Business Segments and Geographic Areas

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Business Segments and Geographic Areas

(13) BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

PHI is primarily a provider of helicopter services, and to a lesser extent helicopter maintenance and repair services. The Company has used a combination of factors to identify its reportable segments as required by Accounting Standards Codification 280, “Segment Reporting.” The overriding determination of the Company’s segments is based on how the chief operating decision-maker of the Company, the Chairman of the Board and Chief Executive Officer, evaluates the Company’s results of operations. The underlying factors include customer bases, types of service, operational management, physical locations, and underlying economic characteristics of the types of work the Company performs.

A segment’s operating profit or loss is its operating revenues less its direct expenses and selling, general and administrative expenses. Each segment has a portion of selling, general and administrative expenses that is charged directly to the segment and a portion that is allocated. Direct charges represent the vast majority of segment selling, general and administrative expenses. Allocated selling, general and administrative expenses is based primarily on total segment costs as a percentage of total operating costs.

The Oil and Gas segment provides helicopter services to oil and gas customers operating in the Gulf of Mexico and three foreign countries. The Air Medical segment provides helicopter services to hospitals and emergency service providers in several U.S. states, and individuals, in which case the Company is paid by either a commercial insurance company, federal or state agency, or the patient. The Technical Services segment provides helicopter repair and overhaul services for existing flight operations customers that own their own aircraft. Under this segment, the Company periodically provides flight services to governmental customers, including the Company’s agreement to operate six aircraft for the National Science Foundation in Antarctica. Under this segment, we also offer certain software as a service to our Oil and Gas customers.

Air Medical operations are headquartered in Phoenix, Arizona, where the Company maintains significant separate facilities and administrative staff dedicated to this segment. Those costs are charged directly to the Air Medical segment, resulting in a disproportionate share of selling, general and administrative expenses compared to the Company’s other reportable segments.

The customers, individually or considered as a group under common ownership, which accounted for greater than 10% of accounts receivable or 10% of operating revenues during the periods reflected were as follows:

	Accounts Receivable						Operating Revenues
	December 31,						Years Ended December 31,
	2016			2015			2016			2015			2014
Oil and Gas segment:
Customer A		8	%		6	%		14	%		15	%		17	%
Customer B		8	%		9	%		10	%		11	%		13	%
Air Medical &
Technical Services segments:
Customer C		13	%		15	%		5	%		9	%		10	%

The following table shows information about the profit or loss and assets of each of the Company’s reportable segments for the years ended December 31, 2016, 2015, and 2014. The information contains certain allocations, including allocations of depreciation, rents, insurance, and overhead expenses that the Company deems reasonable and appropriate for the evaluation of its results of operations. The Company does not allocate gains on dispositions of property and equipment, other income, interest expense, income taxes, and corporate selling, general, and administrative expenses to the segments. Where applicable, the tables present the unallocated amounts to reconcile the totals to the Company’s consolidated financial statements. Corporate assets are principally cash, short-term investments, other assets, and certain property and equipment.

	Year Ended December 31,
	2016			2015			2014
	(Thousands of dollars)
Segment operating revenues
Oil and Gas	$	324,129		$	459,611		$	516,909
Air Medical		281,868			312,775			300,212
Technical Services		28,101			31,842			19,149
Total operating revenues		634,098			804,228			836,270
Segment direct expenses
Oil and Gas(1)		344,640			411,757			411,679
Air Medical		227,877			246,487			243,573
Technical Services		19,882			29,112			14,851
Total segment direct expenses		592,399			687,356			670,103
Segment selling, general and administrative expenses
Oil and Gas		6,739			6,511			4,615
Air Medical		10,968			10,455			9,801
Technical Services		1,101			805			157
Total segment selling, general and administrative expenses		18,808			17,771			14,573
Total segment expenses		611,207			705,127			684,676
Net segment (loss) profit
Oil and Gas		(27,250	)		41,343			100,615
Air Medical		43,023			55,833			46,838
Technical Services		7,118			1,925			4,141
Total net segment profit		22,891			99,101			151,594
Other, net (2)		6,214			1,872			(10,539	)
Unallocated selling, general and administrative expenses		(25,610	)		(28,651	)		(28,597	)
Interest expense		(30,644	)		(29,066	)		(29,510	)
Loss on debt extinguishment		—			—			(29,833	)
(Loss) earnings before income taxes	$	(27,149	)	$	43,256		$	53,115

(1) Includes equity in gain/loss of unconsolidated affiliate.

(2) Includes gain/loss on disposition of property and equipment, asset impairments, and other income.

	Year Ended December 31,
	2016		2015		2014
	(Thousands of dollars)
Expenditures for Long-Lived Assets
Oil and Gas	$	59,278	$	32,501	$	119,235
Air Medical		22,429		22,685		37,317
Corporate		1,164		1,389		1,153
Total	$	82,871	$	56,575	$	157,705

	Year Ended December 31,
	2016		2015		2014
	(Thousands of dollars)
Depreciation and Amortization
Oil and Gas	$	40,170	$	42,709	$	29,635
Air Medical		19,716		18,177		13,067
Technical Services		564		518		493
Corporate		5,293		10,214		7,653
Total	$	65,743	$	71,618	$	50,848
Assets
Oil and Gas	$	674,788	$	704,472
Air Medical		368,474		329,484
Technical Services		9,568		7,345
Corporate		395,610		385,032
Total	$	1,448,440	$	1,426,333

The following table presents the Company’s revenues from external customers attributed to operations in the United States and foreign areas and long-lived assets in the United States and foreign areas.

	As of or for Year Ended December 31,
	2016		2015		2014
	(Thousands of dollars)
Operating Revenues:
United States	$	579,300	$	722,339	$	747,063
International		54,798		81,889		89,207
Total	$	634,098	$	804,228	$	836,270
Long-Lived Assets:
United States	$	751,290	$	773,939
International		152,687		109,590
Total	$	903,977	$	883,529

Certain of those foreign customers pay us less promptly and regularly than our domestic customers. To date, these payment delays and irregularities have not resulted in any material losses. Nonetheless, these payment delays and irregularities have, among other things, disrupted our cash flows and exposed us to greater risks of non-payment, and could in the future potentially have a material adverse effect upon our financial position, liquidity, business or results of operations.