Note 11 - Segment Information

9 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

11. Segment Information

The Company has

seven

business segments. The overnight air cargo segment, composed of the Company’s Mountain Air Cargo, Inc. (“MAC”) and CSA Air, Inc. (“CSA”) subsidiaries, operates in the air express delivery services industry. The ground equipment sales segment, composed of the Company’s Global Ground Support, LLC (“GGS”) subsidiary, manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the U.S. military and industrial customers. The ground support services segment, composed of the Company’s Global Aviation Services, LLC (“GAS”) subsidiary, provides ground support equipment maintenance and facilities maintenance services to domestic airlines and aviation service providers. The printing equipment and maintenance segment is composed of Delphax and its subsidiaries, which was consolidated for financial accounting purposes beginning

November 24, 2015,

along with the newly formed subsidiary, Delphax Solutions, Inc. (“Delphax Solutions”). Delphax sells advanced digital print production equipment, maintenance contracts, spare parts, supplies and consumable items for these systems. The equipment is sold through Delphax and its subsidiaries located in the United Kingdom and France. Air T has contributed certain of the assets acquired in foreclosure to a newly formed subsidiary, Delphax Solutions, which has contracted with Delphax to supply legacy parts and consumables, as well as to serve as a fulfilment provider to Delphax for logistics and sales order processing. In addition, Delphax Solutions intends to pursue market success for the élan printer system, as Delphax is

no

longer actively selling its product lines. Delphax Solutions has entered into an agreement with Delphax for a license for intellectual property and rights to the élan printing system and technologies in return for royalties based on sales. Delphax Solutions intends pursue sales of the élan printing system and related product lines both directly and through qualified resellers and agents.

In

July 2016,

the Company

’s majority owned subsidiary, Contrail Aviation Support, LLC (“Contrail Aviation”), acquired the principal assets of a business based in Verona, Wisconsin engaged in acquiring surplus commercial jet engines or components and supplying surplus and aftermarket commercial jet engine component. In

October 2016,

the Company, through a wholly-owned subsidiary, acquired

100%

of the outstanding equity interests of Jet Yard, LLC (“Jet Yard”) to provide commercial aircraft storage, storage maintenance and aircraft disassembly/part-out services at facilities leased at the Pinal Air Park in Marana, Arizona. In

May 2017,

our newly formed subsidiaries AirCo, LLC and AirCo Services, LLC, acquired the inventory and principal assets of a business based in Wichita, Kansas that distributes and sells airplane and aviation parts. AirCo

1,

LLC was formed in

September 2017

as a wholly-owned subsidiary of AirCo, LLC (collectively considered “AirCo” with AirCo, LLC and AirCo Services, LLC). Contrail Aviation, Jet Yard and AirCo comprise the commercial jet engines and parts segment of the Company’s operations. This segment, formerly referred to as the commercial jet engines segment, was renamed to reflect its broader product and service offerings.

The Company

’s leasing segment, comprised of the Company’s Air T Global Leasing, LLC (“ATGL”) subsidiary, provides funding for equipment leasing transactions, which

may

include transactions for the leasing of equipment manufactured by GGS and Delphax and transactions initiated by

third

parties unrelated to equipment manufactured by the Company or any of its subsidiaries. ATGL commenced operations during the quarter ended

December 31, 2015.

In

March 2014,

the Company formed Space Age Insurance Company (“

SAIC”), a captive insurance company licensed in Utah.  SAIC insures risks of the Company and its subsidiaries that were

not

previously insured by the various Company insurance programs (including the risk of loss of key customers and contacts, administrative actions and regulatory changes); and

may

from time to time underwrite

third

-party risk through certain reinsurance arrangements.  On

December 15, 2017,

BCCM, Inc. (“BCCM”), a newly-formed, wholly-owned subsidiary of the Company, completed the acquisition of Blue Clay Capital. BCCM also has

two

wholly-owned subsidiaries, BCCM Advisors, LLC and BCCM Services, LLC. The activity of SAIC and BCCM, including the wholly-owned subsidiaries, is included in the Corporate segment noted below.

Each business segment has separate management teams and infrastructures that offer different products and services. We evaluate the performance of our business segments based on opera

ting income. For the quarters ended

December 31, 2017

and

2016,

the premiums paid to SAIC by the Company were allocated among the operating segments based on segment revenue and certain identified corporate expense were allocated to the segments based on the relative benefit of those expenses to each segment.

Segment data is summarized as follows

(data by segment is shown pre-intercompany eliminations):

	Three Months Ended December 31,						Nine Months Ended December 31,
	2017			2016			2017			2016
Operating Revenues:
Overnight Air Cargo	$	18,028,688		$	17,099,640		$	52,851,936		$	50,888,019
Ground Equipment Sales:
Domestic		11,877,589			781,519			32,200,847			16,472,690
International		1,045,318			1,960,841			2,187,825			4,029,235
Total Ground Equipment Sales		12,922,907			2,742,360			34,388,672			20,501,925
Ground Support Services		8,651,138			7,579,661			26,565,537			21,417,854
Printing Equipment and Maintenance:
Domestic		1,048,793			2,151,030			2,773,103			5,400,433
International		-			538,868			2,709,993			2,248,291
Total Printing Equipment and Maintenance		1,048,793			2,689,898			5,483,096			7,648,724
Commercial Jet Engines and Parts:
Domestic		6,718,293			1,558,983			17,184,368			2,009,171
International		1,349,852			1,439,182			8,737,037			2,284,101
Total Commercial Jet Engines and Parts		8,068,145			2,998,165			25,921,405			4,293,272
Leasing		33,863			37,547			104,426			501,062
Corporate		338,490			281,926			919,555			845,778
Intercompany		(4,590,777	)		2,339,973			(5,174,517	)		(1,311,221	)
Total	$	44,501,246		$	35,769,170		$	141,060,109		$	104,785,413
Operating Income (Loss):
Overnight Air Cargo	$	996,819		$	716,356		$	2,709,991		$	2,136,337
Ground Equipment Sales		1,084,303			(912,893	)		2,415,527			672,464
Ground Support Services		(114,064	)		(41,199	)		518,873			(391,968	)
Printing Equipment and Maintenance		(984,465	)		1,056,972			(542,651	)		(5,890,238	)
Commercial Jet Engines and Parts		38,047			491,479			800,227			534,285
Leasing		(8,776	)		226,011			2,793			405,426
Corporate		(83,335	)		(453,577	)		(2,339,114	)		(1,917,110	)
Intercompany		(376,849	)		556,268			(325,740	)		38,478
Total	$	551,680		$	1,639,417		$	3,239,906		$	(4,412,326	)
Capital Expenditures:
Overnight Air Cargo	$	7,076		$	43,542		$	27,422		$	79,582
Ground Equipment Sales		206,603			-			208,861			19,596
Ground Support Services		70,241			119,381			213,525			331,520
Printing Equipment and Maintenance		19,926			-			28,417			9,927
Commercial Jet Engines and Parts		6,639,721			50,154			13,722,702			50,154
Corporate		44,462			-			1,046,317			3,066,500
Leasing		-			393,890			-			1,027,228
Intercompany		-			-			-			(3,066,500	)
Total	$	6,988,029		$	606,967		$	15,247,244		$	1,518,007
Depreciation, amortization and impairment:
Overnight Air Cargo	$	27,161		$	31,866		$	88,305		$	91,175
Ground Equipment Sales		90,558			359,021			340,937			453,941
Ground Support Services		121,340			103,600			346,596			274,309
Printing Equipment and Maintenance		2,570			(13,082	)		10,577			1,713,322
Commercial Jet Engines and Parts		430,366			38,221			627,480			66,627
Leasing		14,810			14,516			44,432			232,806
Corporate		130,109			49,390			289,602			116,175
Intercompany		(1,324	)		(171,734	)		(3,974	)		(193,284	)
Total	$	815,590		$	411,798		$	1,743,955		$	2,755,071

The elimination of intercompany revenues is related to the sale during the

quarter ended

December 31, 2016

of

two

élan printers by Delphax to ATGL during the

nine

months ended

December 31, 2016,

along with the premiums paid to SAIC, and the elimination of intercompany operating income for such period reflects the margins on the sales of those assets, elimination of excess depreciation and amortization related to the margin on those assets, and the premiums paid to SAIC. The sale of élan printers did

not

reoccur during the

nine

months ended

December 31, 2017.

The elimination of intercompany revenues is primarily related to the sale of an aircraft from Contrail Aviation to AirCo during the quarter ended

December 31, 2017

along with the premiums paid to SAIC. The elimination of intercompany operating income for such period reflects the margins on the sales of those assets.