BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

Under Accounting Standards Codification 280, “Segment Reporting,” we have determined that we have the following three reportable segments:

•Oil and Gas

•Air Medical

•Technical Services.

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. In addition, a portion of our selling, general and administrative expenses are not allocated to any segment.

The Oil and Gas segment provides helicopter services to oil and gas customers operating in the Gulf of Mexico and a selected number of 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 certain 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 December 31,				Operating Revenues Years Ended December 31,
	2018		2017		2018		2017		2016
Oil and Gas segment:
Customer A	15	%	11	%	17	%	14	%	14	%
Customer B	5	%	5	%	7	%	9	%	10	%
Air Medical & Technical Services segments:
Customer C	—	%	10	%	—	%	—	%	5	%

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, 2018, 2017, and 2016. 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 its 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,
	2018			2017			2016
	(Thousands of dollars)
Segment operating revenues
Oil and Gas	$	380,238		$	298,398		$	324,129
Air Medical	257,132			257,273			281,868
Technical Services	37,053			23,874			28,101
Total operating revenues	674,423			579,545			634,098
Segment direct expenses
Oil and Gas ⁽¹⁾	371,930			321,272			344,640
Air Medical	230,840			208,987			227,877
Technical Services	28,849			16,825			19,882
Total segment direct expenses	631,619			547,084			592,399
Segment selling, general and administrative expenses
Oil and Gas	18,485			5,899			6,739
Air Medical	13,833			12,442			10,968
Technical Services	1,418			1,405			1,101
Total segment selling, general and administrative expenses	33,736			19,746			18,808
Total segment expenses	665,355			566,830			611,207
Net segment (loss) profit
Oil and Gas	(10,177		)	(28,773		)	(27,250		)
Air Medical	12,459			35,844			43,023
Technical Services	6,786			5,644			7,118
Total net segment profit	9,068			12,715			22,891
Impairments of assets	(109,024		)	(368		)	(407		)
Other, net ⁽²⁾	(574		)	2,466			6,621
Unallocated selling, general and administrative expenses	(32,949		)	(34,071		)	(25,610		)
Interest expense	(33,981		)	(32,183		)	(30,644		)
(Loss) earnings before income taxes	$	(167,460	)	$	(51,441	)	$	(27,149	)


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


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



	Year Ended December 31,
	2018		2017		2016
	(Thousands of dollars)
Expenditures for Long-Lived Assets
Oil and Gas	$	34,171	$	52,525	$	59,278
Air Medical	7,268		5,696		22,429
Corporate	1,469		257		1,164
Total	$	42,908	$	58,478	$	82,871



	As of or for Year Ended December 31,
	2018		2017		2016
	(Thousands of dollars)
Depreciation and Amortization
Oil and Gas	$	47,723	$	39,655	$	40,170
Air Medical	22,606		20,413		19,716
Technical Services	499		581		564
Corporate	8,426		7,378		5,293
Total	79,254		68,027		65,743
Assets
Oil and Gas	$	594,331	$	722,734
Air Medical	387,701		372,646
Technical Services	5,515		5,979
Corporate	274,679		300,487
Total	1,262,226		1,401,846

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,
	2018		2017		2016
	(Thousands of dollars)
Operating Revenues:
United States	$	516,717	$	530,115	$	579,300
International	157,706		49,430		54,798
Total	$	674,423	$	579,545	$	634,098
Long-Lived Assets:
United States	$	552,350	$	601,530
International	350,135		345,235
Total	$	902,485	$	946,765

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.