Segment Information

9 Months Ended

Sep. 30, 2017

11. Segment Information

As of September 30, 2017, 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) stand-alone pre-owned vehicle specialty retail locations that buy and sell used vehicles, perform vehicle repair and maintenance services, and arrange finance and insurance products under the EchoPark and other pre-owned brands (the “Pre-Owned Stores 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 and President; (2) the Company’s Executive Vice President and Chief Financial Officer; and (3) the Company’s Executive Vice President of Operations. Sonic has determined that its operating segments also represent its reportable segments.

Reportable segment revenues and segment income (loss) for the three and nine months ended September 30, 2017 and 2016 are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In thousands)
Revenues:
Franchised Dealerships	$	2,448,574	$	2,514,240	$	7,051,291	$	7,077,666
Pre-Owned Stores		57,127		43,688		147,978		97,200
Total consolidated revenues	$	2,505,701	$	2,557,928	$	7,199,269	$	7,174,866

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(In thousands)
Segment income (loss) (1):
Franchised Dealerships	$	51,384		$	48,265		$	125,397		$	141,119
Pre-Owned Stores		(4,504	)		(4,010	)		(17,429	)		(10,639	)
Total segment income (loss)		46,880			44,255			107,968			130,480
Interest expense, other, net		(13,028	)		(13,016	)		(39,200	)		(37,560	)
Other income (expense), net		4			11			(14,490	)		120
Income (loss) from continuing operations before taxes	$	33,856		$	31,250		$	54,278		$	93,040

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