Segment Reporting and Related Disclosures

12 Months Ended

May 31, 2016

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 determined that we no longer expected similar economic characteristics and qualitative factors to 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 at the end of fiscal 2015, we restated the segment information for fiscal 2014.

Our equipment pool, based on acquisition cost, comprised $403,154 of T&M equipment and $31,759 of DP equipment at May 31, 2016, and $434,963 of T&M equipment and $37,824 of DP equipment at May 31, 2015. 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
2016
Rentals and leases	$	105,850	$	17,935	$	123,785
Sales of equipment and other revenues	49,518		2,030		51,548
Segment and consolidated total	$	155,368	$	19,965	$	175,333
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

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

	2016		2015		2014
T&M	$	51,669	$	52,278	$	52,652
DP	4,262		4,167		4,382
Segment and consolidated total	$	55,931	$	56,445	$	57,034

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 direct and allocated SG&A expenses. Marginal contribution for these operating segments was as follows for the fiscal year ended May 31:

	2016			2015		2014
T&M	$	38,527		$	50,410	$	58,924
DP	6,695			6,914		5,962
Total marginal contribution of operating segments	45,222			57,324		64,886
Deduct:
Unallocated SG&A expenses	37,139			34,396		32,747
Add:
Interest income, net	(329		)	332		387
Other income	33			1,390		—
Consolidated income before income taxes	$	7,787		$	24,650	$	32,526

No single customer accounted for more than 10% of total revenues during fiscal 2016, 2015 or 2014. We conduct rental, leasing and sales activity in foreign countries. Selected country information is presented below:

Year ended May 31,	2016		2015		2014
Revenues: 1
U.S.	$	141,535	$	200,323	$	203,806
Other 2	33,798		38,006		37,331
Total	$	175,333	$	238,329	$	241,137

As of May 31,	2016		2015		2014
Net Long Lived Assets: 3
U.S.	$	168,331	$	197,514	$	188,343
Other 2	43,583		47,277		46,667
Total	$	211,914	$	244,791	$	235,010

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.