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Segment Information
 6 Months Ended
Jun. 30, 2012
Segment Information

Note 5 – Segment Information

Reportable Operating Segments

We manage and evaluate our operations in two reportable segments. The two reportable segments are Housekeeping (housekeeping, laundry, linen and other services), and Dietary (dietary department services). Although both segments serve the same client base and share many operational similarities, they are managed separately due to distinct differences in the type of service provided, as well as the specialized expertise required of the professional management personnel responsible for delivering the respective segment’s services. We consider the various services provided within each reportable segment to comprise an identifiable reportable operating segment since such services are rendered pursuant to a single service agreement, specific to that reportable segment, as well as the fact that the delivery of the respective reportable segment’s services are managed by the same management personnel of the particular reportable segment.

The Company’s accounting policies for the segments are generally the same as the Company’s significant accounting policies. Differences between the reportable segments’ operating results and other disclosed data and our consolidated financial statements relate primarily to corporate level transactions and recording of transactions at the reportable segment level which use methods other than generally accepted accounting principles. There are certain inventories and supplies that are primarily expensed when incurred within the operating segments, while they are capitalized for the consolidated financial statements. As discussed, most corporate expense is not allocated to the operating segments, and such expenses include corporate salary and benefit costs, bad debt expense, certain legal costs, information technology costs, depreciation, amortization of finite lived intangibles, share based compensation costs and other corporate specific costs. Additionally, there are allocations for workers compensation and general liability expense within the operating segments that differ from our actual expense recorded for U.S. GAAP. Additionally, included in the differences between the reportable segments’ operating results and other disclosed data are amounts attributable to Huntingdon, our investment holding company subsidiary. Huntingdon does not transact any business with the reportable segments. Segment amounts disclosed are prior to any elimination entries made in consolidation.

Housekeeping provides services in Canada, although essentially all of its revenues and net income, 99% in both categories, are earned in one geographic area, the United States. Dietary provides services solely in the United States.

 

     Housekeeping
Services		      Dietary Services      Corporate and
Eliminations		     Total  

Three Months Ended June 30, 2012

           

Revenues

    $ 183,215,000       $ 83,891,000       $ 2,000  (1)    $ 267,108,000   

Income before income taxes

      17,671,000         4,620,000         (4,008,000 ) (1)      18,283,000   

Three Months Ended June 30, 2011

           

Revenues

    $ 158,681,000       $ 52,897,000       $ (71,000 ) (1)    $ 211,507,000   

Income before income taxes

      16,195,000         2,521,000         (3,999,000 ) (1)      14,717,000   

Six Months Ended June 30, 2012

           

Revenues

    $ 364,397,000       $ 163,281,000       $ 37,000  (1)    $ 527,715,000   

Income before income taxes

      35,127,000         8,674,000         (11,735,000 ) (1)      32,066,000   

Six Months Ended June 30, 2011

           

Revenues

    $ 315,143,000       $ 104,554,000       $ 200,000  (1)    $ 419,897,000   

Income before income taxes

      33,390,000         5,990,000         (12,324,000 ) (1)      27,056,000   

 

(1) 

Represents primarily corporate office cost and related overhead, recording of transactions at the reportable segment level which use methods other than U.S. GAAP and consolidated subsidiaries’ operating expenses that are not allocated to the reportable segments, net of investment and interest income.

Total Consolidated Revenues from Clients

The following revenues earned from clients represent their reporting in accordance with U.S. GAAP and differ from segment revenues reported above due to the inclusion of adjustments used for segment reporting purposes by management. We earned total revenues from clients in the following service categories:

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2012      2011      2012      2011  

Housekeeping services

    $ 121,897,000       $ 106,715,000       $ 243,550,000       $ 212,463,000   

Laundry and linen services

      60,245,000         51,266,000         118,775,000         101,440,000   

Dietary services

      83,816,000         52,922,000         163,206,000         104,772,000   

Maintenance services and other

      1,150,000         604,000         2,184,000         1,222,000   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 267,108,000       $ 211,507,000       $ 527,715,000       $ 419,897,000   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

Major Client

We have one client, a nursing home chain (“Major Client”), which accounted for the respective percentages of our revenues as detailed below:

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2012     2011     2012     2011  

Total revenues

      7 %      9 %      7 %      9 % 

Housekeeping

      9 %      11 %      9 %      11 % 

Dietary services

      3 %      5 %      3 %      6 % 

Additionally, at both June 30, 2012 and December 31, 2011, amounts due from such client represented less than 1% of our accounts receivable balance. The loss of such client, or a significant reduction in revenues from such client, would have a material adverse effect on the results of operations of our two operating segments. In addition, if such client changes its payment terms it may increase our accounts receivable balance and have a material adverse effect on our cash flows and cash and cash equivalents.