SEGMENT REPORTING

We operate in two business segments: Fleet Management Solutions (FMS), which provides full service leasing, commercial rental, contract maintenance, contract-related maintenance of trucks, tractors and trailers to customers principally in the U.S., Canada and the U.K.; and Supply Chain Solutions (SCS), which provides comprehensive supply chain solutions including distribution and transportation services in North America and Asia. The SCS segment also provides dedicated services, which includes vehicles and drivers as part of a dedicated transportation solution in the U.S.

Our primary measurement of segment financial performance, defined as “Earnings Before Tax” (EBT) from continuing operations, includes an allocation of CSS and excludes non-operating pension costs, restructuring and other charges, net described in Note 4, “Restructuring and Other Charges (Recoveries)” and excludes the items discussed in Note 25, “Other Items Impacting Comparability.” CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services, public affairs, information technology, health and safety, legal 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 business segment and each operating segment within each business 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 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 in several ways, 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 SCS segment. 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 customers (equipment contribution) are included in both FMS and SCS 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. Each business segment follows the same accounting policies as described in Note 1, “Summary of Significant Accounting Policies.” Business segment revenue and EBT from continuing operations is as follows:



	Years ended December 31,
	2014			2013		2012
	(In thousands)
Revenue:
Fleet Management Solutions:
Full service lease	$	2,102,703		2,016,570		1,956,812
Commercial rental	836,719			753,456		738,564
Full service lease and commercial rental	2,939,422			2,770,026		2,695,376
Contract maintenance	182,411			178,001		184,149
Contract-related maintenance	196,841			186,580		170,323
Other	71,064			72,029		71,955
Fuel services revenue	787,887			829,586		854,578
Total Fleet Management Solutions from external customers	4,177,625			4,036,222		3,976,381
Inter-segment revenue	478,133			458,464		428,944
Fleet Management Solutions	4,655,758			4,494,686		4,405,325
Supply Chain Solutions from external customers	2,461,149			2,383,063		2,280,586
Eliminations	(478,133		)	(458,464	)	(428,944	)
Total revenue	$	6,638,774		6,419,285		6,256,967

EBT:
Fleet Management Solutions	$	434,018		344,049		307,628
Supply Chain Solutions	122,356			129,959		115,193
Eliminations	(41,361		)	(35,489	)	(29,265	)
	$	515,013		438,519		393,556
Unallocated Central Support Services	(51,740		)	(45,493	)	(42,348	)
Non-operating pension costs	(9,768		)	(24,285	)	(31,423	)
Restructuring and other (charges) recoveries, net and other items⁽¹⁾	(114,956		)	154		(16,668	)
Earnings before income taxes from continuing operations	$	338,549		368,895		303,117

______________


(1)	See Note 25, “Other Items Impacting Comparability,” for a discussion of items excluded from our primary measure of segment performance.

The following table sets forth share-based compensation, depreciation expense, gains on vehicle sales, net, other non-cash charges, net, interest expense (income), capital expenditures and total assets for the years ended December 31, 2014, 2013 and 2012 as provided to the chief operating decision-maker for each of Ryder’s reportable business segments:



	FMS			SCS		CSS		Eliminations		Total
	(In thousands)
2014
Share-based compensation expense	$	4,895		4,381		11,629		—		20,905
Depreciation expense ⁽¹⁾	$	1,011,227		28,847		185		—		1,040,259
Gains on vehicles sales, net	$	(126,410	)	(414	)	—		—		(126,824	)
Pension lump sum settlement expense	$	76,239		6,612		14,380		—		97,231
Amortization expense and other non-cash charges, net	$	19,936		1,825		25,502		—		47,263
Interest expense (income) ⁽²⁾	$	144,583		(2,327	)	(181	)	—		142,075
Capital expenditures paid ⁽³⁾	$	2,166,319		22,824		70,021		—		2,259,164
Total assets	$	8,818,816		898,196		198,734		(239,760	)	9,675,986
2013
Share-based compensation expense	$	4,979		4,934		9,397		—		19,310
Depreciation expense ⁽¹⁾	$	926,724		29,560		857		—		957,141
Gains on vehicles sales, net	$	(96,011	)	(164	)	—		—		(96,175	)
Amortization expense and other non-cash charges, net	$	19,071		3,640		33,678		—		56,389
Interest expense (income) ⁽²⁾	$	139,288		(1,864	)	(228	)	—		137,196
Capital expenditures paid ⁽³⁾	$	2,092,544		22,677		25,243		—		2,140,464
Total assets	$	8,309,149		869,074		160,249		(234,690	)	9,103,782
2012
Share-based compensation expense	$	5,359		4,433		9,072		—		18,864
Depreciation expense ⁽¹⁾	$	910,352		28,275		1,050		—		939,677
Gains on vehicle sales, net	$	(89,075	)	(33	)	—		—		(89,108	)
Amortization expense and other non-cash charges, net	$	15,567		2,768		30,874		—		49,209
Interest expense (income) ⁽²⁾	$	140,747		11		(201	)	—		140,557
Capital expenditures paid ⁽³⁾	$	2,090,443		19,278		23,514		—		2,133,235
Total assets	$	7,556,509		807,935		144,355		(189,820	)	8,318,979

____________


(1)	Depreciation expense associated with CSS assets was allocated to business segments based upon estimated and planned asset utilization. Depreciation expense totaling $21 million, $14 million, and $12 million during 2014, 2013, and 2012, respectively, associated with CSS assets was allocated to other business segments.


(2)	Interest expense was primarily allocated to the FMS segment since such borrowings were used principally to fund the purchase of revenue earning equipment used in FMS; however, interest expense (income) was also reflected in SCS based on targeted segment leverage ratios.


(3)	Excludes acquisition payments of $10 million, $2 million, and $5 million in 2014, 2013, and 2012, respectively, comprised primarily of long-lived assets. See Note 3, “Acquisitions,” for additional information.

Geographic Information



	Years ended December 31,
	2014		2013	2012
	(In thousands)
Revenue:
United States	$	5,614,037	5,411,376	5,231,899
Foreign:
Canada	435,280		455,440	477,495
Europe	400,853		372,209	384,105
Mexico	158,481		161,279	143,282
Asia	30,123		18,981	20,186
	1,024,737		1,007,909	1,025,068
Total	$	6,638,774	6,419,285	6,256,967
Long-lived assets:
United States	$	6,583,508	5,996,646	5,261,622
Foreign:
Canada	530,316		529,880	557,351
Europe	553,467		568,850	534,728
Mexico	26,230		29,008	24,973
Asia	521		279	787
	1,110,534		1,128,017	1,117,839
Total	$	7,694,042	7,124,663	6,379,461

Certain Concentrations

We have a diversified portfolio of customers across a full array of transportation and logistics solutions and across many industries. We believe this will help to mitigate the impact of adverse downturns in specific sectors of the economy. Our portfolio of full service lease and commercial rental customers is not concentrated in any one particular industry or geographic region. We derive a significant portion of our SCS revenue from the automotive industry, mostly from manufacturers and suppliers of original equipment parts. During 2014, 2013 and 2012, the automotive industry accounted for approximately 27%, 29% and 30%, respectively, of SCS total revenue.