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Segment Information | 9 Months Ended
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May 31, 2021
Segment Information [Abstract] |
Segment Information | NOTE 11 – SEGMENT INFORMATION Segment Information Our sales are primarily comprised of training and consulting services and our internal reporting and operating structure is currently organized around two divisions. The Enterprise Division, which consists of our Direct Office and International Licensee segments and the Education Division, which is comprised of our Education practice. Based on the applicable guidance, our operations are comprised of three reportable segments and one corporate services group. The following is a brief description of our reportable segments: Direct Offices – Our Direct Office segment has a depth of expertise in helping organizations solve problems that require changes in human behavior, including leadership, productivity, execution, trust, and sales performance. We have a variety of principle-based offerings that help build winning and profitable cultures. This segment includes our sales personnel that serve the United States and Canada; our international sales offices located in Japan, China, the United Kingdom, Australia, Germany, Switzerland, and Austria; our government services sales channel; and our book and audio sales. International Licensees – Our independently owned international licensees provide our offerings and services in countries where we do not have a directly-owned office. These licensee partners allow us to expand the reach of our services to large multinational organizations as well as smaller organizations in their countries. This segment’s results are primarily comprised of royalty revenues received from these licensees. Education Practice – Centered around the principles found in The Leader in Me, the Education practice is dedicated to helping educational institutions build a culture that will produce great results. We believe these results are manifested by increases in student performance, improved school culture, decreased disciplinary issues, and increased teacher engagement and parental involvement. This segment includes our domestic and international Education practice operations, which are focused on sales to educational institutions such as elementary schools, high schools, and colleges and universities. Corporate and Other – Our corporate and other information includes leasing operations, shipping and handling revenues, royalty revenues from Franklin Planner Corp., and certain corporate administrative functions. We have determined that the Company’s chief operating decision maker is the CEO, and the primary measurement tool used in business unit performance analysis is Adjusted EBITDA, which may not be calculated as similarly titled amounts disclosed by other companies. Adjusted EBITDA is a non-GAAP financial measure. For reporting purposes, our consolidated Adjusted EBITDA may be calculated as net income (loss) excluding interest expense, income taxes, depreciation expense, amortization expense, stock-based compensation, and certain other charges such as adjustments for changes in the fair value of contingent liabilities arising from business acquisitions. We reference this non-GAAP financial measure in our decision making because it provides supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods and we believe it provides investors with greater transparency to evaluate operational activities and financial results. Our operations are not capital intensive and we do not own any manufacturing facilities or equipment. Accordingly, we do not allocate assets to the reportable segments for analysis purposes. Interest expense and interest income are primarily generated at the corporate level and are not allocated. Income taxes are likewise calculated and paid on a corporate level (except for entities that operate in foreign jurisdictions) and are not allocated for analysis purposes. We account for the following segment information on the same basis as the accompanying condensed consolidated financial statements (in thousands).
|  | Sales to |  |  |  |
Quarter Ended |  | External |  |  |  | Adjusted
May 31, 2021 |  | Customers |  | Gross Profit |  | EBITDA
Enterprise Division: |  |  |  |  |  |
Direct offices | $ | 42,704 | $ | 34,678 | $ | 8,894
International licensees |  | 2,395 |  | 2,069 |  | 821
|  | 45,099 |  | 36,747 |  | 9,715
Education practice |  | 11,899 |  | 8,179 |  | 1,132
Corporate and eliminations |  | 1,738 |  | 981 |  | (2,284)
Consolidated | $ | 58,736 | $ | 45,907 | $ | 8,563
Quarter Ended |  |  |  |  |  |
May 31, 2020 |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |
Direct offices | $ | 26,760 | $ | 21,108 | $ | 352
International licensees |  | 708 |  | 339 |  | (724)
|  | 27,468 |  | 21,447 |  | (372)
Education practice |  | 8,216 |  | 4,711 |  | (1,536)
Corporate and eliminations |  | 1,421 |  | 663 |  | (1,734)
Consolidated | $ | 37,105 | $ | 26,821 | $ | (3,642)
Three Quarters Ended |  |  |  |  |  |
May 31, 2021 |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |
Direct offices | $ | 115,185 | $ | 93,201 | $ | 21,729
International licensees |  | 7,421 |  | 6,454 |  | 3,608
|  | 122,606 |  | 99,655 |  | 25,337
Education practice |  | 27,874 |  | 17,510 |  | (2,010)
Corporate and eliminations |  | 4,743 |  | 2,469 |  | (5,925)
Consolidated | $ | 155,223 | $ | 119,634 | $ | 17,402
Three Quarters Ended |  |  |  |  |  |
May 31, 2020 |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |
Direct offices | $ | 106,844 | $ | 81,221 | $ | 10,796
International licensees |  | 7,120 |  | 5,696 |  | 2,696
|  | 113,964 |  | 86,917 |  | 13,492
Education practice |  | 30,190 |  | 17,828 |  | (3,707)
Corporate and eliminations |  | 5,309 |  | 2,772 |  | (4,410)
Consolidated | $ | 149,463 | $ | 107,517 | $ | 5,375
A reconciliation of our consolidated Adjusted EBITDA to consolidated net income (loss) is provided below (in thousands).
| Quarter Ended |  | Three Quarters Ended
|  | May 31, |  |  | May 31, |  |  | May 31, |  |  | May 31,
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020
Segment Adjusted EBITDA | $ | 10,847 |  | $ | (1,908) |  | $ | 23,327 |  | $ | 9,785
Corporate expenses |  | (2,284) |  |  | (1,734) |  |  | (5,925) |  |  | (4,410)
Consolidated Adjusted EBITDA |  | 8,563 |  |  | (3,642) |  |  | 17,402 |  |  | 5,375
Stock-based compensation |  | (2,370) |  |  | 5,104 |  |  | (5,127) |  |  | 1,460
Business acquisition costs |  | (300) |  |  | - |  |  | (300) |  |  | -
Decrease (increase) in the fair value of |  |  |  |  |  |  |  |  |  |  |
contingent consideration liabilities |  | (118) |  |  | 276 |  |  | (164) |  |  | 367
Government COVID-19 assistance |  | - |  |  | - |  |  | 234 |  |  | -
Knowledge Capital wind-down costs |  | - |  |  | - |  |  | - |  |  | (389)
Gain from insurance settlement |  | - |  |  | 933 |  |  | 150 |  |  | 933
Depreciation |  | (1,423) |  |  | (1,652) |  |  | (4,904) |  |  | (4,925)
Amortization |  | (1,238) |  |  | (1,164) |  |  | (3,503) |  |  | (3,504)
Income (loss) from operations |  | 3,114 |  |  | (145) |  |  | 3,788 |  |  | (683)
Interest income |  | 16 |  |  | 18 |  |  | 56 |  |  | 36
Interest expense |  | (525) |  |  | (621) |  |  | (1,633) |  |  | (1,783)
Income (loss) before income taxes |  | 2,605 |  |  | (748) |  |  | 2,211 |  |  | (2,430)
Income tax benefit (provision) |  | 10,149 |  |  | (10,220) |  |  | 9,605 |  |  | (7,985)
Net income (loss) | $ | 12,754 |  | $ | (10,968) |  | $ | 11,816 |  | $ | (10,415)
Revenue by Category The following table presents our revenue disaggregated by geographic region (in thousands).
| Quarter Ended |  | Three Quarters Ended
|  | May 31, |  |  | May 31, |  |  | May 31, |  |  | May 31,
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020
Americas | $ | 47,524 |  | $ | 32,788 |  | $ | 124,679 |  | $ | 119,545
Asia Pacific |  | 7,922 |  |  | 2,759 |  |  | 21,351 |  |  | 19,987
Europe/Middle East/Africa |  | 3,290 |  |  | 1,558 |  |  | 9,193 |  |  | 9,931
| $ | 58,736 |  | $ | 37,105 |  | $ | 155,223 |  | $ | 149,463
‎ The following table presents our revenue disaggregated by type of service (in thousands).
Quarter Ended |  | Services and |  |  |  |  |  | Leases and |  |
May 31, 2021 |  | Products |  | Subscriptions |  | Royalties |  | Other |  | Consolidated
Enterprise Division: |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 23,266 | $ | 18,752 | $ | 686 | $ | - | $ | 42,704
International licensees |  | 412 |  | - |  | 1,983 |  | - |  | 2,395
|  | 23,678 |  | 18,752 |  | 2,669 |  | - |  | 45,099
Education practice |  | 4,298 |  | 7,171 |  | 430 |  | - |  | 11,899
Corporate and eliminations |  | - |  | - |  | 345 |  | 1,393 |  | 1,738
Consolidated | $ | 27,976 | $ | 25,923 | $ | 3,444 | $ | 1,393 | $ | 58,736
Quarter Ended |  |  |  |  |  |  |  |  |  |
May 31, 2020 |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 10,051 | $ | 15,965 | $ | 744 | $ | - | $ | 26,760
International licensees |  | 191 |  | - |  | 517 |  | - |  | 708
|  | 10,242 |  | 15,965 |  | 1,261 |  | - |  | 27,468
Education practice |  | 1,373 |  | 6,286 |  | 557 |  | - |  | 8,216
Corporate and eliminations |  | - |  | - |  | 334 |  | 1,087 |  | 1,421
Consolidated | $ | 11,615 | $ | 22,251 | $ | 2,152 | $ | 1,087 | $ | 37,105
Three Quarters Ended |  |  |  |  |  |  |  |  |  |
May 31, 2021 |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 60,589 | $ | 52,499 | $ | 2,097 | $ | - | $ | 115,185
International licensees |  | 1,267 |  | - |  | 6,154 |  | - |  | 7,421
|  | 61,856 |  | 52,499 |  | 8,251 |  | - |  | 122,606
Education practice |  | 8,018 |  | 17,977 |  | 1,879 |  | - |  | 27,874
Corporate and eliminations |  | - |  | - |  | 1,053 |  | 3,690 |  | 4,743
Consolidated | $ | 69,874 | $ | 70,476 | $ | 11,183 | $ | 3,690 | $ | 155,223
Three Quarters Ended |  |  |  |  |  |  |  |  |  |
May 31, 2020 |  |  |  |  |  |  |  |  |  |
Enterprise Division: |  |  |  |  |  |  |  |  |  |
Direct offices | $ | 58,946 | $ | 45,425 | $ | 2,473 | $ | - | $ | 106,844
International licensees |  | 1,191 |  | - |  | 5,929 |  | - |  | 7,120
|  | 60,137 |  | 45,425 |  | 8,402 |  | - |  | 113,964
Education practice |  | 7,908 |  | 19,296 |  | 2,986 |  | - |  | 30,190
Corporate and eliminations |  | - |  | - |  | 1,649 |  | 3,660 |  | 5,309
Consolidated | $ | 68,045 | $ | 64,721 | $ | 13,037 | $ | 3,660 | $ | 149,463

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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