BASIS 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 (“Bristow Group”, the “Company”, “we”, “us”, or “our”) after elimination of all significant intercompany accounts and transactions. Our fiscal year ends March 31, and we refer to fiscal years based on the end of such period. Therefore, the fiscal year ending March 31, 2019 is referred to as “fiscal year 2019”. Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission, the information contained in the following notes to condensed consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and related notes thereto contained in our fiscal year 2018 Annual Report (the “fiscal year 2018 Financial Statements”). Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the entire fiscal year.

The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair presentation of the consolidated balance sheet of the Company as of September 30, 2018, the consolidated statements of operations and comprehensive loss for the three and six months ended September 30, 2018 and 2017, the consolidated cash flows for the six months ended September 30, 2018 and 2017, and the consolidated statements of changes in stockholders’ investment for the three and six months ended September 30, 2018.

Loss on Impairment

Loss on impairment includes the following (in thousands):



	Three Months Ended September 30,				Six Months Ended September 30,
	2018		2017		2018		2017
Impairment of inventories	$	9,276	$	—	$	9,276	$	1,192
Impairment of property and equipment⁽¹⁾	104,939		—		104,939		—
Impairment of intangible assets	3,005		—		3,005		—
	$	117,220	$	—	$	117,220	$	1,192

_____________


⁽¹⁾	Includes impairment of $87.5 million for H225 aircraft and $17.5 million for Eastern Airways International Limited (“Eastern Airways”) aircraft and equipment.

Prior to the three months ended September 30, 2018, we had been actively marketing our H225 aircraft with the expectation of a substantial return of the aircraft to oil and gas service. However, market conditions and more significantly, the recent development of alternative opportunities outside of our traditional oil and gas service for our H225 aircraft and our decision to pursue those opportunities during the three months ended September 30, 2018, indicate a substantial return to oil and gas service within our operations is not likely. Therefore, during the three months ended September 30, 2018, we concluded that cash flows associated with our H225 helicopters are largely independent from the cash flows associated with the remainder of our oil and gas related property and equipment (“oil and gas asset group”) and should be tested for impairment as a stand-alone asset group. In accordance with Accounting Standard Codification 360-10, we performed an impairment analysis for our stand-alone H225 asset group and determined that the forecasted cash flows over the remaining useful life of the asset group were insufficient to recover the carrying value of the asset group. We determined the fair value of the H225 asset group to be $116.4 million and recorded an impairment charge of $87.5 million. In addition, we performed a review of our H225 aircraft related inventory and recorded an impairment charge of $8.9 million to record the inventory at the lower of cost or net realizable value. These impairments are included in our Corporate and other region in Note 11. The inputs used in our fair value estimates were from Level 3 of the fair value hierarchy discussed in Note 5.

The removal of the H225 aircraft from our oil and gas asset group and changes in our forecasted cash flows for that asset group during the three months ended September 30, 2018 indicated the need for the performance of a recoverability analysis of the oil and gas asset group. In accordance with Accounting Standard Codification 360-10, we estimate future undiscounted cash flows to test the recoverability of our oil and gas asset group, which largely consists of our oil and gas related held for use aircraft. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs including assumptions related to projected demand for services, rates and anticipated aircraft disposal values. We determined that the estimated future undiscounted cash flows exceeded the carrying value for our oil and gas asset group as of September 30, 2018, and no impairment was recorded on these assets. Future declines in operating performance, aircraft disposal values, anticipated business outlook, or projected aircraft deliveries currently accounted for as construction in progress may reduce our estimated future undiscounted cash flows and result in impairment of our oil and gas asset group.

In addition, changes in our forecasted cash flows during the three months ended September 30, 2018 indicated the need for the performance of a recoverability analysis for the airline related assets of Eastern Airways. In accordance with Accounting Standard Codification 360-10, we estimate future undiscounted cash flows to test the recoverability of the airline related assets of Eastern Airways for potential impairment. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs including assumptions related to projected demand for services and rates. We determined that the estimated future undiscounted cash flows were below the carrying value for our airline related assets of Eastern Airways as of September 30, 2018. We determined the fair value of the asset group to be $20.5 million and recorded an impairment charge of $17.5 million. As part of our impairment review of the airline assets of Eastern Airways, we also recorded impairments of $3.0 million related to the remaining intangible assets and $0.3 million related to inventory. These impairments are included in our Europe and Caspian region in Note 11. The inputs used in our fair value estimates were from Level 3 of the fair value hierarchy discussed in Note 5.

During the six months ended September 30, 2017, as a result of changes in expected future utilization of aircraft within our training fleet we recorded a $1.2 million charge to impair inventory used on our training fleet, which is included in loss on impairment on our condensed consolidated statement of operations. This impairment is included in our Corporate and other region in Note 11.

Foreign Currency

During the three and six months ended September 30, 2018 and 2017, our primary foreign currency exposure was to the British pound sterling, the euro, the Australian dollar, the Norwegian kroner and the Nigerian naira. The value of these currencies has fluctuated relative to the U.S. dollar as indicated in the following table:



	Three Months Ended September 30,		Six Months Ended September 30,
	2018	2017	2018	2017
One British pound sterling into U.S. dollars
High	1.33	1.36	1.43	1.36
Average	1.30	1.31	1.33	1.29
Low	1.27	1.28	1.27	1.24
At period-end	1.30	1.34	1.30	1.34
One euro into U.S. dollars
High	1.18	1.20	1.24	1.20
Average	1.16	1.17	1.18	1.14
Low	1.13	1.13	1.13	1.06
At period-end	1.16	1.18	1.16	1.18
One Australian dollar into U.S. dollars
High	0.75	0.81	0.78	0.81
Average	0.73	0.79	0.74	0.77
Low	0.71	0.76	0.71	0.74
At period-end	0.72	0.78	0.72	0.78
One Norwegian kroner into U.S. dollars
High	0.1249	0.1294	0.1290	0.1294
Average	0.1214	0.1257	0.1230	0.1216
Low	0.1179	0.1190	0.1179	0.1152
At period-end	0.1228	0.1256	0.1228	0.1256
One Nigerian naira into U.S. dollars
High	0.0028	0.0032	0.0028	0.0033
Average	0.0028	0.0029	0.0028	0.0031
Low	0.0027	0.0027	0.0027	0.0027
At period-end	0.0027	0.0028	0.0027	0.0028

_____________

Source: FactSet

Other income (expense), net, in our condensed consolidated statements of operations includes foreign currency transaction losses of $2.3 million and gains of $2.5 million for the three months ended September 30, 2018 and 2017, respectively, and foreign currency transaction losses of $5.3 million and gains of $0.8 million for the six months ended September 30, 2018 and 2017, respectively. Transaction gains and losses represent the revaluation of monetary assets and liabilities from the currency that will ultimately be settled into the functional currency of the legal entity holding the asset or liability. The most significant items revalued are denominated in U.S. dollars on entities with British pound sterling, Australian dollar and Nigerian naira functional currencies and denominated in British pound sterling on entities with U.S. dollar functional currencies, with transaction gains or losses primarily resulting from the strengthening or weakening of the U.S. dollar versus those other currencies.

Our earnings (losses) from unconsolidated affiliates, net are also affected by the impact of changes in foreign currency exchange rates on the reported results of our unconsolidated affiliates. During the three months ended September 30, 2018 and 2017, earnings (losses) from unconsolidated affiliates, net decreased by $1.0 million and increased by $0.3 million, respectively, and during the six months ended September 30, 2018 and 2017, earnings (losses) from unconsolidated affiliates, net decreased by $3.6 million and $0.9 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. The value of the Brazilian real has fluctuated relative to the U.S. dollar as indicated in the following table:



	Three Months Ended September 30,		Six Months Ended September 30,
	2018	2017	2018	2017
One Brazilian real into U.S. dollars
High	0.2699	0.3244	0.3020	0.3244
Average	0.2537	0.3162	0.2657	0.3138
Low	0.2390	0.3009	0.2390	0.2995
At period-end	0.2504	0.3161	0.2504	0.3161

_____________

Source: FactSet

We estimate that the fluctuation of currencies versus the same period in the prior fiscal year had the following effect on our financial condition and results of operations (in thousands):



	Three Months Ended September 30, 2018			Six Months Ended September 30, 2018
Revenue	$	(5,257	)	$	5,192
Operating expense	4,913			(273		)
Earnings (losses) from unconsolidated affiliates, net	(1,278		)	(2,718		)
Non-operating expense	(4,831		)	(6,182		)
Loss before provision for income taxes	(6,453		)	(3,981		)
Benefit for income taxes	1,280			1,193
Net loss	(5,173		)	(2,788		)
Cumulative translation adjustment	(7,999		)	(37,171		)
Total stockholders’ investment	$	(13,172	)	$	(39,959	)

Interest Expense, Net

During the three and six months ended September 30, 2018 and 2017, interest expense, net consisted of the following (in thousands):



	Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017
Interest income	$	1,229		$	154		$	1,408		$	368
Interest expense	(27,662		)	(18,717		)	(54,985		)	(34,952		)
Interest expense, net	$	(26,433	)	$	(18,563	)	$	(53,577	)	$	(34,584	)

Accounts Receivable

As of September 30 and March 31, 2018, the allowance for doubtful accounts for non-affiliates was $0.6 million and $3.3 million, respectively. There were no allowances for doubtful accounts related to accounts receivable due from affiliates as of September 30 and March 31, 2018. The allowance for doubtful accounts for non-affiliates as of September 30, 2018 primarily relates to various customers of Eastern Airways. The allowance for doubtful accounts for non-affiliates as of March 31, 2018 primarily relates to amounts due from a customer in Nigeria for which we no longer believed collection was probable. During the three months ended September 30, 2018, we wrote-off $2.3 million of accounts receivable previously reserved for from a customer in Nigeria as no collection is expected.

Inventories

As of September 30 and March 31, 2018, inventories were net of allowances of $22.4 million and $26.0 million, respectively. As discussed above in Loss on Impairment, we performed a review of our H225 aircraft related inventory and Eastern Airways inventory and recorded impairment charges of $8.9 million and $0.3 million, respectively, to record the inventories at the lower of cost or net realizable value during the three months ended September 30, 2018. During the six months ended September 30, 2017, as a result of changes in expected future utilization of aircraft within our training fleet, we recorded a $1.2 million charge to impair inventory used on our training fleet, which is included in loss on impairment on our condensed consolidated statement of operations. These impairment charges are not reflected in the allowances above.

Prepaid Expenses and Other Current Assets

As of September 30 and March 31, 2018, prepaid expenses and other current assets included the short-term portion of contract acquisition and pre-operating costs totaling $9.9 million and $10.8 million, respectively, related to the search and rescue (“SAR”) contracts in the U.K. and two customer contracts in Norway, which are recoverable under the contracts and will be expensed over the terms of the contracts. For the three months ended September 30, 2018 and 2017, we expensed $2.5 million and $2.8 million, respectively, and for the six months ended September 30, 2018 and 2017, we expensed $5.2 million and $5.7 million, respectively, related to these contracts.

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 $18.8 million and $19.9 million as of September 30 and March 31, 2018, respectively, related to our Asia Pacific reporting unit was as follows (in thousands):



March 31, 2018	$	19,907
Foreign currency translation	(1,129		)
September 30, 2018	$	18,778

Accumulated goodwill impairment of $50.9 million as of both September 30 and March 31, 2018 related to our reporting units were as follows (in thousands):



Europe Caspian	$	(33,883	)
Africa	(6,179		)
Americas	(576		)
Corporate and other	(10,223		)
Total accumulated goodwill impairment	$	(50,861	)

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):



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

	Gross Carrying Amount
March 31, 2018	$	8,169		$	12,777		$	4,878		$	1,107		$	755		$	27,686
Foreign currency translation	—			(78		)	(253		)	(14		)	(1		)	(346		)
September 30, 2018	$	8,169		$	12,699		$	4,625		$	1,093		$	754		$	27,340

	Accumulated Amortization
March 31, 2018	$	(8,169	)	$	(11,372	)	$	(1,213	)	$	(915	)	$	(719	)	$	(22,388	)
Impairments	—			—			(2,933		)	(72		)	—			(3,005		)
Amortization expense	—			(143		)	(142		)	(107		)	(30		)	(422		)
September 30, 2018	$	(8,169	)	$	(11,515	)	$	(4,288	)	$	(1,094	)	$	(749	)	$	(25,815	)

Weighted average remaining contractual life, in years	0.0			4.1			1.2			0.0			0.1			5.4

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



2019	$	96
2020	161
2021	161
2022	161
2023	161
Thereafter	785
	$	1,525

The Bristow Norway AS and Eastern Airways acquisitions, included in our Europe Caspian region, resulted in intangible assets for customer contracts, customer relationships, trade names and trademarks, internally developed software and licenses. The Capiteq Limited, operating under the name Airnorth, acquisition included in our Asia Pacific region, resulted in intangible assets for customer contracts, customer relationships and trade name and trademarks. As discussed above in Loss on Impairment, during the three months ended September 30, 2018, we recorded an impairment of $3.0 million related to Eastern Airways intangible assets. As of September 30, 2018, Eastern Airways has no remaining intangible assets.

Other Assets

In addition to the other intangible assets described above, other assets included the long-term portion of contract acquisition and pre-operating costs totaling $42.2 million and $50.6 million, respectively, as of September 30 and March 31, 2018, related to the SAR contracts in the U.K. and two customer contracts in Norway, which are recoverable under the contracts and will be expensed over the terms of the contracts.

Property and Equipment, Assets Held for Sale and OEM Cost Recoveries

During the three and six months ended September 30, 2018 and 2017, we took delivery of aircraft and made capital expenditures as follows:



	Three Months Ended September 30,				Six Months Ended September 30,
	2018		2017		2018		2017
	(In thousands, except for number of aircraft)
Number of aircraft delivered:
Medium	—		2		—		5
Total aircraft	—		2		—		5
Capital expenditures (in thousands):
Aircraft and equipment ⁽¹⁾	$	4,394	$	5,679	$	12,731	$	16,489
Land and buildings	4,013		6,085		4,571		7,828
Total capital expenditures	$	8,407	$	11,764	$	17,302	$	24,317

_____________


⁽¹⁾	During the three and six months ended September 30, 2017, we spent $1.0 million and $2.3 million, respectively, on progress payments for aircraft to be delivered in future periods. During the three and six months ended September 30, 2018, we made no progress payments for aircraft to be delivered in future periods.

The following table presents details on the aircraft sold or disposed of and impairment charges on assets held for sale and property and equipment during the three and six months ended September 30, 2018 and 2017:



	Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017

	(In thousands, except for number of aircraft)
Number of aircraft sold or disposed of	—			—			3			6
Proceeds from sale or disposal of assets	$	688		$	269		$	8,462		$	42,244
Gain (loss) from sale or disposal of assets ⁽¹⁾	$	(1,293	)	$	(343	)	$	(2,971	)	$	1,920

Number of held for sale aircraft impaired	—			2			—			4
Impairment charges on assets held for sale ⁽¹⁾⁽²⁾	$	—		$	8,183		$	—		$	9,747
Impairment charges on property and equipment ⁽³⁾	$	104,939		$	—		$	104,939		$	—

_____________


⁽¹⁾	Included in loss on disposal of assets on our condensed consolidated statements of operations.


⁽²⁾	Includes a $6.5 million impairment of the Bristow Academy disposal group for the three and six months ended September 30, 2017.


⁽³⁾	Includes $87.5 million impairment related to H225s and $17.5 million related to Eastern Airways assets for the three and six months ended September 30, 2018, included in loss on impairment on our condensed consolidated statement of operations. See Loss on Impairment above for further details.

During fiscal year 2018, we reached agreements with original equipment manufacturers (“OEM”) to recover approximately $136.0 million related to ongoing aircraft issues, of which $125.0 million was realized during fiscal year 2018 and $11.0 million was recovered during the six months ended September 30, 2018. To reflect the amount realized from these OEM cost recoveries during fiscal year 2018, we recorded a $94.5 million decrease in the carrying value of certain aircraft in our fleet through a decrease in property and equipment – at cost, reduced rent expense by $16.6 million and recorded a deferred liability of $13.9 million, included in other accrued liabilities and other liabilities and deferred credits, related to a reduction in rent expense to be recorded in future periods, of which $2.4 million and $5.9 million was recognized during the three and six months ended September 30, 2018, respectively. We determined the realized portion of the cost recoveries related to a long-term performance issue with the aircraft, requiring a reduction of carrying value for owned aircraft and a reduction in rent expense for leased aircraft. For the owned aircraft, we allocated the $94.5 million as a reduction in carrying value by reducing the historical acquisition value of each affected aircraft on a pro-rata basis utilizing the historical acquisition value of the aircraft. For the leased aircraft, we will recognize the remaining deferred liability of $8.0 million as a reduction in rent expense prospectively on a straight-line basis over the remaining lease terms. This will result in a reduction to rent expense of $2.0 million during the remainder of fiscal year 2019, $4.0 million during fiscal year 2020 and $2.0 million during fiscal year 2021.

During the six months ended September 30, 2018, we recovered the remaining $11.0 million in OEM cost recoveries by agreeing to net certain amounts previously accrued for aircraft leases and capital expenditures against those recoveries. During the six months ended September 30, 2018, we recorded a $7.6 million increase in revenue and a $2.1 million decrease in direct cost. We expect to realize the remaining $1.3 million recovery during fiscal year 2019 as follows: $1.0 million decrease in direct cost in the three months ended December 31, 2018, and $0.3 million decrease in direct cost in the three months ended March 31, 2019. The increase in revenue relates to compensation for lost revenue in prior periods from the late delivery of aircraft and the decreases in direct cost over fiscal year 2019 relate to prior costs we have incurred and future costs we expect to incur.

In connection with the $87.5 million impairment of our H225 aircraft, we revised our salvage values for each H225 aircraft. In accordance with accounting standards, we will recognize the change in depreciation due to the reduction in carrying value and revision of salvage values on a prospective basis over the remaining life of the aircraft. This will result in an increase of depreciation expense of $3.0 million during the remainder of fiscal year 2019, $5.9 million during fiscal year 2020, $1.9 million during fiscal year 2021 and a reduction of $10.3 million during fiscal year 2022 and beyond.

On November 1, 2017, we sold our 100% interest in Bristow Academy. As of September 30, 2017, we concluded the disposal group, comprised of the Bristow Academy assets and liabilities met the assets held for sale criteria under ASC 360, but did not meet the requirements for classification as discontinued operations. We evaluated the carrying value of the Bristow Academy disposal group and determined an impairment of $6.5 million, recorded within loss on disposal of assets on our condensed consolidated statement of operations, was necessary to record the disposal group at fair value based on the terms of the sale. The Bristow Academy disposal group is included in Corporate and other in Note 9 — Segment Information.

Other Accrued Liabilities

Other accrued liabilities of $52.7 million and $66.0 million as of September 30 and March 31, 2018, respectively, includes the following:



	September 30, 2018		March 31, 2018

	(In thousands)
Accrued lease costs	$	8,431	$	11,708
Deferred OEM cost recovery	3,997		8,082
Eastern Airways overdraft liability	6,718		8,989
Accrued property and equipment	640		4,874
Deferred gain on sale leasebacks	1,305		1,305
Other operating accruals	31,644		31,020
	$	52,735	$	65,978

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 replacing the existing accounting standard and industry-specific guidance for revenue recognition with a five-step model for recognizing and measuring revenue from contracts with customers. The underlying principle of the new standard is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. This new standard is effective for annual reporting periods beginning after December 15, 2017. We adopted the standard as of April 1, 2018 using the modified retrospective method applied to open contracts and only to the version of the contracts in effect as of April 1, 2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with our historical accounting policy. There was no impact on our condensed consolidated financial statements and no cumulative effect adjustment was recognized. For further details, see Note 2.

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 accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. Additionally, this accounting guidance 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. In July 2018, the FASB issued a practical expedient that would allow entities the option to apply the provisions of the new lease guidance at the effective date of adoption without adjusting the comparative periods presented. We have not yet adopted this standard and are currently evaluating the effect this standard will have on our financial statements.

In October 2016, the FASB issued accounting guidance related to current and deferred income taxes for intra-entity transfer of assets other than inventory. This accounting guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We adopted this accounting guidance effective April 1, 2018 using the modified retrospective method, through a cumulative-effect adjustment directly to retained earnings. Upon adoption, we increased deferred tax liabilities by approximately $1.7 million and recognized an offsetting decrease to retained earnings.

In January 2017, the FASB issued accounting guidance which clarifies the definition of a business with the objective of adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendment provides criteria for determining when a transaction involves the acquisition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the transaction does not involve the acquisition of a business. If the criteria are not met, then the amendment requires that to be considered a business, the operation must include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The guidance may reduce the number of transactions accounted for as business acquisitions. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The amendments should be applied prospectively, and no disclosures are required at the effective date. We adopted this accounting guidance effective April 1, 2018. This accounting guidance has had no impact on our financial statements since adoption as we have not entered into any transactions during this period.

In March 2017, the FASB issued accounting guidance related to the presentation of net periodic pension cost and net periodic post-retirement benefit cost. The accounting guidance requires employers to disaggregate the service cost component from the other components of net benefit cost and disclose the amount of net benefit cost that is included in the statement of operations or capitalized in assets, by line item. The accounting guidance requires employers to report the service cost component in the same line item(s) as other compensation costs and to report other pension-related costs (which include interest costs, amortization of pension-related costs from prior periods, and the gains or losses on plan assets) separately and exclude them from the subtotal of operating income. The accounting guidance also allows only the service cost component to be eligible for capitalization when applicable. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted as of the first interim period of an annual period for which interim or annual financial statements have not been issued. The accounting guidance requires application on a retrospective basis for the presentation of the service cost component and the other components of net periodic pension cost and net periodic post-retirement benefit cost in the statement of operations and on a prospective basis for the capitalization of the service cost component of net periodic pension cost and net periodic post-retirement benefit in assets. We adopted this accounting guidance effective April 1, 2018, and our statement of operations was retrospectively adjusted by $0.1 million and $0.1 million with an increase in direct cost and a corresponding credit in other income (expense), net for the three and six months ended September 30, 2017, respectively.

In May 2017, the FASB issued accounting guidance on determining which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We have adopted this accounting guidance effective April 1, 2018, with no impact on our financial statements as there were no changes to the terms or conditions of share-based payment awards.

In February 2018, the FASB issued new accounting guidance on income statement reporting of comprehensive income, specifically pertaining to reclassification of certain tax effects from accumulated other comprehensive income. This pronouncement is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2018, with early adoption permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.

In June 2018, the FASB issued an amendment to the accounting guidance related to accounting for employee share-based payments which clarifies that an entity should recognize excess tax benefits in the period in which the amount of the deduction is determined. This amendment is effective for annual periods beginning after December 15, 2018. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.

In August 2018, the FASB modified 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 obligation (“PBO”) and accumulated benefit obligation (“ABO”) in excess of respective plan assets. The amendment is effective for fiscal years ending after December 15, 2020 for public business entities and early adoption is permitted. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our disclosure requirements.

In August 2018, the FASB issued new accounting 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. This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The guidance will be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.