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SEGMENT REPORTING
3 Months Ended
Mar. 31, 2017
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. We report our financial performance in three business segments: (1) FMS, which provides leasing, commercial rental and 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 transportation 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 segment “Earnings Before Tax” (EBT) from continuing operations, includes an allocation of Central Support Services (CSS) and excludes non-operating pension costs and the operating tax adjustment discussed in Note 12 "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 segment and, ultimately, to hold leadership of each 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. CSS costs attributable to the business segments are predominantly allocated to FMS, DTS and SCS as follows:

Finance, corporate services, and health and safety — allocated based upon estimated and planned resource utilization;

Human resources — individual costs within this category are allocated under various methods, including allocation based on estimated utilization and number of personnel supported;

Information technology — principally allocated based upon utilization-related metrics such as number of users or minutes of CPU time. Customer-related project costs and expenses are allocated to the business segment responsible for the project; and

Other — represents legal and other centralized costs and expenses including certain share-based incentive compensation costs. Expenses, where allocated, are based primarily on the number of personnel supported.
























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 DTS and SCS customers (equipment contribution) are included in both FMS and the segment that served the customer and then eliminated (presented as “Eliminations”). 

The following tables set forth financial information for each of our segments and provide a reconciliation between segment EBT and earnings from continuing operations before income taxes for the three months ended March 31, 2017 and 2016. 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 March 31, 2017
 
 
 
 
 
 
 
 
Revenue from external customers
$
1,018,740

 
266,674

 
462,749

 

 
1,748,163

Inter-segment revenue
113,730

 

 

 
(113,730
)
 

Total revenue
$
1,132,470

 
266,674

 
462,749

 
(113,730
)
 
1,748,163

 
 
 
 
 
 
 
 
 
 
Segment EBT
$
52,108

 
11,279

 
27,446

 
(11,216
)
 
79,617

Unallocated CSS
 
 
 
 
 
 
 
 
(10,213
)
     Non-operating pension costs 
 
 
 
 
 
 
 
 
(7,243
)
Other items (1)
 
 
 
 
 
 
 
 
(2,205
)
Earnings from continuing operations before income taxes
 
 
 
 
 
 
 
 
$
59,956

 
 
 
 
 
 
 
 
 
 
   Segment capital expenditures paid (2)
$
344,355

 
768

 
10,998

 

 
356,121

Unallocated CSS capital expenditures paid
 
 
 
 
 
 
 
 
5,218

Capital expenditures paid
 
 
 
 
 
 
 
 
$
361,339

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended March 31, 2016
 
 
 
 
 
 
 
 
Revenue from external customers
$
996,115

 
244,842

 
388,715

 

 
1,629,672

Inter-segment revenue
101,813

 

 

 
(101,813
)
 

Total revenue
$
1,097,928

 
244,842

 
388,715

 
(101,813
)
 
1,629,672

 
 
 
 
 
 
 
 
 
 
Segment EBT
$
83,301

 
14,268

 
19,796

 
(11,744
)
 
105,621

Unallocated CSS
 
 
 
 
 
 
 
 
(10,045
)
Non-operating pension costs 
 
 
 
 
 
 
 
 
(6,868
)
Earnings from continuing operations before income taxes
 
 
 
 
 
 
 
 
$
88,708

 
 
 
 
 
 
 
 
 
 
  Segment capital expenditures paid (2)
$
560,285

 
517

 
7,323

 

 
568,125

Unallocated CSS capital expenditures paid
 
 
 
 
 
 
 
 
6,906

Capital expenditures paid
 
 
 
 
 
 
 
 
$
575,031

————————————
(1)
See Note 12, "Other Items Impacting Comparability," for additional information.
(2)
Excludes revenue earning equipment acquired under capital leases.