INFORMATION BY BUSINESS SEGMENTS

The business segment presentation reflects the basis used by the Company's management to analyze performance and determine the allocation of resources. The Company's management evaluates performance based on income (loss) from operations before income taxes as well as net income (loss) attributable to Avista Corp. shareholders. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Avista Utilities' business is managed based on the total regulated utility operation; therefore, it is considered one segment. AEL&P is a separate reportable business segment, as it has separate financial reports that are reviewed in detail by the Chief Operating Decision Maker and its operations and risks are sufficiently different from Avista Utilities and the other businesses at AERC that it cannot be aggregated with any other operating segments. The Other category, which is not a reportable segment, includes other investments and operations of various subsidiaries, as well as certain other operations of Avista Capital.

The following table presents information for each of the Company’s business segments (dollars in thousands):



	Avista Utilities		Alaska Electric Light and Power Company		Total Utility		Other			Intersegment Eliminations (1)			Total
For the three months ended September 30, 2018:
Operating revenues	$	279,549	$	9,570	$	289,119	$	6,894		$	—		$	296,013
Resource costs	98,461		3,058		101,519		—			—			101,519
Other operating expenses (2)	76,355		3,005		79,360		7,347			—			86,707
Depreciation and amortization	44,569		1,466		46,035		207			—			46,242
Income (loss) from operations	35,317		1,787		37,104		(660		)	—			36,444
Interest expense (3)	23,560		896		24,456		462			(313		)	24,605
Income taxes	2,564		188		2,752		(1,204		)	—			1,548
Net income (loss) attributable to Avista Corp. shareholders	11,935		824		12,759		(2,640		)	—			10,119
Capital expenditures (4)	108,907		4,176		113,083		257			—			113,340
For the three months ended September 30, 2017:
Operating revenues	$	280,776	$	10,864	$	291,640	$	5,456		$	—		$	297,096
Resource costs	104,516		4,052		108,568		—			—			108,568
Other operating expenses (2) (5)	79,188		3,469		82,657		6,598			—			89,255
Depreciation and amortization	41,516		1,452		42,968		137			—			43,105
Income (loss) from operations (5)	32,880		1,298		34,178		(1,279		)	—			32,899
Interest expense (3)	23,132		895		24,027		215			(71		)	24,171
Income taxes	5,972		44		6,016		(863		)	—			5,153
Net income (loss) attributable to Avista Corp. shareholders	5,419		427		5,846		(1,395		)	—			4,451
Capital expenditures (4)	109,066		1,073		110,139		1,050			—			111,189
For the nine months ended September 30, 2018:
Operating revenues	$	970,525	$	33,715	$	1,004,240	$	20,432		$	—		$	1,024,672
Resource costs	353,148		8,958		362,106		—			—			362,106
Other operating expenses (2)	230,342		9,049		239,391		20,714			—			260,105
Depreciation and amortization	132,022		4,397		136,419		587			—			137,006
Income (loss) from operations	174,310		10,488		184,798		(869		)	—			183,929
Interest expense (3)	71,953		2,686		74,639		1,179			(712		)	75,106
Income taxes	17,716		2,098		19,814		(2,347		)	—			17,467
Net income (loss) attributable to Avista Corp. shareholders	91,727		5,878		97,605		(7,019		)	—			90,586
Capital expenditures (4)	288,046		8,169		296,215		809			—			297,024



	Avista Utilities		Alaska Electric Light and Power Company		Total Utility		Other			Intersegment Eliminations (1)			Total
For the nine months ended September 30, 2017:
Operating revenues	$	992,904	$	38,002	$	1,030,906	$	17,161		$	—		$	1,048,067
Resource costs	366,590		10,315		376,905		—			—			376,905
Other operating expenses (2) (5)	225,980		9,236		235,216		19,863			—			255,079
Depreciation and amortization	123,249		4,347		127,596		482			—			128,078
Income (loss) from operations	199,376		12,080		211,456		(3,184		)	—			208,272
Interest expense (3)	68,641		2,684		71,325		558			(112		)	71,771
Income taxes	49,881		3,582		53,463		(1,915		)	—			51,548
Net income (loss) attributable to Avista Corp. shareholders	85,623		5,961		91,584		(3,246		)	—			88,338
Capital expenditures (4)	283,081		4,772		287,853		1,219			—			289,072
Total Assets:
As of September 30, 2018:	$	5,223,031	$	280,826	$	5,503,857	$	79,426		$	(25,885	)	$	5,557,398
As of December 31, 2017:	$	5,177,878	$	278,688	$	5,456,566	$	73,241		$	(15,075	)	$	5,514,732


(1)	Intersegment eliminations reported as interest expense represent intercompany interest.

(2)

Other operating expenses for Avista Utilities for the three and nine months ended September 30, 2018 include acquisition costs of $1.0 million and $2.6 million, respectively, which are separately disclosed on the Condensed Consolidated Statements of Income. The three and nine months ended September 30, 2017 include acquisition costs of $6.7 million and $8.0 million, respectively, which are also separately disclosed.


(3)	Including interest expense to affiliated trusts.


(4)	The capital expenditures for the other businesses are included in other investing activities on the Condensed Consolidated Statements of Cash Flows.

(5)

Effective January 1, 2018, the Company adopted ASU No. 2017-07, which resulted in a $1.9 million and $5.7 million reclassification of the non-service cost component of pension and other postretirement benefit costs for the three and nine months ended September 30, 2017, respectively. The costs were reclassified from utility other operating expenses to other expense (income) - net on the Condensed Consolidated Statements of Income.