Segment Reporting and Related Disclosures

12 Months Ended

May. 31, 2015

Segment Reporting [Abstract]

Segment Reporting and Related Disclosures

Segment Reporting and Related Disclosures

Accounting guidance establishes reporting standards for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. In order to determine our operating segments, we considered the following: an operating segment is a component of an enterprise (i) that engages in business activities from which it may earn revenues and incur expenses, (ii) whose operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and (iii) for which discrete financial information is available. In accordance with this guidance, we have identified two operating segments: our T&M and DP businesses.

In the past, we concluded that although we had separate operating segments for T&M and DP equipment, these two segments could be aggregated into a single reportable segment because they had similar economic characteristics and qualitative factors. However, as a result of a change in economic characteristics in fiscal 2015 in our T&M segment, primarily attributable to the expiration of the Keysight agreement and greater competition in the marketplace, we no longer expect that similar economic characteristics and qualitative factors will continue in the future. As such, management concluded that the operating segments should no longer be aggregated. Following the change in the composition of our reportable operating segments, we restated the segment information for fiscal 2014 and fiscal 2013.

Our equipment pool, based on acquisition cost, comprised $434,963 of T&M equipment and $37,824 of DP equipment at May 31, 2015, and $421,128 of T&M equipment and $37,911 of DP equipment at May 31, 2014. Additional segment asset information is not available.

Revenues for these operating segments were as follows for the fiscal year ended May 31:

	T&M		DP		Total
2015
Rentals and leases	$	111,327	$	17,928	$	129,255
Sales of equipment and other revenues	107,270		1,804		109,074
Segment and consolidated total	$	218,597	$	19,732	$	238,329
2014
Rentals and leases	$	120,629	$	16,788	$	137,417
Sales of equipment and other revenues	101,898		1,822		103,720
Segment and consolidated total	$	222,527	$	18,610	$	241,137
2013
Rentals and leases	$	120,846	$	15,745	$	136,591
Sales of equipment and other revenues	109,700		2,440		112,140
Segment and consolidated total	$	230,546	$	18,185	$	248,731

Depreciation of rental and lease equipment for these operating segments was as follows for the fiscal year ended May 31:

	2015		2014		2013
T&M	$	52,278	$	52,652	$	52,692
DP	4,167		4,382		4,103
Segment and consolidated total	$	56,445	$	57,034	$	56,795

Amortization expense is not material and is included in SG&A expenses.

We consider the marginal contribution as our measure of segment profit or loss. The marginal contribution is calculated as operating revenue less operating costs and variable SG&A expenses. Marginal contribution for these operating segments was as follows for the fiscal year ended May 31:

	2015		2014		2013
T&M	$	50,410	$	58,924	$	62,350
DP	6,914		5,962		5,896
Total marginal contribution of operating segments	57,324		64,886		68,246
Deduct:
Fixed SG&A expenses	34,396		32,747		31,535
Add:
Interest income, net	332		387		402
Other income	1,390		—		—
Consolidated income before income taxes	$	24,650	$	32,526	$	37,113

No single customer accounted for more than 10% of total revenues during fiscal 2015, 2014 or 2013. We conduct rental, leasing and sales activity in foreign countries. Selected country information is presented below:

Year ended May 31,	2015		2014		2013
Revenues: 1
U.S.	$	200,323	$	203,806	$	211,745
Other 2	38,006		37,331		36,986
Total	$	238,329	$	241,137	$	248,731

As of May 31,	2015		2014		2013
Net Long Lived Assets: 3
U.S.	$	197,514	$	188,343	$	198,956
Other 2	47,277		46,667		49,726
Total	$	244,791	$	235,010	$	248,682

¹  Revenues by country are based on the shipping destination.

²  Other consists of countries other than the U.S. Each foreign country individually accounts for less than 10% of the total consolidated revenues and net long-lived assets.

³  Net long-lived assets include rental and lease equipment and other property, net of accumulated depreciation and amortization.