11. Segment Information

The Company’s operations are organized by management into operating segments by line of business and geography. The Company has determined it has two reportable segments as defined in generally accepted accounting principles for segment reporting, including: (i) Retail, consisting of our automotive retail operations and (ii) PAG Investments, consisting of our investments in businesses other than automotive retail operations. The Retail reportable segment includes all automotive dealerships and all departments relevant to the operation of the dealerships and the retail automotive joint ventures. The individual dealership operations included in the Retail reportable segment have been grouped into four geographic operating segments, which have been aggregated into one reportable segment as their operations (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals) and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The Company previously presented its smart USA distribution operation as a third reportable segment. That operation was transitioned to DVI on June 30, 2011 and is presented in discontinued operations.

The following table summarizes revenues and income from continuing operations before certain items and income taxes, which is the measure by which management allocates resources to its segments, and which we refer to as adjusted segment income, for each of our reportable segments. Adjusted segment income excludes the item in the table below in order to enhance the comparability of segment income from period to period.

Three Months Ended June 30


			PAG
	Retail		Investments		Total
Revenues
2011	$	2,888,420	$	—	$	2,888,420
2010		2,614,602		—		2,614,602
Adjusted segment income
2011		55,123		6,268		61,391
2010		43,343		4,102		47,445

Six Months Ended June 30


			PAG
	Retail		Investments		Total
Revenues
2011	$	5,683,907	$	—	$	5,683,907
2010		5,038,789		—		5,038,789
Adjusted segment income
2011		108,911		7,392		116,303
2010		81,473		3,597		85,070

The following table reconciles total adjusted segment income to consolidated income from continuing operations before income taxes.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Adjusted segment income	$	61,391	$	47,445	$	116,303	$	85,070
Gain on debt repurchase		—		422		—		1,027


Income from continuing operations before income taxes	$	61,391	$	47,867	$	116,303	$	86,097