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, 2013 is referred to as “fiscal year 2013.” 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 2012 Annual Report (the “fiscal year 2012 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, 2012, the consolidated results of operations for the three and six months ended September 30, 2012 and 2011, and the consolidated cash flows for the six months ended September 30, 2012 and 2011.

See “Foreign Currency” in Note 1 to the fiscal year 2012 Financial Statements for a discussion of the related accounting policies. During the three and six months ended September 30, 2012 and 2011, 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,
		2012	2011	2012	2011
One British pound sterling into U.S. dollars
	High	1.63	1.66	1.63	1.66
	Average	1.58	1.61	1.58	1.62
	Low	1.54	1.53	1.53	1.53
	At period-end	1.61	1.56	1.61	1.56
One euro into U.S. dollars
	High	1.31	1.45	1.33	1.49
	Average	1.25	1.41	1.27	1.42
	Low	1.21	1.34	1.21	1.34
	At period-end	1.29	1.34	1.29	1.34
One Australian dollar into U.S. dollars
	High	1.06	1.10	1.06	1.10
	Average	1.04	1.05	1.03	1.06
	Low	1.01	0.97	0.97	0.97
	At period-end	1.04	0.97	1.04	0.97
One Nigerian naira into U.S. dollars
	High	0.0065	0.0068	0.0065	0.0068
	Average	0.0063	0.0066	0.0063	0.0065
	Low	0.0062	0.0063	0.0061	0.0063
	At period-end	0.0064	0.0064	0.0064	0.0064

Other income (expense), net, in our condensed consolidated statements of income includes foreign currency transaction gains (losses) of $(0.2) million and $(0.1) million for the three months ended September 30, 2012 and 2011, respectively, and $(1.1) million and $0.2 million for the six months ended September 30, 2012 and 2011, 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, 2012 and 2011, earnings from unconsolidated affiliates, net of losses, were decreased by $0.2 million and $7.5 million, respectively, and during the six months ended September 30, 2012 and 2011, earnings from unconsolidated affiliates, net of losses, were decreased by $3.8 million and $6.9 million, respectively, as a result of the impact of changes in foreign currency exchange rates on the results of our unconsolidated affiliates, primarily the impact of changes in the Brazilian real and U.S. dollar exchange rate on results 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		Six Months Ended
		September 30,		September 30,
		2012	2011	2012	2011
One Brazilian real into U.S. dollars
	High	0.5029	0.6511	0.5488	0.6511
	Average	0.4941	0.6170	0.5033	0.6222
	Low	0.4879	0.5322	0.4811	0.5322
	At period-end	0.4944	0.5476	0.4944	0.5476

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 discussed below (in thousands):

	Three Months Ended		Six Months Ended
	September 30, 2012		September 30, 2012
Revenue	$	(6,621)	$	(15,399)
Operating expense		7,049		16,748
Earnings from unconsolidated affiliates, net of losses		7,268		3,111
Non-operating expense		(248)		(1,440)
Income before benefit for income taxes		7,448		3,020
Benefit for income taxes		(2,607)		(1,097)
Net income		4,841		1,923
Cumulative translation adjustment		4,321		4,626
Total stockholders' investment	$	9,162	$	6,549

As of September 30 and March 31, 2012, the allowance for doubtful accounts for non-affiliates was $2.8 million and $0.1 million, respectively. As of September 30 and March 31, 2012, there were no allowances for doubtful accounts related to accounts receivable due from affiliates. The allowance for doubtful accounts for non-affiliates was increased by $2.6 million during the three months ended September 30, 2012 related to amounts due from ATP Oil and Gas Corporation, a client in the U.S. Gulf of Mexico, that are no longer considered probable of collection due to their filing for bankruptcy. See “Summary of Significant Accounting Policies” in Note 1 to the fiscal year 2012 Financial Statements for further information related to our policies on accounts receivable.

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 was dormant, obsolete or excess based on a review of our future inventory needs completed during the three months ended September 30, 2011 and is included on a separate line within operating expense on the condensed consolidated statements of income. This inventory review was driven by changes made during 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 to newer technology aircraft types, (2) the introduction of the Bristow Client Promise through which we began to position Bristow Group 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 to newer technology aircraft types accelerated over a period leading up to September 30, 2011 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.

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 in loss on disposal of assets in the condensed consolidated statements of income.

During the three and six months ended September 30, 2012, we recorded charges of $2.0 million and $3.9 million to reduce the carrying value of two and nine aircraft held for sale, respectively. These charges are included in loss on disposal of assets on the condensed consolidated statements of income. Additionally, during the three and six months ended September 30, 2012, respectively, we sold or disposed of six and ten aircraft and other equipment for proceeds of $25.7 million and $46.0 million, resulting in net gains (losses) of $0.8 million and $(2.6) million. During the three and six months ended September 30, 2011, respectively, we sold or disposed of six and eight aircraft and other equipment for proceeds of $11.2 million and $12.0 million, resulting in net gains of $2.1 million and $2.3 million. 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 statements of income. Additionally, we recorded charges totaling $0.4 million to reduce the carrying value of three aircraft held for sale during the three and six months ended September 30, 2011. These charges are included in loss on disposal of assets on the condensed consolidated statements of income. Also, during the three and six 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 in loss on disposal of assets in the condensed consolidated statements of income.

In June 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement that provided new guidance on the presentation of comprehensive income in financial statements. This pronouncement requires entities 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. In December 2011, the FASB deferred the effective date of the presentation of reclassifications of items out of other comprehensive income. The remaining provisions for this pronouncement were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. We adopted this pronouncement for our fiscal year beginning April 1, 2012 using the two-statement approach.