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Fair Value Of Financial Instruments | 12 Months Ended
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Aug. 31, 2017
Fair Value Of Financial Instruments [Abstract] |
Fair Value Of Financial Instruments | ﻿ 10.FAIR VALUE OF FINANCIAL INSTRUMENTS ﻿ Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into the following three levels based on reliability: ﻿
| · |  | Level 1 valuations are based on quoted prices in active markets for identical instruments that the Company can access at the measurement date.
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| · |  | Level 2 valuations are based on inputs other than quoted prices included in Level 1 that are observable for the instrument, either directly or indirectly, for substantially the full term of the asset or liability including the following:
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| a. |  | quoted prices for similar, but not identical, instruments in active markets;
| b. |  | quoted prices for identical or similar instruments in markets that are not active;
| c. |  | inputs other than quoted prices that are observable for the instrument; or
| d. |  | inputs that are derived principally from or corroborated by observable market data by correlation or other means.
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| · |  | Level 3 valuations are based on information that is unobservable and significant to the overall fair value measurement.
﻿ The book value of our financial instruments at August 31, 2017 and 2016 approximated their fair values. The assessment of the fair values of our financial instruments is based on a variety of factors and assumptions. Accordingly, the fair values may not represent the actual values of the financial instruments that could have been realized at August 31, 2017 or 2016, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement. The following methods and assumptions were used to determine the fair values of our financial instruments, none of which were held for trading or speculative purposes: ﻿ Cash, Cash Equivalents, and Accounts Receivable – The carrying amounts of cash, cash equivalents, and accounts receivable approximate their fair values due to the liquidity and short-term maturity of these instruments. ﻿ Other Assets – Our other assets, including notes receivable, were recorded at the net realizable value of estimated future cash flows from these instruments. ﻿ Debt Obligations – At August 31, 2017, our debt obligations consisted of variable-rate term notes payable and borrowings on our variable-rate revolving line of credit. The term notes payable and revolving line of credit (Note 5) are negotiated components of our Restated Credit Agreement, which is renewed on a regular basis to maintain the long-term borrowing capability of the agreement. Accordingly, the applicable interest rates on the term loans and revolving line of credit are reflective of current market conditions, and the carrying value of term loan and revolving line of credit obligations therefore approximate their fair value. ﻿ Contingent Consideration Liabilities from Business Acquisitions ﻿ We have contingent consideration liabilities resulting from our business acquisitions. We measure the fair values of the contingent consideration liabilities at each reporting date based on various valuation models as described below. Changes to the fair value of the contingent consideration liabilities are recorded as components of our selling, general, and administrative expenses in the accompanying consolidated statements of operations in the period of adjustment. ﻿ Robert Gregory Partners – On May 15, 2017, we acquired the assets of RGP (Note 2). The purchase price included contingent consideration payments to the former owners of RGP of up to $4.5 million, based on the achievement of specified levels of earnings before interest, income taxes, depreciation, and amortization expense (EBITDA) and the delivery of “add-on coaching services content” for our AAP as set forth in the purchase agreement. The specified levels of EBITDA include measures for RGP coaching services plus earnings from add-on coaching services sold through the AAP. The fair value of the contingent consideration on the acquisition date was $1.4 million, of which $0.5 was paid during the fourth quarter for the successful delivery of the add-on coaching services content. The fair value of the RGP contingent liability is estimated using a Monte Carlo simulation method, which considers numerous potential financial outcomes using estimated variables such as expected revenues, growth rates, and a discount rate. This fair value measurement is considered a Level 3 measurement because we estimate revenues and corresponding expected growth rates each period. The following range of growth rates were used to calculate the initial fair value of the contingent consideration: ﻿
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﻿ |  | Likely |  | Minimum |  | Maximum
﻿RGP growth rate - Year 1 |  | 14.8 | % |  | (12.0) | % |  | 35.0 | %
﻿RGP growth rate - Year 2 |  | 10.0 | % |  | (12.0) | % |  | 35.0 | %
﻿RGP growth rate - Year 3 |  | 10.0 | % |  | (12.0) | % |  | 35.0 | %
﻿ |  |  |  |  |  |  |  |  |
﻿Add-on services growth rate - Year 1 |  | 60.0 | % |  | (20.0) | % |  | 130.0 | %
﻿Add-on services growth rate - Year 2 |  | 50.0 | % |  | (20.0) | % |  | 130.0 | %
﻿Add-on services growth rate - Year 3 |  | 40.0 | % |  | (20.0) | % |  | 130.0 | %
﻿ At August 31, 2017, the estimated fair value of the RGP contingent consideration was $0.9 million, which was recorded as a component of other long-term assets. ﻿ Jhana Education – On July 11, 2017, we acquired the stock of Jhana Education (Note 2). The purchase price included potential contingent consideration of $7.2 million through the measurement period, which ends in July 2026. The first two payments of $1.0 million each are payable during the first half of fiscal 2018, based on specified dates and objectives. The payment of the remaining $5.2 million is based on a percentage of consolidated Company and total AAP sales. The fair value of the contingent consideration was calculated using a probability weighted expected return methodology, which is a Level 3 measurement because we estimate projected consolidated Company and AAP sales over the measurement period. Probabilities were applied to each potential sales outcome and the resulting values were discounted using a rate that considered Jhana’s weighted average cost of capital and specific risk premiums associated with the potential contingent consideration. At August 31, 2017, the fair value of the contingent consideration was $6.1 million, with $2.7 million recorded in accrued liabilities and the remaining $3.4 million recorded in other long-term liabilities. ﻿ Ninety Five 5, LLC – In fiscal 2013, we acquired Ninety Five 5, LLC (NinetyFive5). The purchase price included contingent consideration payments to the former owners up to a maximum of $8.5 million, based on cumulative EBITDA as set forth in the purchase agreement. The contingent consideration measurement period ended on August 31, 2017. During the measurement period, w e reassessed the fair value of the contingent consideration liability each period using the probability weighted expected return method. This fair value measurement is considered a Level 3 measurement because we estimated projected earnings during measurement period utilizing various potential pay-out scenarios. Probabilities were applied to each potential scenario and the resulting values were discounted using a rate that considered Ninety Five 5’s weighted average cost of capital as well as a specific risk premium associated with the riskiness of the contingent consideration itself, the related projections, and the overall business. ﻿ Based on achieved EBITDA results through the first half of fiscal 2016, we paid the former owners of NinetyFive5 $2.2 million in the third quarter of fiscal 2016. No further contingent consideration payments were made or are expected to be made to the former owners of NinetyFive5 since the measurement period ended on August 31, 2017. During the fiscal years ended A ugust 31, 2017 and 2016, the NinetyFive5 contingent consideration liability was comprised of the following activity (in thousands): ﻿
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﻿Contingent consideration liability at August 31, 2015 |  | $ | 2,565
﻿Payment of first contingent consideration award |  |  | (2,167)
﻿Increase in contingent consideration liability |  |  | 1,538
﻿Contingent consideration liability at August 31, 2016 |  |  | 1,936
﻿Decrease in contingent consideration liability |  |  | (1,936)
﻿Contingent consideration liability at August 31, 2017 |  | $ | -
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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13433-108611 + Details
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