SEGMENT INFORMATION

12 Months Ended

Sep. 30, 2016

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 14 SEGMENT INFORMATION

        We operate principally in the contract drilling industry. Our contract drilling business includes the following reportable operating segments: U.S. Land, Offshore and International Land. The contract drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies. To provide information about the different types of business activities in which we operate, we have included Offshore and International Land, along with our U.S. Land reportable operating segment, as separate reportable operating segments. Additionally, each reportable operating segment is a strategic business unit which is managed separately. Our primary international areas of operation include Colombia, Ecuador, Argentina, Bahrain, U.A.E. and other South American and Middle Eastern countries. Other includes additional non-reportable operating segments. Revenues included in Other consist primarily of rental income. Consolidated revenues and expenses reflect the elimination of all material intercompany transactions.

        We evaluate segment performance based on income or loss from operations (segment operating income) before income taxes which includes:

•           revenues from external and internal customers 

•           direct operating costs 

•           depreciation and 

•           allocated general and administrative costs

but excludes corporate costs for other depreciation, income from asset sales and other corporate income and expense.

        General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, on other methods which we believe to be a reasonable reflection of the utilization of services provided.

        Segment operating income for all segments is a non-GAAP financial measure of our performance, as it excludes certain general and administrative expenses, corporate depreciation, income from asset sales and other corporate income and expense. We consider segment operating income to be an important supplemental measure of operating performance for presenting trends in our core businesses. We use this measure to facilitate period-to-period comparisons in operating performance of our reportable segments in the aggregate by eliminating items that affect comparability between periods. We believe that segment operating income is useful to investors because it provides a means to evaluate the operating performance of the segments on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect our operating performance in future periods.

        Summarized financial information of our reportable segments for continuing operations for each of the years ended September 30, 2016, 2015 and 2014 is shown in the following table:

(in thousands)	External Sales		Inter- Segment			Total Sales			Segment Operating Income (Loss)			Depreciation		Total Assets		Additions to Long-Lived Assets
2016
Contract Drilling
U.S. Land	$	1,242,462	$	—		$	1,242,462		$	74,118		$	508,237	$	5,005,299	$	209,156
Offshore		138,601		—			138,601			15,659			12,495		105,152		9,694
International Land		229,894		—			229,894			(14,086	)		57,102		487,181		2,364
		1,610,957		—			1,610,957			75,691			577,834		5,597,632		221,214
Other		13,275		855			14,130			(7,491	)		20,753		1,234,323		20,076
		1,624,232		855			1,625,087			68,200			598,587		6,831,955		241,290
Eliminations		—		(855	)		(855	)		—			—		—		—
Total	$	1,624,232	$	—		$	1,624,232		$	68,200		$	598,587	$	6,831,955	$	241,290
2015, as adjusted
Contract Drilling
U.S. Land	$	2,523,518	$	—		$	2,523,518		$	698,375		$	519,950	$	5,429,179	$	949,978
Offshore		241,666		—			241,666			68,002			11,659		118,852		16,100
International Land		382,331		—			382,331			(7,093	)		57,334		565,712		39,645
		3,147,515		—			3,147,515			759,284			588,943		6,113,743		1,005,723
Other		14,187		880			15,067			(10,911	)		19,096		1,025,402		27,518
		3,161,702		880			3,162,582			748,373			608,039		7,139,145		1,033,241
Eliminations		—		(880	)		(880	)		—			—		—		—
Total	$	3,161,702	$	—		$	3,161,702		$	748,373		$	608,039	$	7,139,145	$	1,033,241
2014, as adjusted
Contract Drilling
U.S. Land	$	3,099,954	$	—		$	3,099,954		$	1,025,745		$	455,934	$	5,261,361	$	930,263
Offshore		251,341		—			251,341			69,969			12,300		137,104		4,372
International Land		351,263		—			351,263			35,145			40,367		593,471		84,068
		3,702,558		—			3,702,558			1,130,859			508,601		5,991,936		1,018,703
Other		13,410		867			14,277			(9,068	)		15,383		726,174		27,117
		3,715,968		867			3,716,835			1,121,791			523,984		6,718,110		1,045,820
Eliminations		—		(867	)		(867	)		—			—		—		—
Total	$	3,715,968	$	—		$	3,715,968		$	1,121,791		$	523,984	$	6,718,110	$	1,045,820

        The following table reconciles segment operating income (loss) to income from continuing operations before income taxes as reported on the Consolidated Statements of Operations:

	Years Ended September 30,
	2016			2015 (as adjusted)			2014 (as adjusted)
				(in thousands)
Segment operating income	$	68,200		$	748,373		$	1,121,791
Income from asset sales		9,896			11,834			19,083
Corporate general and administrative costs and corporate depreciation		(104,062	)		(88,244	)		(87,700	)
Operating income (loss)		(25,966	)		671,963			1,053,174
Other income (expense)
Interest and dividend income		3,166			5,840			1,543
Interest expense		(22,913	)		(15,023	)		(4,657	)
Gain (loss) on investment securities		(25,989	)		—			45,234
Other		(965	)		(901	)		(636	)
Total unallocated amounts		(46,701	)		(10,084	)		41,484
Income (loss) from continuing operations before income taxes	$	(72,667	)	$	661,879		$	1,094,658

        The following table presents revenues from external customers and long-lived assets by country based on the location of service provided:

	Years Ended September 30,
	2016		2015 (as adjusted)		2014 (as adjusted)
	(in thousands)
Revenues
United States	$	1,386,786	$	2,750,043	$	3,338,365
Argentina		159,427		177,984		107,189
Colombia		20,488		70,076		81,168
Ecuador		4,948		30,987		67,976
Other Foreign		52,583		132,612		121,270
Total	$	1,624,232	$	3,161,702	$	3,715,968
Long-Lived Assets
United States	$	4,804,328	$	5,149,315	$	4,753,844
Argentina		183,286		211,862		145,783
Colombia		91,815		102,401		105,842
Ecuador		438		28,918		71,011
Other Foreign		64,866		70,674		111,107
Total	$	5,144,733	$	5,563,170	$	5,187,587

        Long-lived assets are comprised of property, plant and equipment.

        Revenues from one customer accounted for approximately 11.9 percent, 10.1 percent and 10.7 percent of total operating revenues during the years ended September 30, 2016, 2015 and 2014, respectively. Revenues from another customer accounted for approximately 9.4 percent, 4.6 percent and 2.9 percent of total operating revenues during the years ended September 30, 2016, 2015 and 2014, respectively. Collectively, the receivables from these customers were approximately $49.5 million and $101.3 million at September 30, 2016 and 2015, respectively.