Segment Information

3 Months Ended

Mar. 31, 2020

ASC 280, Segment Reporting, requires reporting of segment information that is consistent with the manner in which the chief operating decision maker operates and views the Company. Our operations are grouped into two operating segments: ADESA Auctions and AFC, which also serve as our reportable business segments. These reportable business segments offer different services and have fundamental differences in their operations. Results of the former IAA segment and spin-related costs are now reported as discontinued operations (see Note 2). Segment results for the three months ended March 31, 2019 have been reclassified to conform with the new presentation of segments.

The holding company is maintained separately from the reportable segments and includes expenses associated with the corporate offices, such as salaries, benefits and travel costs for the corporate management team, certain human resources, information technology and accounting costs, and certain insurance, treasury, legal and risk management costs. Holding company interest expense includes the interest expense incurred on finance leases and the corporate debt structure. Intercompany charges relate primarily to interest on intercompany debt or receivables and certain administrative costs allocated by the holding company.

Financial information regarding our reportable segments is set forth below as of and for the three months ended March 31, 2020 (in millions):



	ADESA Auctions		AFC			Holding Company			Consolidated
Operating revenues	$	567.0	$	78.5		$	—		$	645.5
Operating expenses
Cost of services (exclusive of depreciation and amortization)	370.7		23.9			—			394.6
Selling, general and administrative	122.8		6.5			33.1			162.4
Depreciation and amortization	39.1		2.7			5.9			47.7
Total operating expenses	532.6		33.1			39.0			604.7
Operating profit (loss)	34.4		45.4			(39.0		)	40.8
Interest expense	0.8		13.6			23.6			38.0
Other (income) expense, net	—		(0.1		)	(1.9		)	(2.0		)
Intercompany expense (income)	0.7		(0.8		)	0.1			—
Income (loss) from continuing operations before income taxes	32.9		32.7			(60.8		)	4.8
Income taxes	8.8		8.1			(14.9		)	2.0
Net income (loss) from continuing operations	$	24.1	$	24.6		$	(45.9	)	$	2.8
Total assets	$	3,279.5	$	2,445.3		$	274.9		$	5,999.7

Financial information regarding our reportable segments is set forth below as of and for the three months ended March 31, 2019 (in millions):



	ADESA Auctions			AFC			Holding Company			Consolidated
Operating revenues	$	599.7		$	89.9		$	—		$	689.6
Operating expenses
Cost of services (exclusive of depreciation and amortization)	370.7			23.2			—			393.9
Selling, general and administrative	126.6			7.2			41.4			175.2
Depreciation and amortization	35.0			2.4			6.9			44.3
Total operating expenses	532.3			32.8			48.3			613.4
Operating profit (loss)	67.4			57.1			(48.3		)	76.2
Interest expense	0.7			17.1			38.7			56.5
Other (income) expense, net	(1.9		)	(0.1		)	(0.1		)	(2.1		)
Intercompany expense (income)	10.3			(1.2		)	(9.1		)	—
Income (loss) from continuing operations before income taxes	58.3			41.3			(77.8		)	21.8
Income taxes	15.9			10.8			(20.2		)	6.5
Net income (loss) from continuing operations	$	42.4		$	30.5		$	(57.6	)	$	15.3
Total assets	$	3,797.0		$	2,406.1		$	98.5		$	6,301.6

Geographic Information

Our foreign operations include Canada, Mexico, Continental Europe and the U.K. Most of our operations outside the U.S. are in Canada. Approximately 57% and 70% of our foreign operating revenues were from Canada for the three months ended March 31, 2020 and 2019, respectively. The 2019 acquisition of COTW has increased the percentage of operating revenues from Europe. Information regarding the geographic areas of our operations is set forth below (in millions):



	Three Months Ended March 31,
	2020		2019
Operating revenues
U.S.	$	523.3	$	579.9
Foreign	122.2		109.7
	$	645.5	$	689.6