SEGMENT REPORTING

Ryder is a global leader in transportation and supply chain management solutions. 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 based on three business segments: (1) FMS, which provides full service leasing and leasing with flexible maintenance options, commercial rental, and contract or transactional maintenance services of trucks, tractors and trailers to customers principally in the U.S., Canada and the U.K.; (2) DTS, which provides turnkey transportation solutions in the U.S. that includes dedicated vehicles, drivers and engineering and administrative support; and (3) SCS, which provides integrated logistics solutions, including distribution, management, dedicated transportation and professional services primarily in North America. 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 and other charges, net discussed in Note 5, "Restructuring and Other Charges, Net" and items discussed in Note 25, "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 that served the customer and then eliminated (presented as “Eliminations”). Prior year 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,
	2018			2017		2016
	(In thousands)
Revenue:
Fleet Management Solutions:
ChoiceLease	$	2,602,831		2,460,424		2,362,040
Commercial rental	905,305			777,261		808,912
ChoiceLease and commercial rental	3,508,136			3,237,685		3,170,952
SelectCare	462,046			428,422		415,507
Other	87,331			77,450		78,042
Fuel services revenue	620,245			520,500		463,738
Total Fleet Management Solutions from external customers	4,677,758			4,264,057		4,128,239
Inter-segment revenue	577,469			469,514		427,955
Fleet Management Solutions	5,255,227			4,733,571		4,556,194
Dedicated Transportation Solutions	1,333,313			1,095,645		1,020,543
Supply Chain Solutions	2,398,144			1,937,352		1,609,356
Eliminations	(577,469		)	(469,514	)	(427,955	)
Total revenue	$	8,409,215		7,297,054		6,758,138

EBT:
Fleet Management Solutions	$	324,345		313,002		371,126
Dedicated Transportation Solutions	61,236			55,346		63,204
Supply Chain Solutions	133,570			103,561		106,477
Eliminations	(63,594		)	(53,275	)	(50,148	)
	455,557			418,634		490,659
Unallocated Central Support Services	(49,048		)	(48,128	)	(40,736	)
Non-operating pension costs ⁽¹⁾	(7,541		)	(27,741	)	(29,943	)
Restructuring and other items, net ⁽²⁾	(25,107		)	(28,220	)	(12,724	)
Earnings before income taxes from continuing operations	$	373,861		314,545		407,256

______________


(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 25, “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, 2018, 2017 and 2016, as provided to the chief operating decision-maker for each of Ryder’s reportable business segments:



	FMS			DTS		SCS		CSS		Eliminations		Total
	(In thousands)
2018
Non-operating pension costs and share-based compensation expense	$	6,340		1,831		5,283		19,039		—		32,493
Depreciation expense ⁽¹⁾	$	1,354,544		4,773		34,729		918		—		1,394,964
Used vehicle sales, net	$	22,021		(43	)	(239	)	—		—		21,739
Amortization expense and other non-cash charges, net	$	26,203		542		3,355		1,053		—		31,153
Interest expense (income) ⁽²⁾	$	179,562		(2,262	)	1,067		193		—		178,560
Capital expenditures paid ⁽³⁾	$	2,979,482		1,444		45,348		24,135		—		3,050,409
Total assets	$	11,704,332		324,906		1,085,001		297,709		(360,864	)	13,051,084
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		1,015		(21,967	)	(263	)	—		8,335
Interest expense (income) ⁽²⁾	$	144,137		(1,659	)	(2,446	)	318		—		140,350
Capital expenditures paid ⁽³⁾	$	1,783,917		3,375		50,117		23,027		—		1,860,436
Total assets	$	10,388,022		278,863		870,048		196,686		(269,620	)	11,463,999
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		(37	)	—		38,857
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	$	9,954,230		257,762		717,915		199,745		(217,439	)	10,912,213

____________


(1)	Depreciation expense associated with CSS assets was allocated to business segments based upon estimated and planned asset utilization. Depreciation expense totaling $25 million, $24 million and $24 million during 2018, 2017 and 2016, 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 $35 million in 2018 and $1 million in 2017. See Note 3, "Acquisitions," for additional information.

Geographic Information



	Years ended December 31,
	2018		2017	2016
	(In thousands)
Long-lived assets:
United States	$	9,114,595	7,935,167	7,854,845
Foreign:
Canada	648,856		623,576	532,403
Europe	522,633		527,869	472,027
Mexico	55,462		44,997	33,979
Singapore	237		357	338
	1,227,188		1,196,799	1,038,747
Total	$	10,341,783	9,131,966	8,893,592