Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 ________________________________________
FORM 10-Q
________________________________________ 
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015              or             
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-35701
Era Group Inc.
(Exact Name of Registrant as Specified in Its Charter)
________________________________________ 
Delaware
 
72-1455213
(State or Other Jurisdiction of
Incorporation or Organization)
 
(IRS Employer
Identification No.)
 
 
818 Town & Country Blvd., Suite 200
 
 
Houston, Texas
 
77024
(Address of Principal Executive Offices)
 
(Zip Code)
713-369-4700
(Registrant’s Telephone Number, Including Area Code)

________________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý     No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  ¨
 
Accelerated filer  ý
 
Non-accelerated filer  ¨
(Do not check if a smaller
reporting company)
 
Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  ý
The total number of shares of common stock, par value $0.01 per share, outstanding as of October 30, 2015 was 20,498,319. The Registrant has no other class of common stock outstanding.


Table of Contents

ERA GROUP INC.
Table of Contents
 
Part I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
Item 3.
 
 
 
 
Item 4.
 
 
 
Part II.
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 6.


1

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS
ERA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
September 30,
2015
 
December 31,
2014
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
13,808

 
$
40,867

Receivables:
 
 
 
Trade, net of allowance for doubtful accounts of $1,999 and $1,955 in 2015 and 2014, respectively
39,498

 
33,390

Other, net of allowance for doubtful accounts of $0 and $437 in 2015 and 2014, respectively
2,513

 
2,062

Inventories, net
24,932

 
26,869

Deferred income taxes
2,276

 
1,996

Prepaid expenses and other
3,055

 
2,661

Escrow deposits
2,297

 

Total current assets
88,379

 
107,845

Property and equipment
1,175,693

 
1,171,267

Accumulated depreciation
(311,070
)
 
(308,141
)
Net property and equipment
864,623

 
863,126

Equity investments and advances
30,256

 
31,753

Goodwill
1,589

 
352

Intangible assets
1,411

 

Other assets
12,522

 
14,098

Total assets
$
998,780

 
$
1,017,174

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST
 AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
12,037

 
$
15,120

Accrued wages and benefits
7,861

 
7,521

Accrued interest
3,992

 
949

Current portion of long-term debt
25,335

 
27,426

Derivative instruments
71

 
1,109

Accrued income taxes
7,415

 
267

Other current liabilities
4,735

 
3,162

Total current liabilities
61,446

 
55,554

Long-term debt
242,873

 
282,118

Deferred income taxes
213,998

 
217,027

Other liabilities
1,956

 
2,111

Total liabilities
520,273

 
556,810

Commitments and contingencies (see Note 8)

 

Redeemable noncontrolling interest
4,783

 

Equity:
 
 
 
Era Group Inc. stockholders’ equity:
 
 
 
Common stock, $0.01 par value, 60,000,000 shares authorized; 20,499,050 and 20,371,672 outstanding in 2015 and 2014, respectively, exclusive of treasury shares
207

 
204

Additional paid-in capital
432,774

 
429,109

Retained earnings
43,949

 
31,797

Treasury shares, at cost, 151,193 and 18,609 shares in 2015 and 2014, respectively
(2,632
)
 
(551
)
Accumulated other comprehensive income, net of tax
92

 
95

Total Era Group Inc. stockholders’ equity
474,390

 
460,654

Noncontrolling interest
(666
)
 
(290
)
Total equity
473,724

 
460,364

Total liabilities, redeemable noncontrolling interest and stockholders’ equity
$
998,780

 
$
1,017,174







The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Table of Contents

ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Operating revenues
$
69,741

 
$
90,510

 
$
207,894

 
$
256,533

Costs and expenses:
 
 
 
 
 
 
 
Operating
43,007

 
54,282

 
126,396

 
158,601

Administrative and general
11,238

 
12,941

 
31,760

 
34,340

Depreciation and amortization
12,186

 
11,746

 
35,186

 
34,458

Total costs and expenses
66,431

 
78,969

 
193,342

 
227,399

Gains on asset dispositions, net
1,813

 
42

 
4,959

 
6,072

Operating income
5,123

 
11,583

 
19,511

 
35,206

Other income (expense):
 
 
 
 
 
 
 
Interest income
232

 
130

 
800

 
418

Interest expense
(3,121
)
 
(3,629
)
 
(9,547
)
 
(11,222
)
Gain (loss) on debt extinguishment
(16
)
 

 
248

 

Derivative gains (losses), net
8

 
(1,703
)
 
(14
)
 
(1,744
)
Note receivable impairment

 

 

 
(2,457
)
Foreign currency gains (losses), net
146

 
(485
)
 
(2,271
)
 
(521
)
Gain on sale of FBO (see Note 5)

 

 
12,946

 

Other, net

 
(3
)
 
(9
)
 
10

Total other income (expense)
(2,751
)
 
(5,690
)
 
2,153

 
(15,516
)
Income before income taxes and equity earnings
2,372

 
5,893

 
21,664

 
19,690

Income tax expense
1,343

 
2,868

 
9,426

 
8,130

Income before equity earnings
1,029

 
3,025

 
12,238

 
11,560

Equity earnings (losses), net of tax
(376
)
 
1,286

 
(719
)
 
2,321

Net income
653

 
4,311

 
11,519

 
13,881

Net loss (income) attributable to non-controlling interest in subsidiary
208

 
(45
)
 
633

 
51

Net income attributable to Era Group Inc.
$
861

 
$
4,266

 
$
12,152

 
$
13,932

 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
Basic
$
0.04

 
$
0.21

 
$
0.59

 
$
0.69

Diluted
$
0.04

 
$
0.21

 
$
0.59

 
$
0.68

 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
20,260,514

 
20,098,239

 
20,243,653

 
20,039,609

Diluted
20,287,069

 
20,163,990

 
20,292,782

 
20,108,399













The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Net income
 
$
653

 
$
4,311

 
$
11,519

 
$
13,881

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
136

 
(65
)
 
(4
)
 
(119
)
Income tax benefit
 

 
18

 
1

 
42

Total other comprehensive income (loss)
 
136

 
(47
)
 
(3
)
 
(77
)
Comprehensive income
 
789

 
4,264

 
11,516

 
13,804

Comprehensive loss (income) attributable to non-controlling interest in subsidiary
 
208

 
(45
)
 
633

 
51

Comprehensive income attributable to Era Group Inc.
 
$
997

 
$
4,219

 
$
12,149

 
$
13,855








































The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited, in thousands)
 
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained Earnings
 
Treasury
Shares
 
Accumulated
Other
Comprehensive
Income
 
Non-
controlling
Interest In
Subsidiary
 
Total
Equity
December 31, 2014
 
$
204

 
$
429,109

 
$
31,797

 
$
(551
)
 
$
95

 
$
(290
)
 
$
460,364

Issuance of common stock:
 
 
 
 
 
 
 
 
 
 
 
 
 

Restricted stock grants
 
2

 
(2
)
 

 

 

 

 

Employee Stock Purchase Plan
 
1

 
1,095

 

 

 

 

 
1,096

Share award amortization
 

 
2,249

 

 

 

 

 
2,249

Stock option amortization
 

 
281

 

 

 

 

 
281

Employee Stock Purchase Plan amortization
 

 
144

 

 

 

 

 
144

Cancellation of restricted stock
 

 
12

 

 
(12
)
 

 

 

Tax deficit from share award plans
 

 
(114
)
 

 

 

 

 
(114
)
Purchase of treasury shares
 

 

 

 
(2,069
)
 

 

 
(2,069
)
Net income(1)
 

 

 
12,152

 

 

 
(376
)
 
11,776

Currency translation adjustments, net of tax
 

 

 

 

 
(3
)
 

 
(3
)
September 30, 2015
 
$
207

 
$
432,774

 
$
43,949

 
$
(2,632
)
 
$
92

 
$
(666
)
 
$
473,724


(1)
Excludes net loss of $257 attributable to redeemable noncontrolling interests in subsidiary.

































The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Table of Contents

ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
Nine Months Ended 
 September 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
11,519

 
$
13,881

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
35,186

 
34,458

Amortization of deferred financing costs
773

 
674

Debt discount amortization
191

 
186

Share-based compensation
2,674

 
5,126

Note receivable impairment

 
2,457

Bad debt expense, net
60

 
195

Gains on asset dispositions, net
(4,959
)
 
(6,072
)
Gain on debt extinguishment, net
(248
)
 

Gain on sale of FBO
(12,946
)
 

Gain on sale of interest in equity investees

 
(1,518
)
Derivative losses, net
14

 
1,744

Cash settlements on derivative transactions, net
(274
)
 
(755
)
Foreign currency losses, net
2,693

 
135

Deferred income tax expense (benefit)
(5,279
)
 
6,938

Equity losses (earnings), net of tax
719

 
(803
)
Changes in operating assets and liabilities:
 
 
 
Increase in receivables
(7,500
)
 
(9,712
)
Decrease in prepaid expenses and other assets
2,558

 
1,142

Increase in accounts payable, accrued expenses and other liabilities
10,662

 
13,890

Net cash provided by operating activities
35,843

 
61,966

Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(47,260
)
 
(63,966
)
Proceeds from disposition of property and equipment
20,631

 
7,020

Cash settlements on forward contracts, net
(1,103
)
 

Business acquisitions, net of cash acquired
(3,165
)
 

Investments in and advances to equity investees

 
(125
)
Proceeds from sale of interest in equity investees

 
6,381

Proceeds from sale of FBO
14,252

 

Principal payments on notes due from equity investees
514

 
474

Principal payments on third party notes receivable
25

 
424

Escrow deposits, net
(340
)
 

Escrow deposits on like-kind exchanges, net
(1,857
)
 

Net cash used in investing activities
(18,303
)
 
(49,792
)
Cash flows from financing activities:
 
 
 
Payments on long-term debt
(52,149
)
 
(2,187
)
Proceeds from Revolving Credit Facility
35,000

 

Revolving Credit Facility issuance costs

 
(2,446
)
Extinguishment of long-term debt
(24,335
)
 

Proceeds from share award plans
1,096

 
1,458

Purchase of treasury shares
(2,069
)
 

Tax expense on vested restricted stock
(114
)
 

Net cash used in financing activities
(42,571
)
 
(3,175
)
Effects of exchange rate changes on cash and cash equivalents
(2,028
)
 
23

Net decrease in cash and cash equivalents
(27,059
)
 
9,022

Cash and cash equivalents, beginning of period
40,867

 
31,335

Cash and cash equivalents, end of period
$
13,808


$
40,357

Supplemental cash flow information:
 
 
 
Cash paid for interest
$
10,983

 
$
9,434

Cash paid for income taxes
$
5,990

 
$
734




The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Table of Contents

ERA GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
1.
BASIS OF PRESENTATION AND ACCOUNTING POLICY
The condensed consolidated financial statements include the accounts of Era Group Inc. and its consolidated subsidiaries (collectively referred to as the “Company”). The condensed consolidated financial information for the three and nine months ended September 30, 2015 and 2014 has been prepared by the Company and has not been audited by its independent registered public accounting firm. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the Company’s financial position as of September 30, 2015, its results of operations for the three and nine months ended September 30, 2015 and 2014, its comprehensive income for the three and nine months ended September 30, 2015 and 2014, its changes in equity for the nine months ended September 30, 2015, and its cash flows for the nine months ended September 30, 2015 and 2014. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the “Company” refers to Era Group Inc. and its consolidated subsidiaries and any reference in this Quarterly Report on Form 10-Q to “Era Group” refers to Era Group Inc. without its subsidiaries.
Certain of the Company’s operations are subject to seasonal factors. Operations in the U.S. Gulf of Mexico are often at their highest levels from April to September, as daylight hours increase, and are at their lowest levels from November to February, as daylight hours decrease. The Company’s Alaskan operations also see an increase during May to September, as its firefighting and flightseeing operations occur during this time and daylight hours are significantly longer.
Basis of Consolidation. The consolidated financial statements include the accounts of Era Group Inc., its wholly and majority-owned subsidiaries and entities that meet the criteria of Variable Interest Entities (“VIEs”) of which the Company is the primary beneficiary. All significant inter-company accounts and transactions are eliminated in consolidation. Era do Brazil LLC (“Era do Brazil”) is a VIE of which the Company is the primary beneficiary. Aeróleo Taxi Aereo S/A (“Aeróleo”) meets the criteria of a VIE; however, the Company is not the primary beneficiary, and Aeróleo is therefore not consolidated.
Revenue Recognition. The Company recognizes revenues when they are realized or realizable and earned. Revenues are realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenues that do not meet these criteria are deferred until the criteria are met. The unrecognized revenues and related activity during the three and nine months ended September 30, 2015 and 2014, were as follows (in thousands): 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
Balance at beginning of period
$
37,084

 
$
28,477

 
$
31,047

 
$
24,243

Revenues deferred during the period
12,381

 
8,861

 
32,531

 
25,773

Revenues recognized during the period
(7,333
)
 
(7,837
)
 
(21,446
)
 
(20,515
)
Balance at end of period
$
42,132

 
$
29,501

 
$
42,132

 
$
29,501

As of September 30, 2015, deferred revenues of $42.1 million were related to dry-leasing revenues for certain helicopters leased by the Company to Aeróleo, its Brazilian joint venture. The deferral originated from difficulties experienced by Aeróleo following Petróleo Brasileiro S.A.’s (“Petrobras Brazil”) cancellation in 2011 of certain contract awards to Aeróleo for a number of AW139 medium helicopters under dry-lease from the Company, and the deferral continues as a result of continued financial difficulties at Aeróleo. The Company will recognize revenues as cash is received or earlier should future collectability become reasonably assured. All costs and expenses related to these dry-leases were recognized as incurred.
Receivables. Customers are primarily major integrated and independent exploration and production companies, hospitals, international helicopter operators and the U.S. government. Customers are typically granted credit on a short-term basis, and related credit risks are considered minimal. The Company routinely reviews its receivables and makes provisions for probable doubtful accounts; however, those provisions are estimates and actual results could differ from those estimates and those differences

7

Table of Contents

may be material. Receivables are deemed uncollectible and removed from receivables and the allowance for doubtful accounts when collection efforts have been exhausted.
New Accounting Standards. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 - Revenue From Contracts With Customers, which will base revenue recognition on the contract between a vendor and customer and will require reporting entities to allocate the transaction price to various performance obligations in a contract and recognize revenues when those performance obligations are satisfied. ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017 and any interim periods within that period. Early adoption is permitted for annual reporting periods beginning after December 15, 2016 and any interim periods within that period. The Company is currently evaluating the potential impact and the method of the adoption of ASU 2014-09 on its consolidated financial statements.
In February 2015, the FASB issued ASU 2015-02 - Consolidation, which amends the guidance for evaluating whether certain entities should be consolidated, particularly for general partner and limited partner relationships and VIEs that have fee arrangements or related party relationships with a reporting entity. ASU 2015-02 will be effective for annual reporting periods beginning after December 15, 2015 and any interim periods within that period, and early adoption is permitted. The Company has not adopted ASU 2015-02 and believes adoption will not have a material impact on its consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03 - Interest - Imputation of Interest, which requires debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct reduction of the carrying amount of that liability. The recognition and measurement guidance for debt issuance costs is not affected by this ASU. ASU 2015-03 will be effective for annual reporting periods beginning after December 15, 2015 and any interim periods within that period, and early adoption is permitted. In September 2015, the FASB issued ASU 2015-15 - Interest - Imputation of Interest, which amends ASU 2015-03 to allow issuers to continue to recognize debt issuance costs related to line-of-credit arrangements as an asset and amortize that asset over the term of the credit agreement. The Company has not adopted ASU 2015-03 or ASU 2015-15. As of September 30, 2015 and December 31, 2014, the Company had debt issuance costs of $3.4 million and $4.0 million, respectively, exclusive of debt issuance costs associated with its amended and restated senior secured revolving credit facility (the “Revolving Credit Facility”). Such costs are included in other assets on the condensed consolidated balance sheets. The Company believes the adoption of ASU 2015-03 would reduce other assets and long-term debt by such amounts.
In July 2015, the FASB issued ASU 2015-11 - Inventory, which is intended to simplify the way reporting entities account for inventory by requiring it to be valued at the lower of cost and net realizable value unless that entity uses the last-in, first-out or the retail inventory valuation method. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016 and any interim periods within that period, and early adoption is permitted as of the beginning of an interim or annual reporting period. The Company has not adopted ASU 2015-11 and believes adoption will not have a material impact on its consolidated financial statements.
In September 2015, the FASB issued ASU 2015-16 - Business Combinations, which requires adjustments to provisional amounts recorded in business combinations to be recognized in the reporting period in which they are identified either separately on the face of the income statement or in the notes to the financial statements. ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015 and any interim periods within that period, and early adoption is permitted. The Company adopted ASU 2015-16 effective on July 1, 2015, and such adoption did not have a material impact on its consolidated financial statements.
2.
FAIR VALUE MEASUREMENTS
The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
The Company’s financial assets and liabilities as of September 30, 2015 and December 31, 2014 that are measured at fair value on a recurring basis were as follows (in thousands):

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Table of Contents

 
Level 1
 
Level 2
 
Level 3
September 30, 2015
 
 
 
 
 
LIABILITIES
 
 
 
 
 
Derivative instruments(1)
$

 
$
71

 
$

 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
LIABILITIES
 
 
 
 
 
Derivative instruments(1)
$

 
$
1,109

 
$

____________________
(1)
The fair value of the Company’s derivative instruments was estimated using market data gathered by a third party financial institution, adjusted for market and credit risks applicable to the Company.
The estimated fair values of the Company’s other financial assets and liabilities as of September 30, 2015 and December 31, 2014 were as follows (in thousands): 
 
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
September 30, 2015
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
Long-term debt, including current portion
$
268,208

 
$

 
$
262,459

 
$

 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
Long-term debt, including current portion
$
309,544

 
$

 
$
320,099

 
$

The carrying values of cash and cash equivalents, receivables, notes receivable from other business ventures and accounts payable approximate fair value. The fair value of the Company’s long-term debt was estimated using discounted cash flow analyses based on estimated current rates for similar types of arrangements. Considerable judgment was required in developing certain of the estimates of fair value and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
3.
DERIVATIVE INSTRUMENTS
In 2011, the Company entered into two interest rate swap agreements maturing in December 2015 that call for the Company to pay fixed interest rates of 1.29% and 1.76% on an aggregate notional value of $25.4 million, which decreases each month by the amount of principal payments made on the note (see Note 5 for more information about the Company’s promissory notes), and receive a variable interest rate based on LIBOR on these notional values. The general purpose of these interest rate swap agreements is to provide protection against increases in interest rates, which might lead to higher interest costs for the Company. The fair value of these derivative instruments as of September 30, 2015 and December 31, 2014 was a liability of $0.1 million and $0.3 million, respectively. The Company recognized gains of $0.1 million and $0 for the three months ended September 30, 2015 and 2014, respectively, and gains of $0.2 million for each of the nine months ended September 30, 2015 and 2014. These gains are included in derivative losses, net on the condensed consolidated statements of operations.
From time to time, the Company enters into forward exchange option contracts to hedge against foreign currency payment commitments and anticipated transaction exposures. All derivatives are recognized as assets or liabilities and marked to fair value each period. The Company does not use financial instruments for trading or speculative purposes. None of the Company’s derivative instruments contain credit-risk-related contingent features, and counterparties to the derivative contracts are high credit quality financial institutions.
The Company entered into forward contracts during the second quarter of 2014 to mitigate its exposure to exchange rate fluctuations on euro-denominated aircraft purchase commitments. The Company did not designate these contracts as hedges for accounting purposes. The Company recorded a loss of $0 and $0.3 million on these derivative instruments during the three and nine months ended September 30, 2015, respectively. This loss is recorded in foreign currency gains (losses), net in the condensed consolidated statements of operations. The Company had no open forward contracts as of September 30, 2015.

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4.
ESCROW DEPOSITS
From time to time, the Company enters into Qualified Exchange Accommodation Agreements with a third party to meet the like-kind exchange requirements of Section 1031 of the Internal Revenue Code (“IRC”) and the provisions of Revenue Procedure 2000-37. In accordance with these provisions, the Company is permitted to deposit proceeds from the sale of assets into escrow accounts for the purpose of acquiring other assets and qualifying for the temporary deferral of realized taxable gains. Consequently, the Company establishes escrow accounts with financial institutions for the deposit of funds received on sales of equipment, which are designated for replacement property within a specified period of time. As of September 30, 2015, the Company had deposits of $2.0 million in like-kind exchange escrow accounts. There were no such deposits as of December 31, 2014.
During the nine months ended September 30, 2015, the Company sold one EC135 light twin helicopter for cash proceeds of $2.8 million, net of fees. The sale transaction was treated as a tax-free like-kind exchange for tax purposes under Section 1031 of the IRC whereby proceeds are held by a qualified intermediary until qualified assets are delivered. The Company was unable to purchase a qualifying asset prior to the expiration of the 180-day period subsequent to the closing date of the sale. As a result, the proceeds of $2.8 million were returned to the Company, and the sale was treated as a taxable event.
The Company also transferred title of one AW139 helicopter to Hauser Investments Limited (“Hauser”) in connection with its acquisition of Hauser (see Note 5). This transfer was also treated as a tax-free like-kind exchange whereby Hauser deposited $11.8 million into an escrow account with a qualified intermediary for the benefit of the Company. The Company withdrew $8.4 million and $1.4 million from the escrow account to make deposits on a qualifying asset during the second and third quarters of 2015, respectively, thereby deferring recognition of the taxable gain.
5.
ACQUISITIONS AND DISPOSITIONS
Sicher Helicopters SAS (“Sicher”). On April 9, 2015, the Company contributed $3.2 million in cash for a 75% interest in Hauser, which owns 100% of Sicher, a Colombian entity. In connection with the acquisition, the Company also transferred title of an AW139 helicopter to Hauser to be used in Sicher’s operations.
The Company recorded all identifiable assets acquired and liabilities assumed at the estimated acquisition date fair value in accordance with Accounting Standards Codification 805 - Business Combinations (“ASC 805”). This acquisition did not represent a material business combination under ASC 805. The acquisition of the 75% interest in Hauser resulted in the recognition of goodwill of $1.2 million and other intangible assets, comprised primarily of a Colombian air operator certificate, of $1.4 million. The fair value of the noncontrolling interest was determined using a discounted cash flow analysis. The initial accounting for the acquisition is not complete because the Company is still evaluating certain information used to estimate the fair values recorded including the valuations of the tangible assets, intangible assets, deferred income taxes and noncontrolling interest.
The noncontrolling interest partner has a right to put its interest to the Company, and the Company has a right to call its partner’s 25% ownership interest, each upon the occurrence of certain events and at fair value at the time of exercise as determined by an independent accounting firm. As a result of this put right, the noncontrolling interest related to Hauser is recorded in the mezzanine section of the condensed consolidated balance sheet as it does not meet the definition of a liability or equity under U.S. GAAP.
Capital Expenditures. During the nine months ended September 30, 2015, capital expenditures were $47.3 million and consisted primarily of deposits on future helicopter deliveries and a base expansion project. During the three and nine months ended September 30, 2015, the Company capitalized interest of $1.8 million and $5.4 million, respectively. During the three and nine months ended September 30, 2014, the Company capitalized interest of $1.0 million and $3.0 million, respectively. As of September 30, 2015 and December 31, 2014, construction in progress, which is a component of property and equipment, included capitalized interest of $9.4 million and $5.0 million, respectively. One S92 heavy helicopter was delivered in September 2015 but was not yet placed in service as of September 30, 2015. A summary of changes to our operating helicopter fleet is as follows:
Equipment Additions - The Company acquired three BO-105 light twin helicopters and one AS350 single engine helicopter in connection with the acquisition of Hauser during the nine months ended September 30, 2015. The Company placed four AW139 helicopters into service during the nine months ended September 30, 2014.
Equipment Dispositions - During the nine months ended September 30, 2015, the Company sold or otherwise disposed of property and equipment for proceeds of $18.5 million and recognized gains of $3.1 million. Additionally, a dry-leasing customer exercised a purchase option for three helicopters from which the Company recognized a gain of $1.2 million and an investment in sales-type lease of $2.3 million. Subsequent to exercising the purchase option, the customer opted for an early buy-out of two of the three sales-type leases, resulting in cash proceeds of $2.1 million and additional gains of $0.6 million. As of September 30, 2015, the investment in sales-type leases was $0.7 million. During the nine months ended September 30, 2014, the Company sold or otherwise disposed of property and equipment for proceeds of $7.0 million and recognized gains of $6.1 million.

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Fixed Base Operations (“FBO”) Sale. On May 1, 2015, the Company sold its FBO business at Ted Stevens Anchorage International Airport to Piedmont Hawthorne Aviation, LLC. Pursuant to a membership interests purchase agreement, Piedmont Hawthorne Aviation, LLC acquired 100% of Era Group’s wholly-owned subsidiary, Era FBO LLC, for cash proceeds of $14.3 million. The Company recognized a pre-tax gain of $12.9 million on the sale.
6.
INCOME TAXES
The Company’s effective income tax rates were 56.6% and 48.7% for the three months ended September 30, 2015 and 2014, respectively, and 43.5% and 41.3% for the nine months ended September 30, 2015 and 2014, respectively. In connection with the acquisition of Hauser, the transfer of the AW139 helicopter was treated as a sale for U.S. income tax purposes. Accordingly, the Company recognized a nonrecurring income tax expense of $1.0 million, which has been recorded as a deferred tax liability as the Company plans to qualify the transfer for like-kind exchange treatment under the IRC. The additional expense increased the Company’s effective income tax rate by 4.4% for the nine months ended September 30, 2015. The effective income tax rate for the three months ended September 30, 2015 increased by 22.8% due to non-deductible losses at Sicher, which is a controlled foreign corporation.
7.    LONG-TERM DEBT
The Company’s borrowings as of September 30, 2015 and December 31, 2014 were as follows (in thousands):
 
 
September 30, 2015
 
December 31, 2014
7.750% senior notes (excluding unamortized discount)
 
$
175,100

 
$
200,000

Senior secured revolving credit facility
 
70,000

 
85,000

Promissory notes
 
25,335

 
27,426

Other
 
119

 

 
 
270,554

 
312,426

Less: portion due within one year
 
(25,335
)
 
(27,426
)
Less: debt discount, net
 
(2,346
)
 
(2,882
)
Total long-term debt
 
$
242,873

 
$
282,118

7.750% Senior Notes. On December 7, 2012, Era Group issued $200.0 million aggregate principal amount of its 7.750% senior unsecured notes due December 15, 2022 (the “7.750% Senior Notes”) and received net proceeds of $191.9 million. Interest on the 7.750% Senior Notes is payable semi-annually in arrears on June 15 and December 15 of each year. During the nine months ended September 30, 2015, the Company repurchased $24.9 million of the 7.750% Senior Notes and recognized a gain on extinguishment of $0.2 million.
Amended and Restated Senior Secured Revolving Credit Facility. On March 31, 2014, Era Group entered into the Revolving Credit Facility that matures in March 2019. The Revolving Credit Facility provides Era Group with the ability to borrow up to $300.0 million, with a sub-limit of up to $50.0 million for letters of credit. Subject to the satisfaction of certain conditions precedent and the agreement by the lenders, the Revolving Credit Facility includes an “accordion” feature which, if exercised, will increase total commitments by up to $100.0 million. Era Group’s availability under the Revolving Credit Facility may be limited by the terms of the 7.750% Senior Notes.
Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to, at Era Group’s election, either a base rate or LIBOR, each as defined, plus an applicable margin. The applicable margin is based on the Company’s ratio of funded debt to EBITDA, as defined, and ranges from 75 to 200 basis points on the base rate margin and 175 to 300 basis points on the LIBOR margin. The applicable margin as of September 30, 2015 was 125 basis points on the base rate margin and 225 basis points on the LIBOR margin. In addition, the Company is required to pay a quarterly commitment fee based on the average unfunded portion of the committed amount at a rate based on the Company’s ratio of funded debt to EBITDA, as defined, that ranges from 37.5 to 50 basis points. As of September 30, 2015, the commitment fee was 50 basis points.
The obligations under the Revolving Credit Facility are secured by a portion of the Company’s helicopter fleet and the Company’s other tangible and intangible assets and are guaranteed by Era Group’s wholly owned U.S. subsidiaries. The Revolving Credit Facility contains various restrictive covenants including interest coverage, funded debt to EBITDA, and fair market value of mortgaged helicopters plus accounts receivable and inventory to funded debt, as well as other customary covenants including certain restrictions on the Company’s ability to enter into certain transactions, including those that could result in the incurrence of additional indebtedness and liens, the making of loans, guarantees or investments, sales of assets, payments of dividends or repurchases of capital stock, and entering into transactions with affiliates.

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As of September 30, 2015, Era Group had $70.0 million of outstanding borrowings under the Revolving Credit Facility, and the remaining availability was $227.2 million, net of issued letters of credit of $2.8 million. In connection with the amendment of the Revolving Credit Facility in 2014, Era Group incurred debt issuance costs of $2.4 million. Such costs are included in other assets on the condensed consolidated balance sheets and are amortized to interest expense in the condensed consolidated statements of operations over the life of the Revolving Credit Facility.
Promissory Notes. During the nine months ended September 30, 2015, Era Group made scheduled payments on other long-term debt of $2.1 million.
8.
COMMITMENTS AND CONTINGENCIES
Fleet. The Company’s unfunded capital commitments as of September 30, 2015 consisted primarily of agreements to purchase helicopters and totaled $174.5 million, of which $65.3 million is payable during the remainder of 2015 with the balance payable through 2017. The Company also had $1.6 million of deposits paid on options not yet exercised. The Company may terminate $107.3 million of its total commitments (inclusive of deposits paid on options not yet exercised) without further liability other than aggregate liquidated damages of $2.5 million.
Included in these commitments are orders to purchase nine AW189 heavy helicopters, three S92 heavy helicopters and five AW169 light twin helicopters. The AW189 and S92 helicopters are scheduled to be delivered in 2015 through 2017. Delivery dates for the AW169 helicopters have yet to be determined. In addition, the Company had outstanding options to purchase up to an additional ten AW189 helicopters and three S92 helicopters. If these options are exercised, the helicopters would be scheduled for delivery beginning in 2016 through 2018.
Other. In the normal course of its business, the Company becomes involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management uses estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its financial statements related thereto where appropriate. It is possible that a change in the Company’s estimates related to such exposure could occur, but the Company does not expect such changes in estimated costs would have a material effect on its consolidated financial position, results of operations or cash flows.
In April 2014, the Company entered into a settlement agreement with Airbus Helicopters (formerly Eurocopter), a division of Airbus Group (formerly European Aeronautic Defense and Space Company), with respect to the extended suspension of operations of H225 heavy helicopters in 2012 and 2013. The settlement agreement provides for certain service and product credit discounts, including credits that will be available to the Company for a period of four years from the date of the agreement to be applied against support services available from Airbus Helicopters covering spare parts, repair and overhaul, service bulletins, technical assistance or other services. The Company expects to be able to apply such service credits over the next two to three quarters, and such credits will result in a reduction in operating expenses in the periods utilized.  During the three and nine months ended September 30, 2015, the Company utilized credits in the amount of $1.4 million and $3.9 million, respectively.
9.
EARNINGS (LOSS) PER COMMON SHARE
Basic earnings per common share of the Company are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share of the Company are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the if-converted method and/or treasury method. Dilutive securities for this purpose assumes all common shares have been issued pursuant to the exercise of outstanding stock options.

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Computations of basic and diluted earnings per common share of the Company for the three and nine months ended September 30, 2015 and 2014 were as follows (in thousands, except share and per share data):
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
 
2015
 
2014
 
2015
 
2014
Net income (loss) attributable to Era Group Inc.(1)
 
$
848

 
$
4,213

 
$
11,989

 
$
13,752

Shares:
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
20,260,514

 
20,098,239

 
20,243,653

 
20,039,609

Net effect of dilutive stock options and restricted stock awards based on the treasury stock method (2)
 
26,555

 
65,751

 
49,129

 
68,790

Weighted average common shares outstanding - diluted
 
20,287,069

 
20,163,990

 
20,292,782

 
20,108,399

 
 
 
 
 
 
 
 
 
Earnings (loss) per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.04

 
$
0.21

 
$
0.59

 
$
0.69

Diluted
 
$
0.04

 
$
0.21

 
$
0.59

 
$
0.68

____________________
(1)
Excludes net income of $13 and $53 attributable to unvested common shares for the three months ended September 30, 2015 and 2014, respectively, and $163 and $180 for the nine months ended September 30, 2015 and 2014, respectively.
(2)
Excludes weighted average common shares of 331,145 and 45,000 for the three months ended September 30, 2015 and 2014, respectively, and 163,048 and 31,978 for the nine months ended September 30, 2015 and 2014, respectively, for certain share awards as the effect of their inclusion would have been antidilutive.
10.
RELATED PARTY TRANSACTIONS
The Company terminated its Amended and Restated Transition Services Agreement (“TSA”) with SEACOR Holdings Inc. (“SEACOR”) effective June 30, 2015. The Company incurred costs under the TSA of $0 and $0.8 million during the three months ended September 30, 2015 and 2014, respectively, and $0.6 million and $2.3 million during the nine months ended September 30, 2015 and 2014, respectively. Such costs are classified as administrative and general expenses in the condensed consolidated statements of operations. As of September 30, 2015 and December 31, 2014, the Company had a payable due to SEACOR of $0.1 million and $0.3 million, respectively.
The Company purchased products from its Dart Holding Company Ltd. (“Dart”) joint venture totaling $0.5 million and $1.7 million during the three and nine months ended September 30, 2015, respectively, and $1.2 million and $2.8 million during the three and nine months ended September 30, 2014, respectively. The Company also has a note receivable from Dart which had a balance of $3.7 million and $4.0 million as of September 30, 2015 and December 31, 2014, respectively.
The Company paid $0 and $0.3 million during the three and nine months ended September 30, 2015, respectively, and $0.1 million and $0.3 million during the three and nine months ended September 30, 2014, respectively, for services from its Era Training Center, LLC (“ETC”) joint venture. The Company also has a note receivable from ETC which had a balance of $4.4 million and $4.7 million as of September 30, 2015 and December 31, 2014, respectively.
In connection with the transfer of ownership of Aeróleo (see Note 13), the Company issued standby letters of credit in the amount of $1.8 million which will remain outstanding until all required payments have been made to the transferring partner. If such payments are not made prior to October 18, 2016, the letters of credit will be used to fund the remaining balance.

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11.
SHARE-BASED COMPENSATION
Restricted Stock Awards. The number of shares and weighted average grant price of restricted stock awards during the nine months ended September 30, 2015 were as follows:
 
Number of Shares
 
Weighted Average Grant Price
Non-vested as of December 31, 2014
195,920

 
$
25.48

Restricted stock awards granted:
 
 
 
Non-employee directors
16,938

 
$
21.26

Employees
176,750

 
$
20.78

Vested
(71,186
)
 
$
25.58

Forfeited
(600
)
 
$
23.66

Non-vested as of September 30, 2015
317,822

 
$
22.62

The total fair value of shares vested during the nine months ended September 30, 2015 and 2014 was $1.8 million and $4.0 million, respectively.
Stock Options. During the nine months ended September 30, 2015, the Company awarded 75,000 stock options. The Company uses a Black-Scholes option pricing model to estimate the fair value of stock options. The following table shows the assumptions used to compute the share-based compensation expense for stock options granted during the nine months ended September 30, 2015:
Risk free interest rate
 
1.48
%
Expected life (years)
 
5

Volatility
 
35.27
%
Dividend yield
 
%
Weighted average exercise price of options granted (per option)
 
$
20.13

Weighted average grant-date fair value of options granted (per option)
 
$
6.69

Employee Stock Purchase Plan (“ESPP”). During the nine months ended September 30, 2015, the Company issued 66,273 shares under the ESPP. As of September 30, 2015, 180,641 shares remain available for issuance under the ESPP.
Total share-based compensation expense, which includes stock options, restricted stock and the ESPP, was $2.7 million and $5.2 million for the nine months ended September 30, 2015 and 2014, respectively.
12.
GUARANTORS OF SECURITIES
On December 7, 2012, Era Group issued the 7.750% Senior Notes. Era Group’s payment obligations under the 7.750% Senior Notes are jointly and severally guaranteed by all of its existing 100% owned U.S. subsidiaries that guarantee the Revolving Credit Facility and any future U.S. subsidiaries that guarantee the Revolving Credit Facility or other material indebtedness Era Group may incur in the future (the “Guarantors”). All the Guarantors currently guarantee the Revolving Credit Facility, and the guarantees of the Guarantors are full and unconditional and joint and several.
As a result of the agreement by these subsidiaries to guarantee the 7.750% Senior Notes, the Company is presenting the following condensed consolidating balance sheets and statements of operations, comprehensive income and cash flows for Era Group (“Parent”), the Guarantors and the Company’s other subsidiaries (“Non-guarantors”). These statements should be read in conjunction with the unaudited condensed consolidated financial statements of the Company. The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include all disclosures included in annual financial statements.

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Supplemental Condensed Consolidating Balance Sheet as of September 30, 2015
 
Parent
 
Guarantors
 
Non-guarantors
 
Eliminations
 
Consolidated
 
(in thousands, except share data)
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
10,877

 
$

 
$
2,931

 
$

 
$
13,808

Receivables:
 
 
 
 
 
 
 
 
 
Trade, net of allowance for doubtful accounts of $1,999
40

 
39,364

 
94

 

 
39,498

Other

 
2,460

 
43

 
10

 
2,513

Inventories, net

 
24,735

 
197

 

 
24,932

Deferred income taxes
4,134

 

 

 
(1,858
)
 
2,276

Prepaid expenses and other
607

 
2,326

 
122

 

 
3,055

Escrow deposits
190

 
2,107

 

 

 
2,297

Total current assets
15,848

 
70,992

 
3,387

 
(1,848
)
 
88,379

Property and equipment

 
1,150,020

 
25,673

 

 
1,175,693

Accumulated depreciation

 
(308,103
)
 
(2,967
)
 

 
(311,070
)
Net property and equipment

 
841,917

 
22,706

 

 
864,623

Equity investments and advances

 
30,256

 

 

 
30,256

Investments in consolidated subsidiaries
198,957

 

 

 
(198,957
)
 

Goodwill

 
352

 
1,237

 

 
1,589

Intangible assets

 

 
1,411

 

 
1,411

Intercompany receivables
501,929

 

 
1,199

 
(503,128
)
 

Other assets
5,704

 
6,818

 

 

 
12,522

Total assets
$
722,438

 
$
950,335

 
$
29,940

 
$
(703,933
)
 
$
998,780

LIABILITIES, REDEEMABLE NONCONTROLLING INTREST AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
449

 
$
10,895

 
$
693

 
$

 
$
12,037

Accrued wages and benefits

 
7,828

 
33

 

 
7,861

Accrued interest
3,977

 
15

 

 

 
3,992

Current portion of long-term debt

 
25,335

 

 

 
25,335

Derivative instruments

 
71

 

 

 
71

Accrued income taxes

 
7,404

 
1

 
10

 
7,415

Other current liabilities
960

 
3,767

 
8

 

 
4,735

Total current liabilities
5,386

 
55,315

 
735

 
10

 
61,446

Long-term debt
242,754

 

 
119

 

 
242,873

Deferred income taxes

 
215,038

 
818

 
(1,858
)
 
213,998

Intercompany payables

 
481,130

 
21,998

 
(503,128
)
 

Other liabilities

 
1,956

 

 

 
1,956

Total liabilities
248,140

 
753,439

 
23,670

 
(504,976
)
 
520,273

Redeemable noncontrolling interest

 

 
4,783

 

 
4,783

Equity:
 
 
 
 
 
 
 
 
 
Era Group Inc. stockholders’ equity:
 
 
 
 
 
 
 
 
 
Common stock, $0.01 par value, 60,000,000 shares authorized; 20,499,050 outstanding, exclusive of treasury shares
207

 

 

 

 
207

Additional paid-in capital
432,774

 
99,812

 
5,056

 
(104,868
)
 
432,774

Retained earnings
43,949

 
97,658

 
(3,569
)
 
(94,089
)
 
43,949

Treasury shares, at cost, 151,193 shares
(2,632
)
 

 

 

 
(2,632
)
Accumulated other comprehensive income, net of tax

 
92

 

 

 
92

Total Era Group Inc. stockholders’ equity
474,298

 
197,562

 
1,487

 
(198,957
)
 
474,390

Noncontrolling interest in subsidiary

 
(666
)
 

 

 
(666
)
Total equity
474,298

 
196,896

 
1,487

 
(198,957
)
 
473,724

Total liabilities, redeemable noncontrolling interest and stockholders’ equity
$
722,438

 
$
950,335

 
$
29,940

 
$
(703,933
)
 
$
998,780


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Supplemental Condensed Consolidating Balance Sheet as of December 31, 2014
 
Parent
 
Guarantors
 
Non-guarantors
 
Eliminations
 
Consolidated
 
(in thousands, except share data)
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
16,481

 
$
22,188

 
$
2,198

 
$

 
$
40,867

Receivables:
 
 
 
 
 
 
 
 
 
Trade, net of allowance for doubtful accounts of $1,955
39

 
33,351

 

 

 
33,390

Other, net of allowance for doubtful accounts of $437
65

 
1,997

 

 

 
2,062

Inventories, net

 
26,869

 

 

 
26,869

Deferred income taxes
4,083

 

 

 
(2,087
)
 
1,996

Prepaid expenses and other
424

 
2,237

 

 

 
2,661

Total current assets
21,092

 
86,642

 
2,198

 
(2,087
)
 
107,845

Property and equipment

 
1,161,330

 
9,937

 

 
1,171,267

Accumulated depreciation

 
(306,010
)
 
(2,131
)
 

 
(308,141
)
Net property and equipment

 
855,320

 
7,806

 

 
863,126

Equity investments and advances

 
31,753

 

 

 
31,753

Investments in consolidated subsidiaries
182,294

 

 

 
(182,294
)
 

Goodwill

 
352

 

 

 
352

Intercompany receivables
616,932

 
12,258

 
1,395

 
(630,585
)
 

Other assets
6,914

 
7,184

 

 

 
14,098

Total assets
$
827,232

 
$
993,509

 
$
11,399

 
$
(814,966
)
 
$
1,017,174

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
299

 
$
14,817

 
$
4

 
$

 
$
15,120

Accrued wages and benefits

 
7,521

 

 

 
7,521

Accrued interest
930

 
19

 

 

 
949

Current portion of long-term debt

 
27,426

 

 

 
27,426

Derivative instruments
784

 
325

 

 

 
1,109

Accrued income taxes

 
267

 

 

 
267

Other current liabilities
556

 
2,606

 

 

 
3,162

Total current liabilities
2,569

 
52,981

 
4

 

 
55,554

Long-term debt
282,118

 

 

 

 
282,118

Deferred income taxes

 
219,114

 

 
(2,087
)
 
217,027

Intercompany payables
81,986

 
536,341

 
12,258

 
(630,585
)
 

Other liabilities

 
2,111

 

 

 
2,111

Total liabilities
366,673

 
810,547

 
12,262

 
(632,672
)
 
556,810

Equity:
 
 
 
 
 
 
 
 
 
Era Group Inc. stockholders’ equity:
 
 
 
 
 
 
 
 
 
Common stock, $0.01 par value, 60,000,000 shares authorized; 20,371,672 outstanding, exclusive of treasury shares
204

 

 

 

 
204

Additional paid-in capital
429,109

 
99,845

 
496

 
(100,341
)
 
429,109

Retained earnings
31,797

 
83,312

 
(1,359
)
 
(81,953
)
 
31,797

Treasury shares, at cost, 18,609 shares
(551
)
 

 

 

 
(551
)
Accumulated other comprehensive income, net of tax

 
95

 

 

 
95

Total Era Group Inc. stockholders’ equity
460,559

 
183,252

 
(863
)
 
(182,294
)
 
460,654

Noncontrolling interest in subsidiary

 
(290
)
 

 

 
(290
)
Total equity
460,559

 
182,962

 
(863
)
 
(182,294
)
 
460,364

Total liabilities and stockholders’ equity
$
827,232

 
$
993,509

 
$
11,399

 
$
(814,966
)
 
$
1,017,174



16

Table of Contents

Supplemental Condensed Consolidating Statements of Operations for the Three Months Ended September 30, 2015
 
Parent
 
Guarantors
 
Non-guarantors
 
Eliminations
 
Consolidated
 
(in thousands)
Operating revenues
$

 
$
69,491

 
$
655

 
$
(405
)
 
$
69,741

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating

 
42,812

 
600

 
(405
)
 
43,007

Administrative and general
1,773

 
9,329

 
136

 

 
11,238

Depreciation

 
11,674

 
512

 

 
12,186

Total costs and expenses
1,773

 
63,815

 
1,248

 
(405
)
 
66,431

Gains on asset dispositions, net

 
1,813

 

 

 
1,813

Operating income (loss)
(1,773
)
 
7,489

 
(593
)
 

 
5,123

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
4

 
228

 

 

 
232

Interest expense
(2,801
)
 
(298
)
 
(22
)
 

 
(3,121
)
Intercompany interest income (expense)

 
165

 
(165
)
 

 

Gain on debt extinguishment
(16
)
 

 

 

 
(16
)
Derivative losses, net

 
8

 

 

 
8

Foreign currency gains, net
4

 
75

 
67

 

 
146

Total other income (expense)
(2,809
)
 
178

 
(120
)
 

 
(2,751
)
Income (loss) before income taxes and equity earnings
(4,582
)
 
7,667

 
(713
)
 

 
2,372

Income tax expense (benefit)
(2,593
)
 
4,340

 
(404
)
 

 
1,343

Income (loss) before equity earnings
(1,989
)
 
3,327

 
(309
)
 

 
1,029

Equity losses, net of tax

 
(376
)
 

 

 
(376
)
Equity in earnings (losses) of subsidiaries
2,850

 

 

 
(2,850
)
 

Net income (loss)
861

 
2,951

 
(309
)
 
(2,850
)
 
653

Net loss attributable to non-controlling interest in subsidiary

 
49

 
159

 

 
208

Net income (loss) attributable to Era Group Inc.
$
861

 
$
3,000

 
$
(150
)
 
$
(2,850
)
 
$
861


17

Table of Contents

Supplemental Condensed Consolidating Statements of Operations for the Three Months Ended September 30, 2014
 
Parent
 
Guarantors
 
Non-guarantors
 
Eliminations
 
Consolidated
 
(in thousands)
Operating revenues
$

 
$
90,120

 
$
527

 
$
(137
)
 
$
90,510

Costs and expenses:
 
 
 
 
 
 
 
 
 
Operating

 
54,289

 
58

 
(65
)
 
54,282

Administrative and general
2,047

 
10,966

 

 
(72
)
 
12,941

Depreciation

 
11,601

 
145

 

 
11,746

Total costs and expenses
2,047

 
76,856

 
203

 
(137
)
 
78,969

Gains on asset dispositions, net

 
42

 

 

 
42

Operating income
(2,047
)
 
13,306

 
324

 

 
11,583

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income<