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Segment Information
 6 Months Ended
Feb. 27, 2016
Segment Information [Abstract]  
Segment Information

 

 

NOTE 7 – 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.

 

·

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.

 

·

Education Practice – This division includes our domestic and international Education practice operations, which are focused on sales to educational institutions.

 

·

International Licensees – This division is primarily comprised of our international licensees’ royalty revenues.

 

·

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 or loss 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 quarter and two quarters ended February 28, 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

 

 

 

 

February 27, 2016

 

Customers

 

Gross Profit

 

EBITDA

 

Depreciation

 

Amortization

 

 

 

 

 

 

 

 

 

 

 

Direct offices

$

 24,567 

$

 17,804 

$

 4,373 

$

 69 

$

 1 

Strategic markets

 

 7,545 

 

 4,832 

 

 1,296 

 

 24 

 

 246 

Education practice

 

 6,750 

 

 3,086 

 

 (1,042)

 

 1 

 

 -

International licensees

 

 3,938 

 

 2,936 

 

 1,893 

 

 1 

 

 -

Total

 

 42,800 

 

 28,658 

 

 6,520 

 

 95 

 

 247 

Corporate and eliminations

 

 2,469 

 

 1,196 

 

 (2,114)

 

 799 

 

 662 

Consolidated

$

 45,269 

$

 29,854 

$

 4,406 

$

 894 

$

 909 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

February 28, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct offices

$

 25,604 

$

 18,374 

$

 2,611 

$

 80 

$

 1 

Strategic markets

 

 9,015 

 

 5,022 

 

 1,743 

 

 57 

 

 283 

Education practice

 

 5,241 

 

 2,528 

 

 (1,043)

 

 1 

 

 -

International licensees

 

 4,279 

 

 3,288 

 

 1,879 

 

 1 

 

 -

Total

 

 44,139 

 

 29,212 

 

 5,190 

 

 139 

 

 284 

Corporate and eliminations

 

 2,177 

 

 803 

 

 (1,343)

 

 901 

 

 669 

Consolidated

$

 46,316 

$

 30,015 

$

 3,847 

$

 1,040 

$

 953 

 

 

 

 

 

 

 

 

 

 

 

Two Quarters Ended

 

 

 

 

 

 

 

 

 

 

February 27, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct offices

$

 48,228 

$

 34,385 

$

 7,017 

$

 142 

$

 2 

Strategic markets

 

 14,730 

 

 9,330 

 

 2,137 

 

 94 

 

 492 

Education practice

 

 14,754 

 

 7,585 

 

 (858)

 

 2 

 

 -

International licensees

 

 8,622 

 

 6,558 

 

 4,393 

 

 2 

 

 -

Total

 

 86,334 

 

 57,858 

 

 12,689 

 

 240 

 

 494 

Corporate and eliminations

 

 4,152 

 

 2,067 

 

 (3,809)

 

 1,566 

 

 1,325 

Consolidated

$

 90,486 

$

 59,925 

$

 8,880 

$

 1,806 

$

 1,819 

 

 

 

 

 

 

 

 

 

 

 

Two Quarters Ended

 

 

 

 

 

 

 

 

 

 

February 28, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct offices

$

 51,079 

$

 35,813 

$

 5,544 

$

 167 

$

 2 

Strategic markets

 

 18,817 

 

 11,337 

 

 4,576 

 

 89 

 

 566 

Education practice

 

 11,159 

 

 5,745 

 

 (1,707)

 

 2 

 

 -

International licensees

 

 8,818 

 

 6,745 

 

 3,966 

 

 3 

 

 -

Total

 

 89,873 

 

 59,640 

 

 12,379 

 

 261 

 

 568 

Corporate and eliminations

 

 4,317 

 

 1,579 

 

 (2,653)

 

 1,743 

 

 1,338 

Consolidated

$

 94,190 

$

 61,219 

$

 9,726 

$

 2,004 

$

 1,906 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Two Quarters Ended

 

 

February 27,

 

 

February 28,

 

 

February 27,

 

 

February 28,

 

 

2016

 

 

2015

 

 

2016

 

 

2015

Enterprise Adjusted EBITDA

$

 6,520 

 

$

 5,190 

 

$

 12,689 

 

$

 12,379 

Corporate expenses

 

 (2,114)

 

 

 (1,343)

 

 

 (3,809)

 

 

 (2,653)

Consolidated Adjusted EBITDA

 

 4,406 

 

 

 3,847 

 

 

 8,880 

 

 

 9,726 

Share-based compensation expense

 

 (1,111)

 

 

 (608)

 

 

 (1,874)

 

 

 (1,010)

Reduction (increase) to contingent earn

 

 

 

 

 

 

 

 

 

 

 

   out liability

 

 (1,238)

 

 

 -

 

 

 (1,368)

 

 

 28 

Restructuring costs

 

 (376)

 

 

 -

 

 

 (376)

 

 

 -

Other expenses

 

 (139)

 

 

 (65)

 

 

 (139)

 

 

 (65)

Depreciation

 

 (894)

 

 

 (1,040)

 

 

 (1,806)

 

 

 (2,004)

Amortization

 

 (909)

 

 

 (953)

 

 

 (1,819)

 

 

 (1,906)

Income (loss) from operations

 

 (261)

 

 

 1,181 

 

 

 1,498 

 

 

 4,769 

Interest income

 

 83 

 

 

 107 

 

 

 161 

 

 

 218 

Interest expense

 

 (552)

 

 

 (535)

 

 

 (1,093)

 

 

 (1,074)

Discount on related party receivable

 

 -

 

 

 -

 

 

 -

 

 

 (131)

Income (loss) before income taxes

$

 (730)

 

$

 753 

 

$

 566 

 

$

 3,782 

 

We reassess the fair value of expected contingent consideration and the corresponding liability resulting from the fiscal 2013 acquisition of NinetyFive 5 each period.  The increase to the liability during the quarter ended February 27, 2016 totaled approximately $1.2 million 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.