Bristow Group Inc. (OTC: BRSWQ) (“Bristow” or the “Company”) filed its quarterly report on Form 10-Q for the quarter ended December 31, 2018 (the “Q3 FY2019 10-Q”), as well as amendments to its previously filed Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (the “Amended FY2018 10-K”), Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (collectively, the “Amended Reports”).
Key Management and Audit Findings:
- Due to substantial doubt about the Company’s ability to continue as a going concern, the Company was required to reclassify from long-term to short-term approximately $1.4 billion of its debt on its consolidated balance sheets included in the Amended Reports and the Q3 FY2019 10-Q.
- The material weakness previously communicated in February 2019, did not result in any related misstatements to the financial statements.
- The Company did not detect any indications of accounting irregularities or impropriety.
- KPMG LLP’s reconsideration of previously concluded upon audit and review matters resulted in no material change in conclusions from those previously reached.
As previously communicated in February 2019, Bristow identified a control deficiency, classified as a material weakness, related to monitoring compliance with non-financial covenants underlying its secured financing and helicopter lease agreements and, as a result, began a review to assess compliance with non-financial covenants in certain agreements. The review commenced when the Company’s senior management became aware that certain pledged and leased helicopter engines were not matched to specific pledged or leased helicopter airframes or returned to such airframes within specified periods, as is required under certain of the agreements. All such instances were cured prior to December 31, 2018 for all but nine helicopter engines for which the pledged or leased engines were not returned to the pledged or leased airframes within specified periods due to delays with certain of the Company’s maintenance service providers.
The Company determined that it was necessary to delay the filing of its Q3 FY2019 10-Q to provide additional time to complete the review and allow KPMG LLP (“KPMG”), the Company’s independent registered public accounting firm, sufficient time to perform procedures arising out of management’s assessment of such compliance.
As a result of the material weakness, the Company determined it was necessary to file the Amended Reports, and KPMG performed and completed certain other procedures it deemed necessary in order to issue a revised Report of Independent Registered Public Accounting Firm Regarding Internal Control Over Financial Reporting for the Amended FY2018 10-K, including a reconsideration of previously concluded upon audit and review matters. Management devoted significant time and effort to provide additional supporting documentation to KPMG to facilitate the completion of those additional procedures by KPMG.
With the filings made today, the review of existing processes and controls has been completed and a remediation plan has been developed and is being implemented to remediate the previously disclosed material weakness. The material weakness will be considered remediated once these controls have operated for a sufficient period of time for management to conclude, through testing, that these controls are operating effectively. There were limited matters identified through the assessment which were considered breaches of certain debt or lease agreement covenants; however, none of those breaches matured into events of default and were appropriately cured or resolved with the relevant lender and/or lessor.
As disclosed in the filings, the material weakness did not result in any corrected misstatements or material corrections to the financial statements. The Company did not detect any indications of accounting irregularities or impropriety in this process. Further, KPMG’s reconsideration of previously concluded upon audit and review matters resulted in no material change in conclusions from those previously reached.
Irrespective of the conclusions noted above, the Company was required to reclassify approximately $1.4 billion of its debt on its consolidated balance sheets included in the Amended Reports and the Q3 FY2019 10-Q from long-term to short-term as a result of the Company’s previously disclosed going concern assessment which was required to extend twelve-months from the date of the Amended Reports.
Bristow also disclosed in a Form 12b-25 filed with the Securities and Exchange Commission on June 17, 2019, that it has delayed the preparation and completion of the fiscal year 2019 Form 10-K due to the effort required to prepare and complete the Amended Reports and the Q3 FY2019 10-Q, the Company’s attention to the Chapter 11 cases, the additional time required by management to make appropriate revisions to the financial statements and disclosures included in the fiscal year 2019 Form 10-K to reflect the commencement of the Chapter 11 cases, and the timing of the Bankruptcy Court hearing and approval regarding KPMG’s retention as its independent registered public accounting firm. The Company intends to file the fiscal year 2019 Form 10-K as soon as practicable after the anticipated Bankruptcy Court hearing regarding KPMG’s retention.
- Specialized Navy Sailors Deployed with Marine Squadron ahead of V-22 Transition
- Thales H160 Level D sim approved
- Boeing, Honeywell and Rolls-partner on German CH-47 bid
- Wyoming Army National Guard activated to assist with California wildfires
- Bristow names new CFO
- Essex & Herts Air Ambulance receives COVID19 cash from Government
- Christoph 43 completes 570 missions in first half of 2020
- New head of police air unit for Brazilian state of Ceara
- ARNG Helicopter modernization project
- Whirly-Girls Announce New Instrument Rating Scholarship for Female Aviators for 2021
- SAFE awarded USAF contract for CH-53 maintenance platforms
- Austria orders the AW169M
- HSC-22 Receives First MQ-8C Firescout
- Neptune Energy extends contract with CHC Helicopters
- Baden-Württemberg police take on new fire-fighting role
- Bell Presents the Turkish Director General of Forestry with the Outstanding Operational Readiness Award
- Bell Presents the Turkish National Police with the Outstanding Operational Readiness Award
- Cornwall Air Ambulance to feature in new TV series
- STARS to take over Lifeflight in Manitoba
- Volocopter offers reservations for commercial flights