solution for our global clients.
Most countries in which we operate limit foreign ownership of aviation companies. To comply with these regulations and at the same time expand internationally, we have formed or acquired interests in a number of foreign helicopter operators. These investments typically combine a local ownership interest with our experience in providing industrial aviation services to the offshore energy industry. These arrangements have allowed us to expand operations while diversifying the risks and reducing the capital outlays associated with independent expansion. We lease some of our aircraft to a number of unconsolidated affiliates, which in turn provide industrial aviation services to clients locally.

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Since the beginning of fiscal year 2012, we have made strategic investments and acquisitions including investment in new generations of aircraft that are in demand by our clients, and expanded or increased investments in new markets and industries. These investments have included investments by consolidated affiliates in fixed-wing operators: Airnorth in Australia and Eastern Airways in the U.K., both of which are consolidated in our financial statements, an equity method investment in Sky-Futures in the U.K., the leading provider of unmanned aerial vehicles inspection data services for the oil and gas industry and an equity method investment in Cougar Helicopters Inc. (“Cougar”) in Canada.
Also since the beginning of fiscal year 2012, we have raised $1.3 billion of capital with both public and private financings, generated gross proceeds of $116.4 million through the divestiture of non-core businesses (including the sale of our 50% interest in each of FBS Limited, FB Heliservices Limited and FB Leasing Limited, collectively referred to as the FB Entities, in fiscal year 2014 and the sale of Helideck Certification Agency (“HCA”) in fiscal year 2015), generated proceeds of approximately $235 million through the sale of other aircraft and equipment to the helicopter aftermarket and received $1.1 billion from the sale and leaseback of 51 aircraft in fiscal years 2012 through 2016. Concurrently, we have invested approximately $2.5 billion in capital expenditures to grow our business.
While we plan to continue to be disciplined concerning future capital commitments, we also intend to continue managing our capital structure and liquidity position with additional external financings, as needed. Our strategy will involve funding our short-term liquidity requirements with borrowings under our amended and restated revolving credit and term loan agreement (“Amended and Restated Credit Agreement”), which consists of a $400 million revolving credit facility (“Revolving Credit Facility”), a $350 million term loan (“Term Loan”) (together referred to as our “Credit Facilities”), and a $200 million term loan credit agreement (“Term Loan Credit Agreement”) and funding our long-term capital needs with operating leases, bank debt, private and public debt and equity offerings, while maintaining a prudent capital structure.
Not only have we invested in the Company, we are also committed to returning capital to investors. Since fiscal year 2012, we have repurchased $184.8 million of shares through our share repurchase program and paid $169.8 million in dividends to deliver a more balanced return to our shareholders. See Item 7. “Management’s Discussion and Analysis of Financial Condition — Our Strategy — Capital Allocation Strategy” included elsewhere in this Annual Report for additional details on our dividends and share buyback program.
Our capital commitments in future periods related to fleet renewal are discussed under Item 7. “Management’s Discussion and Analysis of Financial Condition — Liquidity and Capital Resources — Future Cash Requirements” included elsewhere in this Annual Report and are detailed in the table provided in that section.
Consistent with our growth strategy, we regularly engage in discussions with potential sellers and strategic partners regarding the possible purchase of assets, pursuit of joint ventures or other expansion opportunities that increase our position in existing markets or facilitate expansion into new markets. These potential expansion opportunities consist of both smaller transactions as well as larger transactions that could have a material impact on our financial position, cash flow and results of operations. We cannot predict the likelihood of completing, or the timing of, any such transactions.
The oil and gas business environment experienced a significant downturn during fiscal years 2015 and 2016. Brent crude oil prices declined from approximately $106 per barrel at July 1, 2014 to $37 per barrel at March 31, 2016, driven by increased global supply and forecasts of reduced demand for crude oil resulting from weaker global economic growth in many regions of the world. The oil price decline has negatively impacted the cash flow of our clients and resulted in their implementation of measures to reduce operational and capital costs in calendar years 2015 and 2016 compared to 2014 levels, negatively impacting activity during fiscal years 2015 and 2016. The cost reductions are expected to continue in fiscal year 2017. The current price environment has had an impact on both the offshore production and the offshore exploration activity of our clients, with offshore production activity being impacted to a lesser extent. The largest share of our revenue relates to oil and gas production, and the significant drop in the price of crude oil has resulted in the rescaling, delay or cancellation of planned offshore projects which has negatively impacted our operations and could continue to negatively impact our operations in future periods. We expect this “lower for longer” oil price environment to continue in calendar year 2017 with significant uncertainty as to when a recovery will occur. Our largest contract, U.K. SAR, is not directly impacted by declining oil prices.



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As of March 31, 2016, the aircraft in our fleet, the aircraft which we expect to take delivery of in the future and the aircraft which we have the option to acquire were as follows:
 
 
Number of Aircraft
 
 
 
 
Consolidated Affiliates
 
Unconsolidated
Affiliates (3)
 
 
 
 
Operating Aircraft
 
 
 
 
 
 
 
 
 
 
Type
 
Owned
Aircraft
 
Leased
Aircraft
 
Aircraft
Held For
Sale
 
On
Order (1)
 
Under
Option (2)
 
In Fleet
 
Maximum
Passenger
Capacity
Large Helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AW189
 
5

 

 

 
8

 
4

 

 
16

H175
 

 

 

 
17

 

 

 
16

H225
 
16

 
11

 

 

 
1

 

 
19

Mil Mi-8
 
7

 

 

 
— 

 
— 

 

 
20

Sikorsky S-92A
 
35

 
41

 

 
1

 
3

 
11

 
19

 
 
63

 
52

 

 
26

 
8

 
11

 
 
Medium Helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AW139
 
16

 
11

 

 

 

 
2

 
12

Bell 212
 

 

 

 
— 

 
— 

 
14

 
12

Bell 412
 
9

 

 
8

 
— 

 
— 

 
17

 
13

H155
 
1

 

 

 
— 

 
— 

 

 
13

Sikorsky S-76 C/C++
 
35

 
9

 
4

 
— 

 
— 

 
32

 
12

Sikorsky S-76D
 

 

 

 
10

 
6

 

 
12

 
 
61

 
20

 
12

 
10

 
6

 
65

 
 
Small Helicopters:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AS350BB
 

 

 

 
— 

 
— 

 
1

 
4

Bell 206B
 

 
1

 

 
— 

 
— 

 
2

 
4

Bell 206L Series
 

 

 
5

 
— 

 
— 

 
6

 
6

Bell 407
 
23

 

 
4

 
— 

 
— 

 

 
6

BK-117
 

 
2

 

 
— 

 
— 

 

 
7

H135
 

 

 

 
— 

 
— 

 
3

 
6

 
 
23

 
3

 
9

 

 

 
12

 
 
Training Aircraft:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AW109
 

 
1

 

 
— 

 
— 

 

 
4

AS355
 

 
1

 

 
— 

 
— 

 

 
5

Bell 206B
 
1

 
10

 

 
— 

 
— 

 

 
4

Robinson R22
 

 
3

 

 
— 

 
— 

 

 
2

Robinson R44
 

 
7

 

 
— 

 
— 

 

 
4

Sikorsky S-300CBi
 
29

 

 

 
— 

 
— 

 

 
2

Fixed wing
 
1

 

 

 
— 

 
— 

 

 
 
 
 
31

 
22

 

 

 

 

 
 
Fixed wing (4)
 
30

 
16

 
1

 

 

 
32

 
 
Total
 
208

 
113

 
22

 
36

 
14

 
120

 
 
_______________
(1) 
Signed client contracts are currently in place that will utilize eight of these aircraft. For additional information, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity — Future Capital Requirements” included elsewhere in this Annual Report.

(2) 
Represents aircraft which we have the option to acquire. If the options are exercised, the agreements provide that aircraft would be delivered over fiscal years 2018 through 2019. For additional information, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity — Future Capital Requirements” included elsewhere in this Annual Report.
(3) 
Includes 50 helicopters (primarily medium) and 25 fixed wing aircraft owned and managed by Líder, our unconsolidated affiliate in Brazil.
(4) 
Bristow Helicopters owns a 60% interest in Eastern Airways. Eastern Airways operates a total of 31 fixed wing aircraft which are included in our Europe Caspian and Africa regions. Additionally, Bristow Helicopters Australia owns a 100% interest in Airnorth. Airnorth operates a total of 13 fixed wing aircraft, which are included in our Asia Pacific region.

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The following table presents the distribution of our operating revenue for fiscal year 2016 and aircraft as of March 31, 2016 among our regions:
 
 
 
 
Aircraft in Consolidated Fleet(1)(2)
 
 
 
 
 
 
Operating
Revenue  for
Fiscal Year
2016
 
Helicopters
 
 
 
 
 
 
 
 
 
 
Small
 
Medium
 
Large
 
Training
 
Fixed
Wing
 
Total
 
Unconsolidated
Affiliates (3)
 
Total
 
 
Europe Caspian
 
50
%
 

 
14

 
69

 

 
29

 
112

 

 
112

Africa
 
15
%
 
14

 
26

 
6

 

 
5

 
51

 
45

 
96

Americas
 
18
%
 
19

 
44

 
18

 

 

 
81

 
75

 
156

Asia Pacific
 
17
%
 
2

 
9

 
22

 

 
13

 
46

 

 
46

Corporate and other
 
%
 

 

 

 
53

 

 
53

 

 
53

Total
 
100
%
 
35

 
93

 
115

 
53

 
47

 
343

 
120

 
463

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_______________
(1) 
Includes 22 aircraft held for sale and 113 leased aircraft as follows:
 
  
 
Held for Sale Aircraft in Consolidated Fleet
 
 
  
 
Helicopters
 
 
 
 
 
 
  
 
Small
 
Medium
 
Large
 
Training
 
Fixed
Wing
 
Total
 
 
Europe Caspian
 

 
1

 

 

 

 
1

 
 
Africa
 
5

 
4

 

 

 
1

 
10

 
 
Americas
 
4

 
7

 

 

 

 
11

 
 
Asia Pacific
 

 

 

 

 

 

 
 
Corporate and other
 

 

 

 

 

 

 
 
Total
 
9

 
12

 

 

 
1

 
22

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
Leased Aircraft in Consolidated Fleet
 
 
  
 
Helicopters
 
 
 
 
 
 
  
 
Small
 
Medium
 
Large
 
Training
 
Fixed
Wing
 
Total
 
 
Europe Caspian
 

 
5

 
36

 

 
11

 
52

 
 
Africa
 

 

 
3

 

 
2

 
5

 
 
Americas
 
1

 
13

 
5

 

 

 
19

 
 
Asia Pacific
 
2

 
2

 
8

 

 
3

 
15

 
 
Corporate and other
 

 

 

 
22

 

 
22

 
 
Total
 
3

 
20

 
52

 
22

 
16

 
113

 
(2) 
The average age of our commercial helicopter fleet, which excludes training aircraft, was 8.5 years as of March 31, 2016.
(3) 
The 120 aircraft operated by our unconsolidated affiliates do not include those aircraft leased from us.    


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Our historical LACE and LACE rate is as follows:
 
 
Fiscal Year Ended March 31,
 
 
2016
 
2015
 
2014
 
2013
 
2012
LACE
 
162

 
166

 
158

 
158

 
149

LACE Rate (in millions)
 
$
8.85

 
$
9.33

 
$
9.34

 
$
8.35

 
$
7.89

The following table presents the distribution of LACE helicopters owned and leased, and the percentage of LACE leased as of March 31, 2016. The percentage of LACE leased is calculated by taking the total LACE for leased commercial helicopters divided by the total LACE for all commercial helicopters we operate, including both owned and leased aircraft.
 
LACE
 
Percentage of LACE Leased
 
Owned Aircraft
 
Leased Aircraft
 
Europe Caspian
37

 
39

 
51
%
Africa
16

 
3

 
16
%
Americas
29

 
12

 
29
%
Asia Pacific
18

 
10

 
35
%
Total
99

 
63

 
39
%
Region Operations
Europe Caspian
As of March 31, 2016, we operated our oil and gas operations in our Europe Caspian region from seven bases in the U.K. and four bases in Norway. Our Europe Caspian operations are managed from our region headquarters in Aberdeen, Scotland. Based on the number of aircraft operating, we are one of the largest providers of industrial aviation services in the North Sea, where there are harsh weather conditions and geographically concentrated offshore facilities. The offshore facilities in the Northern North Sea and Norwegian North Sea are large and require frequent crew change flight services. In the Southern North Sea, the facilities are generally smaller with some unmanned platforms requiring shuttle operations to up-man in the morning and down-man in the evening. We deploy the majority of the large aircraft in our consolidated fleet in the North Sea where our clients are primarily major integrated and independent offshore energy companies. We provide commercial SAR services for a number of oil and gas companies operating in the Norwegian sector of the North Sea. As discussed under “— Overview” above, in March 2013, we were awarded a contract to provide public sector SAR services for all of the U.K. with nine out of the ten bases operational as of March 31, 2016. Our North Sea operations are subject to seasonality as drilling activity is lower during the winter months due to harsh weather and shorter days.
Bristow Helicopters owns a 60% interest in Eastern Airways, a regional fixed wing operator based in the U.K. Eastern Airways has approximately 700 employees and its operations focus on providing scheduled and charter services targeting U.K. oil and gas transport. Eastern Airways operates 31 fixed wing aircraft. We believe our investment in Eastern Airways strengthens our ability to provide a complete suite of point to point transportation services for existing European based passengers, expand industrial aviation services in certain areas like the Shetland Islands and create a more integrated logistics solution for global clients.
Additionally, our Europe Caspian region includes operations in Turkmenistan. We operate one medium aircraft through our 51% interest in Turkmenistan Helicopters Limited, a Turkmenistan corporation that provides industrial aviation services to an international offshore energy company from a single location.
Africa
As of March 31, 2016, most of the aircraft in our Africa region operated in Nigeria, where we are the largest provider of industrial aviation services to the offshore energy industry. We deploy a combination of small, medium and large aircraft in Nigeria and service a client base comprised mostly of major integrated offshore energy companies. We have five operational bases, with the largest bases located in Escravos, Lagos, Port Harcourt and Eket. The marketplace for our services had historically been concentrated predominantly in the oil rich swamp and shallow waters of the Niger Delta area. More recently we have been undertaking work further offshore in support of deepwater exploration. Operations in Nigeria are subject to seasonality as the Harmattan, a dry and dusty trade wind, blows between the end of November and the middle of March. At times when the heavy amount of dust in the air severely limits visibility, our aircraft are unable to operate.
We own a 25% interest in Petroleum Air Services (“PAS”), an Egyptian corporation which provides helicopter and fixed wing transportation to the offshore energy industry. Additionally, spare fixed wing capacity is chartered to tourism operators. PAS

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operates 38 helicopters and seven fixed wing aircraft from multiple locations. The remaining 75% interest in PAS is owned by the Egyptian General Petroleum Corporation.
We also lease one medium limited SAR aircraft to an alliance partner in Tanzania which operates out of Julius Nyerere International Airport, Dar es Salaam.
Americas
As of March 31, 2016, we operated from six operating facilities in the U.S. Gulf of Mexico. We are one of the largest suppliers of industrial aviation services in the U.S. Gulf of Mexico. Our clients in this business unit are mostly independent and major integrated offshore energy companies. The U.S. Gulf of Mexico is a major offshore energy producing region. The shallow water platforms are typically unmanned and are serviced by small aircraft. The deepwater platforms are serviced by medium and large aircraft. Among our strengths in this region, in addition to our operating facilities, are our advanced flight-following systems and our widespread and strategically located offshore fuel stations. Operations in the U.S. Gulf of Mexico are subject to seasonality as the months of December through March typically have more days of harsh weather conditions than the other months of the year. Additionally, during the months of June through November, tropical storms and hurricanes may reduce activity as we are unable to operate in the area of the storm.
We own a 40% economic interest in Cougar, the largest offshore energy and SAR helicopter service provider in Atlantic Canada. Cougar has approximately 270 employees and its operations are primarily focused on serving the offshore oil and gas industry off Canada’s Atlantic coast. We leased eight large helicopters and three shore-based facilities to Cougar as of March 31, 2016, including state-of-the-art helicopter passenger, maintenance and SAR facilities located in Newfoundland and Labrador.
We also own a 41.9% economic interest in Líder, the largest provider of helicopter and corporate aviation services in Brazil. Líder has five primary operating units: helicopter service, maintenance, chartering, ground handling and aircraft sales, and provides commercial SAR and medical evacuation services to the oil and gas industry. Líder’s fleet includes 50 rotor wing and 25 fixed wing aircraft (including owned and managed aircraft). Líder’s management has introduced large helicopters into their operational portfolio allowing them to gain competence and positioning them for the anticipated growth associated with Brazil’s pre-salt fields. Líder also has a vast network of over 20 bases located strategically in Brazil including locations in Macae, Rio de Janiero, Sao Tome, Urucu and Vitória. We currently lease five medium aircraft to Líder.
Additionally, we operate seven medium aircraft in Trinidad that are used to service our clients who are primarily engaged in offshore energy activities. We operate from a base located at Trinidad’s Piarco International Airport.
Asia Pacific
We are the largest provider of industrial aviation services to the offshore energy industry in Australia, where we have five bases located in Western Australia, three in Victoria, one in Northern Territory and one in Queensland. These operations are managed from our Asia Pacific region’s head office facility in Perth, Western Australia. Our operating bases are located in the vicinity of the major offshore energy exploration and production fields in the North West Shelf, Browse and Carnarvon basins of Western Australia and the Bass Straits in Victoria, where our fleet provides industrial aviation services solely to offshore energy operators. We also provide airport management services on Barrow Island in Western Australia. Our clients in Australia are primarily major integrated offshore energy companies. We provide SAR and medical evacuation services to the oil and gas industry in Australia and engineering support to the Republic of Singapore Air Force’s (the “RSAF”) fleet of helicopters at their base in Oakey, Queensland. The RSAF contract has been re-awarded to Bristow Australia following a competitive tender for five additional years with a five-year option. Operations in the Asia Pacific region during the months of November through April may be impacted by cyclones that may reduce activity as we are unable to operate in the area of the storm.
Bristow Helicopters Australia owns a 100% interest in Airnorth, a regional fixed wing operator based in Darwin, North Territory, Australia. Airnorth has 265 employees and its operations focus on providing both charter and scheduled services targeting the energy and mining industries in Northern and Western Australia as well as international services to Dili, Timor-Leste. Airnorth operates 13 fixed wing aircraft. We believe this investment strengthens our ability to provide point to point transportation services for existing Australian based passengers, expand industrial aviation services in certain areas in Southeast Asian markets and create a more integrated logistics solution for global clients.
Also included in our Asia Pacific region are our operations in Russia. We operate seven large aircraft in Russia from three locations on Sakhalin Island, where we provide industrial aviation services to international and domestic offshore energy companies and operate a local SAR service.


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Bristow Academy
Bristow Academy is a leading provider of helicopter training services with over 25 years of operating history and training facilities in Titusville, Florida; Carson City, Nevada, and Gloucestershire, England. Bristow Academy trains students from around the world to become helicopter pilots and is approved to provide helicopter flight training at the commercial pilot and flight instructor level by both the U.S. Federal Aviation Administration (the “FAA”) and the European Aviation Safety Authority (the “EASA”). Bristow Academy operates 53 aircraft (including 31 owned, 22 leased aircraft) and employs approximately 120 people, including approximately 35 primary flight instructors. A significant part of Bristow Academy’s operations include military training, which generated approximately 37% of Bristow Academy’s operating revenue for fiscal year 2016.
Clients and Contracts
Our principal clients are major integrated, national and independent offshore energy companies and the U.K Department for Transport. The following table presents our top ten clients in fiscal year 2016 and their percentage contribution to our consolidated gross revenue during fiscal years 2016, 2015 and 2014 and includes any clients accounting for 10% or more of our consolidated gross revenue during such fiscal years.
 
 
Fiscal Year Ended March 31,
Client Name
 
2016
 
2015
 
2014
Chevron
 
11.4
%
 
11.7
%
 
13.2
%
U.K. Department for Transport
 
10.3
%
 
2.6
%
 
2.3
%
ConocoPhillips
 
7.6
%
 
9.3
%
 
8.8
%
BP
 
6.5
%
 
7.7
%
 
6.5
%
IAC (1)
 
5.6
%
 
7.7
%
 
7.9
%
Inpex
 
4.7
%
 
2.3
%
 
%
Statoil
 
3.7
%
 
4.7
%
 
5.9
%
Cougar (2)
 
3.6
%
 
3.3
%
 
3.8
%
Exxon Mobil
 
3.5
%
 
3.6
%
 
3.3
%
ENI
 
3.1
%
 
3.4
%
 
3.7
%
 
 
60.0
%
 
56.3
%
 
55.4
%
_______________
(1)
IAC is the Integrated Aviation Consortium in the U.K. North Sea and comprises six major oil companies: BP, CNR International, Petrofac, Shell, TAQA and Total.
(2) 
As discussed above, we own a 40% economic interest in Cougar.
Our helicopter contracts are generally based on a two-tier rate structure consisting of a daily or monthly fixed fee plus additional fees for each hour flown. For example, the monthly standing charges generally average approximately 70% of revenue while variable charges generally average approximately 30% of revenue. We also provide services to clients on an “ad hoc” basis, which usually entails a shorter notice period and shorter contract duration. Our charges for ad hoc services are generally based on an hourly rate, or a daily or monthly fixed fee plus additional fees for each hour flown. Generally, our ad hoc services have a higher margin than our other helicopter contracts due to supply and demand dynamics.
Generally, our helicopter contracts are cancelable by the client with a notice period ranging from 30 to 180 days and in some cases up to one year. In the Americas region, we generally enter into short-term contracts for twelve months or less. Outside of the Americas, contracts are typically between two and five years in term. These long term contracts generally include escalation provisions allowing annual rate increases, which may be based on a fixed dollar or percentage increase, an increase in an agreed index or our actual substantiated increased costs, which we negotiate to pass along to clients. Cost reimbursements from clients are recorded as reimbursable revenue with the related reimbursed cost recorded as reimbursable expense in our consolidated statements of operations.
Generally, SAR services contracts include a monthly standing charge, which average approximately 85% of the total contract revenue, and a monthly variable charge that covers flying, fuel and ancillary items, which average approximately 15% of the total contract revenue. See further details on the U.K. SAR contract in “— Overview.”

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Competition
The helicopter transportation business is highly competitive throughout the world. We compete directly against multiple providers in almost all of our operating regions. We have several significant competitors in the North Sea, Nigeria, the U.S. Gulf of Mexico and Australia, and a number of smaller local competitors in other markets. In Nigeria, we have seen a recent increase in competitive pressure and new regulation that could impact our ability to win future work. Despite the new competition in Nigeria, we believe that it is difficult for additional significant competitors to enter our industry because it requires considerable capital investment, working capital, a complex system of onshore and offshore bases, personnel and operating experience. However, these requirements can be overcome with the appropriate level of client support and commitment. In addition, while not the predominant practice, certain of our clients and potential clients in the offshore energy industry perform their own industrial aviation services on a limited basis.
In most situations, clients charter aircraft on the basis of competitive bidding. On limited occasions, our clients renew or extend existing contracts without employing a competitive bid process. Contracts are generally awarded based on a number of factors, including price, quality of service, operational experience, record of safety, quality and type of equipment, client relationship and professional reputation. Incumbent operators typically have a competitive advantage in the bidding process based on their relationship with the client, knowledge of the site characteristics and existing facilities to support the operations. Because certain of our clients in the offshore energy industry have the capability to perform their own industrial aviation services, our ability to increase charter rates may be limited under certain circumstances.
Code of Business Integrity
We have adopted a Code of Business Integrity (our “Code”) that applies to Bristow Group Inc. and all of its subsidiaries, affiliates and controlled joint ventures, including all directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees thereof. Our Code covers topics including, but not limited to, anti-corruption, conflicts of interest, insider trading, competition and fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code is posted on our website, http://www.bristowgroup.com, under the “About Us” and “Vision, Mission, Values” caption. We will disclose any amendment to the Code or waiver with respect to our senior officers on our website or, alternatively, through the filing of a Form 8-K.
Safety, Industry Hazards and Insurance
Hazards such as severe weather and mechanical failures are inherent in the transportation industry and may result in the loss of equipment and revenue. It is possible that personal injuries and fatalities may occur. We believe our air accident rate per 100,000 flight hours, which has historically been more than ten times lower than the reported global offshore energy production helicopter average data, indicates that we have consistently performed better than the industry average with respect to safety. In fiscal year 2016, one Sikorsky S-76C+ and one Sikorsky S-76C++ aircraft operated by us were involved in accidents. In one of these accidents, two of our crew members and four passengers were fatally injured. The second accident resulted in no significant injuries or fatalities. During fiscal years 2015 and 2014, we had no accidents that resulted in fatalities.
Our well established global safety program called “Target Zero” focuses on improved safety performance. Our safety vision is to have zero accidents, zero harm to people, and zero harm to the environment. The key components to achieving this are to improve safety culture and individual behaviors, increase the level of safety reporting by the frontline employees, increase accountability for addressing identified hazards by the operational managers and provide for independent oversight of the operational safety programs. See discussion of Target Zero in “— Overview.”
We maintain hull and liability insurance which generally insures us against damage to our aircraft and the related liabilities which may be incurred as a result. We also carry insurance for war risk, expropriation and confiscation of the aircraft we use in certain of our international operations. Further, we carry various other liability and property insurance, including workers’ compensation, general liability, employers’ liability, auto liability, and property and casualty coverage. We believe that our insurance program is adequate to cover any claims ultimately incurred related to property damage and liability events.

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Employees
As of March 31, 2016, we employed 4,777 employees. Many of our employees are represented under collective bargaining agreements. Periodically, certain groups of our employees who are not covered by a collective bargaining agreement consider entering into such an agreement. We believe that our relations with our employees are generally satisfactory.
The following table sets forth our main employee groups and status of the collective bargaining agreements:
Employee Group
  
Representatives
  
Status of Agreement
  
Approximate Number of
Employees Covered
by Agreement as of
U.K. Pilots
  
British Airline Pilots Association (“BALPA”)
  
Agreement expires in March 2017.
  
400
U.K. Engineers and Staff
  
Unite
  
Agreement expires in March 2017.
  
540
Bristow Norway Pilots
  
Norsk Flygerforbund (“NALPA”); Parat Luftfart(“PARAT”)
  
Agreement expired in March 2015. Currently in negotiations.
  
150
Bristow Norway Engineers
  
Norsk Helikopteransattes Forbund (“NU of HE”)/BNTF
  
Local agreement expires in October 2016 and national agreement expires in April 2016.
  
110
Nigeria Junior and Senior Staff
  
National Union of Air Transport Employees; Air Transport Services Senior Staff Association of Nigeria
  
Agreements expired in April 2011. Currently in negotiations.
  
60
Nigeria Pilots and Engineers
  
Nigerian Association of Airline Pilots and Engineers
  
We recognize this union for representation purposes, but there is no formal commitment to negotiate remuneration.
  
180
North America Pilots
  
Office and Professional Employees International Union (“OPEIU”)
  
Agreement expired April 2015. Negotiations currently ongoing.
  
150
Gulf of Mexico Mechanics
 
OPEIU
 
Agreement expires in April 2017.
 
200
Australia Pilots
  
Australian Federation of Air Pilots
  
Agreement expired in December 2015. Currently in negotiations.
  
130
Australia Engineers and BDI Tradesmen and Staff
  
Australian Licensed Aircraft Engineers Association (“ALAEA”), Australian Manufacturing Union (“AMWU”) and elected employee representatives
  
Agreement for BDI tradesmen and staff expires in March 2017. Agreement for Australia engineers expired March 2015. Currently in negotiations.
  
220
Trinidad Mechanics
  
Fitters/Handlers
  
Agreements expire in May and June 2016.
  
40
Airnorth Pilots
 
Aircrew Logistics Pilots Group
 
Agreement expired in June 2015. Currently being rolled over on an annual basis.
 
60
Airnorth Engineers
 
Aircraft Logistics Engineers Group
 
Agreement expired in June 2015. Currently in negotiations.
 
50
Barrow Island Aerodome Staff
  
Transport Workers Union
  
Agreement expired in March 2016. Will not be renewing agreement.
  
40
Líder, our unconsolidated affiliate in Brazil, employs approximately 1,610 employees and Cougar, our unconsolidated affiliate in Canada, employs approximately 270 employees.

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Governmental Regulation
United States
As a commercial operator of aircraft, our U.S. operations are subject to regulations under the Federal Aviation Act of 1958, as amended, and other laws. We carry persons and property in our helicopters under an Air Taxi Certificate granted by the FAA. The FAA regulates our U.S. flight operations and, in this respect, exercises jurisdiction over personnel, aircraft, ground facilities and certain technical aspects of our operations. The National Transportation Safety Board is authorized to investigate aircraft accidents and to recommend improved safety standards. Our U.S. operations are also subject to the Federal Communications Act of 1934 because we use radio facilities in our operations.
Under the Federal Aviation Act, it is unlawful to operate certain aircraft for hire within the U.S. unless such aircraft are registered with the FAA and the FAA has issued an operating certificate to the operator. As a general rule, aircraft may be registered under the Federal Aviation Act only if the aircraft are owned or controlled by one or more citizens of the U.S. and an operating certificate may be granted only to a citizen of the U.S. For purposes of these requirements, a corporation is deemed to be a citizen of the U.S. only if at least 75% of its voting interests are owned or controlled by U.S. citizens, the president of the company is a U.S. citizen, two-thirds or more of the directors are U.S. citizens and the company is under the actual control of U.S. citizens. If persons other 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 not met, we have been advised that our aircraft may be subject to deregistration under the Federal Aviation Act, and we may 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 and Bristow Academy operations. Therefore, our organizational documents currently provide for the automatic suspension of voting rights of shares of our outstanding voting capital stock owned or controlled by non-U.S. citizens, and our right to redeem those shares, to the extent necessary to comply with these requirements. As of March 31, 2016, approximately 1,512,000 shares of our common stock, par value $.01 per share (“Common Stock”), were held of record by persons with foreign addresses. These shares represented approximately 4% of our total outstanding Common Stock as of March 31, 2016. Our foreign ownership may fluctuate on each trading day because our Common Stock is publicly traded.
Also, we are subject to the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”), which generally prohibits us and our intermediaries from making corrupt payments to foreign officials for the purpose of obtaining or keeping business.
Additionally, we are subject to the International Traffic in Arms Regulations (“ITAR”) that control the export and import of defense-related articles, services and technical data. ITAR dictates that information and material pertaining to defense and military related technologies may only be shared with U.S. persons or organizations unless authorization from the U.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. U.S. persons or organizations may incur heavy fines if they violate ITAR or the EAR.
United Kingdom
Our operations in the U.K. are subject to the Civil Aviation Act 1982 and other similar English and European Union statutes and regulations. We carry persons and property in our aircraft pursuant to an operating license issued by the (Civil Aviation Authority (“CAA”). The holder of an operating license must meet the ownership and control requirements of Council Regulation 2407/92. To operate under this license, the company through which we conduct operations in the U.K., Bristow Helicopters, must be owned directly or through majority ownership by European Union nationals, and must at all times be effectively controlled by them. To comply with these restrictions, we own only 49% of the ordinary shares of Bristow Aviation, the entity that owns Bristow Helicopters. In addition, we have a put/call agreement with the other two stockholders of Bristow Aviation which grants us the right to buy all of their Bristow Aviation ordinary shares (and grants them the right to require us to buy all of their shares). Under English law, to maintain Bristow Helicopters’ operating license, we would be required to find a qualified European Union owner to acquire any of the Bristow Aviation shares that we have the right or obligation to acquire under the put/call agreement. In addition to our equity investment in Bristow Aviation, we own deferred stock, essentially a subordinated class of stock with no voting rights, and hold subordinated debt issued by Bristow Aviation.

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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 certain aircraft for hire within the U.K. unless such aircraft are approved by the CAA. Changes in U.K. or European Union 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.
Also, we are subject to the U.K. Bribery Act 2010 (the “U.K. Bribery Act”), which creates criminal offenses for bribery and failing to prevent bribery.
Additionally, we are subject to the U.K. and European Union Dual-Use Export Regulations. Dual use goods are products and technologies which have both civilian and military applications. U.K. and European Union regulations may require export authorization for certain exports of dual use items.
Nigeria
Our operations in Nigeria are subject to the Nigerian Content Development Act 2010, 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 meet these local content requirements up to 5% of the value of the contract.
Other
Our operations in other markets are subject to local governmental regulations that may limit foreign ownership of aviation companies. Because of these local regulations, we conduct some of our operations through entities in which citizens of such countries own a majority interest and we hold a noncontrolling interest, or under contracts which provide that we operate assets for the local companies and conduct their flight operations. Such contracts are used for our operations in Russia and Turkmenistan. Changes in local laws, regulations or 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 these areas.
Environmental
Our operations are subject to laws and regulations controlling the discharge of materials into the environment or otherwise relating to the protection of the environment. If we fail to comply with these environmental laws and regulations, 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. These laws and regulations may expose us to strict, joint and several liability for the conduct of or conditions caused by others or for our own acts even though these actions were in compliance with all applicable laws at the time they were performed. To date, such laws and regulations have not had a material adverse effect on our business, results of operations or financial condition.
Increased public awareness and concern over the environment may result in future changes in the regulation of the offshore energy industry, which in turn could adversely affect us. The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment and there can be no assurance as to the effect of such regulation on our operations or on the operations of our clients. We try to anticipate future regulatory requirements that might be imposed and plan accordingly to remain in compliance with changing environmental laws and regulations and to minimize the cost of such compliance. We do not believe that compliance with federal, state or local environmental laws and regulations will have a material adverse effect on our business, financial position or results of operations. We cannot be certain that future events, such as changes in existing laws, the promulgation of new laws, or the development or discovery of new facts or conditions will not cause us to incur significant costs. Below is a discussion of the material U.S. environmental laws and regulations that relate to our business. We believe that we are in substantial compliance with all of these environmental laws and regulations.

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Under the Comprehensive Environmental Response, Compensation and Liability Act, referred to as CERCLA or the Superfund law, and related state laws and regulations, 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 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 addition, neighboring landowners or other third parties may file claims for personal injury, property damage and recovery of response cost. We currently own, lease, or 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 and disposal or release of hazardous substances, wastes, or hydrocarbons was not under our control. These properties and the substances disposed or released on them may be subject to CERCLA and analogous state statutes. 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. These laws and regulations may also expose us to liability for our acts that were in compliance with applicable laws at the time the acts were performed. We have been named as a potentially responsible party in connection with certain sites. See further discussion under Item 3. “Legal Proceedings” included elsewhere in this Annual Report.
In addition, since our operations generate wastes, including some hazardous wastes, we may be subject to the provisions of the Resource, Conservation and Recovery Act, or RCRA, and analogous state laws that limit the approved methods of disposal for some types of hazardous and nonhazardous wastes and require owners and operators of facilities that treat, store or dispose of hazardous waste and to clean up releases of hazardous waste constituents into the environment associated with their operations. Some wastes handled by us that currently are exempt from treatment as hazardous wastes may in the future be designated as “hazardous wastes” under RCRA or other applicable statutes. If this were to occur, we would become subject to more rigorous and costly operating and disposal requirements.
The Federal Water Pollution Control Act, also known as the Clean Water Act, and analogous state laws impose restrictions and strict controls regarding the discharge of pollutants into state waters or waters of the U.S. The discharge of pollutants into jurisdictional waters is prohibited unless the discharge is permitted by the U.S. Environmental Protection Agency, also referred to as the EPA, or applicable state agencies. Some of our properties and operations require permits for discharges of wastewater and/or stormwater, and we have a system in place for securing and maintaining these permits. In addition, the Oil Pollution Act of 1990 imposes a variety of requirements on responsible parties related to the prevention of oil spills and liability for damages, including natural resource damages, resulting from such spills in the waters of the U.S. A responsible party includes the owner or operator of a facility. The Clean Water Act and analogous state laws provide for administrative, civil and criminal penalties for unauthorized discharges and, together with the Oil Pollution Act, impose rigorous requirements for spill prevention and response planning, as well as substantial potential liability for the cost of removal, remediation, and damages in connection with any unauthorized discharges.
Some of our operations also result in emissions of regulated air pollutants. The Federal Clean Air Act and analogous state laws require permits for facilities that have the potential to emit substances into the atmosphere that could adversely affect environmental quality. Failure to obtain a permit or to comply with permit requirements could result in the imposition of substantial administrative, civil and even criminal penalties.
Our facilities and operations are also governed by laws and regulations relating to worker health and workplace safety, including the Federal Occupational Safety and Health Act, or OSHA. We believe that appropriate precautions are taken to protect our employees and others from harmful exposure to potentially hazardous materials handled and managed at our facilities, and that we operate in substantial compliance with all OSHA or similar regulations.
In addition, we could be affected by future laws or regulations imposed in response to concerns over climate change. Changes in climate change concerns, or in the regulation of such concerns, including greenhouse gas emissions, could subject us to additional costs and restrictions, including compliance costs and increased energy and raw materials costs.
Our operations outside of the U.S. are subject to similar foreign governmental controls relating to protection of the environment. We believe that, to date, our operations outside of the U.S. have been in substantial compliance with existing requirements of these foreign governmental bodies and that such compliance has not had a material adverse effect on our operations. There is no assurance, however, that future expenditures to maintain compliance will not become material.

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Item 1A. Risk Factors
If you hold our securities or are considering an investment in our securities, you should carefully consider the following risks, together with the other information contained in this Annual Report.
Risks Relating to Our Clients and Contracts
The demand for our services is substantially dependent on the level of offshore oil and gas exploration, development and production activity.
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 revenue 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. 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 the Organization of Petroleum Exporting Countries and other oil producing countries to control prices or change production levels;
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;
the policies of various governments regarding exploration and development of their oil and gas reserves; and
the worldwide political environment, including uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in the Middle East, Nigeria or other geographic areas, or further acts of terrorism in the U.K., U.S. or elsewhere.
Additionally, an increase in onshore fracking, which generally does not require use of our services, could have an adverse effect on our operations. If onshore fracking were to meaningfully increase in the international markets in which we operate, and if it were to drive a meaningful increase in the supply of hydrocarbons available to the markets we serve, it could potentially adversely impact the level of activity in our offshore oil and gas markets and the demand for our industrial aviation services.
A focus by our clients 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 have 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 and to otherwise improve cost efficiencies with respect to air transportation services. 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.

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Our industry is highly competitive and cyclical, with intense price competition.
The helicopter and the 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, client relationship and professional reputation.
Our industry has historically been cyclical and is affected by the volatility of oil and gas price levels. There have been 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 often result in our aircraft being idle for long periods of time.
We have several significant competitors in the North Sea, Nigeria, the U.S. Gulf of Mexico, Australia, Canada and Brazil, and a number of smaller local competitors in other markets. Certain of our clients have the capability to perform their own air transportation operations or find new competitors should they elect to do so, which has a limiting effect on our rates.
As a result of significant competition, we must continue to provide safe and efficient service and we must continue to evolve our technology or we will lose market share, which could have a material adverse effect on our business, financial condition and results of operations due to the loss of a significant number of our clients or termination of a significant number of our contracts. See further discussion in Item 1. “Business — Competition” included elsewhere in this Annual Report.
We depend on a small number of large offshore energy industry clients for a significant portion of our revenue.
We derive a significant amount of our revenue from a small number of offshore energy companies. Our loss of one of these significant clients, if not offset by sales to new or other existing clients, could have a material adverse effect on our business, financial condition and results of operations. See further discussion in Item 1. “Business — Clients and Contracts included elsewhere in this Annual Report.
Our contracts often can be terminated or downsized by our clients without penalty.
Many of our fixed-term contracts contain provisions permitting early termination by the client at their convenience, generally without penalty, and with limited notice requirements. In addition, many of our contracts permit our clients 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 client contracts or the terms of those contracts.
Our U.K. SAR contract can be terminated and is subject to certain other rights of the U.K. Department for Transport.
The U.K. SAR contract 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. 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 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 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 option exercise fee. We currently lease the majority of the aircraft that service the U.K. SAR contract. Although we are entitled to some compensation for termination or 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 revenue. Additionally, we do not have the right to transfer 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 incur recurring fixed expenses for these recently acquired, non-revenue 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 clients may shift risk to us.
We give to and receive from our clients indemnities relating to damages caused or sustained by us in connection with our operations. Our clients’ changing views on risk allocation together with deteriorating market conditions could force us 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 risks. To the extent that we accept such additional risk, and seek to insure against it, if possible, our insurance premiums could rise. 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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We may not be able to obtain client contracts with acceptable terms covering some of our new helicopters, and some of our new helicopters may replace existing helicopters already under contract, which could adversely affect the utilization of our existing fleet.
We have ordered, and have options for, a substantial number of new helicopters. Many of our new helicopters may not be covered by client contracts when they are delivered to us, and we cannot assure you as to when we will be able to utilize these new helicopters or on what terms. To the extent our helicopters are covered by a client contract when they are delivered to us, some of these contracts may be for a short term, requiring us to seek renewals more frequently. Alternatively, we expect that some of our clients may request new helicopters in lieu of our existing helicopters, which could adversely affect the utilization of our existing fleet.
Reductions in spending on industrial aviation services by government agencies could lead to modifications of SAR contract terms or delays in receiving payments, which could adversely impact our business, financial condition and results of operations.
We were awarded a government contract to provide SAR services for all of the U.K. that commenced in April 2015. Any reductions in the budgets of government agencies for spending on industrial aviation services, implementation of cost saving measures by government agencies, imposed modifications of contract terms or delays in collecting receivables owed to us by our government agency clients could have an adverse effect on our business, financial condition and results of operations.
In addition, there are inherent risks in contracting with government agencies. Applicable laws and regulations in the countries in which we operate may enable our government agency clients to (i) terminate contracts for convenience, (ii) reduce, modify or cancel contracts or subcontracts if requirements or budgetary constraints change, or (iii) terminate contracts or adjust their terms.
Our fixed operating expenses and long-term contracts with clients could adversely affect our business under certain circumstances.
Our profitability is directly related to demand for our services. Because 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 are fixed and must be paid even when aircraft are not actively servicing clients and thereby generating income. A decrease in our revenue could therefore result in a disproportionate decrease in our earnings, as a substantial portion of our operating expense would remain unchanged. Similarly, the discontinuation of any rebates, discounts or preferential financing terms offered to us by manufacturers, lenders or lessors would have the effect of increasing our related expenses, and without a corresponding increase in our revenue, would negatively impact our results of operations.
Certain of our long-term aircraft services contracts contain price escalation terms and conditions. Although supplier costs, fuel costs, labor costs, insurance costs, and other cost increases are typically passed through to our clients through rate increases where possible, these escalations may not be sufficient to enable us to recoup increased costs in full and we may not be able to realize the full benefit of contract price escalations during a market downturn. There can be no assurance that we will be able to estimate costs accurately or recover increased costs by passing these costs on to our clients. We may not be successful in identifying or securing cost escalations for other costs that may escalate during the applicable client contract term. In the event that we are unable to fully recover material costs that escalate during the terms of our client contracts, the profitability of our client contracts and our business, financial condition and results of operations could be materially and negatively affected.
Additionally, cost increases related to our airline scheduled service cannot be passed on to previously purchased air passenger tickets but may be passed on partially or wholly to future purchased tickets if the rates remain competitive to other competing airlines.
Risks Relating to Our Business
Our operations involve a degree of inherent risk that may not be covered by our insurance and may increase our operating costs.
The operation of helicopters and fixed wing aircraft inherently involves a degree of risk. Hazards such as harsh weather and marine conditions, mechanical failures, facility fires and spare parts damage, pandemic outbreaks, crashes and collisions are inherent 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 and the grounding of such aircraft or insufficient ground facilities or spare parts to support operations. In addition to any loss of property or life, our revenue, profitability and margins could be materially affected by an accident or asset damage.

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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 clients’ personnel, equipment, cargo and other property, as well as the environment. If any of these events were to occur with equipment or other assets that we need to operate or lease to third parties, we could experience loss of revenue, termination of charter contracts, higher insurance rates, and damage to our reputation and client 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. For example, on August 12, 2015, a Sikorsky S-76C+ operated by us was involved in an accident in which two of our crew members and four passengers were fatally injured. There were six other passengers on board who suffered injuries in the accident. Also, on February 3, 2016, a Sikorsky S-76C++ operated by us was involved in a controlled water landing with minor injuries reported for the nine passengers and two crew on board the aircraft. Following standard practice and out of an abundance of caution, we temporarily suspended operation of the 16 Sikorsky S-76C model aircraft we had operating in Nigeria. In March 2014, one of our hangars in Nigeria experienced a fire, which resulted in damage to the hangar, two helicopters and a substantial portion of the inventory spare parts. Although the hangar, helicopters and inventory were covered by insurance, we incurred deductible and additional insurance premiums as a result of this fire. The lack of sufficient insurance for this incident or the occurrence of another such incident or accident could have a material adverse effect on our operations and financial condition.
Certain models of aircraft that we operate have also experienced accidents while operated by third parties. Most recently, on April 29, 2016, an incident occurred with an Airbus Helicopters H225 Super Puma helicopter operated by another helicopter company, which resulted in the loss of life for eleven passengers and two crew members in Norway. This incident resulted in the Civil Aviation Authorities in the U.K. and Norway issuing safety directives, requiring operators to suspend commercial operations of the affected aircraft and our cessation of operations of a total of 20 large Airbus Helicopters aircraft globally for a period of time pending determination of the root cause. 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 would lose revenue and might lose clients. In addition, safety issues experienced by a particular model of aircraft could result in clients 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.
We attempt to protect ourselves against financial losses and damage by carrying insurance, including hull and liability, general liability, workers’ compensation, 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. In addition, future terrorist activity, risks of war, accidents or other events could increase our insurance premiums. The loss of our liability insurance coverage, inadequate coverage from our liability insurance 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 clients and could adversely impact our reputation, operations and financial performance.
Our clients consider safety and reliability as the two 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 clients, our ability to retain current clients and attract new clients may be adversely affected. Accidents or disasters could impact client or passenger confidence in a particular fleet type, us or the air transportation services industry as a whole and could lead to a reduction in client 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 clients, which could adversely impact our reputation, operations and financial results. Our aircraft have been involved in accidents in the past, some of which have included loss of life and property damage. We may experience similar accidents in the future.
Our diversification efforts into other industrial aviation services such as fixed wing, search and rescue, and unmanned aerial vehicle services may prove unsuccessful.
Our business has traditionally been significantly dependent upon the level of offshore oil and gas exploration, development and production activity. Although the company has begun diversification efforts with the recent investments in Eastern Airways, Airnorth and Sky-Futures, the effect of the recent downturn in the oil and gas industry has nevertheless negatively impacted our financial results and could continue to negatively impact our financial results in future periods. While diversification into other industrial aviation services is intended to grow the business and offset the cyclical nature of the underlying oil and gas business, we have only limited experience in providing fixed wing and unmanned aerial vehicle services and cannot be certain that diversification benefits associated with those lines of business will ever be realized.

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Our operations in certain regions of the world are subject to additional risks.
Operations in certain regions are subject to various risks inherent in conducting business in international locations, including:
political, social and economic instability, including risks of war, general strikes and civil disturbances;
physical and economic retribution directed at U.S. companies and personnel;
governmental actions that restrict payments or the movement of funds or result in the deprivation of contract rights;
violations of our Code;
adverse tax consequences;
fluctuations in currency exchange rates, hard currency shortages and controls on currency exchange that affect demand for our services and our profitability;    
potential noncompliance with a wide variety of laws and regulations, such as the FCPA, and similar non-U.S. laws and regulations, including the U.K. Bribery Act and Brazil’s Clean Companies Act (the “BCCA”);
the taking of property without fair compensation; and
the lack of well-developed legal systems in some countries that could make it difficult for us to enforce our contractual rights.
Historically, there has been continuing political and social unrest in Nigeria, where we derived 14%, 18% and 20% of our gross revenue during fiscal years 2016, 2015 and 2014, respectively. There has been a recent change in the leadership in Nigeria. The current leadership is facing numerous challenges which, if not addressed, may cause political or social unrest and result in a lack of demand for our services in Nigeria and safety risks for our operations and our people. In addition, the passage of the Nigerian Petroleum Industry Bill could lead to further uncertainty in demand in the region. 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.
We also have a joint venture operating in Sakhalin that may be negatively impacted by any further civil unrest within, war related to, or sanctions against Russia.
We are highly dependent upon the level of activity in the North Sea and to a lesser extent the U.S. Gulf of Mexico, which are mature exploration and production regions.
In fiscal years 2016, 2015 and 2014, approximately 58%, 58%, and 55%, respectively, of our gross revenue was derived from air transportation services provided to oil and gas clients 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 and exploration 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 could be more difficult to identify. The ability of our clients to produce sufficient quantities to support the costs of exploration in different basins could impact the level of future activity in these regions. Generally, the production from these drilled oil and gas properties is declining. 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 U.K. North Sea, respectively.
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.

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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. Generally, we do not enter into hedging transactions to protect against foreign exchange risks related to our revenue or operating expense.
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 kroner and Nigerian naira. In preparing our financial statements, we must convert all non-U.S. dollar currencies to U.S. dollars. The effect of foreign currency translation is reflected as a component of stockholders’ investment, while foreign currency transaction gains or losses and translation of currency amounts not deemed permanently reinvested are credited or charged to income and reflected in other income (expense), net. Additionally, our earnings from unconsolidated affiliates, net of losses, are affected by the impact of changes in foreign currency exchange rates on the reported results of our unconsolidated affiliates, primarily the impact of changes in the Brazilian real and the U.S. dollar exchange rate on results for our affiliate in Brazil. Changes in exchange rates could cause significant changes in our financial position and results of operations in the future.
We operate in countries with foreign exchange controls including Brazil, Egypt, Nigeria, Russia and Turkmenistan. 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.
See further discussion of foreign exchange risks and controls under Item 7A. “Quantitative and Qualitative Disclosure about Market Risk” included elsewhere in this Annual Report.
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, 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 growing number 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 would adversely affect our revenue and profitability and could jeopardize our ability to meet the demands of our clients and grow our business. Additionally, lack of availability of new aircraft resulting from a backlog in orders could result in an increase in prices for certain types of new and used helicopters.
If any of the helicopter manufacturers we contract with, the government bodies that regulate them or other parties identify safety issues with helicopter models we currently operate or that we intend to acquire, we may be required to suspend flight operations, as was done with the S-76C and H225 aircraft referenced above. If we are forced to suspend operations of helicopter models, our business, financial condition and results of operations during any period in which flight operations are suspended could be affected.
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 could 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, we rely on a few key vendors 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. To the extent that these suppliers also supply parts for aircraft used by governments in military operations, parts delivery for our aircraft may be delayed. Our inability to perform timely maintenance and repairs can 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, this may pose a risk to our operating results. Additionally, supplier cost increases for critical aircraft components and parts also pose a risk to our operating results. Cost increases for contracted services are passed through to our clients through rate increases where possible, including as a component of contract escalation charges. However, as certain of our contracts are long-term in nature, cost increases may not be adjusted in our contract rates until the contracts are up for renewal.

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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 significantly on the level of international oil and gas activity and our ability to operate outside of the North Sea and the U.S. Gulf of Mexico.
Our future growth will depend significantly on our ability to expand into markets outside of the North Sea and the U.S. Gulf of Mexico. Expansion of our business depends on our ability to operate in these other regions.
Expansion of our business outside of the North Sea and the U.S. Gulf of Mexico may be adversely affected by:
local regulations restricting foreign ownership of helicopter operators;
requirements to award contracts to local operators; and
the number and location of new drilling concessions granted by foreign governments.
We cannot predict the restrictions or requirements that may be imposed in the countries in which we operate. If we are unable to continue to operate or retain contracts in markets outside of the North Sea and the U.S. Gulf of Mexico, our operations outside of the North Sea and the U.S. Gulf of Mexico may not grow, and our future business, financial condition and results of operations may be adversely affected.
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 through bank debt, public or private debt, or equity financings to execute our growth strategy. Adequate sources of capital funding may not be available when needed, or may not be available on favorable terms. If we raise additional funds by issuing equity or certain types of convertible debt securities, dilution to the holdings of existing stockholders may result. Further, 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 assets as security or subject us to financial and/or operating covenants that affect our ability to conduct our business. If funding is insufficient at any time in the future, we may be unable to acquire additional aircraft, take advantage of business opportunities 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 Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Future Cash Requirements” included elsewhere in this Annual Report.
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 of the Transportation Code in the U.S. and other statutes require our President and two-thirds of our board of directors 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.
Our ability to attract and retain qualified pilots, mechanics and other highly-trained personnel is an important factor in determining our future success. For example, many of our clients 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 the U.K. or U.S. military reserves who have been, or could be, called to active duty. If significant numbers of such personnel are called to active duty, it would reduce the supply of such workers and likely increase our labor costs. Additionally, 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 and Airbus Helicopters AS332 aircraft types in response to the Airbus Helicopters H225 grounding may require us to retain additional pilots, mechanics and other flight-related personnel.
A number of personnel departed the company during the current oil and gas industry downturn, and we may be unable to take advantage of current opportunities in the industry downturn with our reduced workforce. We also may be unable to timely replace such personnel when the industry emerges from the current downturn. Our failure to attract and retain qualified personnel could have a material adverse effect on our current business and future growth.

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Labor problems could adversely affect us.
Certain of our employees in the U.K., Norway, Nigeria, the U.S. and Australia (collectively, about 50% of our employees) are represented under collective bargaining or union agreements. Any disputes over the terms of these agreements or our potential inability to negotiate acceptable contracts with the unions that represent our employees under these agreements could result in strikes, work stoppages or other slowdowns by the affected workers. Periodically, certain groups of our employees who are not covered under a collective bargaining agreement consider entering into such an agreement. For example, discussions are underway with members of our Nigerian pilot and engineers union who protested by suspending their operation for two days in April 2016. Also, in 2013 our U.S. Gulf of Mexico mechanics elected to unionize. Further, 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 disruption of our operations or higher ongoing labor costs, which could adversely affect our business, financial condition and results of operations.
See Item 1. “Business — Employees” included elsewhere in this Annual Report for further discussion on the status of collective bargaining or union agreements.
Our operations are subject to weather-related and seasonal fluctuations.
Our operations can be impaired by harsh weather conditions. Poor visibility, high wind, heavy precipitation, sand storms 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 revenue is dependent on actual flight hours, and a substantial portion of our direct cost 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.
The fall and winter months have fewer hours of daylight, particularly in the North Sea and Canada. While some of our aircraft are equipped to fly at night, we generally do not do so. In addition, drilling activity in the North Sea and Canada is lower 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. Consequently, flight hours are generally lower during these periods, typically resulting in a reduction in operating revenue during those 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 November and the middle of March. The heavy amount of dust in the air can severely limit visibility and block the sun for several days, comparable to a heavy fog. We are unable to operate aircraft during these harsh conditions. Consequently, flight hours may be lower during these periods resulting in reduced operating revenue, which may have a material adverse effect on our business, financial condition and results of operations.
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 Gulf of Mexico, June through November is tropical storm and hurricane season, and in Australia, November through April is cyclone season. When a weather event is about to enter or begins developing in these regions, flight activity may increase because of evacuations of offshore workers. However, during such an event, we are unable to operate in the area of the storm. In addition, as a significant portion of our facilities are located along the coast of these regions, extreme weather may cause substantial damage to our property in these locations, including possibly aircraft. Additionally, we incur costs in evacuating our aircraft, personnel and equipment prior to tropical storms, hurricanes and cyclones.

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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 client demands, including technology preferences. Our future growth and financial performance will depend in part upon our ability to develop, market and integrate new services such as Sky-Futures, which is the leading provider of drone inspection data services for the oil and gas industry, and to accommodate the latest technological advances and client preferences. In addition, the introduction of new technologies or services that compete with our services could result in our revenue 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.
We are increasingly dependent on information technology, and if we are unable to protect against service interruptions, data corruption, cyber-based attacks 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 company and with clients, 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, cyber attacks, 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.
In addition, cyber attacks could lead to potential unauthorized access and disclosure of confidential information, including the Personally Identifiable Information of our customers and employees. Cyber attacks 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 cyber attacks and suffer losses in the future. Further, as the methods of cyber attacks continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any cyber attacks.
We are exposed to credit risk.
We are exposed to credit risk on our financial investments, 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 on financial instruments arises from the potential for counterparties to default on their contractual obligations and is limited to those contracts on which we would incur a loss in replacing the instrument. 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.
Credit risk arises on our trade receivables from the unexpected loss in cash and earnings when a client cannot meet its obligation to us or when the value of any security provided declines. To mitigate trade credit risk, we have developed credit policies that include the review, approval and monitoring of new clients, 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 fiscal year 2016, we generated approximately 75% of our consolidated operating revenue from external clients 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 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.

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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.
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 Brazil, Canada, and Egypt. We provide engineering and administrative support to certain of these entities. We derive significant amounts of lease revenue, service revenue, equity earnings and dividend income from these entities. In fiscal years 2016, 2015 and 2014, we received approximately $78.9 million, $87.7 million and $92.7 million, respectively, of revenue from the provision of aircraft and other services to unconsolidated affiliates. As a result of not owning a majority interest or maintaining voting control of our unconsolidated affiliates, we do not have the ability to control their policies, management or affairs. The interests of persons who control these entities or partners may differ from ours, and may cause such entities to take actions that are not in our best interest. If we are unable to maintain our relationships with our partners in these entities, we could lose our ability to operate in these 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, our aircraft may be subject to deregistration and we may lose our ability to operate within these countries if certain levels of local ownership are not maintained. 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 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, which could restrict or prohibit our ability to operate in certain regions. Any such restriction or prohibition on our ability to operate may have a material adverse effect on our business, financial condition and results of operations. See further discussion in Item 1. “Business — Governmental Regulation” included elsewhere in this Annual Report.
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 significant transactions. Any such acquisitive 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. Such dispositions could take the form of asset sales, mergers or sales of equity interests.
These transactions may present significant risks such as insufficient revenue to offset liabilities assumed, potential loss of significant revenue and income streams, increased or unexpected expenses, inadequate return of capital, regulatory or compliance issues, the triggering of certain covenants in our debt agreements (including accelerated repayment) and unidentified issues not discovered in due diligence. 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.

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We are subject to legal compliance risks.
As a global business, we are subject to complex laws and regulations in the U.S., the U.K. and other countries in which we operate. These laws and regulations relate to a number of aspects of our business, including anti-bribery laws, interactions with government officials and other third parties, import and export controls, the payment of taxes, employment and labor relations, fair competition, data privacy protections, securities regulation, 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 revenue and profitability. Non-compliance could also result in significant fines, damages, and other criminal sanctions against us, our officers or our employees, prohibitions or additional requirements on the conduct of our business and damage our reputation. Certain violations of law could also result in suspension or debarment from government contracts. We also incur additional legal compliance costs associated with our global regulations. 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 U.K. Bribery Act. Although we implement 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 with our internal policies. Any such violation of the law or even internal policies could have a material adverse effect on our business, financial condition and results of operations.
Our failure to dispose of aircraft through sales into the aftermarket could 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 large aircraft and newer technology aircraft may be required. During a downturn in the oil and gas industry or 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 aircraft, we may record gains or losses on aircraft sales. 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 can be unpredictable. In May 2015, a global competitor filed for Chapter 11 bankruptcy protection and announced its intention to reject leases resulting in the return of approximately 90 leased helicopters to lessors. This significant return of aircraft 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.
Actions taken by agencies empowered to enforce governmental regulations could increase our costs and reduce our ability to operate successfully.
Our operations are regulated by governmental agencies in the various jurisdictions in which we operate. These agencies have jurisdiction over many aspects of our business, including personnel, aircraft and ground facilities. Statutes and regulations in these jurisdictions also subject us to various certification and reporting requirements and inspections regarding safety, training and general regulatory compliance. Other statutes and regulations in these jurisdictions regulate the offshore operations of our clients. The agencies empowered to enforce these statutes and regulations may suspend, curtail or require us to modify our operations. In February 2014 the CAA issued the CAP 1145 regulation, which is intended to improve the safety of offshore helicopter operations in the U.K. The regulation was issued in response to the August 23, 2013 crash of a competitor’s Airbus Helicopters AS332L2 Super Puma where four passengers lost their lives. The regulation is in part intended to improve the ability of passengers and crew to survive an offshore incident, and also addresses pilot training, helidecks, acceptable weather conditions for flying and other safety topics. For example, one requirement that went into effect on September 1, 2014 is that passengers may only occupy seats next to an emergency exit window. Additionally, in April 2016 the crash of a competitor's Airbus Helicopters H225 Super Puma in Norway where eleven passengers and two crew members lost their lives has resulted in the grounding of such aircraft in the U.K. and Norway. At this time the investigation is underway, so there have been no additional regulations issued. Additional directive requirements could present North Sea operators, including us, with significant operational challenges. A suspension or substantial curtailment of our operations for any prolonged period, and any substantial modification of our current operations, may have a material adverse effect on our business, financial condition and results of operations. See further discussion in Item 1. “Business — Government Regulation” and “Business - Environmental” included elsewhere in this Annual Report.

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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. We cannot determine whether, or in what form, legislation will ultimately be enacted or what the impact of any such legislation would have on our profitability. If these or other changes to tax laws are enacted, our profitability could be negatively impacted.
Our future effective tax rates could also be 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 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.
If our goodwill, amortizable intangible assets or investments in unconsolidated affiliates become impaired we may be required to record a significant charge to earnings.
We acquire other companies and intangible assets, and make investments in unconsolidated affiliates, and may not realize all of the economic benefit from those acquisitions or investments, which could cause an impairment of goodwill, intangibles or investments in unconsolidated affiliates. We review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. We test goodwill for impairment at least annually. Factors that may be a change in circumstances, indicating that the carrying value of our goodwill, amortizable intangible assets or investments in unconsolidated affiliates may not be recoverable, include a decline in our stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in the industry in which we operate. For example, in fiscal year 2016, we recognized a loss of $49.7 million associated with the impairment of goodwill and other intangible assets as a result in the market downturn. We may be required to record significant additional charges in our consolidated financial statements during the period in which any impairment of our goodwill, amortizable intangible assets or investments in unconsolidated affiliates is determined, which could adversely affect our results of operations.
Adverse results of legal proceedings could materially and adversely affect our business, financial condition and results of operations.
We are 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.
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. 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.

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Environmental regulations and liabilities may increase our costs and adversely affect us.
Our operations are subject to U.S. federal, state and local, and foreign environmental laws and regulations 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 the business of operating and maintaining aircraft requires that we use, store and dispose of materials that are subject to environmental regulation. Environmental laws and regulations change frequently, which makes it impossible for us to predict their cost or impact on our future operations. Liabilities associated with environmental matters could have a material adverse effect on our business, financial condition and results of operations. We could be exposed to strict, joint and several liability for cleanup costs, natural resource damages and other damages as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties. 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 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.
Changes in environmental laws or regulations, including laws relating to greenhouse emissions 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. For additional information see Item 1. “Business - Environmental” and Item 3. “Legal Proceedings” included elsewhere in this Annual Report.
The recent downgrades in our credit ratings could impact our ability to access capital and materially adversely affect our business, financial condition and results of operations.
Credit rating agencies continually review their ratings for the companies that they follow, including us. Credit rating agencies also evaluate the industries in which we and our affiliates operate as a whole and may change their credit rating for us based on their overall view of such industries. In March 2016, Moody’s conducted a review of oilfield services companies in the United States and downgraded our corporate family rating to Ba3 from Ba2, with a negative outlook. There can be no assurance that any rating assigned to our currently outstanding public debt securities will remain in effect for any given period of time or that any such ratings will not be further lowered, suspended or withdrawn entirely by a rating agency if, in that rating agency’s judgment, circumstances so warrant.
A further downgrade of our credit ratings could, among other things:
limit our ability to access capital or otherwise adversely affect the availability of other new financing on favorable terms, if at all;
result in more restrictive covenants in agreements governing the terms of any future indebtedness that we may incur;
cause us to refinance indebtedness with less favorable terms and conditions, which debt may require collateral and restrict, among other things, our ability to pay distributions or repurchase shares;
increase our cost of borrowing;
adversely affect the market price of our outstanding debt securities; and
impair our business, financial condition and results of operation.
Regulations limit foreign ownership of our company, 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.
Our 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) shall not collectively own or control more than 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 shares owned by stockholders who are not citizens of the U.S. shall automatically be suspended, in the reverse chronological order of the dates and times of registry of such shares in our stock records, until the voting rights of a sufficient number thereof shall have been suspended so that the number of shares owned by stockholders who are not citizens of the U.S. that continue to have voting rights equals the

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greatest whole number that is less than or equal to the Permitted Foreign Ownership Percentage. 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. These restrictions may have a material adverse impact on the liquidity or market value of our Common Stock because holders may be unable to transfer our Common Stock to persons who are not citizens of the U.S.
If we do not restrict the amount of foreign ownership of our Common Stock, we might lose our status as a U.S. air carrier and be prohibited from operating aircraft in the U.S., which would adversely impact our business, financial condition and results of operations.
Since we hold the status of a U.S. air carrier under the regulations of both the U.S. Department of Transportation and the FAA and we engage in the operating and dry-leasing of aircraft in the U.S., we are subject to regulations pursuant to Title 49 of the Transportation Code (the “Transportation Code”) and other statutes (collectively, the “Aviation Acts”). The Transportation Code requires that certificates to engage in air transportation be held only by citizens of the U.S. as that term is defined in the relevant section of the Transportation Code. That section requires: (i) that our President and two-thirds of our board of directors and other managing officers be U.S. citizens; (ii) that at least 75% of our outstanding voting stock be owned by U.S. citizens; and (iii) that we must be under the actual control of U.S. citizens. Further, our aircraft operating in the U.S. must generally be registered in the U.S. In order to register such aircraft under the Aviation Acts, we must be owned or controlled by U.S. citizens. Although our restated certificate of incorporation and amended and restated by-laws contain provisions intended to ensure compliance with the provisions of the Aviation Acts, a failure to maintain compliance could result in the loss of our air carrier status prohibiting us from both operating as an air carrier and operating aircraft in the U.S. during any period in which we did not comply with these regulations, and thereby adversely affect our business, financial condition and results of operations.
Risks Related to Our Level of Indebtedness
Covenants in our debt agreements may restrict the manner in which we can operate our business.
Our Credit Facilities and the indenture governing the 6 ¼% Senior Notes limit, 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 other restricted payments;
incur liens to secure indebtedness;
make certain investments;
sell certain assets;
enter into transactions with our affiliates; or
merge with another person or sell substantially all of our assets.
If we fail to comply with these and other covenants, we would be in default under our Credit Facilities and the indenture governing the 6 ¼% Senior Notes, and the principal and accrued interest on our outstanding indebtedness may become due and payable. In addition, our Credit Facilities contain, and our future indebtedness agreements may contain, additional affirmative and negative covenants. 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 Credit Facilities also require us, and our future credit facilities may require us, to maintain specified financial covenants. Our ability to meet these financial covenants can be affected by events beyond our control, and we cannot assure you that we will meet these tests in the future. The breach of any of these covenants could result in a default under our Credit Facilities. Upon the occurrence of an event of default under our existing or future credit facilities, the lenders could elect to declare all amounts outstanding under such credit facilities, 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 the indentures governing the 6 ¼% Senior Notes and our Credit Facilities, contain cross-default provisions. Under these provisions, a default under one agreement governing our indebtedness may constitute a default under our other agreements of indebtedness.

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Our level of indebtedness could adversely affect our ability to obtain financing, impair our ability to fulfill our obligations under our indebtedness and limit our ability to adjust to changing market conditions.
As of March 31, 2016, we had approximately $1.1 billion of outstanding indebtedness. In addition, we had $255.4 million of availability for borrowings under our Credit Facilities as of March 31, 2016, subject to our maintenance of financial covenants and other conditions. Although the agreements governing our Credit Facilities and the indenture governing our 6 ¼% Senior Notes due 2022 (the “6 ¼% Senior Notes”) contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and we could incur substantial additional indebtedness in the future.
Our level of indebtedness may have important consequences to our business, including:
impairing our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes;
requiring us to dedicate a substantial portion of our cash flow to the payment of principal and interest on our indebtedness, which reduces the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes or to repurchase our notes upon a change of control;
subjecting us to the risk of increased sensitivity to interest rate increases on our indebtedness with variable interest rates, including borrowings under our Credit Facilities;
increasing the possibility of an event of default under the financial and other covenants contained in our debt agreements; and
limiting our ability to adjust to rapidly changing market conditions, reducing our ability to withstand competitive pressures and making us more vulnerable to a downturn in general economic conditions or our business than our competitors with less debt.
If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required to refinance all or a portion of our existing debt or obtain additional financing. There is no assurance that any such refinancing would be possible or that any additional financing could be obtained. Our inability to obtain such refinancing or financing may have a material adverse effect on us.
Failure to comply with covenants contained in certain of our lease agreements could limit our ability to maintain our leased aircraft fleet and could adversely affect our business.
We have a significant amount of fixed obligations related to operating leases, including aircraft leases. The terms of our aircraft lease agreements contain covenants that impose operating and financial limitations on us. Such lease agreements limit, among other things, our ability to utilize aircraft in certain jurisdictions and/or to sublease aircraft, and may contain restrictions upon a change of control. A breach of lease covenants could result in an obligation to repay amounts outstanding under the lease, including rent and a stated value amount per aircraft. If such an event occurs, we may not be able to pay all amounts due under the leases or to refinance such leases on terms satisfactory to us or at all, which could have a material adverse effect on our business, financial condition and results of operations.
To service our indebtedness and lease obligations we will continue to require a significant amount of cash, and our ability to generate cash depends on many factors beyond our control.
Our ability to make scheduled payments of principal or interest with respect to our indebtedness and lease obligations will depend on our ability to generate cash and on our financial results. Our ability to generate cash depends on the demand for our services, which is subject to levels of activity in offshore oil and gas exploration, development and production, general economic conditions, the ability of our affiliates to generate and distribute cash flows, and financial, competitive, regulatory and other factors affecting our operations, many of which are beyond our control. We cannot assure you that our operations will generate sufficient cash flow or that future borrowings will be available to us under our Credit Facilities or otherwise in an amount sufficient to enable us to pay our indebtedness or lease obligations or to fund our other liquidity needs.


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Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The number and types of aircraft we operate are described in Item 1. “Business — Overview” above. In addition, we lease various office and operating facilities worldwide, including facilities at the Acadiana Regional Airport in New Iberia, Louisiana, the Redhill Aerodrome near London, England, the Aberdeen Airport, Scotland, along the U.S. Gulf of Mexico and in Bergen and Stavanger, Norway, and numerous residential locations near our operating bases or the bases of our affiliates in the U.K., Norway, Australia, Russia, Nigeria, Canada and Trinidad, which we use primarily for housing pilots and staff supporting those operations. We have nine SAR bases as follows: Caernarfon, Humberside, Inverness, Lydd, Newquay, Prestwick, St. Athan, Stornoway and Sumburgh. We also lease office space in a building in Houston, Texas, which we use as our corporate headquarters and for other business purposes. Eastern Airways owns a majority controlling stake in the Humberside Airport in Kirmington, United Kingdom. Additionally, we have multiple properties in Titusville, Florida, where the largest campus of our Bristow Academy business unit is located. These facilities are generally suitable for our operations and can be replaced with other available facilities if necessary.
Additional information about our properties can be found in Note 7 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report (under the captions “Aircraft Purchase Contracts and “Operating Leases”). A detail of our long-lived assets by geographic area as of March 31, 2016 and 2015 can be found in Note 11 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.
Item 3. Legal Proceedings
Nigerian Litigation
In November 2005, two of our consolidated foreign affiliates were named in a lawsuit filed with the High Court of Lagos State, Nigeria by Mr. Benneth Osita Onwubalili and his affiliated company, Kensit Nigeria Limited, which allegedly acted as agents of our affiliates in Nigeria. The claimants allege that an agreement between the parties was terminated without justification and seek damages of $16.3 million. We responded to this claim in early 2006. There has been minimal activity on this claim since then.
Environmental Contingencies
The EPA has in the past notified us that we are a potential responsible party, or PRP, at three former waste disposal facilities that are on the National Priorities List of contaminated sites. Under the Superfund law, persons who are identified as PRPs may be subject to strict, joint and several liability for the costs of cleaning up environmental contamination resulting from releases of hazardous substances at National Priorities List sites. Although we have not yet obtained a formal release of liability from the EPA with respect to any of the sites, we believe that our potential liability in connection with these sites is not likely to have a material adverse effect on our business, financial condition and results of operations.
Other Matters
Although infrequent, aircraft accidents have occurred in the past, and the related losses and liability claims have been covered by insurance subject to various risk retention factors. We also are a defendant in certain claims and litigation arising out of operations in the normal course of business. In the opinion of management, uninsured losses, if any, will not be material to our financial position, results of operations or cash flows.
Item 4. Mine Safety Disclosures
None.

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PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our Common Stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “BRS”. The following table shows the range of prices for our Common Stock during each quarter of our last two fiscal years.
 
 
Fiscal Year Ended March 31,
 
 
2016
 
2015
 
 
High
 
Low
 
High
 
Low
First Quarter
 
$
64.64

 
$
52.22

 
$
80.62

 
$
71.27

Second Quarter
 
53.63

 
25.71

 
81.60

 
66.48

Third Quarter
 
37.19

 
21.93

 
75.00

 
58.14

Fourth Quarter
 
26.71

 
11.02

 
66.20

 
50.80

On May 20, 2016, the last reported sale price of our Common Stock on the NYSE was $14.59 per share. As of May 20, 2016, there were 356 holders of record of our Common Stock.
We paid quarterly dividends of $0.34 per share during the first, second and third quarters of fiscal year 2016 and $0.07 per share during the fourth quarter of fiscal year 2016 and quarterly dividends of $0.32 per share during each quarter of fiscal year 2015. On May 23, 2016, our board of directors approved a dividend of $0.07 per share of our Common Stock, payable on June 29, 2016 to shareholders of record on June 14, 2016. During fiscal years 2016 and 2015, we paid dividends totaling $38.1 million and $45.1 million, respectively, to our shareholders. The declaration of future dividends is at the discretion of our board of directors and subject to our results of operations, financial condition, cash requirements and other factors and restrictions under applicable law, and our debt agreements.
We did not repurchase any shares of Common Stock during fiscal year 2016. During fiscal years 2015 and 2014, we repurchased 1,160,940 and 1,043,875 shares of our Common Stock for $80.8 million and $77.7 million, respectively. As of May 20, 2016, we had $150.0 million of remaining repurchase authority that was authorized by our board of directors for share repurchases through November 4, 2016; however, covenants in our debt agreements restrict our ability to repurchase our Common Stock.


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The following graph compares the cumulative 5-year total shareholder return on our Common Stock relative to the cumulative total returns of the S&P 500 index, the PHLX Oil Service Sector index and the Simmons Offshore Transportation Services Group. We have included the Simmons Offshore Transportation Services Group as management reviews this data internally and believes that this comparison is most representative to our peer group. The graph assumes that the value of the investment in our Common Stock and in each of the indices (including reinvestment of dividends) was $100 on March 31, 2011 and tracks it through March 31, 2016.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Bristow Group Inc., the S&P 500 Index, the PHLX Oil Service Sector Index,
and the Simmons Offshore Transportation Services Group

 *$100 invested on 3/31/11 in stock or index, including reinvestment of dividends.
Fiscal year ending March 31.
    
 
 
 
 
 
 
 
Bristow Group Inc.
 
$
100.00

 
$
102.29

 
$
143.68

 
$
166.88

 
$
122.55

 
$
43.94

S&P 500 Index
 
$
100.00

 
$
108.54

 
$
123.69

 
$
150.73

 
$
169.92

 
$
172.95

PHLX Oil Service Sector Index
 
$
100.00

 
$
79.70

 
$
83.98

 
$
105.98

 
$
80.31

 
$
66.62

Simmons Offshore Transportation Services Group
 
$
100.00

 
$
95.90

 
$
99.28

 
$
115.39

 
$
66.47

 
$
42.89


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Item 6. Selected Financial Data
The following table contains our selected historical consolidated financial data. You should read this table along with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and the related notes thereto, all of which are included elsewhere in this Annual Report. 
 
 
Fiscal Year Ended March 31,
 
 
2016(1)
 
2015(2)
 
2014(3)
 
2013(4)
 
2012(5)
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except per share data)
Statement of Income Data: (6)
 
 
 
 
 
 
 
 
 
 
Gross revenue
 
$
1,715,513

 
$
1,858,669

 
$
1,669,582

 
$
1,508,473

 
$
1,341,803

Net income (loss) attributable to Bristow Group
 
$
(72,442
)
 
$
84,300

 
$
186,737

 
$
130,102

 
$
63,530

Basic earnings (loss) per common share
 
$
(2.12
)
 
$
2.40

 
$
5.15

 
$
3.61

 
$
1.76

Diluted earnings (loss) per common share
 
$
(2.12
)
 
$
2.37

 
$
5.09

 
$
3.57

 
$
1.73

Cash dividends declared per share
 
$
1.09

 
$
1.28

 
$
1.00

 
$
0.80

 
$
0.60

 
 
 
 
2016
 
2015
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands)
Balance Sheet Data: (6)
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
3,271,862

 
$
3,230,720

 
$
3,398,257

 
$
2,950,692

 
$
2,740,363

Long-term obligations (7)
 
$
1,140,889

 
$
864,422

 
$
841,302

 
$
787,269

 
$
757,245

_______________
(1) 
Results for fiscal year 2016 include goodwill and intangible impairment charges of $49.7 million ($38.0 million, net of tax and noncontrolling interest), $28.7 million ($20.6 million, net of tax) in additional depreciation due to fleet changes, $27.0 million ($19.1 million, net of tax) for organizational restructuring costs, impairment of inventories of $5.4 million ($4.0 million, net of tax) and tax valuation allowance of $20.1 million. Additional discussion of these items and other significant items in fiscal year 2016 is included under Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Overview of Operating Results — Fiscal Year 2016 Compared to Fiscal Year 2015” included elsewhere in this Annual Report.
(2) 
Results for fiscal year 2015 include a gain on the sale of HCA of $3.9 million ($2.5 million, net of tax), a $7.2 million ($5.7 million, net of tax) impairment of inventories and $10.4 million ($8.0 million, net of tax) in additional depreciation due to fleet changes. Additional discussion of these items and other significant items in fiscal year 2015 is included under Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Overview of Operating Results — Fiscal Year 2016 Compared to Fiscal Year 2015” included elsewhere in this Annual Report.
(3) 
Results for fiscal year 2014 include a gain on the sale of the FB Entities of $103.9 million ($67.9 million, net of tax), $12.7 million ($8.3 million net of tax) in charges related to the cancellation of a potential financing, a $12.7 million ($10.1 million, net of tax) write-down of inventory spare parts to the lower of cost or market value and $13.6 million ($8.8 million, net of tax) in lower earnings from Líder resulting primarily from a tax amnesty payment Líder made to the Brazilian government. Additional discussion of these items and other significant items in fiscal year 2014 is included under Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Overview of Operating Results — Fiscal Year 2015 Compared to Fiscal Year 2014” included elsewhere in this Annual Report.
(4) 
Results for fiscal year 2013 include a gain on disposal of assets of $8.1 million ($6.4 million, net of tax), the retirement of our 7 ½% Senior Notes (redemption premium and write-off of deferred financing costs) of $17.5 million ($11.4 million, net of tax), additional inventory allowance of $2.8 million ($2.2 million, net of tax), the correction of a calculation error related to foreign currency derivative transactions increasing our earning from Líder by $2.8 million ($1.8 million, net of tax), severance costs in the Southern North Sea of $2.2 million ($1.7 million, net of tax), the reversal of accrued maintenance cost for the sale of AS332Ls that ultimately did not execute of $0.9 million ($0.7 million, net of tax) and the write-off of deferred financing fees for the 364-Day Term Loan of $2.1 million ($1.3 million, net of tax).
(5) 
Results for fiscal year 2012 include a loss on disposal of assets of $31.7 million ($26.0 million, net of tax), a $25.9 million ($18.5 million, net of tax) write-down of inventory spare parts to lower of cost or market value, an impairment charge of $2.7 million ($2.7 million, net of tax) for two medium aircraft, a $2.7 million ($1.7 million, net of tax) impairment charge resulting from the abandonment of certain assets located in Creole, Louisiana as we ceased operations from that location, $2.1 million ($1.4 million, net of tax) in direct costs associated with the sale of 11 AS332L aircraft and $0.8 million in tax expense related to various tax items.
(6) 
Results of operations and financial position of companies that we have acquired have been included beginning on the respective dates of acquisition and include Airnorth (January 2015), Eastern Airways (February 2014) and Rotorwing Leasing Resources, L.L.C. (“RLR”) (July 2011). Amounts also include our investment in Cougar (October 2012). On July 14, 2013, we sold our 50% interest in the FB Entities and on November 21, 2014, we sold our 50% interest in HCA.
(7) 
Includes long-term debt and current maturities of long-term debt.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with “Forward-Looking Statements,” Item 1A. “Risk Factors” and our Consolidated Financial Statements for fiscal years 2016, 2015 and 2014, and the related notes thereto, all of which are included elsewhere in this Annual Report.
Executive Overview
This Executive Overview only includes what management considers to be the most important information and analysis for evaluating our financial condition and operating performance. It provides the context for the discussion and analysis of the financial information that follows and does not disclose every item impacting our financial condition and operating performance.
See discussion of our business and the operations within our Industrial Aviation Services Segment under Part I. Item 1. “Business — Overview” included elsewhere in this Annual Report.
Our Strategy
Our goal is to strengthen our position as the leading industrial aviation services provider to the offshore energy industry and a leading industrial aviation services provider for civilian SAR and to pursue additional business opportunities that leverage our strengths in these markets. We intend to employ the following well defined business/commercial and capital allocation strategies to achieve this goal:
Business/Commercial Strategy
Be the preferred industrial aviation services provider. We are positioned in the market to be the preferred provider of industrial aviation services by maintaining strong relationships with our clients and providing a high level of safety and operating reliably. This differentiation is maintained because of our focus on our cornerstone philosophy of “Target Zero Accidents”, “Target Zero Downtime” and “Target Zero Complaints” allowing us to achieve “Operational Excellence”.  Operational Excellence means we maintain close relationships with field operations, corporate management and contacts at our oil and gas clients and governmental agencies which we believe help us better anticipate client needs and provide them reliable service. We provide our clients operational predictability by positioning the right assets in the right place at the right time. This in turn allows us to better manage our fleet utilization and capital investment program and drive internal efficiencies.  By better understanding and delivering on our clients’ needs, we effectively compete against other industrial aviation service providers with better aircraft optionality, client service, and reliability, not just on price and safety. In October 2014, we, along with four major helicopter operators, formally launched HeliOffshore. HeliOffshore is an industry organization with the primary goal of enhancing the already strong safety record of the offshore helicopter industry by sharing best practices in automation, performance monitoring, operating procedures, and advanced technology to establish common global flight standards. We believe this will make our sector a sustainably reliable and dependable logistics option for the oil and gas industry.
Grow our business while managing our assets. We plan to continue to grow our business globally and increase our revenue and profitability over time, while managing through cyclical downturns in the energy industry or governmental spending reductions or modifications. We conduct flight operations in most major oil and gas producing regions of the world, and through our strong relationships with our existing clients, we are aware of future business opportunities in the markets we currently serve that would allow us to grow through new contracts. Additionally, new opportunities may result in growth through acquisitions, participation with existing unconsolidated affiliates, investing in new companies, or creating partnerships and alliances with existing industry participants or in new sectors of the air transport industry. We are also actively managing our aircraft fleet with the expressed goal of renewing the fleet with newer technology aircraft over time, while also reducing the number of fleet types we operate. We expect that a reduction in the number of fleet types we operate will allow us to realize operating, maintenance, inventory and supply chain efficiencies across a more standardized global fleet of aircraft.

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Sustaining Operational Excellence. We continue to invest in operations transformation across our organization, with the goal of developing and sustaining industry differentiation through Operational Excellence. We define our objective of ongoing improvement across four strategic areas: client alignment, operational excellence, exceptional people and profitable growth.  We strive for the highest standards in safety performance, mission execution, people management and financial discipline. We have appointed a number of global account and business development executives to support our drive to deliver Operational Excellence to our clients.  We are also working to improve operational performance through our global supply chain and fleet management groups.  We are in the process of further standardizing, simplifying and integrating our business processes across our global operations so we can better provide more consistent and high quality service delivery.  We have invested in two new technology platforms, eFlight and a new ERP platform, to support flight operations and activities such as finance, supply chain and maintenance.  The expected benefits of these efforts in addition to a scalable platform for growth include fewer process steps, decreased cost, better maintenance turnaround, minimization of aircraft downtime, faster billing and collections, reduced inventory levels and lower risk exposure, which should lead to improved margins, asset turnover, cash flow and Bristow Value Added (“BVA”).  We expect the technology execution portion of Operational Excellence to not only improve our differentiated position with our clients but also reduce risk and reinforce our objective of profitable growth.
Capital Allocation Strategy
Our capital allocation strategy is based on three principles as follows:


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Prudent balance sheet management. Throughout our corporate and regional management, we proactively manage our capital allocation plan with a focus on achieving business growth and improving rates of return, within the dictates of prudent balance sheet management. In addition to cash flow generated from operations, we intend to maintain adequate liquidity and manage our capital structure relative to our commitments with external financings when necessary and through the use of operating leases for a target of 35% of our LACE. The target recognizes that we will have variability above or below the target of approximately 5% of our LACE due to timing of leases, purchases, disposals and lease terminations. As of March 31, 2016, commercial helicopters under operating leases accounted for 39% of our LACE. Our adjusted debt to total equity ratio and total liquidity were 119.3% and $359.7 million, respectively, as of March 31, 2016 compared to 99.7% and $369.9 million, respectively, as of March 31, 2015. As of March 31, 2016 and 2015, adjusted debt includes balance sheet debt of $1.1 billion and $0.9 billion, respectively, the net present value of operating leases of $578.3 million and $640.0 million, respectively, letters of credit, bank guarantees and financial guarantees of $11.7 million and $10.7 million, respectively, and the unfunded pension liability of $70.1 million and $99.6 million, respectively. On November 5, 2015, we received $200 million in proceeds from a new two-year term loan facility and used a portion of the proceeds to repay loans outstanding under our $400 million revolving credit facility and fees and expenses related thereto. The additional liquidity under our $400 million revolving credit facility was used for capital expenditures, working capital needs and general corporate purposes. Additionally, we have been working closely with helicopter manufacturers to defer capital expenditures for certain ordered aircraft into future fiscal years to more closely align the expenditures for those aircraft with the expected timing of revenue and cash flow generated by those assets. Our $200 million financing and capital expenditure deferral efforts, along with the sale of idle assets and cost management initiatives, are intended to provide us with increased liquidity to fulfill our capital needs for new aircraft and infrastructure, including for the U.K. SAR contract, and provide additional financial flexibility through the current energy market downturn.
Highest return of BVA. Our internal financial management framework, called BVA, focuses on the returns we deliver across our organization. BVA is a financial performance measure that we use to measure gross cash flow less a capital charge, assumed to be 10.5% of the use of gross invested capital employed. Our goal is to achieve strong improvements in BVA over time by (1) improving the cash returns we earn throughout our organization via Operational Excellence initiatives and capital efficiency improvements as well as through better pricing based on the differentiated value we deliver to clients via the Bristow Client Promise program; (2) deploying more capital into commercial opportunities where management believes we can deliver strong returns and when we believe it will benefit us and our shareholders, including making strategic acquisitions or strategic equity investments; and (3) withdrawing capital from areas where returns are deemed inadequate and unable to be sufficiently improved. When appropriate, we may divest parts of the Company. Improvements in BVA are the primary financial measure in our management incentive plan, which is designed to align the interests of management with shareholders and also encourages management actions that increase the long-term value of the Company.
Balanced shareholder return. We continue to proactively manage our liquidity position with cash flows from operations, as well as external financings discussed above. On May 23, 2016, our board of directors approved a dividend of $0.07 per share, our twenty-first consecutive quarterly dividend. Our board of directors has approved a dividend policy with a goal of an annualized quarterly dividend payout ratio of approximately 20-30% of forward adjusted earnings per share; however actual dividend payments are at the discretion of the board of directors and may not meet or may exceed this ratio. Also, our board of directors has authorized expenditures to repurchase shares of Common Stock since November 2011. Through May 15, 2015, we had repurchased 2,756,419 shares of our Common Stock for a total of $184.8 million since 2011. We did not repurchase any shares of Common Stock during fiscal year 2016. Covenants in our debt agreements restrict our ability to repurchase our Common Stock. For additional information on our repurchases of Common Stock, see “Share Repurchases” in Note 10 to the financial statements elsewhere in this Annual Report. The timing and method of any repurchases under the program will depend on a variety of factors, is subject to our results of operations, financial condition, cash requirements and other factors and restrictions under applicable law and our debt instruments, and may be suspended or discontinued at any time.

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Market Outlook
Our core business is providing industrial aviation services to the worldwide oil and gas industry. We also provide public and private sector SAR services and fixed wing services. Our global operations and critical mass of helicopters provide us with geographic and client diversity which helps mitigate risks associated with a single market or client.
The oil and gas business environment experienced a significant downturn during fiscal years 2015 and 2016. Brent crude oil prices declined from approximately $106 per barrel at July 1, 2014 to $37 per barrel at March 31, 2016, driven by increased global supply and forecasts of reduced demand for crude oil resulting from weaker global economic growth in many regions of the world. The oil price decline has negatively impacted the cash flow of our clients and has resulted in their implementation of measures to reduce operational and capital costs in calendar years 2015 and 2016 compared to 2014 levels, negatively impacting activity during fiscal years 2015 and 2016. These cost reductions are expected to continue in fiscal year 2017. The current price environment has had an impact on both the offshore production and the offshore exploration activity of our clients, with offshore production activity being impacted to a lesser extent. Although the largest share of our revenue relates to oil and gas production and our largest contract, U.K. SAR, is not directly impacted by declining oil prices, the significant drop in the price of crude oil has resulted in the rescaling, delay or cancellation of planned offshore projects which has negatively impacted our operations and could continue to negatively impact our operations in future periods. We continue to expect this “lower for longer” oil price environment to continue in calendar year 2017 with significant uncertainty as to when a recovery will occur.
The SAR market is continuing to evolve and we believe further outsourcing of public SAR services to the private sector will continue in the future, although the timing of these opportunities is uncertain. The clients for our SAR services include both the oil and gas industry and governmental agencies. We are also pursuing other public and oil and gas SAR opportunities for multiple aircraft in various jurisdictions around the globe. We are also pursuing other non-SAR government aircraft logistics opportunities.
As discussed above, we continue to seek ways to operate more efficiently and work with our clients to improve the efficiency of their operations within our “Operational Excellence” strategy. We have reduced operating costs to achieve savings during fiscal year 2016 by implementing operating cost initiatives and further cost reductions and cash savings or capital deferral efforts are planned across our business in fiscal year 2017.
Recent Events
Impact of fleet changes — The management of our global aircraft fleet involves a careful evaluation of the expected demand for industrial aviation services across global energy 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 large 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 aircraft or changes in the expected future use of aircraft within our fleet, we may record gains or losses on aircraft sales, impairment charges for aircraft operating or held for sale, or accelerate or increase depreciation on aircraft used in our operations. In certain instances where a cash return can be made on newer aircraft in excess of the expected return available through the provision of industrial aviation services, we may sell newer aircraft. The number of aircraft sales and the amount of gains and losses recorded on these sales is unpredictable. While aircraft sales are common in our business and are reflected in our operating results, gains and losses on aircraft sales may result in our operating results not reflecting the ordinary operating performance of our primary business, which is providing aircraft services to our clients. The gains and losses on aircraft sales and any impairment charges are not included in the calculation of adjusted EBITDAR, adjusted earnings per share or gross cash flows for purposes of calculating BVA.
As part of an ongoing process to rationalize and simplify our global fleet of commercial helicopters, during fiscal year 2014 we implemented a plan to reduce the number of aircraft types in our fleet to eight model types in approximately five years and six model types in approximately ten years. During fiscal year 2014, we completed our exit from five model types, in fiscal year 2015 we completed our exit from four model types while adding two model types and in fiscal year 2016 we completed our exit from two model types resulting in 11 model types in our fleet as of March 31, 2016. As we modernize our fleet, the introduction of new technology aircraft types temporarily slows fleet type reduction.
During fiscal year 2015, we recorded impairment charges of $36.1 million related to 27 held for sale aircraft, primarily related to one large aircraft type we were in the process of removing from our fleet. Additionally, as we expected to complete the disposal of the remaining aircraft of this type still operating as of March 31, 2015, we adjusted the salvage value and recorded additional depreciation expense of $6.0 million during fiscal year 2015. During fiscal year 2016, we saw further deterioration in market sales for aircraft resulting mostly from an increase in idle aircraft and reduced demand across the offshore energy market. While other markets exist for certain aircraft model types, including utility, firefighting, government, VIP transportation and

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tourism, the market for certain model type aircraft slowed. As a result of these market changes, we recorded impairment charges of $29.6 million related to 16 held for sale aircraft during fiscal year 2016. Additionally, due to changes in estimated salvage values for our fleet of operational aircraft and other changes in the timing of exiting certain aircraft from our operations, we recorded an additional $28.7 million in depreciation expense during fiscal year 2016.
Goodwill impairment — During the three months ended September 30, 2015, we noted rapid and significant declines in the market value of our stock resulting from the downturn in the oil and gas market driven by reduced crude oil prices. We identified this decline in market value of our stock and an overall reduction in expected operating results resulting from the downturn as indicators that the fair value of our goodwill could have fallen below its carrying amount. As a result, we performed an interim goodwill impairment test as of September 30, 2015 and determined that the goodwill associated with our Bristow Norway reporting unit within our Europe Caspian region and associated with our Bristow Academy reporting unit within Corporate and other was impaired. We performed our annual goodwill impairment test as of March 31, 2016 and as a result of a further decline in forecasted operational results determined that all of the goodwill associated with our Africa region and a portion of the goodwill associated with Eastern Airways were impaired. In fiscal year 2016, we recognized a loss of $41.6 million associated with the impairment of goodwill.
Selected Regional Perspectives
Brazil represents a significant part of our long term helicopter growth outlook due to its concentration and size of its offshore oil reserves. However, in the short term, Brazil and specifically, Petrobras, continues to evidence uncertainty as its restructuring efforts have impacted the helicopter industry. Petrobras cancelled its new tenders for multiple medium and large aircraft that were expected to commence in calendar year 2016. While this represents a contraction in short-term demand, Brazil’s impact on long-term helicopter demand is expected to be material. Petrobras represented 60% of Líder’s operating revenue in fiscal year 2015 and 65% of Líder’s operating revenue in calendar year 2015.
Líder also has significant business in the general aviation sector and is the exclusive dealer for Bombardier jet aircraft sales in Brazil. Additionally, Líder has recently secured a position as the exclusive dealer for Honda Jet aircraft sales in Brazil which is expected to add to its aircraft sales business.
Currency fluctuations continue to make it difficult to predict the earnings from our Líder investment. These currency fluctuations, which primarily do not impact Líder’s cash flow from operations, had a significant negative impact on Líder’s results in fiscal years 2014, 2015 and 2016, impacting our earnings from unconsolidated affiliates. Earnings from unconsolidated affiliates, net of losses, on our consolidated statements of operations, is included in calculating adjusted EBITDAR and adjusted net income.
We are subject to competition and the political environment in the countries where we operate. In Nigeria, we have seen an increase in competitive pressure and the application of existing local content regulations that could impact our ability to win future work at levels previously anticipated. In order to properly and fully embrace new regulations, we have made a number of key changes to our operating model in Nigeria, while maintaining safety as our number one priority at all times. The objectives of these changes being (a) enhancing the level of continued compliance by each of Bristow Helicopters Nigeria Ltd. (“BHNL”) and Pan African Airlines Nigeria Ltd. (“PAAN”) with local content regulations, (b) providing technical aviation maintenance services through a wholly-owned Bristow Group entity, BGI Aviation Technical Services Nigeria Limited (“BATS”), and (c) each of BHNL, PAAN and BATS committing to continue to apply and use all key Bristow Group standards and policies, including without limitation our Target Zero safety program, our Code of Business Integrity and our Operations Manuals. As a result of these changes, our ability to continue to consolidate BHNL and PAAN under the current accounting requirements could change.
We conduct business in various foreign countries, and as such, our cash flows and earnings are subject to fluctuations and related risks from changes in foreign currency exchange rates. During fiscal year 2016, our primary foreign currency exposure was related to the British pound sterling, the euro, the Australian dollar, the Norwegian kroner and the Nigerian naira and our unconsolidated affiliates foreign currency exposure is primarily related to the Brazilian real. For details on this exposure and the related impact on our results of operations, see “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” and Note 1 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.

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Overview of Operating Results
The following table presents our operating results and other statement of operations information for the applicable periods:
 
Fiscal Years Ended
March 31,
 
Favorable
(Unfavorable)
 
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except per share
amounts, percentages and flight hours)
 
Gross revenue:
 
 
 
 
 
 
 
 
Operating revenue
$
1,629,547

 
$
1,726,987

 
$
(97,440
)
 
(5.6
)%
 
Reimbursable revenue
85,966

 
131,682

 
(45,716
)
 
(34.7
)%
 
Total gross revenue
1,715,513

 
1,858,669

 
(143,156
)
 
(7.7
)%
 
 
 
 

 
 
 
 
 
Operating expense:
 
 

 
 
 
 
 
Direct cost
1,227,541

 
1,174,991

 
(52,550
)
 
(4.5
)%
 
Reimbursable expense
81,824

 
124,566

 
42,742

 
34.3
 %
 
Depreciation and amortization
136,812

 
114,293

 
(22,519
)
 
(19.7
)%
 
General and administrative
224,645

 
254,158

 
29,513

 
11.6
 %
 
 
1,670,822

 
1,668,008

 
(2,814
)
 
(0.2
)%
 
 
 
 


 
 
 
 
 
Loss on impairment
(55,104
)
 
(7,167
)
 
(47,937
)
 
*

 
Loss on disposal of assets
(30,693
)
 
(35,849
)
 
5,156

 
14.4
 %
 
Earnings from unconsolidated affiliates, net of losses
261

 
(1,771
)
 
2,032

 
114.7
 %
 
 
 
 


 
 
 
 
 
Operating income (loss)
(40,845
)
 
145,874

 
(186,719
)
 
(128.0
)%
 
 
 
 


 
 
 
 
 
Interest expense, net
(34,128
)
 
(29,354
)
 
(4,774
)
 
(16.3
)%
 
Extinguishment of debt

 
(2,591
)
 
2,591

 
*

 
Gain on sale of unconsolidated affiliates

 
3,921

 
(3,921
)
 
*

 
Other income (expense), net
(4,258
)
 
(6,377
)
 
2,119

 
33.2
 %
 
 
 
 


 


 
 
 
Income (loss) before provision for income taxes
(79,231
)
 
111,473

 
(190,704
)
 
(171.1
)%
 
Provision for income taxes
2,082

 
(22,766
)
 
24,848

 
109.1
 %
 
 
 
 


 


 
 
 
Net income (loss)
(77,149
)
 
88,707

 
(165,856
)
 
(187.0
)%
 
Net (income) loss attributable to noncontrolling interests
4,707

 
(4,407
)
 
9,114

 
206.8
 %
 
Net income (loss) attributable to Bristow Group
(72,442
)
 
84,300

 
(156,742
)
 
(185.9
)%
 
Accretion of redeemable noncontrolling interests
(1,498
)
 

 
(1,498
)
 
*

 
Net income (loss) attributable to common stockholders
$
(73,940
)
 
$
84,300

 
$
(158,240
)
 
(187.7
)%
 
 
 
 


 
 
 
 
 
Diluted earnings (loss) per common share
$
(2.12
)
 
$
2.37

 
$
(4.49
)
 
(189.5
)%
 
Operating margin (1)
(2.5
)%
 
8.4
%
 
(10.9
)%
 
(129.8
)%
 
Flight hours (2)
191,850

 
208,813

 
(16,963
)
 
(8.1
)%
 
 
 
 

 
 
 
 
 
Non-GAAP financial measures: (3)
 
 

 
 
 
 
 
Adjusted EBITDAR
$
417,363

 
$
473,824

 
$
(56,461
)
 
(11.9
)%
 
Adjusted EBITDAR margin (1)
25.6
 %
 
27.4
%
 
(1.8
)%
 
(6.6
)%
 
Adjusted net income
$
51,308

 
$
133,963

 
$
(82,655
)
 
(61.7
)%
 
Adjusted diluted earnings per share
$
1.45

 
$
3.77

 
$
(2.32
)
 
(61.5
)%
 

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Table of Contents

 
Fiscal Years Ended
March 31,
 
Favorable
(Unfavorable)
 
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except per share
amounts, percentages and flight hours)
 
Gross revenue:
 
 
 
 
 
 
 
 
Operating revenue
$
1,726,987

 
$
1,516,326

 
$
210,661

 
13.9
 %
 
Reimbursable revenue
131,682

 
153,256

 
(21,574
)
 
(14.1
)%
 
Total gross revenue
1,858,669

 
1,669,582

 
189,087

 
11.3
 %
 
 
 
 
 
 
 
 
 
 
Operating expense:
 
 
 
 
 
 
 
 
Direct cost
1,174,991

 
1,041,575

 
(133,416
)
 
(12.8
)%
 
Reimbursable expense
124,566

 
144,557

 
19,991

 
13.8
 %
 
Depreciation and amortization
114,293

 
95,977

 
(18,316
)
 
(19.1
)%
 
General and administrative
254,158

 
199,814

 
(54,344
)
 
(27.2
)%
 
 
1,668,008

 
1,481,923

 
(186,085
)
 
(12.6
)%
 
 
 
 
 
 
 
 
 
 
Loss on impairment
(7,167
)
 
(12,669
)
 
5,502

 
43.4
 %
 
Loss on disposal of assets
(35,849
)
 
(722
)
 
(35,127
)
 
*

 
Earnings from unconsolidated affiliates, net of losses
(1,771
)
 
12,709

 
(14,480
)
 
(113.9
)%
 
 
 
 
 
 
 
 
 
 
Operating income
145,874

 
186,977

 
(41,103
)
 
(22.0
)%
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(29,354
)
 
(43,218
)
 
13,864

 
32.1
 %
 
Extinguishment of debt
(2,591
)
 

 
(2,591
)
 
*

 
Gain on sale of unconsolidated affiliate
3,921

 
103,924

 
(100,003
)
 
(96.2
)%
 
Other income (expense), net
(6,377
)
 
(2,692
)
 
(3,685
)
 
(136.9
)%
 
 
 
 
 
 
 
 
 
 
Income before provision for income taxes
111,473

 
244,991

 
(133,518
)
 
(54.5
)%
 
Provision for income taxes
(22,766
)
 
(57,212
)
 
34,446

 
60.2
 %
 
 
 
 
 
 
 
 
 
 
Net income
88,707

 
187,779

 
(99,072
)
 
(52.8
)%
 
Net income attributable to noncontrolling interests
(4,407
)
 
(1,042
)
 
(3,365
)
 
*

 
Net income attributable to Bristow Group
$
84,300

 
$
186,737

 
$
(102,437
)
 
(54.9
)%
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share
$
2.37

 
$
5.09

 
$
(2.72
)
 
(53.4
)%
 
Operating margin (1)
8.4
%
 
12.3
%
 
(3.9
)%
 
(31.7
)%
 
Flight hours (2)
208,813

 
195,400

 
13,413

 
6.9
 %
 
 
 
 
 
 
 
 
 
 
Non-GAAP financial measures:(3)
 
 
 
 
 
 
 
 
Adjusted EBITDAR
$
473,824

 
$
433,656

 
$
40,168

 
9.3
 %
 
Adjusted EBITDAR margin (1)
27.4
%
 
28.6
%
 
(1.2
)%
 
(4.2
)%
 
Adjusted net income
$
133,963

 
$
163,176

 
$
(29,213
)
 
(17.9
)%
 
Adjusted diluted earnings per share
$
3.77

 
$
4.45

 
$
(0.68
)
 
(15.3
)%
 
_______________ 
* percentage change not meaningful
(1) 
Operating margin is calculated as operating income divided by operating revenue. Adjusted EBITDAR margin is calculated as adjusted EBITDAR divided by operating revenue.

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(2) 
Excludes flight hours from Bristow Academy and unconsolidated affiliates. Includes flight hours from Eastern Airways and Airnorth fixed wing operations in the U.K., Nigeria and Australia for fiscal years 2016, 2015 and 2014 totaling 41,473, 29,663 and 4,107, respectively.
(3) 
These financial measures have not been prepared in accordance with generally accepted accounting principles (“GAAP”) and have not been audited or reviewed by our independent registered public accounting firm. These financial measures are therefore considered non-GAAP financial measures. Adjusted EBITDAR is calculated by taking our net income and adjusting for interest expense, depreciation and amortization, rent expense (included as a component of direct cost and general and administrative expense), provision for income taxes, gain (loss) on disposal of assets and any special items during the reported periods. See further discussion of our use of the adjusted EBITDAR metric below. Adjusted net income (loss) and adjusted diluted earnings (loss) per share are adjusted for gain (loss) on disposal of assets and any special items during the reported periods. As discussed below, management believes these non-GAAP financial measures provide meaningful supplemental information regarding our results of operations. A description of the adjustments to and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures is as follows:
 
Fiscal Year Ended March 31,
 
2016
 
2015
 
2014
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Adjusted EBITDAR
$
417,363

 
$
473,824

 
$
433,656

Loss on disposal of assets
(30,693
)
 
(35,849
)
 
(722
)
Special items(i)
(82,063
)
 
(17,132
)
 
58,740

Depreciation and amortization
(136,812
)
 
(114,293
)
 
(95,977
)
Rent expense
(211,840
)
 
(164,767
)
 
(105,769
)
Interest expense
(35,186
)
 
(30,310
)
 
(44,938
)
Provision for income taxes
2,082

 
(22,766
)
 
(57,211
)
Net income (loss)
$
(77,149
)
 
$
88,707

 
$
187,779

 
 
 
 
 
 
Adjusted net income
$
51,308

 
$
133,963

 
$
163,176

Loss on disposal of assets(ii)
(22,028
)
 
(28,528
)
 
(574
)
Special items(i) (ii)
(101,722
)
 
(21,135
)
 
24,135

Net income (loss) attributable to Bristow Group
$
(72,442
)
 
$
84,300

 
$
186,737

 
 
 
 
 
 
Adjusted diluted earnings per share
$
1.45

 
$
3.77

 
$
4.45

Loss on disposal of assets (ii)
(0.62
)
 
(0.80
)
 
(0.02
)
Special items(i) (ii)
(2.92
)
 
(0.59
)
 
0.66

Diluted earnings (loss) per share
(2.12
)
 
2.37

 
5.09

_______________ 
(i) 
See information about special items during fiscal years 2016, 2015 and 2014 under “Fiscal Year 2016 Compared to Fiscal Year 2015” and “Fiscal Year 2015 Compared to Fiscal Year 2014” below.
(ii) 
These amounts are presented after applying the appropriate tax effect to each item and dividing by the weighted average shares outstanding during the related period to calculate the earnings per share impact.
(iii) 
Adjusted diluted earnings per share is calculated using the diluted weighted average number of shares outstanding of 34,893,844, 35,528,605 and 36,696,764 for fiscal years 2016, 2015 and 2014, respectively.
Management believes that adjusted EBITDAR, adjusted net income (loss) and adjusted diluted earnings (loss) per share (collectively, the “Non-GAAP measures”) provide relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and regional performance.
Adjusted EBITDAR provides us with an understanding of one aspect of earnings before the impact of investing and financing transactions and income taxes. Additionally, we believe that adjusted EBITDAR provides us with a useful supplemental measure of our operational performance by excluding the financing decisions we make regarding aircraft purchases or leasing. Adjusted EBITDAR should not be considered a measure of discretionary cash available to us for investing in the growth of our business.

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Adjusted net income and adjusted diluted earnings per share present our consolidated results excluding asset dispositions and special items that do not reflect the ordinary earnings of our operations. We believe that these measures are useful supplemental measures because net income and diluted earnings per share include asset disposition effects and special items, and inclusion of these items does not reflect the ongoing operational earnings of our business.
The Non-GAAP measures are not calculated or presented in accordance with GAAP and other companies in our industry may calculate these measures differently than we do. As a result, these financial measures have limitations as analytical and comparative tools and you should not consider these measures in isolation, or as a substitute for analysis of our results as reported under GAAP. In calculating these financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to be inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of the Non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or special items.
Some of the additional limitations of adjusted EBITDAR are:
Adjusted EBITDAR does not reflect our current or future cash requirements for capital expenditures;
Adjusted EBITDAR does not reflect changes in, or cash requirements for, our working capital needs;
Adjusted EBITDAR does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debts;
Adjusted EBITDAR does not reflect the significant rent expense or the cash requirements necessary to make lease payments on our operating leases; and
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDAR does not reflect any cash requirements for such replacements.
The following tables present region adjusted EBITDAR and adjusted EBITDAR margin discussed in “Region Operating Results,” and consolidated adjusted EBITDAR and adjusted EBITDAR margin for fiscal years 2016, 2015 and 2014:
 
Fiscal Year Ended March 31,
2016
 
2015
 
2014
 
 
 
 
 
 
 
(In thousands, except percentages)
Europe Caspian
$
260,329

 
$
260,696

 
$
225,708

Africa
67,827

 
116,757

 
106,553

Americas
92,974

 
135,935

 
136,503

Asia Pacific
65,414

 
59,981

 
45,781

Corporate and other
(69,181
)
 
(99,545
)
 
(80,889
)
Consolidated adjusted EBITDAR
$
417,363

 
$
473,824

 
$
433,656

 
 
 
 
 
 
Europe Caspian
32.1
%
 
32.9
%
 
35.0
%
Africa
27.2
%
 
34.7
%
 
33.3
%
Americas
32.0
%
 
38.7
%
 
38.1
%
Asia Pacific
24.0
%
 
25.2
%
 
23.8
%
Consolidated adjusted EBITDAR margin
25.6
%
 
27.4
%
 
28.6
%

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Fiscal Year 2016 Compared to Fiscal Year 2015
As discussed under “Market Outlook” above, the oil and gas business environment experienced a significant downturn during fiscal years 2015 and 2016 resulting in a decline in crude oil prices and negatively impacting activity with our oil and gas clients. While this decline started in fiscal year 2015, activity and pricing declined further in fiscal year 2016, resulting in a significant decrease in gross revenue for our oil and gas services year-over-year. This decline in revenue was partially offset by the benefit of diversification efforts with the start-up of the U.K. SAR contract in April 2015 and the addition of fixed-wing operations in Australia with the acquisition of Airnorth in January 2015.
Operating revenue from external clients by line of services is as follows:
 
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
 
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
 
 
Oil and gas services
$
1,222,501

 
$
1,498,510

 
$
(276,009
)
 
(18.4
)%
 
 
Fixed wing services
208,538

 
156,196

 
52,342

 
33.5
 %
 
 
U.K. SAR services
177,230

 
48,917

 
128,313

 
262.3
 %
 
 
Corporate and other
21,278

 
23,364

 
(2,086
)
 
(8.9
)%
 
 
Total gross revenue
$
1,629,547

 
$
1,726,987

 
$
(97,440
)
 
(5.6
)%
 
In addition to operational decreases, changes in foreign currency exchange rates during fiscal year 2016 resulted in $98.6 million of the decrease year-over-year. The contribution of fixed-wing revenue from Airnorth in fiscal year 2016 was fully offset by a decline in revenue for Eastern Airways in the U.K. as their business was impacted by the oil and gas market and general economic conditions.
For fiscal year 2016, we reported a net loss of $72.4 million and a diluted loss per share of $2.12 compared to net income of $84.3 million and diluted earnings per share of $2.37 for fiscal year 2015.
The net loss for fiscal year 2016 was significantly impacted by the following items:
Organizational restructuring costs of $19.1 million, which includes severance expense of $15.9 million related to separation programs across our global organization designed to increase efficiency and reduce costs and other restructuring costs of $3.2 million; $11.3 million of the restructuring costs are included in direct costs and $7.8 million are included in general and administrative expense,
A loss on disposal of assets of $22.0 million (primarily consisting of impairment charges on aircraft of $29.6 million), accelerated depreciation expense related to a softening aircraft sales aftermarket and changes in the planned timing of exits from aircraft model types in our fleet of $20.6 million, and $4.0 million of impairment charges on inventory,
Impairment charges on goodwill and intangibles of $38.0 million (included in loss on impairment), and
A non-cash adjustment related to the valuation of deferred tax assets of $20.1 million.
Additionally, diluted loss per share was unfavorably impacted by adjustments in the accretion amount of redeemable noncontrolling interests in Eastern Airways and Airnorth.
Excluding these items, adjusted net income and adjusted diluted earnings per share were $51.3 million and $1.45, respectively, for fiscal year 2016. These adjusted results compare to adjusted net income and adjusted diluted earnings per share of $134.0 million and $3.77, respectively, for fiscal year 2015. Adjusted EBITDAR and adjusted EBITDAR margin, which is adjusted for the same items discussed above and excludes the impact of changes in rent expense and tax charges, was $417.4 million and 25.6%, respectively, in fiscal year 2016 compared to $473.8 million and 27.4% in fiscal year 2015, respectively.
The year-over-year decline in net income and diluted earnings per share (GAAP and adjusted), and in adjusted EBITDAR was driven primarily by the decline in oil and gas revenue discussed above. These declines were partially offset by a reduced impact from changes in foreign currency exchange rates in fiscal year 2016 as the impact on revenue was more than offset by an impact on costs and earnings from unconsolidated affiliates discussed below.
In response to the ongoing downturn, we have implemented cost reduction measures as part of an organizational restructuring, which partially offset the impact of certain higher costs within direct costs and general and administrative expense. See the further discussion of changes in direct costs and general and administrative expense below.

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Our results for fiscal years 2016 and 2015 were also significantly impacted by changes in foreign currency exchange rates, which lowered net income, diluted earnings per share (GAAP and adjusted) and adjusted EBITDAR by $26.6 million, $0.75 and $29.4 million, respectively, in fiscal year 2016 and by $31.4 million, $0.88 and $39.8 million, respectively, in fiscal year 2015. These impacts were primarily reflected in a $22.4 million and a $25.7 million pre-tax reduction in our earnings from unconsolidated affiliates as results related to Líder were impacted by changes in the Brazilian real and the U.S. dollar exchange rate.
Direct costs increased 4.5%, or $52.6 million, year-over-year primarily due to a $45.3 million increase in rent expense and a $13.3 million increase in contract expense primarily related to the establishment of new U.K. SAR bases, a $12.8 million increase in severance expense related to organizational restructuring efforts and a $9.2 million increase in bad debt expense. These increased costs were partially offset by the benefit of organizational restructuring efforts reflected in a $26.8 million decline in salaries and benefits due to a decrease in headcount across all regions and $4.9 million decrease in travel and meals expense.
Reimbursable expense decreased 34.3%, or $42.7 million, primarily due a decline in activity and a contract amendment in our Europe Caspian region.
Depreciation and amortization increased 19.7%, or $22.5 million, to $136.8 million for fiscal year 2016 from $114.3 million for fiscal year 2015. This increase in depreciation and amortization expense is primarily due to an increase in accelerated depreciation of $18.3 million as a result of fleet changes for older aircraft, an increase of $7.1 million due to information technology projects placed into service since the prior year and an increase of $3.8 million due to the addition of Airnorth.
General and administrative expense decreased 11.6%, or $29.5 million, primarily due to a decrease in compensation expense of $11.1 million driven by management’s decision to not award short-term bonuses for fiscal year 2016 and from reduced headcount due to organizational restructuring efforts, a decline in stock price during fiscal year 2016 resulting in a reduction of $13.0 million for the accrual for incentive compensation awards year-over-year, $5.5 million in expense related to CEO succession recorded in fiscal year 2015 and a decrease in training and seminars of $4.1 million due to systems implementation training costs incurred in fiscal year 2015. This decrease was partially offset by an increase of $9.7 million in severance expense associated with the organizational restructuring efforts.
Loss on impairment for fiscal year 2016 includes $49.7 million of goodwill impairment related to our Bristow Norway reporting unit and Eastern Airways within our Europe Caspian region ($25.2 million), Bristow Academy reporting unit within our Corporate and other region ($10.2 million) and Africa region ($6.2 million), $8.1 million impairment of intangible in Eastern Airways and $5.4 million of inventory impairments. For further details, see “Executive Overview – Market Outlook Recent Events Goodwill Impairment.” Loss on impairment for fiscal year 2015 includes $7.2 million of inventory impairments.
Loss on disposal of assets decreased $5.2 million to a loss of $30.7 million for fiscal year 2016 from a loss of $35.8 million for fiscal year 2015. The loss on disposal of assets in fiscal year 2016 included impairment charges of $29.6 million related to 16 held for sale aircraft and a loss of $1.1 million from the sale of aircraft and other equipment. During fiscal year 2015, the loss on disposal of assets included impairment charges of $36.1 million related to 27 held for sale aircraft partially offset by a gain of $0.2 million from the sale of 44 aircraft and other equipment.
Earnings from unconsolidated affiliates, net of losses, increased $2.0 million to earnings of $0.3 million for fiscal year 2016 from a loss of $1.8 million in fiscal year 2015. The increase in earnings from unconsolidated affiliates, net of losses, primarily resulted from a decrease in losses from investment in Líder in Brazil to $0.1 million of losses in fiscal year 2016 from $4.2 million in losses in fiscal year 2015 primarily due to less of an unfavorable impact of foreign currency exchange rates. Our earnings from Líder in fiscal years 2016 and 2015 were reduced by the unfavorable impact of foreign currency exchange rates changes of $22.4 million and $25.7 million, respectively.
Interest expense, net, increased 16.3%, or $4.8 million, year-over-year primarily due to a decrease in capitalized interest resulting from a decrease in construction in progress during fiscal year 2016.
Other income (expense), net decreased $2.1 million to a loss of $4.3 million in fiscal year 2016 from a loss of $6.4 million in fiscal year 2015. During fiscal year 2015, we incurred $2.6 million in premium and fees for the repurchase of a portion of our 6 ¼% Senior Notes, which is included in other income (expense), net on our consolidated statements of operations.
For further details on income tax expense, see “Region Operating Results – Taxes” included elsewhere in this Annual Report.

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As discussed above, our results for fiscal year 2016 were impacted by a number of special items. In fiscal year 2015, special items that impacted our results included a gain on the sale of an unconsolidated affiliate, North America restructuring, CEO succession costs, the repurchase of a portion of our 6 ¼% Senior Notes (the repurchase premium and write-off of deferred financing fees), an accounting correction, the accrued maintenance cost reversal, additional depreciation expense related to fleet changes and Nigeria severance costs. The items noted in fiscal years 2016 and 2015 have been identified as special items as they are not considered by management to be part of our ongoing operations when assessing and measuring the operational and financial performance of the Company. The impact of these items on our adjusted EBITDAR, adjusted net income and adjusted diluted earnings per share is as follows:
 
Fiscal Year Ended  
 March 31, 2016
 
Adjusted
EBITDAR
 
Adjusted
Net Income
 
Adjusted
Diluted Earnings
Per Share
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Organizational restructuring costs
$
(26,959
)
 
$
(19,094
)
 
$
(0.54
)
Additional depreciation expense resulting from fleet changes

 
(20,577
)
 
(0.58
)
Impairment of inventories
(5,439
)
 
(4,004
)
 
(0.11
)
Goodwill and intangible impairment
(49,665
)
 
(37,979
)
 
(1.08
)
Tax valuation allowance

 
(20,068
)
 
(0.57
)
Accretion of redeemable noncontrolling interests

 

 
(0.04
)
Total special items
$
(82,063
)
 
$
(101,722
)
 
(2.92
)
 
 
 
 
 
 
 
Fiscal Year Ended  
 March 31, 2015
 
Adjusted
EBITDAR
 
Adjusted
Net Income
 
Adjusted
Diluted  Earnings
Per Share
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Gain on sale of unconsolidated affiliate
$
3,921

 
$
2,549

 
$
0.07

North America restructuring
(1,611
)
 
(1,047
)
 
(0.03
)
CEO succession
(5,501
)
 
(3,576
)
 
(0.10
)
Impairment of inventories
(7,167
)
 
(5,734
)
 
(0.16
)
Repurchase of 6¼% Senior Notes
(2,591
)
 
(2,113
)
 
(0.06
)
Accrued maintenance cost reversal
813

 
642

 
0.02

Accounting correction
(4,071
)
 
(3,216
)
 
(0.09
)
Additional depreciation expense resulting from fleet changes

 
(7,992
)
 
(0.22
)
Nigeria severance costs
(925
)
 
(648
)
 
(0.02
)
Total special items
$
(17,132
)
 
$
(21,135
)
 
(0.59
)
Fiscal Year 2015 Compared to Fiscal Year 2014
Gross revenue increased 11.3%, or $189.1 million, year-over-year primarily due to the addition of new contracts with improved contract terms, improvement in flight activity in oil and gas services revenue and the addition of fixed wing and U.K. SAR services under our existing Gap SAR contract. Operating revenue from external clients by line of services is as follows:
 
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
 
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
 
 
Oil and gas services
$
1,498,510

 
$
1,427,237

 
$
71,273

 
5.0
 %
 
 
Fixed wing services
156,196

 
21,234

 
134,962

 
635.6
 %
 
 
U.K. SAR services
48,917

 
37,789

 
11,128

 
29.4
 %
 
 
Corporate and other
23,364

 
30,066

 
(6,702
)
 
(22.3
)%
 
 
Total gross revenue
$
1,726,987

 
$
1,516,326

 
$
210,661

 
13.9
 %
 
For fiscal year 2015, we reported net income of $84.3 million and diluted earnings per share of $2.37 compared to net income of $186.7 million and diluted earnings per share of $5.09 for fiscal year 2014.

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Net income for fiscal year 2015 was significantly impacted by the following items:
An increase in general and administrative expense of $54.3 million driven by higher compensation costs of $20.1 million primarily related to improved BVA year-over-year and stock price performance versus our peer group, and higher professional fees of $13.1 million primarily related to ongoing Operations Transformation and other initiatives,
A loss on disposal of assets of $35.8 million (primarily due to non-cash impairment charges related to aircraft of $36.1 million) and non-cash inventory impairment charges of $7.2 million, and
Additional depreciation expense related to fleet changes of $10.4 million.
Excluding these items, adjusted net income and adjusted diluted earnings per share were $134.0 million and $3.77, respectively, for fiscal year 2015. These adjusted results compare to adjusted operating income, adjusted net income and adjusted diluted earnings per share of $233.5 million, $163.2 million and $4.45, respectively, for fiscal year 2014.
Our results for fiscal year 2015 were significantly impacted by changes in foreign currency exchange rates, which lowered net income and diluted earnings per share (GAAP and adjusted) and adjusted EBITDAR by $31.4 million, $0.88 and $39.8 million, respectively, in fiscal year 2015 and by $8.0 million, $0.22 and $9.7 million, respectively, in fiscal year 2014. These impacts were primarily reflected in a $20.3 million and a $3.2 million after-tax reduction in our earnings from unconsolidated affiliates, net of losses, as results related to Líder were impacted by changes in the Brazilian real and the U.S. dollar exchange rate. In addition to foreign currency losses discussed above, net income for fiscal year 2015 was impacted by a $59.0 million increase in rent expense primarily related to an increase in the number of aircraft leased compared to fiscal year 2014, an increase in general and administrative expense of $54.3 million driven by higher compensation costs of $20.1 million primarily related to improved BVA year-over-year and stock price performance versus our peer group, higher professional fees of $13.1 million primarily related to ongoing Operations Transformation and other initiatives and a loss on disposal of assets of $35.8 million (primarily due to non-cash impairment charges related to aircraft of $36.1 million).
The decline in our results was partially offset by the positive impact from the addition of Eastern Airways in our Europe Caspian region, the startup of new contracts in our Asia Pacific region, improved contract terms in our Africa region and the recovery of $19.6 million from original equipment manufacturers provided in the form of maintenance credits resulting from settlements for aircraft performance issues and related costs that benefited results in our regions. Additionally, fiscal year 2015 net income benefited from the reversal of $4.4 million of bad debt expense in our Americas region related to a client that had previously filed for bankruptcy for which we subsequently settled and collected funds.
Adjusted EBITDAR and adjusted EBITDAR margin, which is adjusted for the same items discussed above and excludes the impact of changes in rent expense, was $473.8 million and 27.4%, respectively, in fiscal year 2015 compared to $433.7 million and 28.6% in fiscal year 2014, respectively. Excluding the foreign currency impacts in fiscal years 2015 and 2014, adjusted EBITDAR would have been $513.6 million and $443.4 million, respectively, and adjusted EBITDAR margin would have been 28.8% and 28.9%, respectively. This increase in adjusted EBITDAR and in adjusted EBITDAR margin reflects the increase in activity, startup of new contracts, improved pricing and maintenance credits discussed above, partially offset by the foreign currency exchange impact and general and administrative expense increase.
Direct costs increased 12.8%, or $133.4 million, primarily due to a $63.8 million increase in salaries and benefits related to increased activity and the addition of Eastern Airways in February 2014, a $56.8 million increase in rent expense primarily due to an increase in the number of leased aircraft, an increase of $16.4 million in fuel primarily due to the addition of Eastern Airways and an increase of $5.0 million in travel and meals due to an increase in activity, partially offset by a $18.5 million decline in maintenance expense. The decrease in maintenance expense is primarily due to the maintenance credits discussed above.
Reimbursable expense declined 13.8%, or $20.0 million, primarily due to a decline in our Europe Caspian region.
Depreciation and amortization increased 19.1%, or $18.3 million, primarily due to the addition of Eastern Airways in February 2014 and a decrease in salvage values for some older aircraft operating in Australia, Nigeria and Trinidad, partially offset by a decrease in our Americas region due to the planned closure of our Alaska operations.
General and administrative expense increased 27.2%, or $54.3 million, primarily due to higher compensation costs of $20.1 million primarily related to improved BVA year-over-year and stock price performance versus our peer group, higher professional fees of $13.1 million primarily related to ongoing Operations Transformation and other initiatives and higher other general and administrative expenses of $21.1 million primarily related to information technology expenses and training (including implementation and training costs for a new ERP system), repairs and maintenance expense, insurance, utilities and travel expense. Additionally, we recorded $5.5 million of additional expense related to CEO succession.

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Loss on impairment for fiscal years 2015 and 2014 included $7.2 million and $12.7 million of inventory impairments, respectively, to write-down certain spare parts within inventories to market value. These impairment charges resulted from the identification of inventory that was dormant, obsolete or excess related to changes to our fleet strategy and plans.
Loss on disposal of assets increased $35.1 million to a loss of $35.8 million for fiscal year 2015 from a loss of $0.7 million for fiscal year 2014. The loss on disposal of assets in fiscal year 2015 included impairment charges of $36.1 million related to 27 held for sale aircraft, partially offset by a gain of $0.2 million from the sale of 44 aircraft and other equipment. During fiscal year 2014, the loss on disposal of assets included impairment charges of $6.8 million related to 11 held for sale aircraft, partially offset by a gain of $6.1 million from the sale of 46 aircraft and other equipment.
Earnings from unconsolidated affiliates, net of losses, decreased $14.5 million to a loss of $1.8 million for fiscal year 2015 from earnings of $12.7 million in fiscal year 2014. The decrease in earnings from unconsolidated affiliates, net of losses, primarily resulted from lower earnings of $7.1 million from our investment in Líder in Brazil, a decrease of $3.2 million in earnings due to the sale of our investment in the FB Entities in July 2013 and a decrease in dividends of $2.0 million from our cost method investment in Egypt. Our earnings from Líder in fiscal years 2015 and 2014 were reduced by the unfavorable impact of foreign currency exchange rate changes of $25.7 million and $3.9 million, respectively. During fiscal year 2014, we recorded $13.6 million of lower earnings from Líder due to additional tax charges which resulted primarily from a tax amnesty payment Líder made to the Brazilian government. The $13.6 million was a special item and excluded from adjusted operating income, adjusted EBITDAR, adjusted net income and adjusted earnings per share in fiscal year 2014.
Interest expense, net, decreased 32.1%, or $13.9 million, primarily due to the write-off of $12.7 million of deferred financing fees related to a potential financing in fiscal year 2014.
Other income (expense), net decreased $3.7 million to a loss of $6.4 million in fiscal year 2015 from a loss of $2.7 million in fiscal year 2014 due to changes in foreign currency exchange rates during fiscal year 2015 driven by the strengthening of the U.S. dollar versus the Australian dollar, British pound sterling, the euro, Norwegian kroner and Nigerian naira as well as a gain of $1.1 million on the sale of intellectual property during fiscal year 2014.
For further details on income tax expense, see “Region Operating Results – Taxes” included elsewhere in this Annual Report.
As discussed above, our results for fiscal year 2015 were impacted by a number of special items. These special items, on a combined basis, decreased our net income by $21.1 million and diluted earnings per share by $0.59. In fiscal year 2014, special items that impacted our results included a gain on the sale of an unconsolidated affiliate, cancellation of potential financing, the impairment of inventories, restructuring items, Líder taxes, Mexico goodwill impairment, Nigeria fire and the CEO succession and officer separation. The items noted in fiscal years 2015 and 2014 have been identified as special items as they are not considered by management to be part of our ongoing operations when assessing and measuring the operational and financial performance of the Company. The impact of these items on our adjusted EBITDAR, adjusted net income and adjusted diluted earnings per share is as follows:
 
Fiscal Year Ended  
 March 31, 2014
 
Adjusted
EBITDAR
 
Adjusted
Net Income
 
Adjusted
Diluted  Earnings
Per Share
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Gain on sale of unconsolidated affiliate
$
103,924

 
$
67,897

 
$
1.85

Cancellation of potential financing

 
(8,276
)
 
(0.23
)
Impairment of inventories
(12,669
)
 
(10,071
)
 
(0.27
)
Restructuring items
(5,521
)
 
(6,466
)
 
(0.18
)
Líder taxes
(13,587
)
 
(8,832
)
 
(0.24
)
Mexico goodwill impairment

 
(374
)
 
(0.01
)
Nigeria fire
(8,569
)
 
(6,598
)
 
(0.18
)
CEO succession and officer separation
(4,838
)
 
(3,145
)
 
(0.09
)
Total special items
$
58,740

 
$
24,135

 
0.66


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Table of Contents

Region Operating Results
The following tables set forth certain operating information for the regions comprising our Industrial Aviation Services segment. Intercompany lease revenue and expense are eliminated from our segment reporting, and depreciation expense of aircraft is presented in the region that operates the aircraft.
Set forth below is a discussion of operations of our regions. Our consolidated results are discussed under “Results of Operations” above.
Europe Caspian
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
2016
 
2015
 
2014
 
2016 vs 2015
 
2015 vs 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Operating revenue
$
809,914

 
$
792,293

 
$
645,025

 
$
17,621

 
2.2
 %
 
$
147,268

 
22.8
 %
Earnings from unconsolidated affiliates, net of losses
$
310

 
$
1,107

 
$
4,715

 
$
(797
)
 
(72.0
)%
 
$
(3,608
)
 
(76.5
)%
Operating income
$
50,406

 
$
128,543

 
$
122,647

 
$
(78,137
)
 
(60.8
)%
 
$
5,896

 
4.8
 %
Operating margin
6.2
%
 
16.2
%
 
19.0
%
 
(10.0
)%
 
(61.7
)%
 
(2.8
)%
 
(14.7
)%
Adjusted EBITDAR
$
260,329

 
$
260,696

 
$
225,708

 
$
(367
)
 
(0.1
)%
 
$
34,988

 
15.5
 %
Adjusted EBITDAR margin
32.1
%
 
32.9
%
 
35.0
%
 
(0.8
)%
 
(2.4
)%
 
(2.1
)%
 
(6.0
)%
The Europe Caspian region comprises all of our operations and affiliates in Europe, including oil and gas operations in the U.K. and Norway, Eastern Airways fixed wing operations and public sector SAR operations in the U.K. and our operations in Turkmenistan.
Fiscal Year 2016 Compared to Fiscal Year 2015
The year-over-year increase in operating revenue was primarily driven by the start-up of seven U.K. SAR bases during fiscal year 2016, which contributed $128.3 million in additional operating revenue, and the addition of a new oil and gas contract that commenced operations in late fiscal year 2015 and ended during the three months ended March 31, 2016 and contributed $42.1 million in additional operating revenue in fiscal year 2016. Partially offsetting these increases was a decrease in operating revenue for fiscal year 2016 reflecting an impact from the downturn in the oil and gas industry, which has resulted in decreased activity levels with our oil and gas clients and impacted our revenue for Eastern Airways. Eastern Airways contributed $133.5 million and $144.8 million in operating revenue and $21.5 million and $29.4 million in adjusted EBITDAR for fiscal years 2016 and 2015, respectively.
Additionally, a substantial portion of our operations in the Europe Caspian region are contracted in British pound sterling and Norwegian kroner, both of which weakened significantly against the U.S. dollar in fiscal year 2016. Foreign currency exchange rate changes resulted in a $65.8 million reduction in revenue for our Europe Caspian region year-over-year.
Operating income and operating margin were significantly impacted by impairments of goodwill and intangibles totaling $21.2 million relating to Eastern Airways. Operating income and operating margin for the fiscal year 2016 was also impacted by an impairment on goodwill for operations in Norway totaling $12.1 million. These impairment charges resulted from lower forecasted results for future periods driven by the ongoing oil and gas market downturn. For additional details on the impairment of goodwill, see Note 1 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report. The reduction in oil and gas and fixed wing revenue and the impairment charges were the primary drivers of the year-over-year decrease in operating income and operating margin. Operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin were negatively impacted by changes in foreign currency exchange rates, which reduced operating income by $3.6 million and adjusted EBITDAR by $11.9 million compared to fiscal year 2015. The changes in foreign currency exchange rates had minimal impact on operating margin. However, adjusted EBITDAR margin would have been 31.1% in fiscal year 2016 excluding foreign currency exchange rates. Adjusted EBITDAR margin declined slightly compared to fiscal year 2015 with the impact from the downturn in the offshore energy market and foreign currency exchange rate changes only being partially offset by the start-up of U.K. SAR bases and cost reduction activities. The involuntary separation program initiated in July 2015, combined with a prior voluntary separation program, resulted in $6.7 million in severance expense during fiscal year 2016, which is excluded from adjusted EBITDAR and adjusted EBITDAR margin.

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Additionally, operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin in fiscal years 2016 and 2015 benefited from the recovery of $14.3 million and $7.5 million, respectively, in credits for maintenance expense from original equipment manufacturers resulting from settlement for aircraft performance and transportation costs.
Fiscal Year 2015 Compared to Fiscal Year 2014
Bristow Helicopters acquired a 60% interest in Eastern Airways in February 2014, which contributed to an increase of $123.6 million in operating revenue and $25.2 million in adjusted EBITDAR for fiscal year 2015 representing a significant portion of improvement over fiscal year 2014 in our Europe Caspian region. Additionally, the operations of our Europe Caspian region continued to expand since fiscal year 2014 with the net addition of 15 LACE. These additional aircraft, as well as an overall increase in activity with existing clients and under new contracts, resulted in an additional $32.7 million of operating revenue in fiscal year 2015.
The increases in operating income and adjusted EBITDAR were driven by revenue growth. Other expenses also increased as a result of the addition of Eastern Airways and the increase in activity levels, such as salaries and benefits of $45.8 million ($33.9 million from Eastern Airways), fuel expense of $15.7 million ($16.9 million from Eastern Airways) and rent expense of $40.9 million ($6.5 million from Eastern Airways). Additionally, operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin benefited from the recovery of $7.5 million and $8.5 million in credits for maintenance expense from original equipment manufacturers during fiscal years 2015 and 2014, respectively, resulting from settlements for aircraft performance and transportation costs. During fiscal year 2014, insurance expense was $4.6 million higher due to a fire in Nigeria which resulted in an increase in premiums across all regions. Also in fiscal year 2014, we incurred $2.1 million in severance costs as a result of the termination of a contract in the Southern North Sea. The $4.6 million and $2.1 million are not included in adjusted EBITDAR or adjusted EBITDAR margin in fiscal year 2014. These items were partially offset by an unfavorable impact from foreign currency exchange rate changes of $22.5 million and the decrease in earnings from unconsolidated affiliates, net losses of $3.6 million due to the sale of the FB Entities in July 2013 and sale of HCA in November 2014. Despite the increase in adjusted EBITDAR, adjusted EBITDAR margin decreased during fiscal year 2015 due to an unfavorable impact from foreign currency exchange rate changes and lower margin at Eastern Airways.
Africa
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
2016
 
2015
 
2014
 
2016 vs 2015
 
2015 vs 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Operating revenue
$
249,545

 
$
336,005

 
$
320,266

 
$
(86,460
)
 
(25.7
)%
 
$
15,739

 
4.9
 %
Earnings from unconsolidated affiliates, net of losses
$
2,068

 
$
2,068

 
$
4,043

 
$

 
 %
 
$
(1,975
)
 
(48.8
)%
Operating income
$
19,702

 
$
91,758

 
$
84,999

 
$
(72,056
)
 
(78.5
)%
 
$
6,759

 
8.0
 %
Operating margin
7.9
%
 
27.3
%
 
26.5
%
 
(19.4
)%
 
(71.1
)%
 
0.8
%
 
3.0
 %
Adjusted EBITDAR
$
67,827

 
$
116,757

 
$
106,553

 
$
(48,930
)
 
(41.9
)%
 
$
10,204

 
9.6
 %
Adjusted EBITDAR margin
27.2
%
 
34.7
%
 
33.3
%
 
(7.5
)%
 
(21.6
)%
 
1.4
%
 
4.2
 %
The Africa region comprises all of our operations and affiliates on the African continent, including Nigeria, Tanzania, and Egypt.
Fiscal Year 2016 Compared to Fiscal Year 2015
Operating revenue for Africa decreased due to an overall decrease in activity compared to fiscal year 2015 driven by the downturn in the oil and gas industry. Activity declined with some customers and certain contracts ended, reducing revenue by $85.8 million, and the temporary operational suspension of our S-76 fleet reduced revenue by $6.8 million, which was only partially offset by a $5.7 million increase due to new contracts.
Operating income and operating margin were significantly impacted by an impairment of goodwill for operations in Africa of $6.2 million during fiscal year 2016, which resulted from lower forecasted results for future periods driven by the ongoing oil and gas market downturn. For additional details on the impairment of goodwill, see Note 1 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.
Operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin decreased in fiscal year 2016 primarily due to the decline in activity, $4.7 million of bad debt expense recorded in fiscal year 2016 and an increase in depreciation and amortization expense of $16.8 million primarily as a result of management’s decision to exit certain aircraft fleet types operating

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Table of Contents

in this market sooner than originally anticipated. Offsetting these declines were decreases in salaries and benefits expense of $21.1 million, maintenance expense of $7.2 million, training expense of $3.3 million and travel and meals expense of $1.6 million due to cost reduction initiatives implemented in this region as a part of organizational restructuring efforts. Additionally, during fiscal years 2016 and 2015, we recorded $5.2 million and $0.9 million in severance expense resulting from voluntary and involuntary separation programs as part of these restructuring efforts, which is excluded from adjusted EBITDAR and adjusted EBITDAR margin. Adjusted EBITDAR and adjusted EBITDAR margin decreased primarily due to the decline in activity in this region and $4.7 million of bad debt expense.
As previously discussed, we have seen recent changes in the Africa region as a result of increased competition entering the market. Additionally, changing regulations and political environment have made, and are expected to continue to make, our operating results for Nigeria unpredictable. Market uncertainty related to the oil and gas downturn has continued in this region putting smaller clients under pressure as activity declines, which has reduced our activity levels and overall pricing. We implemented cost reduction measures in advance of these reductions and expect additional efficiencies in the future.
On August 12, 2015, a Sikorsky S-76C+ operated by us was involved in an accident in which two of our crew members and four passengers were fatally injured. There were six other passengers on board who suffered injuries in the accident. The Nigerian Accident Investigation Bureau issued its preliminary report related to the accident on September 21, 2015. The cause(s) of the accident remain unknown at this time. We continue to work with authorities in their investigation.
On February 3, 2016, a Sikorsky S-76C++ operated by us was involved in a controlled water landing with minor injuries reported for the nine passengers and two crew onboard the aircraft. The cause(s) of the incident remain unknown at this time. We are fully cooperating with local authorities in their investigation to determine the cause. Following standard practice and out of an abundance of caution, the Nigerian Civil Aviation Authority (the “NCAA”) advised us to temporarily suspend operation of the 16 Sikorsky S-76C model aircraft we operate in Nigeria until they completed their review of our operations and meetings with our management. We cooperated fully with the NCAA during the audit and resumed service of the Sikorsky S-76 aircraft in early March 2016 following the audit’s completion.
Fiscal Year 2015 Compared to Fiscal Year 2014
Operating revenue for Africa increased in fiscal year 2015 primarily due to increased activity from new and certain existing contracts in Nigeria which increased operating revenue by $23.9 million, improved contract terms in Nigeria which increased operating revenue by $11.5 million and a contract in Tanzania that started in the fourth quarter of fiscal year 2014 which increased operating revenue by $14.7 million, partially offset by lower activity from other contracts in Nigeria which decreased operating revenue by $32.7 million.
Operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR improved as a result of better cost management resulting in decreases in maintenance expense ($4.8 million), freight ($2.9 million) and travel and meals ($0.9 million), partially offset by an unfavorable impact from foreign currency exchange rate changes of $1.2 million. Additionally, operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin benefited from the recovery of $2.8 million in credits for maintenance expense from original equipment manufacturers during fiscal year 2015 resulting from settlements for aircraft performance and transportation costs. In fiscal year 2015, management made the decision to exit certain fleet types operating in this region earlier than originally anticipated. We recorded additional depreciation expense of $1.9 million related to five medium and one fixed wing aircraft operating in this region. During fiscal year 2014, insurance expense was $1.2 million higher due to a fire in Nigeria resulting in an increase in premiums across all regions. The $1.9 million of additional depreciation expense in fiscal year 2015 and $1.2 million of higher insurance expense in fiscal year 2014 is not included in adjusted EBITDAR or adjusted EBITDAR margin.

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Americas
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
2016
 
2015
 
2014
 
2016 vs 2015
 
2015 vs 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Operating revenue
$
290,299

 
$
351,429

 
$
358,680

 
$
(61,130
)
 
(17.4
)%
 
$
(7,251
)
 
(2.0
)%
Earnings from unconsolidated affiliates, net of losses
$
(2,117
)
 
$
(4,946
)
 
$
3,951

 
$
2,829

 
57.2
 %
 
$
(8,897
)
 
(225.2
)%
Operating income
$
34,463

 
$
79,176

 
$
69,480

 
$
(44,713
)
 
(56.5
)%
 
$
9,696

 
14.0
 %
Operating margin
11.9
%
 
22.5
%
 
19.4
%
 
(10.6
)%
 
(47.1
)%
 
3.1
%
 
16.0
 %
Adjusted EBITDAR
$
92,974

 
$
135,935

 
$
136,503

 
$
(42,961
)
 
(31.6
)%
 
$
(568
)
 
(0.4
)%
Adjusted EBITDAR margin
32.0
%
 
38.7
%
 
38.1
%
 
(6.7
)%
 
(17.3
)%
 
0.6
%
 
1.6
 %
The Americas region comprises all our operations and affiliates in North America and South America, including Brazil, Canada, Trinidad and the U.S. Gulf of Mexico.
Fiscal Year 2016 Compared to Fiscal Year 2015
Operating revenue decreased in fiscal year 2016 primarily due to a decrease in the number of small and medium aircraft on contract in the U.S. Gulf of Mexico, primarily resulting from the oil and gas downturn, which reduced operating revenue by $58.7 million in fiscal year 2016, a decrease of $8.4 million in Brazil due to fewer aircraft leased to Líder and a decrease of $3.7 million in Trinidad primarily due to the end of a contract. These decreases were partially offset by new contracts in Suriname and Guyana which increased operating revenue by $12.7 million.
Operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin were negatively impacted by unfavorable exchange rate changes in fiscal years 2016 and 2015 which reduced our earnings from our investment in Líder. Earnings from our investment in Líder were reduced by $22.4 million and $25.7 million in the fiscal year 2016 and 2015, respectively, as a result of unfavorable foreign currency exchange rate changes. Excluding this impact, our earnings from our investment in Líder would have been $22.3 million and $21.5 million, respectively, and our adjusted EBITDAR for the Americas region would have been $115.4 million (39.8% adjusted EBITDAR margin) and $161.6 million (46.0% adjusted EBITDAR margin), respectively, in fiscal year 2016 and 2015. This year-over-year decrease in adjusted EBITDAR primarily resulted from a decline in activity during fiscal year 2016.
In addition to the decrease from our investment in Líder, operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin were impacted by the reversal of $4.4 million of bad debt expense in fiscal year 2015 discussed below. These decreases were partially offset by a $19.9 million decrease in salaries and benefits and a $9.1 million decrease in maintenance expense driven by cost reduction initiatives and reduced flight activity. During fiscal year 2016, we also recorded accelerated depreciation expense on aircraft exiting our fleet of $6.0 million and severance expense related to organizational restructuring efforts of $2.1 million. Depreciation and amortization, including accelerated depreciation, and the severance expense recorded during fiscal year 2016, were excluded from adjusted EBITDAR and adjusted EBITDAR margin.
During fiscal year 2015, we reversed $4.4 million of bad debt expense in the Americas region related to a client that had previously filed for bankruptcy for which we subsequently settled and collected funds and we recorded $1.6 million in costs associated with the restructuring of this region and planned closure of our Alaska operations which related primarily to employee severance and retention costs. The $1.6 million in restructuring costs in fiscal year 2015 was excluded from adjusted EBITDAR and adjusted EBITDAR margin.
Fiscal Year 2015 Compared to Fiscal Year 2014
Operating revenue decreased for Americas in fiscal year 2015 primarily due to our planned closure of operations in Alaska which reduced operating revenue by $14.0 million, a decline in the number of small aircraft on contract in the U.S. Gulf of Mexico which reduced operating revenue by $13.2 million, a decrease in aircraft in Brazil which reduced operating revenue by $2.4 million and a decline in revenue of $2.3 million resulting from the end of contracts in Mexico, partially offset by an increase in the number of medium and large aircraft on contract in the U.S. Gulf of Mexico, which increased operating revenue by $28.3 million.
Operating income, operating margin, adjusted EBITDAR and adjusted EBITDAR margin were significantly negatively impacted by unfavorable exchange rate changes in fiscal year 2015 and to a lesser extent in fiscal year 2014 reducing our earnings from our investment in Líder. Earnings from our investment in Líder were reduced by $25.7 million and $3.9 million in the fiscal years 2015 and 2014, respectively, as a result of unfavorable foreign currency exchange rate changes. Additionally, during fiscal

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year 2014, we recorded $13.6 million in reduced earnings from Líder for additional charges which resulted primarily from a tax amnesty payment Líder made to the Brazilian government. See further discussion about our investment in Líder and the Brazil market in “Executive Overview — Market Outlook” and “Fiscal Year 2015 Compared to Fiscal Year 2014” included elsewhere in this Annual Report. Excluding the foreign exchange impacts in fiscal years 2015 and 2014 and tax amnesty payment in fiscal year 2014, our earnings from our investment in Líder would have been $21.5 million and $20.4 million, respectively, and our adjusted EBITDAR for the Americas region would have been $161.6 million (46.0% adjusted EBITDAR margin) and $154.0 million (42.9% adjusted EBITDAR margin), respectively, in fiscal years 2015 and 2014.
During fiscal year 2015, we reversed $4.4 million of bad debt expense in our Americas region related to a client that had previously filed for bankruptcy for which we have subsequently settled and collected funds. Also, during fiscal years 2015 and 2014, we recorded $1.6 million and $3.4 million, respectively, in costs associated with the restructuring of this region and planned closure of our Alaska operations, which related primarily to employee severance and retention costs. Adjusted EBITDAR and adjusted EBITDAR margin excludes these restructuring costs during fiscal years 2015 and 2014. The increase in operating income, operating margin and adjusted EBITDAR margin were driven by the change in mix of fleet on contract in the U.S. Gulf of Mexico to more medium and large aircraft and benefited from the recovery of $2.8 million in credits for maintenance expense from original equipment manufacturers during fiscal year 2015 resulting from settlements for aircraft performance and transportation costs. The reversal of the bad debt expense of $4.4 million also added to adjusted EBITDAR. These increases were partially offset by a decrease in earnings from unconsolidated affiliates, net of losses, related to Líder and Cougar. Additionally impacting operating income and operating margin in fiscal year 2014 was a $13.6 million reduction in earnings from Líder for additional charges primarily from a tax amnesty payment Líder made to the Brazilian government and an increase in insurance expense in fiscal year 2014 of $1.5 million primarily resulting from an increase in premiums across all regions due to a fire in Nigeria. The $13.6 million and $1.5 million are not included in adjusted EBITDAR or adjusted EBITDAR margin in fiscal year 2014.
Asia Pacific
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
2016
 
2015
 
2014
 
2016 vs 2015
 
2015 vs 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Operating revenue
$
272,054

 
$
237,597

 
$
192,497

 
$
34,457

 
14.5
 %
 
$
45,100

 
23.4
 %
Operating income
$
4,073

 
$
12,455

 
$
18,227

 
$
(8,382
)
 
(67.3
)%
 
$
(5,772
)
 
(31.7
)%
Operating margin
1.5
%
 
5.2
%
 
9.5
%
 
(3.7
)%
 
(71.2
)%
 
(4.3
)%
 
(45.3
)%
Adjusted EBITDAR
$
65,414

 
$
59,981

 
$
45,781

 
$
5,433

 
9.1
 %
 
$
14,200

 
31.0
 %
Adjusted EBITDAR margin
24.0
%
 
25.2
%
 
23.8
%
 
(1.2
)%
 
(4.8
)%
 
1.4
 %
 
5.9
 %
The Asia Pacific region comprises all our operations and affiliates in Australia and Southeast Asia, including Malaysia, Sakhalin, and our fixed wing operations through Airnorth in Australia.
Fiscal Year 2016 Compared to Fiscal Year 2015
In January 2015, Bristow Helicopters Australia acquired an 85% interest in Airnorth and in November 2015, purchased the remaining 15% of the outstanding shares of Airnorth. Airnorth contributed $75.4 million in operating revenue and $20.6 million in adjusted EBITDAR for fiscal year 2016, which is an incremental $64.0 million in operating revenue and $18.5 million of adjusted EBITDAR compared to fiscal year 2015. Operating revenue also increased by $50.1 million from new contracts in Australia, offset by $49.3 million due to the ending of short-term contracts in Australia and a $7.7 million decrease in Russia. A substantial portion of our operations in the Asia Pacific region are contracted in the Australian dollar, which has weakened significantly against the U.S. dollar since fiscal year 2015. Foreign currency exchange rate changes resulted in a reduction in our revenue for our Asia Pacific region of $23.6 million year-over-year.
Operating income and operating margin decreased primarily due to an increase in costs of helicopter operations in this region, including depreciation and amortization expense of $2.9 million ($3.8 million from Airnorth), maintenance expense of $12.8 million ($7.2 million from Airnorth) and rent expense of $11.9 million ($6.7 million from Airnorth). Adjusted EBITDAR improved primarily due to the addition of Airnorth, partially offset by the inclusion of $4.6 million in credits for maintenance expense from our original equipment manufacturer recorded during fiscal year 2015 as settlements for aircraft performance and transportation costs. Adjusted EBITDAR and adjusted EBITDAR margin exclude the impact of increased rent expense from the additional aircraft on lease in fiscal year 2016.
During fiscal years 2016 and 2015, we recorded additional depreciation expense of $5.3 million and $6.0 million, respectively, for four large aircraft operating in this region due to management’s decision to exit these fleet types earlier than originally anticipated,

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and during fiscal year 2016 we recorded $2.3 million in severance expense related to organizational restructuring efforts. The $2.3 million in severance expense is not included in adjusted EBITDAR or adjusted EBITDAR margin for fiscal year 2016. The decline in adjusted EBITDAR margin relates to the inclusion of $4.6 million in credits for maintenance expense from our original equipment manufacturer recorded during fiscal year 2015 as settlements for aircraft performance and transportation costs, partially offset by addition of Airnorth in fiscal year 2016. Before the benefit of the maintenance credits utilized during fiscal year 2015, adjusted EBITDAR margin was 23.3%, representing an improvement due to the addition of Airnorth.
Fiscal Year 2015 Compared to Fiscal Year 2014
Operating revenue for Asia Pacific increased in fiscal year 2015 primarily due to the start of new contracts and additional activity and aircraft on contract, including a significant contract with INPEX in Australia which increased operating revenue by $83.9 million, partially offset by the ending of short-term contracts in Australia which reduced operating revenue by $26.1 million, a decline in revenue resulting from the end of contracts in Malaysia of $10.6 million and a decline in activity in Russia which reduced operating revenue by $4.5 million. Additionally, Airnorth contributed $11.4 million of operating revenue and $2.1 million of adjusted EBITDAR during fiscal year 2015.
Operating income and operating margin declined primarily due to an increase in salaries and benefits of $16.8 million ($3.5 million from Airnorth), rent expense of $11.2 million ($1.4 million from Airnorth) and depreciation and amortization of $11.1 million ($0.9 million from Airnorth), partially offset by the increase in operating revenue. Additionally, operating income and operating margin were unfavorably impacted by foreign currency exchange rate changes of $1.8 million. Adjusted EBITDAR and adjusted EBITDAR margin improved due to the increase in operating revenue and addition of Airnorth, partially offset by the salaries and benefits increase and unfavorable impact of foreign currency exchange rate changes. During fiscal years 2015 and 2014, we were able to recover $4.6 million and $3.6 million, respectively, in credits for maintenance expense from original equipment manufacturers as settlements for aircraft performance and transportation costs. In fiscal year 2015, management made the decision to exit certain fleet types operating in this region earlier than originally anticipated. We recorded additional depreciation expense of $6.0 million related to four large aircraft operating in this region. The $6.0 million of additional depreciation expense related to the four large aircraft was not included in adjusted EBITDAR or adjusted EBITDAR margin in fiscal year 2015. During fiscal year 2014 insurance expense was $1.1 million higher due to a fire in Nigeria resulting in an increase in premiums across all regions. This $1.1 million was not included in adjusted EBITDAR or adjusted EBITDAR margin in fiscal year 2014.
Corporate and Other
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
2016
 
2015
 
2014
 
2016 vs 2015
 
2015 vs 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Operating revenue
$
23,487

 
$
26,412

 
$
31,764

 
$
(2,925
)
 
(11.1
)%
 
$
(5,352
)
 
(16.8
)%
Operating loss
$
(118,796
)
 
$
(130,209
)
 
$
(107,654
)
 
$
11,413

 
8.8
 %
 
$
(22,555
)
 
(21.0
)%
Adjusted EBITDAR
$
(69,181
)
 
$
(99,545
)
 
$
(80,889
)
 
$
30,364

 
30.5
 %
 
$
(18,656
)
 
(23.1
)%
Corporate and other includes our Bristow Academy operations, supply chain management and corporate costs that have not been allocated out to other regions.
Fiscal Year 2016 Compared to Fiscal Year 2015
Operating revenue decreased primarily due to a decline in Bristow Academy revenue of $8.8 million, partially offset by an increase in third party part sales of $2.6 million and the correction of an error in fiscal year 2015 discussed below, which decreased operating revenue by $4.1 million in fiscal year 2015.
Operating loss during fiscal year 2016 included the impairment of goodwill for Bristow Academy totaling $10.2 million, which resulted from lower forecasted results for future periods, and impairment of inventories totaling $5.4 million. For additional details on the impairment of goodwill, see Note 1 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report. Operating loss for fiscal year 2015 also included impairment of inventories totaling $7.2 million. Adjusted EBITDAR improved primarily due to a favorable impact from changes in foreign currency exchange rates on our Corporate results of $6.7 million during fiscal year 2016. We recognized a benefit in both operating loss and adjusted EBITDAR from a decline in compensation expense of $24.4 million primarily due to management’s decision not to award bonuses during fiscal year 2016 and for our performance cash plan resulting from recent stock price performance.
During fiscal year 2016 we recorded severance expense of $6.2 million related to voluntary and involuntary separation plans and during fiscal year 2015 we recorded $5.5 million of expense related to CEO succession, both of which are excluded from adjusted EBITDAR.

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During fiscal year 2015, we determined that we had been improperly capitalizing profit on intercompany technical services billings related to aircraft modifications. To correct this error, we reduced property and equipment, net of accumulated depreciation, by $4.4 million and increased deferred gains on aircraft sold and leased back included within other long-term liabilities by $0.9 million as of December 31, 2014. The impact on our consolidated statements of operations for fiscal year 2015 was an increase in direct costs of $4.1 million. The error was not material to our consolidated financial statements for fiscal year 2015 or our previously reported consolidated financial statements for any period.
Fiscal Year 2015 Compared to Fiscal Year 2014
Operating revenue decreased primarily due to the correction of an error in fiscal year 2015 discussed above which decreased operating revenue by $4.1 million, a decrease in operating revenue at Bristow Academy of $1.6 million primarily resulting from lower activity at the Nevada campus in fiscal year 2015 and a decrease in technical services paid and work order sales of $0.5 million.
The operating loss for Corporate and other increased primarily due to an increase in compensation costs of $16.3 million, primarily resulting from improved BVA year-over-year and stock price performance versus our peer group, professional fees of $8.9 million, primarily related to ongoing Operational Excellence initiatives, and $0.7 million of additional expense related to CEO succession and officer separation ($5.5 million recorded in fiscal year 2015 versus $4.8 million recorded in fiscal year 2014) and the negative impact of $4.1 million related to the accounting correction described above.
Partially offsetting the above was a decline in inventory allowances and a favorable foreign currency exchange impact of $13.1 million primarily included in other income. During fiscal years 2015 and 2014, we recorded $7.2 million and $12.7 million, respectively, of inventory allowances relating to excess inventory identified for older large aircraft models we will remove from our operational fleet over the next two fiscal years. Adjusted EBITDAR for Corporate and other decreased primarily due to the increase in compensation costs and professional fees. The portion of compensation costs related to CEO succession and officer separation, the charges recorded for inventory allowances and the accounting correction were excluded from the calculation of adjusted EBITDAR.
Gain (loss) on disposal of assets
The loss on disposal of assets in fiscal year 2016 included impairment charges totaling $29.6 million related to 16 held for sale aircraft and losses of $1.1 million from the sale or disposal of 35 aircraft and other equipment. The loss on disposal of assets in fiscal year 2015 included impairment charges totaling $36.1 million related to 27 held for sale aircraft, partially offset by gains of $0.2 million from the sale or disposal of 44 aircraft and other equipment. The loss on disposal of assets in fiscal year 2014 includes impairment charges totaling $6.8 million related to 11 held for sale aircraft, partially offset by gains of $6.1 million from the sale of 46 aircraft and other equipment.
Interest Expense, Net
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
2016
 
2015
 
2014
 
2016 vs 2015
 
2015 vs 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Interest income
$
1,058

 
$
956

 
$
1,720

 
$
102

 
10.7
 %
 
$
(764
)
 
(44.4
)%
Interest expense
(42,039
)
 
(37,834
)
 
(40,243
)
 
(4,205
)
 
(11.1
)%
 
2,409

 
6.0
 %
Amortization of debt discount
(1,000
)
 
(4,323
)
 
(3,708
)
 
3,323

 
76.9
 %
 
(615
)
 
(16.6
)%
Amortization of debt fees
(2,722
)
 
(2,712
)
 
(15,091
)
 
(10
)
 
(0.4
)%
 
12,379

 
82.0
 %
Capitalized interest
10,575

 
14,559

 
14,104

 
(3,984
)
 
(27.4
)%
 
455

 
3.2
 %
Interest expense, net
$
(34,128
)
 
$
(29,354
)
 
$
(43,218
)
 
$
(4,774
)
 
(16.3
)%
 
$
13,864

 
32.1
 %
The increase in interest expense, net in fiscal year 2016 is primarily due to a decrease in capitalized interest resulting from lower construction in progress and an increase in interest expense due to an increase in borrowings, partially offset by lower amortization of debt discount and a write-off of deferred financing fees of $0.7 million related to the repurchase of $48.5 million of our 6¼% Senior Notes in fiscal year 2015. The decrease in interest expense, net in fiscal year 2015 was primarily due to the write-off of $12.7 million of deferred financing fees related to a potential financing in fiscal year 2014, partially offset by a write-off of deferred financing fees of $0.7 million related to the repurchase of a portion of our 6¼% Senior Notes in fiscal year 2015.
Extinguishment of debt
Extinguishment of debt includes $2.6 million in premium and fees as a result of the repurchase of a portion of our 6¼% Senior Notes during fiscal year 2015.

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Gain on Sale of Unconsolidated Affiliate
Gain on sale of unconsolidated affiliate included $3.9 million and $103.9 million in pre-tax gains related to the sale of HCA and the FB Entities during fiscal years 2015 and 2014, respectively. See discussion of the FB Entities sale under “Executive Overview — Market Outlook” included elsewhere in this Annual Report.
Other Income (Expense), Net
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
2016
 
2015
 
2014
 
2016 vs 2015
 
2015 vs 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Foreign currency losses
$
(4,340
)
 
$
(6,548
)
 
$
(3,684
)
 
$
2,208

 
33.7
 %
 
$
(2,864
)
 
(77.7
)%
Other
82

 
171

 
992

 
(89
)
 
(52.0
)%
 
(821
)
 
(82.8
)%
Other income (expense), net
$
(4,258
)
 
$
(6,377
)
 
$
(2,692
)
 
$
2,119

 
33.2
 %
 
$
(3,685
)
 
(136.9
)%
Other income (expense), net decreased primarily due to less of an unfavorable impact of changes in foreign currency exchange rates in fiscal year 2016 compared to fiscal year 2015. Additionally, other income (expense), net in fiscal year 2015 included $2.6 million in premium and fees as a result of the repurchase of $48.5 million of our 6¼% Senior Notes. The foreign currency losses within other income (expense), net are reflected within adjusted EBITDAR of the regions discussed above, with the $4.3 million loss in fiscal year 2016 being reflected primarily within the Europe Caspian region ($11.1 million) and Americas region ($1.1 million), partially offset by a gain in Corporate and other ($7.0 million) and Asia Pacific region ($1.3 million), and the $6.5 million loss in fiscal year 2015 being reflected primarily within the Europe Caspian region ($9.2 million) and Asia Pacific region ($1.2 million), partially offset by a gain in Corporate and other ($4.7 million). Other income (expense), net increased from fiscal year 2014 to fiscal year 2015 primarily due changes in foreign currency exchange rates during fiscal year 2015 driven by the strengthening of the U.S. dollar versus the Australian dollar, British pound sterling, the euro, Norwegian kroner and Nigerian naira and a gain of $1.1 million on the sale of intellectual property during fiscal year 2014. The foreign currency losses within other income (expense), net are reflected within adjusted EBITDAR of the regions discussed above, with the loss for fiscal year 2014 being reflected primarily within Corporate and other ($2.8 million).
Taxes
 
Fiscal Year Ended
March 31,
 
Favorable
(Unfavorable)
 
2016
 
2015
 
2014
 
2016 vs 2015
 
2015 vs 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except percentages)
Effective tax rate
2.6
%
(1) 
20.4
%
 
23.4
%
 
(17.8
)%
 
(87.3
)%
 
3.0
%
 
12.8
 %
Net foreign tax on non-U.S. earnings
$
5,079

 
$
30,515

 
$
28,847

 
$
25,436

 
83.4
 %
 
$
(1,668
)
 
(5.8
)%
Benefit of foreign earnings indefinitely reinvested abroad
$
(12,634
)
 
$
(52,428
)
 
$
(46,354
)
 
$
(39,794
)
 
(75.9
)%
 
$
6,074

 
13.1
 %
Valuation allowance
$
20,068

 
$
4,510

 
$
4,532

 
$
(15,558
)
 
*

 
$
22

 
0.5
 %
Benefit of foreign tax deduction in the U.S.
$
(2,092
)
 
$

 
$

 
$
2,092

 
*

 
$

 
 %
Expense (benefit) from change in tax contingency
$
382

 
$
(65
)
 
$
(1,522
)
 
$
(447
)
 
*

 
$
(1,457
)
 
(95.7
)%
Dividend inclusion as a result of internal realignment
$

 
$

 
$
2,625

 
$

 
 %
 
$
2,625

 
*

Foreign statutory rate reduction
$
(901
)
 
$

 
$
(2,944
)
 
$
901

 
 %
 
$
(2,944
)
 
*

Benefit from foreign tax credits
$

 
$
(12,566
)
 
$
(12,752
)
 
$
(12,566
)
 
(100.0
)%
 
$
(186
)
 
(1.5
)%
Impact of goodwill impairment
$
9,333

 
$

 
$

 
$
(9,333
)
 
 %
 
$

 
 %
_______________ 
(1) 
Due to a pre-tax loss for fiscal year 2016, this effective tax rate represents the income tax benefit rate recorded for the period.
* percentage change not meaningful
Fiscal Year 2016 Compared to Fiscal Year 2015
Our effective income tax rate for fiscal year 2016 is 2.6% representing the income tax benefit rate for the fiscal year, which was reduced by $20.1 million of tax expense for an increase in valuation allowance and increased by $0.9 million of tax benefit

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due to the revaluation of our deferred taxes as a result of the enactment of a tax rate reduction in the U.K. and a $2.1 million tax benefit due to the deduction of foreign tax in lieu of foreign tax credits.
A portion of our aircraft fleet is owned directly or indirectly by our wholly owned Cayman Island subsidiaries. Our foreign operations combined with our leasing structure provided a material benefit to the effective tax rates for fiscal years 2016 and 2015. In fiscal year 2016, our unfavorable permanent differences, such as valuation allowances and non-tax deductible goodwill write-off had the effect of increasing our income tax expense and reducing our effective tax rate applied to pre-tax losses. Also, our effective tax rates for fiscal years 2016 and 2015 benefited from the permanent investment outside the U.S. of foreign earnings, upon which no U.S. tax has been provided.
Fiscal Year 2015 Compared to Fiscal Year 2014
Our effective income tax rate for fiscal year 2015 is 20.4% which includes $1.5 million of tax expense for the sale of HCA and $4.5 million of tax expense for an increase in valuation allowance.
Our effective income tax rate for fiscal year 2014 reflected $36.6 million of tax expense for the sale of the FB entities, $4.5 million of tax expense for an increase in valuation allowance and $2.6 million of tax expense related to an internal reorganization, partially offset by a $4.8 million benefit due to changes to of our deferred taxes as a result of the Líder tax amnesty payment and a $2.9 million benefit due to the revaluation of our deferred taxes as a result of the enactment of a tax rate reduction in the U.K. Excluding these items, our effective tax rate was 13.7% for fiscal year 2014.
Also our effective tax rate for the fiscal years 2015 and 2014 were reduced by the permanent investment outside the U.S. of foreign earnings, upon which no U.S. tax has been provided, and by the amount of our foreign source income and our ability to realize foreign tax credits.
Noncontrolling Interest
Noncontrolling interest expense decreased to income of $4.7 million for fiscal year 2016 compared to a loss of $4.4 million for fiscal year 2015 primarily due to lower earnings from Eastern Airways, partially offset by the addition of Airnorth in January 2015. Noncontrolling interest expense increased to $4.4 million for fiscal year 2015 compared to $1.0 million for fiscal year 2014 primarily due to the addition of Eastern Airways in February 2014. See Note 2 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.
Liquidity and Capital Resources
Cash Flows
Operating Activities
Net cash provided by operating activities was $116.0 million, $253.2 million and $232.1 million during fiscal years 2016, 2015 and 2014, respectively. Changes in non-cash working capital generated $23.0 million, $1.9 million and $19.9 million in cash flows during fiscal years 2016, 2015 and 2014, respectively. During fiscal years 2016, 2015 and 2014, we received dividends less than recorded earnings of $2.6 million, $9.4 million and $1.6 million, respectively. During fiscal years 2015 and 2014, we pre-funded fiscal years 2016 and 2015 employer contributions for our U.K. pension plans, which decreased in operating cash flow by $18.6 million and $20.8 million, respectively. Cash flow from operations decreased in fiscal year 2016 due to lower top-line earnings driven by the decline in oil and gas activity across all regions, $47.1 million of higher rent expense due to additional leased aircraft and $27.0 million in organizational restructuring costs in fiscal year 2016. Additionally, in fiscal year 2016, the impact of significant payments made in preparation for the commencement of the U.K. SAR contract totaled $22.9 million compared to $33.2 million in fiscal year 2015.

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Table of Contents

Investing Activities
Cash flows used in investing activities were $316.8 million, $203.1 million and $266.3 million for fiscal years 2016, 2015 and 2014, respectively. Cash was used primarily for capital expenditures as follows:
    
 
Fiscal Year Ended March 31,
 
2016
 
2015
 
2014
Number of aircraft delivered:
 
 
 
 
 
Medium
1

 
6

 
8

Large
3

 
10

 
11

SAR aircraft
4

 
5

 
2

Total aircraft
8

 
21

 
21

Capital expenditures (in thousands):
 
 
 
 
 
Aircraft and related equipment
$
285,530

 
$
476,368

 
$
563,724

Other
86,845

 
125,466

 
64,889

Total capital expenditures
$
372,375

 
$
601,834

 
$
628,613

In addition to these capital expenditures, investing cash flows were impacted by the following items during the last three fiscal years:
Fiscal Year 2016 — During fiscal year 2016, we received $30.8 million in proceeds primarily from the sale or disposal of 32 aircraft and certain other equipment (including $13.4 million in insurance recoveries) and received $29.2 million for the sale of three aircraft, which we subsequently leased back.
Fiscal Year 2015 — During fiscal year 2015, we received $25.7 million in proceeds from the disposal of 30 aircraft and certain other equipment. Also, we received $8.5 million in insurance recoveries and $380.7 million for the sale of 14 aircraft which we subsequently leased back. Additionally, we sold our 50% interest in HCA for $4.2 million. Cash was used for the acquisition of an 85% interest in Airnorth for $20.3 million, net of cash received.
Fiscal Year 2014 — During fiscal year 2014, we received proceeds of $43.6 million primarily from the sale or disposal of 32 aircraft and certain other equipment and received $246.4 million for the sale of 14 aircraft which we subsequently leased back. Additionally, we sold our 50% interest in the FB Entities for $112.2 million. Cash was used for the acquisition of a 60% interest in Eastern Airways for $39.9 million, net of cash received.
For further details on Airnorth and Eastern Airways, see Note 2 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.
Financing Activities
We generated cash in financing activities of $191.6 million and $10.2 million during fiscal years 2016 and 2014, respectively, and used cash from financing activities of $128.3 million during fiscal year 2015.
During fiscal year 2016, we received $580.9 million from borrowings on our Revolving Credit Facility, $200 million from borrowings on our $200 million Term Loan Credit Facility and $127.4 million from borrowing on our $350 million Term Loan. During fiscal year 2016, we used cash to repay debt of $677.0 million, including $115 million of our 3% Convertible Senior Notes, and pay dividends of $38.1 million on our Common Stock.
During fiscal year 2015, we received $453.0 million from borrowings on our Revolving Credit Facility and $5.2 million in proceeds from the issuance of Common Stock upon exercise of stock options. During fiscal year 2015, we used cash to repay debt of $460.3 million, pay dividends of $45.1 million on our Common Stock and repurchase $80.8 million of our Common Stock.

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During fiscal year 2014, we received $528.6 million from borrowings on our Revolving Credit Facility and $15.4 million in proceeds from the issuance of Common Stock issued upon exercise of stock options. During fiscal year 2014, we used cash to repay debt of $512.5 million, pay deferred financing fees of $15.5 million, pay dividends of $36.3 million on our Common Stock and repurchase $77.7 million of our Common Stock. Additionally, during fiscal year 2014, we received $106.1 million for progress payments we had made on aircraft under construction and assigned any future payments due on these construction agreements to the purchaser.
Future Cash Requirements
Debt Obligations
Total debt as of March 31, 2016 was $1.1 billion, of which $62.7 million was classified as current. Our significant debt maturities relate to our Revolving Credit Facility, $200 million Term Loan Credit Facility, $350 million Term Loan and 6 ¼% Senior Notes, which mature in calendar years 2019, 2017, 2019 and 2022, respectively.
See further discussion of outstanding debt as of March 31, 2016 and our debt issuances and our debt redemptions in Note 5 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.
Pension Obligations
As of March 31, 2016, we had recorded on our balance sheet a $70.1 million pension liability related to the Bristow Helicopters Limited, Bristow International Aviation (Guernsey) Limited and Bristow Norway AS pension plans. The liability represents the excess of the present value of the defined benefit pension plan liabilities over the fair value of plan assets that existed at that date. The minimum funding rules of the U.K. require the employer to agree to a funding plan with the plans’ trustee (the “Trustee”) for securing that the pension plan has sufficient and appropriate assets to meet its technical provisions liabilities. In addition, where there is a shortfall in assets against this measure, we are required to make scheduled contributions in amounts sufficient to bring the plan up to 100% funded as quickly as can be reasonably afforded. The employer contributions for the main U.K. pension plan for fiscal years 2016, 2015 and 2014 were £12.4 million ($17.8 million), £12.5 million ($18.6 million), and £12.5 million ($20.8 million), respectively. Under U.K. legislation, an actuarial valuation must be carried out at least once every three years with interim reports for intervening years. The next tri-annual valuation will be completed with an effective date of April 1, 2016. The Bristow Norway pension plan will require contributions of approximately £0.2 million ($0.3 million) for fiscal year 2017. See further discussion of our pension plans in Note 9 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.
Contractual Obligations, Commercial Commitments and Off Balance Sheet Arrangements
We have various contractual obligations that are recorded as liabilities on our consolidated balance sheet. Other items, such as certain purchase commitments, interest payments and other executory contracts are not recognized as liabilities on our consolidated balance sheet but are included in the table below. For example, we are contractually committed to make certain minimum lease payments for the use of property and equipment under operating lease agreements.

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The following table summarizes our significant contractual obligations and other commercial commitments on an undiscounted basis as of March 31, 2016 and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the timing of principal and interest payments on outstanding borrowings as of March 31, 2016. Additional details regarding these obligations are provided in Note 5, 6, 7 and 9 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.
 
 
 
Payments Due by Period
 
 
Fiscal Year Ending March 31,
Total
 
2017
 
2018 -
2019
 
2020 -
2021
 
2022 and
beyond
 
 
 
 
 
 
 
 
 
(In thousands)
Contractual obligations:
 
 
 
 
 
 
 
 
 
 
Long-term debt and short-term borrowings:
 
 
 
 
 
 
 
 
 
 
Principal (1)
 
$
1,141,223

 
$
62,716

 
$
292,443

 
$
378,748

 
$
407,316

Interest (2)
 
224,370

 
44,982

 
77,386

 
51,580

 
50,422

Aircraft operating leases (3)
 
573,234

 
174,349

 
280,159

 
106,063

 
12,663

Other operating leases (4)
 
92,734

 
10,385

 
20,469

 
15,573

 
46,307

Pension obligations (5)
 
54,729

 
17,843

 
35,131

 
1,755

 

Aircraft purchase obligations
 
399,297

 
105,249

 
184,707

 
109,341

 

Other purchase obligations (6)
 
327,332

 
46,808

 
59,939

 
67,000

 
153,585

Total contractual cash obligations
 
$
2,812,919

 
$
462,332

 
$
950,234

 
$
730,060

 
$
670,293

Other commercial commitments:
 
 
 
 
 
 
 
 
 
 
Letters of credit
 
$
11,686

 
$
11,686

 
$

 
$

 
$

Contingent consideration (7)
 
46,163

 
29,846

 
16,317

 

 

Total commercial commitments
 
$
57,849

 
$
41,532

 
$
16,317

 
$

 
$

_______________
(1) 
Excludes unamortized discount of $0.3 million on the Term Loan.
(2) 
Interest payments for variable interest debt are based on interest rates as of March 31, 2016.
(3) 
Represents separate operating leases for aircraft. During fiscal year 2016, we entered into five new aircraft operating leases.
(4) 
Represents minimum rental payments required under non-aircraft operating leases that have initial or remaining non-cancelable lease terms in excess of one year.
(5) 
Represents expected funding for pension benefits in future periods. These amounts are undiscounted and are based on the expectation that both U.K. pension plans will be fully funded in approximately three years. As of March 31, 2016, we had recorded on our balance sheet a $70.1 million pension liability associated with these obligations. The timing of the funding is dependent on actuarial valuations and resulting negotiations with the plan trustees.
(6) 
Other purchase obligations primarily represent unfilled purchase orders for aircraft parts, commitments associated with upgrading facilities at our bases and non-cancelable power-by-the-hour maintenance commitments. For further details on the non-cancelable power-by-the-hour maintenance commitments, see Note 1 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.
(7) 
The Cougar purchase agreement includes a potential earn-out of $40 million payable over three years based on Cougar achieving certain agreed performance targets. During fiscal year 2014, the first year earn-out payment of $6.0 million was paid as Cougar achieved agreed performance targets. During fiscal year 2016, the second year earn-out payment of $8.0 million was paid as Cougar achieved agreed performance targets. Cougar achieved the agreed performance targets relating to the third year earn-out payment of which $10 million was paid in April 2016. Subsequent to March 31, 2016, we entered into an agreement to pay the remaining earn-out payment of $16 million in April 2017. The fair value of the earn-out relating to Cougar was $26 million as of March 31, 2016 and is included in contingent consideration on our consolidated balance sheet. The Eastern Airways purchase agreement includes a potential earn-out of £6 million ($8.6 million) over a three year period, which is contingent upon both the achievement of agreed performance targets and the continued employment of the selling shareholders. The first and second year earn-out payments relating to Eastern were not achieved. The Airnorth purchase agreement includes a potential earn-out of A$17 million ($13 million) to be paid over four years. During fiscal year 2016, a portion of the first year earn-out payment of A$2 million ($1.5 million) was paid as Airnorth achieved agreed performance targets. The fair value of a portion of the Airnorth earn-out, which is contingent upon the achievement of agreed performance targets, is A$9.4 million ($7.2 million) as of March 31, 2016 and is included in contingent consideration and other liabilities and deferred credits on our consolidated balance sheet. The remaining A$7 million ($5.4 million) of the Airnorth earn-out, which is contingent upon both the achievement of agreed performance targets and the continued employment of the selling shareholders, will be included as general and administrative expense in our consolidated statements of operations as earned. The earn-out for Airnorth will be remeasured to fair value at each reporting date until the contingency is resolved and any changes in estimated fair value will be recorded as accretion expense included in interest expense on our consolidated statements of operations.

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Financial Condition and Sources of Liquidity
The following table summarizes our capital structure and sources of liquidity as of March 31, 2016 and 2015 (in thousands):
 
 
2016
 
2015
Capital structure:
 
 
 
6  ¼% Senior Notes due 2022
$
401,535

 
$
401,535

Term Loan
335,665

 
222,179

Term Loan Credit Facility
200,000

 

Revolving Credit Facility
144,000

 
83,800

Airnorth debt
19,652

 
23,119

Eastern Airways debt
15,643

 
19,680

Other debt
24,394

 

3% Convertible Senior Notes due 2038

 
114,109

Total debt
1,140,889

 
864,422

Stockholders’ investment
1,509,892

 
1,618,786

Total capital
$
2,650,781

 
$
2,483,208

Liquidity:
 
 
 
Cash
$
104,310

 
$
104,146

Undrawn borrowing capacity on Revolving Credit Facility
255,420

 
265,715

Total liquidity
$
359,730

 
$
369,861

Adjusted debt to equity ratio (1)
119.3
%
 
99.7
%
_______________
(1) 
Adjusted debt includes the net present value of operating leases totaling $578.3 million and $640.0 million, respectively, letters of credit, bank guarantees and financial guarantees totaling $11.7 million and $10.7 million, respectively, and the unfunded pension liability totaling $70.1 million and $99.6 million, respectively, as of March 31, 2016 and 2015. Adjusted debt to equity ratio is a non-GAAP financial measure that management believes provides meaningful supplemental information regarding our financial position.
We actively manage our liquidity through generation of cash from operations while assessing our funding needs on an ongoing basis. While we have generated significant cash from operations, financing cash flows have also been a significant source of liquidity over the past several years. The significant factors that affect our overall liquidity include capital expenditure commitments, pension funding, operating leases, adequacy of bank lines of credit and our ability to attract additional capital on satisfactory terms.
Substantially all of our cash balances are held outside the U.S. and are 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., but under current law, any such repatriation would be subject to U.S. federal income tax, as adjusted for applicable foreign tax credits. We have provided for U.S. federal income taxes on undistributed foreign earnings where we have determined that such earnings are not indefinitely reinvested. We expect to meet the continuing funding requirements of our U.S. operations with cash generated by such U.S. operations, cash from earnings generated by non-U.S. operations that are not indefinitely reinvested and our existing Revolving Credit Facility. If cash held by non-U.S. operations is required for funding operations in the U.S., and if U.S. tax has not previously been provided on the earnings of such operations, we would make a provision for additional U.S. tax in connection with repatriating this cash, which may be material to our cash flows and results of operations.
On November 5, 2015, we received $200 million in proceeds from a new two-year term loan facility, which we used for capital expenditures, working capital needs and general corporate purposes.
We expect that our cash on deposit as of March 31, 2016 of $104.3 million, cash flow from operations, proceeds from aircraft sales and from the sale and leaseback of owned aircraft, available borrowing capacity under our Revolving Credit Facility, as well as future financings will be sufficient to satisfy our capital commitments, including our oil and gas aircraft purchase commitments to service our oil and gas clients and remaining capital requirements in connection with our U.K. SAR contract. The available borrowing capacity under our Revolving Credit Facility was $255.4 million as of March 31, 2016. While we plan to continue to be disciplined concerning future capital commitments, we also intend to continue managing our capital structure and liquidity position with external financings as needed. Our strategy will involve funding our short-term liquidity requirements with borrowings under our Revolving Credit Facility and funding our long-term capital needs from among operating leases, bank debt, private and public debt and equity offerings, while maintaining a prudent capital structure.

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Exposure to Currency Fluctuations
See our discussion of the impact of market risk, including our exposure to currency fluctuations, on our financial position and results of operations discussed under Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” included elsewhere in this Annual Report.
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, whereas, in other circumstances, generally accepted accounting principles require us to make estimates, judgments and assumptions that we believe are reasonable based upon information available. We base our estimates and judgments on historical experience, professional advice and various other sources that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions. We believe that of our significant accounting policies, as discussed in Note 1 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report, the following involve a higher degree of judgment and complexity. Our management has discussed the development and selection of critical accounting policies and estimates with the Audit Committee of our board of directors and the Audit Committee has reviewed our disclosure.
Taxes
Our annual tax provision is based on expected taxable income, statutory rates and tax planning opportunities available to us in the various jurisdictions in which we operate. The determination and evaluation of our annual tax provision and tax 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 also operate in many jurisdictions where the tax laws relating to the offshore oil service industry are open to interpretation which could potentially result in tax authorities asserting additional tax liabilities. While our annual tax provision is based on the best information available at the time, a number of years may elapse before the ultimate tax liabilities in the various jurisdictions are determined.
We recognize foreign tax credits available to us 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. In estimating the amount of foreign tax credits that are realizable, we estimate future taxable income in each statutory category. 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 periodically reassess these estimates and record changes to the amount of realizable foreign tax credits based on these revised estimates. Changes to the amount of realizable foreign tax credits can be significant given any material change to our estimates on which the realizability of foreign tax credits is based.
We maintain reserves for estimated income tax exposures in jurisdictions of operation. The expenses reported for these taxes, including our annual tax provision, include the effect of reserve provisions and changes to reserves that we consider appropriate, as well as related interest. Tax exposure items primarily include potential challenges to intercompany pricing, disposition transactions and the applicability or rate of various withholding taxes. These exposures are resolved primarily through the settlement of audits within these tax jurisdictions or by judicial means, but can also be affected by changes in applicable tax law or other factors, which could cause us to conclude that a revision of past estimates is appropriate. We believe that an appropriate liability has been established for estimated exposures. However, actual results may differ materially from these estimates. We review these liabilities quarterly. During fiscal years 2016 and 2015, we had accruals of reserves for estimated tax exposures of $0.4 million and $0.5 million, respectively, and during fiscal year 2014, we had net reversals of reserves for estimated tax exposures of $1.5 million. We recognize interest and penalties accrued related to unrecognized tax benefits as a component of our provision for income taxes. As of March 31, 2016 and 2015, we had $1.1 million and $4.9 million, respectively, of unrecognized tax benefits, all of which would have an impact on our effective tax rate, if recognized. The $4.2 million recorded in fiscal year 2014 relates to pre-acquisition tax matters for the February 2014 acquisition of a 60% interest in Eastern Airways and are the subject on an indemnity, for which a corresponding indemnity asset has been established for the same amount. In fiscal year 2016, we determined that the reserve for tax contingencies related to Eastern Airways pre-acquisition tax matters was no longer needed as all related tax matters were resolved or expired, therefore, the liability was released along with the corresponding indemnity.
We do not believe it is possible to reasonably estimate the potential effect of changes to the assumptions and estimates identified because the resulting change to our tax liability, if any, is dependent on numerous factors which cannot be reasonably estimated. These include, among others, the amount and nature of additional taxes potentially asserted by local tax authorities; the willingness of local tax authorities to negotiate a fair settlement through an administrative process; the impartiality of the local

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courts; and the potential for changes in the tax paid to one country to either produce, or fail to produce, an offsetting tax change in other countries. Our experience has been that the estimates and assumptions we have used to provide for future tax assessments have proven to be appropriate. However, past experience is only a guide and the potential exists that the tax resulting from the resolution of current and potential future tax controversies may differ materially from the amounts accrued.
Judgment is required in determining whether deferred tax assets will be realized in full or in part. When it is estimated to be more-likely-than-not that all or some portion of specific deferred tax assets, such as foreign tax credit carryovers or net operating loss carry forwards, will not be realized, a valuation allowance must be established for the amount of the deferred tax assets that are estimated to not be realizable. As of March 31, 2016, we have established deferred tax assets for foreign taxes we expect to be realizable. Our ability to realize the benefit of our deferred tax assets requires that we achieve certain future earnings levels prior to the expiration of our foreign tax credit carryforwards. In the event that our earnings performance projections or future financial conditions do not indicate that we will be able to benefit from our deferred tax assets, valuation allowances would be established following the “more-likely-than-not” criteria. We periodically evaluate our ability to utilize our deferred tax assets and, in 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. If our facts or financial results were to change, thereby impacting the likelihood of establishing and then realizing the deferred tax assets, judgment would have to be applied to determine changes to the amount of the valuation allowance in any given period. Such changes could result in either a decrease or an increase in our provision for income taxes, depending on whether the change in judgment resulted in an increase or a decrease to the valuation allowance. We continually evaluate strategies that could allow for the future utilization of our deferred tax assets.
We consider 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, we have not provided for U.S. deferred taxes on the unremitted earnings of certain foreign subsidiaries as of March 31, 2016 that are indefinitely invested abroad of $832.1 million. Should we decide to make distributions from the unremitted earnings of these subsidiaries in the future, additional tax liabilities would arise, offset by any available foreign tax credits. At the current time, a determination of the amount of unrecognized deferred tax liability is not practical.
We have not provided for deferred taxes in circumstances where we expect that, due to the structure of operations and applicable law, the operations in such jurisdictions will not give rise to future tax consequences. Should our expectations change regarding the expected future tax consequences, we may be required to record additional deferred taxes that could have a material adverse effect on our consolidated financial position, results of operations and cash flows.
Property and Equipment
Our net property and equipment represents 70% of our total assets as of March 31, 2016. We determine the carrying value of these assets based on our property and equipment accounting policies, which incorporate our estimates, assumptions, and judgments relative to capitalized costs, useful lives and salvage values of our assets.
Our property and equipment accounting policies are also designed to depreciate our assets over their estimated useful lives. The assumptions and judgments we use in determining the estimated useful lives and residual values of our aircraft reflect both historical experience and expectations regarding future operations, utilization and performance of our assets. The use of different estimates, assumptions and judgments in the establishment of property and equipment accounting policies, especially those involving the useful lives and residual values of our aircraft, would likely result in materially different net book values of our assets and results of operations.
Useful lives and residual values of aircraft are difficult to estimate due to a variety of factors, including changes in operating conditions or environment, the introduction of technological advances in aviation equipment, changes in market or economic conditions, including changes in demand for certain types of aircraft, and changes in laws or regulations affecting the aviation or offshore oil and gas industry. We evaluate the remaining useful lives of our aircraft when certain events occur that directly impact our assessment of their remaining useful lives. Our consideration of ultimate residual value takes into account current expectations of fair market value and the expected time to ultimate disposal. The determination of the ultimate value to be received upon sale depends largely upon the condition of the aircraft and the flight time left on the aircraft and major components until the next major maintenance check is required. The future value also depends on the aftermarket that exists as of that date, which can differ substantially over time.
We review our property and equipment for impairment when events or changes in circumstances indicate that the carrying value of assets or asset groups may be impaired or when reclassifications are made between property and equipment and assets held for sale.

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Asset impairment evaluations are based on estimated undiscounted cash flows for the assets being evaluated. If the sum of the expected future cash flows is less than the carrying amount of the asset or 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. A change in these underlying assumptions will 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 continue to evaluate our estimates and assumptions and believe that our assumptions, which include an estimate of future cash flows based upon the anticipated performance of the underlying contracts, are appropriate.
Supply and demand are the key drivers of aircraft idle time and our ability to contract our aircraft at economical rates. During periods of oversupply, it is not uncommon for us to have aircraft idled for extended periods of time, which could be an indication that an asset group may be impaired. In most instances our aircraft could be used interchangeably. In addition, our aircraft are generally equipped to operate throughout the world. Because our aircraft are mobile, we may move aircraft from a weak geographic market to a stronger geographic market if an adequate opportunity arises to do so. As such, our aircraft are considered to be interchangeable within classes or asset groups and accordingly, our impairment evaluation is made by asset group. Additionally, our management periodically makes strategic decisions related to our fleet that involve the possible removal of all or a substantial portion of specific aircraft types from our fleet, at which time these aircraft are reclassified to held for sale and subsequently sold or otherwise disposed of.
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.
Where a determination has been made to exit an entire asset group, the asset group is reviewed for potential impairment. 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 revenue 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. Significant and unanticipated changes to these assumptions could require a provision for impairment in a future period. Given the nature of these evaluations and their application to specific asset groups and specific times, it is not possible to reasonably quantify the impact of changes in these assumptions.
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 income is also affected by assumptions about expected returns on plan assets. We evaluate our assumptions periodically and make adjustments to these assumptions and the recorded liabilities as necessary.
Three of the most 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 determining the discount rate for our U.K. plans and NOK-denominated corporate bonds that are credit-rated AA or AAA as a basis for determining the discount rate for our Norway plan. We base mortality rates utilized on actuarial research on these rates, which are adjusted to allow for expected 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 pension expense on a fair value valuation of assets and an amortization approach for assessed gains and losses that reduces year-to-year volatility. This approach recognizes investment and other actuarial gains or losses over the average remaining lifetime of the plan members. Investment gains or losses for this purpose are the difference between the expected return calculated using the market-related value of assets and the actual return based on the market-related value of assets.

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Allowance for Doubtful Accounts
We establish allowances for doubtful accounts on a case-by-case basis when we believe the payment of amounts owed to us is unlikely to occur. In establishing these allowances, we consider a number of factors, including our historical experience, changes in our client’s financial position and restrictions placed on the conversion of local currency to U.S. dollars, as well as disputes with clients regarding the application of contract provisions to our services.
We derive a significant portion of our revenue from services to major integrated oil and gas companies and government-owned or government-controlled oil and gas companies. Our receivables are concentrated in certain oil-producing countries. We generally do not require collateral or other security to support client receivables. If the financial condition of our clients was to deteriorate or their access to freely-convertible currency was restricted, resulting in impairment of their ability to make the required payments, additional allowances may be required.
Inventory Allowance
We maintain inventory that primarily consists of spare parts to service our aircraft. We establish an allowance to distribute the cost of spare parts expected to be on hand at the end of an aircraft type’s life over the service lives of the related equipment, taking into account the estimated salvage value of the parts. Also, we periodically review the condition and continuing usefulness of the parts to determine whether the realizable value of this inventory is lower than its book value. Parts related to aircraft types that our management has determined will no longer be included in our fleet or will be substantially reduced in our fleet in future periods are specifically reviewed. If our valuation of these parts is significantly lower than the book value of the parts, an additional provision may be required.
Contingent Liabilities
We establish reserves for estimated loss contingencies when we believe a loss is probable and the amount of the loss can be reasonably estimated. Our contingent liability reserves relate primarily to potential tax assessments, litigation, personal injury claims and environmental liabilities. Income for each reporting period includes revisions to contingent liability reserves resulting from different facts or information which becomes known or circumstances which change and affect our previous assumptions with respect to the likelihood or amount of loss. Such revisions are based on information which becomes known or circumstances that change after the reporting date for the previous period through the reporting date of the current period. Reserves for contingent liabilities are based upon our assumptions and estimates regarding the probable outcome of the matter. Should the outcome differ from our assumptions and estimates or other events result in a material adjustment to the accrued estimated reserves, revisions to the estimated reserves for contingent liabilities would be required to be recognized.
Goodwill Impairment
We perform a test for impairment of our goodwill annually as of March 31 and whenever events or circumstances indicate impairment may have occurred. We first assess qualitative factors to determine if it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount and if a quantitative assessment should be performed. An entity may also bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative impairment test. Because our business is cyclical in nature, goodwill could be significantly impaired depending on when the assessment is performed in the business cycle. The qualitative factors considered during our assessment include the capital markets environment, global economic conditions, the demand for helicopter services, changes in our results of operations, the magnitude of the excess of fair value over the carrying amount of each reporting unit as determined in prior years’ quantitative testing and other factors.
We estimate the implied fair value of the reporting units using a variety of valuation methods, including the income and market approaches. The determination of estimated fair value require us to use significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions related to the future performance of the reporting units, such as projected demand for our services and rates.
The income approach is based on a discounted cash flow model, which utilizes present values of cash flows to estimate fair value. The future cash flows are projected based on our estimates of future rates for our services, utilization, operating costs, capital requirements, growth rates and terminal values. Forecasted rates and utilization take into account current market conditions and our anticipated business outlook. Operating costs are forecasted using a combination of our historical average operating costs and expected future costs, including ongoing cost reduction initiatives. Capital requirements in the discounted cash flow model are based on management’s estimates of future capital costs driven by expected market demand in future periods. The estimated capital requirements include cash outflows for new aircraft, infrastructure and improvements. A terminal period is used to reflect our estimate of stable, perpetual growth. The future cash flows are discounted using a market-participant risk-adjusted weighted average cost of capital (“WACC”) for each of the reporting units and in total. These assumptions are derived from unobservable inputs and reflect management’s judgments and assumptions.

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The market approach is based upon the application of price-to-earnings multiples to management’s estimates of future earnings adjusted for a control premium. Management’s earnings estimates are derived from unobservable inputs that require significant estimates, judgments and assumptions as described in the income approach.
For purposes of the goodwill impairment test, we calculate the reporting units’ estimated fair values as the average of the values calculated under the income approach and the market approach. As of March 31, 2016, we had goodwill related to our Africa region, Eastern Airways and Airnorth. We performed a qualitative analysis and concluded it is more likely than not that the fair value of Airnorth is not less than the carrying value and, therefore, did not perform a quantitative analysis for Airnorth. During the fourth quarter of fiscal year 2016, we revised both the Africa region and Eastern Airway’s forecasts downward from prior forecasts; therefore, we performed a quantitative analysis as of March 31, 2016. The estimated fair value of Airnorth exceeded the carrying value by 12.8%. The estimated fair value of the Africa region and Eastern Airways were below the carrying value, resulting in an impairment of all of the goodwill for Africa of $6.2 million and a portion of the goodwill for Eastern Airways of $13.1 million reflected in our results for the three months ended March 31, 2016. Changes in assumptions used in the fair value calculation could result in an estimated reporting unit fair value that is below the carrying value, which may give rise to an impairment of goodwill.
We evaluate the estimated fair value of our reporting units compared to our market capitalization. The estimates used to determine the fair value of the reporting units discussed above reflect management’s best estimates. Changes in the assumption used in the fair value calculation could result in an estimated reporting unit fair value that is below the carrying value, which may give rise to an impairment of goodwill.
Recent Accounting Pronouncements
See Note 1 in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report for discussion of recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are subject to certain market risks arising from the use of financial instruments in the ordinary course of business. This risk arises primarily as a result of potential changes in the fair market value of financial instruments that would result from adverse fluctuations in foreign currency exchange rates, credit risk and interest rates as discussed below. The sensitivity analyses presented do not consider the effects that such adverse changes may have on overall economic activity, nor do they consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ. See the notes to our consolidated financial statements included in Item 8 of this Annual Report for a description of our accounting policies and other information related to these financial instruments.
Foreign Currency Risk
Through our foreign operations, we are exposed to currency fluctuations and exchange rate risks. The majority of our revenue and expense from our North Sea operations are in British pound sterling. Approximately 30% of our gross revenue for fiscal year 2016 was translated for financial reporting purposes from British pound sterling into U.S. dollars. In addition, some of our contracts to provide services internationally provide for payment in foreign currencies. Our foreign exchange rate risk is even greater when our revenue is denominated in a currency different from the associated costs. We attempt to minimize our foreign exchange rate exposure by contracting the majority of our services other than our North Sea operations in U.S. dollars. 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 certain foreign countries. Except as described below, we do not enter into hedging transactions to protect against foreign exchange risks related to our revenue.

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Throughout fiscal years 2016, 2015 and 2014, our primary foreign currency exposure has been to the British pound sterling, the euro, the Australian dollar, the Norwegian kroner, and the Nigerian naira. The value of these currencies has fluctuated relative to the U.S. dollar as indicated in the following table:
 
Fiscal Years Ended March 31,
 
 
2016
 
2015
 
2014
 
One British pound sterling into U.S. dollars
 
 
 
 
 
 
High
1.59

 
1.72

 
1.68

 
Average
1.51

 
1.60

 
1.59

 
Low
1.39

 
1.47

 
1.48

 
At period-end
1.44

 
1.48

 
1.67

 
One euro into U.S. dollars
 
 
 
 
 
 
High
1.16

 
1.39

 
1.39

 
Average
1.10

 
1.25

 
1.34

 
Low
1.06

 
1.05

 
1.28

 
At period-end
1.14

 
1.07

 
1.38

 
One Australian dollar into U.S. dollars
 
 
 
 
 
 
High
0.81

 
0.95

 
1.07

 
Average
0.74

 
0.87

 
0.93

 
Low
0.68

 
0.76

 
0.87

 
At period-end
0.77

 
0.76

 
0.93

 
One Norwegian kroner into U.S. dollars
 
 
 
 
 
 
High
0.1367

 
0.1698

 
0.1753

 
Average
0.1210

 
0.1507

 
0.1670

 
Low
0.1114

 
0.1203

 
0.1590

 
At period-end
0.1209

 
0.1251

 
0.1666

 
One Nigerian naira into U.S. dollars
 
 
 
 
 
 
High
0.0050

 
0.0063

 
0.0065

 
Average
0.0050

 
0.0059

 
0.0063

 
Low
0.0050

 
0.0049

 
0.0061

 
At period-end
0.0050

 
0.0051

 
0.0061

 
_______________ 
Source: Bank of England, FactSet and Oanda.com
Our earnings from unconsolidated affiliates, net of losses, are also affected by the impact of changes in foreign currency exchange rates on the reported results of our unconsolidated affiliates. Earnings from unconsolidated affiliates, net of losses, decreased by $22.4 million, $25.7 million and $3.9 million during fiscal years 2016, 2015 and 2014, respectively, as a result of the impact of changes in foreign currency exchange rates on the earnings of our unconsolidated affiliates, primarily the impact of changes in the Brazilian real to U.S. dollar exchange rate on earnings for our affiliate in Brazil. The value of the Brazilian real has fluctuated relative to the U.S. dollar as indicated in the following table:
 
Fiscal Years Ended March 31,
 
 
2016
 
2015
 
2014
 
One Brazilian real into U.S. dollars
 
 
 
 
 
 
High
0.3437

 
0.4572

 
0.5123

 
Average
0.2816

 
0.4096

 
0.4471

 
Low
0.2378

 
0.3052

 
0.4093

 
At period-end
0.2822

 
0.3080

 
0.4432

 
_______________ 
Source: FactSet and Oanda.com

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A hypothetical 10% change in the average U.S. dollar exchange rate relative to other currencies would have affected our revenue, operating expense and operating income for fiscal year 2016 as follows:
 
British
pound
sterling
 
Euro
 
Australian
dollar
 
Norwegian kroner
 
Nigerian Naira
Revenue
3.0
%
 
0.1
%
 
1.1
 %
 
0.7
%
 
0.3
%
Operating expense
2.4
%
 
0.4
%
 
1.1
 %
 
0.8
%
 
0.4
%
Operating income
*

 
36.1
%
 
(0.6
)%
 
7.2
%
 
5.6
%
_______________ 
* percentage change not meaningful
The effect of the hypothetical change in exchange rates ignores the effect this movement may have on other variables, including competitive risk. If it were possible to quantify this competitive risk impact, the results could be different from the sensitivity effects shown above. In addition, all currencies may not uniformly strengthen or weaken relative to the U.S. dollar. In reality, some currencies may weaken while others may strengthen.
In the past three fiscal years, our stockholders’ investment has decreased by $77.2 million as a result of translation adjustments. Changes in exchange rates could cause significant changes in our financial position and results of operations in the future.
As a result of the changes in exchange rates, we recorded foreign currency transaction losses of $4.3 million, $6.5 million and $3.7 million during fiscal years 2016, 2015, and 2014, respectively.
We estimate that the fluctuation of these currencies for fiscal year 2016 versus the prior fiscal year had the following effect on our financial condition and results of operations, net of the effect of the derivative contracts discussed below (in thousands): 
 
Fiscal Year
Ended
 
Revenue
$
(98,639
)
 
Operating expense
100,654

 
Earnings from unconsolidated affiliates, net of losses
3,260

 
Non-operating expense
2,193

 
Income before provision for income taxes
7,468

 
Provision from income taxes
(852
)
 
Net income
6,616

 
Cumulative translation adjustment
(20,195
)
 
Total stockholders’ investment
$
(13,579
)
 
A hypothetical 10% decrease in the value of the foreign currencies in which our business is denominated relative to the U.S. dollar as of March 31, 2016 would result in a $23.5 million decrease in the fair value of our net monetary liabilities denominated in currencies other than U.S. dollars.

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Credit Risk
The market for our services and products is primarily the offshore oil and gas industry, and our clients consist primarily of major integrated, national and independent oil and gas producers. We perform ongoing credit evaluations of our clients and have not historically required collateral. We maintain allowances for potential credit losses.
Cash equivalents, which consist of funds invested in highly-liquid debt instruments with original maturities of 90 days or less, are held by major banks or investment firms, and we believe that credit risk in these instruments is minimal. We also manage our credit risk by not entering into complex financial transactions or those with a perceived high level of credit risk.
For more information on the impact of the global market conditions see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Market Outlook” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Financial Condition and Sources of Liquidity” included elsewhere in this Annual Report.
Interest Rate Risk
As of March 31, 2016, we had $1.1 billion of debt outstanding, of which $715.0 million carried a variable rate of interest. The market value of our fixed rate debt fluctuates with changes in interest rates. The fair value of our debt has been estimated in accordance with the accounting standard regarding fair value. The fair value of our fixed rate long-term debt is estimated based on quoted market prices. The carrying and fair value of our long-term debt, including the current portion, were as follows (in thousands):
 
 
 
 
 
2016
 
2015
 
 
 
Carrying
Value
 
Fair Value
 
Carrying
Value
 
Fair Value
 
 
6 ¼% Senior Notes
$
401,535

 
$
277,059

 
$
401,535

 
$
381,458

 
 
Term Loan
335,665

 
335,665

 
222,179

 
222,179

 
 
Term Loan Credit Facility
200,000

 
200,000

 

 

 
 
Revolving Credit Facility
144,000

 
144,000

 
83,800

 
83,800

 
 
Airnorth debt
19,652

 
19,652

 
23,119

 
23,119

 
 
Eastern Airways debt
15,643

 
15,643

 
19,680

 
19,680

 
 
Other debt
24,394

 
24,394

 

 

 
 
3% Convertible Senior Notes

 

 
114,109

 
115,288

 
 
 
$
1,140,889

 
$
1,016,413

 
$
864,422

 
$
845,524

 
If prevailing market interest rates had been 1% higher as of March 31, 2016, and all other factors affecting our debt remained the same, the fair value of the 6 ¼% Senior Notes would have decreased by $13.1 million or 4.7%, respectively. Under comparable sensitivity analysis as of March 31, 2015, the fair value of the 6 ¼% Senior Notes and 3% Convertible Senior Notes would have decreased by $39.0 million or 7.8%, respectively.

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Item 8. Consolidated Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Bristow Group Inc.:
We have audited the accompanying consolidated balance sheets of Bristow Group Inc. and subsidiaries as of March 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’ investment and redeemable noncontrolling interests for each of the years in the three-year period ended March 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bristow Group Inc. and subsidiaries as of March 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2016, 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), Bristow Group Inc.’s internal control over financial reporting as of March 31, 2016, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 27, 2016 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP
Houston, Texas
May 27, 2016

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BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
Fiscal Year Ended March 31,
 
2016

2015

2014
 
 
 
 
 
 
 
(In thousands, except per share amounts)
Gross revenue:





Operating revenue from non-affiliates
$
1,550,638


$
1,639,263


$
1,423,653

Operating revenue from affiliates
78,909


87,724


92,673

Reimbursable revenue from non-affiliates
85,966


131,682


153,180

Reimbursable revenue from affiliates




76


1,715,513


1,858,669


1,669,582







Operating expense:





Direct cost
1,227,541


1,174,991


1,041,575

Reimbursable expense
81,824


124,566


144,557

Depreciation and amortization
136,812


114,293


95,977

General and administrative
224,645


254,158


199,814


1,670,822


1,668,008


1,481,923










Loss on impairment
(55,104
)
 
(7,167
)
 
(12,669
)
Loss on disposal of assets
(30,693
)

(35,849
)

(722
)
Earnings from unconsolidated affiliates, net of losses
261


(1,771
)

12,709










Operating income (loss)
(40,845
)

145,874


186,977

 
 
 
 
 
 
Interest expense, net
(34,128
)
 
(29,354
)
 
(43,218
)
Extinguishment of debt


(2,591
)


Gain on sale of unconsolidated affiliates


3,921


103,924

Other income (expense), net
(4,258
)

(6,377
)

(2,692
)
Income (loss) before provision for income taxes
(79,231
)

111,473


244,991

Benefit (provision) for income taxes
2,082


(22,766
)

(57,212
)
Net income (loss)
(77,149
)

88,707


187,779

Net (income) loss attributable to noncontrolling interests
4,707


(4,407
)

(1,042
)
Net income (loss) attributable to Bristow Group
(72,442
)

84,300


186,737

Accretion of redeemable noncontrolling interests
(1,498
)
 

 

Net income (loss) attributable to common stockholders
$
(73,940
)
 
$
84,300

 
$
186,737







Earnings (loss) per common share:





Basic
$
(2.12
)

$
2.40


$
5.15

Diluted
$
(2.12
)

$
2.37


$
5.09










Cash dividends declared per common share
$
1.09


$
1.28


$
1.00

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

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BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
Fiscal Year Ended March 31,
 
2016
 
2015
 
2014
 
 
 
 
 
 
 
(In thousands)
Net income (loss)
$
(77,149
)
 
$
88,707

 
$
187,779

Other comprehensive income:
 
 
 
 
 
Currency translation adjustments
(21,604
)
 
(71,617
)
 
18,729

Pension liability adjustment, net of tax provision (benefit) of $4.4 million, $10.6 million and $(10.4) million, respectively
705

 
(36,978
)
 
23,367

Total comprehensive income (loss)
(98,048
)
 
(19,888
)
 
229,875

 
 
 
 
 
 
Net (income) loss attributable to noncontrolling interests
4,707

 
(4,407
)
 
(1,042
)
Currency translation adjustments attributable to noncontrolling interests
1,409

 
(5,228
)
 
1,081

Total comprehensive (income) loss attributable to noncontrolling interests
6,116

 
(9,635
)
 
39

Total comprehensive income (loss) attributable to Bristow Group
(91,932
)
 
(29,523
)
 
229,914

Accretion of redeemable noncontrolling interests
(1,498
)
 

 

Total comprehensive income (loss) attributable to common stockholders
$
(93,430
)
 
$
(29,523
)
 
$
229,914

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


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BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
 
 
2016

2015
 
 
 
 
 
(In thousands)
ASSETS
Current assets:



Cash and cash equivalents
$
104,310


$
104,146

Accounts receivable from non-affiliates
243,425


250,610

Accounts receivable from affiliates
5,892


8,008

Inventories
142,503


147,169

Assets held for sale
43,783


57,827

Prepaid expenses and other current assets
53,183


70,091

Total current assets
593,096


637,851

Investment in unconsolidated affiliates
194,952


216,376

Property and equipment – at cost:



Land and buildings
253,098


171,959

Aircraft and equipment
2,570,577


2,493,869


2,823,675


2,665,828

Less – Accumulated depreciation and amortization
(540,423
)

(508,727
)

2,283,252


2,157,101

Goodwill
29,990


75,628

Other assets
170,572


143,764

Total assets
$
3,271,862


$
3,230,720

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ INVESTMENT
Current liabilities:



Accounts payable
$
96,966


$
84,193

Accrued wages, benefits and related taxes
59,431


81,648

Income taxes payable
27,400


7,926

Other accrued taxes
7,995


13,335

Deferred revenue
24,206


36,784

Accrued maintenance and repairs
22,196


23,316

Accrued interest
11,985


12,831

Other accrued liabilities
48,392


48,667

Deferred taxes
1,881


17,704

Short-term borrowings and current maturities of long-term debt
62,716


18,730

Contingent consideration
29,522

 
33,938

Deferred sale leaseback advance


55,934

Total current liabilities
392,690


435,006

Long-term debt, less current maturities
1,078,173


845,692

Accrued pension liabilities
70,107


99,576

Other liabilities and deferred credits
33,273


39,782

Deferred taxes
172,254


165,655

Commitments and contingencies (Note 7)



Redeemable noncontrolling interests
15,473

 
26,223

Stockholders’ investment:



Common stock, $.01 par value, authorized 90,000,000; outstanding: 34,976,743 and 34,838,374 shares (exclusive of 1,291,441 treasury shares)
377


376

Additional paid-in capital
801,173


781,837

Retained earnings
1,172,273


1,284,442

Accumulated other comprehensive loss
(289,819
)

(270,329
)
Treasury shares, at cost (2,756,419 shares)
(184,796
)

(184,796
)
Total Bristow Group stockholders’ investment
1,499,208


1,611,530

Noncontrolling interests
10,684


7,256

Total stockholders’ investment
1,509,892


1,618,786

Total liabilities, redeemable noncontrolling interests and stockholders’ investment
$
3,271,862


$
3,230,720

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

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BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Fiscal Year Ended March 31,
 
2016
 
2015
 
2014
 
 
 
 
 
 
 
(In thousands)
Cash flows from operating activities:
 
Net income (loss)
$
(77,149
)
 
$
88,707

 
$
187,779

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
136,812

 
114,293

 
95,977

Deferred income taxes
(51,643
)
 
(7,457
)
 
5,465

Write-off of deferred financing fees

 
660

 
12,733

Discount amortization on long-term debt
1,000

 
4,323

 
3,708

Loss on disposal of assets
30,693

 
35,849

 
722

Gain on sale of unconsolidated affiliates

 
(3,921
)
 
(103,924
)
Loss on impairment
55,104

 
7,167

 
12,669

Extinguishment of debt

 
2,591

 

Stock-based compensation
21,181

 
16,353

 
15,433

Equity in earnings from unconsolidated affiliates less than dividends received
2,619

 
9,418

 
1,629

Tax expense related to stock-based compensation

 
(1,550
)
 
(5,723
)
Increase (decrease) in cash resulting from changes in:
 
 
 
 
 
Accounts receivable
46,608

 
24,112

 
3,647

Inventories
(3,380
)
 
(21,478
)
 
12,824

Prepaid expenses and other assets
493

 
(25,485
)
 
(3,149
)
Accounts payable
13,316

 
(4,665
)
 
(5,154
)
Accrued liabilities
(34,035
)
 
29,461

 
11,697

Other liabilities and deferred credits
(25,593
)
 
(15,152
)
 
(14,239
)
Net cash provided by operating activities
116,026

 
253,226

 
232,094

Cash flows from investing activities:
 
 
 
 
 
Capital expenditures
(372,375
)
 
(601,834
)
 
(628,613
)
Acquisitions, net of cash received

 
(20,303
)
 
(39,850
)
Proceeds from sale of unconsolidated affiliates

 
4,185

 
112,210

Proceeds from asset dispositions
60,035

 
414,859

 
289,951

Investment in unconsolidated affiliates
(4,410
)
 

 

Net cash used in investing activities
(316,750
)
 
(203,093
)
 
(266,302
)
Cash flows from financing activities:
 
 
 
 
 
Proceeds from borrowings
928,802

 
454,393

 
533,064

Payment of contingent consideration
(9,453
)
 

 
(6,000
)
Debt issuance costs
(5,139
)
 

 
(15,523
)
Repayment of debt and debt redemption premiums
(677,003
)
 
(460,274
)
 
(512,492
)
Proceeds from assignment of aircraft purchase agreements

 

 
106,113

Partial prepayment of put/call obligation
(55
)
 
(59
)
 
(57
)
Acquisition of noncontrolling interests
(7,309
)
 
(3,170
)
 
(2,078
)
Dividends paid to noncontrolling interest
(153
)
 

 

Repurchase of common stock

 
(80,831
)
 
(77,661
)
Common stock dividends paid
(38,076
)
 
(45,078
)
 
(36,320
)
Issuance of common stock

 
5,172

 
15,398

Tax expense related to stock-based compensation

 
1,550

 
5,723

Net cash provided by (used in) financing activities
191,614

 
(128,297
)
 
10,167

Effect of exchange rate changes on cash and cash equivalents
9,274

 
(22,031
)
 
12,759

Net increase (decrease) in cash and cash equivalents
164

 
(100,195
)
 
(11,282
)
Cash and cash equivalents at beginning of period
104,146

 
204,341

 
215,623

Cash and cash equivalents at end of period
$
104,310

 
$
104,146

 
$
204,341

Supplemental disclosure of non-cash investing activities:
 
 
 
 
 
Deferred sale leaseback advance
$
18,285

 
$
69,680

 
$
60,194

Completion of deferred sale leaseback
$
(74,480
)
 
$
(183,688
)
 
$

Aircraft sold for future spare parts and maintenance
$
1,228

 
$
13,417

 
$

Aircraft purchased with short-term borrowings
$
24,394

 
$

 
$


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

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BRISTOW GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT AND REDEEMABLE NONCONTROLLING INTERESTS
(In thousands, except share amounts)
<
 
 
 
Total Bristow Group Stockholders’ Investment
 
 
 
 
 
Redeemable Noncontrolling Interests
 
Common
Stock
 
Common
Stock
(Shares)
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income Loss
 
Treasury
Stock
 
Noncontrolling
Interests
 
Total
Stockholders’
Investment
$

 
$
367

 
36,150,639

 
$
731,883

 
$
1,094,803

 
$
(199,683
)
 
$
(26,304
)
 
$
9,891

 
$
1,610,957

Issuance of common stock

 
6

 
601,405

 
33,008

 

 

 

 

 
33,014

Correction of historical shares outstanding

 

 
300

 

 

 

 

 

 

Acquisition of noncontrolling interest
21,139

 

 

 
(2,078
)
 

 

 

 

 
(2,078
)
Distributions paid to noncontrolling interests

 

 

 

 

 

 

 
(57
)
 
(57
)
Repurchases of common stock

 

 
(1,043,875
)
 

 

 

 
(77,661
)
 

 
(77,661
)
Common stock dividends ($1.00 per share)

 

 

 

 
(36,320
)
 

 

 

 
(36,320
)
Currency translation adjustments
473

 

 

 

 

 

 

 
(1,554
)
 
(1,554
)
Net income
671

 

 

 

 
186,737

 

 

 
371

 
187,108

Other comprehensive loss