Note 1 ¾ 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, 2012 is referred to as “fiscal year 2012.” Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), 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 2011 Annual Report (the “fiscal year 2011 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 financial position of the Company as of September 30, 2011, the consolidated results of operations for the three and six months ended September 30, 2011 and 2010, and the consolidated cash flows for the six months ended September 30, 2011 and 2010.

Certain balance sheet amounts as of March 31, 2011 have been reclassified to conform to current period presentation.

During the three and six months ended September 30, 2011 and 2010, our primary foreign currency exposure was to the British pound sterling, the euro, the Australian dollar 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		Six Months Ended
		September 30,		September 30,
		2011	2010	2011	2010
One British pound sterling into U.S. dollars
	High	1.66	1.60	1.66	1.60
	Average	1.61	1.55	1.62	1.52
	Low	1.53	1.51	1.53	1.43
	At period-end	1.56	1.58	1.56	1.58
One euro into U.S. dollars
	High	1.45	1.37	1.49	1.37
	Average	1.41	1.29	1.42	1.28
	Low	1.34	1.25	1.34	1.19
	At period-end	1.34	1.37	1.34	1.37
One Australian dollar into U.S. dollars
	High	1.10	0.97	1.10	0.97
	Average	1.05	0.91	1.06	0.89
	Low	0.97	0.84	0.97	0.81
	At period-end	0.97	0.97	0.97	0.97
One Nigerian naira into U.S. dollars
	High	0.0068	0.0068	0.0068	0.0070
	Average	0.0066	0.0067	0.0065	0.0067
	Low	0.0063	0.0065	0.0063	0.0065
	At period-end	0.0064	0.0066	0.0064	0.0066

We estimate that the fluctuation of these 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		Six Months Ended
	September 30, 2011		September 30, 2011
Revenue	$	11,166	$	29,334
Operating expense		(9,810)		(25,446)
Earnings from unconsolidated affiliates, net of losses		(7,572)		(7,550)
Non-operating expense		(1,321)		(1,068)
Income before provision for income taxes		(7,537)		(4,730)
Provision for income taxes		1,209		542
Net income		(6,328)		(4,188)
Cumulative translation adjustment		(12,145)		(11,360)
Total stockholders' investment	$	(18,473)	$	(15,548)

Other income (expense), net, in our condensed consolidated statements of income includes foreign currency transaction gains (losses) of $(0.1) million and $0.2 million for the three and six months ended September 30, 2011, respectively, and $(0.1) million and $(0.2) million for the three and six months ended September 30, 2010, 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 the three months ended September 30, 2011 and 2010, earnings from unconsolidated affiliates, net of losses, were decreased by $7.5 million and increased by $0.1 million, respectively, and during the six months ended September 30, 2011 and 2010, earnings from unconsolidated affiliates were decreased by $8.1 million and $0.5 million, respectively, as a result of the impact of changes in foreign currency exchange rates on the results of our unconsolidated affiliates, primarily our affiliate in Brazil.

In addition to the foreign currency items discussed above, other income (expense), net also includes gains on sales of two joint ventures of $0.6 million during the six months ended September 30, 2010.

As of September 30 and March 31, 2011, the allowance for doubtful accounts for non-affiliates was $0.1 million. As of September 30 and March 31, 2011, the allowance for doubtful accounts for affiliates was zero.

During the three and six months ended September 30, 2011, we recorded an impairment charge of $24.6 million to write-down certain spare parts within inventories to lower of cost or market. This impairment charge resulted from the identification of $48.8 million of inventory that is dormant, obsolete or excess based on a review of our future inventory needs completed during the three months ended September 30, 2011. This inventory review was driven by changes made in the three months ended September 30, 2011 to our future fleet strategy. The change in fleet strategy resulted from (1) a continued shift in demand for our aircraft to newer technology aircraft types, (2) the introduction of the Bristow Client Promise through which we will position Bristow as the premium service provider of offshore transportation services and (3) the introduction of the new financial metric of Bristow Value Added. The change in demand for our older aircraft has accelerated over the last few quarters as a result of a renewed focus on safety and reliability across the offshore energy industry after the Macondo oil spill in the U.S. Gulf of Mexico. The change in fleet strategy resulted in the determination that we will operate certain older types of aircraft for a shorter period than originally anticipated and led to the global review of spare parts inventories supporting our fleet. This impairment charge is included on a separate line within operating expense on the condensed consolidated statements of income.

Additionally, during the six months ended September 30, 2011, we sold inventory in Mexico for a loss of $1.0 million. This loss is recorded as a reduction in gain (loss) on disposal of assets on the condensed consolidated statement of income.

During the three and six months ended September 30, 2011, we recorded an impairment charge of $2.7 million resulting from the abandonment of certain assets located in Creole, Louisiana and used in our U.S. Gulf of Mexico operations as we ceased operations from that location. This impairment charge is included in depreciation and amortization expense on the condensed consolidated statement of income. We expect to incur approximately $0.1 million during the three months ended December 31, 2011 related to lease termination costs at this location. Additionally, we recorded an impairment charge of $0.4 million to reduce the carrying value of three aircraft held for sale during the three and six months ended September 30, 2011. This impairment charge is included as a reduction in gain on disposal of assets on the condensed consolidated statement of income. Also, during the three months ended September 30, 2011, we recorded a $1.1 million loss on the disposal of a fixed wing aircraft previously operating in Nigeria that was damaged in an incident upon landing. The aircraft was insured, but subject to self-insured retention and loss sensitive factors. The $1.1 million loss is included as a reduction in gain (loss) on disposal of assets in our condensed consolidated statement of income.

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement that provides a uniform framework for fair value measurements and related disclosures between U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and International Financial Reporting Standards (“IFRS”). This pronouncement does not extend the use of fair value but, rather, provides guidance about how fair value should be applied where it already is required or permitted under U.S. GAAP or IFRS. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity's use of a nonfinancial asset that is different from the asset's highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. The provisions for this pronouncement are effective for interim and annual periods beginning on or after December 15, 2011. We will adopt this pronouncement beginning January 1, 2012.

In June 2011, the FASB issued an accounting pronouncement that provides new guidance on the presentation of comprehensive income in financial statements. Entities are required to present total comprehensive income either in a single, continuous statement of comprehensive income or in two, separate, but consecutive, statements. Under the single-statement approach, entities must include the components of net income, a total for net income, the components of other comprehensive income and a total for comprehensive income. Under the two-statement approach, entities must report a statement of income and, immediately following, a statement of comprehensive income. Under either method, entities must display adjustments for items reclassified from other comprehensive income to net income in both net income and comprehensive income. The provisions for this pronouncement are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. We will adopt this pronouncement for our fiscal year beginning April 1, 2012.

In September 2011, the FASB amended the accounting guidance on the annual testing of goodwill for impairment. The amended guidance will allow companies to assess qualitative factors to determine if it is more likely than not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. This guidance will be effective for our fiscal year ending March 31, 2013, with early adoption permitted. We have determined that this new guidance will not have a material impact on our consolidated financial statements.