10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington DC 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 000-09061

ELECTRO RENT CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

CALIFORNIA	95-2412961
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

6060 Sepulveda Boulevard

Van Nuys, California 91411-2512

(Address of Principal Executive Offices and Zip Code)

(818) 786-2525

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock without par value	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer	¨	Accelerated Filer	x
Non-Accelerated Filer	¨	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

The aggregate market value of the registrant’s stock held by non-affiliates of the registrant as of November 30, 2012, was $297,250,041.

Number of shares of the registrant’s common stock outstanding as of August 14, 2013: 23,996,293.

DOCUMENTS INCORPORATED BY REFERENCE

The information contained in the Proxy Statement with respect to our Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission not later than September 30, 2013 this is required by Part III of the Annual Report on
Form 10-K is incorporated herein for reference.

EXPLANATORY NOTE

Unless otherwise noted, (1) the terms “we”, “us” and “our” refer to Electro Rent Corporation and its subsidiaries, and (2) the terms “Common Stock” and “shareholder(s)” refer to our common stock and the holders of that stock, respectively.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Report. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. We caution investors that any forward-looking statements presented in this Report, or that we may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information currently available to, us. Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include the following: common stock price fluctuations, fluctuations in operating results (including as a result of changing economic conditions), risks associated with technology changes, risks associated with customer solvency, competition, risks associated with international operations, risks associated with our manufacturers and suppliers, dependence on key personnel, control by management and others, risks associated with possible acquisitions and new business ventures and anti-takeover provisions. For further discussion of these and other factors, see Item 1A. “Risk Factors”; Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; and Item 7A. “Quantitative and Qualitative Disclosure About Interest Rates and Currency Rates,” in this Report, and our other filings with the Securities and Exchange Commission.

This Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Report.

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PART I

Item 1. Business.

We are one of the largest global organizations devoted to the rental, lease and sale of new and used electronic test and measurement (“T&M”) equipment. We purchase that equipment from leading manufacturers such as Agilent Technologies, Inc. (“Agilent”) and Tektronix Inc. (“Tektronix”) primarily for use by our customers in the aerospace, defense, telecommunications, electronics, industrial and semiconductor industries. Although it represented only approximately 7% of our revenues in fiscal 2013, we believe our data products (“DP”) division is one of the largest rental companies in the United States for personal computers and servers from manufacturers including Dell, HP/Compaq, IBM, Toshiba and Apple. We have also recently expanded our efforts in the rental, lease and sale of electrical test and inspection equipment used in the industrial industry, which includes electrical contractors and utility companies and their related support services providers.

The Electro Rent Approach. For the most part, customers who purchase or lease equipment from us place orders through our inside sales force, which has access to our proprietary computer system that we update in real time for equipment availability and pricing. In the case of rentals and some leases, we generally use a pool of equipment we have previously purchased for that purpose, or we may add equipment to that pool to fill a lease or rental order if the addition makes economic sense. Our equipment fulfillment team typically can arrange delivery of equipment from our pool to our customers within one or two days of a request. Most of our equipment is technically complex and must be tested and serviced when returned to us. We do most of that testing in house, using a team of experienced technicians and our state of the art calibration laboratory.

Although our customers respond to equipment pricing and availability in making their decisions to choose to work with us, we believe that our success also depends on other factors:

• Customer Responsiveness. Our customer service, responsiveness and expert technical staff provide us a key competitive advantage. Our resale channel for Agilent T&M equipment, for the United States and Canada, has enabled us to substantially expand the number and technical expertise of our T&M sales force, which at approximately 112 persons is the largest among our principal competitors. We believe our management team is the most experienced and stable in the industry, averaging 29 years at Electro Rent. In 2008 and 2009, Forbes magazine named us as one of their “100 Most Trustworthy Companies” out of the more than 8,000 publicly traded companies for what Forbes termed “transparent and conservative accounting practices and solid corporate governance and management.” Also, we were honored as a Frost & Sullivan 2012 Company of the Year.

• Global Platform. Although our customers represent a cross-section of the economy, much of our business is conducted with large companies in the aerospace and defense, semiconductor, electronics and telecommunications industries. As the largest T&M rental, leasing and sales company in North America, and one of the only rental companies in the world with a global platform and key locations in the US, Canada, China and Europe, our size and reach appeals to our multinational customers and assists us in maximizing our equipment utilization and inventory management across different geographic markets.

• Multichannel Offerings. In the last two years, we have expanded our business to offer customers a single source for their equipment acquisitions, whether they want to rent, lease or buy new or used equipment. We believe that we offer the greatest breadth of acquisition options in the industry, allowing our customers to match the appropriate option to their usage and capital needs, budget and other factors, such as accounting rules and regulatory requirements. In addition, spreading costs over multiple channels allows us to maintain the largest sales force among our principal competitors, which in turn broadens and deepens our customer contacts and provides them more technical strength and assistance.

• Inventory Management Systems. To maximize our overall profit from the rental, leasing, and sales of equipment, we manage our equipment pool on an on-going basis by controlling the timing, pricing and mix of our purchases and sales. We acquire new and used equipment to meet current technological standards and current and anticipated customer demand, and we sell our used equipment when we believe that is the most lucrative option. We employ a complex equipment management strategy and our proprietary PERFECT™ software to adjust our inventory and pricing in order to maximize equipment availability, utilization and profitability. We manage each specific equipment class based on a separate assessment of that equipment’s historical and projected life cycle and numerous other factors, including the U.S. and global economy, interest rates and new product launches.

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Our Strategic Growth Initiatives. We believe that our resources and financial infrastructure remain capable of handling a significantly greater volume of business activity without a proportionate increase in expenses. Based on this belief, we have been seeking ways to increase revenues to leverage that infrastructure through internal growth and external acquisitions. Despite the continuing recessionary environment, we have used our strong balance sheet to make significant equipment purchases to meet T&M rental demand, support areas of potential growth and keep our equipment pool technologically up-to-date. We purchased $64.1 million of rental and lease equipment during fiscal 2013, compared to $96.7 million during fiscal 2012, a decline of 33.7% from the unusually high level of fiscal 2012 which reflected rebuilding of our inventory as part of the recovery from the economic downturn of 2009 and 2010. Our equipment purchases have allowed us to expand and upgrade our equipment base with equipment that is limited in supply but growing in demand, enhancing our ability to meet the needs of a wide range of customers, as well as expand our equipment pool offerings in some related areas such as telecommunications and industrial products.

Our Markets and Competition. We believe the North American general purpose test equipment rental market generates in excess of $300 million of annual rental and lease revenue, and is characterized by intense competition from several large competitors. Although no single competitor holds a dominant market share in North America, our primary competitors in the T&M rental area include McGrath RentCorp, Continental Resources, Inc., Test Equity LLC, and Microlease plc. We compete for rental business with Microlease plc and Livingston Group Ltd. in Europe, and ORIX Corporation and a number of local operators in Asia. These entities also compete with us in leasing T&M equipment, as do banks, vendors and other financing sources. In addition, in selling used equipment, we may also compete with sales of new equipment by our suppliers, including Agilent and Tektronix, and their other distributors. Our competitors engage in aggressive pricing for both rentals and sales. In order to maintain or increase our market share, we may choose to lower our prices, resulting in lower revenues and decreased profitability.

The market for the lease and rental of computers and servers is highly fragmented, although our principal competitors include SmartSource Rentals, Source One Rentals, Rentex and CRE Rentals. The computer rental market has been characterized by intense competition that has led to industry consolidation. We acquired two competitors during the last fifteen years and SmartSource, our largest competitor, has expanded primarily due to its numerous acquisitions. While we have focused on the rental of large quantities of computers to unique customers, SmartSource concentrates more on audio visual and trade show technology rentals.

Our Backlog. As of May 31, 2013, we had a sales order backlog for new T&M equipment of $7.6 million, compared to $8.4 million as of May 31, 2012 and $17.0 million as of May 31, 2011. The decline in our backlog for fiscal 2013 is primarily due to shorter manufacturing lead time and a decline in new sales orders, reflecting lower demand.

Backlog represents the cumulative balance, at a given point in time, of recorded customer sales orders that have not yet been shipped or recognized as sales. Backlog increases when an order is received, and declines when we recognize sales. Although backlog consists of firm orders for which goods and services are yet to be provided, customers can, and sometimes do, terminate or modify these orders. Backlog, on any particular date, while indicative of short-term revenue performance, is not necessarily a reliable indicator of medium or long-term revenue performance.

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International Operations. We have rental, leasing and sales activity in foreign countries, which in the aggregate accounted for approximately 14.9% of our revenues in 2013, 13.8% in 2012 and 12.6% in 2011. Selected financial information regarding our international operations is presented below:

Fiscal Year ended May 31, (in thousands)	2013		2012		2011
Revenues: 1
U.S.	$	211,745	$	214,354	$	199,861
Other 2		36,986		34,200		28,868
Total	$	248,731	$	248,554	$	228,729

As of May 31, (in thousands)	2013		2012		2011
Net Long Lived Assets: 3
U.S.	$	198,956	$	207,449	$	176,268
Other 2		49,726		49,595		33,491
Total	$	248,682	$	257,044	$	209,759

¹  Revenues by country are based on the location of shipping destination, whether the order originates in the U.S. parent or a foreign subsidiary.

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

³  Net long-lived assets include rental and lease equipment and other property, net of accumulated depreciation and amortization. Subsequent to the issuance of the May 31, 2012 consolidated financial statements, we determined that, for geographic disclosure purposes, the previously reported amount of net long-lived assets as of May 31, 2012 and 2011 should not have included goodwill or intangibles (which totaled $4,310 at May 31, 2012 and $4,323 at May 31, 2011) and, accordingly, such amount has been excluded from the May 31, 2012 and 2011 balances, respectively, displayed in the table above.

For risks relating to our international operations, see “Item 1A. Risk Factors – Risks Associated with International Operations.”

Other Information about Us. The following table shows, for each of the last three fiscal years, revenues from rentals and leases and sales of equipment and other revenues for our T&M and DP operating segments:

Fiscal Year ended May 31, (in thousands)	T&M		DP		Total
2013
Rentals and leases	$	120,846	$	15,745	$	136,591
Sales of equipment and other revenues		109,700		2,440		112,140
	$	230,546	$	18,185	$	248,731
2012
Rentals and leases	$	113,540	$	16,197	$	129,737
Sales of equipment and other revenues		116,417		2,400		118,817
	$	229,957	$	18,597	$	248,554
2011
Rentals and leases	$	101,273	$	16,789	$	118,062
Sales of equipment and other revenues		108,450		2,217		110,667
	$	209,723	$	19,006	$	228,729

The majority of our rental equipment inventory not out on rent is located at our Van Nuys, California warehouse and is serviced by an ISO9001:2000 and AS9100 Revision B registered and compliant laboratory. We also service our customers through sales offices and calibration and service centers in the United States, Canada, China and Europe, which are linked by a proprietary on-line computer system. These centers also function as depots for the sale of used equipment.

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For additional financial information about our segments, see Note 14 to our consolidated financial statements included in this Form 10-K.

No single customer accounted for more than 10% of our total revenues during fiscal 2013, 2012 or 2011. We do not derive any significant portion of our revenues from direct United States Government contracts.

We have no material patents, trademarks, licenses, franchises or concessions.

At May 31, 2013, we employed approximately 417 individuals. Except in China, where we have 14 employees, none of these employees are members of a labor union. None of our employees are subject to collective bargaining agreements. We believe that our employee relations are satisfactory.

Electro Rent Corporation was incorporated in California in 1965 and became a publicly held corporation in 1980.

Obtaining Additional Information. Our Internet address is www.electrorent.com. Copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our website via links to the Securities and Exchange Commission’s website as soon as reasonably practicable after we electronically file those materials with the Securities and Exchange Commission. We provide paper copies of these reports to shareholders upon written request to Shareholder Relations, Electro Rent Corporation, 6060 Sepulveda Boulevard, Van Nuys, California 91411-2512.

Item 1A. Risk Factors.

Please carefully consider the following discussion of various risks and uncertainties. We believe these risk factors are the most relevant to our business and could cause our results to differ materially from the forward-looking statements made by us. The following risk factors are not the only risk factors that we face. Our business, financial condition and results of operations could be seriously harmed if any of these risks or uncertainties actually occur or materialize. In that event, the market price for our common stock could decline, and our shareholders may lose all or part of their investment.

COMMON STOCK PRICE FLUCTUATIONS

Our Common Stock price has fluctuated significantly and may continue to do so in the future.

General Factors. We believe some of the reasons for past fluctuations in the price of our stock have included:

• announcements of developments related to our business;

• announcements concerning new products or enhancements in the equipment that we rent, or developments in our relationships with our customers;

• variations in our revenues, gross margins, earnings or other financial results from investors’ expectations; and

• fluctuations in results of our operations and general conditions in the economy, our market, and the markets served by our customers.

In addition, prices in the stock market have been volatile in recent years. In many cases, the fluctuations have been unrelated to the operating performance of the affected companies. As a result, the price of our Common Stock could fluctuate in the future without regard to our operating performance.

Future Sales of our Common Stock. Sales of our Common Stock by our officers, directors and employees could adversely and unpredictably affect the price of our shares. Additionally, the price could be affected even by the potential for sales by these persons. In addition to the 23,996,293 shares outstanding as of August 14, 2013, as of such date, up to 475,668 shares of Common Stock may be issued upon conversion of our stock units previously granted under our Equity Incentive Plan.

We cannot predict the effect that any future sales of our Common Stock, or the potential for those sales, will have on our share price.

FLUCTUATIONS IN OPERATING RESULTS

Historically, our operating results have fluctuated, and we expect that fluctuations could continue in the future. The fluctuations in our past results have resulted from many factors, some of which are beyond our control. In the future, these or other factors could have a material adverse impact on our operating results and cause our stock price to decrease.

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Timing of Equipment Purchases and Sales and Equipment Pool Management. The profitability of our business depends in part on controlling the timing, pricing and mix of purchases and sales of equipment and on managing our equipment pool. We seek to acquire new and used equipment at attractive prices, from which we feel we can make a profit as a result of a combination of renting and/or selling that equipment. We base expenditures for equipment purchases, sales and marketing and other items on our expectations of future customer demand. In order to maximize overall profit from the rental, leasing, and sales of equipment, we manage our equipment pool on an on-going basis by analyzing our product strategy for each specific equipment class in light of that equipment’s historical and projected lifecycle. In doing so, we compare our estimate of potential profit from rental with the potential profit from the product’s immediate sale and replacement with new or other equipment.

Our overall equipment management is complex and our equipment strategy can change during the equipment’s lifetime based upon numerous factors, including the U.S. and global economy, interest rates and new product launches. Our strategic equipment decisions are based on the following fundamentals:

• our acquisition cost;

• our estimates of current and future market demand for rentals;

• our estimates of current and future supply of equipment;

• the book value of the equipment after depreciation and other impairment;

• our estimates of the effect of interest rates on rental and leasing fees as well as capital financing; and

• our estimates of the potential current and future sale prices of equipment.

However, historical trends are not necessarily indicative of future trends. If our assumptions prove to be wrong, not only may our revenues fall short of our expectations, but we may not be able to adjust our inventory quickly enough to compensate for lower demand for one or more products in our inventory. In addition, as demand for a product falls, we may have difficulty in selling any of our excess equipment at a favorable price or at all. Both of these factors can compound the impact of any revenue shortfall and further affect our operating results and the price of our stock.

Risks Associated with Changing Economic Conditions. In recent years, our financial results were impacted by competitive pressure on rental rates due in large part to the recession in the U.S. and our major international markets. Our customers historically have reduced their expenditures for electronic equipment during economic downturns. Accordingly, when the domestic and/or international economy weakens, demand for our services declines. A large part of our equipment pool is rented or leased to customers in the aerospace, defense, telecommunications, electronics, industrial and semiconductor industries. Continued slowdowns in the U.S. and global economy, or one or more of these specific industries, may result in lower demand and price pressure and could have a material adverse effect on our operating results and stock price.

Economic uncertainty continues to impact our customers and competitors, resulting in more stringent credit requirements and reduced access to capital. We will continue to focus on remaining profitable in the current conditions, as well as being prepared for the possibility that recessionary trends may return in future periods.

Seasonal and Quarterly Fluctuations. Regardless of the overall economic outlook domestically and globally, December, January and February typically reflect lower rental activity. In addition, because February is a short month, revenue billing in that month is reduced. We cannot predict whether these seasonal factors or their effects will change in the future. The seasonal spending patterns of our customers are affected by factors such as:

• weather, holiday and vacation considerations; and

• budgetary considerations.

Additionally, our operating results are subject to quarterly fluctuations resulting from a variety of factors, including remarketing activities, product announcements by manufacturers, economic conditions and variations in the financial mix of new rentals and leases. The financial mix of new rentals and leases is a result of a combination of factors such as:

• changes in customer demands and/or requirements;

• new product announcements;

• price changes;

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• changes in delivery dates;

• changes in maintenance policies and the pricing policies of equipment manufacturers; and

• price competition from other rental, leasing and finance companies.

Other Factors. Other factors that may affect our operating results include:

• competitive forces within our current and anticipated future markets;

• changes in interest rates;

• our ability to attract customers and meet their expectations;

• currency fluctuations and other risks of international operations;

• general economic conditions;

• differences in the timing of our spending on acquiring equipment, renting or leasing that equipment and receiving revenues from our customers; and

• changes and reductions to government spending that could negatively impact our customers in the aerospace and defense industry.

All or any of these and similar factors could result in our operating results differing substantially from the expectations of public market analysts and investors, which would likely have a material adverse impact on our stock price.

RISKS ASSOCIATED WITH TECHNOLOGY CHANGES

If we do not adequately anticipate or respond to changes in technology, it could have a material adverse effect on our operating results and stock price.

Technological Advancements. We must anticipate and keep pace with the introduction of new hardware, software and networking technologies and acquire equipment that will be marketable to our current and prospective customers. The equipment we rent can be the subject of rapid technological developments, evolving customer demands and frequent new product announcements and enhancements. If we fail to adequately anticipate or adapt to new technological developments or to recognize changing market conditions, our operating results and stock price could be materially and adversely affected.

Expenses Resulting from Technological Advancements. As a result of technology developments, we may have to make substantial and unanticipated expenditures to acquire new equipment or invest in further staff education on operating and servicing the equipment we deliver to our customers. Further, we may not adequately anticipate or respond successfully to technological changes for many reasons, including misjudging the impact of technological changes as well as financial, technological or other constraints. If we do not adequately anticipate or respond to changes in technological advancements or customer preferences, it would likely have a material adverse impact on our operating results and stock price.

Introduction of New Products and Services. The markets in which we operate are characterized by rapidly changing technology, evolving industry standards and declining prices of certain products. Our operating results will depend to a significant extent on our ability to continue to introduce new services and to control and/or reduce costs on existing services. Whether we succeed in our new offerings depends on several factors such as:

• proper identification of customer needs;

• our costs;

• timely completion and introduction of products and services as compared to our competitors;

• our ability to differentiate our equipment and services from our competitors; and

• market acceptance of our business.

RISKS ASSOCIATED WITH CUSTOMER SOLVENCY

If we do not collect on contracts with customers, it could have a material adverse effect on our operating results and stock price.

One of the reasons some of our customers find it more attractive to rent or lease electronic equipment than owning that equipment is the need to deploy their capital elsewhere. This can be particularly true in industries with high growth rates such as the telecommunications industry. However, some of our customers have liquidity issues, which have been compounded by the current weak economy, and

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ultimately cannot fulfill the terms of their agreements with us. If we are not able to manage credit risk issues, or if a large number of customers should have financial difficulties at the same time, our credit losses would increase above historical levels. If this should occur, our results of operations and stock price may be materially and adversely affected.

COMPETITION

If we do not effectively compete in our market, our operating results and stock price will be materially and adversely affected.

Our industry is characterized by intense competition from several large competitors, some of which have access to greater financial and other resources than we do. Although no single competitor holds a dominant market share, we face competition from both established entities and new entries in the market. Our primary competitors in the North American T&M rental area include McGrath RentCorp, Continental Resources, Inc., Test Equity LLC and Microlease plc. Our largest competitors for rental business are Microlease plc and Livingston Group Ltd. in Europe and ORIX Corporation in Asia. These entities also compete with us in leasing T&M equipment, as do banks, vendors and other financing sources. In addition, in selling our equipment, we also compete with sales by our suppliers, including Agilent and Tektronix, and their other distributors.

The market for the lease and rental of computers and servers is highly fragmented, although our principal competitors include SmartSource Rentals, Source One Rentals, Rentex and CRE Rentals. The computer rental market has been characterized by intense competition that has led to industry consolidation. We acquired two competitors during the last seventeen years and SmartSource, our largest competitor, has expanded primarily due to its numerous acquisitions.

Our competitors engage in aggressive pricing for both rentals and sales. In order to maintain or increase our market share, we may choose to lower our prices, resulting in lower revenues and decreased profitability.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

If we do not adequately anticipate and respond to the risks inherent in international operations, it could have a material adverse effect on our operating results and stock price.

Currency Risks. We generated 14.9% of our revenues from international operations during the past fiscal year. Our contracts to supply equipment outside of the U.S. are generally priced in local currency. However, our consolidated financial statements are prepared in U.S. dollars. Consequently, changes in exchange rates can unpredictably and adversely affect our consolidated operating results, and could result in exchange losses. Although we use foreign currency forward contracts to mitigate the risks associated with fluctuations in exchange rates, we may not be able to eliminate or reduce the effects of currency fluctuations. Thus, exchange rate fluctuations could have a material adverse impact on our operating results and stock price.

Other Risks Associated with International Operations. Additionally, our financial results may be adversely affected by other international risks, such as:

• international political and economic conditions;

• changes in government regulation in various countries;

• trade barriers;

• difficulty in staffing our foreign sales and service centers, and in training and retaining foreign employees;

• issues relating to the repatriation of any profits;

• adverse tax consequences; and

• costs associated with expansion into new territories.

We expect to continue our international operations and that the revenues we derive from these activities will continue to be a meaningful portion of our total revenues. If we do not anticipate and respond to the risks associated with international operations, it could have a material adverse effect on our operating results and stock price.

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RISKS ASSOCIATED WITH OUR MANUFACTURERS AND SUPPLIERS

If we are not able to obtain equipment at favorable rates, it could have a material adverse effect on our operating results and stock price.

About 92% of our equipment portfolio at acquisition cost consists of general purpose T&M instruments purchased from leading manufacturers such as Agilent and Tektronix. The remainder of our equipment pool consists of personal computers and workstations, which include personal computers from Dell, Apple, and Toshiba and workstations primarily from Hewlett Packard. We depend on these manufacturers and suppliers to contract for our equipment. If, in the future, we are not able to purchase necessary equipment from one or more of these suppliers on favorable terms, we may not be able to meet our customers’ demands in a timely manner or for a price that generates a profit. If this should occur, we can make no assurance that we will be able to secure necessary equipment from an alternative source on acceptable terms and our business and stock price may be materially and adversely affected.

DEPENDENCE ON KEY PERSONNEL

If we are unable to recruit and retain qualified personnel, it could have a material adverse effect on our operating results and stock price.

Our success depends in large part on the continued services of our executive officers, our senior managers and other key personnel, including, among others, our Chief Executive Officer, Daniel Greenberg, our President, Steven Markheim, and our Chief Financial Officer, Craig Jones. The loss of these people, especially without advance notice, could materially and adversely impact our results of operations. It is also very important that we attract and retain highly skilled personnel to accommodate growth and to replace personnel who leave. Competition for qualified personnel can be intense, especially in technology industries, and there are a limited number of people with the requisite knowledge and experience to market, sell and service our equipment. Under these conditions, we could be unable to recruit, train, and retain employees. If we cannot attract and retain qualified personnel, it could have a material adverse impact on our operating results and stock price.

CONTROL BY MANAGEMENT AND OTHERS

Senior management has significant influence over our policies and affairs and may be in a position to determine the outcome of corporate actions.

As of August 14, 2013, our executive officers and directors collectively own approximately 21.9% of our Common Stock.

As of that date, (i) Mr. Daniel Greenberg, our Chairman and Chief Executive Officer, beneficially owns approximately 19.9% of our outstanding shares of Common Stock, and (ii) one other shareholder controls 16.1% of our outstanding shares of Common Stock. Consequently, these shareholders may have significant influence over our policies and affairs and may be in a position to determine the outcome of corporate actions requiring shareholder approval. These may include, for example, the election of directors, the adoption of amendments to our corporate documents and the approval of mergers and sales of our assets.

RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS AND NEW BUSINESS VENTURES

If we cannot successfully implement any recent or future acquisitions or new business ventures, it could have a material adverse effect on our operating results and stock price.

On occasion, we evaluate business opportunities that appear to fit within our overall business strategy. We have completed the following acquisitions in recent years:

• In fiscal 2010, we acquired certain assets and select post-closing liabilities of Telogy, LLC (“Telogy”), a private company headquartered in Union City, California, and a leading provider of electronic T&M equipment.

• In fiscal 2012, we acquired certain assets and select post-closing liabilities of EMT, a private company based in Las Vegas, Nevada, and a provider of electronic T&M equipment.

In fiscal 2010, we became a reseller of Agilent’s new T&M equipment in the U.S. and Canada, resulting in the hiring of additional sales and support staff. We could decide to pursue one or more other opportunities by acquisition or internal development. Acquisitions and new business ventures, both domestic and foreign, involve many risks, including:

• the difficulty of integrating acquired operations and personnel with our existing operations;

• the difficulty of developing and marketing new products and services;

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• the diversion of our management’s attention as a result of evaluating, negotiating and integrating acquisitions or new business ventures;

• our exposure to unforeseen liabilities of acquired companies; and

• the loss of key employees of an acquired operation.

In addition, an acquisition or new business venture could adversely impact cash flows and/or operating results, and dilute shareholder interests, for many reasons, including:

• charges to our income to reflect the impairment of acquired intangible assets, including goodwill;

• interest costs and debt service requirements for any debt incurred in connection with an acquisition or new business venture; and

• any issuance of securities in connection with an acquisition or new business venture that dilutes or lessens the rights of our current shareholders.

Additionally, we have implemented various new business ventures in the past, and not all of such ventures have been successful. The risks associated with acquisitions and new business ventures could have a material adverse impact on our operating results and stock price.

RISKS ASSOCIATED WITH FLUCTUATING INTEREST RATES

Interest rate fluctuations could have a material adverse effect on our operating results and stock price.

Our leasing yields tend to correlate with market interest rates. When interest rates are higher, our leasing terms incorporate a higher financing charge. However, in times of relatively lower interest rates our financing charges also decrease, and some of our customers choose to purchase new equipment, rather than leasing equipment at all. Lower leasing yields are reflected in lower rental and lease revenues.

RISKS ASSOCIATED WITH CHANGES IN GOVERNMENT SPENDING

We have customers in the aerospace and defense industry that derive a significant amount of revenue from the U.S. Government.

The federal government has implemented significant changes and reductions to government spending and other programs. In addition, uncertainty and other concerns resulting from previously announced defense spending reductions and the potential future, additional reductions have impacted, and are likely to continue to impact, the manner in which our customers in the aerospace and defense industry make procurement decisions, resulting in reduced demand by such customers in our rental services and resale business. A shift in government priorities to government programs in which our customers do not participate and/or reductions in funding for or the termination of government programs in which our customers do participate, unless offset by other programs and opportunities, could have a material adverse effect on the demand of our services and products and, as a consequence, our financial results.

ANTI-TAKEOVER PROVISIONS

The anti-takeover provisions contained in our Articles of Incorporation and Bylaws and in California law could materially and adversely impact the value of our Common Stock.

Certain provisions of our Articles of Incorporation, our Bylaws and California law could, together or separately, discourage, delay or prevent a third party from acquiring us, even if doing so might benefit our shareholders. This may adversely impact the interests of our shareholders with respect to a potential acquisition and may also affect the price investors would receive for their shares of Common Stock. Some examples of these provisions in our Articles of Incorporation and Bylaws are:

• the right of our board of directors to issue preferred stock with rights and privileges that are senior to the Common Stock, without prior shareholder approval; and

• certain limitations of the rights of shareholders to call a special meeting of shareholders.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We own a building that houses our corporate headquarters and Los Angeles sales office located at 6060 Sepulveda Boulevard, Van Nuys, California. The building contains approximately 84,500 square feet of office space. Approximately 40,500 square feet are currently leased to others. These tenant arrangements provide for all of the leased property to be available for our future needs.

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We own a building at 15385 Oxnard Street, Van Nuys, California, which contains approximately 68,200 square feet. We use all of this space, except for 1,000 square feet that are currently being leased to others. This building houses our California warehouse and equipment calibration center.

We own a facility in Wood Dale, Illinois, containing approximately 30,750 square feet. This facility houses our Illinois warehouse and service center.

As of May 31, 2013, we had sales offices in the metropolitan areas of Atlanta and Los Angeles. We also have service centers in Chicago, Dallas, Los Angeles, New York/Newark, San Francisco, Charlotte, Orlando, Toronto and Washington/Baltimore. We have foreign sales offices and warehouses in Mechelen, Belgium, and Beijing, China.

Our facilities aggregate approximately 269,000 square feet as of May 31, 2013. Except for the corporate headquarters, the Wood Dale, Illinois facilities and the Oxnard Street building, each of which we own, all of our facilities are rented pursuant to leases for up to seven years for aggregate annual rentals of approximately $1.1 million in fiscal 2013. Most of our leases provide us with the option of renewing our leases at the end of the initial lease term, at the fair rental value, for periods of up to five years. We do not consider any rented facility essential to our operations. We consider our facilities to be in good condition, well maintained and adequate for our needs.

Item 3. Legal Proceedings.

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business, including claims of alleged infringement, misuse or misappropriation of intellectual property rights of third parties. As of the date of this report, we are not a party to any litigation which we believe would have a material adverse effect on our business operations or financial condition.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Stock; Holders.

Our common stock is quoted on the NASDAQ stock market under the symbol ELRC. There were approximately 313 shareholders of record at August 14, 2013. The following table sets forth, for the period shown, the high and low sale prices of our Common Stock as reported by NASDAQ.

	Fiscal Year 2013				Fiscal Year 2012
	High		Low		High		Low
First Quarter	$	18.10	$	13.61	$	17.98	$	13.55
Second Quarter		18.23		13.56		17.30		12.64
Third Quarter		16.39		13.93		18.93		15.65
Fourth Quarter		18.73		15.91		19.35		13.51

Sales of Unregistered Securities.

We did not make any unregistered sales of our securities during the quarter ended May 31, 2013.

Securities Authorized for Issuance Under Equity Compensation Plans.

The following table provides information as of May 31, 2013 with respect to shares of our Common Stock that may be issued under our existing stock incentive plans, all of which were approved by our shareholders:

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EQUITY COMPENSATION PLAN INFORMATION

Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average  exercise price of outstanding options, warrants and rights (b)		Number of shares  of common stock remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) (c)
0	$	0		553,256

Stock Repurchases.

We have from time to time repurchased shares of our Common Stock under an authorization from our Board of Directors. Shares repurchased by us are retired and returned to the status of authorized but unissued stock. We did not repurchase any shares during fiscal 2013, 2012 or 2011. We may choose to make additional open market or other purchases of our Common Stock in the future, but we have no commitment to do so.

Dividends.

Since July 2007, we have been paying quarterly dividends in each January, April, July and October. During fiscal 2013, in December 2012, we also paid a special dividend of $1.00 per common share. The total amount of cash dividends we paid in fiscal 2013, 2012 and 2011 is discussed under “Item 7. Management’s Discussion and Analysis and Results of Operations-Liquidity and Capital Resources.” We expect to continue paying a quarterly dividend in future quarters, although the amount and timing of dividends, if any, will be determined by our Board of Directors in each quarter, subject to compliance with applicable law.

Performance Graph.

This graph compares our total shareholder return with (1) the NASDAQ Composite Index, (2) the Russell 2000 Index, and (3) the composite prices of the companies listed by Value Line, Inc. in its Industrial Services Industry Group. Our Common Stock is listed in both the Russell 2000 Index and the Industrial Services Industry Group. The comparison is over a five year period, beginning May 31, 2008 and ending May 31, 2013. The total shareholder return assumes $100 invested at the beginning of the period in our Common Stock and in each index. It also assumes reinvestment of all dividends.

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Cumulative Five Year Total Return

Value of $100 Invested on May 31, 2008

Fiscal Years Ended May 31

	2008		2009		2010		2011		2012		2013
Electro Rent Corporation		100		72		107		126		120		165
NASDAQ Composite		100		71		91		116		117		144
Russell 2000		100		68		91		118		108		141
Value Line Industrial Services		100		86		111		152		140		175

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Item 6. Selected Financial Data.

(in thousands, except per share amounts)

The following selected consolidated financial data should be read in conjunction with our audited consolidated financial statements and the accompanying notes included in “Item 8. Financial Statements and Supplementary Data” below and other financial and statistical information included in this Form 10-K.

	Fiscal year ended May 31,
	2013			2012 (1)(4)			2011(4)			2010 (2)(4)			2009(4)
Operations data:
Revenues	$	248,731		$	248,554		$	228,729		$	145,867		$	130,481
Costs of revenues and depreciation		155,477			159,218			144,582			90,319			77,495
Selling, general and administrative expenses		56,543			53,250			47,412			37,794			35,591
Operating profit		36,711			36,086			36,734			17,754			17,395
Bargain purchase gain, net (3)					(3,435	)		(202	)		(679	)		—
Interest and other, net		(402	)		(484	)		(352	)		(1,599	)		(1,507	)
Income before income taxes		37,113			40,005			37,288			20,032			18,902
Income tax provision		14,359			14,233			13,533			8,435			7,150
Net income	$	22,754		$	25,772		$	23,755		$	11,597		$	11,752
Earnings per share:
Basic	$	0.94		$	1.07		$	0.99		$	0.48		$	0.47
Diluted	$	0.94		$	1.07		$	0.99		$	0.48		$	0.47
Shares used in per share calculation:
Basic		24,226			23,983			23,974			23,932			24,899
Diluted		24,269			24,152			24,072			24,004			24,980
Balance sheet data (at end of year):
Total assets	$	318,926		$	329,831		$	305,927		$	276,068		$	271,334
Bank borrowings	$	10,000		$	—		$	—		$	—		$	—
Shareholders’ equity	$	228,549		$	248,131		$	240,375		$	229,962		$	228,753
Shareholders’ equity per common share	$	9.52		$	10.34		$	10.02		$	9.60		$	9.55
Cash dividends declared per common share	$	1.80		$	0.80		$	0.60		$	0.45		$	0.75

(1) Includes the post-acquisition operating results and year-end balance sheet information for the assets acquired from EMT on August 24, 2011. (See Note 3 to the consolidated financial statements included in this Form 10-K).

(2) Includes the post-acquisition operating results and year-end balance sheet information for the assets acquired from Telogy on March 31, 2010. (See Note 3 to the consolidated financial statements included in this Form 10-K).

(3) The estimated fair value of the net assets acquired from EMT in fiscal 2012, and Telogy in fiscal 2010, exceeded the acquisition cost, resulting in bargain purchase gains with respect to these transactions.

(4) We have reclassified $10,709, $10,010, $8,653 and $8,865 from selling, general and administrative expenses to costs of revenues and depreciation for fiscal 2012, 2011, 2010 and 2009, respectively, to conform to the current year presentation. (See Note 1 to our consolidated financial statements in this Form 10-K).

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(in thousands, except per share amounts).

The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto and the other financial and statistical information appearing elsewhere in this Form 10-K.

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Overview

We are one of the largest global organizations devoted to the rental, lease and sale of new and used electronic T&M equipment. We purchase that equipment from leading manufacturers such as Agilent Technologies, Inc. (“Agilent”) and Tektronix Inc. primarily for use by our customers in the aerospace, defense, telecommunications, electronics, industrial and semiconductor industries.

In addition, although it represented only approximately 7%, 7% and 8% of our revenues in fiscal 2013, 2012 and 2011, respectively, we believe our data products (“DP”) division is one of the largest rental businesses in the United States for personal computers and servers from manufacturers including Dell, H/P Compaq, IBM, Toshiba and Apple.

In fiscal 2010, we became a reseller for Agilent, the largest T&M equipment manufacturer in North America, which provides us with the exclusive right to sell Agilent’s more complex T&M equipment to small and medium size customers (who previously purchased directly from Agilent) in the United States and Canada through January 31, 2014. We do not currently have reseller agreements with any other manufacturers for equipment similar to that included in our Agilent reseller agreement. In addition, we sell used equipment from a variety of manufacturers that was previously in our rental and lease pool.

We have a focused sales strategy, using a direct sales force to meet our customers’ needs in our T&M equipment rental, lease and sales business. We have a large technical sales force that consists primarily of field engineers and applications engineers, each of whom specializes in all the products and services offered by our company. Our sales force is usually assigned to specific territories, and identifies potential customers through coordinated efforts with our marketing organization. Our marketing organization is staffed by professionals with many years of industry-related experience. As our customers have a wide range of requirements for equipment, our sales force is able to leverage our extensive knowledge of the test and measurement equipment environment to determine the right product to rent, lease or sell to the customer to meet the customer’s specific needs.

Our sales force also specializes in configuring new Agilent equipment to sell to our customers that is tailored to the customer’s need. These configurations typically start with a base model, which is frequently upgraded through an extensive list of options in order to perform the customer’s specific test or measurement. Once the configuration is determined, it serves as the basis for our orders to Agilent, who builds the product accordingly. We order equipment from Agilent once the customer has placed an order with us. Equipment is typically shipped directly to the customer by Agilent at our request. Occasionally, equipment is shipped to our warehouse prior to delivery to the customer. Inventory held for sale is immaterial and is therefore included in other assets in our consolidated balance sheets. Each order and sales invoice is subject to our standard sales terms and conditions, which include provisions covering equipment delivery delays and warranty services.

On March 31, 2010, we completed the acquisition of certain assets (including accounts receivable and rental equipment but excluding certain designated assets) and select liabilities of Telogy for $24.7 million in cash, subject to post-closing adjustments. The purchase price was reduced by $0.3 million in fiscal 2011 reflecting the final determination of assets acquired and other components of the purchase price in accordance with specific provisions of the asset purchase agreement with Telogy. Telogy, headquartered in Union City, California, was a leading provider of electronic T&M equipment in North America.

On August 24, 2011, we completed the acquisition of certain assets (including accounts receivable and rental equipment but excluding certain designated assets) and the assumption of specified post-closing liabilities of EMT, for $10.7 million in cash, of which $0.5 million was deposited into an escrow account for any post-closing adjustments. The purchase price was reduced by $0.3 million reflecting the final determination of the post-closing adjustment of the purchase price in accordance with the asset purchase agreement with EMT. (See Note 3 to the consolidated financial statements included in this Form 10-K).

In recent years, our financial results were impacted by competitive pressure on rental rates due in large part to the recession in the U.S. and our major international markets. During fiscal 2010 through 2012, we experienced a modest improvement in our T&M and DP rental rates and a significant increase in our equipment on rent, in part due to our acquisition of EMT at the end of the first quarter of fiscal 2012, while maintaining a high utilization rate, in particular in our North American and European operations. In addition, our rental revenues have benefited from our expanded sales force and integration and cross training of our resale organization and T&M sales force. As a result of these continued improvements, and sales of T&M equipment in connection with our resale channel, we experienced strong growth in revenues for fiscal 2012. During fiscal 2012, our operating profit modestly declined reflecting our

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significant investment in broadening and strengthening our sales and sales support organizations, as well as our administrative infrastructure, necessary to support our increased sales and rental demand and to better focus on future growth opportunities. During fiscal 2013, our revenues were flat compared to fiscal 2012, as rental and lease growth and increased sales of used equipment, in part due to a large buyout of used equipment by a customer in the third fiscal quarter of 2013, were offset by a decline in sales of new equipment. Our new equipment sales were affected by changes in the U.S. national budgetary policy and continuing uncertainty in the economy, including the telecommunications and national defense sectors, causing delays in our customers’ procurement decisions. As a result, many customers have chosen to rent equipment or delay all significant procurement decisions as they contemplate how to operate going forward. Our operating profit modestly increased for fiscal 2013 as compared to fiscal 2012, as growth in our higher margin rental and lease revenues and used equipment sales offset declines in our sales of new equipment, which have lower operating margins. We experienced an increase in our selling, general and administrative expenses as a result of our infrastructure investment which began in fiscal 2011 and continued throughout fiscal 2012 and 2013 in support of our expanded sales opportunities for new and used equipment, as well as growth in our rental and lease business.

Economic uncertainty continues to impact our customers and competitors, resulting in more stringent credit requirements and reduced access to capital. We will continue to focus on remaining profitable in the current conditions, as well as being prepared for the possibility that recessionary trends may return in future periods.

To maximize our overall profit from the rental, leasing, and sales of equipment, we manage our equipment pool on an on-going basis by controlling the timing, pricing and mix of our purchases and sales of equipment. We acquire new and used equipment to meet current technological standards and current and anticipated customer demand, and we sell our used equipment where we believe that is the most lucrative option. We employ a complex equipment management strategy and our proprietary PERFECT™ software to adjust our inventory and pricing on a dynamic basis in order to maximize equipment availability, utilization and profitability. We manage each specific equipment class based on a separate assessment of that equipment’s historical and projected life cycle and numerous other factors, including the U.S. and global economy, interest rates and new product launches. If we do not accurately predict market trends, or if demand for the equipment we supply declines, we can be left with inventory that we are unable to rent or sell for a profit. We assess the carrying value of the equipment pool on a quarterly basis or more frequently when factors indicating potential impairment are present.

Profitability and Key Business Trends

Comparing fiscal 2013 to fiscal 2012, our revenues increased by 0.1% from $248.6 million to $248.7 million, our operating profit increased 1.7% from $36.1 million to $36.7 million and our net income decreased by 11.7% from $25.8 million to $22.8 million. Our net income for fiscal 2012 included a bargain purchase gain, net of deferred taxes, of $3.4 million, as a result of our acquisition of EMT.

Our rental and lease revenues increased $6.9 million, or 5.3%, from $129.7 million for fiscal 2012 to $136.6 million for fiscal 2013. For fiscal 2013 and 2012, 88% of our rental and lease revenues were derived from T&M equipment. Our T&M rental revenues increased $6.0 million due to an increase in rental demand, in particular in our North American and European operations, and the integration of our resale organization and T&M sales force. Our rental revenues also include a $1.3 million increase related to the equipment acquired from EMT in late August 2011. Our T&M lease revenues increased approximately $1.3 million, which was primarily attributed to an increase in demand for equipment leases. The impact of the changes in T&M rental and lease rates on rental and lease revenues was insignificant. Rental revenues in our DP segment declined $0.4 million, due to a decrease of $1.4 million relating to lower demand, offsetting an increase of $1.0 million due to higher rental rates. Our DP lease revenues were relatively unchanged.

Our sales of equipment and other revenues decreased $6.7 million, or 5.6%, from $118.8 million for fiscal 2012 to $112.1 million for fiscal 2013. This decrease was primarily due to a decline in new equipment sales of $13.4 million as our customers that traditionally purchase new equipment delayed procurement decisions in response to changes in our U.S. national budgetary policy and uncertainty in the global economy, which more than offset higher used equipment sales of $6.1 million, that reflected a large buyout by a customer in the third fiscal quarter of fiscal 2013 and our increased sales and marketing efforts in this area.

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Some of our key profitability measurements are presented below:

	Fiscal 2013			Fiscal 2012			Fiscal 2011
Net income per diluted common share (EPS)	$	0.94		$	1.07		$	0.99
Net income as a percentage of average assets		7.0	%		8.1	%		8.2	%
Net income as a percentage of average equity		9.6	%		10.7	%		10.3	%

Our net income for fiscal 2012 included a bargain purchase gain, net of deferred taxes, of $3.4 million as a result of our acquisition of EMT. For fiscal 2013, our operating profit increased 1.7%, or $0.6 million, compared to fiscal 2012. Our rental and lease business contributed an additional $3.2 million in operating profit, including $1.1 million in connection with the equipment acquired from EMT, resulting from a) a $6.9 million increase in rental and lease revenues, b) an offsetting increase in depreciation expense of $3.1 million, or 5.9%, due to a higher average rental equipment pool, and c) an offsetting increase in our costs of rentals and leases, excluding depreciation, of $0.5 million, or 2.7%. Sales of equipment and other revenues decreased $6.7 million, or 5.6%, but contributed an additional $0.7 million in operating profit, as a decline in our lower margin new equipment sales was offset by an increase in our higher margin used equipment sales, and other revenues slightly increased. Although our higher margin used equipment sales contributed an additional $2.2 million in operating profit, this was offset by a $2.2 million decline in operating profit from sales of our lower margin new equipment. Our selling, general and administrative expenses increased by $3.3 million, or 6.2%, for fiscal 2013 compared to fiscal 2012, primarily due to the broadening and strengthening of our sales organization in support of our new and used equipment sales, higher rental demand, and future growth opportunities.

We have revenues, expenses, assets and liabilities in foreign currencies, primarily euros, Canadian dollar and Chinese yuan, due to our foreign operations. We enter into forward contracts to hedge against unfavorable currency fluctuations in our monetary assets and liabilities in our European and Canadian operations, and our exposure to fluctuations in the Chinese yuan is not significant. These contracts are designed to minimize the effect of fluctuations in foreign currencies. As a result of these forward contracts, as well as the relative stability of these foreign currencies,the impact on our operating results as a result of foreign currency fluctuations has been insignificant. See “Item 7A—Quantitative and Qualitative Disclosures About Market Risk—Changes in foreign currencies” for additional information about our exposure to foreign currency exchange risk.

The average amount of our equipment on rent, based on acquisition cost, increased to $245.5 million for fiscal 2013, compared to $234.1 million for fiscal 2012 and $212.1 million for fiscal 2011. The average acquisition cost of equipment on lease increased to $35.0 million for fiscal 2013 compared to $31.7 million and $28.7 million for fiscal 2012 and 2011, respectively. The increase in our average equipment on rent and lease is primarily attributable to a growth in our T&M business, which was due, in part, to the acquisition of EMT in fiscal 2012, as well as strengthening demand in our worldwide operations and the expansion of our sales force and integration and cross training of our resale organization and T&M sales force, resulting in increased opportunities.

Average rental rates for our T&M and DP segments decreased by 0.1% for fiscal 2013 compared to fiscal 2012, but increased 1% compared to fiscal 2011. Our average lease rates decreased by 2.6% for fiscal 2013 compared to fiscal 2012, and 5.4% compared to fiscal 2011. Average utilization for our T&M equipment pool, calculated based on average acquisition cost of equipment on rent and lease compared to the average total equipment pool, decreased to 66.9% for fiscal 2013, compared to 67.7% for fiscal 2012 and 70.0% for fiscal 2011. The average utilization of our DP equipment pool, based on the same method of calculation, decreased to 35.6% for fiscal 2013, compared to 38.1% and 41.9% for fiscal 2012 and 2011, respectively. The decline in lease rates is the result of competitive pressures. Our utilization rate fluctuates frequently, and is impacted by new equipment purchases in support of existing and potential business, and sales of used equipment.

As of May 31, 2013 and May 31, 2012, our sales order backlog for T&M equipment relating to our resale channel was $7.6 million and $8.4 million, respectively. The decline in backlog for fiscal 2013 is primarily due to shorter manufacturing lead time and a reduction in new sales orders, reflecting lower demand.

RESULTS OF OPERATIONS

Reclassification

The previously reported statement of operations line item captioned “costs of revenues other than depreciation of rental and lease equipment” has been changed to separately present “costs of rentals and leases, excluding depreciation” and “costs of sales of equipment and other revenues” to comply with the applicable income statement disclosure requirements for public companies. Further, in order to more

18

closely align activity related to our rental and lease operations, including revenues and the expenses associated with providing those revenues, we have reclassified certain expenses previously included in selling, general and administrative expenses to costs of rentals and leases, excluding depreciation, which resulted in a reduction to previously reported selling, general and administrative expenses of $10.7 million and $10.0 million, respectively, for fiscal 2012 and 2011, respectively. (See Note 1 to our condensed consolidated financial statements included in this Form 10-K for further discussion).

Fiscal 2013 Compared with Fiscal 2012

Total Revenues: Total revenues for fiscal 2013 and 2012 were $248.7 million and $248.6 million, respectively. The 0.1% increase in total revenues was due to a 5.3% increase in rental and lease revenues offset by a 5.6% decrease in sales of equipment and other revenues.

Rental and lease revenues for fiscal 2013 were $136.6 million, compared to $129.7 million for the prior fiscal year. This increase is due to an increase in T&M rental and lease demand, in particular in our North American operations, due in part to the acquisition of EMT, and the integration of our resale organization and T&M sales force, which began in the first quarter of fiscal 2012, providing additional rental opportunities to an expanding customer base, and higher demand from our customers in lieu of new equipment purchases. This increase was partially offset by a decline in rental and lease revenues in our DP business, due to a decrease in demand.

Sales of equipment and other revenues decreased to $112.1 million for fiscal 2013 from $118.8 million in the prior year. Sales of used equipment, including finance leases, increased to $31.0 million for fiscal 2013, compared to $24.9 million for fiscal 2012, in part due to a large buyout by a customer in the third quarter of fiscal 2013, while sales of new equipment decreased to $75.0 million for fiscal 2013 compared to $88.4 million for fiscal 2012, as our customers that traditionally purchase new equipment delayed procurement decisions due to changes in the U.S. national budgetary policy and uncertainty in the global economy.

Operating expenses

Depreciation of Rental and Lease Equipment: Depreciation of rental and lease equipment increased in fiscal 2013 to $56.8 million, or 41.6% of rental and lease revenues, from $53.7 million, or 41.4% of rental and lease revenues, in fiscal 2012. The increased depreciation expense in fiscal 2013 was due to a higher average rental and lease equipment pool. The depreciation ratio, as a percentage of rental and lease revenues, marginally increased due to a moderate decline in utilization rates while rental rates were flat.

Costs of rentals and leases, excluding depreciation: Costs of rentals and leases, excluding depreciation, which primarily includes labor related costs of our operations personnel, supplies, repairs, and insurance and warehousing costs associated with our rental and lease equipment, increased to $17.8 million for fiscal 2013 compared to $17.3 million for fiscal 2012, primarily due to higher labor related costs to support growth in our rental and lease business. This expense is not expected to significantly fluctuate from period to period, as only moderate changes are required from time to time to handle changes in rental and lease activity.

Costs of Sales of Equipment and Other Revenues: Costs of sales of equipment and other revenues, which primarily includes the cost of equipment sales, decreased to $80.9 million for fiscal 2013 from $88.2 million in fiscal 2012. Costs of sales of equipment and other revenues decreased as a percentage of sales of equipment and other revenues to 76.3% in fiscal 2013 from 77.8% in fiscal 2012. This decrease is due to a decline in sales of new T&M equipment, which generally carry a lower margin than used equipment sales, while higher margin used equipment sales increased. Our sales margin percentage is expected to fluctuate depending on the mix of used and new equipment sales. Our sales margin is also impacted by competition, economic uncertainty, changes in U.S. governmental policies, and customer requirements and funding.

Selling, General and Administrative Expenses: Selling, general and administrative expenses increased 6.2% to $56.5 million in fiscal 2013 compared to $53.3 million in fiscal 2012. As a percentage of total revenues, selling, general and administrative expenses increased modestly to 22.7% in fiscal 2013 from 21.4% in fiscal 2012. Our selling, general and administrative expenses increased primarily due to the broadening and strengthening of our sales and sales support organizations, as well as our administrative infrastructure, necessary to support our sales and rental demand and to better focus on future growth opportunities.

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Gain on Bargain Purchase: We recorded a gain on bargain purchase, net of deferred taxes, of $3.4 million during fiscal 2012 related to our acquisition of EMT. The gain on bargain purchase, net of deferred taxes, resulted from the excess of the net fair value of the assets acquired and liabilities assumed in the EMT acquisition, over the respective purchase price. We believe that we were able to negotiate a bargain purchase price as a result of our access to the liquidity necessary to complete the transaction, and the recurring losses and bankruptcy filing of EMT.

Income Tax Provision: Our effective tax rate was 38.7% for fiscal 2013, compared to 35.6% for fiscal 2012. The increase for fiscal 2013 is due to a bargain purchase gain, net of deferred taxes, of $3.4 million for fiscal 2012, related to our purchase of EMT on August 24, 2011. Bargain purchase gains are recorded net of deferred taxes and are treated as permanent differences, resulting in a lower effective tax rate in the period recorded.

Fiscal 2012 Compared with Fiscal 2011

Total Revenues: Total revenues for fiscal 2012 and 2011 were $248.6 million and $228.7 million, respectively. The 8.7% increase in total revenues was due to a 9.9% increase in rental and lease revenues and a 7.4% increase in sales of equipment and other revenues.

Rental and lease revenues for fiscal 2012 were $129.7 million, compared to $118.1 million for the prior fiscal year. This increase reflects the EMT acquisition in August 2011 and an increase in T&M rental demand and rental rates in our North American and European operations, due to improved market conditions and the integration of our new resale organization and existing T&M sales force, providing additional rental opportunities to an expanding customer base. This increase was offset by a decline in lease revenues in our DP business, due to a decrease in demand.

Sales of equipment and other revenues increased to $118.8 million for fiscal 2012 from $110.7 million in fiscal 2011. Sales of used equipment, including finance leases, decreased to $24.9 million for fiscal 2012, compared to $32.9 million for the prior year period, while sales of new equipment increased to $88.4 million for fiscal 2012 compared to $71.4 million for fiscal 2011 due to an increase in our sales of new T&M equipment through our resale channel, as we continued to grow and expand both our customer base and our sales infrastructure in connection with our Agilent resale agreement

Depreciation of Rental and Lease Equipment: Depreciation of rental and lease equipment increased in fiscal 2012 to $53.7 million, or 41.4% of rental and lease revenues, from $47.9 million, or 40.6% of rental and lease revenues, in fiscal 2011. The increased depreciation expense in fiscal 2012 was due to a higher average rental and lease equipment pool. The depreciation ratio, as a percentage of rental and lease revenues, increased slightly as modest improvements in our average rental rates were more than offset by a decrease in our average utilization rates.

Costs of Rentals and Leases, excluding depreciation: Costs of rentals and leases, excluding depreciation, which primarily includes labor related costs of our operations personnel, supplies, repairs, and insurance and warehousing costs associated with our rental and lease equipment, increased to $17.3 million for fiscal 2012 compared to $16.4 million for fiscal 2011, primarily due to higher labor related costs. This expense is not expected to significantly fluctuate from period to period, as only moderate changes are required from time to time to handle changes in rental and lease activity.

Costs of Sales of Equipment and Other Revenues: Costs of sales of equipment and other revenues, which primarily include the cost of equipment sales, increased to $88.2 million for fiscal 2012 from $80.3 million in fiscal 2011. Costs of sales of equipment and other revenues increased as a percentage of sales of equipment and other revenues to 77.8% in fiscal 2012 from 77.0% in fiscal 2011. This increase is due to a decrease in used equipment sales and an increase in sales of new T&M equipment, which generally carry a lower margin than used equipment sales. Our sales margin percentage is expected to fluctuate depending on the mix of used and new equipment sales. Our sales margin is also impacted by competition, the global recession, and customer requirements and funding.

Selling, General and Administrative Expenses: Selling, general and administrative expenses increased 12.3% to $53.3 million in fiscal 2012 compared to $47.4 million in fiscal 2011. As a percentage of total revenues, selling, general and administrative expenses increased to 21.4% in fiscal 2012 from 20.7% in fiscal 2011. Our selling, general and administrative expenses increased primarily due to the broadening and strengthening of our sales organization in support of our resale channel and higher rental demand.

Gain on Bargain Purchase: We recorded gain on bargain purchase, net of deferred taxes, of $3.4 million during fiscal 2012 related to our acquisition of EMT and $0.2 million during fiscal 2011 related to our acquisition of Telogy, LLC (“Telogy”), a private company headquartered in Union City, California, and a leading provider of electronic T&M equipment, in March 2010. The gain on bargain purchase, net of deferred taxes, resulted from the excess of the net fair value of the assets acquired and liabilities assumed in the EMT and Telogy acquisitions, respectively, over the respective purchase prices. A

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majority of the Telogy bargain purchase gain was recorded in fiscal 2010, the year of acquisition. We believe that we were able to negotiate bargain purchase prices as a result of our access to the liquidity necessary to complete the transactions, and the recurring losses and bankruptcy filings of both EMT and Telogy.

Income Tax Provision: Our effective tax rate was 35.6% for fiscal 2012, compared to 36.3% for fiscal 2011. Our effective tax rate for fiscal 2012 includes our bargain purchase gain, net of deferred taxes, of $3.4 million compared to $0.2 million for the prior year period, resulting from of our purchase of EMT on August 24, 2011. Bargain purchase gains are recorded net of deferred taxes and are treated as permanent differences, resulting in a lower effective tax rate in the period recorded. Our effective tax rate for fiscal 2011 includes the benefit from derecognition of $1.4 million of interest and penalties resulting from the effective settlement of our uncertain tax positions. (See Note 6 to our consolidated financial statements included in this Form 10-K.)

Liquidity and Capital Resources

Capital Expenditures. Our primary capital requirements have been purchases of rental and lease equipment. We generally purchase equipment throughout the year to replace equipment that has been sold and to maintain adequate levels of rental equipment to meet existing and expected customer demands. To meet T&M rental demand, support areas of potential growth for both T&M and DP equipment and to keep our equipment pool technologically up-to-date, we made payments for purchases of $64.1 million of rental and lease equipment during fiscal 2013, $96.7 million in fiscal 2012, excluding $15.8 million, at fair value, of rental and lease equipment acquired in connection with our acquisition of EMT in fiscal 2012, and $91.5 million in fiscal 2011. The decrease in equipment purchases of 33.7% from fiscal 2012 to fiscal 2013 is due to a decline from the unusually high payment level of fiscal 2012 which reflected continued recovery from the economic downturn.

Share Repurchases and Dividends. We periodically repurchase shares of our common stock under an authorization from our board of directors. Shares we repurchase are retired and returned to the status of authorized but unissued stock. There were no shares repurchased in fiscal 2013, 2012 and 2011. We may make repurchases of our Common Stock in the future through open market transactions or otherwise, but we have no commitments to do so.

For fiscal 2013, we paid dividends of $1.80 per common share, including a special dividend of $1.00 per common share, compared to $0.80 per common share in fiscal 2012 and $0.60 per common share in fiscal 2011, respectively, amounting to an aggregate of $43.8 million, $19.4 million and $14.4 million for fiscal 2013, 2012 and 2011, respectively. We expect to continue paying a quarterly dividend in future quarters, although the amount and timing of dividends, if any, will be made at the discretion of our board of directors in each quarter, subject to compliance with applicable law.

Cash and Cash Equivalents and Investments. The balance of our cash and cash equivalents was $10.4 million at May 31, 2013, an increase of $1.1 million from May 31, 2012. Outside our normal operations and equipment purchases, we use our cash to pay dividends to shareholders and to take advantage of strategic acquisitions and new customer opportunities. Since the beginning of fiscal 2011 we have returned $77.6 million in cash to our shareholders, increasing our annual dividend rate from $0.60 per common share to $0.80 per common share in fiscal 2012. We have also made payments of $34.7 million in connection with two acquisitions and invested heavily in new equipment to take advantage of key new customer opportunities. On December 19, 2012, we used $6.1 million of our cash and borrowed $23.0 million against our credit facility with Union Bank to pay the quarterly dividend of $0.20 per common share and the special dividend of $1.00 per common share on December 21, 2012. We expect that the level of our cash needs may increase as we pay dividends in future quarters, or if we decide to buy back our Common Stock, increase equipment purchases in response to demand, finance another acquisition, or pursue other opportunities. Given our growth record achieved, with minimal debt since fiscal 2000, and our available line of credit of which we have $44.0 million remaining that we may borrow as of July 31, 2013, we believe that we have ample access to borrowing capacity and that our cash flow from operations and ability to borrow will allow us to continue funding our current and future growth. We may seek to expand our borrowing capacity in order to ensure sufficient resources to quickly respond to strategic growth opportunities.

Cash Flows and Credit Facilities. We have three principal sources of liquidity: cash flows provided by our operating activities, proceeds from the sale of equipment from our portfolio, and external funds that historically have been provided by bank borrowings.

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During fiscal 2013, 2012, and 2011 net cash provided by operating activities was $68.9 million, $69.9 million and $68.8 million, respectively. Operating cash flow for fiscal 2013 was comparable to fiscal 2012 as an improvement in our working capital, and an increase in income after giving effect to non-cash items, for fiscal 2013, was offset by tax payments of $15.6 million for fiscal 2013, compared to a tax refund, net of taxes paid, of $0.5 million for fiscal 2012. Operating cash flow for fiscal 2012 was comparable to fiscal 2011 as an improvement in income, after giving effect to non-cash items, was offset by a tax refund, net of taxes paid, of $2.0 million for fiscal 2011, and an increase in our demonstration inventory of $1.6 million for fiscal 2012.

During fiscal 2013, 2012 and 2011 net cash used in investing activities was $34.1 million, $82.9 million and $45.7 million, respectively. The decline in cash used in investing activities for fiscal 2013 was due, in part, to a decrease in payments for purchases of rental and lease equipment to $64.1 million compared to $96.7 million and $91.5 million for fiscal 2012 and 2011, respectively. There were no redemptions of trading investments in fiscal 2013 or 2012, compared to redemptions of trading investments, of $14.3 million for fiscal 2011. Proceeds from sale of rental and lease equipment were $31.1 million for fiscal 2013 compared to $25.0 million for fiscal 2012 and $32.9 million for fiscal 2011. Fiscal 2012 includes cash paid for the acquisition of EMT of $10.3 million.

Net cash flows used in financing activities were $33.6 million for fiscal 2013, compared to $19.3 million in fiscal 2012 and $14.2 million in 2011. These funds used were primarily composed of payments for dividends of $43.8 million for fiscal 2013, $19.4 million for fiscal 2012 and $14.4 million for fiscal 2011.

As the following table illustrates, aggregate cash flows from operating activities and proceeds from the sale of equipment have provided 118% of the funds required for equipment purchased for the three years ended May 31, 2013, excluding equipment purchased in connection with acquisitions.

(in thousands)	Fiscal Three Years Ended May 31, 2013			2013			2012			2011
Cash flows from operating activities1	$	207,555		$	68,930		$	69,875		$	68,751
Proceeds from sale of equipment		89,078			31,119			25,042			32,917
Total		296,633			100,049			94,917			101,668
Payments for equipment purchases		(252,335	)		(64,088	)		(96,709	)		(91,538	)
Net increase in equipment portfolio at acquisition cost		108,226			11,972			60,489			35,765

¹ For the components of cash flows from operating activities see the consolidated statements of cash flows.

We have a $50.0 million revolving bank line of credit, subject to certain restrictions, to meet equipment acquisition needs as well as working capital and general corporate requirements. We borrowed $63.5 million and repaid $53.5 million on our line of credit during fiscal 2013. Of the $63.5 million borrowed, $23.0 million was borrowed on December 19, 2012 to fund the quarterly and special dividend that we paid on December 21, 2012. As of May 31, 2013, we had $10.0 million on borrowings outstanding under the revolving bank line of credit. There are no other bank borrowings outstanding or off balance sheet financing arrangements at May 31, 2013. We are in compliance with all loan covenants at May 31, 2013.

We believe that cash and cash equivalents, cash flows from operating activities, proceeds from the sale of equipment and our borrowing capacity will be sufficient to fund our operations for at least the next twelve months.

Inflation. Inflation generally has favorably influenced our results of operations by enhancing the sale prices of our used equipment. However, lower inflation rates and the continued availability of newer, less expensive equipment with similar or better specifications over a period of several years could result in lower relative sale prices for used electronic equipment, which could reduce margins and earnings. Prices of new and used electronic test equipment have not consistently followed the overall inflation rate, while prices of new and used personal computers and servers have consistently declined. Because we are unable to predict the advances in technology and the rate of inflation for the next several years, it is not possible to estimate the impact of these factors on our margins and earnings.

CONTRACTUAL OBLIGATIONS

At May 31, 2013, our material contractual obligations consist of outstanding borrowings under our commercial credit agreement, which is a revolving line of credit and therefore there is no schedule of payments, expiring in November 2015, and operating leases for facilities.

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We lease certain facilities under various operating leases. Most of the lease agreements provide us with the option of renewing the lease at the end of the initial lease term, at the fair rental value, for periods of up to seven years. In most cases, we expect that facility leases will be renewed or replaced by other leases in the normal course of business.

The table below presents the expected amount of payments due under our contractual obligations, as of May 31, 2013, but does not reflect changes that could arise after that time:

	Payments due by period
Contractual Obligations (in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Commercial Credit Agreement	$	10,000	$	—	$	10,000	$	—	$	—
Facility lease payments, not including property taxes and insurance		1,509		719		631		159		—
Total	$	11,509	$	719	$	10,631	$	159	$	—

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, we review these estimates, including those related to asset lives and depreciation methods, impairment of long-lived assets (including rental and lease equipment), impairment of goodwill and definite lived intangible assets, revenue recognition and income taxes. These estimates are based on our historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies include the more significant judgments and estimates used in the preparation of our financial statements:

Asset Lives and Depreciation Methods: Our primary business involves the purchase and subsequent rental and lease of long-lived electronic equipment. We have chosen asset lives that we believe correspond to the economic lives of the related assets. We have chosen depreciation methods that we believe generally match our benefit from the assets with the associated costs. These judgments have been made based on our expertise in each equipment type that we carry. If the asset life and depreciation method chosen do not reduce the book value of the asset to at least our potential future cash flows from the asset, we would be required to record an impairment loss. Depreciation methods and useful lives are periodically reviewed and revised as deemed appropriate.

Impairment of Long-Lived Assets: We review the carrying value of our rental and lease equipment and finite lived intangible assets whenever events or circumstances have occurred, or our outlook for future market conditions would indicate the carrying amount is not fully recoverable. This requires us to make estimates related to future cash flows from the assets and to determine whether any deterioration is other than temporary. If these estimates or the related assumptions change in the future, we may be required to record impairment charges. There were no such impairment charges during fiscal 2013, 2012 and 2011.

Goodwill Impairment: Goodwill is the excess of the acquisition cost of a business over the fair value of the identifiable net assets acquired. We recognized goodwill of $3.1 million on the acquisition of Rush Computer Rentals in January 2006. Impairment testing for goodwill is performed annually, on May 31, or more frequently if indications of potential impairment exist under the provisions of ASC 350, Intangibles—Goodwill and Other (“ASC 350”). The impairment test for goodwill uses a two-step approach, which is performed at the reporting unit level. We have separate operating segments (reporting units) for T&M and DP equipment, although these two segments are aggregated into a single reportable segment in accordance with ASC 280, Segment Reporting. Step one of the impairment test compares the fair value of the reporting unit using a market approach to its carrying value. If the carrying value exceeds the fair value, there is a potential impairment and step two must be performed. Step two compares the carrying value of the reporting unit’s goodwill to its implied fair value (i.e., fair value of reporting unit less the fair value of the unit’s assets and liabilities, including identifiable intangible assets). If the implied fair value of goodwill is less than the carrying amount of goodwill, impairment is recognized.

Definite-lived Intangible Assets: Definite-lived intangible assets consist of customer relationships. The assets are amortized over their useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable in accordance with ASC 360. If any indications of impairment are present, then we test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If the net undiscounted cash flows indicate the asset is not recoverable, we determine the fair value of the asset and record any impairment. We reevaluate the useful life determinations for these intangible assets each reporting period to determine whether events and circumstances warrant a revision in their remaining useful lives.

Revenue Recognition—Principal Agent Considerations: In accordance with accounting guidance, we are acting as the principal with respect to sales of new equipment through our resale agreement, based on several factors, including: (1) We act as the primary obligor by working directly with our customers to define their needs, providing them with options to satisfy such needs, contracting directly with the customer, and, to the extent required, providing customers with instruction on the use of the product and additional technical support once the product is received by the customer. The product manufacturer is not a party to our customer sales agreements, nor is it referenced in the agreements, and therefore has

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no obligation to our customers with the exception of the manufacturer’s standard warranty on the product. (2) We bear back-end risk of inventory loss with respect to any product return from the customer as the original manufacturer is not required to accept returns of equipment from us. We also bear front-end risk of inventory loss in those cases where we acquire products for resale into our inventory prior to shipment to customers. (3) We have full discretion in setting pricing terms with our customers and to negotiate all such terms ourselves. (4) We assume all credit risk. Accordingly, sales of new equipment through our resale channel are recorded in Sales of Equipment and Other Revenues and the related equipment costs are recorded in Costs of Sales of Equipment and Other Revenues in our consolidated statements of operations.

Income Taxes: We are required to estimate income taxes in each of the jurisdictions in which we operate. Significant judgment is required in determining the provision for income taxes and deferred tax assets and liabilities. This process involves us estimating actual current tax exposure and assessing temporary differences resulting from differing treatment of items, such as depreciation and amortization, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We then assess the likelihood that our deferred tax assets will be recovered. To the extent management believes that recovery is not likely, we establish a valuation allowance. We determined that a valuation allowance was required in fiscal 2013, 2012 and 2011 of $1.1 million, $0.9 million and $0.6 million, respectively, for our deferred tax asset related to certain foreign net operating loss carry forwards and other related timing differences.

The guidance for uncertain income tax positions provides that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by us that our company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. During the second quarter of fiscal 2011 we effectively settled our remaining uncertain tax positions, and derecognized $4.5 million of previously recognized uncertain tax positions, and the related deferred tax asset, and $1.4 million for interest and penalties previously recognized. (See Note 6 to our consolidated financial statements included in this Form 10-K.)

OFF BALANCE SHEET TRANSACTIONS

As of May 31, 2013 we did not have any “off-balance-sheet arrangements,” as defined in Item 303(a)(4)(ii) of Regulation S-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We could be exposed to market risks related to changes in interest rates and foreign currency exchange rates.

Interest Rate and Market Risk.

We are exposed to fluctuations in interest rates on our commercial credit agreement with Union Bank, N.A. which matures on November 30, 2015. The loan agreement bears interest at the reference rate minus 0.25% or LIBOR plus 1.50%, and the weighted average interest rate at May 31, 2013 was 2.35%. Our borrowings under on our commercial credit agreement at May 31, 2013 were $10.0 million, and we have not previously had borrowings outstanding at any fiscal year end under this commercial credit agreement. As our borrowings outstanding have not been significant, and the interest rate is low, a hypothetical increase in interest rates by 10% would not have a material impact on our financial condition or results of operations.

The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and investments in a variety of high quality securities, including direct obligations of the United States government, securities issued by agencies of the United States government and AAA-rated money market or cash management funds. Our investments were not significant for fiscal 2013 and 2012.

Changes in foreign currencies.

We have wholly owned Chinese and European subsidiaries. In addition, we have revenues, cash and cash equivalents and accounts receivable in other foreign currencies, primarily the Canadian dollar. Our international operations subject us to foreign currency risks (i.e., the possibility that the financial results

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could be better or worse than planned because of changes in foreign currency exchange rates). During fiscal 2010 we began using forward contracts to hedge our economic exposure with respect to assets and liabilities denominated in foreign currencies. Although there can be no assurances, given the extent of our international operations and our hedging, we do not expect a 10% change in foreign currency rates to have a material impact on our consolidated balance sheet.

Item 8. Financial Statements and Supplementary Data.

See Consolidated Financial Statements beginning on page F-1 of this Form 10-K.

Supplemental Financial Information regarding quarterly results is contained in Note 22—Quarterly Information (unaudited), in the Notes to our Consolidated Financial Statements on page F-21 of this Form 10-K.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not Applicable.

Item 9A. Controls and Procedures.

As of May 31, 2013, the end of the period covered by this Annual Report on Form 10-K, we have, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as such terms are defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities and Exchange Act of 1934 as amended. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934). Our management assessed the effectiveness of our internal control over financial reporting as of May 31, 2013. In making this assessment, our management used the criteria set forth in Internal Control Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our management has concluded that, as of May 31, 2013, our internal control over financial reporting is effective based on these criteria.

Deloitte & Touche LLP, an independent registered public accounting firm, who audited our consolidated financial statements included in this Form 10-K has issued an attestation report on our internal control over financial reporting, which is included below.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Electro Rent Corporation

Van Nuys, California

We have audited the internal control over financial reporting of Electro Rent Corporation and subsidiaries (the “Company”) as of May 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2013, based on the criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) the consolidated financial statements as of and for the year ended May 31, 2013 of the Company and our report dated August 14, 2013 expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

Los Angeles, California

August 14, 2013

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Item 9B. Other Information.

Not Applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this Item is incorporated by reference to our definitive Proxy Statement with respect to our Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission not later than September 30, 2013.

Item 11. Executive Compensation.

The information required by this Item is incorporated by reference to our definitive Proxy Statement with respect to our Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission not later than September 30, 2013.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item is incorporated by reference to our definitive Proxy Statement with respect to our Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission not later than September 30, 2013.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated by reference to our definitive Proxy Statement with respect to our Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission not later than September 30, 2013.

Item 14. Principal Accountant Fees and Services.

The information required by this Item is incorporated by reference to our definitive Proxy Statement with respect to our Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission not later than September 30, 2013.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Financial Statements.

	Page
1.      Index to Financial Statements:
See Consolidated Financial Statements included as part of this Form 10-K. Pursuant to Rule 7-05 of Regulation S-X, the schedules have been omitted as the information to be set forth therein is included in the notes of the audited consolidated financial statements.		F-1

All other schedules have been omitted since the required information is not present or is not present in amounts sufficient to require submission of a schedule, or because the information required is included in the financial statements or related notes.

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(b) Exhibits.

Exhibit No.	Description of Document	Incorporation by Reference
3.1	Restated Articles of Incorporation, filed October 3, 1984	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
3.2	Certificate of Amendment of Restated Articles of Incorporation, filed October 24, 1988	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
3.3	Certificate of Amendment of Restated Articles of Incorporation, filed October 15, 1997	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 1998.
3.4	Bylaws of Registrant, adopted February 6, 1979	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
3.5	Amendment of Bylaws of Registrant, adopted October 6, 1994	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 1995.
3.6	Amendment of Bylaws of Registrant, adopted November 15, 1996	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 1997.
3.7	Amendment of Bylaws of Registrant, adopted July 11, 2002	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
4.1	Form of Common Stock Certificate	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
10.1*	Electro Rent Corporation Supplemental Executive Retirement Plan	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
10.2*	Executive Employment Agreement (Amended and Restated as of July 15, 1992) between Registrant and Daniel Greenberg	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
10.3*	Amendment No. 1 to Executive Employment Agreement (Amended and Restated as of July 15, 1992) between Registrant and Daniel Greenberg, dated October 12, 2001	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2003.
10.4*	Employment Agreement between Registrant and Steven Markheim, dated as of October 31, 2005	Incorporated by reference from Registrant’s Current Report on Form 8-K filed November 1, 2005.
10.5*	Employment Agreement between Registrant and Craig R. Jones, dated as of October 31, 2005	Incorporated by reference from Registrant’s Current Report on Form 8-K filed November 1, 2005.
10.6*	1996 Stock Option Plan	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 1996.
10.7*	Form of Stock Option Agreement (Incentive Stock Option) (1996 Plan)	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 1996.
10.8*	Form of Stock Option Agreement (Nonstatutory Stock Option) (1996 Plan)	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 1996.
10.9*	Amendment Number One to 1996 Stock Option Plan, adopted November 1, 1996	Incorporated by reference from Registrant’s Registration Statement on Form S-8 filed December 5, 1996 (Registration No. 333-17295).
10.10*	Amendment No. 1 to 1996 Stock Option Plan, 1996 Director Option Plan, and 2002 Employee Stock Option Plan	Incorporated by reference from Registrant’s Proxy Statement on Form DEF 14A filed December 2, 2003.

29

Exhibit No.	Description of Document	Incorporation by Reference
10.11*	2005 Equity Incentive Plan	Incorporated by reference from Registrant’s Registration Statement on Form S-8 filed December 20, 2005 (File No. 333-130487).
10.12*	Form of 2005 Stock Option Agreement	Incorporated by reference from Registrant’s Registration Statement on Form S-8 filed December 20, 2005 (File No. 333-130487).
10.13*	Form of Stock Unit Award Agreement (Employee)	Incorporated by reference from Registrant’s Current Report on Form 8-K filed July 21, 2009.
10.14*	Form of Stock Unit Award Agreement (Director)	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
10.15*	Form of Indemnification Agreement	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
10.16	Commercial Credit Agreement dated as of September 29, 2008 between Electro Rent Corporation (the “Company”) and Union Bank of California, N.A.	Incorporated by reference from Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2010.
10.17	First Amendment to Commercial Credit Agreement dated as of March 4, 2009 between the Company and Union Bank of California, N.A	Incorporated by reference from Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2010.
10.18	Second Amendment to Commercial Credit Agreement dated as of September 16, 2009 between the Company and Union Bank of California, N.A.	Incorporated by reference from Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2010.
10.19	Third Amendment to Commercial Credit Agreement dated as of September 22, 2010 between the Company and Union Bank of California, N.A.	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2011.
10.20	Asset Purchase Agreement between Registrant and Telogy, LLC dated as of March 16, 2010	Incorporated by reference from Registrant’s Current Report on Form 8-K filed March 22, 2010.
10.21	Agreement between the Company and UBS regarding Auction Rate Securities	Incorporated by reference from Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2010.
10.22	Fourth amendment to Commercial Credit Agreement dated as of September 28, 2011 between the Company and Union Bank of California, N.A.	Incorporated by reference from Registrant’s Current Report on Form 8-K filed September 30, 2011.
10.23	Fifth amendment to Commercial Credit Agreement dated as of February 3, 2012 between the Company and Union Bank of California, N.A.	Incorporated by reference from Registrant’s Current Report on Form 8-K filed February 9, 2012.
10-24	Sixth Amendment to Commercial Credit Agreement between Electro Rent Corporation and Union Bank, N.A.	Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on November 29, 2012
10.25#	EMG US Authorized Technology Partner Agreement dated as of December 1, 2009 by and between Electro Rent Corporation and Agilent Technologies, Inc., as amended	Incorporated by reference from the amendment to Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2012 filed on February 1, 2013.
10.26#	Amendment #18 to Authorized Technology Partner Program Agreement #ANT76 by and between Electro Rent Corporation and Agilent Technologies, Inc.	Filed herewith.

30

Exhibit No.	Description of Document	Incorporation by Reference
14	Code of Business Conduct and Ethics	Incorporated by reference from Registrant’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009.
21	Subsidiaries of the Registrant. •   ER International, Inc., a Delaware corporation •   Electro Rent Asia, Inc., a California corporation •   Electro Rent (Tianjin) Rental Co., Ltd., a Chinese wholly foreign-owned enterprise •   Electro Rent (Beijing) Technology Rental Co., Ltd., a Chinese wholly foreign-owned enterprise •   Electro Rent Europe NV, a Belgium corporation •   Electro Rent, LLC, a Delaware limited liability company
23	Consent of Deloitte & Touche LLP, the Company’s independent registered public accounting firm	Filed herewith.
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer	Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer	Filed herewith.
32.1**	Section 1350 Certification by Principal Executive Officer	Filed herewith.
32.2**	Section 1350 Certification by Principal Financial Officer	Filed herewith.
101.INS***	XBRL Instance Document.
101.SCH***	XBRL Taxonomy Extension Schema Document.
101.CAL***	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF***	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB***	XBRL Taxonomy Label Linkbase Document.
101.PRE***	XBRL Taxonomy Extension Presentation Linkbase Document.

# The Company has requested confidential treatment for portions of this agreement. Accordingly, certain portions of this agreement have been omitted in the version filed with this report and such confidential portions have been filed with the Securities and Exchange Commission.

* Management contract or compensatory plan or arrangement.

** This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

*** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

(c) Schedule of Financial Statements

None.

31

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Electro Rent Corporation
Dated: August 14, 2013	By	/s/ Daniel Greenberg
		Daniel Greenberg
		Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/ Daniel Greenberg	Chairman of the Board and Chief Executive Officer	August 14, 2013
Daniel Greenberg	(Principal Executive Officer)
/s/ Craig R. Jones	Chief Financial Officer	August 14, 2013
Craig R. Jones	(Principal Financial and Accounting Officer)
/s/ Gerald D. Barrone	Director	August 14, 2013
Gerald D. Barrone
/s/ Nancy Y. Bekavac	Director	August 14, 2013
Nancy Y. Bekavac
/s/ Karen J. Curtin	Director	August 14, 2013
Karen J. Curtin
/s/ Theodore E. Guth	Director	August 14, 2013
Theodore E. Guth
/s/ Joseph J. Kearns	Director	August 14, 2013
Joseph J. Kearns
/s/ James S. Pignatelli	Director	August 14, 2013
James S. Pignatelli

32

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2013

		Page Number
1.	Financial Statements
	Report of Independent Registered Public Accounting Firm		F-2
	Consolidated Statements of Operations for each of the three years in the period ended May 31, 2013		F-3
	Consolidated Balance Sheets at May 31, 2013 and 2012		F-4
	Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended May 31, 2013		F-5
	Consolidated Statements of Cash Flows for each of the three years in the period ended May 31, 2013		F-6
	Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Electro Rent Corporation

Van Nuys, California

We have audited the accompanying consolidated balance sheets of Electro Rent Corporation and subsidiaries (the “Company”) as of May 31, 2013 and 2012, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended May 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at May 31, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of May 31, 2013, based on the criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 14, 2013 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Los Angeles, California

August 14, 2013

F-2

ELECTRO RENT 2013 ANNUAL REPORT

Consolidated Statements of Operations

Year Ended May 31, (in thousands, except per share information)	2013		2012		2011
Revenues:
Rentals and leases	$	136,591	$	129,737	$	118,062
Sales of equipment and other revenues		112,140		118,817		110,667
Total revenues		248,731		248,554		228,729
Operating expenses:
Depreciation of rental and lease equipment		56,795		53,651		47,922
Costs of rentals and leases, excluding depreciation		17,788		17,320		16,397
Costs of sales of equipment and other revenues		80,894		88,247		80,263
Selling, general and administrative expenses		56,543		53,250		47,412
Total operating expenses		212,020		212,468		191,994
Operating profit		36,711		36,086		36,735
Gain on bargain purchase, net of deferred taxes		—		3,435		202
Interest income, net		402		484		352
Income before income taxes		37,113		40,005		37,289
Income tax provision		14,359		14,233		13,533
Net income	$	22,754	$	25,772	$	23,756
Earnings per share:
Basic	$	0.94	$	1.07	$	0.99
Diluted	$	0.94	$	1.07	$	0.99
Shares used in per share calculation:
Basic		24,226		23,983		23,974
Diluted		24,269		24,152		24,072
Cash dividend declared per share	$	1.80	$	0.80	$	0.60

The accompanying notes are an integral part of these consolidated financial statements.

F-3

ELECTRO RENT 2013 ANNUAL REPORT

Consolidated Balance Sheets

As of May 31, (in thousands, except share information)	2013		2012
Assets
Cash and cash equivalents	$	10,402	$	9,290
Accounts receivable, net of allowance for doubtful accounts of $457 and $522		34,350		35,915
Rental and lease equipment, net of accumulated depreciation of $224,397 and $204,108		234,856		243,173
Other property, net of accumulated depreciation and amortization of $18,873 and $17,832		13,826		13,871
Goodwill		3,109		3,109
Intangibles, net of amortization of $1,468 and $1,304		1,037		1,201
Other assets		21,346		23,272
	$	318,926	$	329,831
Liabilities and Shareholders’ Equity
Liabilities:
Bank borrowings	$	10,000	$	—
Accounts payable		7,479		8,555
Accrued expenses		15,866		11,870
Deferred revenue		7,292		6,904
Deferred tax liability		49,740		54,371
Total liabilities		90,377		81,700
Commitments and contingencies (Note 11)
Shareholders’ equity:
Preferred stock, $1 par—shares authorized 1,000,000; none issued
Common stock, no par—shares authorized 40,000,000; issued and outstanding 2013—23,995,626; 2012—23,987,826		37,724		36,179
Retained earnings		190,825		211,952
Total shareholders’ equity		228,549		248,131
	$	318,926	$	329,831

The accompanying notes are an integral part of these consolidated financial statements.

F-4

ELECTRO RENT 2013 ANNUAL REPORT

Consolidated Statements of Shareholders’ Equity

	Common Stock								Total
Three years ended May 31, (in thousands)	Number of Shares		Amount			Retained Earnings			Shareholders’ Equity
Balance, June 1, 2010		23,961	$	33,555		$	196,407		$	229,962
Exercise of stock options and issuance of restricted shares		20		197			—			197
Excess tax benefit for share based compensation, net of tax deficit		—		34			—			34
Non-cash stock compensation expense		—		956			—			956
Dividends declared		—		—			(14,530	)		(14,530	)
Net income and total comprehensive income for the year ended May 31,  2011		—		—			23,756			23,756
Balance, May 31, 2011		23,981		34,742			205,633			240,375
Issuance of restricted shares		7		—			—			—
Excess tax benefit for share based compensation, net of tax deficit		—		46			—			46
Non-cash stock compensation expense		—		1,438			—			1,438
Dividends declared		—		—			(19,453	)		(19,453	)
Net settlement of shares		—		(47	)		—			(47	)
Net income and total comprehensive income for the year ended May 31,  2012		—		—			25,772			25,772
Balance, May 31, 2012		23,988		36,179			211,952			248,131
Excess tax benefit for share based compensation		—		251			—			251
Issuance of restricted shares		8		—			—			—
Non-cash stock compensation expense		—		1,330			—			1,330
Dividends declared		—		—			(43,881	)		(43,881	)
Net settlement of shares		—		(36	)		—			(36	)
Net income and total comprehensive income for the year ended May 31,  2013		—		—			22,754			22,754
Balance, May 31, 2013		23,996	$	37,724		$	190,825		$	228,549

The accompanying notes are an integral part of these consolidated financial statements.

F-5

ELECTRO RENT 2013 ANNUAL REPORT

Consolidated Statements of Cash Flows

Year Ended May 31, (in thousands)	2013			2012			2011
Cash flows from operating activities:
Net income	$	22,754		$	25,772		$	23,756
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		58,109			54,960			49,127
Put option loss		—			—			952
Realized gain on redemption of trading securities		—			—			(952	)
Remeasurement (gain)/loss on foreign currency		(2	)		267			43
Provision for losses on accounts receivable		445			233			500
Gain on sale of rental and lease equipment		(13,189	)		(10,954	)		(12,083	)
Gain on bargain purchase, net of deferred taxes		—			(3,435	)		(202	)
Stock compensation expense		1,330			1,438			956
Excess tax benefit for share based compensation		(251	)		(102	)		(37	)
Deferred income taxes		(4,631	)		11,120			23,454
Change in operating assets and liabilities:
Accounts receivable		1,322			(5,594	)		(4,819	)
Other assets		(931	)		(5,839	)		(8,950	)
Accounts payable		(467	)		(120	)		1,184
Accrued expenses		4,068			1,516			(3,974	)
Deferred revenue		373			613			(204	)
Net cash provided by operating activities		68,930			69,875			68,751
Cash flows from investing activities:
Proceeds from sales of rental and lease equipment		31,119			25,042			32,917
Cash paid for acquisition		—			(10,327	)		—
Proceeds from acquisition purchase price adjustment		—			—			260
Payments for purchase of rental and lease equipment		(64,088	)		(96,709	)		(91,538	)
Redemptions of investments, trading		—			—			14,275
Payments for purchase of other property		(1,105	)		(900	)		(1,563	)
Net cash used in investing activities		(34,074	)		(82,894	)		(45,649	)
Cash flows from financing activities:
Borrowing under bank line of credit		63,500			3,250			—
Payment under bank line of credit		(53,500	)		(3,250	)		—
Proceeds from issuance of common stock		—			—			197
Minimum tax withholdings on share based compensation		(36	)		(47	)		—
Excess tax benefit for share based compensation		251			102			37
Payment of dividends		(43,765	)		(19,378	)		(14,449	)
Net cash used in financing activities		(33,550	)		(19,323	)		(14,215	)
Net (decrease) increase in cash and cash equivalents		1,306			(32,342	)		8,887
Effect of exchange rate changes on cash		(194	)		191			(352	)
Cash and cash equivalents at beginning of year		9,290			41,441			32,906
Cash and cash equivalents at end of year	$	10,402		$	9,290		$	41,441

The accompanying notes are an integral part of these consolidated financial statements.

F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2013, 2012 AND 2011

(in thousands, except per share amounts)

Note 1: Summary of Significant Accounting Policies

Basis of Presentation: The consolidated financial statements include Electro Rent Corporation and its wholly owned subsidiaries (collectively “we”, “us”, or “our” hereafter). All intercompany balances and transactions have been eliminated in consolidation.

Business and Organization: We primarily engage in the short-term rental, lease, and sale of state-of-the-art electronic equipment. We maintain an equipment portfolio composed primarily of test and measurement equipment (“T&M”) and personal computer-related data products (“DP”) equipment purchased from leading manufacturers. Another aspect of our business is the sale of equipment after its utilization for rental or lease and the sale of a range of new T&M equipment for Agilent Technologies, Inc. (“Agilent”) beginning on December 1, 2009, as well as other smaller vendors. Agilent has given us the exclusive right to sell Agilent’s more complex T&M equipment to small and medium size customers (who previously purchased directly from Agilent) in the United States and Canada.

We conduct our business activities in the United States, as well as through our wholly owned subsidiaries, Electro Rent, LLC, Electro Rent Europe, NV, and Electro Rent (Beijing) Test and Measurement Equipment Rental Co., Ltd. which conduct some or all of these business activities in Canada, Europe and China, respectively. Our wholly owned subsidiary, Electro Rent Asia, Inc., is the U.S. parent company of Electro Rent (Beijing) Test and Measurement Equipment Rental Co., Ltd., and our wholly owned subsidiary, ER International, Inc., is the U.S. parent company of Electro Rent Europe, NV.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosures of contingent assets and liabilities as of the date of these financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, we review these estimates including those related to asset lives and depreciation methods, impairment of long-lived assets, including rental and lease equipment, goodwill and intangibles, investments, allowance for doubtful accounts, income taxes and contingencies and litigation. These estimates are based on our evaluation of current business and economic conditions, historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe, however, that our estimates, including those for the above-listed items, are reasonable.

Revenue Recognition: We generate revenues primarily through the rental and leasing of T&M and DP equipment and through the sale of new and used equipment. Rental revenues comprise short term agreements that can be daily, weekly or monthly. Rental revenues are recognized in the month they are due on the accrual basis of accounting. Our operating lease agreements have varying terms, typically one to three years. Upon lease termination, customers have the option to renew the lease term, purchase the equipment at fair market value, or continue to rent on a month-to-month basis. Our operating leases do not provide for contingent rentals. Revenues related to operating leases are recognized on a straight-line basis over the term of the lease. Negotiated lease early-termination charges are recognized upon receipt. Rentals and leases are primarily billed to customers in advance, and unearned billings are recorded as deferred revenue.

We enter into finance leases as lessor for some of our equipment. Our finance lease agreements contain bargain purchase options and are accounted for as sale-type leases. Revenues from finance leases, which are recorded at the present value of the aggregate future lease payments, less unearned interest, are included in sales of equipment and other revenues in our consolidated statements of operations. Unearned interest is recognized over the life of the finance lease term using the effective interest method. Our finance lease terms vary, and are typically one to three years. The net investment in finance leases, which represents the receivables due from lessees, net of unearned interest, is included in other assets in our consolidated balance sheets. Historically, we have not required security deposits based on our assessed credit risk within our customer bases.

Initial direct costs for operating and finance leases are insignificant.

F-7

Sales of new equipment through our resale channel are recognized in the period in which the equipment is delivered and risk of loss passes to the customer, while sales of used equipment from our rental and lease equipment pool are recognized in the period in which the equipment is shipped and risk of loss passes to the customer. In the case of equipment sold to customers that is already on rent or lease to the same party, revenue is recognized at the agreed-upon date when the rent or lease term ends and risk of loss passes to the customer.

In accordance with accounting guidance, we are acting as the principal with respect to sales of new equipment through our Agilent resale agreement, based on several factors, including: (1) We act as the primary obligor by working directly with our customers to define their needs, providing them with options to satisfy such needs, contracting directly with the customer, and, to the extent required, providing customers with instruction on the use of the product and additional technical support once the product is received by the customer. The product manufacturer is not a party to our customer sales agreements, nor is it referenced in the agreements, and therefore has no obligation to our customers with the exception of the manufacturer’s standard warranty on the product. (2) We bear back-end risk of inventory loss with respect to any product return from the customer as the original manufacturer is not required to accept returns of equipment from us. We also bear front-end risk of inventory loss in those cases where we acquire products for resale into our inventory prior to shipment to customers. (3) We have full discretion in setting pricing terms with our customers and to negotiate all such terms ourselves. (4) We assume all credit risk. Accordingly, sales of new equipment through our resale channel are recorded in sales of equipment and other revenues and the related equipment costs are recorded in costs of sales of equipment and other revenues in our consolidated statements of operations.

Other revenues, consisting primarily of billings to customers for delivery and repairs, are recognized in the period in which the respective services are performed.

Operating expenses: Costs of rentals and leases, excluding depreciation, primarily include labor related costs of our operations personnel, supplies, repairs, insurance and warehousing costs associated with our rental and lease equipment, relating to our rental and lease revenues.

Costs of sales of equipment and other revenues primarily include the cost of new equipment and the carrying value of used equipment sold.

Selling, general and administrative expenses include sales and advertising costs, payroll and related benefit costs, insurance expenses, property taxes on our property and rental and lease equipment, legal and professional fees, and administrative overhead. Advertising costs are expensed as incurred. Total advertising expenses were $982, $962 and $1,013 for fiscal 2013, 2012 and 2011, respectively. SG&A expenses also include shipping and handling costs of $3,951, $4,184 and $3,638 for fiscal 2013, 2012 and 2011, respectively.

Reclassifications: We have expanded the presentation of our costs of revenues to separately present costs associated with each of the revenue streams presented in the condensed consolidated statements of operations, to comply with the applicable income statement disclosure requirements for public companies. Accordingly, the previously reported statement of operations line item captioned “costs of revenues other than depreciation of rental and lease equipment” has been replaced with separate line items for “costs of rentals and leases, excluding depreciation” and “costs of sales of equipment and other revenues”.

Further, in order to more closely align activity related to our rental and lease operations, including revenues and the expenses associated with providing those revenues, we have reclassified certain expenses previously included in selling, general and administrative expenses to costs of rentals and leases, excluding depreciation, which resulted in a reduction to previously reported selling, general and administrative expenses of $10,710 and $10,010 for fiscal 2012 and 2011, respectively. These reclassified costs primarily include direct expenses of supporting our rental and lease operations, including labor related costs of our operations personnel, supplies, repairs, and insurance and warehousing costs associated with our rental and lease equipment.

Rental and Lease Equipment and Other Property: Assets are generally stated at cost, less accumulated depreciation. Upon retirement or disposal of assets, the cost and the related accumulated depreciation are eliminated from the accounts and any gain or loss is recognized. We depreciate our buildings over 31.5 years, furniture and other equipment over three to ten years, and leasehold improvements over the lease period, typically three to five years. Each is depreciated on a straight-line basis. Depreciation of rental and lease equipment assets is provided over the estimated useful lives of the respective assets. We depreciate $428,957 and $414,631 of equipment, at acquisition cost, at May 31, 2013 and 2012, respectively, using straight-line methods ranging from two to ten years, and $30,296 and

F-8

$32,650 of equipment, at acquisition cost, at May 31, 2013 and 2012, respectively, using accelerated methods ranging from two to four years. We generally use straight-line methods for our T&M equipment, which we believe maintains its value consistently throughout the equipment’s useful life, and accelerated methods primarily for our DP equipment, which tend to depreciate faster due to frequent technological advancements. Depreciation methods and useful lives are periodically reviewed and revised, as deemed appropriate, including revisions to reflect shorter useful lives to more closely match depreciation expense with rental revenue for rental arrangements where the customer can acquire title through payment of all required rentals. Normal maintenance and repairs are expensed as incurred. Rental and lease equipment at net book value comprised $230,074 of T&M equipment and $4,782 of DP equipment at May 31, 2013, and $239,620 of T&M equipment and $3,553 of DP equipment at May 31, 2012.

Income Taxes: We recognize a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when reported amounts of the assets or liabilities are recovered or settled. Deferred tax assets are periodically reviewed for recoverability.

We recognize the tax impact from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax impact recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We recognize interest, penalties and foreign currency gains and losses with respect to uncertain tax positions as components of our income tax provision. Accrued interest and penalties are included within accrued expenses in the consolidated balance sheet. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. During the second quarter of fiscal 2011 we effectively settled our remaining uncertain tax positions, and derecognized $4,515 of previously recognized uncertain tax positions, and the related deferred tax asset, and $1,396 for interest and penalties previously recognized. (See Note 6 for further discussion.)

Impairment of Long-Lived Assets: The carrying value of equipment held for rental and lease and finite lived intangible assets (subject to amortization) are evaluated whenever events or circumstances have occurred, or our outlook for future market conditions would indicate the carrying amount is not fully recoverable. We recognize impairment losses on equipment held for rental and lease when the expected future undiscounted cash flows are less than the asset’s carrying value, in which case the asset is written down to its estimated fair value. There were no such impairment charges during fiscal 2013, 2012 and 2011.

Goodwill and Intangible Assets: Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, and intangible assets, comprising purchased customer relationships and trade names, are discussed further in Note 4. Pursuant to FASB ASC Topic No. 350, Intangibles – Goodwill and Other (“ASC 350”), goodwill and intangible assets with indefinite lives are not amortized but tested annually for impairment, or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. In connection with the annual impairment test for goodwill and indefinite lived intangibles, we have the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If we determine that it was more likely than not that the fair value of the reporting unit is less than its carrying amount, then we perform the impairment test. The impairment test involves a two-step process. The first step involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. We generally determine the fair value of our reporting units using the market approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the test to determine the amount of impairment loss. The second step involves measuring the impairment by comparing the implied fair values of the affected reporting unit’s goodwill and intangible assets with the respective carrying values. We completed the required impairment review at the end of fiscal 2013, 2012 and 2011 and concluded that there were no impairments.

Cash and Cash Equivalents: We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of AAA-rated money market funds in all periods presented.

Allowance for Doubtful Accounts: We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make rental and lease payments. The estimated losses are based on historical collection experience in conjunction with an evaluation of the current status of the

F-9

existing accounts. If the financial condition of our customers were to deteriorate, then additional allowances could be required that would reduce income. Conversely, if the financial condition of our customers were to improve or if legal remedies to collect past due amounts were more successful than expected, then the allowance for doubtful accounts may need to be reduced and income would be increased.

A roll forward of the allowance for doubtful accounts is as follows at May 31:

	2013			2012			2011
Beginning of year	$	522		$	602		$	536
Provision for doubtful accounts		445			233			500
Write-offs		(510	)		(313	)		(434	)
End of year	$	457		$	522		$	602

Other Assets: We include demonstration equipment used in connection with our resale activity, totaling $6,057 and $5,495 as of May 31, 2013 and 2012, respectively, in other assets for a period up to two years. Demonstration equipment is recorded at the lower of cost or estimated market value until the units are sold or transferred to our rental and lease equipment pool. Demonstration equipment transferred to our rental and lease equipment pool is depreciated over its remaining estimated useful life.

Other assets consisted of the following at May 31:

	2013		2012
Net investment in sales-type leases	$	9,437	$	11,681
Demonstration equipment		6,057		5,495
Supplemental executive retirement plan assets		2,947		2,370
Income taxes receivable		—		861
Prepaid expenses and other		2,905		2,865
	$	21,346	$	23,272

Concentration of Credit Risk: Financial instruments that potentially expose us to concentration of credit risk consist primarily of cash equivalents and trade accounts receivable. We invest excess cash primarily in money market funds of major financial institutions. Excess cash of $14 and $2,507 as of May 31, 2013 and 2012, respectively, was invested in four large money market funds that invest in government securities. We believe that we are not exposed to any significant financial risk with respect to cash and cash equivalents. For trade accounts receivable, we sell primarily on 30-day terms, perform credit evaluation procedures on each customer’s individual transactions and require security deposits or personal guarantees from our customers when significant credit risks are identified. Typically, most customers are large, established firms.

We purchase rental and lease equipment from numerous vendors and resale equipment from Agilent. During fiscal 2013, 2012 and 2011, Agilent accounted for approximately 74%, 75% and 82%, respectively, of all new equipment purchases, including rental equipment and equipment purchased for resale. No other vendor accounted for more than 10% of such purchases.

Foreign Currency: The U.S. dollar has been determined to be the functional currency of all foreign subsidiaries. The assets and liabilities of our foreign subsidiaries are remeasured from their local currency to U.S. dollars at current or historic exchange rates, as appropriate. Revenues and expenses are remeasured from any foreign currencies to U.S. dollars using historic or average monthly exchange rates, as appropriate, for the month in which the transaction occurred. Remeasurement gains and losses are included in selling, general and administrative expenses or income taxes, as appropriate. The assets, liabilities, revenues and expenses of our foreign subsidiaries are individually less than 10% of our respective consolidated amounts. The euro, Canadian dollar and Chinese yuan are our primary foreign currencies. Remeasurement gains and losses have not been significant.

We enter into forward contracts to hedge against unfavorable currency fluctuations in our monetary assets and liabilities in our European and Canadian operations. These contracts are designed to minimize the effect of fluctuations in foreign currencies. Such derivative instruments are not designated as hedging instruments and, therefore, are recorded at fair value as a current asset or liability, and any changes in fair value are recorded in our consolidated statements of operations.

F-10

The fair value of our foreign exchange forward contracts in the consolidated balance sheets is shown in the table below:

Derivatives Not Designated as Hedging Instruments	Consolidated Balance Sheet Location	May 31, 2013		May 31, 2012
Foreign exchange forward contracts	Other assets	$	114	$	179

The table below provides data about the amount of fiscal 2013 and 2012 losses recognized in income for derivative instruments not designated as hedging instruments:

Derivatives Not Designated	Location of Loss Recognized	Year ended May 31,
as Hedging Instruments	in Income on Derivatives	2013		2012
Foreign exchange forward contracts	Selling, general and administrative expenses	$	306	$	507

Net Income Per Common and Common Equivalent Share: Basic earnings per share (“EPS”) is computed as net income divided by the weighted average number of shares of common stock outstanding and shares issuable for vested restricted stock units for the reported year, excluding the dilutive effects of restricted stock, stock options and other potentially dilutive securities. Diluted EPS is computed as net income divided by the weighted average number of shares outstanding of common stock and common stock equivalents for the reported year. The dilutive effects of restricted stock and stock options are computed using the treasury stock method.

Cash Flow:

Non-Cash Investing and Financing Activities:

We had rental equipment purchases, not yet paid for, totaling $4,965 and $5,418 as of May 31, 2013, and 2012 respectively. We had sales of used equipment, not yet collected, of $11,419 and $10,021 as of May 31, 2013 and 2012, respectively, included in accounts receivable, and net investment in sales-type leases included in other assets. During fiscal 2013 and 2012, we transferred $2,937 and $2,207 respectively, of demonstration equipment, included in other assets, to rental and lease equipment.

Supplemental disclosures of cash paid (refunded) during the fiscal year for:

Year ended May 31,	2013		2012			2011
Interest	$	180	$	21		$	56
Income taxes		15,579		(543	)		(2,048	)

Stock-Based Compensation: Share-based payments to employees, including grants of employee stock options, are recognized in the consolidated financial statements as compensation expense over the period that an employee provides service in exchange for the award based on its fair value on the date of grant. Compensation expense resulting from restricted stock and restricted stock units is measured at fair value on the date of grant and is recognized in selling, general and administrative expenses over the vesting period (see Note 12 for further discussion).

Recent Accounting Pronouncements: In June 2011, the financial accounting standards board (“FASB”) issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity is required to present components of comprehensive income in either (1) a continuous statement of net income or (2) two separate but consecutive statements. This guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption of the new guidance is permitted and full retrospective application is required. We adopted this guidance effective June 1, 2013 with no material impact on our financial condition, results of operations or cash flows.

In September 2011, the FASB issued guidance to simplify how an entity tests goodwill for impairment. The amendments in the update provide for an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity that adopts this option will no longer be required to calculate the fair value of a reporting unit (Step 1) unless the entity determines, based on a qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. We adopted this guidance effective June 1, 2012 with no material impact on our consolidated financial position, results of operations or cash flows.

F-11

In July 2012, the FASB issued guidance to simplify how an entity tests indefinite-lived intangible assets other than goodwill for impairment and permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after December 15, 2011. The guidance for the qualitative process became effective for our first quarter of fiscal 2013, and had no material impact on our consolidated financial position, results of operations or cash flows.

In February 2013, the FASB issued guidance on reporting the effect of significant reclassifications out of accumulated other comprehensive income. If the amount being reclassified is required under GAAP to be reclassified in its entirety to net income, an entity is required to report the effect of these reclassifications on the respective line items in net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. The guidance is effective prospectively for reporting periods beginning after December 15, 2013. The new guidance affects disclosures only, and is not expected to impact our consolidated financial position, results of operations or cash flows.

Other Comprehensive Income: Comprehensive income is equivalent to net income for all periods presented.

Note 2: Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, supplemental executive retirement plan assets and liabilities, and foreign currency derivatives. The fair value of financial assets and liabilities can be determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:

Level 1 – Observable inputs, such as quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or through corroboration with observable market data; and

Level 3 – Unobservable inputs, for which there is little or no market data for the assets or liabilities, such as internally-developed valuation models.

F-12

Our assets and liabilities measured at fair value on a recurring basis were determined as follows:

	At May 31, 2013
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market funds	$	14	$	—	$	—	$	14
Supplemental executive retirement plan
Money market fund		113		—		—		113
Mutual funds		2,834		—		—		2,834
Foreign exchange forward contracts		—		114		—		114
Total assets measured at fair value	$	2,961	$	114	$	—	$	3,075

	At May 31, 2012
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market funds	$	2,507	$	—	$	—	$	2,507
Supplemental executive retirement plan
Money market fund		80		—		—		80
Mutual funds		2,290		—		—		2,290
Foreign exchange forward contracts		—		179		—		179
Total assets measured at fair value	$	4,877	$	179	$	—	$	5,056

The fair value measures for our money market funds and supplemental executive retirement plan asset (see Note 9 for further discussion our our supplemental executive retirement plan asset) were derived from quoted market prices in active markets and are included in Level 1 inputs. Foreign currency forward contracts were valued based on observable market spot and forward rates as of our reporting date and are included in Level 2 inputs.

Note 3: Acquisitions

Equipment Management Technology, Inc.

On August 24, 2011, pursuant to an Asset Purchase Agreement (“APA”), we completed the purchase of certain assets and the assumption of specified post-closing liabilities of Equipment Management Technology, Inc., a Nevada Corporation (“EMT”), for cash consideration of $10,673. EMT, headquartered in Las Vegas, Nevada, was a provider of electronic T&M equipment. We acquired EMT in order to facilitate growth in our T&M business. EMT had previously filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada. The sale was approved by the Bankruptcy Court on August 11, 2011, and the related sale order was issued on August 12, 2011. At closing, $500 was deposited into an escrow account for any post-closing adjustments that reduce the purchase price. We have accounted for the acquisition of EMT as a business combination in accordance with accounting guidance.

At August 31, 2011, we completed our estimates of the fair value of rental and lease equipment and deferred revenue. Due to the timing of the acquisition, we completed our evaluation of intangible assets and accounts receivable in our second quarter ended November 30, 2011. We acquired gross accounts

F-13

receivable of $972, of which an estimated $430 was not expected to be collected, resulting in a fair value of $542. Under accounting guidance, a bargain purchase gain results if the fair value of the purchase consideration is less than the net fair value of the assets acquired and liabilities assumed. We recorded a bargain purchase gain of $3,194, net of deferred taxes, related to our acquisition of EMT at August 31, 2011. We believe that we were able to negotiate a bargain purchase price as a result of our access to the liquidity necessary to complete the transaction and EMT’s recurring losses and recent bankruptcy filing.

The following table provides the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition.

Total cash consideration	$	10,673
Preliminary purchase price allocation:
Accounts receivable		542
Rental and lease equipment		15,896
Deferred tax liability		(2,092	)
Deferred revenue		(479	)
Net assets acquired		13,867
Bargain purchase gain, net of deferred taxes of $2,092	$	(3,194	)

The bargain purchase gain is classified separately in our condensed consolidated statements of operations.

Acquisition-related transaction costs of $55 were accounted for as expenses in the periods in which the costs were incurred and are included in our selling, general and administrative expenses during fiscal 2012.

The acquisition of EMT was an asset purchase, and EMT’s operations were integrated with ours immediately after the acquisition date. Revenues and income before income taxes from the acquired assets included in our consolidated statements of operations were $5,232 and $2,862, respectively, for fiscal 2012.

During the second and third quarters of fiscal 2012, we increased the bargain purchase gain by a total of $396 ($241, net of deferred tax), consisting of (i) $140, representing the estimated fair value of customer relationships acquired, (ii) $273, of post-closing adjustments, which were disbursed from the escrow funds in accordance with the APA, offset by (iii) $17, representing the final determination of assets acquired and other components of the purchase price.

Supplemental pro forma information reflecting the acquisition of EMT as if it occurred on June 1, 2010 is not practicable because we are not able to obtain reliable historical financial information for 2010 and 2011, primarily due to a deterioration of the organization and controls leading up to and following EMT’s February 2011 bankruptcy filing.

Telogy, LLC

We recorded additional bargain purchase gain associated with our March 31, 2010 acquisition of Telogy LLC (“Telogy”) of $342 ($202, net of deferred tax), during the fiscal year ended May 31, 2011. The increase in the bargain purchase gain consisted of (i) $260, representing the final determination of assets acquired and other components of the purchase price in accordance with specific provisions of the APA, and (ii) $82, resulting from a final determination of fair value of certain assets and liabilities acquired from Telogy.

Note 4: Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets consist of purchased customer relationships and trade names.

Our goodwill and intangibles at May 31, 2013 are the result of our acquisition of EMT on August 24, 2011, Telogy on March 31, 2010, and Rush Computer Rentals, Inc. on January 31, 2006.

F-14

The changes in carrying amount of goodwill and other intangible assets for fiscal 2013 and 2012 were as follows:

	Balance as of June 1, 2012 (net of amortization)		Additions		Amortization			Balance as of May 31,  2013
Goodwill	$	3,109	$	—	$	—		$	3,109
Trade name		411		—		—			411
Customer relationships		790		—		(164	)		626
	$	4,310	$	—	$	(164	)	$	4,146
	Balance as of June 1,  2011 (net of amortization)		Additions		Amortization			Balance as of May 31,  2012
Goodwill	$	3,109	$	—	$	—		$	3,109
Trade name		411		—		—			411
Customer relationships		803		140		(153	)		790
	$	4,323	$	140	$	(153	)	$	4,310

Goodwill is not deductible for tax purposes.

We evaluate the recoverability of goodwill and indefinite-lived intangible assets annually as of May 31, and whenever events or changes in circumstances indicate to us that the carrying amount may not be recoverable. There were no conditions that indicated any impairment of goodwill or identifiable intangible assets as of May 31, 2013, 2012 and 2011.

Intangible assets with finite useful lives are amortized over their respective estimated useful lives. The following table provides a summary of our intangible assets:

	May 31, 2013
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name		—	$	411	$	—		$	411
Customer relationships		3-8 years		2,094		(1,468	)		626
			$	2,505	$	(1,468	)	$	1,037
	May 31, 2012
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name		—	$	411	$	—		$	411
Customer relationships		3-8 years		2,094		(1,304	)		790
			$	2,505	$	(1,304	)	$	1,201

Amortization expense was $164, $153 and $184 for fiscal 2013, 2012 and 2011, respectively.

Amortization expense for customer relationships and non-compete agreements is included in selling, general and administrative expenses. The following table provides estimated future amortization expense related to intangible assets:

Year ending May 31,	Future Amortization
2014	$	164
2015		129
2016		118
2017		118
2018		97
	$	626

F-15

Note 5: Borrowings

On November 29, 2012, we entered into a sixth amendment to our commercial credit agreement (“Credit Agreement Amendment”) with Union Bank, N.A. (“Union Bank”). The Credit Agreement Amendment amends the commercial credit agreement dated September 29, 2008 (the “Commercial Credit Agreement”), pursuant to which the lender provides us with a revolving line of credit. The Credit Agreement Amendment amends our Commercial Credit Agreement with Union Bank by (i) increasing the permitted maximum aggregate outstanding principal amount under the Commercial Credit Agreement from $25,000 to $50,000; (ii) extending the term and maturity date of the Commercial Credit Agreement from October 1, 2015 to November 30, 2015; (iii) deleting the quick ratio financial covenant; (iv) amending the amounts and payment dates of the annual commitment fees such that we agree to pay a $25 commitment fee on November 30, 2012, a $50 commitment fee on November 30, 2013 and a $50 commitment fee on November 30, 2014; (v) amending the minimum tangible net worth financial covenant; and (vi) replacing the positive net earnings financial covenant with an earnings before interest, taxes, depreciation and amortization financial covenant. We are in compliance with all loan covenants at May 31, 2013.

At May 31, 2013, we had $10,000 of borrowings outstanding under the Commercial Credit Agreement. The weighted average interest rate under the line of credit was approximately 2.35%. There were no borrowings outstanding at May 31, 2012.

Note 6: Income Taxes

We recognize a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when reported amounts of the assets or liabilities are recovered or settled. The deferred tax assets are periodically reviewed for recoverability.

Accounting guidance for accounting for uncertain tax positions prescribes a recognition threshold required to meet before being recognized in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.

We recognize interest and penalties accrued with respect to uncertain tax positions as components of our income tax provision. At May 31, 2013 and 2012, we did not have any accrual for interest and penalties.

The reconciliation of our unrecognized tax benefits is as follows for the fiscal years ended May 31:

	2013		2012		2011
Balance as of June 1	$	—	$	—	$	4,691
Decrease related to prior year tax positions		—		—		(4,691	)
Balance as of May 31	$	—	$	—	$	—

We are subject to taxation in the U.S., as well as various states and foreign jurisdictions. We have substantially settled all income tax matters for the United States federal jurisdiction for years through fiscal 2009. Major state jurisdictions have been examined through fiscal 2004 and 2005, and foreign jurisdictions have not been examined for their respective maximum statutory periods.

For financial reporting purposes, income before income taxes comprised the following as of May 31:

	2013			2012			2011
Domestic	$	37,162		$	40,364		$	36,817
Foreign		(49	)		(359	)		472
	$	37,113		$	40,005		$	37,289

F-16

The provision for income taxes consisted of the following for the fiscal years ended May 31:

	2013			2012		2011
Current
Federal	$	17,007		$	1,057	$	(5,583	)
State		1,417			1,523		2,028
Foreign		573			538		(521	)
Deferred
Federal		(4,401	)		10,541		17,083
State		257			559		540
Foreign		(494	)		15		(14	)
	$	14,359		$	14,233	$	13,533

The following reconciles the statutory federal income tax rate to the effective tax rate for the fiscal years ended May 31:

	2013			2012			2011
Statutory federal rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		3.0			3.4			4.5
Derecognition of uncertain tax positions		—			—			(3.4	)
Bargain purchase gain		—			(3.0	)		(0.2	)
Foreign tax refund		—			(0.4	)		—
Permanent differences resulting from valuation allowances		0.7			0.7			0.3
Other		—			(0.1	)		0.1
Effective tax rate		38.7	%		35.6	%		36.3	%

Our effective tax rate in fiscal 2013, 2012 and 2011 was 38.7%, 35.6% and 36.3%, respectively. The lower effective rate in fiscal 2012 was due to the bargain purchase gain on EMT and state tax credits offset by an increase in the foreign valuation allowance. The lower effective rate in fiscal 2011 was due to our effective settlement of our remaining uncertain tax positions and the resulting derecognition of $1,396 for interest and penalties previously recognized in our income tax provision. Tax advantaged investments reduced expense by $0, $0 and $2 for fiscal 2013, 2012 and 2011, respectively.

The tax effects of temporary differences that gave rise to significant portions of the net deferred tax liabilities consisted of the following at May 31:

	2013			2012
Deferred tax assets:
Goodwill and intangible assets	$	—		$	300
Allowance for doubtful accounts		105			206
Deferred compensation and benefits		3,545			2,813
Net operating losses		1,110			871
Valuation allowance		(1,110	)		(871	)
Other		908			1,390
		4,558			4,709
Deferred tax liabilities:
Accumulated depreciation		(51,948	)		(56,532	)
Deferred taxes on bargain purchase		(2,207	)		(2,548	)
Intangible asset		(143	)		—
Net deferred tax liabilities	$	(49,740	)	$	(54,371	)

F-17

We determined that a valuation allowance was required in fiscal 2013 and 2012 of $1,110 and $871, respectively, for our deferred tax asset related to certain foreign net operating loss carry forwards and other related timing differences, which, if unused, will expire between fiscal 2014 and 2017. The increase in the valuation allowance for fiscal 2013, 2012 and 2011 was not significant. As of May 31, 2013, 2012 and 2011, U.S. income taxes had not been assessed on approximately $1,833, $1,599 and $1,425, respectively, of undistributed earnings of foreign subsidiaries because we consider these earnings to be invested indefinitely.

Note 7: Sales-type Leases

We have certain customer leases providing bargain purchase options, which are accounted for as sales-type leases. Interest income is recognized over the life of the lease using the effective interest method.

The initial acceptance of customer finance arrangements is based on an in-depth review of each customer’s credit profile, including review of third party credit reports, customer financial statements and bank verifications. We monitor the credit quality of our sales-type lease portfolio based on payment activity and the related finance lease receivable aging. This credit quality is assessed on a monthly basis. Our historical losses on finance lease receivables are insignificant, and therefore we do not have a specific allowance for credit losses.

The minimum lease payments receivable and the net investment included in other assets were as follows at May 31:

	2013			2012
Gross minimum lease payments receivable	$	9,862		$	12,284
Less—unearned interest		(425	)		(603	)
Net investment in sales-type lease receivables	$	9,437		$	11,681

The following table provides estimated future minimum lease payments by year related to sales-type leases:

Year ending May 31,	Future Amortization
2014	$	6,561
2015		2,726
2016		458
2017		117
	$	9,862

Note 8: Computation of Earnings Per Share

The following is a reconciliation of the denominator used in the computation of basic and diluted EPS for the fiscal years ended May 31:

	2013		2012		2011
Denominator:
Denominator for basic earnings per share—weighted average common shares outstanding (including shares issuable for vested restricted stock units)		24,226		23,983		23,974
Effect of unvested restricted stock units		43		169		98
Diluted shares used in per share calculation		24,269		24,152		24,072
Net income	$	22,754	$	25,772	$	23,756
Earnings per share:
Basic	$	0.94	$	1.07	$	0.99
Diluted	$	0.94	$	1.07	$	0.99

Note 9: Rentals Under Noncancellable Operating Leases

We rent equipment on a short-term basis and lease equipment for periods of typically one to three years. Such leases provide the lessee with the option to renew the lease term, purchase the equipment at fair market value, or continue to rent on a month-to-month basis. Our operating leases do not provide for contingent rentals.

Our cost of equipment under operating leases at May 31, 2013, with remaining noncancellable lease terms of more than one year, was $15,215, before accumulated depreciation of $4,242, and the net book value was $10,973.

F-18

The following sets forth a schedule of minimum future rentals to be received on noncancellable operating leases with remaining lease terms of more than one year as of May 31, 2013:

2014	$	4,747
2015		2,943
2016		647
2017		34
2018		15
	$	8,386

Note 10: Other Property

Other property, at cost, consisted of the following at May 31:

	2013			2012
Land	$	6,985		$	6,985
Buildings		15,774			15,442
Furniture and other equipment		9,730			9,071
Leasehold improvements		210			205
		32,699			31,703
Less—accumulated depreciation and amortization		(18,873	)		(17,832	)
	$	13,826		$	13,871

Depreciation expense was $1,149, $1,157 and $1,020 for fiscal 2013, 2012 and 2011, respectively. Depreciation expense is included in selling, general and administrative expenses.

Note 11: Commitments and Contingencies

We lease certain facilities under various operating leases. Most of the lease agreements provide us with the option of renewing our leases at the end of the initial lease term, at fair market rates, for periods of up to five years. In most cases, we expect that in the normal course of business facility leases will be renewed or replaced by other leases.

Minimum payments over the next five years under these leases as of May 31, 2013, exclusive of property taxes and insurance, were as follows:

2014	$	719
2015		449
2016		182
2017		100
2018		59
	$	1,509

Rent expense was $1,125, $1,007 and $1,057 for fiscal 2013, 2012 and 2011, respectively.

We are subject to legal proceedings and business disputes involving ordinary routine legal matters and claims incidental to our business. The ultimate legal and financial liability with respect to such matters generally cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements or awards against us. Estimates for losses from litigation are made after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, we may be required to record either more or less litigation expense. We are not involved in any pending or threatened legal proceedings that we believe could reasonably be expected to have a material adverse effect on our financial condition, results of operations or cash flows.

Note 12: Stock Option Plans and Equity Incentive Plan

Our 2005 Equity Incentive Plan (the “Equity Incentive Plan”) authorizes our Board of Directors to grant incentive and non-statutory stock option grants, stock appreciation rights, restricted stock awards, restricted stock units, performance unit awards and performance share awards covering a maximum of 1,000 shares of our common stock. The Equity Incentive Plan replaced our prior stock option plans, under which there are no outstanding options. Pursuant to the Equity Incentive Plan, we granted incentive and

F-19

non-statutory options to directors, officers and key employees at prices not less than 100% of the fair market value on the day of grant. All outstanding options expired in October 2011. In addition, we have granted restricted stock and restricted stock units to directors, officers and key employees. The Equity Incentive Plan provides for a variety of vesting dates. Our typical vesting period is three years.

Restricted Stock Units

Restricted stock units represent the right to receive one share of our common stock provided that the vesting conditions are satisfied. The following table represents restricted stock unit activity for fiscal 2013:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Nonvested at June 1, 2012		203		$	13.82
Granted		73			17.11
Vested		(111	)		12.91
Forfeited/canceled		(11	)		12.88
Nonvested at May 31, 2013		154		$	16.13

We granted 73, 101 and 107 restricted stock units during fiscal 2013, 2012 and 2011, respectively. As of May 31, 2013, we have unrecognized share-based compensation cost of approximately $1,270 associated with restricted stock units. This cost is expected to be recognized over a weighted-average period of approximately 1.6 years. We had 246, 145 and 64 of vested restricted stock units as of May 31, 2013, 2012 and 2011, respectively, which received dividends upon vesting and are convertible to common shares five years after grant date.

The total fair value of shares that vested during fiscal 2013 was $1,439, which was calculated based on the closing price of our common stock on the Nasdaq Stock Market on the applicable date of vesting.

Accounting for Share Based Payments

Accounting guidance requires all share-based payments to employees, including grants of employee stock options, restricted stock and restricted stock units, to be recognized as compensation expense in the consolidated financial statements based on their fair values. Compensation expense is recognized over the period that an employee provides service in exchange for the award, approximately 3 years.

Forfeitures are estimated at the date of grant based on historical experience. We use the market price of our common stock on the date of grant to calculate the fair value of each grant of restricted stock and restricted stock units.

We recorded $1,330, $1,438 and $956 of stock-based compensation as part of selling, general and administrative expenses for fiscal 2013, 2012 and 2011, respectively.

We receive a tax deduction for certain stock option exercises during the period the options are exercised, generally for the excess of the fair value of our common stock at the date of exercise over the exercise price of the options, and dividends paid on vested restricted stock units. Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options. The total tax benefit realized from stock option exercises, shares issued and dividend payments for vested restricted stock units for fiscal 2013, 2012 and 2011 was $251, $102 and $37, respectively. Cash received from stock option exercises was $0, $0 and $197 for fiscal 2013, 2012 and 2011, respectively.

Note 13: Savings Plan, Employee Stock Ownership Plan and Retirement Plan

We maintain a Savings Plan (“401(k)”) and a frozen Employee Stock Ownership Plan (“ESOP”). Employees become eligible to participate in the 401(k) after 90 days of employment. We have the option to match contributions of participants at a rate we determine each year. For participants with three or more years of service, we also may elect to make additional discretionary matching contributions in excess of the rate elected for participants with less than three years of service.

The Board of Directors determines the amount to be contributed annually to the 401(k) in cash, provided that such contributions shall not exceed the amount deductible for federal income tax purposes. Cash contributions to the 401(k) of $749, $728 and $483 were made for fiscal 2013, 2012 and 2011, respectively.

F-20

The ESOP was established in 1975 and was frozen in 1994, at which time all participants became fully vested. Contributions to the ESOP were invested primarily in our common stock. The ESOP was terminated in fiscal 2013.

We have a Supplemental Executive Retirement Plan (“SERP”) that provides for automatic deferral of contributions in excess of the maximum amount permitted under the 401(k) for our executives who choose to participate. The SERP is a non-qualified deferred compensation program, and we have an unfunded contractual obligation under this plan. We have the option to match contributions of participants at a rate we determine each year. Cash contributions to the SERP were $29, $30 and $14 for fiscal 2013, 2012 and 2011, respectively. As of May 31, 2013 and 2012, we had $2,947 and $2,370, respectively, of obligations for this plan included in accrued expenses. We have investments in money market stock and bond funds, as directed by the participants, of $2,947 and $2,370 as of May 31, 2013 and 2012, respectively, included in other assets.

Note 14: 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: the rental, lease and sale of T&M and of DP equipment.

Although we have separate operating segments for T&M and DP equipment, these two segments are aggregated into a single reportable segment because they have similar economic characteristics and qualitative factors. The T&M and DP segments have similar long-term average gross margins, and both rent, lease and sell electronic equipment to large corporations, purchase directly from major manufacturers, configure and calibrate the equipment, and ship directly to customers.

Our equipment pool, based on acquisition cost, comprised $423,306 of T&M equipment and $35,947 of DP equipment at May 31, 2013, and $409,686 of T&M equipment and $37,595 of DP equipment at May 31, 2012. Revenues for these operating segments were as follows for the fiscal year ended May 31:

	T&M		DP		Total
2013
Rentals and leases	$	120,846	$	15,745	$	136,591
Sales of equipment and other revenues		109,700		2,440		112,140
	$	230,546	$	18,185	$	248,731
2012
Rentals and leases	$	113,540	$	16,197	$	129,737
Sales of equipment and other revenues		116,417		2,400		118,817
	$	229,957	$	18,597	$	248,554
2011
Rentals and leases	$	101,273	$	16,789	$	118,062
Sales of equipment and other revenues		108,450		2,217		110,667
	$	209,723	$	19,006	$	228,729

No single customer accounted for more than 10% of total revenues during fiscal 2013, 2012 or 2011. Selected country information is presented below:

Year ended May 31,	2013		2012		2011
Revenues: 1
U.S.	$	211,745	$	214,354	$	199,861
Other 2		36,986		34,200		28,868
Total	$	248,731	$	248,554	$	228,729

F-21

As of May 31,	2013		2012		2011
Net Long Lived Assets: 3
U.S.	$	198,956	$	207,449	$	176,268
Other 2		49,726		49,595		33,491
Total	$	248,682	$	257,044	$	209,759

¹  Revenues by country are based on the location of shipping destination, whether the order originates in the U.S. parent or a foreign subsidiary.

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

³ Net long-lived assets include rental and lease equipment and other property, net of accumulated depreciation and amortization. Subsequent to the issuance of the May 31, 2012 consolidated financial statements, we determined that, for geographic disclosure purposes, the previously reported amount of net long-lived assets as of May 31, 2012 and 2011 should not have included goodwill and intangibles (which totaled $4,310 at May 31, 2012 and $4,323 at May 31, 2011) and, accordingly, such amounts have been excluded from the May 31, 2012 and 2011 balances, respectively, displayed in the table above.

Note 15: Quarterly Information (Unaudited)

Summarized quarterly financial data for fiscal 2013 and 2012 was as follows:

	Total		Gross		Income Before		Net		Earnings per share
	Revenues		Profit		Taxes		Income		Basic		Diluted
Fiscal Year 2013
First Quarter	$	58,501	$	22,022	$	8,391	$	5,086	$	0.21	$	0.21
Second Quarter		65,192		24,388		10,457		6,239		0.26		0.26
Third Quarter		64,672		22,160		8,437		5,037		0.21		0.21
Fourth Quarter		60,366		24,684		9,828		6,392		0.27		0.26
Annual totals	$	248,731	$	93,254	$	37,113	$	22,754	$	0.94	$	0.94
Fiscal Year 2012
First Quarter	$	58,650	$	21,740	$	11,913	$	8,505	$	0.35	$	0.35
Second Quarter		61,643		22,588		9,735		6,019		0.25		0.25
Third Quarter		60,079		20,883		8,023		4,995		0.21		0.21
Fourth Quarter		68,182		24,125		10,334		6,253		0.26		0.26
Annual totals	$	248,554	$	89,336	$	40,005	$	25,772	$	1.07	$	1.07

We have reclassified certain expenses previously included in selling, general and administrative expenses to costs of rentals and leases, excluding depreciation, in our consolidated statements of operations, thereby reducing gross profit by $2,773, $2,780, $2,680 and $2,478 for the first, second, third and fourth quarter of fiscal 2012, to conform to the current year presentation.

Note 16: Subsequent Events

On June 5, 2013 our Board of Directors declared a quarterly cash dividend of $0.20 per common share. The dividend was paid on July 10, 2013 to shareholders of record as of June 20, 2013.

F-22

EX-10.26

Exhibit 10.26

*** Confidential treatment has been requested with respect to certain portions of this Agreement. Omitted portions have been filed separately with the Securities and Exchange Commission.

ADDENDUM Exhibit ADM

AMENDMENT#18 TO AUTHORIZED TECHNOLOGY PARTNER

PROGRAM AGREEMENT #ANT76

by and between

Electro Rent Corporation and

Agilent Technologies, Inc.

The above referenced Program Agreement (“Agreement”) executed by and between Agilent Technologies, Inc. (“Agilent”) and Electro Rent Corporation (“Electro Rent”) as of the 1st day of December, 2009 is hereby amended as follows:

1. Products contained within the following Product Categories/Descriptions are hereby removed from the Agreement.

[***]	[***]
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[***]

2. Products contained within the following Product Categories/Descriptions which are defined as “accessories” can be sold under the Agreement and will receive a [***] discount. A detailed product listing is available upon request.

[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]	[***]
[***]

3. The attached Excel Spreadsheet titled ATP Approved Product Categories dated May 31, 2013 contains a listing of all eligible Product Categories/Descriptions available under the Agreement at a [***] discount. A detailed product listing is available upon request.

4. Post sales support can be sold for the following Product Categories/Descriptions and will receive a [***] discount.

[***]	[***]
[***]

[***] – Confidential portions of this document denoted by [***] have been redacted and filed separately with the Securities and Exchange Commission.

*** Confidential treatment has been requested with respect to certain portions of this Agreement. Omitted portions have been filed separately with the Securities and Exchange Commission.

ADDENDUM Exhibit ADM

5. All Products included in ATP Approved Products Categories Excel Spreadsheet dated May 31, 2013 (“Exhibit APC”), referred to above, shall be deemed Category C Products as defined in Agreement number ANT76 and Exhibit R601US, except as otherwise indicated in Exhibit APC.

6. Add the following as subparagraph g. to Agreement No. ANT76, in Section 1. Appointment:

g. Subject to the terms in this Section 1, Appointment, with respect to Products for which Reseller’s appointment is exclusive, if Agilent adds [***], it shall be deemed a reduction in the [***] and Agilent will [***] Reseller in accordance with Paragraph 1 of Exhibit R601US of this Agreement, i.e., an amount equal to [***] of the net order value for any orders received and accepted by Agilent from the added ATP reseller or resellers.

ALL OTHER TERMS AND CONDITIONS OF PROGRAM AGREEMENT ANT76 REMAIN UNCHANGED AND IN FULL FORCE AND EFFECT.

Effective this June 1, 2013

AGREED TO:		AGREED TO:
Customer:		Agilent:	Agilent Technologies, Inc.
	/s/ Steve Markheim		/s/ Ginger Davis
	Authorized Representative Signature		Authorized Representative Signature
Name:		Name:	Ginger Davis
Title:		Title:	Contracts Specialist
Address:		Address:	US TMO Customer Business Center 9780 S. Meridian Blvd. Englewood, CO 80112

[***] – Confidential portions of this document denoted by [***] have been redacted and filed separately with the Securities and Exchange Commission.

Exhibit APC

ATP Approved [***] Excel Spreadsheet Dated May 31, 2013
Exhibit	Discount %	Line Qualifier Value From	Description
[***]	[***]	[***]	[***]
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		[***]	[***]
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[***] – Confidential portions of this document denoted by [***] have been redacted and filed separately with the Securities and Exchange Commission.

ATP Approved [***] Excel Spreadsheet Dated May 31, 2013
Exhibit	Discount %	Line Qualifier Value From	Description
		[***]	[***]
		[***]	[***]
		[***]	[***]
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		[***]	[***]
		[***]	[***]

[***] – Confidential portions of this document denoted by [***] have been redacted and filed separately with the Securities and Exchange Commission.

ATP Approved [***] Excel Spreadsheet Dated May 31, 2013
Exhibit	Discount %	Line Qualifier Value From	Description
		[***]	[***]
		[***]	[***]
		[***]	[***]
		[***]	[***]
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[***] – Confidential portions of this document denoted by [***] have been redacted and filed separately with the Securities and Exchange Commission.

ATP Approved [***] Excel Spreadsheet Dated May 31, 2013
Exhibit	Discount %	Line Qualifier Value From	Description
		[***]	[***]
		[***]	[***]

* Product Categories indicated above are limited to [***] only (except for [***]). These [***] are not included in the [***] list for the US.

[***] – Confidential portions of this document denoted by [***] have been redacted and filed separately with the Securities and Exchange Commission.

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements Nos. 333-130487, 333-110194, and 333-17295 on Form S-8 of our reports dated August 14, 2013, relating to the consolidated financial statements of Electro Rent Corporation, and the effectiveness of Electro Rent Corporation’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Electro Rent Corporation for the year ended May 31, 2013.

/s/ DELOITTE & TOUCHE LLP

Los Angeles, CA

August 14, 2013

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification

By Principal Executive Officer

I, Daniel Greenberg, certify that:

1. I have reviewed this Annual Report on Form 10-K of Electro Rent Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2013

/s/ Daniel Greenberg

Daniel Greenberg

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification

By Principal Financial Officer

I, Craig R. Jones, certify that:

1. I have reviewed this Annual Report on Form 10-K of Electro Rent Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2013

/s/ Craig R. Jones

Craig R. Jones

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Section 1350 Certification

By Principal Executive Officer

I, Daniel Greenberg, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Electro Rent Corporation (the “Company”) for the fiscal year ended May 31, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission upon request.

Dated: August 14, 2013

/s/ Daniel Greenberg

Daniel Greenberg

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

Section 1350 Certification

By Principal Financial Officer

I, Craig R. Jones, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Electro Rent Corporation (the “Company”) for the fiscal year ended May 31, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934,as amended, and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission upon request.

Dated: August 14, 2013

/s/ Craig R. Jones

Craig R. Jones

Chief Financial Officer

XML

Subsequent Events - Additional Information (Detail) (USD $)	12 Months Ended			1 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011	Jun. 05, 2013 Subsequent Event
Subsequent Event [Line Items]
Dividends declared per share	$ 1.80	$ 0.80	$ 0.60	$ 0.20
Dividend payment date				Jul. 10, 2013
Dividend payment shareholders record date				Jun. 20, 2013

XML

Commitments and Contingencies

12 Months Ended

May 31, 2013

Commitments and Contingencies

Note 11: Commitments and Contingencies

We lease certain facilities under various operating leases. Most of the lease agreements provide us with the option of renewing our leases at the end of the initial lease term, at fair market rates, for periods of up to five years. In most cases, we expect that in the normal course of business facility leases will be renewed or replaced by other leases.

Minimum payments over the next five years under these leases as of May 31, 2013, exclusive of property taxes and insurance, were as follows:

2014	$	719
2015		449
2016		182
2017		100
2018		59
	$	1,509

Rent expense was $1,125, $1,007 and $1,057 for fiscal 2013, 2012 and 2011, respectively.

We are subject to legal proceedings and business disputes involving ordinary routine legal matters and claims incidental to our business. The ultimate legal and financial liability with respect to such matters generally cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements or awards against us. Estimates for losses from litigation are made after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, we may be required to record either more or less litigation expense. We are not involved in any pending or threatened legal proceedings that we believe could reasonably be expected to have a material adverse effect on our financial condition, results of operations or cash flows.

XML

Reconciliation of Unrecognized Tax Benefits (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011	Nov. 30, 2011
Reconciliation of Unrecognized Tax Benefits [Line Items]
Beginning balance			$ 4,691	$ 4,515
Decrease related to prior year tax positions			(4,691)
Ending balance				$ 4,515

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	May 31, 2013	May 31, 2012
Allowance for doubtful accounts	$ 457	$ 522
Accumulated depreciation on rental and lease equipment	224,397	204,108
Accumulated depreciation and amortization for other property	18,873	17,832
Amortization of intangibles	$ 1,468	$ 1,304
Preferred stock, par value	$ 1	$ 1
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued
Common stock, par value
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	23,995,626	23,987,826
Common stock, shares outstanding	23,995,626	23,987,826

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Goodwill and Other Intangible Assets

12 Months Ended

May 31, 2013

Goodwill and Other Intangible Assets

Note 4: Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Identifiable intangible assets consist of purchased customer relationships and trade names.

Our goodwill and intangibles at May 31, 2013 are the result of our acquisition of EMT on August 24, 2011, Telogy on March 31, 2010, and Rush Computer Rentals, Inc. on January 31, 2006.

The changes in carrying amount of goodwill and other intangible assets for fiscal 2013 and 2012 were as follows:

	Balance as of June 1, 2012 (net of amortization)		Additions		Amortization			Balance as of May 31,  2013
Goodwill	$	3,109	$	—	$	—		$	3,109
Trade name		411		—		—			411
Customer relationships		790		—		(164	)		626
	$	4,310	$	—	$	(164	)	$	4,146
	Balance as of June 1,  2011 (net of amortization)		Additions		Amortization			Balance as of May 31,  2012
Goodwill	$	3,109	$	—	$	—		$	3,109
Trade name		411		—		—			411
Customer relationships		803		140		(153	)		790
	$	4,323	$	140	$	(153	)	$	4,310

Goodwill is not deductible for tax purposes.

We evaluate the recoverability of goodwill and indefinite-lived intangible assets annually as of May 31, and whenever events or changes in circumstances indicate to us that the carrying amount may not be recoverable. There were no conditions that indicated any impairment of goodwill or identifiable intangible assets as of May 31, 2013, 2012 and 2011.

Intangible assets with finite useful lives are amortized over their respective estimated useful lives. The following table provides a summary of our intangible assets:

	May 31, 2013
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name		—	$	411	$	—		$	411
Customer relationships		3-8 years		2,094		(1,468	)		626
			$	2,505	$	(1,468	)	$	1,037
	May 31, 2012
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name		—	$	411	$	—		$	411
Customer relationships		3-8 years		2,094		(1,304	)		790
			$	2,505	$	(1,304	)	$	1,201

Amortization expense was $164, $153 and $184 for fiscal 2013, 2012 and 2011, respectively.

Amortization expense for customer relationships and non-compete agreements is included in selling, general and administrative expenses. The following table provides estimated future amortization expense related to intangible assets:

Year ending May 31,	Future Amortization
2014	$	164
2015		129
2016		118
2017		118
2018		97
	$	626

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

May 31, 2013

Roll Forward of Allowance For Doubtful Accounts

A roll forward of the allowance for doubtful accounts is as follows at May 31:

	2013			2012			2011
Beginning of year	$	522		$	602		$	536
Provision for doubtful accounts		445			233			500
Write-offs		(510	)		(313	)		(434	)
End of year	$	457		$	522		$	602

Summary of Other Assets

Other assets consisted of the following at May 31:

	2013		2012
Net investment in sales-type leases	$	9,437	$	11,681
Demonstration equipment		6,057		5,495
Supplemental executive retirement plan assets		2,947		2,370
Income taxes receivable		—		861
Prepaid expenses and other		2,905		2,865
	$	21,346	$	23,272

Fair Value of Foreign Exchange Forward Contracts

The fair value of our foreign exchange forward contracts in the consolidated balance sheets is shown in the table below:

Derivatives Not Designated as Hedging Instruments	Consolidated Balance Sheet Location	May 31, 2013		May 31, 2012
Foreign exchange forward contracts	Other assets	$	114	$	179

Losses Recognized in Income for Derivative Instruments

The table below provides data about the amount of fiscal 2013 and 2012 losses recognized in income for derivative instruments not designated as hedging instruments:

Derivatives Not Designated	Location of Loss Recognized	Year ended May 31,
as Hedging Instruments	in Income on Derivatives	2013		2012
Foreign exchange forward contracts	Selling, general and administrative expenses	$	306	$	507

Supplemental Disclosures of Cash Paid (Refunded)

Supplemental disclosures of cash paid (refunded) during the fiscal year for:

Year ended May 31,	2013		2012			2011
Interest	$	180	$	21		$	56
Income taxes		15,579		(543	)		(2,048	)

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Stock Option Plans and Equity Incentive Plan - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Right of restricted stock unit to receive common stock	1
Expected period to recognize the unrecognized share based compensation cost	3 years
Selling, general and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share based compensation	$ 1,330	$ 1,438	$ 956
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted	73,000	101,000	107,000
Unrecognized share based compensation cost	1,270
Expected period to recognize the unrecognized share based compensation cost	1 year 7 months 6 days
Vested restricted stock units	246,000	145,000	64,000
Exercise Of Conversion Right, Period	5
Fair value of shares vested	1,439
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total tax benefit realized	251	102	37
Cash received from stock option exercises	$ 0	$ 0	$ 197
2005 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares authorized	1,000,000
Minimum percentage for fair market value of grant	100.00%
Expiration date	Oct. 31, 2011
Prior stock option plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding options in prior stock option plans	0

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Reconciliation Between Statutory Federal Income Tax Rate and Effective Income Tax Rate from Continuing Operations (Detail)	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Schedule of Effective Tax Rate Reconciliation [Line Items]
Statutory federal rate	35.00%	35.00%	35.00%
State taxes, net of federal benefit	3.00%	3.40%	4.50%
Derecognition of uncertain tax positions			(3.40%)
Bargain purchase gain		(3.00%)	(0.20%)
Foreign tax refund		(0.40%)
Permanent differences resulting from valuation allowances	0.70%	0.70%	0.30%
Other		(0.10%)	0.10%
Effective tax rate	38.70%	35.60%	36.30%

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Stock Option Plans and Equity Incentive Plan

12 Months Ended

May 31, 2013

Stock Option Plans and Equity Incentive Plan

Note 12: Stock Option Plans and Equity Incentive Plan

Our 2005 Equity Incentive Plan (the “Equity Incentive Plan”) authorizes our Board of Directors to grant incentive and non-statutory stock option grants, stock appreciation rights, restricted stock awards, restricted stock units, performance unit awards and performance share awards covering a maximum of 1,000 shares of our common stock. The Equity Incentive Plan replaced our prior stock option plans, under which there are no outstanding options. Pursuant to the Equity Incentive Plan, we granted incentive and non-statutory options to directors, officers and key employees at prices not less than 100% of the fair market value on the day of grant. All outstanding options expired in October 2011. In addition, we have granted restricted stock and restricted stock units to directors, officers and key employees. The Equity Incentive Plan provides for a variety of vesting dates. Our typical vesting period is three years.

Restricted Stock Units

Restricted stock units represent the right to receive one share of our common stock provided that the vesting conditions are satisfied. The following table represents restricted stock unit activity for fiscal 2013:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Nonvested at June 1, 2012		203		$	13.82
Granted		73			17.11
Vested		(111	)		12.91
Forfeited/canceled		(11	)		12.88
Nonvested at May 31, 2013		154		$	16.13

We granted 73, 101 and 107 restricted stock units during fiscal 2013, 2012 and 2011, respectively. As of May 31, 2013, we have unrecognized share-based compensation cost of approximately $1,270 associated with restricted stock units. This cost is expected to be recognized over a weighted-average period of approximately 1.6 years. We had 246, 145 and 64 of vested restricted stock units as of May 31, 2013, 2012 and 2011, respectively, which received dividends upon vesting and are convertible to common shares five years after grant date.

The total fair value of shares that vested during fiscal 2013 was $1,439, which was calculated based on the closing price of our common stock on the Nasdaq Stock Market on the applicable date of vesting.

Accounting for Share Based Payments

Accounting guidance requires all share-based payments to employees, including grants of employee stock options, restricted stock and restricted stock units, to be recognized as compensation expense in the consolidated financial statements based on their fair values. Compensation expense is recognized over the period that an employee provides service in exchange for the award, approximately 3 years.

Forfeitures are estimated at the date of grant based on historical experience. We use the market price of our common stock on the date of grant to calculate the fair value of each grant of restricted stock and restricted stock units.

We recorded $1,330, $1,438 and $956 of stock-based compensation as part of selling, general and administrative expenses for fiscal 2013, 2012 and 2011, respectively.

We receive a tax deduction for certain stock option exercises during the period the options are exercised, generally for the excess of the fair value of our common stock at the date of exercise over the exercise price of the options, and dividends paid on vested restricted stock units. Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options. The total tax benefit realized from stock option exercises, shares issued and dividend payments for vested restricted stock units for fiscal 2013, 2012 and 2011 was $251, $102 and $37, respectively. Cash received from stock option exercises was $0, $0 and $197 for fiscal 2013, 2012 and 2011, respectively.

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Changes in Carrying Amount of Goodwill and Other Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill, Beginning Balance	$ 3,109	$ 3,109
Goodwill, Additions
Goodwill, Ending Balance	3,109	3,109	3,109
Goodwill and other intangible assets, Beginning balance	4,310	4,323
Goodwill and other intangible assets, Additions		140
Amortization	(164)	(153)	(184)
Goodwill and other intangible assets, Ending balance	4,146	4,310	4,323
Customer relationships, Ending Balance	626
Trade name
Acquired Finite-Lived Intangible Assets [Line Items]
Trade name, Beginning balance	411	411
Trade name, Additions
Trade name, Ending balance	411	411
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Customer relationships, Beginning Balance	790	803
Customer relationships, Additions		140
Amortization	(164)	(153)
Customer relationships, Ending Balance	$ 626	$ 790

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Components of Deferred Tax Assets and Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013	May 31, 2012
Deferred tax assets:
Goodwill and intangible assets		$ 300
Allowance for doubtful accounts	105	206
Deferred compensation and benefits	3,545	2,813
Net operating losses	1,110	871
Valuation allowance	(1,110)	(871)
Other	908	1,390
Net deferred tax asset	4,558	4,709
Deferred tax liabilities:
Accumulated depreciation	(51,948)	(56,532)
Deferred taxes on bargain purchase	(2,207)	(2,548)
Intangible asset	(143)
Net deferred tax liabilities	$ (49,740)	$ (54,371)

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Roll Forward of Allowance For Doubtful Accounts (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Allowance for Doubtful Accounts [Line Items]
Beginning of year	$ 522	$ 602	$ 536
Provision for doubtful accounts	445	233	500
Write-offs	(510)	(313)	(434)
End of year	$ 457	$ 522	$ 602

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

May 31, 2013

Changes in Carrying Amount of Goodwill and Other Intangible Assets

The changes in carrying amount of goodwill and other intangible assets for fiscal 2013 and 2012 were as follows:

	Balance as of June 1, 2012 (net of amortization)		Additions		Amortization			Balance as of May 31,  2013
Goodwill	$	3,109	$	—	$	—		$	3,109
Trade name		411		—		—			411
Customer relationships		790		—		(164	)		626
	$	4,310	$	—	$	(164	)	$	4,146
	Balance as of June 1,  2011 (net of amortization)		Additions		Amortization			Balance as of May 31,  2012
Goodwill	$	3,109	$	—	$	—		$	3,109
Trade name		411		—		—			411
Customer relationships		803		140		(153	)		790
	$	4,323	$	140	$	(153	)	$	4,310

Summary of Intangible Assets

The following table provides a summary of our intangible assets:

	May 31, 2013
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name		—	$	411	$	—		$	411
Customer relationships		3-8 years		2,094		(1,468	)		626
			$	2,505	$	(1,468	)	$	1,037
	May 31, 2012
	Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Trade name		—	$	411	$	—		$	411
Customer relationships		3-8 years		2,094		(1,304	)		790
			$	2,505	$	(1,304	)	$	1,201

Estimated Future Amortization Expense Related to Intangible Assets

The following table provides estimated future amortization expense related to intangible assets:

Year ending May 31,	Future Amortization
2014	$	164
2015		129
2016		118
2017		118
2018		97
	$	626

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Acquisitions (Tables)

12 Months Ended

May 31, 2013

Estimated Fair Values of Assets Acquired and Liabilities Assumed

The following table provides the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition.

Total cash consideration	$	10,673
Preliminary purchase price allocation:
Accounts receivable		542
Rental and lease equipment		15,896
Deferred tax liability		(2,092	)
Deferred revenue		(479	)
Net assets acquired		13,867
Bargain purchase gain, net of deferred taxes of $2,092	$	(3,194	)

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Estimated Fair Values of Assets Acquired and Liabilities Assumed (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Aug. 24, 2011
Business Acquisition [Line Items]
Deferred taxes	$ 2,092

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Stock Option Plans and Equity Incentive Plan (Tables)

12 Months Ended

May 31, 2013

Summary of Restricted Stock Unit Activity

The following table represents restricted stock unit activity for fiscal 2013:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Nonvested at June 1, 2012		203		$	13.82
Granted		73			17.11
Vested		(111	)		12.91
Forfeited/canceled		(11	)		12.88
Nonvested at May 31, 2013		154		$	16.13

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Fair Value of Foreign Exchange Forward Contracts (Detail) (Derivatives Not Designated as Hedging Instruments, Foreign exchange forward contracts, Other assets, USD $) In Thousands, unless otherwise specified	May 31, 2013	May 31, 2012
Derivatives Not Designated as Hedging Instruments | Foreign exchange forward contracts | Other assets
Derivatives Not Designated as Hedging Instruments
Foreign exchange forward contracts other assets	$ 114	$ 179

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Summary of Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified						12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2013 Customer relationships	May 31, 2012 Customer relationships	May 31, 2011 Customer relationships	May 31, 2013 Customer relationships Minimum	May 31, 2012 Customer relationships Minimum	May 31, 2013 Customer relationships Maximum	May 31, 2012 Customer relationships Maximum	May 31, 2013 Trade name	May 31, 2012 Trade name
Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life						3 years	3 years	8 years	8 years
Customer Relationships, Gross Carrying Amount			$ 2,094	$ 2,094
Gross Carrying Amount	2,505	2,505
Trade names, Gross Carrying Amount										411	411
Accumulated Amortization	(1,468)	(1,304)	(1,468)	(1,304)
Trade names, Net Carrying Amount										411	411
Customer relationships, Net Carrying Amount	626		626	790	803
Net Carrying Amount	$ 1,037	$ 1,201

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Rentals Under Noncancellable Operating Leases (Tables)

12 Months Ended

May 31, 2013

Future Minimum Lease Payments to be Received Under Operating Leases

The following sets forth a schedule of minimum future rentals to be received on noncancellable operating leases with remaining lease terms of more than one year as of May 31, 2013:

2014	$	4,747
2015		2,943
2016		647
2017		34
2018		15
	$	8,386

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Other Property - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 1,149	$ 1,157	$ 1,020

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Revenues from External Customers and Long-Lived Assets, by Geographical Areas (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended										12 Months Ended
	May 31, 2013		Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012		Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2011	May 31, 2013		May 31, 2012		May 31, 2011
Revenues:
U.S.											$ 211,745	[1]	$ 214,354	[1]	$ 199,861	[1]
Other											36,986	[1],[2]	34,200	[1],[2]	28,868	[1],[2]
Total revenues	60,366		64,672	65,192	58,501	68,182		60,079	61,643	58,650	248,731	[1]	248,554	[1]	228,729	[1]
Net Long Lived Assets:
U.S.	198,956	[3]				207,449	[3]				198,956	[3]	207,449	[3]	176,268	[3]
Other	49,726	[2],[3]				49,595	[2],[3]				49,726	[2],[3]	49,595	[2],[3]	33,491	[2],[3]
Total net long-lived assets	$ 248,682	[3]				$ 257,044	[3]				$ 248,682	[3]	$ 257,044	[3]	$ 209,759	[3]

[1] Revenues by country are based on the location of shipping destination, whether the order originates in the U.S. parent or a foreign subsidiary.

[2] Other consists of other foreign countries. Each foreign country individually accounts for less that 10% of the total revenues and long-lived assets.

[3] Net long-lived assets include rental and lease equipment and other property, net of accumulated depreciation and amortization. Subsequent to the issuance of the May 31, 2012 consolidated financial statements, we determined that, for geographic disclosure purposes, the previously reported amount of net long-lived assets as of May 31, 2012 and 2011 should not have included goodwill or intangibles (which totaled $4,310 at May 31, 2012 and $4,323 at May 31, 2011) and, accordingly, such amount has been excluded from the May 31, 2012 and 2011 balances, respectively, displayed in the table above.

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Other Property (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013	May 31, 2012
Property, Plant and Equipment [Line Items]
Land	$ 6,985	$ 6,985
Buildings	15,774	15,442
Furniture and other equipment	9,730	9,071
Leasehold improvements	210	205
Property, Plant and Equipment, Gross, Total	32,699	31,703
Less-accumulated depreciation and amortization	(18,873)	(17,832)
Total	$ 13,826	$ 13,871

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Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013	May 31, 2012
ASSETS
Supplemental executive retirement plan	$ 2,947	$ 2,370
Fair Value, Measurements, Recurring
ASSETS
Total assets measured at fair value	3,075	5,056
Fair Value, Measurements, Recurring | Money market funds
ASSETS
Money market funds	14	2,507
Fair Value, Measurements, Recurring | Supplemental executive retirement plan | Money market funds
ASSETS
Supplemental executive retirement plan	113	80
Fair Value, Measurements, Recurring | Supplemental executive retirement plan | Mutual Funds
ASSETS
Supplemental executive retirement plan	2,834	2,290
Fair Value, Measurements, Recurring | Foreign exchange forward contracts
ASSETS
Foreign exchange forward contracts	114	179
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring
ASSETS
Total assets measured at fair value	2,961	4,877
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring | Money market funds
ASSETS
Money market funds	14	2,507
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring | Supplemental executive retirement plan | Money market funds
ASSETS
Supplemental executive retirement plan	113	80
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring | Supplemental executive retirement plan | Mutual Funds
ASSETS
Supplemental executive retirement plan	2,834	2,290
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
ASSETS
Total assets measured at fair value	114	179
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Foreign exchange forward contracts
ASSETS
Foreign exchange forward contracts	$ 114	$ 179

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Savings Plan, Employee Stock Ownership Plan and Retirement Plan - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Postemployment Benefits Disclosure [Line Items]
Contributions to Retirement Plan	$ 749	$ 728	$ 483
Other assets	21,346	23,272
Supplemental Executive Retirement Plan [SERP]
Postemployment Benefits Disclosure [Line Items]
Contributions to Retirement Plan	29	30	14
Accrued expense	2,947	2,370
Other assets	$ 2,947	$ 2,370
ESOP
Postemployment Benefits Disclosure [Line Items]
ESOP termination date	2013

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Fair Value Measurements (Tables)

12 Months Ended

May 31, 2013

Assets and Liabilities Measured at Fair Value on Recurring Basis

Our assets and liabilities measured at fair value on a recurring basis were determined as follows:

	At May 31, 2013
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market funds	$	14	$	—	$	—	$	14
Supplemental executive retirement plan
Money market fund		113		—		—		113
Mutual funds		2,834		—		—		2,834
Foreign exchange forward contracts		—		114		—		114
Total assets measured at fair value	$	2,961	$	114	$	—	$	3,075

	At May 31, 2012
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market funds	$	2,507	$	—	$	—	$	2,507
Supplemental executive retirement plan
Money market fund		80		—		—		80
Mutual funds		2,290		—		—		2,290
Foreign exchange forward contracts		—		179		—		179
Total assets measured at fair value	$	4,877	$	179	$	—	$	5,056

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Cash flows from operating activities:
Net income	$ 22,754	$ 25,772	$ 23,756
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	58,109	54,960	49,127
Put option loss			952
Realized gain on redemption of trading securities			(952)
Remeasurement (gain)/loss on foreign currency	(2)	267	43
Provision for losses on accounts receivable	445	233	500
Gain on sale of rental and lease equipment	(13,189)	(10,954)	(12,083)
Gain on bargain purchase, net of deferred taxes		(3,435)	(202)
Stock compensation expense	1,330	1,438	956
Excess tax benefit for share based compensation	(251)	(102)	(37)
Deferred income taxes	(4,631)	11,120	23,454
Change in operating assets and liabilities:
Accounts receivable	1,322	(5,594)	(4,819)
Other assets	(931)	(5,839)	(8,950)
Accounts payable	(467)	(120)	1,184
Accrued expenses	4,068	1,516	(3,974)
Deferred revenue	373	613	(204)
Net cash provided by operating activities	68,930	69,875	68,751
Cash flows from investing activities:
Proceeds from sales of rental and lease equipment	31,119	25,042	32,917
Cash paid for acquisition		(10,327)
Proceeds from acquisition purchase price adjustment			260
Payments for purchase of rental and lease equipment	(64,088)	(96,709)	(91,538)
Redemptions of investments, trading			14,275
Payments for purchase of other property	(1,105)	(900)	(1,563)
Net cash used in investing activities	(34,074)	(82,894)	(45,649)
Cash flows from financing activities:
Borrowing under bank line of credit	63,500	3,250
Payment under bank line of credit	(53,500)	(3,250)
Proceeds from issuance of common stock			197
Minimum tax withholdings on share based compensation	(36)	(47)
Excess tax benefit for share based compensation	251	102	37
Payment of dividends	(43,765)	(19,378)	(14,449)
Net cash used in financing activities	(33,550)	(19,323)	(14,215)
Net (decrease) increase in cash and cash equivalents	1,306	(32,342)	8,887
Effect of exchange rate changes on cash	(194)	191	(352)
Cash and cash equivalents at beginning of year	9,290	41,441	32,906
Cash and cash equivalents at end of year	$ 10,402	$ 9,290	$ 41,441

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Fair Value Measurements

12 Months Ended

May 31, 2013

Fair Value Measurements

Note 2: Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, supplemental executive retirement plan assets and liabilities, and foreign currency derivatives. The fair value of financial assets and liabilities can be determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:

Level 1 – Observable inputs, such as quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or through corroboration with observable market data; and

Level 3 – Unobservable inputs, for which there is little or no market data for the assets or liabilities, such as internally-developed valuation models.

Our assets and liabilities measured at fair value on a recurring basis were determined as follows:

	At May 31, 2013
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market funds	$	14	$	—	$	—	$	14
Supplemental executive retirement plan
Money market fund		113		—		—		113
Mutual funds		2,834		—		—		2,834
Foreign exchange forward contracts		—		114		—		114
Total assets measured at fair value	$	2,961	$	114	$	—	$	3,075

	At May 31, 2012
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Balance
Assets
Money market funds	$	2,507	$	—	$	—	$	2,507
Supplemental executive retirement plan
Money market fund		80		—		—		80
Mutual funds		2,290		—		—		2,290
Foreign exchange forward contracts		—		179		—		179
Total assets measured at fair value	$	4,877	$	179	$	—	$	5,056

The fair value measures for our money market funds and supplemental executive retirement plan asset (see Note 9 for further discussion our our supplemental executive retirement plan asset) were derived from quoted market prices in active markets and are included in Level 1 inputs. Foreign currency forward contracts were valued based on observable market spot and forward rates as of our reporting date and are included in Level 2 inputs.

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Borrowings

12 Months Ended

May 31, 2013

Borrowings

Note 5: Borrowings

On November 29, 2012, we entered into a sixth amendment to our commercial credit agreement (“Credit Agreement Amendment”) with Union Bank, N.A. (“Union Bank”). The Credit Agreement Amendment amends the commercial credit agreement dated September 29, 2008 (the “Commercial Credit Agreement”), pursuant to which the lender provides us with a revolving line of credit. The Credit Agreement Amendment amends our Commercial Credit Agreement with Union Bank by (i) increasing the permitted maximum aggregate outstanding principal amount under the Commercial Credit Agreement from $25,000 to $50,000; (ii) extending the term and maturity date of the Commercial Credit Agreement from October 1, 2015 to November 30, 2015; (iii) deleting the quick ratio financial covenant; (iv) amending the amounts and payment dates of the annual commitment fees such that we agree to pay a $25 commitment fee on November 30, 2012, a $50 commitment fee on November 30, 2013 and a $50 commitment fee on November 30, 2014; (v) amending the minimum tangible net worth financial covenant; and (vi) replacing the positive net earnings financial covenant with an earnings before interest, taxes, depreciation and amortization financial covenant. We are in compliance with all loan covenants at May 31, 2013.

At May 31, 2013, we had $10,000 of borrowings outstanding under the Commercial Credit Agreement. The weighted average interest rate under the line of credit was approximately 2.35%. There were no borrowings outstanding at May 31, 2012.

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Revenues from External Customers and Long-Lived Assets, by Geographical Areas (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Revenue from External Customer [Line Items]
Minimum percentage of revenue accounted for major customer	10.00%
Goodwill and other intangible assets	$ 4,146	$ 4,310	$ 4,323

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Acquisitions

12 Months Ended

May 31, 2013

Acquisitions

Note 3: Acquisitions

Equipment Management Technology, Inc.

On August 24, 2011, pursuant to an Asset Purchase Agreement (“APA”), we completed the purchase of certain assets and the assumption of specified post-closing liabilities of Equipment Management Technology, Inc., a Nevada Corporation (“EMT”), for cash consideration of $10,673. EMT, headquartered in Las Vegas, Nevada, was a provider of electronic T&M equipment. We acquired EMT in order to facilitate growth in our T&M business. EMT had previously filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada. The sale was approved by the Bankruptcy Court on August 11, 2011, and the related sale order was issued on August 12, 2011. At closing, $500 was deposited into an escrow account for any post-closing adjustments that reduce the purchase price. We have accounted for the acquisition of EMT as a business combination in accordance with accounting guidance.

At August 31, 2011, we completed our estimates of the fair value of rental and lease equipment and deferred revenue. Due to the timing of the acquisition, we completed our evaluation of intangible assets and accounts receivable in our second quarter ended November 30, 2011. We acquired gross accounts receivable of $972, of which an estimated $430 was not expected to be collected, resulting in a fair value of $542. Under accounting guidance, a bargain purchase gain results if the fair value of the purchase consideration is less than the net fair value of the assets acquired and liabilities assumed. We recorded a bargain purchase gain of $3,194, net of deferred taxes, related to our acquisition of EMT at August 31, 2011. We believe that we were able to negotiate a bargain purchase price as a result of our access to the liquidity necessary to complete the transaction and EMT’s recurring losses and recent bankruptcy filing.

The following table provides the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition.

Total cash consideration	$	10,673
Preliminary purchase price allocation:
Accounts receivable		542
Rental and lease equipment		15,896
Deferred tax liability		(2,092	)
Deferred revenue		(479	)
Net assets acquired		13,867
Bargain purchase gain, net of deferred taxes of $2,092	$	(3,194	)

The bargain purchase gain is classified separately in our condensed consolidated statements of operations.

Acquisition-related transaction costs of $55 were accounted for as expenses in the periods in which the costs were incurred and are included in our selling, general and administrative expenses during fiscal 2012.

The acquisition of EMT was an asset purchase, and EMT’s operations were integrated with ours immediately after the acquisition date. Revenues and income before income taxes from the acquired assets included in our consolidated statements of operations were $5,232 and $2,862, respectively, for fiscal 2012.

During the second and third quarters of fiscal 2012, we increased the bargain purchase gain by a total of $396 ($241, net of deferred tax), consisting of (i) $140, representing the estimated fair value of customer relationships acquired, (ii) $273, of post-closing adjustments, which were disbursed from the escrow funds in accordance with the APA, offset by (iii) $17, representing the final determination of assets acquired and other components of the purchase price.

Supplemental pro forma information reflecting the acquisition of EMT as if it occurred on June 1, 2010 is not practicable because we are not able to obtain reliable historical financial information for 2010 and 2011, primarily due to a deterioration of the organization and controls leading up to and following EMT’s February 2011 bankruptcy filing.

Telogy, LLC

We recorded additional bargain purchase gain associated with our March 31, 2010 acquisition of Telogy LLC (“Telogy”) of $342 ($202, net of deferred tax), during the fiscal year ended May 31, 2011. The increase in the bargain purchase gain consisted of (i) $260, representing the final determination of assets acquired and other components of the purchase price in accordance with specific provisions of the APA, and (ii) $82, resulting from a final determination of fair value of certain assets and liabilities acquired from Telogy.

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Losses Recognized in Income for Derivative Instruments (Detail) (Foreign exchange forward contracts, Selling, general and administrative expenses, USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012
Foreign exchange forward contracts | Selling, general and administrative expenses
Derivative Instruments, Gain (Loss) [Line Items]
Losses recognized in income for derivative instruments	$ 306	$ 507

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Income Taxes (Tables)

12 Months Ended

May 31, 2013

Reconciliation of Unrecognized Tax Benefits

The reconciliation of our unrecognized tax benefits is as follows for the fiscal years ended May 31:

	2013		2012		2011
Balance as of June 1	$	—	$	—	$	4,691
Decrease related to prior year tax positions		—		—		(4,691	)
Balance as of May 31	$	—	$	—	$	—

Components of Income Before Income Taxes

For financial reporting purposes, income before income taxes comprised the following as of May 31:

	2013			2012			2011
Domestic	$	37,162		$	40,364		$	36,817
Foreign		(49	)		(359	)		472
	$	37,113		$	40,005		$	37,289

Components of Provision for Income Taxes

The provision for income taxes consisted of the following for the fiscal years ended May 31:

	2013			2012		2011
Current
Federal	$	17,007		$	1,057	$	(5,583	)
State		1,417			1,523		2,028
Foreign		573			538		(521	)
Deferred
Federal		(4,401	)		10,541		17,083
State		257			559		540
Foreign		(494	)		15		(14	)
	$	14,359		$	14,233	$	13,533

Reconciliation Between Statutory Federal Income Tax Rate and Effective Income Tax Rate

The following reconciles the statutory federal income tax rate to the effective tax rate for the fiscal years ended May 31:

	2013			2012			2011
Statutory federal rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		3.0			3.4			4.5
Derecognition of uncertain tax positions		—			—			(3.4	)
Bargain purchase gain		—			(3.0	)		(0.2	)
Foreign tax refund		—			(0.4	)		—
Permanent differences resulting from valuation allowances		0.7			0.7			0.3
Other		—			(0.1	)		0.1
Effective tax rate		38.7	%		35.6	%		36.3	%

Components of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that gave rise to significant portions of the net deferred tax liabilities consisted of the following at May 31:

	2013			2012
Deferred tax assets:
Goodwill and intangible assets	$	—		$	300
Allowance for doubtful accounts		105			206
Deferred compensation and benefits		3,545			2,813
Net operating losses		1,110			871
Valuation allowance		(1,110	)		(871	)
Other		908			1,390
		4,558			4,709
Deferred tax liabilities:
Accumulated depreciation		(51,948	)		(56,532	)
Deferred taxes on bargain purchase		(2,207	)		(2,548	)
Intangible asset		(143	)		—
Net deferred tax liabilities	$	(49,740	)	$	(54,371	)

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Other Property (Tables)

12 Months Ended

May 31, 2013

Other Property

Other property, at cost, consisted of the following at May 31:

	2013			2012
Land	$	6,985		$	6,985
Buildings		15,774			15,442
Furniture and other equipment		9,730			9,071
Leasehold improvements		210			205
		32,699			31,703
Less—accumulated depreciation and amortization		(18,873	)		(17,832	)
	$	13,826		$	13,871

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Revenues from Rental, Lease and Sale Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2011	May 31, 2013		May 31, 2012		May 31, 2011
Revenue from External Customer [Line Items]
Rentals and leases									$ 136,591		$ 129,737		$ 118,062
Sales of equipment and other revenues									112,140		118,817		110,667
Total revenues	60,366	64,672	65,192	58,501	68,182	60,079	61,643	58,650	248,731	[1]	248,554	[1]	228,729	[1]
T&M equipment
Revenue from External Customer [Line Items]
Rentals and leases									120,846		113,540		101,273
Sales of equipment and other revenues									109,700		116,417		108,450
Total revenues									230,546		229,957		209,723
DP equipment
Revenue from External Customer [Line Items]
Rentals and leases									15,745		16,197		16,789
Sales of equipment and other revenues									2,440		2,400		2,217
Total revenues									$ 18,185		$ 18,597		$ 19,006

[1] Revenues by country are based on the location of shipping destination, whether the order originates in the U.S. parent or a foreign subsidiary.

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013 Investment	May 31, 2012	May 31, 2011	Nov. 30, 2011	Aug. 24, 2011	May 31, 2010
Summary Of Significant Accounting Policies [Line Items]
Advertising expenses	$ 982	$ 962	$ 1,013
Shipping and handling cost	3,951	4,184	3,638
Rental and lease equipment at net book value	234,856	243,173			15,896
Depreciation of equipment, straight line	428,957	414,631
Depreciation of equipment, accelerated	30,296	32,650
Tax impact realization likelihood percentage	50.00%
Uncertain tax positions settled				4,515		4,691
Interest and penalties	0	0		1,396
Demonstration equipment	6,057	5,495
Investment in money market funds	14	2,507
Number of investment funds	4
Trade accounts receivable terms	30-day terms
Assets, liabilities, revenues and expenses of foreign subsidiaries	Less than 10% of consolidated amounts
Rental equipment purchases	4,965	5,418
Sales of used equipment, not yet collected	11,419	10,021
Transfer of demonstration equipment, included in other assets, to rental and lease equipment	2,937	2,207
Agilent
Summary Of Significant Accounting Policies [Line Items]
Percentage of new equipment purchases	74.00%	75.00%	82.00%
Building
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	31 years 6 months
T&M equipment
Summary Of Significant Accounting Policies [Line Items]
Rental and lease equipment at net book value	230,074	239,620
DP equipment
Summary Of Significant Accounting Policies [Line Items]
Rental and lease equipment at net book value	4,782	3,553
Selling Expense
Summary Of Significant Accounting Policies [Line Items]
Reduction in operating expenses due to reclassification		10,710	10,010
General Expense
Summary Of Significant Accounting Policies [Line Items]
Reduction in operating expenses due to reclassification		10,710	10,010
Administrative Expenses
Summary Of Significant Accounting Policies [Line Items]
Reduction in operating expenses due to reclassification		$ 10,710	$ 10,010
Minimum
Summary Of Significant Accounting Policies [Line Items]
Operating lease agreements Period	1 year
Finance lease agreements Period	1 year
Minimum | Accelerated Depreciation
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	2 years
Minimum | Furniture and other equipment
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	3 years
Minimum | Leasehold improvements
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	3 years
Minimum | Equipment
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	2 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Operating lease agreements Period	3 years
Finance lease agreements Period	3 years
Period for demonstration equipment included in other assets	2 years
Maximum | Accelerated Depreciation
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	4 years
Maximum | Furniture and other equipment
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	10 years
Maximum | Leasehold improvements
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	5 years
Maximum | Equipment
Summary Of Significant Accounting Policies [Line Items]
Property plant and equipment, useful life	10 years

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Segment Reporting and Related Disclosures - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013 Customer Segment	May 31, 2012 Customer	May 31, 2011 Customer
Revenue from External Customer [Line Items]
Number of operating segment	2
Number of major customer accounted for more than 10% of total revenues	0	0	0
T&M equipment
Revenue from External Customer [Line Items]
Equipment pool, based on acquisition cost	$ 423,306	$ 409,686
DP equipment
Revenue from External Customer [Line Items]
Equipment pool, based on acquisition cost	$ 35,947	$ 37,595

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Components of Provision for Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Current
Federal	$ 17,007	$ 1,057	$ (5,583)
State	1,417	1,523	2,028
Foreign	573	538	(521)
Deferred
Federal	(4,401)	10,541	17,083
State	257	559	540
Foreign	(494)	15	(14)
Provision for income taxes	$ 14,359	$ 14,233	$ 13,533

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Estimated Future Amortization Expense Related to Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013
Schedule Of Estimated Future Amortization Expense [Line Items]
2014	$ 164
2015	129
2016	118
2017	118
2018	97
Customer relationships, Net Carrying Amount	$ 626

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Estimated Fair Values of Assets Acquired and Liabilities Assumed (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended	12 Months Ended
	Aug. 24, 2011	Aug. 31, 2011	May 31, 2012	May 31, 2011	May 31, 2013	Aug. 31, 2012
Business Acquisition [Line Items]
Total cash consideration	$ 10,673
Preliminary purchase price allocation:
Accounts receivable	542					972
Rental and lease equipment	15,896		243,173		234,856
Deferred tax liability	(2,092)
Deferred revenue	(479)
Net assets acquired	13,867
Bargain purchase gain, net of deferred taxes of $2,092	$ (3,194)	$ (3,194)	$ (3,435)	$ (202)

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	May 31, 2013	May 31, 2012
ASSETS
Cash and cash equivalents	$ 10,402	$ 9,290
Accounts receivable, net of allowance for doubtful accounts of $457 and $522	34,350	35,915
Rental and lease equipment, net of accumulated depreciation of $224,397 and $204,108	234,856	243,173
Other property, net of accumulated depreciation and amortization of $18,873 and $17,832	13,826	13,871
Goodwill	3,109	3,109
Intangibles, net of amortization of $1,468 and $1,304	1,037	1,201
Other assets	21,346	23,272
Total assets	318,926	329,831
Liabilities:
Bank borrowings	10,000
Accounts payable	7,479	8,555
Accrued expenses	15,866	11,870
Deferred revenue	7,292	6,904
Deferred tax liability	49,740	54,371
Total liabilities	90,377	81,700
Commitments and contingencies (Note 11)
Shareholders' equity:
Preferred stock, $1 par-shares authorized 1,000,000; none issued
Common stock, no par-shares authorized 40,000,000; issued and outstanding 2013-23,995,626; 2012-23,987,826	37,724	36,179
Retained earnings	190,825	211,952
Total shareholders' equity	228,549	248,131
Total liabilities and shareholders' equity	$ 318,926	$ 329,831

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Computation of Earnings Per Share

12 Months Ended

May 31, 2013

Computation of Earnings Per Share

Note 8: Computation of Earnings Per Share

The following is a reconciliation of the denominator used in the computation of basic and diluted EPS for the fiscal years ended May 31:

	2013		2012		2011
Denominator:
Denominator for basic earnings per share—weighted average common shares outstanding (including shares issuable for vested restricted stock units)		24,226		23,983		23,974
Effect of unvested restricted stock units		43		169		98
Diluted shares used in per share calculation		24,269		24,152		24,072
Net income	$	22,754	$	25,772	$	23,756
Earnings per share:
Basic	$	0.94	$	1.07	$	0.99
Diluted	$	0.94	$	1.07	$	0.99

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Consolidated Statements of Shareholders' Equity (USD $) In Thousands	Total	Common Stock	Retained Earnings
Balance at May. 31, 2010	$ 229,962	$ 33,555	$ 196,407
Balance (in shares) at May. 31, 2010		23,961
Exercise of stock options and issuance of restricted shares (in shares)		20
Exercise of stock options and issuance of restricted shares	197	197
Excess tax benefit for share based compensation, net of tax deficit	34	34
Non-cash stock compensation expense	956	956
Dividends declared	(14,530)		(14,530)
Net income and total comprehensive income for the year ended May 31, 2011	23,756		23,756
Balance at May. 31, 2011	240,375	34,742	205,633
Balance (in shares) at May. 31, 2011		23,981
Exercise of stock options and issuance of restricted shares (in shares)		7
Excess tax benefit for share based compensation, net of tax deficit	46	46
Non-cash stock compensation expense	1,438	1,438
Dividends declared	(19,453)		(19,453)
Net settlement of shares	(47)	(47)
Net income and total comprehensive income for the year ended May 31, 2011	25,772		25,772
Balance at May. 31, 2012	248,131	36,179	211,952
Balance (in shares) at May. 31, 2012		23,988
Exercise of stock options and issuance of restricted shares (in shares)		8
Excess tax benefit for share based compensation, net of tax deficit	251	251
Non-cash stock compensation expense	1,330	1,330
Dividends declared	(43,881)		(43,881)
Net settlement of shares	(36)	(36)
Net income and total comprehensive income for the year ended May 31, 2011	22,754		22,754
Balance at May. 31, 2013	$ 228,549	$ 37,724	$ 190,825
Balance (in shares) at May. 31, 2013		23,996

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Minimum Lease Payments Receivable and Net Investment (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013	May 31, 2012
Sales Type Lease Receivables [Line Items]
Gross minimum lease payments receivable	$ 9,862	$ 12,284
Less-unearned interest	(425)	(603)
Net investment in sales-type lease receivables	$ 9,437	$ 11,681

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	May 31, 2013		May 31, 2012		May 31, 2011
Revenues:
Rentals and leases	$ 136,591		$ 129,737		$ 118,062
Sales of equipment and other revenues	112,140		118,817		110,667
Total revenues	248,731	[1]	248,554	[1]	228,729	[1]
Operating expenses:
Depreciation of rental and lease equipment	56,795		53,651		47,922
Costs of rentals and leases, excluding depreciation	17,788		17,320		16,397
Costs of sales of equipment and other revenues	80,894		88,247		80,263
Selling, general and administrative expenses	56,543		53,250		47,412
Total operating expenses	212,020		212,468		191,994
Operating profit	36,711		36,086		36,735
Gain on bargain purchase, net of deferred taxes			3,435		202
Interest income, net	402		484		352
Income before income taxes	37,113		40,005		37,289
Income tax provision	14,359		14,233		13,533
Net income	$ 22,754		$ 25,772		$ 23,756
Earnings per share:
Basic	$ 0.94		$ 1.07		$ 0.99
Diluted	$ 0.94		$ 1.07		$ 0.99
Shares used in per share calculation:
Basic	24,226		23,983		23,974
Diluted	24,269		24,152		24,072
Cash dividend declared per share	$ 1.80		$ 0.80		$ 0.60

[1] Revenues by country are based on the location of shipping destination, whether the order originates in the U.S. parent or a foreign subsidiary.

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Borrowings - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended	1 Months Ended					1 Months Ended
	May 31, 2013 Maximum	Nov. 30, 2012 Commercial Credit Agreement	May 31, 2013 Commercial Credit Agreement	Nov. 29, 2012 Commercial Credit Agreement	May 31, 2012 Commercial Credit Agreement	Sep. 29, 2008 Commercial Credit Agreement	Nov. 30, 2014 Commercial Credit Agreement Scenario, Forecast	Nov. 30, 2013 Commercial Credit Agreement Scenario, Forecast
Line of Credit Facility [Line Items]
Maximum aggregate outstanding principal amount under Commercial Credit Agreement				$ 50,000		$ 25,000
Commitment Fees		25					50	50
Maturity date of Commercial Credit Agreement	Nov. 30, 2015
Borrowing outstanding			$ 10,000		$ 0
Weighted average interest rate			2.35%

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Quarterly Information - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2011	May 31, 2013	May 31, 2012
Schedule Of Quarterly Financial Information [Line Items]
Gross Profit	$ 24,684	$ 22,160	$ 24,388	$ 22,022	$ 24,125	$ 20,883	$ 22,588	$ 21,740	$ 93,254	$ 89,336
Revision Adjustment
Schedule Of Quarterly Financial Information [Line Items]
Gross Profit					$ (2,478)	$ (2,680)	$ (2,780)	$ (2,773)

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Sales-type Leases (Tables)

12 Months Ended

May 31, 2013

Minimum Lease Payments Receivable and Net Investment

The minimum lease payments receivable and the net investment included in other assets were as follows at May 31:

	2013			2012
Gross minimum lease payments receivable	$	9,862		$	12,284
Less—unearned interest		(425	)		(603	)
Net investment in sales-type lease receivables	$	9,437		$	11,681

Estimated Future Minimum Lease Payments Receivable Related to Sales-Type Leases

The following table provides estimated future minimum lease payments by year related to sales-type leases:

Year ending May 31,	Future Amortization
2014	$	6,561
2015		2,726
2016		458
2017		117
	$	9,862

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

May 31, 2013

Basis of Presentation

Basis of Presentation: The consolidated financial statements include Electro Rent Corporation and its wholly owned subsidiaries (collectively “we”, “us”, or “our” hereafter). All intercompany balances and transactions have been eliminated in consolidation.

Business and Organization

Business and Organization: We primarily engage in the short-term rental, lease, and sale of state-of-the-art electronic equipment. We maintain an equipment portfolio composed primarily of test and measurement equipment (“T&M”) and personal computer-related data products (“DP”) equipment purchased from leading manufacturers. Another aspect of our business is the sale of equipment after its utilization for rental or lease and the sale of a range of new T&M equipment for Agilent Technologies, Inc. (“Agilent”) beginning on December 1, 2009, as well as other smaller vendors. Agilent has given us the exclusive right to sell Agilent’s more complex T&M equipment to small and medium size customers (who previously purchased directly from Agilent) in the United States and Canada.

We conduct our business activities in the United States, as well as through our wholly owned subsidiaries, Electro Rent, LLC, Electro Rent Europe, NV, and Electro Rent (Beijing) Test and Measurement Equipment Rental Co., Ltd. which conduct some or all of these business activities in Canada, Europe and China, respectively. Our wholly owned subsidiary, Electro Rent Asia, Inc., is the U.S. parent company of Electro Rent (Beijing) Test and Measurement Equipment Rental Co., Ltd., and our wholly owned subsidiary, ER International, Inc., is the U.S. parent company of Electro Rent Europe, NV.

Use of Estimates

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosures of contingent assets and liabilities as of the date of these financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, we review these estimates including those related to asset lives and depreciation methods, impairment of long-lived assets, including rental and lease equipment, goodwill and intangibles, investments, allowance for doubtful accounts, income taxes and contingencies and litigation. These estimates are based on our evaluation of current business and economic conditions, historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe, however, that our estimates, including those for the above-listed items, are reasonable.

Revenue Recognition

Revenue Recognition: We generate revenues primarily through the rental and leasing of T&M and DP equipment and through the sale of new and used equipment. Rental revenues comprise short term agreements that can be daily, weekly or monthly. Rental revenues are recognized in the month they are due on the accrual basis of accounting. Our operating lease agreements have varying terms, typically one to three years. Upon lease termination, customers have the option to renew the lease term, purchase the equipment at fair market value, or continue to rent on a month-to-month basis. Our operating leases do not provide for contingent rentals. Revenues related to operating leases are recognized on a straight-line basis over the term of the lease. Negotiated lease early-termination charges are recognized upon receipt. Rentals and leases are primarily billed to customers in advance, and unearned billings are recorded as deferred revenue.

We enter into finance leases as lessor for some of our equipment. Our finance lease agreements contain bargain purchase options and are accounted for as sale-type leases. Revenues from finance leases, which are recorded at the present value of the aggregate future lease payments, less unearned interest, are included in sales of equipment and other revenues in our consolidated statements of operations. Unearned interest is recognized over the life of the finance lease term using the effective interest method. Our finance lease terms vary, and are typically one to three years. The net investment in finance leases, which represents the receivables due from lessees, net of unearned interest, is included in other assets in our consolidated balance sheets. Historically, we have not required security deposits based on our assessed credit risk within our customer bases.

Initial direct costs for operating and finance leases are insignificant.

Sales of new equipment through our resale channel are recognized in the period in which the equipment is delivered and risk of loss passes to the customer, while sales of used equipment from our rental and lease equipment pool are recognized in the period in which the equipment is shipped and risk of loss passes to the customer. In the case of equipment sold to customers that is already on rent or lease to the same party, revenue is recognized at the agreed-upon date when the rent or lease term ends and risk of loss passes to the customer.

In accordance with accounting guidance, we are acting as the principal with respect to sales of new equipment through our Agilent resale agreement, based on several factors, including: (1) We act as the primary obligor by working directly with our customers to define their needs, providing them with options to satisfy such needs, contracting directly with the customer, and, to the extent required, providing customers with instruction on the use of the product and additional technical support once the product is received by the customer. The product manufacturer is not a party to our customer sales agreements, nor is it referenced in the agreements, and therefore has no obligation to our customers with the exception of the manufacturer’s standard warranty on the product. (2) We bear back-end risk of inventory loss with respect to any product return from the customer as the original manufacturer is not required to accept returns of equipment from us. We also bear front-end risk of inventory loss in those cases where we acquire products for resale into our inventory prior to shipment to customers. (3) We have full discretion in setting pricing terms with our customers and to negotiate all such terms ourselves. (4) We assume all credit risk. Accordingly, sales of new equipment through our resale channel are recorded in sales of equipment and other revenues and the related equipment costs are recorded in costs of sales of equipment and other revenues in our consolidated statements of operations.

Other revenues, consisting primarily of billings to customers for delivery and repairs, are recognized in the period in which the respective services are performed.

Operating expenses

Operating expenses: Costs of rentals and leases, excluding depreciation, primarily include labor related costs of our operations personnel, supplies, repairs, insurance and warehousing costs associated with our rental and lease equipment, relating to our rental and lease revenues.

Costs of sales of equipment and other revenues primarily include the cost of new equipment and the carrying value of used equipment sold.

Selling, general and administrative expenses include sales and advertising costs, payroll and related benefit costs, insurance expenses, property taxes on our property and rental and lease equipment, legal and professional fees, and administrative overhead. Advertising costs are expensed as incurred. Total advertising expenses were $982, $962 and $1,013 for fiscal 2013, 2012 and 2011, respectively. SG&A expenses also include shipping and handling costs of $3,951, $4,184 and $3,638 for fiscal 2013, 2012 and 2011, respectively.

Reclassifications

Reclassifications: We have expanded the presentation of our costs of revenues to separately present costs associated with each of the revenue streams presented in the condensed consolidated statements of operations, to comply with the applicable income statement disclosure requirements for public companies. Accordingly, the previously reported statement of operations line item captioned “costs of revenues other than depreciation of rental and lease equipment” has been replaced with separate line items for “costs of rentals and leases, excluding depreciation” and “costs of sales of equipment and other revenues”.

Further, in order to more closely align activity related to our rental and lease operations, including revenues and the expenses associated with providing those revenues, we have reclassified certain expenses previously included in selling, general and administrative expenses to costs of rentals and leases, excluding depreciation, which resulted in a reduction to previously reported selling, general and administrative expenses of $10,710 and $10,010 for fiscal 2012 and 2011, respectively. These reclassified costs primarily include direct expenses of supporting our rental and lease operations, including labor related costs of our operations personnel, supplies, repairs, and insurance and warehousing costs associated with our rental and lease equipment.

Rental and Lease Equipment and Other Property

Rental and Lease Equipment and Other Property: Assets are generally stated at cost, less accumulated depreciation. Upon retirement or disposal of assets, the cost and the related accumulated depreciation are eliminated from the accounts and any gain or loss is recognized. We depreciate our buildings over 31.5 years, furniture and other equipment over three to ten years, and leasehold improvements over the lease period, typically three to five years. Each is depreciated on a straight-line basis. Depreciation of rental and lease equipment assets is provided over the estimated useful lives of the respective assets. We depreciate $428,957 and $414,631 of equipment, at acquisition cost, at May 31, 2013 and 2012, respectively, using straight-line methods ranging from two to ten years, and $30,296 and $32,650 of equipment, at acquisition cost, at May 31, 2013 and 2012, respectively, using accelerated methods ranging from two to four years. We generally use straight-line methods for our T&M equipment, which we believe maintains its value consistently throughout the equipment’s useful life, and accelerated methods primarily for our DP equipment, which tend to depreciate faster due to frequent technological advancements. Depreciation methods and useful lives are periodically reviewed and revised, as deemed appropriate, including revisions to reflect shorter useful lives to more closely match depreciation expense with rental revenue for rental arrangements where the customer can acquire title through payment of all required rentals. Normal maintenance and repairs are expensed as incurred. Rental and lease equipment at net book value comprised $230,074 of T&M equipment and $4,782 of DP equipment at May 31, 2013, and $239,620 of T&M equipment and $3,553 of DP equipment at May 31, 2012.

Income Taxes

Income Taxes: We recognize a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when reported amounts of the assets or liabilities are recovered or settled. Deferred tax assets are periodically reviewed for recoverability.

We recognize the tax impact from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax impact recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We recognize interest, penalties and foreign currency gains and losses with respect to uncertain tax positions as components of our income tax provision. Accrued interest and penalties are included within accrued expenses in the consolidated balance sheet. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. During the second quarter of fiscal 2011 we effectively settled our remaining uncertain tax positions, and derecognized $4,515 of previously recognized uncertain tax positions, and the related deferred tax asset, and $1,396 for interest and penalties previously recognized. (See Note 6 for further discussion.)

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets: The carrying value of equipment held for rental and lease and finite lived intangible assets (subject to amortization) are evaluated whenever events or circumstances have occurred, or our outlook for future market conditions would indicate the carrying amount is not fully recoverable. We recognize impairment losses on equipment held for rental and lease when the expected future undiscounted cash flows are less than the asset’s carrying value, in which case the asset is written down to its estimated fair value. There were no such impairment charges during fiscal 2013, 2012 and 2011.

Goodwill and Intangible Assets

Goodwill and Intangible Assets: Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, and intangible assets, comprising purchased customer relationships and trade names, are discussed further in Note 4. Pursuant to FASB ASC Topic No. 350, Intangibles – Goodwill and Other (“ASC 350”), goodwill and intangible assets with indefinite lives are not amortized but tested annually for impairment, or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. In connection with the annual impairment test for goodwill and indefinite lived intangibles, we have the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If we determine that it was more likely than not that the fair value of the reporting unit is less than its carrying amount, then we perform the impairment test. The impairment test involves a two-step process. The first step involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. We generally determine the fair value of our reporting units using the market approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the test to determine the amount of impairment loss. The second step involves measuring the impairment by comparing the implied fair values of the affected reporting unit’s goodwill and intangible assets with the respective carrying values. We completed the required impairment review at the end of fiscal 2013, 2012 and 2011 and concluded that there were no impairments.

Cash and Cash Equivalents

Cash and Cash Equivalents: We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of AAA-rated money market funds in all periods presented.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts: We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make rental and lease payments. The estimated losses are based on historical collection experience in conjunction with an evaluation of the current status of the existing accounts. If the financial condition of our customers were to deteriorate, then additional allowances could be required that would reduce income. Conversely, if the financial condition of our customers were to improve or if legal remedies to collect past due amounts were more successful than expected, then the allowance for doubtful accounts may need to be reduced and income would be increased.

A roll forward of the allowance for doubtful accounts is as follows at May 31:

	2013			2012			2011
Beginning of year	$	522		$	602		$	536
Provision for doubtful accounts		445			233			500
Write-offs		(510	)		(313	)		(434	)
End of year	$	457		$	522		$	602

Other Assets

Other Assets: We include demonstration equipment used in connection with our resale activity, totaling $6,057 and $5,495 as of May 31, 2013 and 2012, respectively, in other assets for a period up to two years. Demonstration equipment is recorded at the lower of cost or estimated market value until the units are sold or transferred to our rental and lease equipment pool. Demonstration equipment transferred to our rental and lease equipment pool is depreciated over its remaining estimated useful life.

Other assets consisted of the following at May 31:

	2013		2012
Net investment in sales-type leases	$	9,437	$	11,681
Demonstration equipment		6,057		5,495
Supplemental executive retirement plan assets		2,947		2,370
Income taxes receivable		—		861
Prepaid expenses and other		2,905		2,865
	$	21,346	$	23,272

Concentration of Credit Risk

Concentration of Credit Risk: Financial instruments that potentially expose us to concentration of credit risk consist primarily of cash equivalents and trade accounts receivable. We invest excess cash primarily in money market funds of major financial institutions. Excess cash of $14 and $2,507 as of May 31, 2013 and 2012, respectively, was invested in four large money market funds that invest in government securities. We believe that we are not exposed to any significant financial risk with respect to cash and cash equivalents. For trade accounts receivable, we sell primarily on 30-day terms, perform credit evaluation procedures on each customer’s individual transactions and require security deposits or personal guarantees from our customers when significant credit risks are identified. Typically, most customers are large, established firms.

We purchase rental and lease equipment from numerous vendors and resale equipment from Agilent. During fiscal 2013, 2012 and 2011, Agilent accounted for approximately 74%, 75% and 82%, respectively, of all new equipment purchases, including rental equipment and equipment purchased for resale. No other vendor accounted for more than 10% of such purchases.

Foreign Currency

Foreign Currency: The U.S. dollar has been determined to be the functional currency of all foreign subsidiaries. The assets and liabilities of our foreign subsidiaries are remeasured from their local currency to U.S. dollars at current or historic exchange rates, as appropriate. Revenues and expenses are remeasured from any foreign currencies to U.S. dollars using historic or average monthly exchange rates, as appropriate, for the month in which the transaction occurred. Remeasurement gains and losses are included in selling, general and administrative expenses or income taxes, as appropriate. The assets, liabilities, revenues and expenses of our foreign subsidiaries are individually less than 10% of our respective consolidated amounts. The euro, Canadian dollar and Chinese yuan are our primary foreign currencies. Remeasurement gains and losses have not been significant.

We enter into forward contracts to hedge against unfavorable currency fluctuations in our monetary assets and liabilities in our European and Canadian operations. These contracts are designed to minimize the effect of fluctuations in foreign currencies. Such derivative instruments are not designated as hedging instruments and, therefore, are recorded at fair value as a current asset or liability, and any changes in fair value are recorded in our consolidated statements of operations.

The fair value of our foreign exchange forward contracts in the consolidated balance sheets is shown in the table below:

Derivatives Not Designated as Hedging Instruments	Consolidated Balance Sheet Location	May 31, 2013		May 31, 2012
Foreign exchange forward contracts	Other assets	$	114	$	179

The table below provides data about the amount of fiscal 2013 and 2012 losses recognized in income for derivative instruments not designated as hedging instruments:

Derivatives Not Designated	Location of Loss Recognized	Year ended May 31,
as Hedging Instruments	in Income on Derivatives	2013		2012
Foreign exchange forward contracts	Selling, general and administrative expenses	$	306	$	507

Net Income Per Common and Common Equivalent Share

Net Income Per Common and Common Equivalent Share: Basic earnings per share (“EPS”) is computed as net income divided by the weighted average number of shares of common stock outstanding and shares issuable for vested restricted stock units for the reported year, excluding the dilutive effects of restricted stock, stock options and other potentially dilutive securities. Diluted EPS is computed as net income divided by the weighted average number of shares outstanding of common stock and common stock equivalents for the reported year. The dilutive effects of restricted stock and stock options are computed using the treasury stock method.

Cash Flow

Cash Flow:

Non-Cash Investing and Financing Activities:

We had rental equipment purchases, not yet paid for, totaling $4,965 and $5,418 as of May 31, 2013, and 2012 respectively. We had sales of used equipment, not yet collected, of $11,419 and $10,021 as of May 31, 2013 and 2012, respectively, included in accounts receivable, and net investment in sales-type leases included in other assets. During fiscal 2013 and 2012, we transferred $2,937 and $2,207 respectively, of demonstration equipment, included in other assets, to rental and lease equipment.

Supplemental disclosures of cash paid (refunded) during the fiscal year for:

Year ended May 31,	2013		2012			2011
Interest	$	180	$	21		$	56
Income taxes		15,579		(543	)		(2,048	)

Stock-Based Compensation

Stock-Based Compensation: Share-based payments to employees, including grants of employee stock options, are recognized in the consolidated financial statements as compensation expense over the period that an employee provides service in exchange for the award based on its fair value on the date of grant. Compensation expense resulting from restricted stock and restricted stock units is measured at fair value on the date of grant and is recognized in selling, general and administrative expenses over the vesting period (see Note 12 for further discussion).

Recent Accounting Pronouncements

Recent Accounting Pronouncements: In June 2011, the financial accounting standards board (“FASB”) issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity is required to present components of comprehensive income in either (1) a continuous statement of net income or (2) two separate but consecutive statements. This guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption of the new guidance is permitted and full retrospective application is required. We adopted this guidance effective June 1, 2013 with no material impact on our financial condition, results of operations or cash flows.

In September 2011, the FASB issued guidance to simplify how an entity tests goodwill for impairment. The amendments in the update provide for an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity that adopts this option will no longer be required to calculate the fair value of a reporting unit (Step 1) unless the entity determines, based on a qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. We adopted this guidance effective June 1, 2012 with no material impact on our consolidated financial position, results of operations or cash flows.

In July 2012, the FASB issued guidance to simplify how an entity tests indefinite-lived intangible assets other than goodwill for impairment and permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after December 15, 2011. The guidance for the qualitative process became effective for our first quarter of fiscal 2013, and had no material impact on our consolidated financial position, results of operations or cash flows.

In February 2013, the FASB issued guidance on reporting the effect of significant reclassifications out of accumulated other comprehensive income. If the amount being reclassified is required under GAAP to be reclassified in its entirety to net income, an entity is required to report the effect of these reclassifications on the respective line items in net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. The guidance is effective prospectively for reporting periods beginning after December 15, 2013. The new guidance affects disclosures only, and is not expected to impact our consolidated financial position, results of operations or cash flows.

Other Comprehensive Income

Other Comprehensive Income: Comprehensive income is equivalent to net income for all periods presented.

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Acquisitions - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended			12 Months Ended
	Aug. 24, 2011	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2011	May 31, 2012	May 31, 2011	Aug. 31, 2012
Business Acquisition [Line Items]
Amount deposited into an escrow account for any post-closing adjustments	$ 10,673						$ 500
Acquired gross accounts receivable	542						972
Acquired gross accounts receivable not expected to be collected							430
Acquired gross accounts receivable resulting in fair value							542
Bargain purchase gain related to EMT	3,194			3,194	3,435	202
Acquisition-related transaction cost					55
Revenues from acquired assets					5,232
Income before income taxes from acquired assets					2,862
Increased bargain purchase gain		396	396
Deferred taxes, net		241	241
Estimated fair value of customer relationships acquired		140	140
Post closing adjustments, disbursed from the escrow funds		273	273
Determination of assets acquired and other components		17	17
Determination of fair value of assets and liabilities acquired	13,867
Telogy LLC
Business Acquisition [Line Items]
Increased bargain purchase gain						342
Deferred taxes, net						202
Determination of assets acquired and other components						260
Determination of fair value of assets and liabilities acquired						$ 82

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Components of Income Before Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2011	May 31, 2013	May 31, 2012	May 31, 2011
Schedule of Components of Income Before Income Tax Expense (Benefit) [Line Items]
Domestic									$ 37,162	$ 40,364	$ 36,817
Foreign									(49)	(359)	472
Income before income taxes	$ 9,828	$ 8,437	$ 10,457	$ 8,391	$ 10,334	$ 8,023	$ 9,735	$ 11,913	$ 37,113	$ 40,005	$ 37,289

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Commitments And Contingencies - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Operating Leased Assets [Line Items]
Rental expenses	$ 1,125	$ 1,007	$ 1,057
Maximum
Operating Leased Assets [Line Items]
Operating lease agreements Period	5 years

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Summary of Other Assets (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013	May 31, 2012
Other Assets [Line Items]
Net investment in sales-type leases	$ 9,437	$ 11,681
Demonstration equipment	6,057	5,495
Supplemental executive retirement plan assets	2,947	2,370
Income taxes receivable		861
Prepaid expenses and other	2,905	2,865
Total other assets	$ 21,346	$ 23,272

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Segment Reporting and Related Disclosures (Tables)

12 Months Ended

May 31, 2013

Revenues from Rental, Lease and Sale Segment

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

	T&M		DP		Total
2013
Rentals and leases	$	120,846	$	15,745	$	136,591
Sales of equipment and other revenues		109,700		2,440		112,140
	$	230,546	$	18,185	$	248,731
2012
Rentals and leases	$	113,540	$	16,197	$	129,737
Sales of equipment and other revenues		116,417		2,400		118,817
	$	229,957	$	18,597	$	248,554
2011
Rentals and leases	$	101,273	$	16,789	$	118,062
Sales of equipment and other revenues		108,450		2,217		110,667
	$	209,723	$	19,006	$	228,729

Revenues from External Customers and Long-Lived Assets, by Geographical Areas

Selected country information is presented below:

Year ended May 31,	2013		2012		2011
Revenues: 1
U.S.	$	211,745	$	214,354	$	199,861
Other 2		36,986		34,200		28,868
Total	$	248,731	$	248,554	$	228,729

As of May 31,	2013		2012		2011
Net Long Lived Assets: 3
U.S.	$	198,956	$	207,449	$	176,268
Other 2		49,726		49,595		33,491
Total	$	248,682	$	257,044	$	209,759

¹  Revenues by country are based on the location of shipping destination, whether the order originates in the U.S. parent or a foreign subsidiary.

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

³ Net long-lived assets include rental and lease equipment and other property, net of accumulated depreciation and amortization. Subsequent to the issuance of the May 31, 2012 consolidated financial statements, we determined that, for geographic disclosure purposes, the previously reported amount of net long-lived assets as of May 31, 2012 and 2011 should not have included goodwill and intangibles (which totaled $4,310 at May 31, 2012 and $4,323 at May 31, 2011) and, accordingly, such amounts have been excluded from the May 31, 2012 and 2011 balances, respectively, displayed in the table above.

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Quarterly Information (Unaudited) (Tables)

12 Months Ended

May 31, 2013

Quarterly Financial Data

Summarized quarterly financial data for fiscal 2013 and 2012 was as follows:

	Total		Gross		Income Before		Net		Earnings per share
	Revenues		Profit		Taxes		Income		Basic		Diluted
Fiscal Year 2013
First Quarter	$	58,501	$	22,022	$	8,391	$	5,086	$	0.21	$	0.21
Second Quarter		65,192		24,388		10,457		6,239		0.26		0.26
Third Quarter		64,672		22,160		8,437		5,037		0.21		0.21
Fourth Quarter		60,366		24,684		9,828		6,392		0.27		0.26
Annual totals	$	248,731	$	93,254	$	37,113	$	22,754	$	0.94	$	0.94
Fiscal Year 2012
First Quarter	$	58,650	$	21,740	$	11,913	$	8,505	$	0.35	$	0.35
Second Quarter		61,643		22,588		9,735		6,019		0.25		0.25
Third Quarter		60,079		20,883		8,023		4,995		0.21		0.21
Fourth Quarter		68,182		24,125		10,334		6,253		0.26		0.26
Annual totals	$	248,554	$	89,336	$	40,005	$	25,772	$	1.07	$	1.07

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Sales-type Leases

12 Months Ended

May 31, 2013

Sales-type Leases

Note 7: Sales-type Leases

We have certain customer leases providing bargain purchase options, which are accounted for as sales-type leases. Interest income is recognized over the life of the lease using the effective interest method.

The initial acceptance of customer finance arrangements is based on an in-depth review of each customer’s credit profile, including review of third party credit reports, customer financial statements and bank verifications. We monitor the credit quality of our sales-type lease portfolio based on payment activity and the related finance lease receivable aging. This credit quality is assessed on a monthly basis. Our historical losses on finance lease receivables are insignificant, and therefore we do not have a specific allowance for credit losses.

The minimum lease payments receivable and the net investment included in other assets were as follows at May 31:

	2013			2012
Gross minimum lease payments receivable	$	9,862		$	12,284
Less—unearned interest		(425	)		(603	)
Net investment in sales-type lease receivables	$	9,437		$	11,681

The following table provides estimated future minimum lease payments by year related to sales-type leases:

Year ending May 31,	Future Amortization
2014	$	6,561
2015		2,726
2016		458
2017		117
	$	9,862

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Future Minimum Lease Payments to be Received Under Operating Leases (Detail) (Non Cancelable Operating Leases, USD $) In Thousands, unless otherwise specified	May 31, 2013
Non Cancelable Operating Leases
Future Minimum Payments Receivable [Line Items]
2014	$ 4,747
2015	2,943
2016	647
2017	34
2018	15
Total	$ 8,386

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Computation of Earnings Per Share (Tables)

12 Months Ended

May 31, 2013

Reconciliation of Denominator Used in Computation of Basic and Diluted Earnings per Share

The following is a reconciliation of the denominator used in the computation of basic and diluted EPS for the fiscal years ended May 31:

	2013		2012		2011
Denominator:
Denominator for basic earnings per share—weighted average common shares outstanding (including shares issuable for vested restricted stock units)		24,226		23,983		23,974
Effect of unvested restricted stock units		43		169		98
Diluted shares used in per share calculation		24,269		24,152		24,072
Net income	$	22,754	$	25,772	$	23,756
Earnings per share:
Basic	$	0.94	$	1.07	$	0.99
Diluted	$	0.94	$	1.07	$	0.99

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Supplemental Disclosures of Cash Paid (Refunded) (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Other Significant Noncash Transactions [Line Items]
Interest	$ 180	$ 21	$ 56
Income taxes	$ 15,579	$ (543)	$ (2,048)

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Other Property

12 Months Ended

May 31, 2013

Other Property

Note 10: Other Property

Other property, at cost, consisted of the following at May 31:

	2013			2012
Land	$	6,985		$	6,985
Buildings		15,774			15,442
Furniture and other equipment		9,730			9,071
Leasehold improvements		210			205
		32,699			31,703
Less—accumulated depreciation and amortization		(18,873	)		(17,832	)
	$	13,826		$	13,871

Depreciation expense was $1,149, $1,157 and $1,020 for fiscal 2013, 2012 and 2011, respectively. Depreciation expense is included in selling, general and administrative expenses.

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Quarterly Financial Data (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2011	May 31, 2013		May 31, 2012		May 31, 2011
Schedule Of Quarterly Financial Information [Line Items]
Total Revenues	$ 60,366	$ 64,672	$ 65,192	$ 58,501	$ 68,182	$ 60,079	$ 61,643	$ 58,650	$ 248,731	[1]	$ 248,554	[1]	$ 228,729	[1]
Gross Profit	24,684	22,160	24,388	22,022	24,125	20,883	22,588	21,740	93,254		89,336
Income Before Taxes	9,828	8,437	10,457	8,391	10,334	8,023	9,735	11,913	37,113		40,005		37,289
Net income	$ 6,392	$ 5,037	$ 6,239	$ 5,086	$ 6,253	$ 4,995	$ 6,019	$ 8,505	$ 22,754		$ 25,772		$ 23,756
Earnings Per Share Basic	$ 0.27	$ 0.21	$ 0.26	$ 0.21	$ 0.26	$ 0.21	$ 0.25	$ 0.35	$ 0.94		$ 1.07		$ 0.99
Earnings Per share Diluted	$ 0.26	$ 0.21	$ 0.26	$ 0.21	$ 0.26	$ 0.21	$ 0.25	$ 0.35	$ 0.94		$ 1.07		$ 0.99

[1] Revenues by country are based on the location of shipping destination, whether the order originates in the U.S. parent or a foreign subsidiary.

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Income Taxes

12 Months Ended

May 31, 2013

Income Taxes

Note 6: Income Taxes

We recognize a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when reported amounts of the assets or liabilities are recovered or settled. The deferred tax assets are periodically reviewed for recoverability.

Accounting guidance for accounting for uncertain tax positions prescribes a recognition threshold required to meet before being recognized in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.

We recognize interest and penalties accrued with respect to uncertain tax positions as components of our income tax provision. At May 31, 2013 and 2012, we did not have any accrual for interest and penalties.

The reconciliation of our unrecognized tax benefits is as follows for the fiscal years ended May 31:

	2013		2012		2011
Balance as of June 1	$	—	$	—	$	4,691
Decrease related to prior year tax positions		—		—		(4,691	)
Balance as of May 31	$	—	$	—	$	—

We are subject to taxation in the U.S., as well as various states and foreign jurisdictions. We have substantially settled all income tax matters for the United States federal jurisdiction for years through fiscal 2009. Major state jurisdictions have been examined through fiscal 2004 and 2005, and foreign jurisdictions have not been examined for their respective maximum statutory periods.

For financial reporting purposes, income before income taxes comprised the following as of May 31:

	2013			2012			2011
Domestic	$	37,162		$	40,364		$	36,817
Foreign		(49	)		(359	)		472
	$	37,113		$	40,005		$	37,289

The provision for income taxes consisted of the following for the fiscal years ended May 31:

	2013			2012		2011
Current
Federal	$	17,007		$	1,057	$	(5,583	)
State		1,417			1,523		2,028
Foreign		573			538		(521	)
Deferred
Federal		(4,401	)		10,541		17,083
State		257			559		540
Foreign		(494	)		15		(14	)
	$	14,359		$	14,233	$	13,533

The following reconciles the statutory federal income tax rate to the effective tax rate for the fiscal years ended May 31:

	2013			2012			2011
Statutory federal rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		3.0			3.4			4.5
Derecognition of uncertain tax positions		—			—			(3.4	)
Bargain purchase gain		—			(3.0	)		(0.2	)
Foreign tax refund		—			(0.4	)		—
Permanent differences resulting from valuation allowances		0.7			0.7			0.3
Other		—			(0.1	)		0.1
Effective tax rate		38.7	%		35.6	%		36.3	%

Our effective tax rate in fiscal 2013, 2012 and 2011 was 38.7%, 35.6% and 36.3%, respectively. The lower effective rate in fiscal 2012 was due to the bargain purchase gain on EMT and state tax credits offset by an increase in the foreign valuation allowance. The lower effective rate in fiscal 2011 was due to our effective settlement of our remaining uncertain tax positions and the resulting derecognition of $1,396 for interest and penalties previously recognized in our income tax provision. Tax advantaged investments reduced expense by $0, $0 and $2 for fiscal 2013, 2012 and 2011, respectively.

The tax effects of temporary differences that gave rise to significant portions of the net deferred tax liabilities consisted of the following at May 31:

	2013			2012
Deferred tax assets:
Goodwill and intangible assets	$	—		$	300
Allowance for doubtful accounts		105			206
Deferred compensation and benefits		3,545			2,813
Net operating losses		1,110			871
Valuation allowance		(1,110	)		(871	)
Other		908			1,390
		4,558			4,709
Deferred tax liabilities:
Accumulated depreciation		(51,948	)		(56,532	)
Deferred taxes on bargain purchase		(2,207	)		(2,548	)
Intangible asset		(143	)		—
Net deferred tax liabilities	$	(49,740	)	$	(54,371	)

We determined that a valuation allowance was required in fiscal 2013 and 2012 of $1,110 and $871, respectively, for our deferred tax asset related to certain foreign net operating loss carry forwards and other related timing differences, which, if unused, will expire between fiscal 2014 and 2017. The increase in the valuation allowance for fiscal 2013, 2012 and 2011 was not significant. As of May 31, 2013, 2012 and 2011, U.S. income taxes had not been assessed on approximately $1,833, $1,599 and $1,425, respectively, of undistributed earnings of foreign subsidiaries because we consider these earnings to be invested indefinitely.

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Summary of Significant Accounting Policies

12 Months Ended

May 31, 2013

Summary of Significant Accounting Policies

Note 1: Summary of Significant Accounting Policies

Basis of Presentation: The consolidated financial statements include Electro Rent Corporation and its wholly owned subsidiaries (collectively “we”, “us”, or “our” hereafter). All intercompany balances and transactions have been eliminated in consolidation.

Business and Organization: We primarily engage in the short-term rental, lease, and sale of state-of-the-art electronic equipment. We maintain an equipment portfolio composed primarily of test and measurement equipment (“T&M”) and personal computer-related data products (“DP”) equipment purchased from leading manufacturers. Another aspect of our business is the sale of equipment after its utilization for rental or lease and the sale of a range of new T&M equipment for Agilent Technologies, Inc. (“Agilent”) beginning on December 1, 2009, as well as other smaller vendors. Agilent has given us the exclusive right to sell Agilent’s more complex T&M equipment to small and medium size customers (who previously purchased directly from Agilent) in the United States and Canada.

We conduct our business activities in the United States, as well as through our wholly owned subsidiaries, Electro Rent, LLC, Electro Rent Europe, NV, and Electro Rent (Beijing) Test and Measurement Equipment Rental Co., Ltd. which conduct some or all of these business activities in Canada, Europe and China, respectively. Our wholly owned subsidiary, Electro Rent Asia, Inc., is the U.S. parent company of Electro Rent (Beijing) Test and Measurement Equipment Rental Co., Ltd., and our wholly owned subsidiary, ER International, Inc., is the U.S. parent company of Electro Rent Europe, NV.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosures of contingent assets and liabilities as of the date of these financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, we review these estimates including those related to asset lives and depreciation methods, impairment of long-lived assets, including rental and lease equipment, goodwill and intangibles, investments, allowance for doubtful accounts, income taxes and contingencies and litigation. These estimates are based on our evaluation of current business and economic conditions, historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe, however, that our estimates, including those for the above-listed items, are reasonable.

Revenue Recognition: We generate revenues primarily through the rental and leasing of T&M and DP equipment and through the sale of new and used equipment. Rental revenues comprise short term agreements that can be daily, weekly or monthly. Rental revenues are recognized in the month they are due on the accrual basis of accounting. Our operating lease agreements have varying terms, typically one to three years. Upon lease termination, customers have the option to renew the lease term, purchase the equipment at fair market value, or continue to rent on a month-to-month basis. Our operating leases do not provide for contingent rentals. Revenues related to operating leases are recognized on a straight-line basis over the term of the lease. Negotiated lease early-termination charges are recognized upon receipt. Rentals and leases are primarily billed to customers in advance, and unearned billings are recorded as deferred revenue.

We enter into finance leases as lessor for some of our equipment. Our finance lease agreements contain bargain purchase options and are accounted for as sale-type leases. Revenues from finance leases, which are recorded at the present value of the aggregate future lease payments, less unearned interest, are included in sales of equipment and other revenues in our consolidated statements of operations. Unearned interest is recognized over the life of the finance lease term using the effective interest method. Our finance lease terms vary, and are typically one to three years. The net investment in finance leases, which represents the receivables due from lessees, net of unearned interest, is included in other assets in our consolidated balance sheets. Historically, we have not required security deposits based on our assessed credit risk within our customer bases.

Initial direct costs for operating and finance leases are insignificant.

Sales of new equipment through our resale channel are recognized in the period in which the equipment is delivered and risk of loss passes to the customer, while sales of used equipment from our rental and lease equipment pool are recognized in the period in which the equipment is shipped and risk of loss passes to the customer. In the case of equipment sold to customers that is already on rent or lease to the same party, revenue is recognized at the agreed-upon date when the rent or lease term ends and risk of loss passes to the customer.

In accordance with accounting guidance, we are acting as the principal with respect to sales of new equipment through our Agilent resale agreement, based on several factors, including: (1) We act as the primary obligor by working directly with our customers to define their needs, providing them with options to satisfy such needs, contracting directly with the customer, and, to the extent required, providing customers with instruction on the use of the product and additional technical support once the product is received by the customer. The product manufacturer is not a party to our customer sales agreements, nor is it referenced in the agreements, and therefore has no obligation to our customers with the exception of the manufacturer’s standard warranty on the product. (2) We bear back-end risk of inventory loss with respect to any product return from the customer as the original manufacturer is not required to accept returns of equipment from us. We also bear front-end risk of inventory loss in those cases where we acquire products for resale into our inventory prior to shipment to customers. (3) We have full discretion in setting pricing terms with our customers and to negotiate all such terms ourselves. (4) We assume all credit risk. Accordingly, sales of new equipment through our resale channel are recorded in sales of equipment and other revenues and the related equipment costs are recorded in costs of sales of equipment and other revenues in our consolidated statements of operations.

Other revenues, consisting primarily of billings to customers for delivery and repairs, are recognized in the period in which the respective services are performed.

Operating expenses: Costs of rentals and leases, excluding depreciation, primarily include labor related costs of our operations personnel, supplies, repairs, insurance and warehousing costs associated with our rental and lease equipment, relating to our rental and lease revenues.

Costs of sales of equipment and other revenues primarily include the cost of new equipment and the carrying value of used equipment sold.

Selling, general and administrative expenses include sales and advertising costs, payroll and related benefit costs, insurance expenses, property taxes on our property and rental and lease equipment, legal and professional fees, and administrative overhead. Advertising costs are expensed as incurred. Total advertising expenses were $982, $962 and $1,013 for fiscal 2013, 2012 and 2011, respectively. SG&A expenses also include shipping and handling costs of $3,951, $4,184 and $3,638 for fiscal 2013, 2012 and 2011, respectively.

Reclassifications: We have expanded the presentation of our costs of revenues to separately present costs associated with each of the revenue streams presented in the condensed consolidated statements of operations, to comply with the applicable income statement disclosure requirements for public companies. Accordingly, the previously reported statement of operations line item captioned “costs of revenues other than depreciation of rental and lease equipment” has been replaced with separate line items for “costs of rentals and leases, excluding depreciation” and “costs of sales of equipment and other revenues”.

Further, in order to more closely align activity related to our rental and lease operations, including revenues and the expenses associated with providing those revenues, we have reclassified certain expenses previously included in selling, general and administrative expenses to costs of rentals and leases, excluding depreciation, which resulted in a reduction to previously reported selling, general and administrative expenses of $10,710 and $10,010 for fiscal 2012 and 2011, respectively. These reclassified costs primarily include direct expenses of supporting our rental and lease operations, including labor related costs of our operations personnel, supplies, repairs, and insurance and warehousing costs associated with our rental and lease equipment.

Rental and Lease Equipment and Other Property: Assets are generally stated at cost, less accumulated depreciation. Upon retirement or disposal of assets, the cost and the related accumulated depreciation are eliminated from the accounts and any gain or loss is recognized. We depreciate our buildings over 31.5 years, furniture and other equipment over three to ten years, and leasehold improvements over the lease period, typically three to five years. Each is depreciated on a straight-line basis. Depreciation of rental and lease equipment assets is provided over the estimated useful lives of the respective assets. We depreciate $428,957 and $414,631 of equipment, at acquisition cost, at May 31, 2013 and 2012, respectively, using straight-line methods ranging from two to ten years, and $30,296 and $32,650 of equipment, at acquisition cost, at May 31, 2013 and 2012, respectively, using accelerated methods ranging from two to four years. We generally use straight-line methods for our T&M equipment, which we believe maintains its value consistently throughout the equipment’s useful life, and accelerated methods primarily for our DP equipment, which tend to depreciate faster due to frequent technological advancements. Depreciation methods and useful lives are periodically reviewed and revised, as deemed appropriate, including revisions to reflect shorter useful lives to more closely match depreciation expense with rental revenue for rental arrangements where the customer can acquire title through payment of all required rentals. Normal maintenance and repairs are expensed as incurred. Rental and lease equipment at net book value comprised $230,074 of T&M equipment and $4,782 of DP equipment at May 31, 2013, and $239,620 of T&M equipment and $3,553 of DP equipment at May 31, 2012.

Income Taxes: We recognize a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. These temporary differences will result in taxable or deductible amounts in future years when reported amounts of the assets or liabilities are recovered or settled. Deferred tax assets are periodically reviewed for recoverability.

We recognize the tax impact from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax impact recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We recognize interest, penalties and foreign currency gains and losses with respect to uncertain tax positions as components of our income tax provision. Accrued interest and penalties are included within accrued expenses in the consolidated balance sheet. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. During the second quarter of fiscal 2011 we effectively settled our remaining uncertain tax positions, and derecognized $4,515 of previously recognized uncertain tax positions, and the related deferred tax asset, and $1,396 for interest and penalties previously recognized. (See Note 6 for further discussion.)

Impairment of Long-Lived Assets: The carrying value of equipment held for rental and lease and finite lived intangible assets (subject to amortization) are evaluated whenever events or circumstances have occurred, or our outlook for future market conditions would indicate the carrying amount is not fully recoverable. We recognize impairment losses on equipment held for rental and lease when the expected future undiscounted cash flows are less than the asset’s carrying value, in which case the asset is written down to its estimated fair value. There were no such impairment charges during fiscal 2013, 2012 and 2011.

Goodwill and Intangible Assets: Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, and intangible assets, comprising purchased customer relationships and trade names, are discussed further in Note 4. Pursuant to FASB ASC Topic No. 350, Intangibles – Goodwill and Other (“ASC 350”), goodwill and intangible assets with indefinite lives are not amortized but tested annually for impairment, or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. In connection with the annual impairment test for goodwill and indefinite lived intangibles, we have the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If we determine that it was more likely than not that the fair value of the reporting unit is less than its carrying amount, then we perform the impairment test. The impairment test involves a two-step process. The first step involves comparing the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. We generally determine the fair value of our reporting units using the market approach methodology of valuation. If the carrying value of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the test to determine the amount of impairment loss. The second step involves measuring the impairment by comparing the implied fair values of the affected reporting unit’s goodwill and intangible assets with the respective carrying values. We completed the required impairment review at the end of fiscal 2013, 2012 and 2011 and concluded that there were no impairments.

Cash and Cash Equivalents: We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of AAA-rated money market funds in all periods presented.

Allowance for Doubtful Accounts: We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make rental and lease payments. The estimated losses are based on historical collection experience in conjunction with an evaluation of the current status of the existing accounts. If the financial condition of our customers were to deteriorate, then additional allowances could be required that would reduce income. Conversely, if the financial condition of our customers were to improve or if legal remedies to collect past due amounts were more successful than expected, then the allowance for doubtful accounts may need to be reduced and income would be increased.

A roll forward of the allowance for doubtful accounts is as follows at May 31:

	2013			2012			2011
Beginning of year	$	522		$	602		$	536
Provision for doubtful accounts		445			233			500
Write-offs		(510	)		(313	)		(434	)
End of year	$	457		$	522		$	602

Other Assets: We include demonstration equipment used in connection with our resale activity, totaling $6,057 and $5,495 as of May 31, 2013 and 2012, respectively, in other assets for a period up to two years. Demonstration equipment is recorded at the lower of cost or estimated market value until the units are sold or transferred to our rental and lease equipment pool. Demonstration equipment transferred to our rental and lease equipment pool is depreciated over its remaining estimated useful life.

Other assets consisted of the following at May 31:

	2013		2012
Net investment in sales-type leases	$	9,437	$	11,681
Demonstration equipment		6,057		5,495
Supplemental executive retirement plan assets		2,947		2,370
Income taxes receivable		—		861
Prepaid expenses and other		2,905		2,865
	$	21,346	$	23,272

Concentration of Credit Risk: Financial instruments that potentially expose us to concentration of credit risk consist primarily of cash equivalents and trade accounts receivable. We invest excess cash primarily in money market funds of major financial institutions. Excess cash of $14 and $2,507 as of May 31, 2013 and 2012, respectively, was invested in four large money market funds that invest in government securities. We believe that we are not exposed to any significant financial risk with respect to cash and cash equivalents. For trade accounts receivable, we sell primarily on 30-day terms, perform credit evaluation procedures on each customer’s individual transactions and require security deposits or personal guarantees from our customers when significant credit risks are identified. Typically, most customers are large, established firms.

We purchase rental and lease equipment from numerous vendors and resale equipment from Agilent. During fiscal 2013, 2012 and 2011, Agilent accounted for approximately 74%, 75% and 82%, respectively, of all new equipment purchases, including rental equipment and equipment purchased for resale. No other vendor accounted for more than 10% of such purchases.

Foreign Currency: The U.S. dollar has been determined to be the functional currency of all foreign subsidiaries. The assets and liabilities of our foreign subsidiaries are remeasured from their local currency to U.S. dollars at current or historic exchange rates, as appropriate. Revenues and expenses are remeasured from any foreign currencies to U.S. dollars using historic or average monthly exchange rates, as appropriate, for the month in which the transaction occurred. Remeasurement gains and losses are included in selling, general and administrative expenses or income taxes, as appropriate. The assets, liabilities, revenues and expenses of our foreign subsidiaries are individually less than 10% of our respective consolidated amounts. The euro, Canadian dollar and Chinese yuan are our primary foreign currencies. Remeasurement gains and losses have not been significant.

We enter into forward contracts to hedge against unfavorable currency fluctuations in our monetary assets and liabilities in our European and Canadian operations. These contracts are designed to minimize the effect of fluctuations in foreign currencies. Such derivative instruments are not designated as hedging instruments and, therefore, are recorded at fair value as a current asset or liability, and any changes in fair value are recorded in our consolidated statements of operations.

The fair value of our foreign exchange forward contracts in the consolidated balance sheets is shown in the table below:

Derivatives Not Designated as Hedging Instruments	Consolidated Balance Sheet Location	May 31, 2013		May 31, 2012
Foreign exchange forward contracts	Other assets	$	114	$	179

The table below provides data about the amount of fiscal 2013 and 2012 losses recognized in income for derivative instruments not designated as hedging instruments:

Derivatives Not Designated	Location of Loss Recognized	Year ended May 31,
as Hedging Instruments	in Income on Derivatives	2013		2012
Foreign exchange forward contracts	Selling, general and administrative expenses	$	306	$	507

Net Income Per Common and Common Equivalent Share: Basic earnings per share (“EPS”) is computed as net income divided by the weighted average number of shares of common stock outstanding and shares issuable for vested restricted stock units for the reported year, excluding the dilutive effects of restricted stock, stock options and other potentially dilutive securities. Diluted EPS is computed as net income divided by the weighted average number of shares outstanding of common stock and common stock equivalents for the reported year. The dilutive effects of restricted stock and stock options are computed using the treasury stock method.

Cash Flow:

Non-Cash Investing and Financing Activities:

We had rental equipment purchases, not yet paid for, totaling $4,965 and $5,418 as of May 31, 2013, and 2012 respectively. We had sales of used equipment, not yet collected, of $11,419 and $10,021 as of May 31, 2013 and 2012, respectively, included in accounts receivable, and net investment in sales-type leases included in other assets. During fiscal 2013 and 2012, we transferred $2,937 and $2,207 respectively, of demonstration equipment, included in other assets, to rental and lease equipment.

Supplemental disclosures of cash paid (refunded) during the fiscal year for:

Year ended May 31,	2013		2012			2011
Interest	$	180	$	21		$	56
Income taxes		15,579		(543	)		(2,048	)

Stock-Based Compensation: Share-based payments to employees, including grants of employee stock options, are recognized in the consolidated financial statements as compensation expense over the period that an employee provides service in exchange for the award based on its fair value on the date of grant. Compensation expense resulting from restricted stock and restricted stock units is measured at fair value on the date of grant and is recognized in selling, general and administrative expenses over the vesting period (see Note 12 for further discussion).

Recent Accounting Pronouncements: In June 2011, the financial accounting standards board (“FASB”) issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity is required to present components of comprehensive income in either (1) a continuous statement of net income or (2) two separate but consecutive statements. This guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption of the new guidance is permitted and full retrospective application is required. We adopted this guidance effective June 1, 2013 with no material impact on our financial condition, results of operations or cash flows.

In September 2011, the FASB issued guidance to simplify how an entity tests goodwill for impairment. The amendments in the update provide for an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity that adopts this option will no longer be required to calculate the fair value of a reporting unit (Step 1) unless the entity determines, based on a qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. We adopted this guidance effective June 1, 2012 with no material impact on our consolidated financial position, results of operations or cash flows.

In July 2012, the FASB issued guidance to simplify how an entity tests indefinite-lived intangible assets other than goodwill for impairment and permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after December 15, 2011. The guidance for the qualitative process became effective for our first quarter of fiscal 2013, and had no material impact on our consolidated financial position, results of operations or cash flows.

In February 2013, the FASB issued guidance on reporting the effect of significant reclassifications out of accumulated other comprehensive income. If the amount being reclassified is required under GAAP to be reclassified in its entirety to net income, an entity is required to report the effect of these reclassifications on the respective line items in net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. The guidance is effective prospectively for reporting periods beginning after December 15, 2013. The new guidance affects disclosures only, and is not expected to impact our consolidated financial position, results of operations or cash flows.

Other Comprehensive Income: Comprehensive income is equivalent to net income for all periods presented.

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Income Taxes - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011	Nov. 30, 2011
Income Taxes [Line Items]
Interest and penalties	$ 0	$ 0		$ 1,396
Effective tax rate	38.70%	35.60%	36.30%
Derecognition of expense recognized in income tax provision	1,396
Tax advantaged investments reduced tax expense	0	0	2
Valuation allowance	1,110	871
Undistributed earnings of foreign subsidiaries	$ 1,833	$ 1,599	$ 1,425
United States federal jurisdiction
Income Taxes [Line Items]
Jurisdiction	Years through fiscal 2009
State jurisdictions
Income Taxes [Line Items]
Jurisdiction	Through fiscal 2004 and 2005

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Goodwill and Intangibles - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Goodwill And Other Intangible Assets [Line Items]
Amortization expense of intangible assets	$ 164	$ 153	$ 184
EMT
Goodwill And Other Intangible Assets [Line Items]
Date of Acquisition	Aug. 24, 2011
Telogy LLC
Goodwill And Other Intangible Assets [Line Items]
Date of Acquisition	Mar. 31, 2010
Rush Computer Rentals, Inc.
Goodwill And Other Intangible Assets [Line Items]
Date of Acquisition	Jan. 31, 2006

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Commitments and Contingencies (Tables)

12 Months Ended

May 31, 2013

Summary of Minimum Future Payment Due Under Lease

Minimum payments over the next five years under these leases as of May 31, 2013, exclusive of property taxes and insurance, were as follows:

2014	$	719
2015		449
2016		182
2017		100
2018		59
	$	1,509

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Summary of Minimum Future Payment Due Under Lease (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013
Operating Leased Assets [Line Items]
2014	$ 719
2015	449
2016	182
2017	100
2018	59
Total	$ 1,509

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Estimated Future Minimum Lease Payments Receivable Related to Sales-Type Leases (Detail) (USD $) In Thousands, unless otherwise specified	May 31, 2013
Lease and Rental Expense [Line Items]
2014	$ 6,561
2015	2,726
2016	458
2017	117
Total intangible assets	$ 9,862

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Savings Plan, Employee Stock Ownership Plan and Retirement Plan

12 Months Ended

May 31, 2013

Savings Plan, Employee Stock Ownership Plan and Retirement Plan

Note 13: Savings Plan, Employee Stock Ownership Plan and Retirement Plan

We maintain a Savings Plan (“401(k)”) and a frozen Employee Stock Ownership Plan (“ESOP”). Employees become eligible to participate in the 401(k) after 90 days of employment. We have the option to match contributions of participants at a rate we determine each year. For participants with three or more years of service, we also may elect to make additional discretionary matching contributions in excess of the rate elected for participants with less than three years of service.

The Board of Directors determines the amount to be contributed annually to the 401(k) in cash, provided that such contributions shall not exceed the amount deductible for federal income tax purposes. Cash contributions to the 401(k) of $749, $728 and $483 were made for fiscal 2013, 2012 and 2011, respectively.

The ESOP was established in 1975 and was frozen in 1994, at which time all participants became fully vested. Contributions to the ESOP were invested primarily in our common stock. The ESOP was terminated in fiscal 2013.

We have a Supplemental Executive Retirement Plan (“SERP”) that provides for automatic deferral of contributions in excess of the maximum amount permitted under the 401(k) for our executives who choose to participate. The SERP is a non-qualified deferred compensation program, and we have an unfunded contractual obligation under this plan. We have the option to match contributions of participants at a rate we determine each year. Cash contributions to the SERP were $29, $30 and $14 for fiscal 2013, 2012 and 2011, respectively. As of May 31, 2013 and 2012, we had $2,947 and $2,370, respectively, of obligations for this plan included in accrued expenses. We have investments in money market stock and bond funds, as directed by the participants, of $2,947 and $2,370 as of May 31, 2013 and 2012, respectively, included in other assets.

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Rentals Under Noncancellable Operating Leases

12 Months Ended

May 31, 2013

Rentals Under Noncancellable Operating Leases

Note 9: Rentals Under Noncancellable Operating Leases

We rent equipment on a short-term basis and lease equipment for periods of typically one to three years. Such leases provide the lessee with the option to renew the lease term, purchase the equipment at fair market value, or continue to rent on a month-to-month basis. Our operating leases do not provide for contingent rentals.

Our cost of equipment under operating leases at May 31, 2013, with remaining noncancellable lease terms of more than one year, was $15,215, before accumulated depreciation of $4,242, and the net book value was $10,973.

The following sets forth a schedule of minimum future rentals to be received on noncancellable operating leases with remaining lease terms of more than one year as of May 31, 2013:

2014	$	4,747
2015		2,943
2016		647
2017		34
2018		15
	$	8,386

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Summary of Restricted Stock Unit Activity (Detail) (Restricted Stock Units, USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	May 31, 2013	May 31, 2012	May 31, 2011
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested, Restricted Stock Units, beginning balance	203
Granted, Restricted Stock Units	73	101	107
Vested, Restricted Stock Units	(111)
Forfeited/canceled, Restricted Stock Units	(11)
Nonvested, Restricted Stock Units, ending balance	154	203
Nonvested, Weighted Average Grant Date Fair Value, beginning balance	$ 13.82
Granted, Weighted Average Grant Date Fair Value	$ 17.11
Vested, Weighted Average Grant Date Fair Value	$ 12.91
Forfeited/canceled, Weighted Average Grant Date Fair Value	$ 12.88
Nonvested, Weighted Average Grant Date Fair Value, ending balance	$ 16.13	$ 13.82

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Subsequent Events

12 Months Ended

May 31, 2013

Subsequent Events

Note 16: Subsequent Events

On June 5, 2013 our Board of Directors declared a quarterly cash dividend of $0.20 per common share. The dividend was paid on July 10, 2013 to shareholders of record as of June 20, 2013.

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Segment Reporting and Related Disclosures

12 Months Ended

May 31, 2013

Segment Reporting and Related Disclosures

Note 14: 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: the rental, lease and sale of T&M and of DP equipment.

Although we have separate operating segments for T&M and DP equipment, these two segments are aggregated into a single reportable segment because they have similar economic characteristics and qualitative factors. The T&M and DP segments have similar long-term average gross margins, and both rent, lease and sell electronic equipment to large corporations, purchase directly from major manufacturers, configure and calibrate the equipment, and ship directly to customers.

Our equipment pool, based on acquisition cost, comprised $423,306 of T&M equipment and $35,947 of DP equipment at May 31, 2013, and $409,686 of T&M equipment and $37,595 of DP equipment at May 31, 2012. Revenues for these operating segments were as follows for the fiscal year ended May 31:

	T&M		DP		Total
2013
Rentals and leases	$	120,846	$	15,745	$	136,591
Sales of equipment and other revenues		109,700		2,440		112,140
	$	230,546	$	18,185	$	248,731
2012
Rentals and leases	$	113,540	$	16,197	$	129,737
Sales of equipment and other revenues		116,417		2,400		118,817
	$	229,957	$	18,597	$	248,554
2011
Rentals and leases	$	101,273	$	16,789	$	118,062
Sales of equipment and other revenues		108,450		2,217		110,667
	$	209,723	$	19,006	$	228,729

No single customer accounted for more than 10% of total revenues during fiscal 2013, 2012 or 2011. Selected country information is presented below:

Year ended May 31,	2013		2012		2011
Revenues: 1
U.S.	$	211,745	$	214,354	$	199,861
Other 2		36,986		34,200		28,868
Total	$	248,731	$	248,554	$	228,729

As of May 31,	2013		2012		2011
Net Long Lived Assets: 3
U.S.	$	198,956	$	207,449	$	176,268
Other 2		49,726		49,595		33,491
Total	$	248,682	$	257,044	$	209,759

¹  Revenues by country are based on the location of shipping destination, whether the order originates in the U.S. parent or a foreign subsidiary.

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

³ Net long-lived assets include rental and lease equipment and other property, net of accumulated depreciation and amortization. Subsequent to the issuance of the May 31, 2012 consolidated financial statements, we determined that, for geographic disclosure purposes, the previously reported amount of net long-lived assets as of May 31, 2012 and 2011 should not have included goodwill and intangibles (which totaled $4,310 at May 31, 2012 and $4,323 at May 31, 2011) and, accordingly, such amounts have been excluded from the May 31, 2012 and 2011 balances, respectively, displayed in the table above.

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Document and Entity Information (USD $)	12 Months Ended
	May 31, 2013	Aug. 14, 2013	Nov. 30, 2012
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	May 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Trading Symbol	ELRC
Entity Registrant Name	ELECTRO RENT CORP
Entity Central Index Key	0000032166
Current Fiscal Year End Date	--05-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		23,996,293
Entity Public Float			$ 297,250,041

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Quarterly Information (Unaudited)

12 Months Ended

May 31, 2013

Quarterly Information (Unaudited)

Note 15: Quarterly Information (Unaudited)

Summarized quarterly financial data for fiscal 2013 and 2012 was as follows:

	Total		Gross		Income Before		Net		Earnings per share
	Revenues		Profit		Taxes		Income		Basic		Diluted
Fiscal Year 2013
First Quarter	$	58,501	$	22,022	$	8,391	$	5,086	$	0.21	$	0.21
Second Quarter		65,192		24,388		10,457		6,239		0.26		0.26
Third Quarter		64,672		22,160		8,437		5,037		0.21		0.21
Fourth Quarter		60,366		24,684		9,828		6,392		0.27		0.26
Annual totals	$	248,731	$	93,254	$	37,113	$	22,754	$	0.94	$	0.94
Fiscal Year 2012
First Quarter	$	58,650	$	21,740	$	11,913	$	8,505	$	0.35	$	0.35
Second Quarter		61,643		22,588		9,735		6,019		0.25		0.25
Third Quarter		60,079		20,883		8,023		4,995		0.21		0.21
Fourth Quarter		68,182		24,125		10,334		6,253		0.26		0.26
Annual totals	$	248,554	$	89,336	$	40,005	$	25,772	$	1.07	$	1.07

We have reclassified certain expenses previously included in selling, general and administrative expenses to costs of rentals and leases, excluding depreciation, in our consolidated statements of operations, thereby reducing gross profit by $2,773, $2,780, $2,680 and $2,478 for the first, second, third and fourth quarter of fiscal 2012, to conform to the current year presentation.

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Rentals Under Noncancellable Operating Leases (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2013
Property Subject to or Available for Operating Lease [Line Items]
Operating lease gross	$ 15,215
Accumulated depreciation	4,242
Net book value	$ 10,973
Minimum
Property Subject to or Available for Operating Lease [Line Items]
Lease Period	1 year
Maximum
Property Subject to or Available for Operating Lease [Line Items]
Lease Period	3 years

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Reconciliation of Denominator Used in Computation of Basic and Diluted Earnings per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	May 31, 2013	Feb. 28, 2013	Nov. 30, 2012	Aug. 31, 2012	May 31, 2012	Feb. 29, 2012	Nov. 30, 2011	Aug. 31, 2011	May 31, 2013	May 31, 2012	May 31, 2011
Denominator:
Denominator for basic earnings per share-weighted average common shares outstanding (including shares issuable for vested restricted stock units)									24,226	23,983	23,974
Effect of unvested restricted stock units									43	169	98
Diluted shares used in per share calculation									24,269	24,152	24,072
Net income	$ 6,392	$ 5,037	$ 6,239	$ 5,086	$ 6,253	$ 4,995	$ 6,019	$ 8,505	$ 22,754	$ 25,772	$ 23,756
Earnings per share:
Basic	$ 0.27	$ 0.21	$ 0.26	$ 0.21	$ 0.26	$ 0.21	$ 0.25	$ 0.35	$ 0.94	$ 1.07	$ 0.99
Diluted	$ 0.26	$ 0.21	$ 0.26	$ 0.21	$ 0.26	$ 0.21	$ 0.25	$ 0.35	$ 0.94	$ 1.07	$ 0.99