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Segment Information
 3 Months Ended
Nov. 28, 2015
Segment Information [Abstract]  
Segment Information

 

 

NOTE 5 – SEGMENT INFORMATION

 

Our sales are primarily comprised of training and consulting sales and related products.  Effective September 1, 2015, we reorganized our internal reporting structure to include four new divisions and a corporate services group in order to facilitate future growth opportunities.  A brief description of these new operating divisions is as follows:

 

·

Direct Offices – This division includes our geographic sales offices that serve the United States and Canada, our international sales offices located in Japan, the United Kingdom, and Australia, and our public program operations.  This division is led by Paul S. Walker, who was named an executive vice-president of the Company on September 1, 2015.

 

·

Strategic Markets – This division includes our government services office, Sales Performance practice, Customer Loyalty practice, and a new “Global 50” group, which is specifically focused on sales to large, multi-national organizations.  The strategic markets division is led by Shawn D. Moon.

 

·

Education Practice – This division includes our domestic and international Education practice operations (focused on sales to educational institutions) and is led by M. Sean Covey.

 

·

Licensee Division – This division is primarily comprised of our international licensees’ royalty revenues and is led by M. Sean Covey.

 

·

Corporate and Other – Our corporate and other information includes leasing income, shipping and handling revenues, book and audio sales, and certain corporate operating expenses.

 

The Company’s chief operating decision maker continues to be the Chief Executive Officer (CEO), and the primary measurement tool used in business unit performance analysis is Adjusted EBITDA, which may not be calculated as similarly titled amounts calculated by other companies.  For enterprise reporting purposes, our consolidated Adjusted EBITDA can be calculated as our income from operations excluding share-based compensation, depreciation expense, amortization expense, and certain other charges such as adjustments for changes in the fair value of contingent earn out liabilities from previous business acquisitions.  Assets are not allocated to the divisions for analysis purposes.

 

The enterprise information presented below for the first quarter of fiscal 2015 has been revised to be comparable with the new divisional structure described above.  We account for our enterprise information on the same basis as the accompanying condensed consolidated financial statements.

 

ENTERPRISE INFORMATION

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales to

 

 

 

 

 

 

 

 

Quarter Ended

 

External

 

 

 

Adjusted

 

 

 

 

November 28, 2015

 

Customers

 

Gross Profit

 

EBITDA

 

Depreciation

 

Amortization

 

 

 

 

 

 

 

 

 

 

 

Direct offices

$
23,661 

$
16,580 

$
2,644 

$
73 

$
1 

Strategic markets

 
7,184 

 
4,501 

 
841 

 
70 

 
246 

Education practice

 
8,005 

 
4,499 

 
183 

 
1 

 

 -

International licensees

 
4,684 

 
3,622 

 
2,501 

 
1 

 

 -

Total

 
43,534 

 
29,202 

 
6,169 

 
145 

 
247 

Corporate and eliminations

 
1,684 

 
869 

 
(1,694)

 
767 

 
663 

Consolidated

$
45,218 

$
30,071 

$
4,475 

$
912 

$
910 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

November 29, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct offices

$
25,476 

$
17,439 

$
2,933 

$
87 

$
1 

Strategic markets

 
9,801 

 
6,314 

 
2,833 

 
32 

 
283 

Education practice

 
5,918 

 
3,218 

 
(664)

 
1 

 

 -

International licensees

 
4,539 

 
3,457 

 
2,087 

 
2 

 

 -

Total

 
45,734 

 
30,428 

 
7,189 

 
122 

 
284 

Corporate and eliminations

 
2,141 

 
776 

 
(1,310)

 
842 

 
669 

Consolidated

$
47,875 

$
31,204 

$
5,879 

$
964 

$
953 

 

A reconciliation of our consolidated Adjusted EBITDA to consolidated income before income taxes is provided below (in thousands).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

November 28,

 

 

November 29,

 

 

2015

 

 

2014

Enterprise Adjusted EBITDA

$
6,169 

 

$
7,189 

Corporate expenses

 
(1,694)

 

 
(1,310)

Consolidated Adjusted EBITDA

 
4,475 

 

 
5,879 

Share-based compensation expense

 
(763)

 

 
(402)

Reduction (increase) to contingent earn

 

 

 

 

 

   out liability

 
(130)

 

 
28 

Depreciation

 
(912)

 

 
(964)

Amortization

 
(910)

 

 
(953)

Income from operations

 
1,760 

 

 
3,588 

Interest income

 
77 

 

 
111 

Interest expense

 
(541)

 

 
(539)

Discount on related party receivable

 

 -

 

 
(130)

Income before income taxes

$
1,296 

 

$
3,030 

 

We reassess the fair value of expected contingent consideration and the corresponding liability resulting from the fiscal 2013 acquisition of NinetyFive 5, LLC (Ninety Five 5) each period.  The increase to the liability during the quarter ended November 28, 2015 totaled approximately $130,000 and is reflected in selling, general, and administrative expenses on our consolidated income statements.  However, the impact of these adjustments is not included in our consolidated Adjusted EBITDA calculations as shown above.