Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information

Segment Information

16.  Segment Information

Our operations are organized by management into operating segments by line of business and geography. We have determined that we have two reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail, consisting of our automotive retail operations, and (ii) Other, consisting of our Hertz rental business operating segment and our investments in non-automotive retail operations operating segment. 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 accounting policies of the segments are the same and are described in Note 1.

The following table summarizes revenues, floor plan interest expense, other interest expense, debt discount amortization, depreciation, equity in earnings of affiliates, and income (loss) from continuing operations before certain non-recurring 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 (loss), for each of our reportable segments. Adjusted segment income excludes the items in the table below in order to enhance the comparability of segment income from period to period.

	Retail		Other		Intersegment Elimination			Total
Revenues
2012	$	13,164,070	$	4,030	$	(4,583	)	$	13,163,517
2011	11,127,492		—		—			11,127,492
2010	9,943,350		—		—			9,943,350
Floor plan interest expense
2012	$	38,797	$	—	$	—		$	38,797
2011	27,218		—		—			27,218
2010	32,822		—		—			32,822
Other interest expense
2012	$	46,782	$	110	$	—		$	46,892
2011	44,256		—		—			44,256
2010	48,541		—		—			48,541
Debt discount amortization
2012	$	—	$	—	$	—		$	—
2011	1,718		—		—			1,718
2010	8,637		—		—			8,637
Depreciation
2012	$	53,980	$	15	$	—		$	53,995
2011	47,101		—		—			47,101
2010	44,523		—		—			44,523
Equity in earnings of affiliates
2012	$	3,238	$	24,334	$	—		$	27,572
2011	2,196		23,255		—			25,451
2010	2,577		17,992		—			20,569
Adjusted segment income
2012	$	283,094	$	23,713	$	(66	)	$	306,741
2011	224,602		23,255		—			247,857
2010	166,010		17,992		—			184,002

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

	Year Ended December 31,
	2012			2011		2010
Adjusted segment income	$	306,741		$	247,857	$	184,002
Debt redemption costs	(17,753		)	—		—
Gain on debt repurchase	—			—		1,634
Income (loss) from continuing operations before income taxes	$	288,988		$	247,857	$	185,636

Total assets, equity method investments, and capital expenditures by reporting segment are as set forth in the table below.

	Retail		Other		Intersegment Elimination			Total
Total assets
2012	$	5,101,289	$	277,767	$	(66	)	$	5,378,990
2011	4,250,672		248,729		—			4,499,401
Equity method investments
2012	$	53,288	$	249,872	$	—		$	303,160
2011	49,911		248,729		—			298,640
Capital expenditures
2012	$	151,411	$	9,875	$	—		$	161,286
2011	131,971		—		—			131,971
2010	74,900		—		—			74,900

The following table presents certain data by geographic area:

	Year Ended December 31,
	2012		2011		2010
Sales to external customers:
U.S.	$	8,403,151	$	7,143,481	$	6,313,835
Foreign	4,760,366		3,984,011		3,629,515
Total sales to external customers	$	13,163,517	$	11,127,492	$	9,943,350
Long-lived assets, net:
U.S.	$	961,780	$	831,666
Foreign	386,115		320,085
Total long-lived assets	$	1,347,895	$	1,151,751

The Company’s foreign operations are predominantly based in the U.K.