13. Business Segment Information

Segment Reporting

Consistent with how our chief operating decision making officer (Chief Executive Officer) evaluates performance and the way we are organized internally, we report our activities in two segments: Aviation Services comprised of supply chain and MRO activities and Expeditionary Services comprised of airlift and mobility activities.

The Aviation Services segment consists of aftermarket support and services businesses that provide spares and maintenance support for aircraft operated by our commercial and government/defense customers. Sales in the Aviation Services segment are derived from the sale and lease of a wide variety of new, overhauled and repaired engine and airframe parts and components and aircraft to the commercial aviation and government and defense markets. We provide customized inventory supply chain management, performance based logistics programs, aircraft component repair management services, and aircraft modifications. The segment also includes repair, maintenance and overhaul of aircraft, landing gear and components. Cost of sales consists principally of the cost of product, direct labor, and overhead.

The Expeditionary Services segment consists of businesses that provide products and services supporting the movement of equipment and personnel by the U.S. and foreign governments and other non-governmental organizations. Sales in the Expeditionary Services segment are derived from fleet management and operations of customer-owned aircraft and the design and manufacture of pallets, shelters, and containers used to support the U.S. military's requirements for a mobile and agile force. We also design and manufacture advanced composite materials for commercial, business and military aircraft. Cost of sales consists principally of the cost of material to manufacture products, direct labor and overhead.

The accounting policies for the segments are the same as those described in Note 1. Our chief operating decision making officer (Chief Executive Officer) evaluates performance based on the reportable segments and utilizes gross profit as a primary profitability measure. Gross profit is calculated by subtracting cost of sales from sales. The assets and certain expenses related to corporate activities are not allocated to the segments. Our reportable segments are aligned principally around differences in products and services.

Selected financial information for each segment is as follows:

	For the Year Ended May 31,
	2018		2017		2016
Net sales:
Aviation Services	$	1,618.9	$	1,485.4	$	1,425.0
Expeditionary Services		129.4		105.4		100.4

	$	1,748.3	$	1,590.8	$	1,525.4

	For the Year Ended May 31,
	2018		2017		2016
Gross profit:
Aviation Services	$	271.9	$	246.0	$	229.5
Expeditionary Services		22.7		17.4		3.6

	$	294.6	$	263.4	$	233.1

	May 31,
	2018		2017
Total assets:
Aviation Services	$	1,205.8	$	1,057.0
Expeditionary Services		130.2		122.8
Corporate and discontinued operations		188.7		324.3

	$	1,524.7	$	1,504.1

	For the Year Ended May 31,
	2018		2017		2016
Capital expenditures:
Aviation Services	$	18.6	$	15.0	$	16.4
Expeditionary Services		2.1		2.0		1.6
Corporate		1.3		8.2		22.1

Total continuing operations		22.0		25.2		40.1
Discontinued operations		5.0		8.4		48.9

	$	27.0	$	33.6	$	89.0

	For the Year Ended May 31,
	2018		2017		2016
Depreciation and amortization:1
Aviation Services	$	34.6	$	30.8	$	26.2
Expeditionary Services		4.6		5.0		6.8
Corporate		16.6		10.9		6.7

Total continuing operations		55.8		46.7		39.7
Discontinued operations		7.3		17.2		18.1

	$	63.1	$	63.9	$	57.8


1	Includes depreciation and amortization of stock-based compensation.

The following table reconciles segment gross profit to income from continuing operations before provision for income taxes.

	For the Year Ended May 31,
	2018			2017			2016
Segment gross profit	$	294.6		$	263.4		$	233.1
Selling, general and administrative		(208.6	)		(181.1	)		(157.6	)
Other expenses		(0.9	)		—			(0.4	)
Interest expense		(8.0	)		(5.3	)		(6.4	)
Interest income		0.1			0.1			0.2

Income from continuing operations before provision for income taxes	$	77.2		$	77.1		$	68.9

The U.S. Department of Defense, other U.S. government agencies and their contractors are our only customers representing 10% or more of total sales in any of the last three fiscal years. Sales by segment for these customers are as follows:

	For the Year Ended May 31,
	2018			2017			2016
Aviation Services	$	224.4		$	260.2		$	301.1
Expeditionary Services		79.9			61.3			65.0

	$	304.3		$	321.5		$	366.1


Percentage of total sales		17.4	%		20.2	%		24.0	%

Sales by type of product/service was as follows:

	For the Year Ended May 31,
	2018		2017		2016
Aviation supply chain	$	1,066.0	$	998.7	$	903.2
Maintenance, repair and overhaul services		552.9		486.7		521.8
Mobility products		112.5		105.4		100.4
Airlift		16.9		—		—

	$	1,748.3	$	1,590.8	$	1,525.4

Geographic Data

	May 31,
	2018		2017
Long-lived assets:
United States	$	393.1	$	369.1
Europe		103.3		108.5
Other		85.6		40.3

Total continuing operations		582.0		517.9
Discontinued operations		—		97.8

	$	582.0	$	615.7

Sales to unaffiliated customers in foreign countries (including sales through foreign sales offices of domestic subsidiaries) were approximately $694.0 million (39.7% of total sales), $595.4 million (37.4% of total sales) and $498.0 million (32.6% of total sales) in fiscal 2018, 2017 and 2016, respectively.