SEGMENT REPORTING

Our operating segments are aggregated into reportable business segments based upon similar economic characteristics, products, services, customers and delivery methods. We report our financial performance in three business segments: (1) FMS, which provides full service leasing, commercial rental, contract maintenance, and contract-related maintenance of trucks, tractors and trailers to customers principally in the U.S., Canada and the U.K.; (2) DTS, which provides vehicles and drivers as part of a dedicated transportation solution in the U.S.; and (3) SCS, which provides comprehensive supply chain solutions including distribution and transportation services in North America and Asia. Dedicated transportation services provided as part of an integrated, multi-service, supply chain solution to SCS customers are reported in the SCS business segment.

Our primary measurement of segment financial performance, defined as “Earnings Before Tax” (EBT) from continuing operations, includes an allocation of Central Support Services (CSS) and excludes non-operating pension costs, restructuring and other charges (recoveries), net discussed in Note 4, "Restructuring and Other Charges" and items discussed in Note 24, "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, marketing 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, DTS 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 under various methods, 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 DTS and SCS segments. 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 the business segment which served the customer 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,
	2016			2015		2014
	(In thousands)
Revenue:
Fleet Management Solutions:
Full service lease	$	2,362,040		2,220,929		2,102,703
Commercial rental	808,912			900,624		836,719
Full service lease and commercial rental	3,170,952			3,121,553		2,939,422
Contract maintenance	197,688			190,989		182,411
Contract-related maintenance	217,819			200,148		196,841
Other	78,042			77,625		71,064
Fuel services revenue	463,738			538,277		787,887
Total Fleet Management Solutions from external customers	4,128,239			4,128,592		4,177,625
Inter-segment revenue	427,955			417,100		478,133
Fleet Management Solutions	4,556,194			4,545,692		4,655,758
Dedicated Transportation Solutions	1,020,895			895,538		899,802
Supply Chain Solutions	1,637,850			1,547,763		1,561,347
Eliminations	(427,955		)	(417,100	)	(478,133	)
Total revenue	$	6,786,984		6,571,893		6,638,774

EBT:
Fleet Management Solutions	$	370,754		462,109		433,736
Dedicated Transportation Solutions	63,611			45,800		44,556
Supply Chain Solutions	105,561			93,754		77,800
Eliminations	(50,148		)	(47,193	)	(41,361	)
	$	489,778		554,470		514,731
Unallocated Central Support Services	(40,945		)	(48,510	)	(51,740	)
Non-operating pension costs	(29,728		)	(19,186	)	(9,768	)
Restructuring and other charges, net and other items ⁽¹⁾	(12,724		)	(17,559	)	(114,956	)
Earnings before income taxes from continuing operations	$	406,381		469,215		338,267

______________


(1)	See Note 24, “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 expense, depreciation expense, used vehicle sales, net, amortization expense and other non-cash charges, net, interest expense (income), capital expenditures paid and total assets for the years ended December 31, 2016, 2015 and 2014, as provided to the chief operating decision-maker for each of Ryder’s reportable business segments:



	FMS			DTS		SCS		CSS		Eliminations		Total
	(In thousands)
2016
Share-based compensation expense	$	5,464		1,254		2,764		9,182		—		18,664
Depreciation expense ⁽¹⁾	$	1,156,888		3,222		25,956		984		—		1,187,050
Used vehicle sales, net	$	(724	)	(90	)	(158	)	—		—		(972	)
Amortization expense and other non-cash charges, net	$	34,652		1,027		3,215		29,366		—		68,260
Interest expense (income) ⁽²⁾	$	151,297		(1,901	)	(1,663	)	110		—		147,843
Capital expenditures paid	$	1,814,146		2,551		64,186		24,274		—		1,905,157
Total assets	$	9,954,452		255,845		713,190		198,394		(219,427	)	10,902,454
2015
Share-based compensation expense	$	5,672		1,155		3,400		10,954		—		21,181
Depreciation expense ⁽¹⁾	$	1,092,750		3,184		25,721		311		—		1,121,966
Used vehicle sales, net	$	(99,758	)	(54	)	(41	)	—		—		(99,853	)
Amortization expense and other non-cash charges, net	$	36,348		1,878		2,971		29,565		—		70,762
Interest expense (income) ⁽²⁾	$	154,276		(1,597	)	(2,174	)	(71	)	—		150,434
Capital expenditures paid	$	2,595,961		3,570		27,841		40,606		—		2,667,978
Total assets	$	10,061,092		275,634		636,647		202,129		(222,922	)	10,952,580
2014
Share-based compensation expense	$	4,895		720		3,661		11,629		—		20,905
Depreciation expense ⁽¹⁾	$	1,018,017		3,211		25,636		185		—		1,047,049
Used vehicle sales, net	$	(115,646	)	5		(419	)	—		—		(116,060	)
Pension lump sum settlement expense	$	76,239		3,335		3,277		14,380		—		97,231
Amortization expense and other non-cash charges, net	$	19,936		516		1,309		25,502		—		47,263
Interest expense (income) ⁽²⁾	$	147,247		(1,520	)	(807	)	(181	)	—		144,739
Capital expenditures paid ⁽³⁾	$	2,166,319		1,883		20,941		70,021		—		2,259,164
Total assets	$	8,998,788		211,388		673,876		193,484		(239,760	)	9,837,776

____________


(1)	Depreciation expense associated with CSS assets was allocated to business segments based upon estimated and planned asset utilization. Depreciation expense totaling $24 million, $22 million and $21 million during 2016, 2015 and 2014, 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 income was also reflected in DTS and SCS based on targeted segment leverage ratios.


(3)	Excludes acquisition payments of $10 million in 2014. See Note 3, “Acquisitions,” for additional information.

Geographic Information



	Years ended December 31,
	2016		2015	2014
	(In thousands)
Revenue:
United States	$	5,892,384	5,603,697	5,614,037
Foreign:
Canada	387,713		408,325	435,280
Europe	339,420		391,339	400,853
Mexico	139,176		139,583	158,481
Asia	28,291		28,949	30,123
	894,600		968,196	1,024,737
Total	$	6,786,984	6,571,893	6,638,774
Long-lived assets:
United States	$	7,854,845	7,817,628	6,790,946
Foreign:
Canada	532,403		504,027	530,316
Europe	472,027		545,630	553,467
Mexico	33,979		31,993	26,230
Asia	338		427	521
	1,038,747		1,082,077	1,110,534
Total	$	8,893,592	8,899,705	7,901,480

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 2016, 2015 and 2014, the automotive industry accounted for approximately 44%, 41% and 43%, respectively, of SCS total revenue.