Note 15 - Segment Reporting

12 Months Ended

Aug. 27, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

15. Segment Reporting

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Company’s chief executive officer. The Company has six operating segments based on the information reviewed by its chief executive officer: US Rental and Cleaning, Canadian Rental and Cleaning, MFG, Specialty Garments, First Aid and Corporate. The US Rental and Cleaning and Canadian Rental and Cleaning operating segments have been combined to form the US and Canadian Rental and Cleaning reporting segment, and as a result, the Company has five reporting segments.

The US and Canadian Rental and Cleaning reporting segment purchases, rents, cleans, delivers and sells, uniforms and protective clothing and non-garment items in the United States and Canada.

The laundry locations of the US and Canadian Rental and Cleaning reporting segment are referred to by the Company as “industrial laundries” or “industrial laundry locations.”

The MFG operating segment designs and manufactures uniforms and non-garment items primarily for the purpose of providing these goods to the US and Canadian Rental and Cleaning reporting segment. MFG revenues are primarily generated when goods are shipped from the Company’s manufacturing facilities, or its subcontract manufacturers, to other Company locations. These intercompany revenues are recorded at a transfer price which is typically in excess of the actual manufacturing cost. Manufactured products are carried in inventory until placed in service at which time they are amortized at this transfer price. On a consolidated basis, intercompany revenues and income are eliminated and the carrying value of inventories and rental merchandise in service is reduced to the manufacturing cost. Income before income taxes from MFG net of the intercompany MFG elimination offsets the merchandise amortization costs incurred by the US and Canadian Rental and Cleaning reporting segment as the merchandise costs of this reporting segment are amortized and recognized based on inventories purchased from MFG at the transfer price which is above the Company’s manufacturing cost.

The Corporate operating segment consists of costs associated with the Company’s distribution center, sales and marketing, information systems, engineering, materials management, manufacturing planning, finance, budgeting, human resources, other general and administrative costs and interest expense. The revenues generated from the Corporate operating segment represent certain direct sales made by the Company directly from its distribution center. The products sold by this operating segment are the same products rented and sold by the US and Canadian Rental and Cleaning reporting segment. In the table below, no assets or capital expenditures are presented for the Corporate operating segment because no assets are allocated to this operating segment in the information reviewed by the chief executive officer. However, depreciation and amortization expense related to certain assets are reflected in income from operations and income before income taxes for the Corporate operating segment. The assets that give rise to this depreciation and amortization are included in the total assets of the US and Canadian Rental and Cleaning reporting segment as this is how they are tracked and reviewed by the Company.

The majority of expenses accounted for within the Corporate segment relate to costs of the US and Canadian Rental and Cleaning segment, with the remainder of the costs relating to the Specialty Garment and First Aid segments.

The Specialty Garments operating segment purchases, rents, cleans, delivers and sells, specialty garments and non-garment items primarily for nuclear and cleanroom applications and provides cleanroom cleaning services at limited customer locations

. The First Aid operating segment sells first aid cabinet services and other safety supplies as well as maintains wholesale distribution and pill packaging operations

.

The Company refers to the US and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as its “Core Laundry Operations,” which is included as a subtotal in the following tables (in thousands):

As of and for the year ended August 27, 2016	US and Canadian Rental and Cleaning			MFG		Net Interco MFG Elim			Corporate			Subtotal Core Laundry Operations			Specialty Garments		First Aid		Total
Revenues	$	1,308,152		$	189,154	$	(188,904	)	$	20,973		$	1,329,375		$	91,257	$	47,414	$	1,468,046
Income (loss) from operations	$	201,148		$	67,385	$	(711	)	$	(81,748	)	$	186,074		$	10,204	$	4,882	$	201,160
Interest (income) expense, net	$	(3,252	)	$	—	$	—		$	709		$	(2,543	)	$	—	$	—	$	(2,543	)
Income (loss) before taxes	$	204,433		$	67,407	$	(711	)	$	(82,714	)	$	188,415		$	10,074	$	4,882	$	203,371
Depreciation and amortization	$	57,062		$	2,073	$	—		$	16,918		$	76,053		$	4,332	$	1,227	$	81,612
Capital expenditures	$	91,384		$	1,598	$	—		$	—		$	92,982		$	4,682	$	571	$	98,235
Total assets	$	1,567,943		$	32,556	$	—		$	—		$	1,600,499		$	77,728	$	23,780	$	1,702,007

As of and for the year ended August 29, 2015	US and Canadian Rental and Cleaning			MFG		Net Interco MFG Elim			Corporate			Subtotal Core Laundry Operations			Specialty Garments		First Aid		Total
Revenues	$	1,305,240		$	192,188	$	(192,188	)	$	17,088		$	1,322,328		$	87,513	$	46,764	$	1,456,605
Income (loss) from operations	$	219,430		$	66,190	$	(733	)	$	(97,301	)	$	187,586		$	7,355	$	5,443	$	200,384
Interest (income) expense, net	$	(3,189	)	$	—	$	—		$	752		$	(2,437	)	$	—	$	—	$	(2,437	)
Income (loss) before taxes	$	222,657		$	66,355	$	(733	)	$	(98,418	)	$	189,861		$	5,964	$	5,443	$	201,268
Depreciation and amortization	$	53,811		$	1,536	$	—		$	16,393		$	71,740		$	4,331	$	1,042	$	77,113
Capital expenditures	$	93,842		$	2,618	$	—		$	—		$	96,460		$	3,820	$	883	$	101,163
Total assets	$	1,401,346		$	34,075	$	—		$	—		$	1,435,421		$	74,449	$	23,367	$	1,533,237

As of and for the year ended August 30, 2014	US and Canadian Rental and Cleaning			MFG		Net Interco MFG Elim			Corporate			Subtotal Core Laundry Operations			Specialty Garments		First Aid		Total
Revenues	$	1,244,408		$	183,340	$	(183,340	)	$	15,077		$	1,259,485		$	91,484	$	43,928	$	1,394,897
Income (loss) from operations	$	209,497		$	63,675	$	(3,777	)	$	(87,145	)	$	182,250		$	7,178	$	3,847	$	193,275
Interest (income) expense, net	$	(3,077	)	$	—	$	—		$	718		$	(2,359	)	$	—	$	—	$	(2,359	)
Income (loss) before taxes	$	212,551		$	63,540	$	(3,777	)	$	(87,897	)	$	184,417		$	7,087	$	3,847	$	195,351
Depreciation and amortization	$	49,116		$	1,306	$	—		$	15,751		$	66,173		$	4,646	$	933	$	71,752
Capital expenditures	$	86,430		$	2,264	$	—		$	—		$	88,694		$	1,847	$	1,267	$	91,808
Total assets	$	1,286,984		$	38,066	$	—		$	—		$	1,325,050		$	77,037	$	22,074	$	1,424,161

The Company’s long-lived assets as of August 27, 2016 and August 29, 2015 and revenues and income before income taxes for the years ended August 27, 2016, August 29, 2015 and August 30, 2014 were attributed to the following countries (in thousands):

Long-lived assets as of:	August 27, 2016		August 29, 2015
United States	$	880,666	$	831,295
Europe, Canada, Mexico and Nicaragua (1)		43,727		40,119
Total	$	924,393	$	871,414

Revenues for the year ended:	August 27, 2016		August 29, 2015		August 30, 2014
United States	$	1,352,101	$	1,333,864	$	1,258,609
Europe and Canada (1)		115,945		122,741		136,288
Total	$	1,468,046	$	1,456,605	$	1,394,897

Income before income taxes for the year ended:	August 27, 2016		August 29, 2015		August 30, 2014
United States	$	197,441	$	188,704	$	182,354
Europe, Canada, Mexico and Nicaragua (1)		5,930		12,564		12,997
Total	$	203,371	$	201,268	$	195,351

(1) No country accounts for greater than 10% of total long-lived assets, revenues or income before income taxes