Segment Reporting

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

Our operating segments are aggregated into reportable business segments based upon similar economic characteristics, products, services, customers and delivery methods. During the first quarter of 2015, our management structure changed within the supply chain business. We created the role of President of DTS for the dedicated product offering which previously was within SCS. We are now reporting our financial performance as follows: (1) FMS, which provides full service leasing, commercial rental, contract maintenance, and contract-related maintenance of trucks, tractors and trailers to customers principally in the U.S., Canada and the U.K.; (2) DTS, which provides vehicles and drivers as part of a dedicated transportation solution in the U.S; and (3) SCS, which provides comprehensive supply chain solutions including distribution and transportation services in North America and Asia. Dedicated services provided as part of an integrated, multi-service, supply chain solution are reported in the SCS business segment.

Our primary measurement of segment financial performance, defined as “Earnings Before Tax” (EBT) from continuing operations, includes an allocation of Central Support Services (CSS) and excludes non-operating pension costs, restructuring and other charges, net and other items discussed in Note (N), "Other Items Impacting Comparability." CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services, public affairs, information technology, health and safety, legal, marketing and corporate communications. The objective of the EBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment and each operating segment within each business segment accountable for their allocated share of CSS costs. Certain costs are considered to be overhead not attributable to any segment and remain unallocated in CSS. Included among the unallocated overhead remaining within CSS are the costs for investor relations, public affairs and certain executive compensation.

Our FMS segment leases revenue earning equipment and provides fuel, maintenance and other ancillary services to the DTS and SCS segments. Inter-segment revenue and EBT are accounted for at rates similar to those executed with third parties. EBT related to inter-segment equipment and services billed to customers (equipment contribution) are included in both FMS and the business segment which served the customer and then eliminated (presented as “Eliminations”).

The following tables set forth financial information for each of our business segments and provides a reconciliation between segment EBT and earnings from continuing operations before income taxes for the three and six months ended June 30, 2015 and 2014. Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented.

	FMS		DTS	SCS	Eliminations		Total
	(in thousands)
For the three months ended June 30, 2015
Revenue from external customers	$	1,042,476	223,514	396,941	—		1,662,931
Inter-segment revenue	106,873		—	—	(106,873	)	—
Total revenue	$	1,149,349	223,514	396,941	(106,873	)	1,662,931
Segment EBT	$	122,452	12,435	27,699	(11,588	)	150,998
Unallocated CSS							(10,924		)
Non-operating pension costs							(4,688		)
Restructuring and other charges, net and other items (1)							(1,939		)
Earnings from continuing operations before income taxes							$	133,447
Segment capital expenditures paid (2)	$	761,542	646	3,570	—		765,758
Unallocated CSS							10,218
Capital expenditures paid							$	775,976
For the three months ended June 30, 2014
Revenue from external customers	$	1,056,992	234,014	393,565	—		1,684,571
Inter-segment revenue	124,230		—	—	(124,230	)	—
Total revenue	$	1,181,222	234,014	393,565	(124,230	)	1,684,571
Segment EBT	$	113,553	12,998	17,730	(10,523	)	133,758
Unallocated CSS							(12,125		)
Non-operating pension costs							(1,544		)
Earnings from continuing operations before income taxes							$	120,089
Segment capital expenditures paid (2)	$	623,138	408	3,841	—		627,387
Unallocated CSS							49,113
Capital expenditures paid							$	676,500

————————————

(1) See Note (N), "Other Items Impacting Comparability," for additional information.

(2) Excludes revenue earning equipment acquired under capital leases.

	FMS		DTS	SCS	Eliminations		Total
	(in thousands)
For the six months ended June 30, 2015
Revenue from external customers	$	2,025,916	436,173	767,995	—		3,230,084
Inter-segment revenue	210,583		—	—	(210,583	)	—
Total revenue	$	2,236,499	436,173	767,995	(210,583	)	3,230,084
Segment EBT	$	212,170	21,405	43,388	(23,122	)	253,841
Unallocated CSS							(22,866		)
Non-operating pension costs							(9,571		)
Restructuring and other charges, net and other items (1)							(3,780		)
Earnings from continuing operations before income taxes							$	217,624
Segment capital expenditures paid (2)	$	1,300,285	1,355	9,557	—		1,311,197
Unallocated CSS							18,021
Capital expenditures paid							$	1,329,218
For the six months ended June 30, 2014
Revenue from external customers	$	2,070,388	449,976	774,944	—		3,295,308
Inter-segment revenue	245,921		—	—	(245,921	)	—
Total revenue	$	2,316,309	449,976	774,944	(245,921	)	3,295,308
Segment EBT	$	190,586	21,684	30,828	(20,151	)	222,947
Unallocated CSS							(22,954		)
Non-operating pension costs							(4,858		)
Earnings from continuing operations before income taxes							$	195,135
Segment capital expenditures paid (2), (3)	$	1,191,377	658	7,463	—		1,199,498
Unallocated CSS							55,724
Capital expenditures paid							$	1,255,222

(1) See Note (N), "Other Items Impacting Comparability," for additional information.

(2) Excludes revenue earning equipment acquired under capital leases.

(3) Excludes acquisition payments of $1.6 million during the six months ended June 30, 2014.