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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 ________________________________________
FORM 10-Q
________________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
June 30, 2020
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
001-35701
 
Bristow Group Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
72-1455213
(State or Other Jurisdiction of
Incorporation or Organization)
 
(IRS Employer
Identification No.)
 
 
 
 
3151 Briarpark Drive, Suite 700
 
 
Houston,
Texas
 
77042
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code:
(713) 267-7600
  Era Group Inc.
         945 Bunker Hill Rd., Suite 650
Houston,
Texas
77024
Former Fiscal Year:
December 31
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
VTOL
NYSE
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes      No  
The total number of shares of common stock, par value $0.01 per share, outstanding as of August 3, 2020 was 30,279,955. The Registrant has no other class of common stock outstanding.




BRISTOW GROUP INC.
INDEX
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
Item 3.
 
 
 
 
Item 4.
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.
 
 
 
 
 
 

 





PART I — FINANCIAL INFORMATION
 
Item 1.     Financial Statements.
BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
 
 
 
 
 
 
 
Successor
 
 
Predecessor
  
 
Three Months Ended  June 30, 2020
 
 
Three Months Ended  June 30, 2019
Revenue:
 
 
 
 
 
Operating revenue from non-affiliates
 
$
246,549

 
 
$
304,130

Operating revenue from affiliates
 
14,959

 
 
12,446

Reimbursable revenue from non-affiliates
 
8,685

 
 
16,600

Total revenues
 
270,193

 
 
333,176

Costs and expenses:
 
 
 
 
 
Operating expense
 
190,436

 
 
257,759

Reimbursable expense
 
8,648

 
 
16,134

Prepetition restructuring charges
 

 
 
13,476

General and administrative
 
52,943

 
 
34,770

Depreciation and amortization
 
16,356

 
 
31,339

Total costs and expenses
 
268,383

 
 
353,478

 
 
 
 
 
 
Loss on impairment
 
(19,233
)
 
 

Gain (loss) on asset dispositions
 
5,522

 
 
(3,787
)
Earnings from unconsolidated affiliates, net of losses
 
(1,978
)
 
 
2,347

Operating loss
 
(13,879
)
 
 
(21,742
)
 
 
 
 
 
 
Interest income
 
262

 
 
387

Interest expense
 
(12,504
)
 
 
(26,708
)
Reorganization items
 

 
 
(76,356
)
Loss on sale of subsidiaries
 

 
 
(56,303
)
Change in fair value of preferred stock derivative liability
 
15,416

 
 

Gain on bargain purchase
 
75,433

 
 

Other income (expense), net
 
3,386

 
 
(3,873
)
Total other income (expense)
 
81,993

 
 
(162,853
)
Income (loss) before benefit (provision) for income taxes
 
68,114

 
 
(184,595
)
Benefit for income taxes
 
3,290

 
 
15,507

Net income (loss)
 
71,404

 
 
(169,088
)
Net (income) loss attributable to noncontrolling interests
 
73

 
 
(158
)
Net income (loss) attributable to Bristow Group Inc.
 
$
71,477

 
 
$
(169,246
)
 
 
 
 
 
 
Income (loss) per common share:
 
 
 
 
 
Basic
 
$
18.41

 
 
$
(4.71
)
Diluted
 
$
5.16

 
 
$
(4.71
)
 
 
 
 
 
 
Weighted average common shares outstanding (1):
 
 
 
 
 
Basic
 
11,102,611

 
 
35,918,916

Diluted
 
38,988,528

 
 
35,918,916

(1) See Note 13 to the condensed consolidated financial statements for details on Weighted average common shares outstanding.
 
 
 
 
 
 
 
 
 

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

1



BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited, in thousands)

  
 
Successor
 
 
Predecessor
 
 
Three Months Ended  June 30, 2020
 
 
Three Months Ended  June 30, 2019
Net income (loss)
 
$
71,404

 
 
$
(169,088
)
Other comprehensive income (loss):
 
 
 
 
 
Currency translation adjustments
 
3,146

 
 
16,899

Unrealized gain (loss) on cash flow hedges, net of tax benefit
 
(881
)
 
 
474

Currency translation adjustments attributable to noncontrolling interests
 
13

 
 
(11
)
Total comprehensive income (loss)
 
73,682

 
 
(151,726
)
 
 
 
 
 
 
Net (income) loss attributable to noncontrolling interests
 
73

 
 
(158
)
Total comprehensive income (loss) attributable to Bristow Group Inc.
 
$
73,755

 
 
$
(151,884
)
 
 
 
 
 
 
 
 
 


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

2



BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
 
 
Successor
 
 
June 30, 2020
 
March 31, 2020
 
 
(Unaudited)
 
(Audited)
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
259,922

 
$
196,662

Restricted cash
 
3,493

 
2,459

Accounts receivable from non-affiliates
 
215,210

 
166,038

Accounts receivable from affiliates
 
8,488

 
14,645

Inventories
 
110,086

 
82,419

Assets held for sale
 
33,523

 
32,401

Prepaid expenses and other current assets
 
30,366

 
29,527

Total current assets
 
661,088

 
524,151

Investment in unconsolidated affiliates
 
89,175

 
110,058

Property and equipment – at cost:
 
 
 
 
Land and buildings
 
178,246

 
160,069

Aircraft and equipment
 
920,861

 
741,245

 
 
1,099,107

 
901,314

Less – Accumulated depreciation and amortization
 
(39,024
)
 
(24,560
)
 
 
1,060,083

 
876,754

Right-of-use assets
 
297,072

 
305,962

Other assets
 
144,373

 
128,336

Total assets
 
$
2,251,791

 
$
1,945,261

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ INVESTMENT
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
61,983

 
$
52,110

Accrued wages, benefits and related taxes
 
48,252

 
42,852

Income taxes payable
 
14,537

 
1,743

Other accrued taxes
 
6,982

 
4,583

Deferred revenue
 
33,329

 
12,053

Accrued maintenance and repairs
 
25,632

 
31,072

Accrued interest
 
943

 
832

Current portion of operating lease liabilities
 
81,953

 
81,484

Other accrued liabilities
 
21,074

 
25,510

Short-term borrowings and current maturities of long-term debt
 
63,541

 
45,739

Total current liabilities
 
358,226

 
297,978

Long-term debt, less current maturities
 
582,264

 
515,385

Accrued pension liabilities
 
13,145

 
17,855

Preferred stock embedded derivative
 

 
286,182

Other liabilities and deferred credits
 
6,051

 
4,490

Deferred taxes
 
48,800

 
22,775

Long-term operating lease liabilities
 
214,125

 
224,595

Commitments and contingencies (Note 10)
 


 

Mezzanine equity preferred stock: $.0001 par value, 6,824,582 issued and outstanding as of March 31, 2020 (1)
 

 
149,785

Stockholders’ investment:
 
 
 
 
Common stock, $0.01 par value, 110,000,000 authorized; 30,288,972 and 11,235,535 outstanding as of June 30 2020 and March 31, 2020, respectively (1)
 
303

 
1

Additional paid-in capital
 
680,987

 
295,897

Retained earnings
 
354,582

 
139,228

Accumulated other comprehensive loss
 
(6,363
)
 
(8,641
)
Total Bristow Group Inc. stockholders’ investment
 
1,029,509

 
426,485

Noncontrolling interests
 
(329
)
 
(269
)
Total stockholders’ investment
 
1,029,180

 
426,216

Total liabilities, mezzanine equity and stockholders’ investment
 
$
2,251,791

 
$
1,945,261

(1) Share information displayed as of March 31, 2020 does not take into account the impact of the 3:1 reverse stock split or the Merger.
The accompanying notes are an integral part of these condensed consolidated financial statements.

3



BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
  
 
Successor
 
 
Predecessor
 
 
Three Months Ended  June 30, 2020
 
 
Three Months Ended  June 30, 2019
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
Net income (loss)
 
$
71,404

 
 
$
(169,088
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Depreciation and amortization
 
21,493

 
 
31,339

Deferred income taxes
 
(6,382
)
 
 
(19,115
)
Loss from extinguishment of debt
 
615

 
 

Write-off of deferred financing fees
 

 
 
2,625

Discount amortization on long-term debt
 
3,619

 
 
850

Reorganization items, net
 

 
 
60,853

(Gain) loss on disposal of assets
 
(5,522
)
 
 
3,787

Loss on impairment
 
19,233

 
 

Loss on sale of subsidiaries
 

 
 
56,303

Deferral of lease payments
 

 
 
285

Gain on bargain purchase
 
(75,433
)
 
 

Change in fair value of preferred stock derivative liability
 
(15,416
)
 
 

Stock-based compensation
 
5,185

 
 
824

Equity in earnings from unconsolidated affiliates less than
    (greater than) dividends received
 
3,632

 
 
(697
)
Increase (decrease) in cash resulting from changes in:
 
 
 
 
 
Accounts receivable
 
10,465

 
 
(19,856
)
Inventory, prepaid expenses and other assets
 
(12,502
)
 
 
(3,752
)
Accounts payable, accrued expenses and other liabilities
 
(27,257
)
 
 
18,880

Net cash used in operating activities
 
(6,866
)
 
 
(36,762
)
Cash flows from investing activities:
 
 
 
 
 
Capital expenditures
 
(2,849
)
 
 
(7,439
)
Proceeds from asset dispositions
 
11,665

 
 
3,204

Deposits on assets held for sale
 
20,000

 
 

Cash transferred in sale of subsidiaries, net of cash received
 

 
 
(22,878
)
Increase in cash from Era merger
 
120,236

 
 

Net cash provided by (used in) investing activities
 
149,052

 
 
(27,113
)
Cash flows from financing activities:
 
 
 
 
 
Proceeds from borrowings
 

 
 
75,585

Debt issuance costs
 

 
 
(10,016
)
Repayment of debt and debt redemption premiums
 
(73,387
)
 
 
(5,821
)
Share repurchases
 
(4,807
)
 
 

Net cash provided by (used in) financing activities
 
(78,194
)
 
 
59,748

Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
302

 
 
1,840

Net increase (decrease) in cash, cash equivalents and restricted cash
 
64,294

 
 
(2,287
)
Cash, cash equivalents and restricted cash at beginning of period
 
199,121

 
 
178,055

Cash, cash equivalents and restricted cash at end of period
 
$
263,415

 
 
$
175,768

Cash paid during the period for:
 
 
 
 
 
Interest
 
$
8,372

 
 
$
9,939

Income taxes
 
$
2,308

 
 
$
4,413



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

4



BRISTOW GROUP INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders’ Investment and Mezzanine Equity
(Unaudited)
(In thousands, except share amounts)

 
 
 
Total Bristow Group Inc. Stockholders’ Investment
 
 
 
 
Mezzanine equity preferred stock
 
Common
Stock
 
Common
Stock
(Shares)
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interests
 
Total
Stockholders’
Investment
March 31, 2020 (Successor)
$
149,785

 
$
1

 
11,235,566

 
$
295,897

 
$
139,228

 
$
(8,641
)
 
$
(269
)
 
$
426,216

Share repurchases
(2,151
)
 

 
(142,721
)
 

 
1,263

 

 

 
1,263

Preferred stock share conversion
(146,448
)
 
4

 
34,836,688

 
270,678

 
142,614

 

 

 
413,296

Elimination of Old Bristow stock

 
(5
)
 
(45,929,533
)
 
5

 

 

 

 

Exchange of common stock

 
231

 
23,027,010

 
(231
)
 

 

 

 

Era purchase price

 
72

 
7,175,029

 
108,268

 

 

 

 
108,340

Preferred stock compensation activity and conversion
(1,186
)
 

 

 
6,370

 

 

 

 
6,370

Restricted stock awards

 

 
129,158

 

 

 

 

 

Purchase of Company common stock (tax withholding)

 

 
(42,225
)
 

 

 

 

 

Currency translation adjustments

 

 

 

 

 

 
13

 
13

Net income (loss)

 

 

 

 
71,477

 

 
(73
)
 
71,404

Other comprehensive income

 

 

 

 

 
2,278

 

 
2,278

June 30, 2020 (Successor)
$

 
$
303

 
30,288,972

 
$
680,987

 
$
354,582

 
$
(6,363
)
 
$
(329
)
 
$
1,029,180


 
Total Bristow Group Inc. Stockholders’ Investment
 
 
 
 
 
Common
Stock
 
Common
Stock
(Shares)
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
 
Noncontrolling
Interests
 
Total
Stockholders’
Investment
March 31, 2019 (Predecessor)
$
386

 
35,918,916

 
$
862,020

 
$
455,598

 
$
(327,989
)
 
$
(184,796
)
 
$
7,148

 
$
812,367

Issuance of common stock

 

 
824

 

 

 

 

 
824

Sale of subsidiaries

 

 

 

 

 

 
(5,612
)
 
(5,612
)
Currency translation adjustments

 

 

 

 

 

 
(11
)
 
(11
)
Net income (loss)

 

 

 
(169,246
)
 

 

 
158

 
(169,088
)
Other comprehensive income

 

 

 

 
17,362

 

 

 
17,362

June 30, 2019 (Predecessor)
$
386

 
35,918,916

 
$
862,844

 
$
286,352

 
$
(310,627
)
 
$
(184,796
)
 
$
1,683

 
$
655,842



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

5


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


Note 1BASIS OF PRESENTATION, CONSOLIDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements include the accounts of Bristow Group Inc. and its consolidated entities.On January 23, 2020, Era Group Inc. (“Era”), Ruby Redux Merger Sub, Inc., a wholly owned subsidiary of Era (“Merger Sub”) and Bristow Group Inc. (“Old Bristow”) entered into an Agreement and Plan of Merger, as amended on April 22, 2020 (the “Merger Agreement”).   On June 11, 2020, the merger (the “Merger”) contemplated by the Merger Agreement was consummated and Merger Sub merged with and into Old Bristow, with Old Bristow continuing as the surviving corporation and as a direct wholly owned subsidiary of Era (the “Merger”). Following the Merger, Era changed its name to Bristow Group Inc. and Old Bristow changed its name to Bristow Holdings U.S. Inc. Unless the context otherwise indicates, in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:
the “Company”, “Combined Company,” “Bristow”,  “we”, “us” and “our” refer to the entity currently known as Bristow Group Inc. and formerly known as Era Group Inc., together with its subsidiaries;
“Old Bristow” refers to the entity formerly known as Bristow Group Inc. and now known as Bristow Holdings U.S. Inc., together with its subsidiaries; and
“Era” refers to Era Group Inc. (currently known as Bristow Group Inc., the parent of the combined company) and its subsidiaries prior to consummation of the Merger.
Pursuant to generally accepted accounting principles in the U.S. (“GAAP”), the Merger was accounted for as an acquisition by Old Bristow of Era even though Era was the legal acquirer and remained the ultimate parent of the combined company. As a result, upon the closing of the Merger, Old Bristow’s historical financial statements replaced Era’s historical financial statements for all periods prior to the completion of the  Merger, and the financial condition, results of operations, comprehensive income and cash flows of Era have been included in those financial statements since June 12, 2020. Any reference to comparative period disclosures in the Quarterly Report on Form 10Q refers to Old Bristow.
Effective upon the closing of the Merger, the Company changed its fiscal year-end from December 31 to March 31, to correspond with Old Bristow’s fiscal year-end. The Company’s fiscal year ends March 31, and fiscal years are referenced based on the end of such period. Therefore, the fiscal year ending March 31, 2021 is referred to as “fiscal year 2021”.
The condensed consolidated financial information for the three months ended June 30, 2020 (Successor) and 2019 (Predecessor) has been prepared by the Company and has not been audited by its independent registered public accounting firm; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair presentation of the condensed consolidated balance sheet, the condensed consolidated statements of operations and comprehensive loss, the condensed consolidated statements of cash flows and the condensed consolidated statements of changes in stockholders’ investment and mezzanine equity.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP in the United States (“U.S.”) have been condensed or omitted from that which would appear in the annual consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Current Report on Form 8-K for the fiscal year ended March 31, 2020 (the “fiscal year 2020 Financial Statements”) filed with the Securities and Exchange Commission (the “SEC”) on June 6, 2020, referred to hereafter as the “ Financial Statement Form 8-K”. Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the entire fiscal year.
Coronavirus Update
The outbreak of the disease caused by the novel coronavirus (“COVID-19”) caused a significant decrease in oil and natural gas prices resulting from demand weakness and over supply and also caused significant disruptions and volatility in the global marketplace in the first half of calendar year 2020.  These conditions are expected to continue for at least the near future. The depressed oil and natural gas price environment was initially exacerbated by decisions by large oil producing countries that have now been altered, but the resolution has not led to a meaningful increase in oil and gas prices which remain below historic averages. For additional information, see Part II Item 1A “Risk Factors” and the “Recent Developments” section of Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).

6


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

Emergence from Voluntary Reorganization under Chapter 11
On May 11, 2019 (the “Petition Date”), Old Bristow and certain of its subsidiaries (collectively the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the U.S. Code (the “Bankruptcy Code”). The Debtors’ Chapter 11 Cases were jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. During the pendency of the Chapter 11 Cases, the Debtors continued to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. On August 1, 2019, the Debtors filed with the Bankruptcy Court their Joint Chapter 11 Plan of Reorganization and on August 20, 2019, the Debtors filed their Amended Joint Chapter 11 Plan of Reorganization (as further modified on August 22, 2019, the “Amended Plan”) and the related Disclosure Statement (as further modified on August 22, 2019, the “Amended Disclosure Statement”). On October 8, 2019, the Bankruptcy Court entered an order approving the Amended Disclosure Statement and confirming the Amended Plan. The effective date of the Amended Plan (the “Effective Date”) occurred on October 31, 2019 at which point the Debtors emerged from the Chapter 11 Cases.    
Upon Old Bristow’s emergence from bankruptcy, Old Bristow adopted fresh-start accounting in accordance with provisions of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) No. 852, “Reorganizations” (“ASC 852”), which resulted in Old Bristow becoming a new entity for financial reporting purposes on the Effective Date. Upon the adoption of fresh-start accounting, the Company’s assets and liabilities were recorded at their fair values as of the fresh-start reporting date, October 31, 2019. As a result of the adoption of fresh-start accounting, Old Bristow’s consolidated financial statements subsequent to October 31, 2019 may not be comparable to the consolidated financial statements prior to October 31, 2019. In this Quarterly Report on Form 10-Q, references to:
“Predecessor” refer to Old Bristow on and prior to October 31, 2019; and
“Successor” refer to the reorganized Old Bristow on and after November 1, 2019 until completion of the Merger and after Completion of the Merger refer to the Combined Company after completion of the Merger.
Basis of Consolidation
The consolidated financial statements include the accounts of Bristow Group Inc., its wholly and majority-owned subsidiaries and entities that meet the criteria of variable interest entities (“VIEs”) of which the Company is the primary beneficiary. All significant inter-company accounts and transactions are eliminated in consolidation.
Business Combinations
The Company recognizes and measures, with certain exceptions, the fair value of assets acquired, liabilities assumed, and non-controlling interests when the acquisition constitutes a change in control of the acquired entity. Shares issued in consideration for a business combination, contingent consideration arrangements and pre-acquisition loss and gain contingencies are all measured and recorded at their acquisition-date fair value. Subsequent changes to fair value of contingent consideration arrangements are generally reflected in earnings. The operating results of entities acquired are included in the accompanying consolidated statements of operations from the date of acquisition. For material acquisitions, the Company typically engages independent appraisers to assist with the determination of the fair value of assets acquired, liabilities assumed, noncontrolling interest, if any, and goodwill or gain on bargain purchase, based on recognized business valuation methodologies. If the initial accounting for the business combination has not concluded by the end of the reporting period in which the acquisition occurs, an estimate will be recorded. The Company may record any material adjustments to the initial estimate based on new information obtained that would have existed as of the date of the acquisition within a year of the acquisition date.
As noted above, on June 11, 2020, the combination of Old Bristow with Era was successfully completed, in an all-stock transaction with Era having issued shares of combined Company Common Stock to Old Bristow’s stockholders. The transaction was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). See Note 2 to the condensed consolidated financial statements for further details on the Merger.

7


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

Restricted Cash
As of June 30, 2020 (Successor), restricted cash consisted of $0.8 million reserved for post-bankruptcy emergence related payments and $2.7 million related to Norwegian payroll withholding taxes.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands).
 
 
Successor
 
 
June 30, 2020
 
March 31, 2020
 
 
 
 
 
Reconciliation of cash, cash equivalents and restricted cash as shown in the statements of cash flows:
 
 
 
 
Cash and cash equivalents
 
$
259,922

 
$
196,662

Restricted cash
 
3,493

 
2,459

Total cash, cash equivalents and restricted cash
 
$
263,415

 
$
199,121


Current Expected Credit Losses (“CECL”)
Customers are primarily international, independent and major integrated exploration, development and production companies, third party helicopter operators and government agencies. The Company designates trade receivables as a single pool of assets based on their short-term nature, similar customer base and risk characteristics. Customers are typically granted credit on a short-term basis, and related credit risks are considered minimal. The Company conducts periodic quantitative and qualitative analysis on historic customer payment trends, customer credit ratings and foreseeable economic conditions. Historically, losses on trade receivables have been immaterial and uncorrelated to each other. Based on these circumstances, the Company decides if additional reserve amounts are needed against the trade receivables asset pool on a case by case basis. Trade receivables are deemed uncollectible and removed from accounts receivable and the allowance for doubtful accounts when collection efforts have been exhausted. As of June 30, 2020 (Successor), the Company did not reserve any additional amounts for CECL.
As of June 30 and March 31, 2020 (Successor), the allowance for doubtful accounts for non-affiliates was $0.4 million and $0.4 million, respectively, and primarily related to a customer in the U.S. Gulf of Mexico. There were no allowances for doubtful accounts related to accounts receivable due from affiliates as of June 30 and March 31, 2020 (Successor).
Prepaid Expenses and Other Current Assets
As of March 31, 2019 (Predecessor), prepaid expenses and other current assets included the short-term portion of contract acquisition and pre-operating costs totaling $9.8 million related to the search and rescue (“SAR”) contracts in the U.K. and two customer contracts in Norway, which were recoverable under the contracts and will be expensed over the terms of the contracts. Old Bristow recorded expenses of $2.4 million for the three months ended June 30, 2019 (Predecessor) related to these contracts. In connection with Old Bristow’s emergence from bankruptcy and the application of ASC 852, the short-term portion of contract acquisition and pre-operating costs was adjusted by $8.8 million to its fair value of zero at the Effective Date.
Leases
The Company determines if an arrangement is a lease at inception or during modification or renewal of an existing lease. Operating leases are maintained for a number of fixed assets including aircraft, land, hangars, buildings, fuel tanks and tower sites. The right-of-use (“ROU”) assets associated with these leases are reflected under long-term assets; the current portion of the long-term payables are reflected within current liabilities; and the payables on lease agreements due after one year are recorded under long-term liabilities on the Company’s condensed consolidated balance sheets. For those contracts with terms of twelve months or less, the lease expense is recognized on a straight-line basis over the lease term and recorded in operating expenses on the statements of operations.  As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate based on the information available at commencement date is used to determine the present value of future payments. Most of the Company’s lease agreements allow the option of renewal or extension, which are contemplated when determining the lease term. When it is reasonably certain that a lease will be extended, this is incorporated into the calculations.
Other Assets
Intangible assets with finite useful lives are amortized over their estimated useful lives to their estimated residual values. The residual value of an intangible asset is generally assumed to be zero, with certain limited exceptions. Finite lived intangible assets are reviewed for recoverability when indicators of impairment are present. Indicators of impairment for finite lived intangible assets are the same as those for impairment of long-lived assets. For finite lived intangible assets, an impairment loss is recognized if the carrying amount of the asset exceeds the undiscounted cash flows projected to be generated by the asset. If the finite lived

8


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

intangible asset is impaired, then the amount of the impairment is calculated as the excess of the asset’s carrying amount over its fair value. After an impairment loss is recognized, the adjusted carrying amount of the intangible asset will be its new accounting basis. After adjusting the carrying amount for impairment loss, the Company’s policy requires the reevaluation of the useful life of that asset.
Intangible assets by type were as follows (in thousands, except for years):
 
Successor
 
U.K. SAR customer contract
 
PBH
 
Total
 
 
 
 
 
 
 
Gross Carrying Amount
March 31, 2020
$
55,706

 
$
74,321

 
$
130,027

Additions (1)

 
13,936

 
$
13,936

Foreign currency translation
(171
)
 
(169
)
 
$
(340
)
June 30, 2020
$
55,535

 
$
88,088

 
$
143,623

 
 
 
 
 
 
 
Accumulated Amortization
March 31, 2020
$
(3,251
)
 
$
(15,503
)
 
$
(18,754
)
Amortization expense
(1,880
)
 
(5,136
)
 
(7,016
)
June 30, 2020
$
(5,131
)
 
$
(20,639
)
 
$
(25,770
)
 
 
 
 
 
 
Weighted average remaining contractual life, in years
6.8

 
11.9

 
9.3


_____________ 
(1) 
In connection with the Merger, the Company recognized $13.9 million of additional intangible assets related to power-by-the-hour (“PBH”) contracts. The amortization expense for the PBH contracts is recorded as maintenance expense and is included in operating expense on the condensed consolidated financial statements.
Future amortization expense of intangible assets for each of the years ending March 31 (Successor) is as follows (in thousands):        
2021
 
$
20,182

2022
 
19,446

2023
 
18,961

2024
 
17,506

2025
 
17,381

Thereafter
 
24,377

Total future amortization
 
$
117,853


The portion of future amortization expense that will be included in maintenance expense is $14.6 million for the remaining nine months ended March 31, 2021, $12.0 million for fiscal year 2022, $11.5 million for fiscal year 2023, $10.0 million for fiscal year 2024, $9.9 million for fiscal year 2025 and $9.4 million thereafter.
Property and Equipment
The Company periodically reviews useful lives and residual values for changes in circumstances that indicate a change in estimate may be required. Upon emergence from the Chapter 11 Cases, Old Bristow performed a review of useful lives and residual values. As a result of this review, certain changes were made to the useful lives and residual values of aircraft and related equipment. No material changes were made to non-aircraft property, plant and equipment useful lives and residual values. The previous policy stated that estimated useful lives of aircraft generally range from 5 to 15 years, and the residual value used in calculating depreciation of aircraft generally ranged from 30% to 50% of cost. The revised policy will generally utilize a 30 year useful life from the date of manufacture of an aircraft for used aircraft and the in-service date for new aircraft and a residual value range of 5% to 25% of cost. In certain circumstances, the useful lives of aircraft are limited by a 30,000 flight hour restriction on the airframe of an aircraft imposed by certain aircraft manufacturers. These changes in useful lives reflect the Company’s view of expected operating conditions and the economic environment, which suggest the Company will utilize its aircraft for longer than it has historically. The changes in residual values reflect the change made to useful lives and the current expectations of value to be recovered at the time of eventual disposal, based on historical sales data during the decline in the oil and gas industry.

9


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

The Company capitalizes betterments and improvements to its aircraft and depreciates such costs over the remaining useful lives of the aircraft. Betterments and improvements increase the life or utility of an aircraft. 
The Company evaluates its asset groups for impairment whenever facts or circumstances indicate the carrying value of an asset group may not be recoverable.
Guarantors of Securities
In March 2020, the SEC amended Rule 3-10 and 3-16 of Regulation S-X, CFR 210.1-01 through 210.3-16, regarding financial disclosure requirements for debt securities issued in registered offerings involving subsidiaries of the registrant as either issuers or guarantors. This amended rule narrows the circumstances that require separate financial statements or summarized financial disclosures of issuers and subsidiary guarantors and simplifies the summarized disclosures required in lieu of those statements. Under the new rule, comparative period information is no longer required. As a result of this amended rule, the Company has included narrative disclosures in lieu of separate financial statements. The Company has early adopted this new rule and has elected to provide the simplified disclosure related to its 7.750% Senior Notes due 2022 within the MD&A.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standard updates (“ASUs”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position or results of operations.
Adopted
In June 2016, the FASB issued ASU No. 2016-13, 2019-04, “Measurement of Credit Losses on Financial Instruments” (ASU No. 2016-13), which sets forth the current expected credit loss model, a new forward-looking impairment model for certain financial instruments based on expected losses rather than incurred losses.  The ASU is effective for interim and annual periods beginning after December 15, 2019, and early adoption of the standard was permitted.  Entities were required to adopt ASU No. 2016-13 using a modified retrospective approach, subject to certain limited exceptions.  Upon evaluating the impact of this ASU, the Company concluded that no additional reserves were necessary as historical losses were immaterial, and, based on the qualitative and quantitative analysis performed in accordance with ASC 326 requirements, the Company determined there was no reasonable expectation of credit losses associated with the Company’s trade receivables in the foreseeable future. ASU No. 2016-13 was adopted effective April 1, 2020, and such adoption did not have a material impact on the condensed consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurements” (Topic 820) modifying the disclosure requirements on fair value measurements. The amendment modifies, removes, and adds several disclosure requirements on fair value measurements in ASC 820, Fair Value Measurement. The amendment will be effective for the Company in fiscal year 2022, and early adoption is permitted. The Company has not yet adopted this accounting guidance and is currently evaluating the effect this accounting guidance will have on its disclosure requirements. This disclosure requirement was adopted effective April 1, 2020 prospectively, and such adoption did not have a material impact on its condensed consolidated financial statements.    
In August 2018, the FASB modified ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans” (Subtopic 715-20), for changes to disclosure requirements for employers that sponsor defined benefit pension plans. Certain disclosure requirements were removed and certain disclosure requirements were added. The amendment also clarifies disclosure requirements for projected benefit obligations and accumulated benefit obligations in excess of respective plan assets. The amendment is effective beginning in the Company’s fiscal year 2021 financial statements, and early adoption is permitted. This disclosure requirement was adopted effective April 1, 2020 by removing the weighted-average expected long-term rate of return on assets in this Quarterly Report. Annual disclosure requirements will be reflected in the Annual Report.
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software” (Subtopic
350-40), providing guidance that addresses the accounting for implementation costs associated with a hosted service. The guidance provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. The amendment is effective beginning in fiscal year 2021 financial statements, and early adoption is permitted. The guidance will be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. This disclosure requirement was adopted effective April 1, 2020 prospectively, and such adoption did not have a material impact on its condensed consolidated financial statements.
In October 2018, the FASB amended ASU No. 2018-17, “Targeted Improvements to Related Party Guidance for Variable Interest Entities” (Topic 810), the guidance for determining whether a decision-making fee is a variable interest. The amendments

10


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

require organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in generally accepted accounting principles). Therefore, these amendments likely will result in more decision makers not consolidating VIEs. This amendment is effective beginning in the Company’s fiscal year 2021 financial statements, and early adoption is permitted. This disclosure requirement was adopted effective April 1, 2020, and such adoption did not have a material impact on the condensed consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-03, “Codification Improvements to Financial Instruments”, which makes improvements to financial instruments guidance. The standard is effective immediately for certain amendments and for fiscal years beginning after December 15, 2019. This accounting guidance was adopted effective April 1, 2020, and such adoption did not have a material impact on the condensed consolidated financial statements.
Not Yet Adopted
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes” (Topic 740), new guidance to simplify the accounting for income taxes, which eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. This ASU also includes guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The standard will be effective for the Company in fiscal year 2022 and early adoption is permitted. The Company is currently assessing the impact of ASU 2019-12 on its consolidated financial statements.
In January 2020, the FASB issued ASU No. 2020-01, “Investments-Equity Securities” Topic 321, “Investments-Equity Method and Joint Ventures” Topic 323 and “Derivatives and Hedging” Topic 815 (ASU No. 2020-01) as an update to ASU No. 2016-01 “Financial Instruments-Overall”, further clarifying certain interactions between the guidance to account for certain equity securities under Topic 321, 323 and 815, and improve current GAAP by reducing diversity in practice and increasing comparability of accounting. The standard will be effective for the Company in fiscal year 2022, and early adoption is permitted. The Company has not yet adopted this accounting guidance and is currently evaluating the effect this accounting guidance will have on its financial statements.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform” (Topic 848). The guidance is intended to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This guidance is effective for the Company in fiscal year 2022. The Company has not yet adopted this accounting guidance and is currently evaluating the effect this accounting guidance will have on its financial statements.
Note 2BUSINESS COMBINATIONS
Era Group Inc.
On June 11, 2020, the Merger was completed. In the Merger, Old Bristow merged with and into Merger Sub, a subsidiary of Era, with Old Bristow remaining as the surviving company and as a subsidiary of Era, the ultimate parent of the Combined Company. Era is one of the largest helicopter operators in the world and the longest serving helicopter transport operator in the U.S., primarily servicing offshore oil and gas production platforms, drilling rigs and other installations. The transaction was structured as an all-stock, reverse-triangular merger, whereby Era issued shares of common stock (“Combined Company Common Stock”) to Old Bristow stockholders, allowing it to qualify as a tax free reorganization for U.S. federal income tax purposes. Following the Merger, Era changed its name to Bristow Group Inc. and its common stock continued to trade on the NYSE under the new ticker symbol VTOL.
While Era was the legal acquirer in the Merger, Old Bristow was determined to be the accounting acquirer, based upon the terms of the Merger and other considerations including that: (i) immediately following completion of the Merger, Old Bristow stockholders owned approximately 77% of the outstanding shares of Combined Company Common Stock and pre-Merger holders of Era common stock (“Era Common Stockholders”) owned approximately 23% of the outstanding shares of Combined Company Common Stock and (ii) the board of directors of the Company consists of eight directors, including six Old Bristow designees. The Merger was accounted for under the acquisition method of accounting under ASC 805, Business Combinations.
Consistent with the guidelines of ASC 805, if the initial accounting for the business combination has not concluded by the end of the reporting period in which the acquisition occurs, an estimate may be recorded. The Company may record any material adjustments to the initial amounts recorded based on new information obtained that would have existed as of the date of the acquisition within a year of the acquisition date. The Company is continuing to analyze and assess relevant information in the following areas to determine the fair value of assets acquired and liabilities assumed as of the Merger date: certain legal and

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

contingency-related matters and aircraft and related contract assets. Due to the recent timing and complexity of the Merger, these amounts are provisional and subject to change as our fair value assessments are finalized. The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation table below. The Company will reflect any such adjustments in subsequent filings in accordance with this accounting standard.
The acquisition date fair value of the consideration transferred consisted of the following (in thousands):
Fair value of Combined Company Common Stock issued (1)
 
$
106,440

Fair value of stock awards (2)
 
1,900

Total consideration transferred
 
$
108,340

___________________ 
(1) 
Represents the fair value of Combined Company Common Stock retained by Era Common Stockholders. based on the closing market price of Era shares on June 11, 2020, the acquisition date.
(2) 
Represents the fair value of restricted share awards of Combined Company Common Stock held by Era employees that were accelerated upon consummation of the Merger.
The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition, June 11, 2020 (in thousands):
Assets acquired:
 
 
Cash and cash equivalents
 
$
120,236

Accounts receivable from non-affiliates
 
35,079

Prepaid expenses and other current assets
 
17,598

Inventories
 
8,826

Property and equipment
 
214,303

Right-of-use assets
 
8,395

Other assets
 
14,305

Total assets acquired
 
$
418,742

Liabilities assumed:
 
 
Accounts payable
 
$
9,686

Accrued wages, benefits and related taxes
 
8,319

Income taxes payable
 
1,791

Deferred revenue
 
236

Accrued interest
 
5,459

Current portion of operating lease liabilities
 
1,711

Other accrued liabilities
 
12,943

Short-term borrowings and current maturities of long-term debt
 
17,485

Long-term debt, less current maturities
 
136,704

Other liabilities and deferred credits
 
1,404

Deferred taxes
 
32,407

Long-term operating lease liabilities
 
6,845

Total liabilities and redeemable noncontrolling interest assumed
 
$
234,990

 
 
 
Net assets acquired
 
$
183,752


The Merger resulted in a gain on bargain purchase due to the estimated fair value of the identifiable net assets acquired exceeding the purchase consideration transferred by $75.4 million and is shown as a gain on bargain purchase on the condensed consolidated statements of operations. The bargain purchase was a result of a combination of factors including depressed oil and gas prices and market volatility linked to the COVID-19 pandemic between the initial announcement and consummation of the Merger.
Specifically, the Era share price declined from $8.59 to $5.16 between the last trading day prior the Merger announcement and the date the Merger closed. The aggregate Merger consideration was based on an exchange ratio that was fixed and did not fluctuate in the event that the value of Old Bristow’s common stock increases or Era’s common stock decreases, between the date of the Merger agreement and consummation of the Merger.

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