PROPERTY AND EQUIPMENT AND ASSETS HELD FOR SALE

Property and Equipment

During fiscal years 2015, 2014 and 2013, we made capital expenditures as follows:



	Fiscal Year Ended March 31,
	2015		2014		2013
Number of aircraft delivered:
Medium	7		10		2
Large	14		11		17
Total aircraft	21		21		19

Capital expenditures (in thousands):
Aircraft and related equipment ⁽¹⁾	$	476,368	$	563,724	$	504,329
Other	125,466		64,889		67,096
Total capital expenditures ⁽²⁾	$	601,834	$	628,613	$	571,425

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⁽¹⁾	During fiscal years 2015, 2014 and 2013, we spent $440.9 million, $529.4 million and $312.7 million, respectively, on construction in progress which primarily represents progress payments on aircraft to be delivered in future periods.


⁽²⁾	During fiscal year 2013, we paid $190.9 million for aircraft and facilities used by Cougar.

Additionally, the following tables present details on the aircraft sold or disposed of and impairments on assets held for sale during fiscal years 2015, 2014 and 2013:



	Fiscal Year Ended March 31,
	2015		2014		2013
	(In thousands, except for number of aircraft)

Number of aircraft sold or disposed of ⁽¹⁾	44		46		27
Proceeds from sale or disposal of assets ⁽¹⁾	$	414,859	$	289,951	$	314,847
Gain from sale or disposal of assets	$	208	$	6,092	$	3,708

Number of aircraft impaired	27		11		10
Impairment charges on aircraft held for sale and construction in progress ⁽²⁾	$	36,057	$	6,814	$	4,362

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⁽¹⁾	During fiscal years 2015, 2014 and 2013, respectively, 14, 14 and 11 of these aircraft sold were leased back and we received $380.7 million, $246.4 million and $255.8 million in proceeds for the aircraft.


⁽²⁾	Fiscal year 2013 includes a gain related to four large aircraft reclassified from held for sale to aircraft and equipment as they were returned to operational status as a result of the issues associated with the Airbus Helicopters H225 Super Puma helicopters and reversed previously recorded impairment charges of $8.7 million.

The following items impacted property and equipment during fiscal year 2015:

•

We recorded impairment charges totaling $36.1 million related to 27 aircraft included in assets held for sale. Included in the impairment charges were $24.5 million recorded during the three months ended December 31, 2014 related to ten large aircraft as a result of negotiations associated with the disposal of all 17 of this aircraft type in our fleet. During the three months ended March 31, 2015, we completed the disposal of 13 of these aircraft and recorded an additional loss of $6.4 million. Additionally, as we expect to complete the disposal of the remaining four aircraft of this type still operating in Australia in fiscal year 2016, we adjusted the salvage value and recorded additional depreciation expense of $6.2 million during the three months ended March 31, 2015. We also expect to record additional depreciation expense of $6.2 million during the three months ended June 30, 2015 related to these remaining aircraft. Also included in the impairment charges were $4.3 million related to three medium prototype aircraft included in assets held for sale. We entered into an agreement in April 2015 to sell these three aircraft and purchase fully developed/non-prototype aircraft.


•	We recorded accelerated depreciation of $4.4 million for ten medium and one fixed wing aircraft operating in our Other International and West Africa business units. Management made the decision to exit these model types earlier than originally anticipated. We expect to record an additional $3.8 million in fiscal year 2016 relating to this change in fleet strategy.

•

We increased the liabilities associated with deferred sale leaseback advance for additional payments made by the purchaser during fiscal year 2015 of $69.7 million, with a corresponding increase to construction in progress. Additionally, we took delivery and entered into leases for five aircraft related to the deferred sale leaseback and removed a total of $183.7 million and $182.6 million, respectively, from construction in progress and deferred sale leaseback advance, current from our consolidated balance sheet. See Note 1 for further details on the deferred sale leaseback.

•

We determined that since fiscal year 2010 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. The offsetting impact on our consolidated statements of income was a reduction in revenue of $3.5 million, an increase in direct cost of $2.0 million and a reduction in depreciation and amortization of $0.2 million. The error is not material to our consolidated financial statements for fiscal year 2015 or our previously reported consolidated financial statements for any period.


•	We received proceeds of $16.0 million from insurance recoveries for inventory destroyed in the fire in Port Harcourt, Nigeria discussed below. Additionally, we recorded a gain of $4.9 million in gain (loss) on disposal of assets on our consolidated statement of income and included in the table above.


•	We transferred 15 aircraft to held for sale and reduced property and equipment by $91.5 million.

The following items impacted property and equipment during fiscal year 2014:


•	In March 2014, we had a fire in our Port Harcourt, Nigeria aircraft hangar. Two aircraft were damaged and $11.1 million of inventory spare parts were destroyed. The aircraft hangar was partially damaged. We wrote off $11.1 million of inventory destroyed in the fire, which was offset by a receivable recorded of $11.1 million for insurance proceeds.

•

We received payment of approximately $106.1 million for progress payments we had previously made on seven aircraft under construction and we assigned any future payments due on these construction agreements to the purchaser. As we have the obligation and intent to lease the aircraft back from the purchaser upon completion, we recorded a liability equal to the cash received and payments made by the purchaser during fiscal year 2014 totaling $60.2 million, with a corresponding increase to construction in progress. See Note 1 for further details on the deferred sale leaseback advance.


•	We transferred 36 aircraft to held for sale and reduced property and equipment by $51.6 million.

The following items impacted property and equipment during fiscal year 2013:


•	We received proceeds from insurance recoveries of $4.7 million and recorded a gain of $2.8 million in gain (loss) on disposal of assets on our consolidated statement of income and included in the table above.


•	We transferred 16 aircraft to held for sale, reducing property and equipment by $13.9 million.

Assets Held for Sale

As of March 31, 2015 and 2014, we had 12 and 16 aircraft, totaling $57.8 million and $29.3 million, classified as held for sale, respectively. We recorded impairment charges of $36.1 million, $6.8 million and $4.4 million to reduce the carrying value of 27, 11 and 10 aircraft held for sale during fiscal years 2015, 2014 and 2013, respectively. These impairment charges were included as a reduction in gain (loss) on disposal of assets in the consolidated statements of income.