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 in 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 segment “Earnings Before Tax” (EBT) from continuing operations, includes an allocation of Central Support Services (CSS) and excludes non-operating pension costs and the restructuring and other items, net discussed in Note 14, "Other Items Impacting Comparability." CSS represents those costs incurred to support all business segments, including human resources, finance and procurement, 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 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”).

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. 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, 2019 and 2018. Prior period segment amounts have been revised to reflect the adoption of ASC 842.



	FMS		DTS	SCS	Eliminations		Total
	(In thousands)
For the three months ended March 31, 2019
Revenue from external customers	$	1,195,035	349,621	635,671	—		2,180,327
Inter-segment revenue	156,564		—	—	(156,564	)	—
Total revenue	$	1,351,599	349,621	635,671	(156,564	)	2,180,327

Segment EBT	$	60,911	17,412	32,317	(17,302	)	93,338
Unallocated CSS							(12,547		)
Non-operating pension costs⁽¹⁾							(6,462		)
Restructuring and other items, net ⁽²⁾							(6,178		)
Earnings from continuing operations before income taxes							$	68,151

Segment capital expenditures paid⁽³⁾	$	1,006,129	343	12,756	—		1,019,228
Unallocated CSS capital expenditures paid							7,483
Capital expenditures paid							$	1,026,711


For the three months ended March 31, 2018
Revenue from external customers	1,110,528		298,970	494,707	—		1,904,205
Inter-segment revenue	132,522		—	—	(132,522	)	—
Total revenue	1,243,050		298,970	494,707	(132,522	)	1,904,205

Segment EBT	54,343		13,052	25,511	(13,272	)	79,634
Unallocated CSS							(10,592		)
Non-operating pension costs⁽¹⁾							(1,222		)
Restructuring and other items, net ⁽²⁾							(15,121		)
Earnings from continuing operations before income taxes							$	52,699

Segment capital expenditures paid ⁽³⁾	645,369		249	12,293	—		657,911
Unallocated CSS capital expenditures paid							4,833
Capital expenditures paid							$	662,744

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


(2)	See Note 14, "Other Items Impacting Comparability," for additional information.


(3)	Excludes revenue earning equipment acquired under finance leases.