Business Segment Information

9 Months Ended

Sep. 30, 2019

Note 9. Business Segment Information

The Company is organized functionally in geographic operating segments. Accordingly, management focuses its attention on revenues, directly related cost of transportation and other expenses for each of the Company’s three primary sources of revenue, salaries and other operating expenses, operating income, identifiable assets, capital expenditures and equity generated in each of these geographical areas when evaluating the effectiveness of geographic management. Transactions among the Company’s various offices are conducted using the same arms-length pricing methodologies the Company uses when its offices transact business with independent agents. Certain costs are allocated among the segments based on the relative value of the underlying services, which can include allocation based on actual costs incurred or estimated cost plus a profit margin.

Financial information regarding the Company’s operations by geographic area is as follows:

	UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the three months ended September 30, 2019:
Revenues¹	$	692,229		88,088		38,341		624,351		196,569		320,769		115,397		(889	)		2,074,855
Directly related cost of transportation and other expenses²	$	389,254		51,420		22,990		489,195		145,345		221,149		81,592		(446	)		1,400,499
Salaries and other operating expenses³	$	210,767		25,731		14,547		70,410		32,482		86,156		28,151		(438	)		467,806
Operating income	$	92,208		10,937		804		64,746		18,742		13,464		5,654		(5	)		206,550
Identifiable assets at period end	$	2,059,345		128,336		72,029		489,322		164,976		563,289		226,657		2,499			3,706,453
Capital expenditures	$	7,644		513		833		523		631		5,119		258		—			15,521
Equity	$	1,578,682		60,526		27,217		216,061		77,733		169,450		111,355		(31,737	)		2,209,287
For the three months ended September 30, 2018:
Revenues¹	$	629,043		92,875		43,443		748,589		205,392		327,212		118,047		(73,654	)		2,090,947
Directly related cost of transportation and other expenses²	$	345,236		58,464		27,635		601,699		158,226		227,418		83,992		(73,037	)		1,429,633
Salaries and other operating expenses³	$	204,240		23,935		13,399		74,067		31,623		84,136		27,384		(624	)		458,160
Operating income	$	79,567		10,476		2,409		72,823		15,543		15,658		6,671		7			203,154
Identifiable assets at period end	$	1,694,556		174,402		53,322		540,465		156,887		508,855		212,817		(6,504	)		3,334,800
Capital expenditures	$	6,889		301		227		1,280		910		751		1,375		—			11,733
Equity	$	1,334,952		66,399		25,663		197,939		86,048		157,973		119,718		(31,360	)		1,957,332

	UNITED STATES		OTHER NORTH AMERICA		LATIN AMERICA		NORTH ASIA		SOUTH ASIA		EUROPE		MIDDLE EAST, AFRICA AND INDIA		ELIMI- NATIONS			CONSOLI- DATED
For the nine months ended September 30, 2019:
Revenues¹	$	2,033,088		265,035		111,277		1,879,155		555,128		952,790		336,383		(2,371	)		6,130,485
Directly related cost of transportation and other expenses²	$	1,142,701		157,997		64,149		1,475,395		407,642		657,720		236,184		(1,468	)		4,140,320
Salaries and other operating expenses³	$	636,243		76,283		41,342		208,781		97,324		258,339		86,385		(884	)		1,403,813
Operating income	$	254,144		30,755		5,786		194,979		50,162		36,731		13,814		(19	)		586,352
Identifiable assets at period end	$	2,059,345		128,336		72,029		489,322		164,976		563,289		226,657		2,499			3,706,453
Capital expenditures	$	23,544		1,509		1,071		1,167		1,235		8,015		1,402		—			37,943
Equity	$	1,578,682		60,526		27,217		216,061		77,733		169,450		111,355		(31,737	)		2,209,287
For the nine months ended September 30, 2018:
Revenues¹	$	1,790,869		257,206		122,170		2,065,405		560,070		977,967		342,589		(213,508	)		5,902,768
Directly related cost of transportation and other expenses²	$	957,997		157,599		75,694		1,640,724		423,612		677,167		242,208		(211,931	)		3,963,070
Salaries and other operating expenses³	$	620,029		70,036		38,996		211,576		92,409		248,906		79,782		(1,592	)		1,360,142
Operating income	$	212,843		29,571		7,480		213,105		44,049		51,894		20,599		15			579,556
Identifiable assets at period end	$	1,694,556		174,402		53,322		540,465		156,887		508,855		212,817		(6,504	)		3,334,800
Capital expenditures	$	16,092		4,020		899		2,623		1,934		9,167		2,907		—			37,642
Equity	$	1,334,952		66,399		25,663		197,939		86,048		157,973		119,718		(31,360	)		1,957,332

In 2019, the Company revised its process to record the transfer, between its geographic operating segments, of revenues and the directly related cost of transportation and other expenses for freight service transactions between Company origin and destination locations. This change better aligns revenue reporting with the location where the services are performed, as well as the transactional reporting being developed as part of the Company’s new accounting systems and processes. The change in presentation had no impact on consolidated or segment operating income. The 2019 results also include the effect of changing the presentation of certain import services from a net to a gross basis, which increased segment revenues and directly related operating expenses but did not change operating income. The impact of these changes on reported segment revenues was immaterial and prior year segment revenues have not been revised.

²	Directly related cost of transportation and other expenses totals operating expenses from airfreight services, ocean freight and ocean services and customs brokerage and other services as shown in the condensed consolidated statements of earnings.

³	Salaries and other operating expenses totals salaries and related, rent and occupancy, depreciation and amortization, selling and promotion and other as shown in the condensed consolidated statements of earnings.