Segment Information

12 Months Ended

Dec. 31, 2016

Segment Information

Segment Information

17. Segment Information

Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations and other non-automotive consolidated operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations. The Retail Automotive reportable segment includes all automotive dealerships and all departments relevant to the operation of the dealerships and our retail automotive joint ventures. The individual dealership operations included in the Retail Automotive reportable segment have been grouped into four geographic operating segments: Eastern, Central, and Western United States and International. The geographic operating segments 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, 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		Retail Commercial				Non-Automotive		Intersegment
	Automotive		Truck		Other		Investments		Elimination		Total
Revenues
2016	$	18,673.2	$	1,000.7	$	448.5	$	—	$	(3.9)	$	20,118.5
2015		17,896.3		944.1		446.4		—		(1.9)		19,284.9
2014		16,657.5		125.6		454.0		—		(5.1)		17,232.0
Floor plan interest expense
2016	$	47.1	$	2.9	$	0.9	$	—	$	—	$	50.9
2015		41.3		2.0		1.2		—		—		44.5
2014		45.1		0.3		1.1		—		—		46.5
Other interest expense
2016	$	74.8	$	4.1	$	6.5	$	—	$	—	$	85.4
2015		56.8		3.8		8.8		—		—		69.4
2014		46.9		0.9		5.0		—		—		52.8
Depreciation
2016	$	81.7	$	3.2	$	4.8	$	—	$	—	$	89.7
2015		71.3		2.0		4.7		—		—		78.0
2014		67.1		0.5		2.6		—		—		70.2
Equity in earnings of affiliates
2016	$	4.9	$	—	$	—	$	64.6	$	—	$	69.5
2015		4.4		—		—		34.9		—		39.3
2014		3.8		6.5		—		30.5		—		40.8
Adjusted segment income
2016	$	412.9	$	26.2	$	4.4	$	64.6	$	—	$	508.1
2015		420.4		35.4		1.2		34.9		—		491.9
2014		390.1		11.7		9.6		30.5		—		441.9

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

	Year Ended December 31,
	2016		2015		2014
Adjusted segment income	$	508.1	$	491.9	$	441.9
Gain on investment		—		—		16.0
Income from continuing operations before income taxes	$	508.1	$	491.9	$	457.9

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

	Retail		Retail Commercial				Non-Automotive		Intersegment
	Automotive		Truck		Other		Investments		Elimination		Total
Total assets (1)
2016	$	7,039.6	$	489.1	$	497.6	$	834.8	$	—	$	8,861.1
2015		6,682.1		525.5		507.7		298.1		—		8,013.4
Equity method investments
2016	$	58.6	$	—	$	—	$	834.8	$	—	$	893.4
2015		38.3		—		—		298.1		—		336.4
Capital expenditures
2016	$	195.6	$	3.3	$	4.2	$	—	$	—	$	203.1
2015		187.7		4.5		7.3		—		—		199.5
2014		170.8		0.4		4.9		—		—		176.1

(1)As discussed in Note 4, we treated the operations of our car rental business as discontinued operations. The associated assets have been reclassified to “Assets held for sale” as of December 31, 2015 on the Consolidated Balance Sheets and therefore are still included within the Other segment in total assets above.

The following table presents certain data by geographic area:

	Year Ended December 31,
	2016		2015		2014
Revenue from external customers:
U.S.	$	12,005.9	$	11,806.9	$	10,435.9
Non-U.S.		8,112.6		7,478.0		6,796.1
Total revenue from external customers	$	20,118.5	$	19,284.9	$	17,232.0
Long-lived assets, net:
U.S.	$	1,847.3	$	1,248.7
Non-U.S.		880.9		627.0
Total long-lived assets	$	2,728.2	$	1,875.7

The Company’s non-U.S. operations are predominantly based in the U.K.

The following tables present our revenue from external customers by product type for our Retail Automotive and Retail Commercial Truck segments:

	Year Ended December 31,
Retail Automotive Dealership Revenue	2016		2015		2014
New vehicle	$	9,547.1	$	9,208.9	$	8,698.8
Used vehicle		5,663.7		5,425.5		4,971.1
Finance and insurance, net		495.0		478.3		436.0
Service and parts		1,948.6		1,830.7		1,716.9
Fleet and wholesale		1,018.8		952.9		834.7
Total retail automotive dealership revenue	$	18,673.2	$	17,896.3	$	16,657.5

	Year Ended December 31,
Retail Commercial Truck Dealership Revenue	2016		2015		2014 (1)
New truck	$	625.5	$	572.5	$	78.7
Used truck		51.8		58.7		9.5
Finance and insurance, net		7.3		6.7		0.9
Service and parts		306.0		286.0		33.9
Lease, rental and wholesale		10.1		20.2		2.6
Total retail commercial truck dealership revenue	$	1,000.7	$	944.1	$	125.6

(1) As we acquired a controlling interest in Premier Truck Group in November 2014, information for the year ended December 31, 2014 represents revenues since our date of acquisition in November 2014.