Segment Information

9 Months Ended

May 28, 2016

Segment Information [Abstract]

Segment Information

NOTE 8 – 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.   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 three quarters ended May 30, 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
May 28, 2016		Customers		Gross Profit		EBITDA		Depreciation		Amortization
Direct offices	$	23,892	$	16,804	$	2,856	$	70	$	1
Strategic markets		6,906		4,027		232		1		61
Education practice		7,397		4,202		(1,584)		1		-
International licensees		4,472		3,488		2,259		1		-
Total		42,667		28,521		3,763		73		62
Corporate and eliminations		2,071		1,041		(1,969)		930		660
Consolidated	$	44,738	$	29,562	$	1,794	$	1,003	$	722
Quarter Ended
May 30, 2015
Direct offices	$	26,307	$	18,379	$	3,219	$	85	$	1
Strategic markets		9,337		5,240		1,994		70		246
Education practice		6,091		2,778		(919)		1		-
International licensees		4,027		2,913		1,559		1		-
Total		45,762		29,310		5,853		157		247
Corporate and eliminations		2,544		1,012		(989)		823		665
Consolidated	$	48,306	$	30,322	$	4,864	$	980	$	912
Three Quarters Ended
May 28, 2016
Direct offices	$	72,119	$	51,189	$	9,873	$	212	$	3
Strategic markets		21,636		13,357		2,369		95		553
Education practice		22,151		11,787		(2,443)		3		-
International licensees		13,093		10,046		6,653		3		-
Total		128,999		86,379		16,452		313		556
Corporate and eliminations		6,225		3,109		(5,777)		2,496		1,985
Consolidated	$	135,224	$	89,488	$	10,675	$	2,809	$	2,541
Three Quarters Ended
May 30, 2015
Direct offices	$	77,387	$	54,191	$	8,763	$	252	$	3
Strategic markets		28,153		16,577		6,570		159		812
Education practice		17,249		8,524		(2,626)		3		-
International licensees		12,845		9,658		5,526		4		-
Total		135,634		88,950		18,233		418		815
Corporate and eliminations		6,863		2,592		(3,643)		2,566		2,003
Consolidated	$	142,497	$	91,542	$	14,590	$	2,984	$	2,818

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

	Quarter Ended				Three Quarters Ended
		May 28,		May 30,		May 28,		May 30,
		2016		2015		2016		2015
Enterprise Adjusted EBITDA	$	3,763	$	5,853	$	16,452	$	18,233
Corporate expenses		(1,969)		(989)		(5,777)		(3,643)
Consolidated Adjusted EBITDA		1,794		4,864		10,675		14,590
Share-based compensation expense		(1,048)		(592)		(2,922)		(1,602)
Reduction (increase) to contingent earn
out liability		(88)		51		(1,456)		79
Restructuring costs		-		-		(376)		-
Impairment of assets		-		(1,082)		-		(1,082)
Other income (expense)		(191)		65		(330)		-
Depreciation		(1,003)		(980)		(2,809)		(2,984)
Amortization		(722)		(912)		(2,541)		(2,818)
Income (loss) from operations		(1,258)		1,414		241		6,183
Interest income		81		104		243		322
Interest expense		(564)		(532)		(1,659)		(1,605)
Discount on related party receivable		-		(233)		-		(364)
Income (loss) before income taxes		(1,741)		753		(1,175)		4,536
Income tax benefit (provision)		689		438		465		(1,089)
Net income (loss)	$	(1,052)	$	1,191	$	(710)	$	3,447

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 increases to the liability during the quarter and three quarters ended May 28, 2016 totaled approximately $0.1 million and $1.5 million, and are 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.