Segment Information

6 Months Ended

Jun. 30, 2019

As of June 30, 2019, Sonic had two operating segments comprised of: (1) retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle repair and maintenance services, and arrange finance and insurance products (the “Franchised Dealerships Segment”) and (2) pre-owned vehicle specialty retail locations that provide customers an opportunity to search, buy, service, finance and sell pre-owned vehicles (the “EchoPark Segment”).

The operating segments identified above are the business activities of Sonic for which discrete financial information is available and for which operating results are regularly reviewed by Sonic’s chief operating decision maker to assess operating performance and allocate resources. Sonic’s chief operating decision maker is a group of three individuals consisting of: (1) the Company’s Chief Executive Officer; (2) the Company’s President; and (3) the Company’s Chief Financial Officer. Sonic has determined that its operating segments also represent its reportable segments.

Reportable segment revenues and segment income (loss) for the three and six months ended June 30, 2019 and 2018 are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands)
Revenues:
Franchised Dealerships Segment	$	2,322,400	$	2,325,583	$	4,461,971	$	4,594,852
EchoPark Segment	291,681		180,166		541,248		311,671
Total consolidated revenues	$	2,614,081	$	2,505,749	$	5,003,219	$	4,906,523


	Three Months Ended June 30,						Six Months Ended June 30,
	2019		2018		2019		2018
	(In thousands)
Segment income (loss) (1):
Franchised Dealerships Segment (2)	$	48,326	$	66,049	$	121,856	$	89,885
EchoPark Segment (3)	2,129		(27,347)		2,688		(41,672)
Total segment income (loss)	50,455		38,702		124,544		48,213
Interest expense, other, net	(13,628)		(13,375)		(26,481)		(26,831)
Other income (expense), net	(5)		17		95		106
Income (loss) from continuing operations before taxes	$	36,822	$	25,344	$	98,158	$	21,488

(1) Segment income (loss) for each segment is defined as operating income (loss) less interest expense, floor plan.

(2) For the three months ended June 30, 2018, the above amount includes approximately $38.0 million of net gain on the disposal of franchised dealerships and approximately $2.6 million of benefit related to lease exit adjustments, offset partially by approximately $10.3 million of impairment expense and approximately $3.1 million of storm-related physical damage and legal costs.

For the six months ended June 30, 2019, the above amount includes approximately $46.7 million of net gain on the disposal of franchised dealerships and approximately $6.3 million of executive transition costs. For the six months ended June 30, 2018, the above amount includes approximately $39.2 million of net gain on the disposal of franchised dealerships, offset partially by approximately $4.6 million of storm-related physical damage and legal costs, approximately $2.2 million of lease exit charges and approximately $14.0 million of impairment expense.

(3) For the three months ended June 30, 2018, the above amount includes approximately $23.3 million of non-recurring compensation-related charges.

For the six months ended June 30, 2019, the above amount includes approximately $1.9 million of impairment expense. For the six months ended June 30, 2018, the above amount includes approximately $32.5 million of non-recurring compensation-related charges.