PROPERTY AND EQUIPMENT AND ASSETS HELD FOR SALE

During fiscal years 2017, 2016 and 2015, we made capital expenditures as follows:



	Fiscal Year Ended March 31,
	2017		2016		2015
Number of aircraft delivered:
Medium	5		1		6
Large	—		3		10
SAR aircraft	4		4		5
Total aircraft ⁽¹⁾	9		8		21

Capital expenditures (in thousands):
Aircraft and related equipment ⁽²⁾	$	127,447	$	285,530	$	476,368
Other	7,663		86,845		125,466
Total capital expenditures	$	135,110	$	372,375	$	601,834

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⁽¹⁾	During fiscal year 2016, we took delivery of two aircraft that were purchased using short-term debt borrowings for the final payments of the aircraft. As of March 31, 2017, the short-term borrowings for these aircraft have been paid.


⁽²⁾	During fiscal years 2017, 2016 and 2015, we spent $71.4 million, $202.7 million and $440.9 million, respectively, on progress payments for aircraft to be delivered in future periods.

The following table presents details on the aircraft sold or disposed of and impairments on assets held for sale during fiscal years 2017, 2016 and 2015:



	Fiscal Year Ended March 31,
	2017			2016			2015

	(In thousands, except for number of aircraft)

Number of aircraft sold or disposed of ⁽¹⁾	14			35			44
Proceeds from sale or disposal of assets ⁽¹⁾	$	18,471		$	60,035		$	414,859
Gain (loss) from sale or disposal of assets	$	(2,049	)	$	(1,122	)	$	208

Number of aircraft impaired	14			16			27
Impairment charges on aircraft held for sale and construction in progress	$	12,450		$	29,571		$	36,057

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⁽¹⁾	During fiscal years 2016 and 2015, three and 14 of these aircraft, respectively, were sold and leased back and we received $29.2 million and $380.7 million, respectively, in proceeds for the aircraft. We did not enter into any sale leasebacks during fiscal year 2017.

In addition to capital expenditures and sale or disposal of assets, the following items impacted property and equipment during fiscal year 2017:


•	We recorded accelerated depreciation of $10.4 million on 11 medium aircraft operating in our Europe Caspian, Americas and Africa regions as our management decided to exit these model types earlier than originally anticipated. In certain instances the salvage values of some aircraft were also adjusted to reflect our expectation of sales values in the current market.


•	We transferred 12 aircraft to held for sale and reduced property and equipment by $19.7 million.

In addition to capital expenditures and sale or disposal of assets, the following items impacted property and equipment during fiscal year 2016:

•

We recorded accelerated depreciation of $28.7 million on 18 medium, four large and one fixed wing aircraft operating in our Europe Caspian, Americas, Africa and Asia Pacific regions as our management decided to exit these model types earlier than originally anticipated. In certain instances the salvage values of some aircraft were also adjusted to reflect our expectation of sales values in the current market.


•	We took delivery and entered into leases for the remaining two aircraft related to the deferred sale leaseback 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. See Note 1 for further details on the deferred sale leaseback advance.


•	We took delivery of two large aircraft which we purchased using short-term debt borrowings for the final payments of the aircraft of $24.4 million.


•	We transferred 35 aircraft to held for sale and reduced property and equipment by $83.6 million.

In addition to capital expenditures and sale or disposal of assets, the following items impacted property and equipment during fiscal year 2015:


•	We recorded accelerated depreciation of $10.4 million for 10 medium, four large and one fixed wing aircraft operating in our Africa, Americas and Asia Pacific regions as our management decided to exit these model types earlier than originally anticipated.

•

We increased the liabilities associated with deferred sale leaseback advance for additional payments made by the purchaser during fiscal year 2015 by $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 $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 operations 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 was 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 a fire in our Port Harcourt, Nigeria hangar. Additionally, we recorded a gain of $4.9 million in gain (loss) on disposal of assets on our consolidated statement of operations and included in the table above.


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

During fiscal years 2017 and 2016, we saw a deterioration in market sales for aircraft resulting mostly from an increase in idle aircraft and reduced demand across the offshore energy market. While other markets exist for certain aircraft model types, including utility, firefighting, government, VIP transportation and tourism, the market for certain model type aircraft slowed. As a result of these market changes, changes in estimated salvage values of our fleet of operational aircraft and other changes in the timing of exiting certain aircraft from our operations, we recorded impairments and additional depreciation expense discussed above. For further details, see Note 1 for a discussion on impairments of property and equipment.

Assets Held for Sale

As of March 31, 2017 and 2016, we had 20 and 22 aircraft, for $38.2 million and $43.8 million, classified as held for sale, respectively. We intend to sell or otherwise dispose of these assets during the next fiscal year. We recorded impairment charges of $12.5 million, $29.6 million and $36.1 million to reduce the carrying value of 14, 16 and 27 aircraft held for sale during fiscal years 2017, 2016 and 2015, respectively. These impairment charges were included in loss on disposal of assets in the consolidated statements of operations.

The impairment charges recorded on held for sale aircraft during fiscal years 2017, 2016 and 2015 related primarily to older model aircraft types our management decided to dispose of earlier than originally anticipated in addition to the impact of changes in expected sales prices in the aircraft aftermarket resulting from the ongoing oil and gas market downturn. The impairment charges recorded in fiscal year 2017 related primarily to the downturn in the oil and gas industry which resulted from reduced crude oil prices and which caused a reduction in demand for aircraft in the offshore energy market and the impairment of older model aircraft classified as held for sale. The impairment charges recorded in fiscal year 2016 related primarily to a medium aircraft model type we made the decision to accelerate our exit from during the current downturn. The impairment charges recorded in fiscal year 2015 related to a large aircraft model type our management decided to sell as part of a single transaction, which reduced the overall sales price for these aircraft. Also during fiscal year 2015, impairment charges included $4.3 million related to three medium prototype aircraft as we entered into an agreement in April 2015 to sell these three aircraft and purchase fully developed/non-prototype aircraft.