Bristow Group Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

VARIABLE INTEREST ENTITIES AND EQUITY INVESTMENTS AND ADVANCES

VARIABLE INTEREST ENTITIES AND EQUITY INVESTMENTS AND ADVANCES

12 Months Ended

Dec. 31, 2018

Equity Method Investments and Joint Ventures [Abstract]

VARIABLE INTEREST ENTITIES AND EQUITY INVESTMENTS AND ADVANCES

VIEs

Aeróleo. On July 1, 2011, the Company acquired a 50% economic interest and a 20% voting interest in Aeróleo, a Brazilian entity that provides helicopter transport services to the Brazilian offshore oil and gas industry, for $4.8 million in cash. The Company and its partner also each loaned Aeróleo $6.0 million at an interest rate of 6.0% per annum. On October 1, 2015, the Company’s partner completed a transfer of its 50% economic and 80% voting interest in Aeróleo to a third party. In connection with the transfer, the Company entered into a shareholders’ agreement with its new partner that requires supermajority shareholder and/or board approval of specified, significant actions, and a put/call option arrangement which gives the Company the right to purchase at any time, and the new partner the right to put to the Company after two years, the new partner’s interest in Aeróleo. The Company has the ability to direct activities that most significantly affect Aeróleo’s financial performance, making the Company the primary beneficiary. As a result, the Company concluded that Aeróleo is a variable interest entity and therefore should be consolidated into the Company’s financial statements.

The Company’s consolidated balance sheets at December 31, 2018 and 2017 include assets of Aeróleo totaling $11.9 million and $11.5 million, respectively. The distribution of these assets to Era Group and its subsidiaries other than Aeróleo is subject to restrictions. In addition, the Company’s consolidated balance sheets at December 31, 2018 and 2017 include liabilities of Aeróleo of $4.5 million and $7.6 million, respectively. The creditors for such liabilities do not have recourse to Era Group or its subsidiaries other than Aeróleo.

Joint Ventures

Dart. Era DHS LLC, a wholly owned subsidiary of the Company, acquired 49% of the capital stock of Dart Helicopter Services LLC (“Dart Helicopters”), a sales, marketing and parts manufacturing organization based in North America that engineers and manufactures after-market parts and equipment for sale to helicopter manufacturers and operators. During 2009, the Company provided a $0.3 million loan to Dart Helicopters with a maturity of June 2012 at an annual interest rate of 5.0%, which was payable quarterly with principal due at maturity. On February 28, 2011, the Company made an additional investment of $5.0 million in Dart Helicopters, and on July 31, 2011, contributed its ownership in Dart Helicopters to Dart in exchange for a 50% economic and voting interest in Dart and a note receivable of $5.1 million. The note receivable had a balance of $2.3 million at December 31, 2018 and bears interest at a rate of 4.0% per annum, requires quarterly principal and interest payments and matures on July 31, 2023. During the years ended December 31, 2018, 2017 and 2016, the Company purchased $2.0 million, $2.0 million and $1.9 million, respectively, of products and services from Dart.

During the year ended December 31, 2018, the Company received dividends of $1.0 million from Dart.

Era Training Center. Era Training Center LLC (“Era Training Center”) previously operated flight training devices and provided training services to the Company and third-party customers. During the years ended December 31, 2018, 2017 and 2016, the Company provided helicopter, management and other services to the joint venture totaling $0.1 million, $0.2 million and $0.2 million, respectively, and incurred $0.2 million, $0.5 million and $0.6 million, respectively, for simulator fees.

During the year ended December 31, 2018, the Company entered into an agreement to dissolve Era Training Center in exchange for the settlement of an existing promissory note with an outstanding principal amount of $3.6 million by acquiring the assets of the joint venture. The agreement included the sale of three simulators to the Company for $2.9 million, partial ownership in a fourth simulator for $0.4 million and a note receivable from the Company’s partner in Era Training Center for $0.4 million.

Equity investments and advances as of December 31, 2018 and 2017 were as follows (in thousands):



	Ownership	2018		2017
Dart	50%	$	27,112	$	26,128
Era Training Center	50%	—		3,928
		$	27,112	$	30,056

As of December 31, 2018 and 2017, cumulative undistributed net earnings of equity investees included in the Company’s consolidated retained earnings were $6.0 million and $2.9 million, respectively.

Combined Condensed Financial Statements

Summarized financial information for the Company’s equity investments and advances in Dart as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016 was as follows (in thousands):



	2018		2017
Current assets	$	31,332	$	29,336
Non-current assets	30,613		29,899
Current liabilities	7,007		6,671
Non-current liabilities	5,558		6,096



	2018		2017		2016
Operating revenues	$	45,602	$	42,891	$	40,930
Costs and expenses:
Operating and administrative	36,592		35,983		32,878
Depreciation and amortization	1,754		1,603		3,161
Total costs and expenses	38,346		37,586		36,039
Operating income	$	7,256	$	5,305	$	4,891
Net income	$	4,912	$	3,603	$	2,657

Summarized financial information for the Company’s equity investments and advances in all other investees as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016 was as follows (in thousands):



	2018		2017
Current assets	$	—	$	257
Non-current assets	—		4,138
Current liabilities	—		654
Non-current liabilities	—		3,298



	2018			2017			2016
Operating revenues	$	170		$	581		$	694
Costs and expenses:
Operating and administrative	63			367			338
Depreciation and amortization	377			503			519
Total costs and expenses	440			870			857
Operating income	$	(270	)	$	(289	)	$	(163	)
Net income (loss)	$	(442	)	$	(527	)	$	(409	)