Business Segments

We report segment information based on the "management" approach defined in ASC 280, Segment Reporting. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments.

We have two reportable segments: (1) Motorized products and services and (2) Towable products and services. The Motorized segment includes all products that include a motorized chassis as well as other related manufactured products. The Towable segment includes all products that are not motorized and are generally towed by another vehicle.

We organize our business reporting on a product basis. Each reportable segment is managed separately to better align to our customers, distribution partners and the unique market dynamics of the product groups. We aggregate two operating segments into the Towable reporting segment based upon their similar products, customers, distribution methods, production processes and economic characteristics. The accounting policies of both reportable segments are the same and described in Note 1: Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended August 26, 2017.

Subsequent to the acquisition of Grand Design in Fiscal 2017, management re-evaluated the manner in which corporate expenses were allocated to the reportable segments. A new corporate allocation policy was adopted in the first quarter of Fiscal 2018 that identifies shared costs and allocates them to the operating segments based on a cost driver most appropriate for the type of cost being allocated. For example, certain costs were allocated based on the financial size of the operating segment, while other costs, where appropriate, were allocated based on the headcount in the operating segments since headcount was deemed the appropriate driver for those types of expenses. Prior year segment information has been restated to conform to the current reporting segment presentation. All corporate expenses were allocated to the operating segments. Assets presented by reportable segment exclude certain corporate assets that cannot reasonably be allocated to the reportable segments. These unallocated corporate assets include cash and deferred tax assets.

We evaluate the performance of our reportable segments based on Adjusted EBITDA after corporate allocations. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other adjustments made in order to present comparable results from period to period. We have included this non-GAAP performance measure as a comparable measure to illustrate the effect of non-recurring transactions occurring during the quarter and improve comparability of our results from period to period. We believe EBITDA and Adjusted EBITDA provide meaningful supplemental information about our operating performance because each measure excludes amounts that we do not consider part of our core operating results when assessing our performance. Examples of items excluded from Adjusted EBITDA include the postretirement health care benefit income from terminating the plan and transaction costs related to our acquisition of Grand Design. These types of adjustments are also specified in the definition of certain measures required under the terms of our Credit Agreement.

Management uses these non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as its performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our board of directors to enable our board of directors to have the same measurement basis of operating performance as is used by management in its assessments of performance and in forecasting and budgeting for our company; (d) to evaluate potential acquisitions; and, (e) to ensure compliance with covenants and restricted activities under the terms of our Credit Agreement. We believe these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry.

The following table shows information by reporting segment:



	Three Months Ended				Nine Months Ended
(In thousands)	May 26, 2018		May 27, 2017		May 26, 2018		May 27, 2017
Net revenues
Motorized	$	249,245	$	241,670	$	641,602	$	635,732
Towable	313,016		234,694		839,039		456,451
Consolidated	$	562,261	$	476,364	$	1,480,641	$	1,092,183

Adjusted EBITDA
Motorized	$	9,319	$	14,567	$	16,518	$	36,521
Towable	44,042		32,761		111,636		54,557
Consolidated	$	53,361	$	47,328	$	128,154	$	91,078

Capital expenditures
Motorized	$	2,643	$	1,527	$	7,383	$	6,626
Towable	3,805		1,275		10,740		3,114
Consolidated	$	6,448	$	2,802	$	18,123	$	9,740

Total assets
Motorized	$	301,667	$	275,673	$	301,667	$	275,673
Towable	613,162		572,977		613,162		572,977
Unallocated corporate assets	50,881		41,701		50,881		41,701
Consolidated	$	965,710	$	890,351	$	965,710	$	890,351

Reconciliation of net income to consolidated Adjusted EBITDA:



	Three Months Ended						Nine Months Ended
(In thousands)	May 26, 2018			May 27, 2017			May 26, 2018			May 27, 2017
Net income	$	32,521		$	19,391		$	72,567		$	46,407
Interest expense	4,172			5,265			13,871			11,571
Provision for income taxes	11,684			10,258			28,478			23,794
Depreciation	2,351			1,859			6,679			5,287
Amortization of intangible assets	1,933			10,159			5,921			22,578
EBITDA	52,661			46,932			127,516			109,637
Postretirement health care benefit income	—			—			—			(24,796		)
Transaction costs	800			450			850			6,374
Non-operating income	(100		)	(54		)	(212		)	(137		)
Adjusted EBITDA	$	53,361		$	47,328		$	128,154		$	91,078