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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 31, 2013

¨	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: 333-188927

CHC Helicopter S.A.

(Exact name of registrant as specified in its charter)

Luxembourg

98-0596821

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

4740 Agar Drive

Richmond, BC V7B 1A3, Canada

(Address of principal executive offices, zip code)

(604) 276-7500

(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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 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 x 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of July 31, 2013, our ultimate parent, 6922767 Holding (Cayman) Inc., had 1,870,561,417 Class A Shares, 7,859,869 Class B Shares, 313,000 Special Shares and one Class C Share of stock outstanding.

CHC HELICOPTER S.A.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED

July 31, 2013

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION


		Page Number
	Trademarks		3

	Glossary		3

ITEM 1.	Financial statements		5

	6922767 Holding S.à.r.l. consolidated balance sheets (unaudited) as of July 31, 2013 and April 30, 2013		5

	6922767 Holding S.à.r.l. consolidated statements of operations (unaudited) for the three months ended July 31, 2013 and 2012		6

	6922767 Holding S.à.r.l. consolidated statements of comprehensive loss (unaudited) for the three months ended July 31, 2013 and 2012		7

	6922767 Holding S.à.r.l. consolidated statements of cash flows (unaudited) for the three months ended July 31, 2013 and 2012		8

	6922767 Holding S.à.r.l. consolidated statements of shareholder’s equity (unaudited) for the three months ended July 31, 2013 and 2012		9

	Notes to 6922767 Holding S.à.r.l. interim consolidated financial statements (unaudited)		10

ITEM 2.	Management’s discussion and analysis of financial condition and results of operations		40

ITEM 3.	Quantitative and qualitative disclosures about market risk		62

ITEM 4.	Controls and procedures		62

	PART II—OTHER INFORMATION		64

ITEM 1.	Legal proceedings		64

ITEM 1A.	Risk factors		64

ITEM 2.	Unregistered sales of equity securities and use of proceeds		77

ITEM 3.	Defaults upon senior securities		77

ITEM 4.	Mine safety disclosures		77

ITEM 5.	Other information		77

ITEM 6.	Exhibits		78

PART I—FINANCIAL INFORMATION

TRADEMARKS

CHC Helicopter and the CHC Helicopter logo are trademarks of CHC Helicopter S.A. All other trademarks and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders. All rights reserved. The absence of a trademark or service mark or logo from this Quarterly Report on Form 10-Q does not constitute a waiver of trademark or other intellectual property rights of CHC Helicopter S.A, its affiliates and/or licensors.

GLOSSARY



Embedded equity		Embedded equity, an intangible asset, represents the amount by which the estimated market value of a leased aircraft exceeds the leased aircraft purchase option price at September 16, 2008, the acquisition date. Embedded equity is assessed on an ongoing basis for impairment. Impairment, if any, is recognized in the consolidated statements of operations.

EMS		Emergency medical services.

Heavy helicopter		A category of twin-engine helicopters that requires two pilots, can accommodate 19 to 26 passengers and can operate under instrument flight rules, which allow daytime and nighttime flying in a variety of weather conditions. The greater passenger capacity, larger cabin, longer flight range, and ability to operate in adverse weather conditions make heavy aircraft more suitable than single engine aircraft for offshore support. Heavy helicopters are generally utilized to support the oil and gas sector, construction and forestry industries and SAR and EMS customer requirements.

Long- term contracts		Contracts of three years or longer in duration.

Medium helicopter		A category of twin-engine helicopters that generally requires two pilots, can accommodate nine to 15 passengers and can operate under instrument flight rules, which allow daytime and nighttime flying in a variety of weather conditions. The greater passenger capacity, longer flight range, and ability to operate in adverse weather conditions make medium aircraft more suitable than single engine aircraft for offshore support. Medium helicopters are generally utilized to support the oil and gas sector, construction and forestry industries and SAR and EMS customer bases in certain jurisdictions. Medium helicopters can also be used to support the utility and mining sectors, as well as certain parts of the construction and forestry industries, where transporting a smaller number of passengers or carrying light loads over shorter distances is required.

Medium term contracts		Contracts of greater than one year and less than three years in duration.



MRO		Maintenance, repair and overhaul.

New technology		When used herein to classify our aircraft, a category of higher-value, recently produced, more sophisticated and more comfortable aircraft, including Eurocopter’s EC225, EC135, EC145 and EC155; Agusta’s AW139; and Sikorsky’s S76C+, S76C++ and S92A.

OEM		Original equipment manufacturer.

PBH		Power-by-the-hour. A program where an aircraft operator pays a fee per flight hour to an MRO provider as compensation for repair and overhaul components required in order for the aircraft to maintain an airworthy condition.

SAR		Search and rescue.

ITEM 1. FINANCIAL STATEMENTS.

6922767 HOLDING S.à.r.l.

Consolidated Balance Sheets

(Expressed in thousands of United States dollars except share information)

(Unaudited)


	July 31, 2013			April 30, 2013
Assets

Current assets:
Cash and cash equivalents	$	114,569		$	123,714
Receivables, net of allowance for doubtful accounts of $6.0 million and $4.3 million, respectively		310,655			317,249
Income taxes receivable		23,374			25,871
Deferred income tax assets		48			49
Inventories (note 5)		113,936			105,794
Prepaid expenses		35,722			22,219
Other assets (note 6)		58,282			56,083

		656,586			650,979
Property and equipment, net (note 3)		1,052,542			1,075,254
Investments		29,363			26,896
Intangible assets (note 7)		194,373			197,810
Goodwill		425,940			430,462
Restricted cash		33,470			29,639
Other assets (note 6)		476,620			438,777
Deferred income tax assets		9,118			10,752
Assets held for sale (note 4)		51,858			32,047

	$	2,929,870		$	2,892,616


Liabilities and Shareholder’s Equity

Current liabilities:
Payables and accruals	$	374,657		$	419,179
Deferred revenue		36,481			27,652
Income taxes payable		40,736			47,987
Deferred income tax liabilities		618			618
Current facility secured by accounts receivable (note 2)		45,450			53,512
Other liabilities (note 8)		20,386			22,791
Current portion of long-term debt obligations (note 9)		24,512			2,138

		542,840			573,877
Long-term debt obligations (note 9)		1,632,068			1,475,087
Deferred revenue		62,242			55,990
Other liabilities (note 8)		239,612			246,455
Deferred income tax liabilities		10,810			10,627

Total liabilities		2,487,572			2,362,036

Redeemable non-controlling interests (note 2)		(6,206	)		(8,262	)

Capital stock: Par value 1 Euro;
Authorized and issued: 1,228,377,771 and 1,228,377,771, respectively		1,607,101			1,607,101
Contributed surplus		80,803			80,686
Deficit		(1,122,463	)		(1,059,110	)
Accumulated other comprehensive loss		(116,937	)		(89,835	)

		448,504			538,842

	$	2,929,870		$	2,892,616

See accompanying notes to interim consolidated financial statements.

6922767 HOLDING S.à.r.l.

Consolidated Statements of Operations

(Expressed in thousands of United States dollars)

(Unaudited)


	Three months ended
	July 31, 2013			July 31, 2012

Revenue	$	414,931		$	416,069

Operating expenses:
Direct costs		(343,106	)		(346,087	)
Earnings from equity accounted investees		2,391			1,012
General and administration costs		(18,061	)		(18,525	)
Depreciation		(32,057	)		(28,310	)
Restructuring costs		—			(1,930	)
Asset impairments (notes 3, 4, 6 and 7)		(7,324	)		(6,501	)
Loss on disposal of assets		(1,122	)		(1,591	)

		(399,279	)		(401,932	)


Operating income		15,652			14,137

Interest on long-term debt		(38,577	)		(29,883	)
Foreign exchange loss		(13,148	)		(7,401	)
Other financing income (charges) (note 10)		5,824			(8,154	)


Loss from continuing operations before income tax		(30,249	)		(31,301	)

Income tax expense (note 11)		(5,308	)		(1,281	)


Loss from continuing operations		(35,557	)		(32,582	)

Earnings from discontinued operations, net of tax		—			345

Net loss	$	(35,557	)	$	(32,237	)


Net earnings (loss) attributable to:
Controlling interest	$	(38,205	)	$	(33,105	)
Non-controlling interest		2,648			868

Net loss	$	(35,557	)	$	(32,237	)

See accompanying notes to interim consolidated financial statements.

6922767 HOLDING S.à.r.l.

Consolidated Statements of Comprehensive Loss

(Expressed in thousands of United States dollars)

(Unaudited)


	Three months ended
	July 31, 2013			July 31, 2012

Net loss	$	(35,557	)	$	(32,237	)

Other comprehensive income (loss):
Net foreign currency translation adjustments		(28,037	)		(28,564	)
Net change in defined benefit pension plan, net of income tax		343			(2,640	)
Net change in cash flow hedges		—			(169	)

Comprehensive loss	$	(63,251	)	$	(63,610	)


Comprehensive income (loss) attributable to:
Controlling interest	$	(65,307	)	$	(66,234	)
Non-controlling interest		2,056			2,624

Comprehensive loss	$	(63,251	)	$	(63,610	)

See accompanying notes to interim consolidated financial statements.

6922767 HOLDING S.à.r.l.

Consolidated Statements of Cash Flows

(Expressed in thousands of United States dollars)

(Unaudited)


	Three months ended
	July 31, 2013			July 31, 2012

Cash provided by (used in):
Operating activities:
Net loss	$	(35,557	)	$	(32,237	)
Earnings from discontinued operations, net of tax		—			345

Loss from continuing operations		(35,557	)		(32,582	)
Adjustments to reconcile net loss to cash flows provided by (used in) operating activities:
Depreciation		32,057			28,310
Loss on disposal of assets		1,122			1,591
Asset impairments		7,324			6,501
Earnings from equity accounted investees		(2,391	)		(1,012	)
Deferred income taxes		1,613			(5,740	)
Non-cash stock-based compensation expense		117			111
Amortization of unfavorable contract credits		—			(2,801	)
Amortization of lease related fixed interest rate obligations		(547	)		(734	)
Amortization of long-term debt and lease deferred financing costs		2,595			2,350
Non-cash accrued interest income on funded residual value guarantees		(1,712	)		(1,780	)
Mark to market loss (gain) on derivative instruments		(14,764	)		5,154
Non-cash defined benefit pension expense (note 12)		98			1,736
Defined benefit contributions and benefits paid		(17,686	)		(13,482	)
Increase to deferred lease financing costs		(1,724	)		(1,273	)
Unrealized loss on foreign currency exchange translation		8,937			17,121
Other		3,063			5,193
Decrease in cash resulting from changes in operating assets and liabilities (note 14)		(26,815	)		(54,580	)

Cash used in operating activities		(44,270	)		(45,917	)


Financing activities:
Sold interest in accounts receivable, net of collections		(6,446	)		8,243
Long-term debt proceeds (notes 9 and 16)		400,000			225,153
Long-term debt repayments (note 16)		(225,948	)		(151,953	)
Increase in senior unsecured notes deferred financing costs		(5,902	)		—
Dividend distribution to parent		(25,148	)		—

Cash provided by financing activities		136,556			81,443


Investing activities:
Property and equipment additions		(104,385	)		(46,667	)
Proceeds from disposal of property and equipment		46,163			47,225
Aircraft deposits net of lease inception refunds		(27,947	)		(30,081	)
Restricted cash		(4,852	)		5,346

Cash used in investing activities		(91,021	)		(24,177	)

Cash provided by continuing operations		1,265			11,349

Cash flows provided by (used in) discontinued operations:
Cash flows provided by (used in) operating activities		—			345
Cash flows provided by (used in) financing activities		—			(345	)

Cash provided by (used in) discontinued operations		—			—

Effect of exchange rate changes on cash and cash equivalents		(10,410	)		(9,821	)

Change in cash and cash equivalents during the period		(9,145	)		1,528
Cash and cash equivalents, beginning of period		123,714			55,547

Cash and cash equivalents, end of period	$	114,569		$	57,075

See accompanying notes to interim consolidated financial statements.

6922767 HOLDING S.à.r.l.

Consolidated Statements of Shareholder’s Equity

(Expressed in thousands of United States dollars)

(Unaudited)


Three months ended July 31, 2013	Capital stock		Contributed surplus		Deficit			Accumulated other comprehensive earnings (loss)			Total shareholder’s equity			Redeemable non- controlling interests

April 30, 2013	$	1,607,101	$	80,686	$	(1,059,110	)	$	(89,835	)	$	538,842		$	(8,262	)

Dividend paid to Parent		—		—		(25,148	)		—			(25,148	)		—
Foreign currency translation		—		—		—			(27,120	)		(27,120	)		(917	)
Stock compensation expense		—		117		—			—			117			—
Defined benefit plan, net of income tax		—		—		—			18			18			325
Net earnings (loss)		—		—		(38,205	)		—			(38,205	)		2,648

July 31, 2013	$	1,607,101	$	80,803	$	(1,122,463	)	$	(116,937	)	$	448,504		$	(6,206	)


Three months ended July 31, 2012	Capital stock		Contributed surplus		Deficit			Accumulated other comprehensive earnings (loss)			Total shareholder’s equity			Redeemable non- controlling interests

April 30, 2012	$	1,607,101	$	55,318	$	(940,031	)	$	(61,596	)	$	660,792		$	1,675

Net change in cash flow hedges		—		—		—			(169	)		(169	)		—
Foreign currency translation		—		—		—			(30,622	)		(30,622	)		2,058
Stock compensation expense		—		111		—			—			111			—
Defined benefit plan, net of income tax		—		—		—			(2,338	)		(2,338	)		(302	)
Net earnings (loss)		—		—		(33,105	)		—			(33,105	)		868

July 31, 2012	$	1,607,101	$	55,429	$	(973,136	)	$	(94,725	)	$	594,669		$	4,299

See accompanying notes to interim consolidated financial statements.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

1.	Significant accounting policies:

(a)

Basis of presentation:

The unaudited interim consolidated financial statements (“interim financial statements”) include the accounts of 6922767 Holding S.à.r.l., a Luxembourg private limited liability company (société à responsabilité limiteé), which is the direct parent of CHC Helicopter S.A., the registrant, and its subsidiaries (the “Company”, “we”, “us” or “our”) after elimination of all significant intercompany accounts and transactions. The ultimate indirect parent of the Company is 6922767 Holding (Cayman) Inc. The interim financial statements are presented in United States dollars and have been prepared in accordance with the United States Generally Accepted Accounting Principles (“US GAAP”) for interim financial information. Accordingly, the interim financial statements do not include all of the information and disclosures for complete financial statements.

In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods indicated. Results of operations for the periods presented are not necessarily indicative of results of operations for the entire year.

The financial information as of April 30, 2013 is derived from our annual audited consolidated financial statements and notes for the fiscal year ended April 30, 2013. These interim financial statements should be read in conjunction with our consolidated financial statements and related notes included in our annual audited consolidated financial statements, which are included in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013 which was filed with the SEC on July 15, 2013.

(b)

Foreign currency:

The currencies which most influence our foreign currency translations and the relevant exchange rates were:


	Three months ended
	July 31, 2013		July 31, 2012

Average rates:
£/US $		1.531101		1.568718
CAD/US $		0.970403		0.983091
NOK/US $		0.169238		0.166634
AUD/US $		0.949830		1.008455
€/US $		1.308394		1.253834

Period end rates:
£/US $		1.518227		1.568504
CAD/US $		0.972101		0.998602
NOK/US $		0.169340		0.166068
AUD/US $		0.895888		1.052127
€/US $		1.329348		1.231376

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

1.	Significant accounting policies (continued):

(c)

Comparative figures:

Certain comparative figures have been reclassified to conform with the financial presentation adopted for the current interim period. A portion of the General and administration costs have been reclassified to Direct costs to reflect the safety group being moved from Corporate to Helicopter Services to reflect its focus on safety within the flying services segment. The impairments of funded residual value guarantees, intangible assets, assets held for use and assets held for sale have been grouped together and shown as asset impairments on the consolidated statements of operations.

During the year ended April 30, 2013, the Company’s chief operating decision maker (“the CODM”) decided to tightly integrate aircraft planning with our Helicopter Services’ commercial operations. As a result, the fleet division previously included in the Corporate Segment was combined with Helicopter Services in the financial information provided to the CODM. Heli-One revenues were also restated to exclude the elimination of inter-company profits on the internal base maintenance work performed for our internal fleet of aircraft. The segmented information for the three months ended July 31, 2012 has been restated in the financial information provided to the CODM to reflect the reclassification of the financial information for both of these changes.

(d)

Recent accounting pronouncements adopted in the period:

Reporting of amounts reclassified out of accumulated other comprehensive income:

On May 1, 2013 we adopted the amendment to the disclosure requirements for amounts reclassified out of accumulated other comprehensive income. Entities are required to separately provide information about the effects on net income of significant amounts reclassified out of each component of accumulated other comprehensive income if those amounts all are required under other accounting pronouncements to be reclassified to net income (loss) in their entirety in the same reporting period. Entities are required to provide this information together, either on the face of the statement where net income is presented or as a separate disclosure in the notes to the financial statements. The amounts reclassified out of accumulated other comprehensive income for defined benefit pension plans are included in the computation of net defined benefit pension plan expense (note 12). No other amounts are reclassified out of accumulated other comprehensive income.

Annual indefinite-life intangible asset impairment testing:

On May 1, 2013 we adopted the amended accounting guidance on the annual indefinite-life intangible asset impairment testing to allow for the assessment of qualitative factors in determining if it is more likely than not that asset might be impaired and whether it is necessary to perform the intangible asset impairment test required by the current accounting standards. This new guidance did not have a material impact on our consolidated financial statements.

(e)

Recent accounting pronouncements not yet adopted:

In July 2013, the FASB issued accounting guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss or tax credit carryforward exists. This guidance is effective for the annual financial statements for the year ending April 30, 2015. We are currently assessing the impact of this guidance on our consolidated financial statements.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

2.	Variable interest entities:

(a)

VIEs of which the Company is the primary beneficiary:

(i)

Local ownership VIEs:

Certain areas of operations are subject to local governmental regulations that may limit foreign ownership of aviation companies. Accordingly, operations in certain jurisdictions may require the establishment of local ownership entities that are considered to be VIEs. The nature of our involvement with consolidated local ownership entities is as follows:

EEA Helicopters Operations B.V. (“EHOB”)

EHOB is incorporated in the Netherlands and through its wholly-owned subsidiaries in Norway, Denmark, the Netherlands, the United Kingdom and Ireland provides helicopter flying services to customers in Europe.

We own 49.9% of the common shares (9,896,085 Class B shares) of EHOB, with the remaining 50.1% of the common shares (9,935,750 Class A shares) held by a European investor. The Management Board of EHOB is comprised of one director nominated by the Class B shareholders and three directors nominated by the Class A shareholder.

We also own 7,000,000 par value 1 Euro Profit Certificates in EHOB. Through our ownership of the Profit Certificates, we are entitled to a cumulative annual dividend equal to 30% of the issue price of each Profit Certificate (equivalent to a cumulative annual dividend of € 2.1 million) for the first 7 years after issuance and thereafter, a cumulative annual dividend equal to 5% of the issue price of each Profit Certificate (equivalent to a cumulative annual dividend of €0.35 million), subject to Board approval and the availability of cash and further subject to any and all restrictions applicable under Dutch law.

We also hold a call option over the Class A shareholder’s stock in EHOB and have granted a put option to the Class A shareholder which entitles the Class A shareholder to put its shares back to us. Both the put and call are exercisable in certain circumstances including: liquidation, events of default, and if the Company makes a public offering of its shares resulting in change in control. The Class A shareholder also holds a call option over our Class B shares which is exercisable only in the event of bankruptcy.

We have determined that the activities that most significantly impact the economic performance of EHOB are: servicing existing flying services contracts and entering into new contracts, safety and training, and maintenance of aircraft. Through agreement with EHOB, we have the right to enter directly into new flying services contracts and require that EHOB act as the subcontractor for provision of those services. EHOB’s fleet of aircraft is leased entirely from us and the lease agreements require that all aircraft maintenance be provided by us. The shareholders’ agreement requires EHOB to ensure safety standards meet minimums set by us.

As a result of consolidating EHOB, the Company has recorded a non-controlling interest relating to the 50.1% Class A shareholder’s interest in the net assets of EHOB. As at July 31, 2013, the redeemable non-controlling loss is $6.2 million (April 30, 2013 – $8.3 million). Because of the terms of the put and call arrangements with the European investor, the non-controlling interest is considered redeemable and is classified outside of equity.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

2.	Variable interest entities (continued):

(a)

VIEs of which the Company is the primary beneficiary (continued):

(i)

Local ownership VIEs (continued):

BHH - Brazilian Helicopter Holdings S.A. (“BHH”)

BHH holds an investment in the common shares of its subsidiary, BHS - Brazilian Helicopter Services Taxi Aereo S.A. (“BHS”). BHS provides helicopter flying services to customers in Brazil.

We have a 60% interest in BHH, comprised of 100% of the non-voting preferred shares and 20% of the ordinary voting shares. The remaining equity interest comprised of 80% of the ordinary voting shares is held by a Brazilian investor, whose investment was financed by us and is therefore considered to be a related party.

We have entered into a put/call arrangement which gives us the right to purchase the BHH shares held by the Brazilian investor and the Brazilian investor the right to put its shares to us at any time and for any reason. The put/call price is the greater of the book value of the shares and the original capital contribution plus 2% per annum. The guaranteed return due to the Brazilian investor has been recorded as a redeemable non-controlling interest.

We have entered into a shareholders’ agreement with the Brazilian Investor, which requires unanimous shareholder consent for important business decisions.

CHC Helicopters Canada Inc (“CHC Canada”)

CHC Canada provides helicopter flying services to customers in Canada.

We own 200,000 Class A Common Shares (25%) and 200,000 (100%) Class B Non-voting Preferred Shares of CHC Canada, with the remaining 600,000 (75%) of the Class A Common Shares held by a Canadian Investor. The Board of CHC Canada is comprised of one director nominated by us and two directors nominated by the Canadian Investor.

We have entered into an arrangement which allows the Canadian Investor to put its shares back to us at any time for any reason. We have also entered into a call arrangement which allows us or the Canadian Investor to elect to purchase the other party’s shares. The calls are exercisable in certain circumstances including: liquidation, events of default, and if the Company makes a public offering of its shares resulting in change of control. The price on the put and the call arrangement is the higher of the book value of the shares and the original capital contribution plus 6% per annum. The guaranteed return due to the Canadian investor has been recorded as a redeemable non-controlling interest.

We have entered into a shareholder’s agreement with the Canadian Investor, which requires unanimous shareholder consent for CHC Canada to enter into any material contracts.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

2.	Variable interest entities (continued):

(a)

VIEs of which the Company is the primary beneficiary (continued):

(i)

Local ownership VIEs (continued):

Atlantic Aviation Limited and Atlantic Aviation FZE (collectively “Atlantic Aviation”)

On October 22, 2012, the Company and a Nigerian company (“Nigerian Company”) finalized an agreement to provide helicopter flying services to customers in Nigeria through Atlantic Aviation.

We have no equity ownership interest in Atlantic Aviation as 100% of the share capital of Atlantic Aviation is held by the Nigerian Company.

The Nigerian Company’s risks and rewards are not representative of its equity interest as it is only entitled to management fees for the first four years of the agreement. In the fifth year the Nigerian Company can opt to receive 40% of the profits or losses or continue with the existing arrangement. We will bear the risk for substantially all of the losses for the first four years of the arrangement.

Under the terms of the agreement the Nigerian Company will not provide any additional funding to Atlantic Aviation as we are funding all start-up costs.

We have also entered into a put/call arrangement which gives us the right to purchase all of the Atlantic Aviation shares held by the Nigerian Company and the Nigerian Company the right to put its shares to us. The calls are exercisable in certain circumstances including: liquidation, events of default, and change of control of the Company or the Nigerian Company. The put is exercisable in the event the agreement is terminated with cause and the Nigerian Company does not continue the business of Atlantic Aviation. The price on the put/call arrangement is a multiple of the Nigerian Company’s share of the preceding 12 months of profits of Atlantic Aviation.

We have determined that the activities that most significantly impact the economic performance of Atlantic Aviation are: entering into flying contracts, safety and training, and maintenance of aircraft. Atlantic Aviation’s fleet of aircraft is leased entirely from us and the lease agreements require that all aircraft maintenance be provided by us. We have entered into various contracts with Atlantic Aviation to provide management, employees and technical services. The framework agreement requires Atlantic Aviation to ensure safety standards meet minimums set by us.

Atlantic Aviation has a contingent credit with a third party bank for up to $10.0 million to be able to issue bonds.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

2.	Variable interest entities (continued):

(a)

VIEs of which the Company is the primary beneficiary (continued):

(i)

Local ownership VIEs (continued):

Other local ownership VIEs

We also have operations in several other countries that are conducted through entities with local ownership. We have consolidated these entities because the local owners do not have extensive knowledge of the aviation industry and defer to us in the overall management and operation of these entities.

Financial information of local ownership VIEs

All of the local ownership VIEs and their subsidiaries have the same purpose and are exposed to similar operational risks and are monitored on a similar basis by management. As such, the financial information reflected on the consolidated balance sheets and statements of operations for all local ownership VIEs has been presented in the aggregate below, including intercompany amounts with other consolidated entities:


	July 31, 2013			April 30, 2013

Cash and cash equivalents	$	(409	)	$	46,366
Receivables, net of allowance		105,365			102,659
Other current assets		50,397			37,174
Goodwill		72,066			72,042
Other long-term assets		134,844			114,657

Total assets	$	362,263		$	372,898


Payables and accruals	$	325,853		$	338,802
Other current liabilities		42,879			37,069
Accrued pension obligations		67,387			74,268
Other long-term liabilities		57,398			54,252

Total liabilities	$	493,517		$	504,391


	Three months ended
	July 31, 2013			July 31, 2012
Revenue	$	256,178		$	260,749
Net earnings (loss)		(3,025	)		4,318

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

2.	Variable interest entities (continued):

(a)

VIEs of which the Company is the primary beneficiary (continued):

(ii)

Accounts receivable securitization:

We enter into trade receivables securitization transactions to raise financing, through the sale of pools of receivables, or beneficial interests therein, to a VIE, Finacity Receivables – CHC 2009, LLC (“Finacity”). Finacity only buys receivables, or beneficial interests therein, from us. These transactions with Finacity satisfy the requirements for sales accounting treatment. Finacity is financed directly by a multi-seller commercial paper conduit, Hannover Funding Company LLC (“Hannover”), which purchases undivided ownership interests in the receivables, or beneficial interests therein, acquired by Finacity from us.

We have determined that servicing decisions most significantly impact the economic performance of Finacity and as we have the power to make these decisions, we are the primary beneficiary of Finacity.

As a result of consolidation, intercompany receivables and payables between the Company and Finacity together with any gain/(loss) arising from the sales treatment of the securitization transactions have been eliminated. The securitized assets and associated liabilities are included in the consolidated financial statements. Cash and cash equivalent balances of Finacity are used only to support the securitizations of the receivables transferred, including the payment of related fees, costs and expenses. The receivables that have been included in securitizations are pledged as security for the benefit of Hannover and are only available for payment of the debt or other obligations arising in the securitization transactions until the associated debt or other obligations are satisfied. The asset backed debt has been issued directly by Finacity.

The following table shows the assets and the associated liabilities related to our secured debt arrangements that are included in the consolidated financial statements:


	July 31, 2013		April 30, 2013

Restricted cash	$	19,305	$	14,143
Transferred receivables		82,468		77,473
Current facility secured by accounts receivable		45,450		53,512

(iii)

Trinity Helicopters Limited:

As at July 31, 2013 we leased two aircraft from Trinity Helicopters Limited (“Trinity”), an entity considered to be a VIE. Prior to December 2011, Trinity was funded by an unrelated lender who was considered to be the primary beneficiary. In conjunction with our lease covenant negotiations, we agreed to purchase the aircraft off lease from the lender. Instead of outright purchasing the aircraft we loaned the lease termination sum to Trinity who used these funds to repay the financing from the unrelated lender and continued to lease the aircraft to us. The security interest in the aircraft was assigned to us.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

2.	Variable interest entities (continued):

(a)

VIEs of which the Company is the primary beneficiary (continued):

(iii)

Trinity Helicopters Limited (continued):

We have been determined to be the primary beneficiary of the VIE and began consolidating this entity upon repayment of the previous lendor. Prior to consolidation of this entity, the aircraft leases were recorded as capital leases.

(b)

VIEs of which the Company is not the primary beneficiary:

(i)

Local ownership VIEs:

Thai Aviation Services (“TAS”)

TAS provides helicopter flying services in Thailand. We have a 29.9% interest in the ordinary shares of TAS, with the remaining 70.1% owned by a group of Thai Investors who are considered to be related to each other. The Thai investors have the ability to call and we have the ability to put all shares owned by us to the Thai investors at fair value in the event of a dispute.

We have determined that the activities that most significantly impact the economic performance of TAS are: servicing existing flying services contracts and entering into new contracts, safety and training, maintenance of aircraft and other investment activities. The Thai investors have the ability to control the majority of these decisions through Board majority.

The following table summarizes the amounts recorded for TAS in the consolidated balance sheet:


	July 31, 2013				April 30, 2013
	Carrying amounts		Maximum exposure to loss		Carrying amounts		Maximum exposure to loss

Receivables, net of allowances	$	4,056	$	4,056	$	2,662	$	2,662
Equity method investment		20,019		20,019		18,119		18,119

(ii)

Leasing entities:

Related party lessors

As at July 31, 2013 we had operating lease agreements for the lease of 31 aircraft (July 31, 2012 – 28 aircraft) from individual related party entities considered to be VIEs. These transactions are carried out on an arm’s-length basis and are recorded at the exchange amounts. The total operating lease expense for these leases was $12.6 million for the three months ended July 31, 2013 (July 31, 2012 - $10.9 million), with $4.6 million outstanding in payables and accruals at July 31, 2013 (April 30, 2013 - $4.5 million). Accounts receivable of $5.6 million (April 30, 2013 - $5.1 million) are due from related party lessors.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

2.	Variable interest entities (continued):

(b)

VIEs of which the Company is not the primary beneficiary (continued):

(ii)

Leasing entities (continued):

The lessor VIEs are considered related parties because they are partially financed through equity contributions from entities that have also invested in the Company. We have determined that the activity that most significantly impacts the economic performance of the related party lessor VIEs is the remarketing of the aircraft at the end of the lease term. As we do not have the power to make remarketing decisions, we have determined that it is not the primary beneficiary of the lessor VIEs.

Other VIE lessors

At July 31, 2013 we leased 26 aircraft (July 31, 2012 – eight aircraft) from three different entities (July 31, 2012 – two different entities) considered to be VIEs. At July 31, 2013, all 26 leases were considered to be operating leases (July 31, 2012 – eight operating leases).

We have determined that the activity that most significantly impacts the economic performance of the lessor VIEs is the remarketing of the aircraft at the end of the lease term. As we do not have the power to make remarketing decisions, we have determined that we are not the primary beneficiary of the lessor VIEs.

3.	Property and equipment:

We recorded no impairment charges for the three months ending July 31, 2013. Due to a decline in older technology aircraft values we recorded impairment charges of $0.7 million for the three months ending July 31, 2012 to write down the carrying value of one aircraft held for use to its fair value. These amounts are included in asset impairments on the consolidated statements of operations. This measurement is considered a level 2 measurement in the fair value hierarchy as the measurement of the fair value of the flying assets is based on aircraft values from third party appraisals using market data.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

4.	Assets held for sale:

We have classified certain assets such as aircraft and buildings as held for sale as these assets are ready for immediate sale and management expects these assets to be sold within one year.


	July 31, 2013						April 30, 2013
	# Aircraft						# Aircraft

Aircraft held for sale:
Book value, beginning of period		14		$	30,206			18		$	79,293
Classified as held for sale, net of impairment		8			21,215			11			7,454
Sales		(1	)		(625	)		(10	)		(35,303	)
Reclassified as held for use		—			—			(5	)		(21,049	)
Foreign exchange		—			(737	)		—			(189	)


Aircraft held for sale		21			50,059			14			30,206

Buildings held for sale		—			1,799			—			1,841

Total assets held for sale				$	51,858					$	32,047

The aircraft classified as held for sale are older technology aircraft that are being divested by us. The buildings classified as held for sale are the result of relocation of certain of our base operations.

During the three months ended July 31, 2013, we recorded impairment charges of $7.1 million (July 31, 2012 - $5.6 million) to write down the carrying value of 10 aircraft held for sale (July 31, 2012 – 10 aircraft) to their fair value less costs to sell. These amounts are included in asset impairments on the consolidated statements of operations. The fair value of assets held for sale is considered a level 2 measurement in the fair value hierarchy as the measurement is based on third party appraisals using market data.

5.	Inventories:


	July 31, 2013			April 30, 2013

Work-in-progress for maintenance contracts under completed contract accounting	$	4,740		$	3,661
Consumables		117,858			111,862
Provision for obsolescence		(8,662	)		(9,729	)

	$	113,936		$	105,794

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

6.	Other assets:


	July 31, 2013		April 30, 2013

Current:
Aircraft operating lease funded residual value guarantees (a)	$	17,879	$	20,184
Deferred financing costs		9,410		8,771
Mobilization costs		8,609		6,474
Residual value guarantee		6,324		6,278
Foreign currency embedded derivatives and forward contracts (note 13)		7,877		5,764
Prepaid aircraft rentals		3,387		3,465
Other		4,796		5,147

	$	58,282	$	56,083


Non-current:
Aircraft operating lease funded residual value guarantees (a)	$	201,626	$	196,497
Aircraft deposits		84,267		67,347
Accrued pension asset		59,308		49,562
Deferred financing costs		53,490		48,971
Mobilization costs		22,190		22,645
Residual value guarantee		13,492		15,047
Security deposits		18,352		10,903
Pension guarantee assets		9,906		10,141
Prepaid aircraft rentals		9,004		9,940
Foreign currency embedded derivatives and forward contracts (note 13)		2,954		2,223
Other		2,031		5,501

	$	476,620	$	438,777

(a)

Aircraft operating lease funded residual value guarantees:

We believe that the aircraft will realize a value upon sale at the end of the lease terms sufficient to recover the carrying value of these guarantees, including accrued interest. In the event that aircraft values decline such that we do not believe funded residual value guarantees are recoverable, an impairment is recorded. During the three months ended July 31, 2013, we recognized no impairment losses (July 31, 2012 – $0.7 million). The impairment losses are included in asset impairments on the consolidated statements of operations.

7.	Intangible assets:

Due to a decline in aircraft values, we recorded impairment charges of $0.2 million in the three months ended July 31, 2013 (July 31, 2012 – recovery of $0.5 million) to write down a portion of our embedded equity to fair value. These amounts are included in asset impairments on the consolidated statements of operations. This measurement is considered a level 2 measurement in the fair value hierarchy as the measurement of embedded equity is based on aircraft values from third party appraisals using market data.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

8.	Other liabilities:


	July 31, 2013		April 30, 2013

Current:
Foreign currency embedded derivatives and forward contracts (note 13)	$	8,211	$	12,732
Deferred gains on sale-leasebacks of aircraft		5,587		4,632
Fixed interest rate obligations		1,380		1,783
Aircraft modifications		3,960		1,629
Residual value guarantees		466		944
Contract inducement		782		792
Lease aircraft return costs		—		279

	$	20,386	$	22,791


Non-current:
Accrued pension obligations	$	127,693	$	137,259
Deferred gains on sale-leasebacks of aircraft		46,880		34,616
Residual value guarantees		28,106		27,401
Foreign currency embedded derivatives and forward contracts (note 13)		7,072		15,771
Insurance claims accrual		12,537		11,192
Contract inducement		8,965		9,247
Fixed interest rate obligations		892		1,155
Deferred rent liabilities		1,196		1,045
Other		6,271		8,769

	$	239,612	$	246,455

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

9.	Long-term debt obligations:


	Principal Repayment terms		Facility maturity dates		July 31, 2013			April 30, 2013

Senior secured notes		At maturity		October 2020	$	1,287,602		$	1,287,303
Senior unsecured notes		At maturity		June 2021		300,000			—

Revolving credit facility:
US LIBOR plus margin		At maturity		October 2015		—			125,000

Other term loans:
Eurocopter Loan - 2.50%		At maturity		December 2015		2,274			2,238
EDC-B.A. CDOR rate (6 month) plus a 0.8% margin		Semi-annually		June 2014		1,055			1,616

Capital lease obligations		Quarterly		November 2013 - October 2017		31,152			25,663

Boundary Bay financing – 6.93%		Monthly		April 2035		34,497			35,405


Total long-term debt obligations						1,656,580			1,477,225

Less: current portion						(24,512	)		(2,138	)


Long-term debt obligations					$	1,632,068		$	1,475,087

On May 13, 2013, we issued $300.0 million of unsecured senior notes (the “unsecured notes”). The unsecured notes are issued under an indenture. The unsecured notes have an aggregate principal value of $300.0 million, were issued at par value, bear interest at a rate of 9.375% with semi-annual interest payments on June 1 and December 1 and mature on June 1, 2021.

The unsecured notes are issued by one of our subsidiaries and are guaranteed by us and most of our subsidiaries on a senior unsecured basis. The unsecured notes are effectively subordinated to the secured indebtedness including the revolving credit facility and the senior secured notes to the extent of the value of the collateral securing such secured indebtedness and are senior to all unsecured subordinated indebtedness of each guarantor.

The unsecured notes have the following optional redemption features:

•

Any time prior to June 1, 2016, the issuer can redeem 35% of the aggregate principal amount of the unsecured notes at a redemption price of 109.375% of the principal plus accrued and unpaid interest with the net proceeds of one or more equity offerings provided that at least 50% of the aggregate principal of the unsecured notes remains outstanding and the redemption occurs within 180 days of the closing date of the equity offering.

•

The issuer can redeem the unsecured notes in whole or part, on or after June 1, 2016, at redemption prices that range from 100% to 107.031% of the principal, plus accrued and unpaid interest.

•

The issuer can redeem the unsecured notes in whole or in part at a price of 100% of the aggregate principal amount plus a premium equal to the greater of 1% of the principal amount or the excess of the present value at the redemption date over the principal amount of the unsecured notes. Under this option, the present value at the redemption is to be computed based on a redemption price of 107.031% on June 1, 2016 plus all required interest payments due on the unsecured notes through June 1, 2016 (excluding accrued but unpaid interest to the applicable redemption date). The applicable discount rate is equal to the treasury rate as of the redemption date plus 50 basis points.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

9.	Long-term debt obligations (continued):

Each holder of the unsecured notes has the right to require us to repurchase the unsecured notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest upon the occurrence of certain events constituting a change in control of the Company.

The unsecured notes contain certain covenants limiting the incurrence of additional indebtedness and liens based on the ratio of consolidated adjusted earnings before interest, taxes, depreciation and amortization to fixed charges and total indebtedness as defined in the indenture and other restrictions including limitations on disposition of assets, the payment of dividends or redemption of equity interests and transactions with affiliates. At July 31, 2013, we were in compliance with all long-term debt obligations covenants.

10.

Other financing income (charges):


	Three months ended
	July 31, 2013			July 31, 2012

Amortization of deferred financing costs	$	(3,758	)	$	(1,637	)
Net gain (loss) on fair value of derivative financial instruments		14,227			(4,311	)
Amortization of guaranteed residual values		(1,608	)		(522	)
Interest expense		(5,268	)		(3,081	)
Interest income		4,058			3,087
Other		(1,827	)		(1,690	)

	$	5,824		$	(8,154	)

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

11.

Income taxes:

As we operate in several tax jurisdictions, our income is subject to various rates of taxation. The income tax recovery (expense) differs from the amount that would have resulted from applying the Luxembourg statutory income tax rates to loss from continuing operations before income taxes as follows:


	Three months ended
	July 31, 2013			July 31, 2012

Loss from continuing operations before income tax	$	(30,249	)	$	(31,301	)
Combined Luxembourg statutory income tax rate		29	%		29	%


Income tax recovery calculated at statutory rate		8,772			9,077
(Increase) decrease in income tax recovery (expense) resulting from:
Rate differences in various jurisdictions		5,839			2,200
Change in tax law		(605	)		(579	)
Non-deductible items		(11,561	)		(8,470	)
Other foreign taxes		(2,054	)		(3,432	)
Non-deductible portion of capital losses		538			183
Non-taxable income		10,200			7,266
Adjustments to prior years		643			(39	)
Functional currency adjustments		7,028			8,034
Valuation allowance		(24,201	)		(15,161	)
Other		93			(360	)

Income tax expense	$	(5,308	)	$	(1,281	)

As at July 31, 2013, there was $23.4 million in unrecognized tax benefits, of which $15.9 million would have an impact on the effective tax rate, if recognized.

During the three months ended, no new uncertain tax positions were identified. As of July 31, 2013 and April 30, 2013, interest and penalties totaling $4.4 million and $4.5 million, respectively, were accrued.

12.

Employee pension plans:

The net defined benefit pension plan expense is as follows:


	Three months ended
	July 31, 2013			July 31, 2012

Current service cost	$	5,006		$	4,650
Interest cost		7,921			7,730
Expected return on plan assets		(12,438	)		(10,094	)
Amortization of net actuarial and experience losses		432			253
Amortization of past service credits		(88	)		(92	)
Employee contributions		(735	)		(711	)

	$	98		$	1,736

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

13.

Derivative financial instruments and fair value measurements:

We are exposed to foreign exchange risk primarily from our subsidiaries which incur revenue and operating expenses in currencies other than US dollars with the most significant being Pound Sterling, Norwegian Kroner, Canadian dollars, Australian dollars and Euros. We monitor these exposures through our cash forecasting process and regularly enter into foreign exchange forward contracts to manage our exposure to fluctuations in expected future cash flows related to transactions in currencies other than the functional currency.

The outstanding foreign exchange forward contracts are as follows:


	Notional		Fair value asset (liability)			Maturity dates

July 31, 2013:
Purchase contracts to sell US dollars and buy Canadian dollars	CAD	247,938	$	(3,233	)		August 2013 to January 2016

Purchase contracts to sell US dollars and buy Euros	€	69,268		6,252			December 2013 to July 2014

Purchase contracts to sell Pounds Sterling and buy Euros	€	49,000		1,409			August 2013 to December 2015

We enter into long-term revenue agreements, which provide for pricing denominated in currencies other than the functional currency of the parties to the contract. This pricing feature was determined to be an embedded derivative which has been bifurcated for valuation and accounting purposes. The embedded derivative contracts are measured at fair value and included in other assets or other liabilities.

The net gain of $14.2 million due to the non-hedging derivative forward exchange contracts and the change in the fair value of embedded derivatives was recognized in the statement of operations as part of other financing charges for the three months ended July 31, 2013 (July 31, 2012 – net loss of $4.3 million).

The following tables summarize the financial instruments measured at fair value on a recurring basis excluding cash and cash equivalents and restricted cash:


	July 31, 2013
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair value

Financial assets:
Other assets, current:
Foreign currency forward contracts	$	—	$	7,133	$	—	$	7,133
Foreign currency embedded derivatives		—		744		—		744
Other assets, non-current:
Foreign currency forward contracts		—		1,117		—		1,117
Foreign currency embedded derivatives		—		1,837		—		1,837

	$	—	$	10,831	$	—	$	10,831

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

13.

Derivative financial instruments and fair value measurements (continued):


	July 31, 2013
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)		Fair value

Financial liabilities:
Other liabilities, current:
Foreign currency forward contracts	$	—	$	(2,163	)	$	—	$	(2,163	)
Foreign currency embedded derivatives		—		(6,048	)		—		(6,048	)
Other liabilities, non-current:
Foreign currency forward contracts		—		(1,659	)		—		(1,659	)
Foreign currency embedded derivatives		—		(5,413	)		—		(5,413	)

	$	—	$	(15,283	)	$	—	$	(15,283	)

Inputs to the valuation methodology for Level 2 measurements include publically available forward notes, credit spreads and US$ or Euro interest rates, and inputs are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. There were no transfers between categories in the fair value hierarchy.

The carrying values of the other financial instruments, which are measured at other than fair value, approximate fair value due to the short terms to maturity, except for non-revolving debt obligations, the fair values of which are as follows:


	July 31, 2013
	Fair value		Carrying value
Senior secured notes	$	1,362,283	$	1,287,602
Senior unsecured notes		297,000		300,000

The fair value of the senior secured and unsecured notes are determined based on market information provided by third parties which is considered to be a level 2 measurement in the fair value hierarchy.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

14.

Supplemental cash flow information:


	Three months ended
	July 31, 2013		July 31, 2012

Cash interest paid	$	1,653	$	2,822
Cash taxes paid		11,525		6,576
Assets acquired through non-cash capital leases		9,101		—

Change in cash resulting from changes in operating assets and liabilities:


	Three months ended
	July 31, 2013			July 31, 2012

Receivables, net of allowance	$	6,628		$	(37,615	)
Income taxes		(5,261	)		(4,643	)
Inventories		(4,370	)		(3,524	)
Prepaid expenses		(13,739	)		(2,609	)
Payables and accruals		(19,785	)		(10,620	)
Deferred revenue		13,334			5,375
Other assets and liabilities		(3,622	)		(944	)

	$	(26,815	)	$	(54,580	)

15.

Guarantees:

We have provided limited guarantees to third parties under some of our operating leases relating to a portion of the residual aircraft values at the termination of the leases, which have terms expiring between fiscal 2014 and 2022. Our exposure under the asset value guarantees including guarantees in the form of funded and unfunded residual value guarantees, rebateable advance rentals and deferred payments is approximately $235.1 million as at July 31, 2013 (April 30, 2013 - $232.3 million).

16.

Related party transactions:

(a)

Related party leasing transactions and balances:

During the three months ended July 31, 2013 we engaged in leasing transactions with VIEs related to our ultimate parent (note 2).

(b)

Balances with ultimate parent:

At July 31, 2013, $2.0 million in payables and accruals is due to and $1.1 million in receivables is due from our ultimate parent.

(c)

On June 24, 2013, we paid a dividend of $25.1 million to our parent.

(d)

On July 16, 2013, we borrowed $25.0 million from our parent. On July 19, 2013, the loan was repaid. The loan bore interest at 4.5% per annum and it expired on October 16, 2013.

(e)

Subsequent to July 31, 2013, we paid a dividend of $60.0 million to our parent.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

17.

Commitments:

We have aircraft operating leases with 19 lessors in respect of 163 aircraft included in our fleet at July 31, 2013 (April 30, 2013 – 18 lessors in respect of 166 aircraft). As at July 31, 2013, these leases had expiry dates ranging from fiscal 2014 to 2024. We have the option to purchase the majority of the aircraft for agreed amounts that do not constitute bargain purchase options, but have no commitment to do so. With respect to such leased aircraft, substantially all of the costs of major inspections of airframes and the costs to perform inspections, major repairs and overhauls of major components are at our expense. We either perform this work internally through our own repair and overhaul facilities or have the work performed by an external repair and overhaul service provider.

At July 31, 2013, we have commitments with respect to operating leases for aircraft, buildings, land and equipment. The minimum lease rentals required under operating leases are payable in the following amounts over the following years ended July 31:


	Aircraft operating leases		Building, land and equipment operating leases		Total operating leases

2014	$	234,407	$	12,082	$	246,489
2015		215,467		9,377		224,844
2016		198,890		7,592		206,482
2017		174,301		6,279		180,580
2018		159,662		4,200		163,862
and thereafter		348,109		53,092		401,201

	$	1,330,836	$	92,622	$	1,423,458

As at July 31, 2013, we have committed to purchase $78.3 million of helicopter parts by October 31, 2015 and 28 new aircraft. The total required additional expenditures related to these purchase commitments is approximately $701.0 million. These aircraft are expected to be delivered in fiscal 2014 to 2017 and will be deployed in our Helicopter Services segment. We intend to enter into leases for these aircraft or purchase them outright upon delivery from the manufacturer.

The terms of certain of the helicopter lease agreements impose operating and financial limitations on us. Such agreements limit the extent to which we may, among other things, incur indebtedness and fixed charges relative to our level of consolidated adjusted earnings before interest, taxes, depreciation and amortization.

Generally, in the event of a covenant breach, a lessor has the option to terminate the lease and require the return of the aircraft, with the repayment of any arrears of lease payments plus the present value of all future lease payments and certain other amounts which could be material to our financial position. The aircraft would then be sold and the surplus, if any, returned to us. Alternatively we could exercise our option to purchase the aircraft. As at July 31, 2013 the Company was in compliance with all financial covenants.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

18.

Contingencies:

One or more of our subsidiaries are, from time to time, named as defendants in lawsuits arising in the ordinary course of our business. Such disputes may involve, for example, breach of contract, employment, wrongful termination and tort claims. We maintain adequate insurance coverage to respond to most claims. We cannot predict the outcome of any such lawsuits with certainty, but our management team does not expect the outcome of pending or threatened legal matters to have a material adverse impact on our financial condition.

In addition, from time to time, the Company or its subsidiaries are involved in tax and other disputes with various government agencies. The following summarizes such presently pending disputes:

In 2006, we voluntarily disclosed to OFAC that several of our subsidiaries formerly operating as Schreiner Airways may have violated applicable U.S. laws and regulations by re-exporting to Iran, Sudan, and Libya certain helicopters, related parts, map data, operation and maintenance manuals, and aircraft parts for third-party customers. OFAC’s investigation is ongoing and we continue to fully cooperate. Should the U.S. government determine that these activities violated applicable laws and regulations, we or our subsidiaries may be subject to civil or criminal penalties, including fines and/or suspension of the privilege to engage in trading activities involving goods, software and technology subject to the U.S. jurisdiction. At July 31, 2013, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

Brazilian customs authorities seized one of our helicopters (customs value of $10.0 million) as a result of allegations that we violated Brazilian customs law by failing to ensure our customs agent and the customs agent’s third party shipping company followed approved routing of the helicopter during transport. We secured release of the helicopter and are disputing through administrative court action any claim for penalties associated with the seizure and the alleged violation. We have preserved our rights by filing a civil action against our customs agent for any losses that may result. At July 31, 2013, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

Our Brazilian subsidiary is also disputing claims from the Brazilian tax authorities that it was not entitled to certain credits in 2004 and 2007. The tax authorities are seeking up to $4.8 million in additional taxes plus interest and penalties. We believe that based on our interpretation of tax legislation and well established aviation industry practice we are in compliance with all applicable tax legislation and plan to defend this claim vigorously. At July 31, 2013, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

We received an inquiry from the Nigerian government regarding the tax treatment of certain of our agreements and operations in Nigeria. We are cooperating with the government of Nigeria but are unable to estimate the likelihood and magnitude of any impact of the inquiry as at July 31, 2013.

In the United Kingdom, the Ministry for Transport is investigating potential wrongdoing involving two ex-employees in conjunction with the SAR-H bid award processes. This arose from our self-reporting potential improprieties by these individuals upon their discovery in 2010. The SAR-H bid process was subsequently cancelled. We will continue to cooperate in all aspects of the investigation. At July 31, 2013, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

19.

Segment information:

We operate under the following segments:

•

Helicopter Services;

•

Heli-One;

•

Corporate and other.

We have provided information on segment revenues and segment EBITDAR (adjusted) because these are the financial measures used by the Company’s chief operating decision maker (“CODM”) in making operating decisions and assessing performance. Transactions between operating segments are at standard industry rates.

The segmented information for the three months ended July 31, 2012 has been restated (see note 1(c)).

The Helicopter Services segment includes flying operations around the world serving offshore oil and gas, EMS/SAR and other industries and the management of the fleet.

Heli-One, the Maintenance, repair and overhaul segment, includes facilities in Norway, Canada, Australia, Poland, and the US that provide helicopter repair and overhaul services for our fleet and for a growing external customer base in Europe, Asia and North America.

Corporate and other includes corporate office costs in various jurisdictions and is not considered a reportable segment.

The accounting policies of the segments and the basis of accounting for transactions between segments are the same as those described in the summary of significant accounting policies.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

19.

Segment information (continued):


Three months ended July 31, 2013
	Helicopter services			Heli-One			Corporate and other			Inter-segment eliminations			Consolidated

Revenue from external customers	$	387,302		$	27,629		$	—		$	—		$	414,931
Add: Inter-segment revenues		424			69,682			—			(70,106	)		—

Total revenue		387,726			97,311			—			(70,106	)		414,931
Direct costs (i)		(261,488	)		(95,688	)		—			69,349			(287,827	)
Earnings from equity accounted investees		2,391			—			—			—			2,391
General and administration costs		—			—			(18,061	)		—			(18,061	)

Segment EBITDAR (adjusted) (ii)		128,629			1,623			(18,061	)		(757	)		111,434

Aircraft lease and associated costs		(55,279	)		—			—			—			(55,279	)
Depreciation														(32,057	)
Asset impairments (iii)														(7,324	)
Loss on disposal of assets														(1,122	)
Interest on long-term debt														(38,577	)
Foreign exchange loss														(13,148	)
Other financing income														5,824
Income tax expense														(5,308	)


Loss from continuing operations														(35,557	)
Earnings from discontinued operations, net of tax														—

Net loss													$	(35,557	)


Segment assets	$	1,699,987		$	509,069		$	668,956		$	—		$	2,878,012
Segment assets - held for sale		51,858			—			—			—			51,858

Total assets	$	1,751,845		$	509,069		$	668,956		$	—		$	2,929,870

(i)	Direct costs in the segment information presented excludes aircraft lease and associated costs. In the consolidated statement of operations these costs are combined.

(ii)

Segment EBITDAR (adjusted) is defined as earnings before interest, taxes, depreciation, amortization and aircraft lease and associated costs or total revenue plus earnings from equity accounted investees less direct costs excluding aircraft lease and associated costs and general and administration expenses.

(iii)

Impairment of intangible assets of $0.2 million relates to the Helicopter Services segment.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

19.

Segment information (continued):


Three months ended July 31, 2012
	Helicopter services			Heli-One			Corporate and other			Inter-segment eliminations			Consolidated

Revenue from external customers	$	391,523		$	24,546		$	—		$	—		$	416,069
Add: Inter-segment revenues		849			68,610			—			(69,459	)		—

Total revenue		392,372			93,156			—			(69,459	)		416,069

Direct costs (i)		(287,624	)		(79,343	)		—			69,310			(297,657	)
Earnings from equity accounted investees		1,012			—			—			—			1,012
General and administration costs		—			—			(18,525	)		—			(18,525	)

Segment EBITDAR (adjusted) (ii)		105,760			13,813			(18,525	)		(149	)		100,899

Aircraft lease and associated costs		(48,430	)		—			—			—			(48,430	)
Depreciation														(28,310	)
Restructuring costs														(1,930	)
Asset impairments (iii)														(6,501	)
Loss on disposal of assets														(1,591	)
Interest on long-term debt														(29,883	)
Foreign exchange loss														(7,401	)
Other financing charges														(8,154	)
Income tax expense														(1,281	)


Loss from continuing operations														(32,582	)
Earnings from discontinued operations, net of tax														345

Net loss													$	(32,237	)

(i)	Direct costs in the segment information presented excludes aircraft lease and associated costs. In the consolidated statement of operations these costs are combined.

(ii)

(iii)

Recovery of intangible assets of $0.5 million and impairment of assets held for use of $0.7 million relate to the Helicopter Services segment.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

20.

Subsequent events:

On August 7, 2013, the Company signed a contract to acquire $100.0 million of heavy helicopters from Eurocopter prior to December 31, 2016.

On September 9, 2013, the Company signed a contract to acquire nine S92’s and the option to acquire 15 S92’s from Sikorsky. The helicopters are expected to be delivered between fiscal 2015 and 2017.

Subsequent to July 31, 2013, we issued one share of capital stock for cash consideration of $60.0 million, which was allocated one Euro to the Capital Stock of the Company and $60.0 million to contributed surplus.

21.

Supplemental condensed consolidated financial information:

The Company and certain of its direct and indirect wholly-owned subsidiaries (the “Guarantor Subsidiaries”) fully and unconditionally guaranteed on a joint and several basis certain outstanding indebtedness of CHC Helicopter SA, the registrant. The following consolidating schedules present financial information as of July 31, 2013 and for the three months ended July 31, 2013 and 2012, based on the guarantor structure that was in place at July 31, 2013.

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)


Balance Sheets as at July 31, 2013 (Expressed in thousands of United States dollars)	Parent			Issuer		Guarantor			Non-guarantor			Eliminations			Consolidated

Assets
Current Assets
Cash and cash equivalents	$	(5,930	)	$	84,908	$	216,359		$	(95,860	)	$	(84,908	)	$	114,569
Receivables, net of allowance for doubtful accounts		4			113		129,846			181,388			(696	)		310,655
Current intercompany receivables		10,903			425,073		513,134			243,675			(1,192,785	)		—
Income taxes receivable		—			—		162			23,212			—			23,374
Deferred income tax assets		—			—		(10	)		58			—			48
Inventories		—			—		106,423			7,513			—			113,936
Prepaid expenses		13			22		13,527			22,182			(22	)		35,722
Other assets		—			6,196		47,829			185,359			(181,102	)		58,282

		4,990			516,312		1,027,270			567,527			(1,459,513	)		656,586
Property and equipment, net		—			—		966,615			86,308			(381	)		1,052,542
Investments		444,012			445,404		436,471			20,016			(1,316,540	)		29,363
Intangible assets		—			—		190,938			3,435			—			194,373
Goodwill		—			—		329,858			96,082			—			425,940
Restricted cash		—			—		5,278			28,192			—			33,470
Other assets		—			33,250		410,975			65,662			(33,267	)		476,620
Long-term intercompany receivables		—			1,045,938		45,354			441,433			(1,532,725	)		—
Deferred income tax assets		—			—		10,230			(1,112	)		—			9,118
Assets held for sale		—			—		51,339			519			—			51,858

	$	449,002		$	2,040,904	$	3,474,328		$	1,308,062		$	(4,342,426	)	$	2,929,870


Liabilities and Shareholder’s Equity
Current Liabilities
Payables and accruals	$	31		$	44,302	$	255,709		$	118,911		$	(44,296	)	$	374,657
Deferred revenue		—			—		22,709			13,772			—			36,481
Income taxes payable		451			541		29,754			10,531			(541	)		40,736
Current intercompany payables		—			39,015		319,153			448,499			(806,667	)		—
Deferred income tax liabilities		—			—		537			81			—			618
Current facility secured by accounts receivable		—			—		—			45,450			—			45,450
Other liabilities		—			174,888		190,510			4,781			(349,793	)		20,386
Current portion of long-term debt obligations		—			—		24,512			—			—			24,512

		482			258,746		842,884			642,025			(1,201,297	)		542,840
Long-term debt obligations		—			1,587,602		1,632,068			—			(1,587,602	)		1,632,068
Long-term intercompany payables		—			—		427,997			58,808			(486,805	)		—
Deferred revenue		—			—		29,358			32,884			—			62,242
Other liabilities		16			—		151,214			88,382			—			239,612
Deferred income tax liabilities		—			—		9,333			1,477			—			10,810

Total liabilities		498			1,846,348		3,092,854			823,576			(3,275,704	)		2,487,572

Redeemable non-controlling interests		—			—		—			(6,206	)		—			(6,206	)

Shareholder’s equity		448,504			194,556		381,474			490,692			(1,066,722	)		448,504

	$	449,002		$	2,040,904	$	3,474,328		$	1,308,062		$	(4,342,426	)	$	2,929,870

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)


Balance Sheets as at April 30, 2013 (Expressed in thousands of United States dollars)	Parent		Issuer		Guarantor			Non-guarantor			Eliminations			Consolidated

Assets
Current Assets
Cash and cash equivalents	$	19,391	$	3,478	$	117,444		$	(13,121	)	$	(3,478	)	$	123,714
Receivables, net of allowance for doubtful accounts		4		113		147,134			170,744			(746	)		317,249
Current intercompany receivables		12,352		439,585		496,789			241,723			(1,190,449	)		—
Income taxes receivable		—		—		362			25,509			—			25,871
Deferred income tax assets		—		—		(8	)		57			—			49
Inventories		—		—		100,263			5,531			—			105,794
Prepaid expenses		26		49		10,287			11,906			(49	)		22,219
Other assets		—		5,593		46,715			93,038			(89,263	)		56,083

		31,773		448,818		918,986			535,387			(1,283,985	)		650,979
Property and equipment, net		—		—		993,911			81,724			(381	)		1,075,254
Investments		507,725		393,062		357,608			18,116			(1,249,615	)		26,896
Intangible assets		—		—		194,360			3,450			—			197,810
Goodwill		—		—		334,129			96,333			—			430,462
Restricted cash		—		—		8,172			21,467			—			29,639
Other assets		—		29,449		377,211			61,596			(29,479	)		438,777
Long-term intercompany receivables		—		859,564		43,324			449,718			(1,352,606	)		—
Deferred income tax assets		—		—		10,104			648			—			10,752
Assets held for sale		—		—		32,047			—			—			32,047

	$	539,498	$	1,730,893	$	3,269,852		$	1,268,439		$	(3,916,066	)	$	2,892,616


Liabilities and Shareholder’s Equity
Current Liabilities
Payables and accruals	$	115	$	6,516	$	280,876		$	138,188		$	(6,516	)	$	419,179
Deferred revenue		—		—		18,901			8,751			—			27,652
Income taxes payable		525		457		36,891			10,571			(457	)		47,987
Current intercompany payables		—		35,729		284,548			466,300			(786,577	)		—
Deferred income tax liabilities		—		—		537			81			—			618
Current facility secured by accounts receivable		—		—		—			53,512			—			53,512
Other liabilities		—		83,596		100,129			6,332			(167,266	)		22,791
Current portion of long-term debt obligations		—		—		2,138			—			—			2,138

		640		126,298		724,020			683,735			(960,816	)		573,877
Long-term debt obligations		—		1,337,303		1,475,087			—			(1,337,303	)		1,475,087
Long-term intercompany payables		—		—		436,282			56,789			(493,071	)		—
Deferred revenue		—		—		25,910			30,080			—			55,990
Other liabilities		16		—		145,550			100,889			—			246,455
Deferred income tax liabilities		—		—		9,287			1,340			—			10,627

Total liabilities		656		1,463,601		2,816,136			872,833			(2,791,190	)		2,362,036

Redeemable non-controlling interests		—		—		—			(8,262	)		—			(8,262	)

Shareholder’s equity		538,842		267,292		453,716			403,868			(1,124,876	)		538,842

	$	539,498	$	1,730,893	$	3,269,852		$	1,268,439		$	(3,916,066	)	$	2,892,616

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)


Statements of Operations for the three months ended July 31, 2013 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated

Revenue	$	—		$	—		$	273,888		$	272,035		$	(130,992	)	$	414,931

Operating expenses:
Direct costs		—			—			(204,716	)		(269,382	)		130,992			(343,106	)
Earnings (loss) from equity accounted investees		(36,727	)		75,035			84,256			1,900			(122,073	)		2,391
General and administration costs		(1,431	)		(3,011	)		(17,458	)		624			3,215			(18,061	)
Depreciation		—			—			(28,704	)		(3,353	)		—			(32,057	)
Assets impairments		—			—			(7,324	)		—			—			(7,324	)
Gain (loss) on disposal of assets		—			—			(1,194	)		72			—			(1,122	)

		(38,158	)		72,024			(175,140	)		(270,139	)		12,134			(399,279	)


Operating income (loss)		(38,158	)		72,024			98,748			1,896			(118,858	)		15,652
Financing income (charges)		(46	)		(107,248	)		(132,286	)		86,431			107,248			(45,901	)


Earnings (loss) from continuing operations before income tax		(38,204	)		(35,224	)		(33,538	)		88,327			(11,610	)		(30,249	)

Income tax expense		—			(714	)		(3,190	)		(2,118	)		714			(5,308	)


Earnings (loss) from continuing operations		(38,204	)		(35,938	)		(36,728	)		86,209			(10,896	)		(35,557	)

Earnings from discontinued operations, net of tax		—			—			—			—			—			—

Net earnings (loss)		(38,204	)		(35,938	)		(36,728	)		86,209			(10,896	)		(35,557	)


Net earnings (loss) attributable to:
Controlling interest		(38,204	)		(35,938	)		(36,728	)		83,561			(10,896	)		(38,205	)
Non-controlling interests		—			—			—			2,648			—			2,648

Net earnings (loss)	$	(38,204	)	$	(35,938	)	$	(36,728	)	$	86,209		$	(10,896	)	$	(35,557	)



Comprehensive earnings (loss)	$	(65,307	)	$	(61,552	)	$	(63,830	)	$	77,691		$	49,747		$	(63,251	)

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)


Cash Flows for the three months ended July 31, 2013 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated

Cash provided by (used in) operating activities	$	(173	)	$	12,332		$	14,284		$	(58,381	)	$	(12,332	)	$	(44,270	)

Financing activities:
Sold interest in accounts receivable, net of collections		—			—			—			(6,446	)		—			(6,446	)
Long-term debt proceeds		25,000			325,000			375,000			—			(325,000	)		400,000
Long-term debt repayments		(25,000	)		(75,000	)		(200,948	)		—			75,000			(225,948	)
Increase in senior unsecured notes deferred financing costs		—			(5,902	)		(5,902	)		—			5,902			(5,902	)
Long term intercompany flow – issuance of debt		—			(175,000	)		(2,204	)		2,204			175,000			—
Dividend distribution to parent		(25,148	)		—			—			—			—			(25,148	)

Cash provided by (used in) financing activities		(25,148	)		69,098			165,946			(4,242	)		(69,098	)		136,556

Investing activities:
Property and equipment additions		—			—			(94,278	)		(10,107	)		—			(104,385	)
Proceeds from disposal of property and equipment		—			—			46,102			61			—			46,163
Aircraft deposits net of lease inception refunds		—			—			(27,947	)		—			—			(27,947	)
Restricted cash		—			—			2,252			(7,104	)		—			(4,852	)

Cash used in investing activities		—			—			(73,871	)		(17,150	)		—			(91,021	)

Cash provided by (used in) continuing operations		(25,321	)		81,430			106,359			(79,773	)		(81,430	)		1,265

Cash flows provided by (used in) discontinued operations:
Cash flows provided by operating activities		—			—			—			—			—			—
Cash flows used in financing activities		—			—			—			—			—			—

Cash provided by (used in) discontinued operations		—			—			—			—			—			—

Effect of exchange rate changes on cash and cash equivalents		—			—			(7,444	)		(2,966	)		—			(10,410	)


Change in cash and cash equivalents during the period		(25,321	)		81,430			98,915			(82,739	)		(81,430	)		(9,145	)

Cash and cash equivalents, beginning of the period		19,391			3,478			117,444			(13,121	)		(3,478	)		123,714

Cash and cash equivalents, end of the period	$	(5,930	)	$	84,908		$	216,359		$	(95,860	)	$	(84,908	)	$	114,569

6922767 HOLDING S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)


Statements of Operations for the three months ended July 31, 2012 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated

Revenue	$	—		$	—		$	261,400		$	277,277		$	(122,608	)	$	416,069

Operating expenses:
Direct costs		—			(31	)		(194,889	)		(273,806	)		122,639			(346,087	)
Earnings (loss) from equity accounted investees		(33,191	)		(58,157	)		(61,957	)		681			153,636			1,012
General and administration costs		(2	)		(1,698	)		(16,790	)		(1,777	)		1,742			(18,525	)
Depreciation		—			—			(25,527	)		(2,783	)		—			(28,310	)
Restructuring costs		—			—			(1,033	)		(897	)		—			(1,930	)
Assets impairments		—			—			(6,501	)		—			—			(6,501	)
Gain (loss) on disposal of assets		—			—			(1,624	)		33			—			(1,591	)

		(33,193	)		(59,886	)		(308,321	)		(278,549	)		278,017			(401,932	)


Operating income (loss)		(33,193	)		(59,886	)		(46,921	)		(1,272	)		155,409			14,137
Financing income (charges)		91			28,756			20,877			(66,406	)		(28,756	)		(45,438	)


Loss from continuing operations before income tax		(33,102	)		(31,130	)		(26,044	)		(67,678	)		126,653			(31,301	)

Income tax recovery (expense)		(3	)		(760	)		(7,493	)		6,215			760			(1,281	)


Loss from continuing operations		(33,105	)		(31,890	)		(33,537	)		(61,463	)		127,413			(32,582	)

Earnings from discontinued operations, net of tax		—			—			345			—			—			345

Net loss		(33,105	)		(31,890	)		(33,192	)		(61,463	)		127,413			(32,237	)


Net earnings (loss) attributable to:
Controlling interest		(33,105	)		(31,890	)		(33,192	)		(62,331	)		127,413			(33,105	)
Non-controlling interests		—			—

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CHC Helicopter S.A. 10-Q