NOTE 5. SEGMENT REPORTING

The Company’s four reportable segments are (1) its modular building and portable storage segment (“Mobile Modular”); (2) its electronic test equipment segment (“TRS-RenTelco”); (3) its containment solutions for the storage of hazardous and non-hazardous liquids and solids segment (“Adler Tanks”); and (4) its classroom manufacturing segment selling modular buildings used primarily as classrooms in California (“Enviroplex”). The operations of each of these segments are described in Part I – Item 1, “Business,” and the accounting policies of the segments are described in “Note 2 – Significant Accounting Policies” in the Company’s annual report on Form 10-K for the year ended December 31, 2016. Management focuses on several key measures to evaluate and assess each segment’s performance, including rental revenue growth, gross profit, income from operations and income before provision for income taxes. Excluding interest expense, allocations of revenue and expense not directly associated with one of these segments are generally allocated to Mobile Modular, TRS-RenTelco and Adler Tanks based on their pro-rata share of direct revenues. Interest expense is allocated among Mobile Modular, TRS-RenTelco and Adler Tanks based on their pro-rata share of average rental equipment at cost, intangible assets, accounts receivable, deferred income and customer security deposits. The Company does not report total assets by business segment. Summarized financial information for the six months ended June 30, 2017 and 2016 for the Company’s reportable segments is shown in the following table:

(dollar amounts in thousands)	Mobile Modular			TRS- RenTelco			Adler Tanks			Enviroplex ¹			Consolidated
Six Months Ended June 30,
2017
Rental revenues	$	68,684		$	39,551		$	29,696		$ —			$	137,931
Rental related services revenues		23,554			1,312			11,865		—				36,731
Sales and other revenues		12,703			10,990			1,153			4,911			29,757
Total revenues		104,941			51,853			42,714			4,911			204,419
Depreciation of rental equipment		10,666			16,071			7,884		—				34,621
Gross profit		47,578			23,847			19,832			1,624			92,881
Selling and administrative expenses		27,617			11,019			14,528			2,049			55,213
Income (loss) from operations		19,961			12,828			5,304			(425	)		37,668
Interest (expense) income allocation		(3,289	)		(1,126	)		(1,515	)		192			(5,738	)
Income (loss) before provision for income taxes		16,672			11,939			3,789			(233	)		32,167
Rental equipment acquisitions		21,531			25,510			2,558		—				49,599
Accounts receivable, net (period end)		57,268			18,443			15,918			4,910			96,539
Rental equipment, at cost (period end)		782,503			249,935			309,784						1,342,222
Rental equipment, net book value (period end)		551,101			96,547			215,559						863,207
Utilization (period end) ²		75.7	%		61.6	%		55.4	%
Average utilization ²		76.7	%		62.3	%		53.4	%
2016
Rental revenues	$	62,792		$	41,197		$	29,290		$ —			$	133,279
Rental related services revenues		23,337			1,501			12,068		—				36,906
Sales and other revenues		8,634			13,194			644			4,147			26,619
Total revenues		94,763			55,892			42,002			4,147			196,804
Depreciation of rental equipment		10,347			18,386			8,038		—				36,771
Gross profit		41,287			22,558			19,077			1,489			84,411
Selling and administrative expenses		24,798			11,343			14,155			1,784			52,080
Income (loss) from operations		16,489			11,215			4,922			(295	)		32,331
Interest (expense) income allocation		(3,602	)		(1,340	)		(1,719	)		115			(6,546	)
Income (loss) before provision for income taxes		12,887			9,949			3,203			(180	)		25,859
Rental equipment acquisitions		26,448			15,373			550		—				42,371
Accounts receivable, net (period end)		52,362			23,098			15,757			4,643			95,860
Rental equipment, at cost (period end)		761,125			251,080			310,089						1,322,294
Rental equipment, net book value (period end)		544,132			94,320			229,970						868,422
Utilization (period end) ²		75.7	%		59.7	%		46.8	%
Average utilization ²		76.0	%		59.5	%		49.7	%

1.	Gross Enviroplex sales revenues were $4,911 and $4,147 for the six months ended June 30, 2017 and 2016, respectively, with no inter-segment sales to Mobile Modular requiring elimination in consolidation.

Utilization is calculated each month by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding accessory equipment and for Mobile Modular and Adler Tanks excluding new equipment inventory. The Average Utilization for the period is calculated using the average costs of rental equipment.

No single customer accounted for more than 10% of total revenues for the six months ended June 30, 2017 and 2016. Revenues from foreign country customers accounted for 5% of the Company’s total revenues for the same periods.