ELECTRO RENT CORP | 2013 | FY |

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.