Segment and Geographic Information

12 Months Ended

Dec. 31, 2017

Segment Reporting [Abstract]

Segment and Geographic Information

Segment and Geographic Information

Industry Segment Information

The Company operates its business in one industry, intermodal transportation equipment, and has two operating segments which also represent its reporting segments:

• Equipment leasing - the Company owns, leases and ultimately disposes of containers and chassis from its lease fleet.

• Equipment trading - the Company purchases containers from shipping line customers, and other sellers of containers, and resells these containers to container retailers and users of containers for storage or one-way shipment. Included in the equipment trading segment revenues are leasing revenues from equipment purchased for resale that is currently on lease until the containers are dropped off.

• These operating segments were determined based on the chief operating decision maker's review and resource allocation of the products and service offered.

The Company acquired the equipment trading segment as part of the Merger on July 12, 2016. Prior to the Merger, the Company operated in only one segment, equipment leasing, and therefore all income and assets were attributed to the leasing segment for periods prior to the Merger.

Note 11—Segment and Geographic Information (continued)

The following tables show segment information for the periods indicated and the consolidated totals reported (in thousands):

As of and for the Year Ended December 31, 2017	Equipment Leasing		Equipment Trading		Totals
Total leasing revenues	$	1,160,196	$	3,321	$	1,163,517
Trading margin	—		4,184		4,184
Net gain on sale of leasing equipment	35,812		—		35,812
Depreciation and amortization expense	500,099		621		500,720
Interest and debt expense	280,909		1,438		282,347
Realized loss on derivative instruments, net	900		—		900
Income before income taxes(1)	262,574		3,254		265,828
Equipment held for sale	31,534		11,661		43,195
Goodwill	220,864		15,801		236,665
Total assets	9,534,330		43,295		9,577,625
Purchases of leasing equipment and investments in finance leases(2)	1,562,863		—		1,562,863

As of and for the Year Ended December 31, 2016	Equipment Leasing			Equipment Trading			Totals
Total leasing revenues	$	827,111		$	1,583		$	828,694
Trading margin	—			618			618
Net (loss) on sale of leasing equipment	(20,347		)	—			(20,347		)
Depreciation and amortization expense	392,250			342			392,592
Interest and debt expense	183,377			637			184,014
Realized loss on derivative instruments, net	3,438			—			3,438
Loss before income taxes(1)	(6,302		)	(3,795		)	(10,097		)
Equipment held for sale	81,804			18,059			99,863
Goodwill	220,864			15,801			236,665
Total assets	8,660,786			52,785			8,713,571
Purchases of leasing equipment and investments in finance leases(2)	629,176			156			629,332

As of and for the Year Ended December 31, 2015	Equipment Leasing		Equipment Trading		Totals
Total leasing revenues	$	707,839	$	—	$	707,839
Net gain on sale of leasing equipment	2,013		—		2,013
Depreciation and amortization expense	300,470		—		300,470
Interest and debt expense	140,644		—		140,644
Realized loss on derivative instruments, net	5,496		—		5,496
Income before income taxes(1)	135,127		—		135,127
Equipment held for sale	—		—		—
Goodwill	—		—		—
Total assets	4,658,997		—		4,658,997
Purchases of leasing equipment and investments in finance leases(2)	398,799		—		398,799

_______________________________________________________________________________

(1) Segment income (loss) before income taxes excludes unrealized gains on interest rate swaps of $1.4 million, unrealized gains on interest rate swaps of $4.4 million, and unrealized losses on interest swaps of $2.2 million for the years ended December 31, 2017, 2016, and 2015, respectively, and the write-off of debt costs of $7.0 million, $0.1 million, and $1.2 million for the years ended December 31, 2017, 2016, and 2015, respectively.

(2) Represents cash disbursements for purchases of leasing equipment and investments in finance lease as reflected in the consolidated statements of cash flows for the periods indicated, but excludes cash flows associated with the purchase of equipment held for resale.

Note 11—Segment and Geographic Information (continued)

There are no intercompany revenues or expenses between segments. Certain administrative expenses have been allocated between segments based on an estimate of services provided to each segment. A portion of the Company's equipment purchased for resale was purchased through certain sale-leaseback transactions with its shipping line customers. Due to the expected longer term nature of these transactions, these purchases are reflected as leasing equipment as opposed to equipment held for sale and the cash flows associated with these transactions are and will be reflected as purchases of leasing equipment and proceeds from the sale of equipment in investing activities in the Company's consolidated statements of cash flows.

Geographic Segment Information

The Company generates the majority of its leasing revenues from international containers which are deployed by its customers in a wide variety of global trade routes. The majority of the Company's leasing related revenue is denominated in U.S. dollars.

The following table summarizes the geographic allocation of equipment leasing revenues for the years ended December 31, 2017, 2016, and 2015 based on customers' primary domicile (in thousands):

	Year Ended December 31, 2017		Year Ended December 31, 2016		Year Ended December 31, 2015
Total revenues:
Asia	$	491,996	$	397,500	$	403,910
Europe	518,598		334,118		226,905
Americas	111,558		58,945		41,566
Bermuda	1,745		464		120
Other International	39,620		37,667		35,338
Total	$	1,163,517	$	828,694	$	707,839

Since the majority of the Company's containers are used internationally, where no one container is domiciled in one particular place for a prolonged period of time, all of the Company's long-lived assets are considered to be international.

The following table represents the geographic allocation of equipment trading revenues for the years ended December 31, 2017 and 2016 (the Company had no equipment trading revenues in 2015) based on the location of the sale (in thousands):

	Year Ended December 31, 2017		Year Ended December 31, 2016
Total revenues:
Asia	$	17,342	$	7,410
Europe	8,383		4,439
Americas	7,747		3,082
Other International	3,925		1,487
Bermuda	22		—
Total	$	37,419	$	16,418