Segment Information

3 Months Ended

Nov. 26, 2016

Segment Information [Abstract]

Segment Information

NOTE 6 – SEGMENT INFORMATION

Our sales are primarily comprised of training and consulting services, and related products.  Our internal reporting structure is comprised of four operating divisions and a corporate services group.  The operating divisions were determined to be reportable segments under the applicable accounting guidance.  The following is a brief description of our reportable segments:

· Direct Offices – This division includes our three sales offices that serve the United States and Canada; our international sales offices located in Japan, China, the United Kingdom, and Australia; and our public program operations.

· Strategic Markets – This division includes our Government Services office, Global 50 group (focused on sales to large multinational organizations), Sales Performance practice, and our Customer Loyalty practice.

· 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 operations, shipping and handling revenues, book and audio sales, and certain corporate administrative expenses.

We 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.  For reporting purposes, our consolidated Adjusted EBITDA can be calculated as our income or loss from operations excluding stock-based compensation, restructuring charges, depreciation expense, amortization expense, and certain other charges such as impaired asset charges and adjustments for changes in the fair value of contingent earn out liabilities from previous business acquisitions.

Our operations are not capital intensive and we do not own any manufacturing facilities or equipment.  Accordingly, we do not allocate assets to the divisions 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
November 26, 2016		Customers		Gross Profit		EBITDA
Direct offices	$	21,247	$	14,124	$	(596)
Strategic markets		4,761		2,552		(1,183)
Education practice		8,743		5,024		7
International licensees		3,431		2,652		1,308
Total		38,182		24,352		(464)
Corporate and eliminations		1,605		956		(2,355)
Consolidated	$	39,787	$	25,308	$	(2,819)
Quarter Ended
November 28, 2015
Direct offices	$	23,651	$	16,570	$	2,669
Strategic markets		7,195		4,509		850
Education practice		8,169		4,665		313
International licensees		4,519		3,458		2,337
Total		43,534		29,202		6,169
Corporate and eliminations		1,684		869		(1,694)
Consolidated	$	45,218	$	30,071	$	4,475

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

	Quarter Ended
		November 26,		November 28,
		2016		2015
Enterprise Adjusted EBITDA	$	(464)	$	6,169
Corporate expenses		(2,355)		(1,694)
Consolidated Adjusted EBITDA		(2,819)		4,475
Stock-based compensation expense		(1,214)		(763)
Reduction (increase) to contingent
earn out liability		1,013		(130)
China office start up costs		(479)		-
Other expense		(288)		-
Depreciation		(866)		(912)
Amortization		(722)		(910)
Income (loss) from operations		(5,375)		1,760
Interest income		116		77
Interest expense		(620)		(541)
Income (loss) before income taxes		(5,879)		1,296
Income tax benefit (provision)		1,921		(506)
Net income (loss)	$	(3,958)	$	790

We reassess the fair value of expected contingent consideration and the corresponding liability resulting from the acquisition of NinetyFive 5 each period.  The increases or decreases to the liability are reflected in selling, general, and administrative expenses on our consolidated statements of operations.  However, the impact of these adjustments is not included in our consolidated Adjusted EBITDA calculations as shown above.