Domestic and Foreign Operations

Business Unit Segment Information

Segment information is presented in accordance with a "management approach," which designates the internal reporting used by the chief operating decision maker for making decisions and assessing performance as the source of the Company's reportable segments. The Company's segments are organized in a manner consistent with which separate financial information is available and evaluated regularly by the chief operating decision-maker ("CODM") in deciding how to allocate resources and in assessing the Company's overall performance.

An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses, and about which separate financial information is regularly evaluated by the CODM. The CODM is the Company's president and chief executive officer. The business is managed based on regions administered by executive vice presidents. Each of the operating segments is directly responsible for revenue and expenses related to their operations including direct regional administrative costs. Finance, information technology, human resources, and legal are shared functions that are not allocated back to the two operating segments. The CODM assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest, taxes, and depreciation and amortization, but does not evaluate operating segments using discrete asset information. There are no inter-segment transactions and the Company does not allocate interest and other income, interest expense, depreciation and amortization or taxes to operating segments. The accounting policies for segment reporting are the same as for the Company as a whole.

In the first quarter of 2017, the Company changed its internal reporting segment information reported to our CODM. The operating segments are internally reported as region one (Commercial) and region two (Airports). All prior periods presented have been restated to reflect the new internal reporting to the CODM.

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Region one (Commercial) encompasses our services in healthcare facilities, municipalities, including meter revenue collection and enforcement services, government facilities, hotels, commercial real estate, residential communities, retail, colleges and universities, as well as ancillary services such as shuttle and transportation services, valet services, taxi and livery dispatch services and event planning, including shuttle and transportation services.


•	Region two (Airports) encompasses our services at all major airports as well as ancillary services, which includes shuttle and transportation services and valet services.


•	"Other" consists of ancillary revenue that is not specifically identifiable to a region and certain unallocated items, such as and including prior year insurance reserve adjustments and other corporate items.

The following is a summary of revenues (excluding reimbursed management contract revenue) and gross profit by operating segment for the years ended December 31, 2017, 2016 and 2015:



	Year Ended December 31,
	2017			Gross Margin		2016			Gross Margin		2015			Gross Margin
Parking services revenue
Region One
Lease contracts	$	433.8				$	420.3				$	447.1
Management contracts	250.0					248.3					238.7
Total Region One	683.8					668.6					685.8
Region Two
Lease contracts	129.3					124.7					123.8
Management contracts	89.1					88.0					100.5
Total Region Two	218.4					212.7					224.3
Other
Lease contracts	—					—					—
Management contracts	9.1					10.5					11.1
Total Other	9.1					10.5					11.1
Reimbursed management contract revenue	679.2					676.6					650.6
Total parking services revenue	$	1,590.5				$	1,568.4				$	1,571.8
Gross Profit
Region One
Lease contracts	35.8			8.3	%	32.6			7.8	%	35.8			8.0	%
Management contracts	96.9			38.8	%	95.7			38.5	%	93.7			39.3	%
Total Region One	132.7					128.3					129.5
Region Two
Lease contracts	6.7			5.2	%	5.7			4.5	%	5.4			4.4	%
Management contracts	26.2			29.2	%	24.6			28.0	%	24.9			20.0	%
Total Region Two	32.9					30.3					30.3
Other
Lease contracts	2.2			—	%	1.1			—	%	(3.1		)	11.8	%
Management contracts	17.5			192.3	%	16.7			159.0	%	13.4			120.5	%
Total Other	19.7					17.8					10.3
Total gross profit	185.3					176.4					170.1
General and administrative expenses	82.9					90.0					97.3
General and administrative expense percentage of gross profit	44.7		%			51.0		%			57.0		%
Depreciation and amortization	21.0					33.7					34.0
Operating income	81.4					52.7					38.8
Other expenses (income):
Interest expense	9.2					10.5					12.7
Interest income	(0.6		)			(0.5		)			(0.2		)
Gain on sale of a business	(0.1		)			—					(0.5		)
Equity in losses from investment in unconsolidated entity	0.7					0.9					1.7
Total other expenses	9.2					10.9					13.7
Earnings before income taxes	72.2					41.8					25.1
Income tax expense	27.7					15.8					4.8
Net income	44.5					26.0					20.3
Less: Net income attributable to noncontrolling interest	3.3					2.9					2.9
Net income attributable to SP Plus Corporation	$	41.2				$	23.1				$	17.4