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 Singapore. 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 “Earnings Before Tax” (EBT) from continuing operations, includes an allocation of Central Support Services (CSS) and excludes non-operating pension costs, restructuring charges and fees, net discussed in Note 4, "Restructuring Charges and Fees, Net" and items discussed in Note 24, "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 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 business segment which served the customer and then eliminated (presented as “Eliminations”). Prior amounts have been reclassified to conform to the current period presentation.

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. Each business segment follows the same accounting policies as described in Note 1, “Summary of Significant Accounting Policies.” Business segment revenue and EBT from continuing operations is as follows:



	Years ended December 31,
	2017			2016		2015
	(In thousands)
Revenue:
Fleet Management Solutions:
ChoiceLease	$	2,460,424		2,362,040		2,220,929
Commercial rental	777,261			808,912		900,624
ChoiceLease and commercial rental	3,237,685			3,170,952		3,121,553
SelectCare	428,422			415,507		391,137
Other	77,450			78,042		77,625
Fuel services revenue	520,500			463,738		538,277
Total Fleet Management Solutions from external customers	4,264,057			4,128,239		4,128,592
Inter-segment revenue	469,514			427,955		417,100
Fleet Management Solutions	4,733,571			4,556,194		4,545,692
Dedicated Transportation Solutions	1,096,042			1,020,895		895,538
Supply Chain Solutions	1,969,500			1,637,850		1,547,763
Eliminations	(469,514		)	(427,955	)	(417,100	)
Total revenue	$	7,329,599		6,786,984		6,571,893

EBT:
Fleet Management Solutions	$	312,720		370,829		461,314
Dedicated Transportation Solutions	55,328			63,571		45,575
Supply Chain Solutions	103,102			105,532		93,575
Eliminations	(53,275		)	(50,148	)	(47,193	)
	$	417,875		489,784		553,271
Unallocated Central Support Services	(48,128		)	(40,736	)	(48,700	)
Non-operating pension costs ⁽¹⁾	(27,741		)	(29,943	)	(17,797	)
Restructuring charges and fees, net and other items ⁽²⁾	(28,220		)	(12,724	)	(17,559	)
Earnings before income taxes from continuing operations	$	313,786		406,381		469,215

______________


(1)	Non-operating pension costs include the amortization of net actuarial loss and prior service costs, interest cost and expected return on plan assets

components of pension and postretirement benefit costs.


(2)	See Note 24, “Other Items Impacting Comparability,” for a discussion of items excluded from our primary measure of segment performance.

The following table sets forth non-operating pension costs and share-based compensation expense, depreciation expense, used vehicle sales, net, amortization expense and other non-cash charges, net, interest expense (income), capital expenditures paid and total assets for the years ended December 31, 2017, 2016 and 2015, as provided to the chief operating decision-maker for each of Ryder’s reportable business segments:



	FMS			DTS		SCS		CSS		Eliminations		Total
	(In thousands)
2017
Non-operating pension costs and share-based compensation expense	$	5,339		1,270		2,982		37,117		—		46,708
Depreciation expense ⁽¹⁾	$	1,218,492		3,520		32,255		908		—		1,255,175
Used vehicle sales, net	$	17,553		(113	)	(199	)	—		—		17,241
Amortization expense and other non-cash charges, net	$	29,550		(21,967	)	1,015		3,516		—		12,114
Interest expense (income) ⁽²⁾	$	144,137		(1,659	)	(2,446	)	318		—		140,350
Capital expenditures paid	$	1,783,917		3,375		50,117		23,027		—		1,860,436
Total assets	$	10,386,613		276,832		864,022		196,686		(271,922	)	11,452,231
2016
Non-operating pension costs and share-based compensation expense	$	5,464		1,254		2,764		46,775		—		56,257
Depreciation expense ⁽¹⁾	$	1,156,888		3,222		25,956		984		—		1,187,050
Used vehicle sales, net	$	(724	)	(90	)	(158	)	—		—		(972	)
Amortization expense and other non-cash charges, net	$	34,652		1,027		3,215		(8,227	)	—		30,667
Interest expense (income) ⁽²⁾	$	151,297		(1,901	)	(1,663	)	110		—		147,843
Capital expenditures paid	$	1,814,146		2,551		64,186		24,274		—		1,905,157
Total assets	$	9,954,452		255,845		713,190		198,394		(219,427	)	10,902,454
2015
Non-operating pension costs and share-based compensation expense	$	5,672		1,155		3,400		28,751		—		38,978
Depreciation expense ⁽¹⁾	$	1,092,750		3,184		25,721		311		—		1,121,966
Used vehicle sales, net	$	(99,758	)	(54	)	(41	)	—		—		(99,853	)
Amortization expense and other non-cash charges, net	$	36,348		1,878		2,971		11,768		—		52,965
Interest expense (income) ⁽²⁾	$	154,276		(1,597	)	(2,174	)	(71	)	—		150,434
Capital expenditures paid ⁽³⁾	$	2,595,961		3,570		27,841		40,606		—		2,667,978
Total assets	$	10,061,092		275,634		636,647		202,129		(222,922	)	10,952,580

____________


(1)	Depreciation expense associated with CSS assets was allocated to business segments based upon estimated and planned asset utilization. Depreciation expense totaling $24 million, $24 million and $22 million during 2017, 2016 and 2015, respectively, associated with CSS assets was allocated to other business segments.


(2)	Interest expense was primarily allocated to the FMS segment since such borrowings were used principally to fund the purchase of revenue earning equipment used in FMS; however, interest income was also reflected in DTS and SCS based on targeted segment leverage ratios.


(3)	Excludes acquisition payments of $1 million in 2017. See Note 3, “Acquisitions,” for additional information.

Geographic Information



	Years ended December 31,
	2017		2016	2015
	(In thousands)
Revenue:
United States	$	6,378,784	5,892,384	5,603,697
Foreign:
Canada	428,252		387,713	408,325
Europe	321,375		339,420	391,339
Mexico	170,398		139,176	139,583
Singapore	30,790		28,291	28,949
	950,815		894,600	968,196
Total	$	7,329,599	6,786,984	6,571,893
Long-lived assets:
United States	$	7,935,167	7,854,845	7,817,628
Foreign:
Canada	623,576		532,403	504,027
Europe	527,869		472,027	545,630
Mexico	44,997		33,979	31,993
Singapore	357		338	427
	1,196,799		1,038,747	1,082,077
Total	$	9,131,966	8,893,592	8,899,705

Certain Concentrations

We have a diversified portfolio of customers across a full array of transportation and logistics solutions and across many industries. We believe this will help to mitigate the impact of adverse downturns in specific sectors of the economy. Our portfolio of ChoiceLease and commercial rental customers is not concentrated in any one particular industry or geographic region. We derive a significant portion of our SCS revenue from the automotive industry, mostly from manufacturers and suppliers of original equipment parts. During 2017, 2016 and 2015, the automotive industry accounted for approximately 40%, 44% and 41%, respectively, of SCS total revenue.