Segment Reporting

9 Months Ended

Sep. 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 transportion services provided as part of an integrated, multi-service, supply chain solution to SCS customers 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 (M), "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 provide a reconciliation between segment EBT and earnings from continuing operations before income taxes for the three and nine months ended September 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 September 30, 2015
Revenue from external customers	$	1,054,840	226,921	387,305	—		1,669,066
Inter-segment revenue	102,738		—	—	(102,738	)	—
Total revenue	$	1,157,578	226,921	387,305	(102,738	)	1,669,066
Segment EBT	$	126,433	13,296	26,573	(11,998	)	154,304
Unallocated CSS							(10,070		)
Non-operating pension costs							(4,780		)
Restructuring and other charges, net and other items (1)							446
Earnings from continuing operations before income taxes							$	139,900
Segment capital expenditures paid (2)	$	740,049	1,175	4,195	—		745,419
Unallocated CSS							12,657
Capital expenditures paid							$	758,076
For the three months ended September 30, 2014
Revenue from external customers	$	1,069,333	227,568	390,249	—		1,687,150
Inter-segment revenue	117,589		—	—	(117,589	)	—
Total revenue	$	1,186,922	227,568	390,249	(117,589	)	1,687,150
Segment EBT	$	120,867	11,850	24,302	(9,564	)	147,455
Unallocated CSS							(13,564		)
Non-operating pension costs							(2,455		)
Restructuring and other charges, net and other items (1)							(1,828		)
Earnings from continuing operations before income taxes							$	129,608
Segment capital expenditures paid (2), (3)	$	470,552	432	7,052	—		478,036
Unallocated CSS							7,915
Capital expenditures paid							$	485,951

————————————

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

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

(3) Excludes acquisition payments of $8.1 million during the three months ended September 30, 2014.

	FMS		DTS	SCS	Eliminations		Total
	(in thousands)
For the nine months ended September 30, 2015
Revenue from external customers	$	3,080,756	663,094	1,155,300	—		4,899,150
Inter-segment revenue	313,321		—	—	(313,321	)	—
Total revenue	$	3,394,077	663,094	1,155,300	(313,321	)	4,899,150
Segment EBT	$	338,603	34,701	69,961	(35,120	)	408,145
Unallocated CSS							(32,936		)
Non-operating pension costs							(14,351		)
Restructuring and other charges, net and other items (1)							(3,334		)
Earnings from continuing operations before income taxes							$	357,524
Segment capital expenditures paid (2)	$	2,040,334	2,530	13,752	—		2,056,616
Unallocated CSS							30,678
Capital expenditures paid							$	2,087,294
For the nine months ended September 30, 2014
Revenue from external customers	$	3,139,721	677,544	1,165,193	—		4,982,458
Inter-segment revenue	363,510		—	—	(363,510	)	—
Total revenue	$	3,503,231	677,544	1,165,193	(363,510	)	4,982,458
Segment EBT	$	311,453	33,534	55,130	(29,715	)	370,402
Unallocated CSS							(36,518		)
Non-operating pension costs							(7,313		)
Restructuring and other charges, net and other items (1)							(1,828		)
Earnings from continuing operations before income taxes							$	324,743
Segment capital expenditures paid (2), (3)	$	1,661,929	1,090	14,515	—		1,677,534
Unallocated CSS							63,639
Capital expenditures paid							$	1,741,173

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

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

(3) Excludes acquisition payments of $9.8 million during the nine months ended September 30, 2014.