Segment Information

9 Months Ended

May 31, 2017

Segment Information [Abstract]

Segment Information

NOTE 10 – 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), newly acquired Robert Gregory Partners, LLC, 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 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
May 31, 2017		Customers		Gross Profit		EBITDA
Direct offices	$	24,019	$	14,902	$	1,323
Strategic markets		5,419		3,208		(720)
Education practice		8,596		5,194		(43)
International licensees		3,822		2,964		1,624
Total		41,856		26,268		2,184
Corporate and eliminations		1,895		1,073		(2,202)
Consolidated	$	43,751	$	27,341	$	(18)
Quarter Ended
May 28, 2016
Direct offices	$	23,894	$	16,805	$	2,842
Strategic markets		6,924		4,045		247
Education practice		7,517		4,322		(1,446)
International licensees		4,332		3,349		2,120
Total		42,667		28,521		3,763
Corporate and eliminations		2,071		1,041		(1,969)
Consolidated	$	44,738	$	29,562	$	1,794
Three Quarters Ended
May 31, 2017
Direct offices	$	68,678	$	45,543	$	2,345
Strategic markets		16,181		9,586		(2,085)
Education practice		25,187		14,626		(885)
International licensees		10,191		7,878		4,267
Total		120,237		77,633		3,642
Corporate and eliminations		5,497		3,047		(6,846)
Consolidated	$	125,734	$	80,680	$	(3,204)
Three Quarters Ended
May 28, 2016
Direct offices	$	72,107	$	51,177	$	9,972
Strategic markets		21,670		13,392		2,386
Education practice		22,520		12,156		(2,155)
International licensees		12,702		9,654		6,249
Total		128,999		86,379		16,452
Corporate and eliminations		6,225		3,109		(5,777)
Consolidated	$	135,224	$	89,488	$	10,675

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

	Quarter Ended				Three Quarters Ended
		May 31,		May 28,		May 31,		May 28,
		2017		2016		2017		2016
Enterprise Adjusted EBITDA	$	2,184	$	3,763	$	3,642	$	16,452
Corporate expenses		(2,202)		(1,969)		(6,846)		(5,777)
Consolidated Adjusted EBITDA		(18)		1,794		(3,204)		10,675
Stock-based compensation expense		(1,210)		(1,048)		(3,987)		(2,922)
Costs to exit Japan publishing business		(1,792)		-		(1,792)		-
Restructuring costs		(1,335)		-		(1,335)		(376)
Contract termination costs		-		-		(1,500)		-
Reduction (increase) to contingent
earn out liability		-		(88)		1,936		(1,456)
China office start-up costs		-		(60)		(505)		(106)
ERP system implementation costs		(327)		(131)		(920)		(224)
Other expenses		(25)		-		(25)		-
Depreciation		(949)		(1,003)		(2,743)		(2,809)
Amortization		(835)		(722)		(2,278)		(2,541)
Income (loss) from operations		(6,491)		(1,258)		(16,353)		241
Interest income		86		81		310		243
Interest expense		(618)		(564)		(1,861)		(1,659)
Loss before income taxes		(7,023)		(1,741)		(17,904)		(1,175)
Income tax benefit		2,482		689		6,073		465
Net loss	$	(4,541)	$	(1,052)	$	(11,831)	$	(710)