SEGMENT AND REVENUE INFORMATION

The Company operates in three reportable segments. The CAM segment consists of the Company's aircraft leasing operations and its segment earnings include an allocation of interest expense. The ACMI Services segment consists of the Company's airline operations, including CMI agreements as well as ACMI and charter service agreements that the Company has with its customers. The MRO Services segment provides aircraft parts, component repairs, airframe maintenance services, aircraft modifications and other aircraft maintenance services. The MRO Services became reportable during 2018 due to the size of its revenues. Prior periods presented below have been prepared by separating MRO Services from "All other" for comparative purposes. The Company's ground services and other activities, which include the mail and package sorting services, maintenance services for ground equipment, facilities and material handling equipment, the sales of aviation fuel and other services, are not large enough to constitute reportable segments and are combined in All other. Inter-segment revenues are valued at arms-length market rates. Cash and cash equivalents are reflected in Assets - All other below.

The Company's segment information for revenue from continuing operations is presented below (in thousands):



	Three Months Ending March 31
	2018			2017
Total revenues:
CAM	$	52,376		$	47,978
ACMI Services	119,374			144,949
MRO Services	52,723			40,338
All other	19,283			48,868
Eliminate inter-segment revenues	(40,716		)	(44,216		)
Total	$	203,040		$	237,917
Customer revenues:
CAM	$	35,887		$	30,782
ACMI Services	119,374			144,949
MRO Services	30,939			25,417
All other	16,840			36,769
Total	$	203,040		$	237,917

CAM's aircraft lease revenues are recognized as operating lease revenues on a straight-line basis over the term of the applicable lease agreements. CAM's customer revenues included $0.8 million and $2.7 million for the three month periods ending March 31, 2018 and 2017 respectively, for maintenance related payments from customers that are recognized at a point in time.

ACMI Services revenues are generated from airline service agreements and are typically based on hours flown, the amount of aircraft operated and crew resources provided during a month. ACMI Services revenues are recognized over time as flight hours are performed for the customer. Certain agreements include provisions for incentive payments based upon on-time reliability. These incentives are measured on a monthly basis and recorded to revenue in the corresponding month earned. Under CMI and ACMI agreements, customers are generally responsible for aviation fuel, landing fees, navigation fees and certain other flight expenses. When functioning as the customers agent for arranging such services, the Company records amounts reimbursable from the customer as revenues net of the related expenses as the costs are incurred. Under charter agreements in which the Company is responsible for fuel and full services, the related costs are recorded in operating expenses. During the three month period ended March 31, 2018, the Company netted $49.2 million of ACMI Services customer reimbursable revenues against the related expenses as an agent of customers. ACMI Services are invoiced monthly or more frequently.

MRO Services revenues for customer contracts for airframe and modification services that do not have an alternative use and for which the Company has an enforceable right to payment are generally recognized over time based on the percentage of costs completed. MRO Services revenues for part sales, component repairs and line service are recognized at a point in time typically when the parts are delivered to the customer and the the services are completed. For airframe maintenance, aircraft modifications, and aircraft component repairs, contracts include assurance warranties that are not sold separately.

Effective January 1, 2018 the Company records revenues and estimated earnings for its airframe maintenance and modification contracts using the percentage-of-completion cost-to-cost method. For such services, the Company estimates the earnings on a contract as the difference between the expected revenue and estimated costs to complete a contract and recognizes revenues and earnings based on the proportion of costs incurred compared to the total estimated costs. The Company's estimates consider the timing and extent of the services, including the amount and rates of labor, materials and other resources required to perform the services. The Company recognizes adjustments in estimated earnings on a contract under the cumulative catch-up method in which the impact of the adjustment on estimated earnings of a contract is recognized in the period the adjustment is identified.

The Company's external customer revenues for providing sorting services and related equipment maintenance for the three month periods ending March 31, 2018 and 2017 were $16.2 million and $36.3 million, respectively, and are reported in All other. The Company's external customer revenues from providing sorting services are recognized as the services are performed for the customer over time. Revenues from related equipment maintenance services are primarily recognized at a point in time. During the three month period ended March 31, 2018, the Company netted $51.3 million of customer reimbursable revenues against the related expenses when functioning as the customers agent for arranging ground services.

Revenue is not recognized until collectibility of customer payment is probable. For customers that are not a governmental agency or department, the Company generally receives partial payment in advance of services, otherwise customer balances are typically paid within 30 to 60 days of service. During the three month periods ending March 31, 2018 the Company recognized $5.9 million of non lease revenue that was reported in deferred revenue at the beginning of the period.

The effects of the adoption of Topic 606 on the Company's customer revenues are summarized below:



	For the three months ending March 31, 2018
	Revenue
	As Reported		Without Topic 606		Increase (decrease)
ACMI Services	$	119,374	$	168,549	$	(49,175	)
MRO Services	30,939		25,479		5,460
Other (ground services)	16,840		68,187		(51,347		)

The Company's other segment information from continuing operations is presented below (in thousands):



	Three Months Ending March 31
	2018			2017
Depreciation and amortization expense:
CAM	$	28,925		$	24,301
ACMI Services	10,225			11,072
MRO Services	850			674
All other	4			395
Total	$	40,004		$	36,442
Segment earnings (loss):
CAM	$	15,464		$	13,330
ACMI Services	3,941			(3,534		)
MRO Services	4,462			3,188
All other	2,581			2,463
Inter-segment earnings eliminated	(3,325		)	(862		)
Net unallocated interest expense	(819		)	(171		)
Net gain (loss) on financial instruments	(885		)	1,869
Other non-service components of retiree benefit costs, net	2,045			(177		)
Loss from non-consolidated affiliate	(2,536		)	—
Pre-tax earnings from continuing operations	$	20,928		$	16,106

The Company's assets are presented below by segment (in thousands):



	March 31		December 31
	2018		2017
Assets:
CAM	$	1,201,208	$	1,192,890
ACMI Services	195,790		189,379
MRO Services	96,451		87,177
All other	74,054		79,398
Total	$	1,567,503	$	1,548,844

Interest expense allocated to CAM was $4.5 million and $3.3 million for the three month periods ending March 31, 2018 and 2017, respectively.