NOTE 16 BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

Description of the Business

We are a global contract drilling company based in Tulsa, Oklahoma with operations in all major U.S. onshore basins as well as South America and the Middle East. Our contract drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies. We are the recognized industry leader in drilling as well as technological innovation.

At September 30, 2018, our contract drilling business includes the following reportable operating segments:

U.S. Land

Offshore

International Land

Each reportable operating segment is a strategic business unit that is managed separately and consolidated revenues and expenses reflect the elimination of all material intercompany transactions. Other includes additional non-reportable operating segments. Revenues included in “other” consist of revenue from our drilling technology services as well as rental income.

Segment Performance

We evaluate segment performance based on income or loss from continuing 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 acquisition related costs, 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.

Summarized financial information of our reportable segments for continuing operations for each of the fiscal years ended September 30, 2018, 2017 and 2016 is shown in the following table:
	September 30, 2018
					International
(in thousands)	U.S. Land		Offshore		Land		Other		Eliminations		Total
External Sales	$	2,068,195	$	142,500	$	238,356	$	38,217	$	-	$	2,487,268
Intersegment		1,189		—		—		1,026	$	(2,215)		-
Total Sales		2,069,384		142,500		238,356		39,243		(2,215)		2,487,268

Segment Operating Income (Loss)		150,698		26,124		(683)		(27,790)		—		148,349
Depreciation and Amortization		505,112		10,392		46,826		21,472		—		583,802
Total Assets		5,012,378		105,439		362,033		735,017		—		6,214,867
Additions to Long-Lived Assets		441,624		4,326		4,424		18,456		—		468,830

	September 30, 2017
					International
(in thousands)	U.S. Land		Offshore		Land		Other		Eliminations		Total
External Sales	$	1,439,523	$	136,263	$	212,972	$	15,983	$	—	$	1,804,741
Intersegment		—		—		—		862		(862)		—
Total Sales		1,439,523		136,263		212,972		16,845		(862)		1,804,741

Segment Operating Income (Loss)		(94,880)		24,201		(7,224)		(9,449)		—		(87,352)
Depreciation and Amortization		499,486		11,764		53,622		20,671		—		585,543
Total Assets		4,967,074		99,533		413,392		959,986		—		6,439,985
Additions to Long-Lived Assets		394,508		2,847		3,400		7,351		—		408,106

	September 30, 2016
					International
(in thousands)	U.S. Land		Offshore		Land		Other		Eliminations		Total
External Sales	$	1,242,462	$	138,601	$	229,894	$	13,275	$	—	$	1,624,232
Intersegment		—		—		—		855		(855)		—
Total Sales		1,242,462		138,601		229,894		14,130		(855)		1,624,232

Segment Operating Income (Loss)		74,118		15,659		(14,086)		(7,491)		—		68,200
Depreciation and Amortization		508,237		12,495		57,102		20,753		—		598,587
Total Assets		5,005,299		105,152		487,181		1,234,323		—		6,831,955
Additions to Long-Lived Assets		209,156		9,694		2,364		20,076		—		241,290

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


	Year Ended September 30,
	2018		2017		2016
	(in thousands)
Segment operating income (loss)	$	148,349	$	(87,352)	$	68,200
Income from asset sales		22,660		20,627		9,896
Acquisition related costs		(8,153)		—		—
Corporate selling, general and administrative costs and corporate depreciation		(131,254)		(105,816)		(104,062)
Operating income (loss)		31,602		(172,541)		(25,966)
Other income (expense)
Interest and dividend income		8,017		5,915		3,166
Interest expense		(24,265)		(19,747)		(22,913)
Gain (loss) on investment securities		1		—		(25,989)
Other		486		1,775		(965)
Total unallocated amounts		(15,761)		(12,057)		(46,701)
Income (loss) from continuing operations before income taxes	$	15,841	$	(184,598)	$	(72,667)

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


	Year Ended September 30,
	2018		2017		2016
	(in thousands)
Operating revenues
United States	$	2,247,400	$	1,591,769	$	1,386,786
Argentina		190,038		157,257		159,427
Colombia		38,793		37,554		20,488
Ecuador		—		6		4,948
Other Foreign		11,037		18,155		52,583
Total	$	2,487,268	$	1,804,741	$	1,624,232
Property, plant and equipment, net
United States	$	4,591,913	$	4,686,235	$	4,804,328
Argentina		133,617		155,978		183,286
Colombia		74,042		81,798		91,815
Ecuador		10,781		22,298		438
Other Foreign		47,029		54,742		64,866
Total	$	4,857,382	$	5,001,051	$	5,144,733