Segment Information

6 Months Ended

Feb. 28, 2017

Segment Information [Abstract]

Segment Information

NOTE 7 – 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 sales personnel 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
February 28, 2017		Customers		Gross Profit		EBITDA
Direct offices	$	23,412	$	16,517	$	1,618
Strategic markets		6,002		3,827		(181)
Education practice		7,848		4,408		(848)
International licensees		2,937		2,262		1,335
Total		40,199		27,014		1,924
Corporate and eliminations		1,997		1,017		(2,291)
Consolidated	$	42,196	$	28,031	$	(367)
Quarter Ended
February 27, 2016
Direct offices	$	24,564	$	17,802	$	4,461
Strategic markets		7,551		4,838		1,289
Education practice		6,835		3,170		(1,022)
International licensees		3,850		2,848		1,792
Total		42,800		28,658		6,520
Corporate and eliminations		2,469		1,196		(2,114)
Consolidated	$	45,269	$	29,854	$	4,406
Two Quarters Ended
February 28, 2017
Direct offices	$	44,659	$	30,640	$	1,022
Strategic markets		10,762		6,379		(1,364)
Education practice		16,591		9,432		(842)
International licensees		6,370		4,914		2,643
Total		78,382		51,365		1,459
Corporate and eliminations		3,601		1,975		(4,645)
Consolidated	$	81,983	$	53,340	$	(3,186)
Two Quarters Ended
February 27, 2016
Direct offices	$	48,214	$	34,371	$	7,130
Strategic markets		14,747		9,347		2,139
Education practice		15,004		7,835		(709)
International licensees		8,369		6,305		4,129
Total		86,334		57,858		12,689
Corporate and eliminations		4,152		2,067		(3,809)
Consolidated	$	90,486	$	59,925	$	8,880

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

	Quarter Ended				Two Quarters Ended
		February 28,		February 27,		February 28,		February 27,
		2017		2016		2017		2016
Enterprise Adjusted EBITDA	$	1,924	$	6,520	$	1,459	$	12,689
Corporate expenses		(2,291)		(2,114)		(4,645)		(3,809)
Consolidated Adjusted EBITDA		(367)		4,406		(3,186)		8,880
Stock-based compensation expense		(1,564)		(1,111)		(2,777)		(1,874)
Contract termination costs		(1,500)		-		(1,500)		-
Reduction (increase) to contingent
earn out liability		924		(1,238)		1,936		(1,368)
Restructuring costs		-		(376)		-		(376)
China office start-up costs		(26)		-		(505)		-
Other expenses		(306)		(139)		(593)		(139)
Depreciation		(928)		(894)		(1,794)		(1,806)
Amortization		(721)		(909)		(1,443)		(1,819)
Income (loss) from operations		(4,488)		(261)		(9,862)		1,498
Interest income		109		83		225		161
Interest expense		(623)		(552)		(1,244)		(1,093)
Income (loss) before income taxes		(5,002)		(730)		(10,881)		566
Income tax benefit (provision)		1,669		282		3,590		(224)
Net income (loss)	$	(3,333)	$	(448)	$	(7,291)	$	342