OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operations

Bristow Group Inc., a Delaware corporation (together with its consolidated entities, unless the context requires otherwise, “Bristow Group”, the “Company”, “we”, “us”, or “our”), is the leading provider of industrial aviation services to the worldwide offshore energy industry based on the number of aircraft operated and one of two helicopter service providers to the offshore energy industry with global operations. With a fleet of 463 aircraft as of March 31, 2016, including 120 held by unconsolidated affiliates, we and our affiliates conduct major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore energy regions of the world, including Australia, Brazil, Canada, Russia and Trinidad. We and our affiliates also provide private sector search and rescue (“SAR”) services in Australia, Canada, Norway, Russia, Trinidad and the United States, and public sector SAR services in the U.K. on behalf of the Maritime & Coastguard Agency. Certain of our affiliates also provide fixed wing charter and scheduled services targeting U.K. and Australia oil and gas industry transport, helicopter military training and helicopter flight training.

Basis of Presentation

The consolidated financial statements include the accounts of Bristow Group Inc. and its consolidated entities after elimination of all significant intercompany accounts and transactions. Investments in affiliates in which we have a majority voting interest and entities that meet the criteria of Variable Interest Entities (“VIEs”) of which we are the primary beneficiary are consolidated. See discussion of VIEs in Note 3. We apply the equity method of accounting for investments in entities if we have the ability to exercise significant influence over an entity that (a) does not meet the variable interest entity criteria or (b) meets the variable interest entity criteria, but for which we are not deemed to be the primary beneficiary. We apply the cost method of accounting for investments in other entities if we do not have the ability to exercise significant influence over the unconsolidated affiliate. These investments in private companies are carried at cost and are adjusted only for capital distributions and other-than-temporary declines in value. Dividends from cost method investments are recognized in earnings from unconsolidated affiliates, net of losses, when paid.

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.

Certain reclassifications of prior period information have been made to conform to the presentation of the current period information. In the prior period financial statements, we had included impairment charges for inventory in impairment of inventories. Current period presentation has reclassified these charges to loss on impairment on our statement of operations and statement of cash flows. These reclassifications had no effect on net income or cash flows provided by operating activities as previously reported.

Summary of Significant Accounting Policies

Use of Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Areas where accounting estimates are made by management include:


•	Allowances for doubtful accounts;


•	Inventory allowances;


•	Property and equipment;


•	Goodwill, intangible and other long-lived assets;


•	Pension benefits;


•	Contingent liabilities; and


•	Taxes.

Cash and Cash Equivalents — Our cash equivalents include funds invested in highly-liquid debt instruments with original maturities of 90 days or less.

Accounts Receivable — Trade and other receivables are stated at net realizable value. We grant short-term credit to our clients, primarily major integrated, national and independent oil and gas companies. We establish allowances for doubtful accounts on a case-by-case basis when a determination is made that the required payment is unlikely to occur. In establishing these allowances, we consider a number of factors, including our historical experience, change in our clients’ financial position and restrictions placed on the conversion of local currency into U.S. dollars, as well as disputes with clients regarding the application of contract provisions to our services.

The following table is a rollforward of the allowance for doubtful accounts, including affiliates and non-affiliates (in thousands):



	Fiscal Year Ended March 31,
	2016			2015			2014
Balance – beginning of fiscal year	$	859		$	5,074		$	5,079
Additional allowances	6,638			1,050			87
Write-offs and collections	(1,935		)	(5,265		)	(92		)
Balance – end of fiscal year	$	5,562		$	859		$	5,074

During fiscal year 2016, the allowance for doubtful accounts for non-affiliates was increased primarily by $4.7 million in connection with amounts due from two clients in Nigeria and one client in Australia for which we no longer believed collection was probable.

During fiscal year 2013, the allowance for doubtful accounts for non-affiliates was increased by $4.9 million in connection with amounts due from ATP Oil and Gas Corporation, a client in the U.S. Gulf of Mexico, due to its filing for bankruptcy. During fiscal year 2015, the allowance recorded for ATP was reversed as we settled outstanding matters related to ongoing bankruptcy proceedings, which resulted in a $4.4 million reduction in bad debt expense, included within direct cost on our consolidated statements of operations. The remaining amount of $0.5 million related to ATP was written off as no further settlement is expected.

As of March 31, 2016 and 2015, there were no allowances for doubtful accounts related to accounts receivable due from affiliates.

Inventories — Inventories are stated at the lower of average cost or market value and consist primarily of spare parts. The following table is a rollforward of the allowance related to dormant, obsolete and excess inventory (in thousands):



	Fiscal Year Ended March 31,
	2016			2015			2014
Balance – beginning of fiscal year	$	45,414		$	47,298		$	31,504
Impairment of inventories	5,439			7,167			12,669
Additional allowances	192			4,867			6,807
Inventory disposed and scrapped	(22,428		)	(10,125		)	(6,096		)
Foreign currency effects	(854		)	(3,793		)	2,414
Balance – end of fiscal year	$	27,763		$	45,414		$	47,298

During fiscal years 2016, 2015 and 2014, we increased our inventory allowance by $0.2 million, $4.9 million and $6.8 million, respectively, as a result of our periodic assessment of inventory that was dormant, obsolete or excess within our operational fleet of aircraft.

During fiscal years 2016, 2015 and 2014, we recorded impairment charges of $5.4 million, $7.2 million and $12.7 million, respectively, to write-down certain spare parts within inventories to market value. These impairment charges resulted from the identification of $19.4 million, $19.1 million and $50.5 million, respectively, of inventory that was dormant, obsolete or excess based on a review of our future inventory needs related to changes to our fleet strategy and plans. The impairment charges in fiscal years 2016 and 2015 related primarily to spare parts held for a large aircraft model where we decided to accelerate removal from our fleet by the end of fiscal year 2016. The fiscal year 2014 impairment charge related primarily to spare parts held for a medium aircraft model that was removed from our fleet in fiscal year 2016. As we had intended to operate these model types longer in certain markets, we identified excess inventory that would not be used on our aircraft and therefore needed to be sold or otherwise disposed of. These impairment charges are included in loss on impairment on the consolidated statements of operations.

Also during fiscal year 2014, we wrote off $11.1 million of inventory destroyed in a fire at our Port Harcourt facility in Nigeria, which was insured and therefore fully offset by a receivable recorded of $11.1 million for insurance proceeds. See Note 4 for further details on the fire in Port Harcourt.

Prepaid Expenses and Other Current Assets — As of March 31, 2016 and 2015, prepaid expenses and other current assets included the short-term portion of contract acquisition and pre-operating costs totaling $12.1 million and $8.9 million, respectively, related to the SAR contracts in the U.K. and Australia and a client contract in Norway which are recoverable under the contracts and will be expensed over the terms of the contracts. During fiscal year 2016 and 2015, we expensed $10.0 million and $2.6 million, respectively, due to the start-up of some of these contracts.

Property and Equipment — Property and equipment are stated at cost. Property and equipment includes construction in progress, primarily consisting of progress payments on aircraft purchases and facility construction, of $307.4 million and $306.0 million as of March 31, 2016 and 2015, respectively. Interest costs applicable to the construction of qualifying assets are capitalized as a component of the cost of such assets.

Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of aircraft generally range from 5 to 15 years, and the residual value used in calculating depreciation of aircraft generally ranges from 30% to 50% of cost. The estimated useful lives for buildings on owned properties range from 15 to 30 years. Other depreciable assets are depreciated over estimated useful lives ranging from 3 to 15 years, except for leasehold improvements which are depreciated over the lesser of the useful life of the improvement or the lease term (including any period where we have options to renew if it is probable that we will renew the lease). The cost and related accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and the resulting gains or losses are included in loss on disposal of assets.

We capitalize betterments and improvements to our aircraft and depreciate such costs over the remaining useful lives of the aircraft. Betterments and improvements increase the life or utility of an aircraft.

For discussion of impairment of long-lived assets, including property and equipment, see Loss on Impairment below. For further details on property and equipment, see Note 4.

Goodwill — Goodwill is recorded when the cost of acquired businesses exceeds the fair value of the identifiable net assets acquired. Goodwill has an indefinite useful life and is not amortized, but is assessed for impairment annually or when events or changes in circumstances indicate that a potential impairment exists.

Goodwill of $30.0 million and $75.6 million as of March 31, 2016 and 2015, respectively, related to our reporting units were as follows (in thousands):



	Europe Caspian			Asia Pacific			Africa			Corporate and other			Total
March 31, 2014	$	40,201		$	—		$	6,177		$	10,302		$	56,680
Foreign currency translation	(4,500		)	(461		)	(231		)	(112		)	(5,304		)
Airnorth acquisition	—			24,252			—			—			24,252
March 31, 2015	35,701			23,791			5,946			10,190			75,628
Purchase price adjustments to previously acquired goodwill ⁽¹⁾	(170		)	(3,991		)	—			—			(4,161		)
Foreign currency translation	(328		)	164			233			33			102
Impairments	(25,177		)	—			(6,179		)	(10,223		)	(41,579		)
March 31, 2016	$	10,026		$	19,964		$	—		$	—		$	29,990

_____________

⁽¹⁾

Relates to the correction of an immaterial error related to the acquisitions of Airnorth and Eastern. We determined that the accounting treatment for the supplemental rent for leased aircraft at Airnorth and Eastern was incorrectly being expensed in advance of a maintenance event occurring. To correct this error, we reduced goodwill by $4.2 million, increased prepaid expenses and other current assets by $2.7 million, increased deferred tax liabilities by $3.1 million, decreased accrued maintenance and repairs by $3.6 million and increased direct costs $1.0 million. This error is not material to our consolidated financial statements for fiscal year 2016 or our previously reported consolidated financial statements for any period.

Accumulated goodwill impairment of $42.2 million and $0.6 million as of March 31, 2016 and 2015, respectively, related to our reporting units were as follows (in thousands):



	Europe Caspian			Africa			Corporate and other			Americas			Total
March 31, 2014	$	—		$	—		$	—		$	(576	)	$	(576	)
Impairments	—			—			—			—			—
March 31, 2015	—			—			—			(576		)	(576		)
Impairments	(25,177		)	(6,179		)	(10,223		)	—			(41,579		)
March 31, 2016	$	(25,177	)	$	(6,179	)	$	(10,223	)	$	(576	)	$	(42,155	)

For further discussion of impairment of goodwill, see Loss on Impairment below.

Other Intangible Assets — Intangible assets with finite useful lives are amortized over their respective estimated useful lives to their estimated residual values. Intangible assets by type were as follows (in thousands):



	Client contracts			Client relationships			Trade name and trademarks			Internally developed software			Licenses			Total

	Gross Carrying Amount
March 31, 2014	$	7,129		$	12,007		$	5,326		$	1,339		$	827		$	26,628
Foreign currency translation	(76		)	(1,238		)	(542		)	(160		)	(69		)	(2,085		)
Airnorth acquisition	1,112			2,287			364			—			—			3,763
March 31, 2015	8,165			13,056			5,148			1,179			758			28,306
Foreign currency translation	5			(277		)	(140		)	(30		)	(6		)	(448		)
March 31, 2016	$	8,170		$	12,779		$	5,008		$	1,149		$	752		$	27,858

	Accumulated Amortization
March 31, 2014	$	(6,932	)	$	(928	)	$	—		$	—		$	(469	)	$	(8,329	)
Amortization expense	(467		)	(655		)	(323		)	(244		)	(73		)	(1,762		)
March 31, 2015	(7,399		)	(1,583		)	(323		)	(244		)	(542		)	(10,091		)
Impairments	—			(8,086		)	—			—			—			(8,086		)
Amortization expense	(663		)	(931		)	(313		)	(236		)	(59		)	(2,202		)
March 31, 2016	$	(8,062	)	$	(10,600	)	$	(636	)	$	(480	)	$	(601	)	$	(20,379	)

Weighted average remaining contractual life, in years	0.4			7.0			14.0			2.8			2.6			6.2

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



2017	$	999
2018	936
2019	806
2020	503
2021	503
Thereafter	3,732
	$	7,479

The Bristow Norway and Eastern Airways acquisitions, included in our Europe Caspian region, resulted in intangible assets for client contracts, client relationships, trade names and trademarks, internally developed software and licenses. The Airnorth acquisition, included in our Asia Pacific region, resulted in intangible assets for client contracts, client relationships and trade name and trademarks. For further details on the Eastern Airways and Airnorth acquisitions, see Note 2. For discussion of impairment of long-lived assets, including purchased intangibles subject to amortization, see Loss on Impairment below.

Other Assets — In addition to the intangible assets discussed above, other assets primarily include debt issuance costs of $12.2 million and $10.0 million as of March 31, 2016 and 2015, respectively, which are being amortized over the life of the related debt, deferred tax assets of $68.0 million and $50.7 million as of March 31, 2016 and 2015, respectively, and the long-term portion of contract acquisition and pre-operating costs totaling $55.1 million and $42.4 million as of March 31, 2016 and 2015, respectively, related to the SAR contracts in the U.K. and a client contract in Norway, which are recoverable under the contracts and will be expensed over the life of the contracts.

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. Results for each reporting period include revisions to contingent liability reserves resulting from different facts or information which become 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. Legal costs are expensed as incurred.

Proceeds from casualty insurance settlements in excess of the carrying value of damaged assets are recognized in gain (loss) on disposal of assets when we have received proof of loss documentation or are otherwise assured of collection of these amounts.

Some of our acquisitions include a provision that provides for additional consideration to be paid to the sellers of the acquired company based on the achievement of specified performance thresholds. In such cases, we record the obligations to pay those amounts at fair value at the acquisition date and include such obligations in the consideration transferred. This contingent consideration obligation is included in contingent consideration for the current portion and other liabilities and deferred credits for the long-term portion on our consolidated balance sheets. We assess the estimated fair value of the contractual obligation to pay the contingent consideration on a quarterly basis and any changes in estimated fair value are recorded as accretion expense included in depreciation and amortization on our consolidated statements of operations. In other cases, additional consideration is based on the achievement of performance thresholds and continued employment with the Company. In these cases, we record such amounts in general and administrative expense when such additional consideration is earned. See Note 2 for a discussion on our acquisitions, Note 3 for a discussion on contingent consideration obligations related to our investments in unconsolidated affiliates and Note 6 for details on the fair value of the contingent consideration obligation.

Loss on Impairment

Loss on impairment includes goodwill impairment charges and intangible impairment charges totaling $41.6 million and $8.1 million, respectively, for fiscal year 2016 and inventory impairment charges of $5.4 million, $7.2 million and $12.7 million during fiscal years 2016, 2015 and 2014, respectively. For details on our analysis of impairment of goodwill, other long-lived assets and investments in unconsolidated affiliates, see discussion below. For further details on inventory impairments, see Inventory discussed above.

Goodwill — As discussed above, we test goodwill for impairment on an annual basis or when events or changes in circumstances indicate that a potential impairment exists. For the purposes of performing an analysis of goodwill, we evaluate whether there are reporting units below the reporting segment we disclose for segment reporting purposes by assessing whether our regional management typically reviews results and whether discrete financial information exists at a lower level. Based on this review, we performed our analysis of goodwill for the following reporting units as of September 30, 2015, with goodwill as reflected below prior to any impairment recorded:

•Bristow Norway, within our Europe Caspian region, which included $12.1 million of goodwill;


•	Eastern Airways, within our Europe Caspian region, which included $24.6 million of goodwill;

•Airnorth, within our Asia Pacific region, which included $21.9 million of goodwill.

•Our Africa region, which included $5.9 million of goodwill; and

•Bristow Academy, within Corporate and other, which included $10.2 million of goodwill.

During the three months ended September 30, 2015, we noted rapid and significant declines in the market value of our stock and an overall reduction in expected operating results resulting from the downturn in the oil and gas market driven by reduced crude oil prices. The impact on our results is reflected in an increase in the number of idle aircraft and reduction in forecasted results across our global oil and gas helicopter operations, and is reflected in reduced operating revenue for our business for the three months ended September 30, 2015, when excluding growth from the U.K. SAR contract and the addition of Airnorth. The reduction in demand for aircraft in the offshore energy market led to further impairment of older model aircraft. Based on these factors, we concluded that the fair value of our goodwill could have fallen below its carrying value and that an interim period analysis of goodwill was required.

We performed the interim impairment test of goodwill across the reporting units discussed above, noting that the estimated fair values of the Africa region, Eastern Airways and Airnorth exceeded the carrying values. The estimated fair values of Bristow Academy and Bristow Norway were below their carrying values, resulting in an impairment of all of the goodwill for those reporting units of $22.3 million reflected in loss on impairment in our statement of operations for the three months ended September 30, 2105. We updated the impairment analysis as of March 31, 2016 for the Africa region, Eastern Airways and Airnorth. 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 loss on impairment in our statement of operations for the three months ended March 31, 2016.

We estimated 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 required 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 was based on a discounted cash flow model, which utilized present values of cash flows to estimate fair value. The future cash flows were 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, both of which have been impacted by the adverse changes in the offshore energy business environment from the current downturn. Operating costs were 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 were based on management’s estimates of future capital costs driven by expected market demand in future periods. The estimated capital requirements included cash outflows for new aircraft, infrastructure and improvements. A terminal period was used to reflect our estimate of stable, perpetual growth. The future cash flows were discounted using a market-participant risk-adjusted weighted average cost of capital for each of the reporting units individually and in the aggregate. These assumptions were derived from unobservable inputs and reflect management’s judgments and assumptions.

The market approach was 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 were 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 calculated the reporting units’ estimated fair values as the average of the values calculated under the income approach and the market approach.

We evaluated the estimated fair value of our reporting units compared to our market capitalization. The aggregate fair values of our reporting units exceeded our market capitalization, and we believe the resulting implied control premium was reasonable based on recent market transactions within our industry or other relevant benchmark data.

The estimates used to determine the fair value of the reporting units discussed above reflect management’s best estimates, and we believe they are reasonable. Future declines in the reporting units’ operating performance or our anticipated business outlook may reduce the estimated fair value of these reporting units and result in additional impairments. Factors that could have a negative impact on the fair value include, but are not limited to:


•	decreases in estimated rates and utilization due to greater-than-expected market pressures, downtime and other risks associated with offshore energy operations;

•sustained declines in our stock price;

•decreases in revenue due to our inability to attract and retain skilled personnel;


•	changes in worldwide offshore energy transportation supply and demand, competition or technology;


•	changes in future levels of drilling activity and expenditures, whether as a result of global capital markets and liquidity, prices of oil and natural gas or otherwise, which may cause our clients to further reduce offshore production and drilling activities;


•	possible cancellation or suspension of contracts as a result of mechanical difficulties, performance or other reasons;


•	inability to manage costs during the current downturn and in future periods;


•	increases in the market-participant risk-adjusted weighted average cost of capital; and

•declines in anticipated growth rates.

Adverse changes in one or more of these factors could result in additional goodwill impairments in future periods.

Property and Equipment, and Purchased Intangibles Subject to Amortization — Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the carrying amount of an asset or asset group to be held and used exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. Assets held for sale are classified as current assets on our consolidated balance sheets and recorded at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale (if any) are presented separately in the appropriate asset and liability sections of the consolidated balance sheets. We recorded impairment charges of $29.6 million, $36.1 million and $6.8 million included in loss on disposal of assets to reduce the carrying value of aircraft held for sale in fiscal years 2016, 2015 and 2014, respectively. Additionally, we recorded impairment of our purchased intangibles for Eastern Airways of $8.1 million included in loss on impairment related to our client relationships.

As of March 31, 2016 we noted a continued decline in market conditions triggering a review of our property and equipment for potential impairment. In accordance with Accounting Standard Codification 360-10-35, we estimated future cash flows to test the recoverability of our property and equipment, which largely consists of our held for use aircraft. The determination of estimated future cash flows required us to use significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions related to projected demand for services and rates. We determined that the estimated future cash flows were above the carrying value as of March 31, 2016 and no impairment was recorded. Future declines in operating performance or anticipated business outlook may reduce our estimated fair value and result in impairment.

Investments in Unconsolidated Affiliates — We perform regular reviews of each investee’s financial condition, the business outlook for its products and services, and its present and projected results and cash flows. When an investee has experienced consistent declines in financial performance or difficulties raising capital to continue operations, and when we expect the decline to be other-than-temporary, the investment is written down to fair value. Actual results may vary from estimates due to the uncertainty regarding the projected financial performance of investees, the severity and expected duration of declines in value, and the available liquidity in the capital markets to support the continuing operations of the investees in which we have investments. We did not recognize any impairment charges related to our investments in unconsolidated affiliates in fiscal years 2016, 2015 and 2014.

During fiscal year 2016, Petrobras cancelled its new tenders for multiple medium and large aircraft that were expected to commence in calendar year 2016, resulting in a significant downward adjustment in the 2016 calendar year plan for our unconsolidated affiliate in Brazil, Líder Táxi Aéreo S.A. (“Líder”), and triggered a review of this investment for potential impairment.

We estimated the implied fair value of our investment in Líder using a variety of valuation methods, including the income and market approaches. The determination of estimated fair value required us to use significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions related to the future performance of Líder, such as projected demand for services and rates. We determined that the fair value of our investment in Líder was above the carrying value and no impairment was recorded. Future declines in operating performance or anticipated business outlook may reduce our estimated fair value and result in impairment.

Deferred Sale Leaseback Advance — As of March 31, 2015, we had a total deferred sale leaseback advance asset of $55.9 million, which was included in deferred sale leaseback advance on our consolidated balance sheet. During fiscal year 2014, we received payment of approximately $106.1 million for progress payments we had made on seven aircraft under construction, and we assigned any future payments due on these construction agreements to the purchaser. As we had the obligation and intent to lease the aircraft back from the purchaser upon completion, we recorded a liability equal to the cash received and additional payments made by the purchaser totaling $147.4 million, with a corresponding increase to construction in progress. During fiscal year 2015, we took delivery and entered into leases for five of the aircraft and removed a total of $183.7 million and $182.6 million, respectively, from construction in progress and deferred sale leaseback advance on our consolidated balance sheet. During fiscal year 2016, we took delivery and entered into leases for the remaining two aircraft and removed a total of $75.8 million and $74.3 million, respectively, from construction in progress and deferred sale leaseback advance on our consolidated balance sheet. As of March 31, 2016, the construction in progress and deferred sale leaseback advance liability related to these deferred sale leaseback transactions were removed from our consolidated balance sheet.

Revenue Recognition — In general, we recognize revenue when it is both realized or realizable and earned. We consider revenue to be realized or realizable and earned when the following conditions exist: there is persuasive evidence of an arrangement, generally a client contract exists; the services or products have been performed or delivered to the client; the sales price is fixed or determinable; and collection has occurred or is probable.

Revenue from helicopter services, including SAR services, is recognized based on contractual rates as the related services are performed. The charges under these contracts are generally based on a two-tier rate structure consisting of a daily or monthly fixed fee plus additional fees for each hour flown. These contracts are for varying periods and generally permit the client to cancel the contract before the end of the term. We also provide services to clients on an “ad hoc” basis, which usually entails a shorter contract notice period and duration. The charges for ad hoc services are based on an hourly rate or a daily or monthly fixed fee plus additional fees for each hour flown. In order to offset potential increases in operating costs, our long-term contracts may provide for periodic increases in the contractual rates charged for our services. We recognize the impact of these rate increases when the criteria outlined above have been met. This generally includes written recognition from the clients that they are in agreement with the amount of the rate escalation. Cost reimbursements from clients are recorded as reimbursable revenue with the related reimbursed costs recorded as reimbursable expense on our consolidated statements of operations.

Bristow Academy, our helicopter training unit, primarily earns revenue from military training, flight training provided to individual students and ground school courses. We recognize revenue from these sources using the same revenue recognition principles described above as services are provided. We consider revenue to be realized or realizable and earned when the following conditions exist: there is persuasive evidence of an arrangement (generally a contract exists); the services have been performed or delivered to the client or student; the sales price is fixed and determinable; and collection has occurred or is probable.

Eastern Airways and Airnorth primarily earn revenue through charter and scheduled airline services and provision of airport services (Eastern Airways only). Both chartered and scheduled airline service revenue is recognized net of passenger taxes and discounts. Revenue is recognized at the earlier of the period in which the service is provided or the period in which the right to travel expires, which is determined by the terms and conditions of the ticket. Ticket sales are recorded within deferred revenue in accordance with the above policy. Airport services revenue is recognized when earned.

Pension Benefits — See Note 9 for a discussion of our accounting for pension benefits.

Maintenance and Repairs — We generally charge maintenance and repair costs, including major aircraft component overhaul costs, to earnings as the costs are incurred. However, certain major aircraft components, such as engines and transmissions, are maintained by third-party vendors under contractual agreements also referred to as power-by-the hour maintenance agreements. Under these agreements, we are charged an agreed amount per hour of flying time related to maintenance, repair and overhaul of the parts and components covered. The costs charged under these contractual agreements are recognized in the period in which the flight hours occur. To the extent that we have not yet been billed for costs incurred under these arrangements, these costs are included in accrued maintenance and repairs on our consolidated balance sheets. From time to time, we receive credits from our original equipment manufacturers as settlement for additional labor and maintenance expense costs incurred for aircraft performance issues. We record these credits as a reduction in maintenance expense when the credits are utilized in lieu of cash payments for purchases or services. The cost of certain major overhauls on owned fixed-wing aircraft operated by Eastern Airways and Airnorth are capitalized when incurred and depreciated over the period until the next expected major overhaul. The cost of major overhauls on leased fixed-wing aircraft operated by Eastern Airways and Airnorth are charged to maintenance and repair costs when incurred.

Taxes — We follow the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based upon temporary differences between the carrying amount and tax basis of our assets and liabilities and measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred income tax assets and liabilities of a change in the tax rates is recognized in income in the period in which the change occurs. We record a valuation reserve when we believe that it is more likely than not that any deferred income tax asset created will not be realized.

In assessing the realizability of deferred income tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which such temporary differences become deductible.

We recognize tax benefits attributable to uncertain tax positions when it is more-likely-than-not that a tax position will be sustained upon examination by the authorities. The benefit from a position that has surpassed the more-likely-than-not threshold is the largest amount of benefit that is more than 50% likely to be realized upon settlement. We recognize interest and penalties accrued related to unrecognized tax benefits as a component of benefit (provision) for income taxes in our statement of operations.

Foreign Currency — In preparing our financial statements, we must convert all non-U.S. dollar currencies to U.S. dollars. Balance sheet information is presented based on the exchange rate as of the balance sheet date, and statement of operations information is presented based on the average exchange rate for the period. The various components of stockholders’ investment are presented at their historical average exchange rates. The resulting difference after applying the different exchange rates is the currency translation adjustment, which is reported in stockholders’ investment as accumulated other comprehensive gains or losses. Foreign currency transaction gains and losses are recorded in other income (expense), net in our statement of operations and result from the effect of changes in exchange rates on transactions denominated in currencies other than a company’s functional currency, including transactions between consolidated companies. An exception is made where an intercompany loan or advance is deemed to be of a long-term investment nature, in which instance foreign currency transaction gains or losses are included as currency translation adjustments and are reported in stockholders’ investment as accumulated other comprehensive gains or losses. Changes in exchange rates could cause significant changes in our financial position and results of operations in the future.

As a result of changes in exchange rates, we recorded foreign currency transaction losses of approximately $4.3 million, $6.5 million and $3.7 million during fiscal years 2016, 2015 and 2014, respectively. Our earnings from unconsolidated affiliates, net of losses, are also affected by the impact of changes in foreign currency exchange rates on the reported results of our unconsolidated affiliates. During fiscal years 2016, 2015 and 2014, earnings from unconsolidated affiliates, net of losses, decreased by $22.4 million, $25.7 million and $3.9 million, 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.

Incentive Compensation — See Note 9 for a discussion of our accounting for incentive compensation arrangements.

Extinguishment of Debt — Extinguishment of debt includes $2.6 million related to premiums paid for the repurchase of a portion of the 6¼% Senior Notes due 2022 (the “6¼% Senior Notes”) during fiscal year 2015. See further discussion in Note 5. We did not have any gains or losses on the extinguishment of debt during fiscal years 2016 and 2014.

Gain on Sale of Unconsolidated Affiliates — On November 21, 2014, we sold our 50% interest in Helideck Certification Agency (“HCA”) for £2.7 million, or approximately $4.2 million. We recorded a pre-tax gain on the sale of an unconsolidated affiliate of $3.9 million during fiscal year 2015 on our consolidated statement of operations. On July 14, 2013, we sold our 50% interest in each of FBS Limited, FB Heliservices Limited and FB Leasing Limited, collectively referred to as the FB Entities for £74.0 million, or approximately $112.2 million. We recorded a pre-tax gain on sale of unconsolidated affiliate of $103.9 million during fiscal year 2014 on our consolidated statements of operations.

Other Income (Expense), Net — The amounts for fiscal years 2016, 2015 and 2014 include the foreign currency transaction gains and losses described under “Foreign Currency” above. Other income (expense), net also includes a gain of $1.1 million for the sale of intellectual property during fiscal year 2014. Other income (expense), net in fiscal years 2016 and 2015 did not include any other significant items.

Accretion of Redeemable Noncontrolling Interests — Accretion of redeemable noncontrolling interests of $1.5 million for fiscal year 2016 related to put arrangements whereby the noncontrolling interest holders may require us to redeem the remaining shares of Airnorth and Eastern Airways at a formula-based amount that is not considered fair value (the “redemption amount”). Redeemable noncontrolling interest is adjusted each period for comprehensive income, dividends attributable to the noncontrolling interest and changes in ownership interest, if any, such that the noncontrolling interest represents the proportionate share of Airnorth’s and Eastern Airways’ equity (the “carrying value”). Additionally, at each period end we are required to compare the redemption amount to the carrying value of the redeemable noncontrolling interest and record the redeemable noncontrolling interest at the higher of the two amounts, with a corresponding charge or credit directly to retained earnings. While this charge or credit does not impact net income (loss), it does result in a reduction or increase of income (loss) available to common shareholders in the calculation of diluted earnings (loss) per share (see Note 10). In November 2015, we purchased the remaining 15% of the outstanding shares of Airnorth for A$7.3 million ($5.3 million) resulting in a reduction of $5.5 million to redeemable noncontrolling interests and an increase of $2.6 million to additional paid-in capital on our consolidated balance sheet.

Recent Accounting Pronouncements

We consider the applicability and impact of all accounting standard updates (“ASUs”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued accounting guidance on revenue recognition for revenue from contracts with customers. This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and will replace most existing revenue recognition guidance when it becomes effective. This new standard is effective for annual reporting periods beginning after December 15, 2016. However, in July 2015, the FASB approved the deferral of the effective date of the revenue recognition standard permitting public entities to apply the new revenue standard to annual reporting periods beginning after December 15, 2017. Early application is permitted, but not before the original effective date of December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect this standard will have on our financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

In August 2014, the FASB issued accounting guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within a year of the date the financial statements are issued. The standard applies to all entities and is effective for annual and interim periods beginning after December 15, 2016 with early adoption permitted. We are evaluating the effect this standard will have on our financial statements and related disclosures.

In February 2015, the FASB issued accounting guidance which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The guidance amends the criteria for determining which entities are considered VIEs and amends the criteria for determining if a service provider possesses a variable interest in a VIE. This pronouncement is effective for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. A reporting entity may apply the amendments using a modified retrospective approach or a full retrospective application. We have evaluated the effect of the standard on our consolidated financial statements and there is no material effect on our financial statements and related disclosures.

In April 2015, the FASB issued accounting guidance relating to the presentation of debt issuance costs. The intent is to simplify the presentation of debt issuance costs by requiring entities to record debt issuance costs on the balance sheet as a direct deduction from the carrying amount of the related debt liability, similar to debt discounts or premiums. In August 2015, the FASB issued additional guidance to allow issuers to continue to recognize debt issuance costs related to line-of-credit arrangements as an asset and amortize that asset over the term of the credit agreement. These pronouncements are effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and early adoption is permitted. As of March 31, 2016 and 2015, we had debt issuance costs of $9.2 million and $8.3 million, respectively, exclusive of debt issuance costs associated with our Revolving Credit Facility, which are included in other assets on the consolidated balance sheets. We have adopted this accounting guidance effective April 1, 2016 and the adoption of this guidance will reduce other assets and long-term debt by such amounts.

In November 2015, the FASB issued a new standard which changes how deferred taxes are classified on an entity’s balance sheet. The guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The new guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and early adoption is permitted. The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively. If applied prospectively, entities are required to include a statement that prior periods were not retrospectively adjusted. If applied retrospectively, entities are also required to include quantitative information about the effects of the change on prior periods. We have not yet adopted this accounting guidance or determined the method of adoption but we believe the adoption of this guidance would reduce current assets and current liabilities and increase long-term assets and long-term liabilities by such amounts.

In February 2016, the FASB issued accounting guidance which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Additionally, this pronouncement requires a modified retrospective transition approach for all leases existing at, or entered into after the date of initial application, with an option to use certain transition relief. We have not yet adopted this standard nor have we determined the effect of the standard on our ongoing financial reporting.

In March 2016, the FASB issued accounting guidance related to accounting for employee share-based payments. The amendments are intended to simplify several aspects of accounting for share-based payment award transactions including income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is permitted. We have not yet adopted this standard nor have we determined the effect of the standard on our ongoing financial reporting.