Business Segments

Segment information reflects our strategic business units (“SBUs”), which are organized to meet customer requirements and global competition. For the year ended December 31, 2018, we operated our business through three operating segments representing our regional tire businesses: Americas; Europe, Middle East and Africa; and Asia Pacific. Segment information is reported on the basis used for reporting to our Chief Executive Officer. Each of the three regional business segments is involved in the development, manufacture, distribution and sale of tires. Certain of the business segments also provide related products and services, which include retreads and automotive and commercial truck maintenance and repair services. Each segment also exports tires to other segments.

Americas manufactures and sells tires for automobiles, trucks, buses, earthmoving, mining and industrial equipment, aircraft, and for various other applications. Americas also provides related products and services including retreaded tires, tread rubber, automotive and commercial truck maintenance and repair services, as well as sells chemical and natural rubber products to our other business segments and to unaffiliated customers.

Europe, Middle East and Africa manufactures and sells tires for automobiles, trucks, buses, aircraft, motorcycles, and earthmoving, mining and industrial equipment throughout Europe, the Middle East and Africa. EMEA also sells retreaded aviation tires, retreading and related services for commercial truck and earthmoving, mining and industrial equipment, and automotive maintenance and repair services.

Asia Pacific manufactures and sells tires for automobiles, trucks, aircraft, farm, and earthmoving, mining and industrial equipment throughout the Asia Pacific region. Asia Pacific also provides related products and services including retreaded truck and aviation tires, tread rubber, and automotive maintenance and repair services.

The following table presents segment sales and operating income, and the reconciliation of segment operating income to Income before Income Taxes:



(In millions)	2018			2017		2016
Sales
Americas	$	8,168		$	8,212	$	8,172
Europe, Middle East and Africa	5,090			4,928		4,880
Asia Pacific	2,217			2,237		2,106
Net Sales	$	15,475		$	15,377	$	15,158
Segment Operating Income
Americas	$	654		$	847	$	1,151
Europe, Middle East and Africa	363			367		472
Asia Pacific	257			342		373
Total Segment Operating Income	1,274			1,556		1,996
Less:
Rationalizations	44			135		210
Interest expense	321			335		372
Other (income) expense ⁽¹⁾	(174		)	70		25
Asset write-offs and accelerated depreciation	4			40		20
Corporate incentive compensation plans	13			33		76
Intercompany profit elimination	4			2		2
Retained expenses of divested operations	9			13		18
Other ⁽²⁾	42			50		66
Income before Income Taxes	$	1,011		$	878	$	1,207


(1)	Refer to Note 5.


(2)	Primarily represents unallocated corporate costs and the elimination of $18 million, $30 million and $22 million for the years ended December 31, 2018, 2017 and 2016, respectively, of royalty income attributable to the strategic business units.

The following table presents segment assets at December 31:



(In millions)	2018		2017
Assets
Americas	$	7,160	$	6,923
Europe, Middle East and Africa	4,809		4,995
Asia Pacific	2,602		2,681
Total Segment Assets	14,571		14,599
Corporate⁽¹⁾	2,301		2,465
	$	16,872	$	17,064


(1)	Corporate includes substantially all of our U.S. net deferred tax assets.

Results of operations are measured based on net sales to unaffiliated customers and segment operating income. Each segment exports tires to other segments. The financial results of each segment exclude sales of tires exported to other segments, but include operating income derived from such transactions. Segment operating income is computed as follows: Net sales less CGS (excluding asset write-offs and accelerated depreciation charges) and SAG (including certain allocated corporate administrative expenses). Segment operating income also includes certain royalties and equity in earnings of most affiliates. Segment operating income does not include net rationalization charges, asset sales, and certain other items.

The following table presents geographic information. Net sales by country were determined based on the location of the selling subsidiary. Long-lived assets consisted of property, plant and equipment. Besides Germany, management did not consider the net sales of any other individual countries outside the United States to be significant to the consolidated financial statements. For long-lived assets, only China was considered to be significant.



(In millions)	2018		2017		2016
Net Sales
United States	$	6,692	$	6,678	$	6,724
Germany	1,883		1,874		1,853
Other international	6,900		6,825		6,581
	$	15,475	$	15,377	$	15,158
Long-Lived Assets
United States	$	2,734	$	2,750
China	762		766
Other international	3,763		3,935
	$	7,259	$	7,451

At December 31, 2018, significant concentrations of cash and cash equivalents held by our international subsidiaries included the following amounts:

•$278 million or 35% in Asia Pacific, primarily India, China and Japan ($344 million or 33% at December 31, 2017),


•	$261 million or 33% in Europe, Middle East and Africa, primarily Belgium ($355 million or 34% at December 31, 2017), and


•	$134 million or 17% in Americas, primarily Chile, Canada and Brazil ($169 million or 16% at December 31, 2017).

Rationalizations, as described in Note 3, Costs Associated with Rationalization Programs, Net (gains) losses on asset sales, as described in Note 5, Other (Income) Expense, and asset write-offs and accelerated depreciation were not charged (credited) to the SBUs for performance evaluation purposes but were attributable to the SBUs as follows:



(In millions)	2018		2017		2016
Rationalizations
Americas	$	3	$	6	$	15
Europe, Middle East and Africa	36		111		184
Asia Pacific	3		2		1
Total Segment Rationalizations	42		119		200
Corporate	2		16		10
	$	44	$	135	$	210



(In millions)	2018			2017			2016
Net (Gains) Losses on Asset Sales
Americas⁽¹⁾	$	(275	)	$	(4	)	$	(4	)
Europe, Middle East and Africa	2			(10		)	(17		)
Asia Pacific	—			—			(1		)
Total Segment Asset Sales	(273		)	(14		)	(22		)
Corporate	—			—			(9		)
	$	(273	)	$	(14	)	$	(31	)


(1)	Americas Net (Gains) Losses on Asset Sales for the year ended December 31, 2018 includes the gain of $272 million related to the TireHub transaction, net of transaction costs.



(In millions)	2018		2017		2016
Asset Write-offs and Accelerated Depreciation
Americas	$	—	$	—	$	1
Europe, Middle East and Africa	4		40		19
Total Segment Asset Write-offs and Accelerated Depreciation	$	4	$	40	$	20

The following tables present segment capital expenditures and depreciation and amortization:



(In millions)	2018		2017		2016
Capital Expenditures
Americas	$	406	$	525	$	618
Europe, Middle East and Africa	180		159		191
Asia Pacific	188		164		137
Total Segment Capital Expenditures	774		848		946
Corporate	37		33		50
	$	811	$	881	$	996



(In millions)	2018		2017		2016
Depreciation and Amortization
Americas	$	414	$	398	$	366
Europe, Middle East and Africa	201		191		192
Asia Pacific	131		124		120
Total Segment Depreciation and Amortization	746		713		678
Corporate	32		68		49
	$	778	$	781	$	727

The following table presents segment equity in the net income of investees accounted for by the equity method:



(In millions)	2018			2017			2016
Equity in (Income)
Americas	$	11		$	(5	)	$	—
Europe, Middle East and Africa	(1		)	—			(1		)
Total Segment Equity in (Income)	$	10		$	(5	)	$	(1	)