[X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Utah
(State of incorporation)
|
87-0401551
(I.R.S. employer identification number)
|
|
2200 West Parkway Boulevard
Salt Lake City, Utah
(Address of principal executive offices)
|
84119-2099
(Zip Code)
|
|
Registrant’s telephone number,
Including area code
|
(801) 817-1776
|
Large accelerated filer
|
☐ |
Accelerated filer
|
☒ | |||||
Non-accelerated filer
|
☐ |
Smaller reporting company
|
☒ | |||||
Emerging growth company
|
☐ |
November 30,
|
August 31,
|
|||||||
2018
|
2018
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
11,085
|
$
|
10,153
|
||||
Accounts receivable, less allowance for doubtful accounts of $3,929 and $3,555
|
55,646
|
71,914
|
||||||
Inventories
|
2,920
|
3,160
|
||||||
Income taxes receivable
|
-
|
179
|
||||||
Prepaid expenses and other current assets
|
13,841
|
14,757
|
||||||
Total current assets
|
83,492
|
100,163
|
||||||
Property and equipment, net
|
20,691
|
21,401
|
||||||
Intangible assets, net
|
50,701
|
51,934
|
||||||
Goodwill
|
24,220
|
24,220
|
||||||
Deferred income tax assets
|
4,877
|
3,222
|
||||||
Other long-term assets
|
12,343
|
12,935
|
||||||
$
|
196,324
|
$
|
213,875
|
|||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current portion of term notes payable
|
$
|
9,063
|
$
|
10,313
|
||||
Current portion of financing obligation
|
2,151
|
2,092
|
||||||
Accounts payable
|
7,685
|
9,790
|
||||||
Income taxes payable
|
325
|
-
|
||||||
Deferred revenue
|
46,221
|
51,888
|
||||||
Accrued liabilities
|
16,948
|
20,761
|
||||||
Total current liabilities
|
82,393
|
94,844
|
||||||
Line of credit
|
8,508
|
11,337
|
||||||
Term notes payable, less current portion
|
2,187
|
2,500
|
||||||
Financing obligation, less current portion
|
18,419
|
18,983
|
||||||
Other liabilities
|
7,747
|
5,501
|
||||||
Deferred income tax liabilities
|
210
|
210
|
||||||
Total liabilities
|
119,464
|
133,375
|
||||||
Shareholders’ equity:
|
||||||||
Common stock, $.05 par value; 40,000 shares authorized, 27,056 shares issued
|
1,353
|
1,353
|
||||||
Additional paid-in capital
|
212,290
|
211,280
|
||||||
Retained earnings
|
59,069
|
63,569
|
||||||
Accumulated other comprehensive income
|
32
|
341
|
||||||
Treasury stock at cost, 13,148 shares and 13,159 shares
|
(195,884
|
)
|
(196,043
|
)
|
||||
Total shareholders’ equity
|
76,860
|
80,500
|
||||||
$
|
196,324
|
$
|
213,875
|
Quarter Ended
|
||||||||
November 30,
|
November 30,
|
|||||||
2018
|
2017
|
|||||||
(unaudited)
|
||||||||
Net sales
|
$
|
53,829
|
$
|
47,932
|
||||
Cost of sales
|
17,046
|
15,064
|
||||||
Gross profit
|
36,783
|
32,868
|
||||||
Selling, general, and administrative
|
34,644
|
33,824
|
||||||
Depreciation
|
1,554
|
901
|
||||||
Amortization
|
1,238
|
1,395
|
||||||
Loss from operations
|
(653
|
)
|
(3,252
|
)
|
||||
Interest income
|
28
|
61
|
||||||
Interest expense
|
(632
|
)
|
(549
|
)
|
||||
Loss before income taxes
|
(1,257
|
)
|
(3,740
|
)
|
||||
Income tax benefit (provision)
|
(100
|
)
|
1,348
|
|||||
Net loss
|
$
|
(1,357
|
)
|
$
|
(2,392
|
)
|
||
Net loss per share:
|
||||||||
Basic and diluted
|
$
|
(0.10
|
)
|
$
|
(0.17
|
)
|
||
Weighted average number of common shares:
|
||||||||
Basic and diluted
|
13,917
|
13,725
|
||||||
COMPREHENSIVE LOSS
|
||||||||
Net loss
|
$
|
(1,357
|
)
|
$
|
(2,392
|
)
|
||
Foreign currency translation adjustments,
|
||||||||
net of income tax benefit of $11 and $42
|
(309
|
)
|
(77
|
)
|
||||
Comprehensive loss
|
$
|
(1,666
|
)
|
$
|
(2,469
|
)
|
Quarter Ended
|
||||||||
November 30,
|
November 30,
|
|||||||
2018
|
2017
|
|||||||
(unaudited)
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net loss
|
$
|
(1,357
|
)
|
$
|
(2,392
|
)
|
||
Adjustments to reconcile net loss to net cash provided
|
||||||||
by operating activities:
|
||||||||
Depreciation and amortization
|
2,792
|
2,295
|
||||||
Amortization of capitalized curriculum costs
|
1,431
|
1,277
|
||||||
Stock-based compensation expense
|
946
|
956
|
||||||
Deferred income taxes
|
(645
|
)
|
(1,799
|
)
|
||||
Increase in contingent consideration liabilities
|
24
|
176
|
||||||
Changes in assets and liabilities:
|
||||||||
Decrease in accounts receivable, net
|
16,096
|
16,148
|
||||||
Decrease in inventories
|
233
|
26
|
||||||
Decrease (increase) in prepaid expenses and other assets
|
847
|
(606
|
)
|
|||||
Decrease in accounts payable and accrued liabilities
|
(5,098
|
)
|
(8,125
|
)
|
||||
Decrease in deferred revenue
|
(7,586
|
)
|
(5,570
|
)
|
||||
Increase (decrease) in income taxes payable/receivable
|
503
|
(53
|
)
|
|||||
Increase (decrease) in other long-term liabilities
|
(52
|
)
|
5
|
|||||
Net cash provided by operating activities
|
8,134
|
2,338
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchases of property and equipment
|
(1,431
|
)
|
(2,414
|
)
|
||||
Curriculum development costs
|
(689
|
)
|
(703
|
)
|
||||
Acquisition of business
|
-
|
(1,109
|
)
|
|||||
Net cash used for investing activities
|
(2,120
|
)
|
(4,226
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from line of credit borrowings
|
22,684
|
24,633
|
||||||
Payments on line of credit borrowings
|
(25,513
|
)
|
(19,960
|
)
|
||||
Principal payments on term notes payable
|
(1,563
|
)
|
(1,250
|
)
|
||||
Principal payments on financing obligation
|
(505
|
)
|
(451
|
)
|
||||
Purchases of common stock for treasury
|
(7
|
)
|
(1,968
|
)
|
||||
Payment of contingent consideration liabilities
|
(217
|
)
|
-
|
|||||
Proceeds from sales of common stock held in treasury
|
230
|
158
|
||||||
Net cash provided by (used for) financing activities
|
(4,891
|
)
|
1,162
|
|||||
Effect of foreign currency exchange rates on cash and cash equivalents
|
(191
|
)
|
(111
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
932
|
(837
|
)
|
|||||
Cash and cash equivalents at the beginning of the period
|
10,153
|
8,924
|
||||||
Cash and cash equivalents at the end of the period
|
$
|
11,085
|
$
|
8,087
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for income taxes
|
$
|
242
|
$
|
640
|
||||
Cash paid for interest
|
651
|
614
|
||||||
Non-cash investing and financing activities:
|
||||||||
Purchases of property and equipment financed by accounts payable
|
$
|
447
|
$
|
901
|
Accumulated
|
||||||||||||||||||||||||||||
Common
|
Common
|
Additional
|
Other
|
Treasury
|
Treasury
|
|||||||||||||||||||||||
Stock
|
Stock
|
Paid-In
|
Retained
|
Comprehensive
|
Stock
|
Stock
|
||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Shares
|
Amount
|
||||||||||||||||||||||
Balance at August 31, 2018
|
27,056
|
$
|
1,353
|
$
|
211,280
|
$
|
63,569
|
$
|
341
|
(13,159
|
)
|
$
|
(196,043
|
)
|
||||||||||||||
Issuance of common stock from
|
||||||||||||||||||||||||||||
treasury
|
64
|
11
|
166
|
|||||||||||||||||||||||||
Purchase of treasury shares
|
(7
|
)
|
||||||||||||||||||||||||||
Stock-based compensation
|
946
|
|||||||||||||||||||||||||||
Cumulative translation
|
||||||||||||||||||||||||||||
adjustments
|
(309
|
)
|
||||||||||||||||||||||||||
Cumulative effect of
|
||||||||||||||||||||||||||||
accounting change
|
(3,143
|
)
|
||||||||||||||||||||||||||
Net loss
|
(1,357
|
)
|
||||||||||||||||||||||||||
Balance at November 30, 2018
|
27,056
|
$
|
1,353
|
$
|
212,290
|
$
|
59,069
|
$
|
32
|
(13,148
|
)
|
$
|
(195,884
|
)
|
Accumulated
|
||||||||||||||||||||||||||||
Common
|
Common
|
Additional
|
Other
|
Treasury
|
Treasury
|
|||||||||||||||||||||||
Stock
|
Stock
|
Paid-In
|
Retained
|
Comprehensive
|
Stock
|
Stock
|
||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Shares
|
Amount
|
||||||||||||||||||||||
Balance at August 31, 2017
|
27,056
|
$
|
1,353
|
$
|
212,484
|
$
|
69,456
|
$
|
667
|
(13,414
|
)
|
$
|
(198,895
|
)
|
||||||||||||||
Issuance of common stock from
|
||||||||||||||||||||||||||||
treasury
|
(3,600
|
)
|
256
|
3,758
|
||||||||||||||||||||||||
Purchase of treasury shares
|
(103
|
)
|
(1,968
|
)
|
||||||||||||||||||||||||
Stock-based compensation
|
956
|
|||||||||||||||||||||||||||
Cumulative translation
|
||||||||||||||||||||||||||||
adjustments
|
(77
|
)
|
||||||||||||||||||||||||||
Net loss
|
(2,392
|
)
|
||||||||||||||||||||||||||
Balance at November 30, 2017
|
27,056
|
$
|
1,353
|
$
|
209,840
|
$
|
67,064
|
$
|
590
|
(13,261
|
)
|
$
|
(197,105
|
)
|
1.
|
World Class
Content – Our content is principle-centered and based on natural laws of human behavior and effectiveness. When our content is applied consistently in an organization, we believe the culture of that organization will change to
enable the organization to achieve their own great purposes. Our content is designed to build new skillsets, establish new mindsets, and provide enabling toolsets to our clients.
|
2.
|
Breadth and
Scalability of Delivery Options – We have a wide range of content delivery options, including: subscription offerings, which includes the All Access Pass (available in multiple languages), The Leader in Me membership, and other subscription offerings; intellectual property licenses; on-site training; training led through certified facilitators;
on-line learning; blended learning; and organization-wide transformational processes, including consulting and coaching.
|
3.
|
Global
Capability – We have sales professionals in the United States and Canada who serve clients in the private sector and in governmental organizations; wholly-owned subsidiaries in Australia, China, Japan, and the United Kingdom;
and we contract with licensee partners who deliver our content and provide related services in over 150 other countries and territories around the world.
|
August 31,
|
ASC 606
|
September 1,
|
||||||||||
2018
|
Adjustments
|
2018
|
||||||||||
Assets:
|
||||||||||||
Other current assets
|
$
|
10,893
|
$
|
109
|
$
|
11,002
|
||||||
Deferred income tax assets
|
3,222
|
1,005
|
4,227
|
|||||||||
Liabilities and Shareholders' Equity:
|
||||||||||||
Deferred revenue
|
51,888
|
2,008
|
53,896
|
|||||||||
Other liabilities
|
5,501
|
2,249
|
7,750
|
|||||||||
Retained earnings
|
63,569
|
(3,143
|
)
|
60,426
|
November 30,
|
November 30,
|
|||||||||||
2018
|
2018
|
Impact of
|
||||||||||
As Reported
|
Without ASC 606
|
ASC 606
|
||||||||||
Revenue
|
$
|
53,829
|
$
|
52,757
|
$
|
1,072
|
||||||
Cost of sales
|
17,046
|
17,046
|
-
|
|||||||||
Selling, general, and administrative
|
34,644
|
34,573
|
71
|
|||||||||
Income tax provision (benefit)
|
100
|
(136
|
)
|
236
|
||||||||
Net loss
|
(1,357
|
)
|
(2,122
|
)
|
765
|
|||||||
Net loss per share:
|
||||||||||||
Basic and diluted
|
$
|
(0.10
|
)
|
$
|
(0.15
|
)
|
November 30,
|
November 30,
|
|||||||||||
2018
|
2018
|
Impact of
|
||||||||||
As Reported
|
Without ASC 606
|
ASC 606
|
||||||||||
Assets:
|
||||||||||||
Prepaid expenses and other current assets
|
$
|
13,841
|
$
|
13,770
|
$
|
71
|
||||||
Deferred income tax assets
|
4,877
|
4,641
|
236
|
|||||||||
Total assets
|
196,324
|
196,017
|
307
|
|||||||||
Liabilities and Shareholders' Equity:
|
||||||||||||
Deferred revenue
|
46,221
|
47,153
|
(932
|
)
|
||||||||
Other liabilities
|
7,747
|
5,743
|
2,004
|
|||||||||
Retained earnings
|
59,069
|
59,834
|
(765
|
)
|
||||||||
Total liabilities and shareholders' equity
|
196,324
|
196,017
|
307
|
·
|
Identification of the contract with a customer
|
·
|
Identification of the performance obligations in the contract
|
·
|
Determination of the transaction price
|
·
|
Allocation of the transaction price to the performance obligations in the contract
|
·
|
Recognition of revenue when the Company satisfies the performance obligations
|
November 30,
|
August 31,
|
|||||||
2018
|
2018
|
|||||||
Finished goods
|
$
|
2,897
|
$
|
3,130
|
||||
Raw materials
|
23
|
30
|
||||||
$
|
2,920
|
$
|
3,160
|
Balance at
|
Change in
|
Balance at
|
||||||||||||||
August 31, 2018
|
Fair Value
|
Payments
|
November 30, 2018
|
|||||||||||||
RGP Acquisition
|
$
|
606
|
$
|
(22
|
)
|
$
|
-
|
$
|
584
|
|||||||
Jhana Acquisition
|
3,942
|
46
|
(217
|
)
|
3,771
|
|||||||||||
$
|
4,548
|
$
|
24
|
$
|
(217
|
)
|
$
|
4,355
|
Quarter Ended
|
||||||||
November 30,
|
November 30,
|
|||||||
2018
|
2017
|
|||||||
Long-term incentive awards
|
$
|
733
|
$
|
791
|
||||
Unvested share awards
|
175
|
131
|
||||||
Employee stock purchase plan
|
38
|
34
|
||||||
$
|
946
|
$
|
956
|
·
|
Time-Based Award
Shares – Twenty-five percent of the 2019 LTIP award shares vest to participants after three years of service. The total number of shares that may be earned by participants after three years of service is 36,470 shares. The
number of shares awarded in this tranche is not variable and will not fluctuate based on financial measures.
|
·
|
Performance-Based
Award Shares – The remaining two tranches of the 2019 LTIP award are based on fiscal 2021 qualified adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) and fiscal 2021 subscription service
sales, respectively. The number of shares that will vest to participants for these two tranches is variable and may be 50 percent of the award (minimum award threshold) up to 200 percent of the participant’s award (maximum threshold).
The number of shares that may be earned for achieving 100 percent of the performance-based objectives (target award threshold) totals 109,409 shares. The maximum number of shares that may be awarded in connection with the
performance-based tranches of the 2019 LTIP totals 218,818 shares.
|
Quarter Ended
|
||||||||
November 30,
|
November 30,
|
|||||||
2018
|
2017
|
|||||||
Numerator for basic and
|
||||||||
diluted loss per share:
|
||||||||
Net loss
|
$
|
(1,357
|
)
|
$
|
(2,392
|
)
|
||
Denominator for basic and
|
||||||||
diluted loss per share:
|
||||||||
Basic weighted average shares
|
||||||||
outstanding
|
13,917
|
13,725
|
||||||
Effect of dilutive securities:
|
||||||||
Stock options and other
|
||||||||
stock-based awards
|
-
|
-
|
||||||
Diluted weighted average
|
||||||||
shares outstanding
|
13,917
|
13,725
|
||||||
EPS Calculations:
|
||||||||
Net loss per share:
|
||||||||
Basic and diluted
|
$
|
(0.10
|
)
|
$
|
(0.17
|
)
|
·
|
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, and Australia; our governmental sales channel; and our public program operations.
|
·
|
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.
|
·
|
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.
|
·
|
Corporate and Other – Our corporate and other information includes leasing operations, shipping and handling revenues, and certain corporate administrative expenses.
|
Sales to
|
||||||||||||
Quarter Ended
|
External
|
Adjusted
|
||||||||||
November 30, 2018
|
Customers
|
Gross Profit
|
EBITDA
|
|||||||||
Enterprise Division:
|
||||||||||||
Direct offices
|
$
|
38,471
|
$
|
27,082
|
$
|
4,111
|
||||||
International licensees
|
3,677
|
2,854
|
1,683
|
|||||||||
42,148
|
29,936
|
5,794
|
||||||||||
Education practice
|
10,347
|
6,389
|
(18
|
)
|
||||||||
Corporate and eliminations
|
1,334
|
458
|
(2,607
|
)
|
||||||||
Consolidated
|
$
|
53,829
|
$
|
36,783
|
$
|
3,169
|
||||||
Quarter Ended
|
||||||||||||
November 30, 2017
|
||||||||||||
Enterprise Division:
|
||||||||||||
Direct offices
|
$
|
34,197
|
$
|
24,561
|
$
|
3,078
|
||||||
International licensees
|
3,320
|
2,503
|
1,412
|
|||||||||
37,517
|
27,064
|
4,490
|
||||||||||
Education practice
|
9,176
|
5,430
|
(670
|
)
|
||||||||
Corporate and eliminations
|
1,239
|
374
|
(3,218
|
)
|
||||||||
Consolidated
|
$
|
47,932
|
$
|
32,868
|
$
|
602
|
Quarter Ended
|
||||||||
November 30,
|
November 30,
|
|||||||
2018
|
2017
|
|||||||
Segment Adjusted EBITDA
|
$
|
5,776
|
$
|
3,820
|
||||
Corporate expenses
|
(2,607
|
)
|
(3,218
|
)
|
||||
Consolidated Adjusted EBITDA
|
3,169
|
602
|
||||||
Stock-based compensation expense
|
(946
|
)
|
(956
|
)
|
||||
Increase in contingent consideration liabilities
|
(24
|
)
|
(176
|
)
|
||||
Licensee transition costs
|
(60
|
)
|
-
|
|||||
ERP system implementation costs
|
-
|
(426
|
)
|
|||||
Depreciation
|
(1,554
|
)
|
(901
|
)
|
||||
Amortization
|
(1,238
|
)
|
(1,395
|
)
|
||||
Loss from operations
|
(653
|
)
|
(3,252
|
)
|
||||
Interest income
|
28
|
61
|
||||||
Interest expense
|
(632
|
)
|
(549
|
)
|
||||
Loss before income taxes
|
(1,257
|
)
|
(3,740
|
)
|
||||
Income tax benefit (provision)
|
(100
|
)
|
1,348
|
|||||
Net loss
|
$
|
(1,357
|
)
|
$
|
(2,392
|
)
|
November 30,
|
November 30,
|
|||||||
2018
|
2017
|
|||||||
Americas
|
$
|
40,918
|
$
|
35,965
|
||||
Asia Pacific
|
9,280
|
8,780
|
||||||
Europe/Middle East/Africa
|
3,631
|
3,187
|
||||||
$
|
53,829
|
$
|
47,932
|
Quarter Ended
|
Services and
|
Leases and
|
||||||||||||||||||
November 30, 2018
|
Products
|
Subscriptions
|
Royalties
|
Other
|
Consolidated
|
|||||||||||||||
Enterprise Division:
|
||||||||||||||||||||
Direct offices
|
$
|
25,009
|
$
|
12,675
|
$
|
787
|
$
|
-
|
$
|
38,471
|
||||||||||
International licensees
|
872
|
-
|
2,805
|
-
|
3,677
|
|||||||||||||||
25,881
|
12,675
|
3,592
|
-
|
42,148
|
||||||||||||||||
Education practice
|
3,917
|
5,713
|
717
|
-
|
10,347
|
|||||||||||||||
Corporate and eliminations
|
-
|
-
|
-
|
1,334
|
1,334
|
|||||||||||||||
Consolidated
|
$
|
29,798
|
$
|
18,388
|
$
|
4,309
|
$
|
1,334
|
$
|
53,829
|
||||||||||
Quarter Ended
|
||||||||||||||||||||
November 30, 2017
|
||||||||||||||||||||
Enterprise Division:
|
||||||||||||||||||||
Direct offices
|
$
|
24,873
|
$
|
9,117
|
$
|
207
|
$
|
-
|
$
|
34,197
|
||||||||||
International licensees
|
491
|
-
|
2,829
|
-
|
3,320
|
|||||||||||||||
25,364
|
9,117
|
3,036
|
-
|
37,517
|
||||||||||||||||
Education practice
|
4,786
|
3,733
|
657
|
-
|
9,176
|
|||||||||||||||
Corporate and eliminations
|
-
|
-
|
-
|
1,239
|
1,239
|
|||||||||||||||
Consolidated
|
$
|
30,150
|
$
|
12,850
|
$
|
3,693
|
$
|
1,239
|
$
|
47,932
|
November 30,
|
August 31,
|
|||||||
2018
|
2018
|
|||||||
Other current assets
|
$
|
1,294
|
$
|
1,123
|
||||
Other long-term assets
|
427
|
411
|
||||||
$
|
1,721
|
$
|
1,534
|
·
|
Sales – Our consolidated net sales for the quarter ended November 30, 2018 increased 12 percent, or $5.9 million, to
$53.8 million, compared with $47.9 million in the first quarter of fiscal 2018. Our sales were favorably impacted by significantly increased subscription and subscription-related sales at both our domestic and international locations,
increased international licensee revenues, and increased Education segment revenues. In addition, the adoption of ASC 606 had a $1.1 million favorable impact on our revenues during the quarter (refer to discussion below). These
increases were partially offset by decreased legacy facilitator revenues during the quarter.
|
·
|
Impact of ASC 606 (Revenue Recognition) – On September 1, 2018, we adopted the new revenue recognition standard commonly referred to as ASC 606 (Note 1). This new standard had a $1.1 million favorable impact on our
consolidated sales, which was primarily attributable to the Education practice. The additional revenue from ASC 606 reduced our loss from operations and pre-tax loss by $1.0 million for the quarter ended November 30, 2018.
|
·
|
Cost of Sales/Gross Profit – Our cost of goods sold was $17.0 million for the quarter ending November 30, 2018, compared with $15.1 million in the first quarter of the prior year. Gross profit for the first quarter of
fiscal 2019 increased 12 percent to $36.8 million compared with $32.9 million in the first quarter of fiscal 2018 and increased primarily due to increased sales. Our consolidated gross margin was 68.3 percent of sales compared with 68.6
percent in the prior year.
|
·
|
Operating Expenses – Our operating expenses for the quarter ended November 30, 2018 increased by $1.3 million compared with the prior year, which was due to a $0.8 million increase in selling, general, and administrative
(SG&A) expenses and a $0.7 million increase in depreciation expense. These increases were partially offset by a $0.2 million decrease in amortization expense. Increased SG&A expenses were primarily related to increased associate
costs resulting from increased commissions on higher sales and investments in new sales and sales related personnel.
|
·
|
Operating Loss and Net Loss – Our loss from operations for the quarter ended November 30, 2018 improved to $(0.7) million compared with a loss of $(3.3) million in the first quarter of fiscal 2018. Net loss for the
first quarter of fiscal 2019 was $(1.4) million, or $(.10) per share, compared with a net loss of $(2.4) million, or $(.17) per share, in the prior year.
|
November 30,
|
% of
|
November 30,
|
% of
|
|||||||||||||||||
2018
|
Sales
|
2017
|
Sales
|
Change
|
||||||||||||||||
Sales
|
$
|
38,471
|
100.0
|
$
|
34,197
|
100.0
|
$
|
4,274
|
||||||||||||
Cost of sales
|
11,389
|
29.6
|
9,636
|
28.2
|
1,753
|
|||||||||||||||
Gross profit
|
27,082
|
70.4
|
24,561
|
71.8
|
2,521
|
|||||||||||||||
SG&A expenses
|
22,971
|
59.7
|
21,483
|
62.8
|
1,488
|
|||||||||||||||
Adjusted EBITDA
|
$
|
4,111
|
10.7
|
$
|
3,078
|
9.0
|
$
|
1,033
|
November 30,
|
% of
|
November 30,
|
% of
|
|||||||||||||||||
2018
|
Sales
|
2017
|
Sales
|
Change
|
||||||||||||||||
Sales
|
$
|
3,677
|
100.0
|
$
|
3,320
|
100.0
|
$
|
357
|
||||||||||||
Cost of sales
|
823
|
22.4
|
817
|
24.6
|
6
|
|||||||||||||||
Gross profit
|
2,854
|
77.6
|
2,503
|
75.4
|
351
|
|||||||||||||||
SG&A expenses
|
1,171
|
31.8
|
1,091
|
32.9
|
80
|
|||||||||||||||
Adjusted EBITDA
|
$
|
1,683
|
45.8
|
$
|
1,412
|
42.5
|
$
|
271
|
November 30,
|
% of
|
November 30,
|
% of
|
|||||||||||||||||
2018
|
Sales
|
2017
|
Sales
|
Change
|
||||||||||||||||
Sales
|
$
|
10,347
|
100.0
|
$
|
9,176
|
100.0
|
$
|
1,171
|
||||||||||||
Cost of sales
|
3,958
|
38.3
|
3,746
|
40.8
|
212
|
|||||||||||||||
Gross profit
|
6,389
|
61.7
|
5,430
|
59.2
|
959
|
|||||||||||||||
SG&A expenses
|
6,407
|
61.9
|
6,100
|
66.5
|
307
|
|||||||||||||||
Adjusted EBITDA
|
$
|
(18
|
)
|
(0.2
|
)
|
$
|
(670
|
)
|
(7.3
|
)
|
$
|
652
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(1)
(in thousands)
|
||||||||||||
September 1, 2018 to September 30, 2018
|
-
|
$
|
-
|
-
|
$
|
13,174
|
||||||||||
October 1, 2018 to October 31, 2018
|
-
|
-
|
-
|
13,174
|
||||||||||||
November 1, 2018 to November 30, 2018
|
-
|
-
|
-
|
13,174
|
||||||||||||
Total Common Shares
|
-
|
$
|
-
|
-
|
(1)
|
On January 23, 2015, our Board of Directors approved a new plan to repurchase up to $10.0 million of the
Company’s outstanding common stock. All previously existing common stock repurchase plans were canceled and the new common share repurchase plan does not have an expiration date. On March 27, 2015, our Board of Directors increased the
aggregate value of shares of Company common stock that may be purchased under the January 2015 plan to $40.0 million so long as we have either $10.0 million in cash and cash equivalents or have access to debt financing of at least $10.0
million. Under the terms of this expanded common stock repurchase plan, we have purchased 1,539,828 shares of our common stock for $26.8 million through November 30, 2018.
|
(A)
|
Exhibits:
|
31.1
|
Rule 13a-14(a) Certifications of the Chief Executive Officer.**
|
31.2
|
Rule 13a-14(a) Certifications of the Chief Financial Officer.**
|
32
|
Section 1350 Certifications.**
|
101.INS |
XBRL Instance Document.
|
101.SCH |
XBRL Taxonomy Extension Schema Document.
|
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF |
XBRL Taxonomy Definition Linkbase Document.
|
101.LAB |
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document.
|
FRANKLIN COVEY CO.
|
||||
Date:
|
January 9, 2019
|
By:
|
/s/ Robert A. Whitman
|
|
Robert A. Whitman
|
||||
Chief Executive Officer
|
||||
(Duly Authorized Officer)
|
||||
Date:
|
January 9, 2019
|
By:
|
/s/ Stephen D. Young
|
|
Stephen D. Young
|
||||
Chief Financial Officer
|
||||
(Principal Financial and Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Franklin Covey Co.;
|
||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
||
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
|
||
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
|
||
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over
financial reporting; and
|
||
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
Date: January 9, 2019
|
/s/ Robert A. Whitman
|
|
|
Robert A. Whitman
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Franklin Covey Co.;
|
||
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
||
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
||
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
|
||
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
|
||
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
||
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over
financial reporting; and
|
||
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
||
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
Date: January 9, 2019
|
/s/ Stephen D. Young
|
|
|
Stephen D. Young
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934, and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company at the dates and for the periods indicated.
|
|
|
|
|
|
|||
/s/ Robert A. Whitman
|
|
/s/ Stephen D. Young
|
|
Robert A. Whitman
Chief Executive Officer |
|
|
Stephen D. Young
Chief Financial Officer |
Date: January 9, 2019
|
Date: January 9, 2019
|
G)E4WI.5&-Z:V,Y
M9"(_/@T*/'@Z>&UP;65T82!X;6QN H*.'6O.PF5T,70_
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Dec. 31, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Nov. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 | |
Entity Registrant Name | FRANKLIN COVEY CO | |
Entity Trading Symbol | fc | |
Entity Central Index Key | 0000886206 | |
Current Fiscal Year End Date | --08-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 13,929,270 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Aug. 31, 2018 |
---|---|---|
Condensed Consolidated Balance Sheets [Abstract] | ||
Allowance for doubtful accounts | $ 3,929 | $ 3,555 |
Common stock, par value | $ 0.05 | $ 0.05 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 27,056,000 | 27,056,000 |
Treasury stock, shares | 13,148,000 | 13,159,000 |
Condensed Consolidated Statements Of Operations And Statements Of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Condensed Consolidated Statements Of Operations And Statements Of Comprehensive Loss [Abstract] | ||
Net sales | $ 53,829 | $ 47,932 |
Cost of sales | 17,046 | 15,064 |
Gross profit | 36,783 | 32,868 |
Selling, general, and administrative | 34,644 | 33,824 |
Depreciation | 1,554 | 901 |
Amortization | 1,238 | 1,395 |
Loss from operations | (653) | (3,252) |
Interest income | 28 | 61 |
Interest expense | (632) | (549) |
Loss before income taxes | (1,257) | (3,740) |
Income tax benefit (provision) | (100) | 1,348 |
Net loss | $ (1,357) | $ (2,392) |
Net loss per share: | ||
Basic and diluted | $ (0.10) | $ (0.17) |
Weighted average number of common shares: | ||
Basic and diluted | 13,917 | 13,725 |
COMPREHENSIVE LOSS | ||
Net loss | $ (1,357) | $ (2,392) |
Foreign currency translation adjustments, net of income tax benefit of $11 and $42 | (309) | (77) |
Comprehensive loss | $ (1,666) | $ (2,469) |
Condensed Consolidated Statements Of Operations And Statements Of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Condensed Consolidated Statements Of Operations And Statements Of Comprehensive Loss [Abstract] | ||
Foreign currency translation adjustments, tax | $ 11 | $ 42 |
Basis Of Presentation |
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Basis Of Presentation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis Of Presentation | NOTE 1 – BASIS OF PRESENTATION General Franklin Covey Co. (hereafter referred to as us, we, our, or the Company) is a global company focused on organizational performance improvement. Our mission is to “enable greatness in people and organizations everywhere,” and our global structure is designed to help individuals and organizations achieve sustained superior performance through changes in human behavior. We are fundamentally a content and solutions company, and we believe that our offerings and services create the connection between capabilities and results. Our expertise extends to seven crucial areas: Leadership, Execution, Productivity, Trust, Educational Improvement, Sales Performance, and Customer Loyalty. We believe that our clients are able to utilize our content to create cultures whose hallmarks are high-performing, collaborative individuals, led by effective, trust-building leaders who execute with excellence and deliver measurably improved results for all of their key stakeholders. In the training and consulting marketplace, we believe there are three important characteristics that distinguish us from our competitors.
We are committed to, and measure ourselves by, our clients’ achievement of transformational results. We have some of the best-known offerings in the training industry, including a suite of individual-effectiveness and leadership-development training content based on the best-selling books, The 7 Habits of Highly Effective People, The Speed of Trust, and The 4 Disciplines of Execution, and proprietary content in the areas of Execution, Sales Performance, Productivity, Educational Improvement, and Customer Loyalty. Our offerings are described in further detail at www.franklincovey.com. The information posted on our website is not incorporated into this report. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods indicated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the fiscal year ended August 31, 2018. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Our fiscal year ends on August 31 of each year and our fiscal quarters end on the last day of November, February, and May of each year. The results of operations for the quarter ended November 30, 2018 are not necessarily indicative of results expected for the entire fiscal year ending August 31, 2019, or for any future periods. Accounting Pronouncements Issued and Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). This new standard was issued in conjunction with the International Accounting Standards Board (IASB) and is designed to create a single, principles-based process by which all businesses calculate revenue. The core principle of this standard is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The new standard replaces numerous individual, industry-specific revenue rules found in generally accepted accounting principles in the United States. We adopted ASU No. 2014-09 on September 1, 2018 using the “modified retrospective” approach. Under this transition method, we applied the new standard to contracts that were not completed as of the adoption date and recognized a cumulative effect adjustment which reduced our retained earnings by $4.1 million ($3.1 million, net of tax) on September 1, 2018, which primarily consisted of initial licensing fees on international locations. The comparative prior period information has not been restated and continues to be presented according to accounting standards for revenue recognition in effect during the period presented. The primary impact of ASU No. 2014-09 on our revenue recognition policies is a change in the way we account for our initial license fee associated with licensing an international location. The Company previously recorded the non-refundable initial license fee from licensing an international location as revenue at the time the license period begins if all other revenue requirements had been met. However, under Topic 606, the Company will recognize revenue on the upfront fees over the course of the initial contract. Under Topic 606, we will account for the All Access Pass (AAP) as a single performance obligation and recognize the associated transaction price on a straight-line basis over the term of the underlying contract. This determination was reached after considering that our web-based functionality and content, in combination with our intellectual property, each represent inputs that transform into a combined output that represents the intended outcome of the AAP, which is to provide a continuously accessible, customized, and dynamic learning and development solution only accessible through the AAP platform. We do not expect the accounting for fulfillment costs or costs incurred to obtain a contract to be materially affected in any period due to the adoption of ASU 2014-09. While we do not believe the adoption of ASU 2014-09 will materially impact our annual financial statements, the change in the timing of revenue recognition of certain contracts could result in significant quarter-to-quarter fluctuations in revenue. See Note 2 for further details regarding our revenue recognition accounting policies under Topic 606. The cumulative after-tax effects of the changes made to our consolidated balance sheet from the adoption of Topic 606 were as follows (in thousands):
The following line items in our condensed consolidated statement of operations were impacted by the adoption of the new standard for the quarter ended November 30, 2018 (in thousands, except per-share data):
Selected condensed consolidated balance sheet line items as of November 30, 2018, which were impacted by the adoption of the new standard, are as follows (in thousands):
The adoption of ASC Topic 606 did not have a material impact on our cash flows from operating, investing, or financing activities. Accounting Pronouncements Issued Not Yet Adopted On February 25, 2016, the FASB issued ASU No. 2016-02, Leases. The new lease accounting standard is the result of a collaborative effort with the IASB (similar to the new revenue standard described above), although some differences remain between the two standards. This new standard will affect all entities that lease assets and will require lessees to recognize a lease liability and a right-of-use asset for all leases (except for short-term leases that have a duration of less than one year) as of the date on which the lessor makes the underlying asset available to the lessee. For lessors, accounting for leases is substantially the same as in prior periods. For public companies, the new lease standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted for all entities. We expect to adopt the provisions of ASU 2016-02 on September 1, 2019, and we may elect to apply the new standard on a prospective basis. At November 30, 2018, our leases primarily consist of the lease on our corporate campus, which is accounted for as a financing obligation on our consolidated balance sheets and operating leases for office and warehousing space. We expect the adoption of this new standard will increase our reported assets and liabilities since we will record the lease obligation and a corresponding right of use asset on our balance sheet for leases that are currently accounted for as operating leases. However, as of November 30, 2018, we have not yet elected the transition method or determined the full impact that the adoption of ASU 2016-02 will have on our consolidated financial statements.
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Revenue Recognition |
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Revenue Recognition [Abstract] | |||||||||||||||||||||
Revenue Recognition | NOTE 2 – REVENUE RECOGNITION We account for revenue in accordance with ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which was adopted on September 1, 2018 using the modified retrospective method (Note 1). We earn revenue from contracts with customers primarily through the delivery of our All Access Pass and The Leader in Me subscription offerings, through the delivery of training days and training course materials, and through the licensing of rights to sell our content into geographic locations where the Company does not maintain a direct office. We also earn revenues from leasing arrangements that are not accounted for under Topic 606. Returns and refunds are generally immaterial, and we do not have any significant warranty obligations. Under Topic 606, we recognize revenue upon the transfer of control of promised products and services to customers in an amount equal to the amount of consideration the Company expects to receive in exchange for those products or services. Although rare, if the consideration promised in a contract includes variable amounts, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained. We include the variable consideration in the transaction price only to the extent that it is probable a significant reversal of the amount of cumulative revenue recognized will not occur. We determine the amount of revenue to be recognized through application of the following steps:
Taxes assessed by a government authority that are collected from a customer are excluded from net revenue. Subscription and Support Revenues Subscription revenues primarily relate to the Company’s All Access Pass and The Leader in Me subscription offerings. We have determined that it is most appropriate to account for the AAP subscription as single performance obligation and recognize the associated transaction price ratably over the term of the underlying contract beginning on the commencement date of each contract, which is the date the Company’s platforms and resources are made available to the customer. This determination was reached after considering that our web-based functionality and content, in combination with our intellectual property, each represent inputs that transform into a combined output that represents the intended outcome of the AAP, which is to provide a continuously accessible, customized, and dynamic learning and development solution only accessible through the AAP platform. We typically invoice our customers annually upon execution of the contract or subsequent renewals. Amounts that have been invoiced are recorded in accounts receivable and in unearned revenue or revenue, depending on whether transfer of control has occurred. Training Days and Product Sales We deliver Company-led training days from our offerings, such as The 7 Habits of Highly Effect People, at a customer’s location based upon a daily consultant rate and a set price for training materials. These revenues are recognized as the training days occur and the services are performed. Customers also have the option to purchase training materials and present our offerings through internal facilitators and not through the use of a Franklin Covey consultant. Revenue is recognized from these product sales when the materials are shipped. Shipping revenues associated with product sales are recorded in revenue with the corresponding shipping cost being recorded as a component of cost of sales. Geographic Location License Rights Our international strategy includes the use of licensees in countries where we do not have a wholly-owned direct office. Licensee companies are unrelated entities that have been granted a license to translate our content and offerings, adapt the content to the local culture, and sell our content in a specific country or region. Licensees are required to pay us royalties based upon a percentage of their sales to clients. We recognize royalty income each reporting period based upon the sales information reported to us from our licensees. When sales information is not received from a particular licensee at the end of a reporting period, the Company estimates the amount of royalties to be received for the period that is being reported based upon prior forecasts and historical performance. These estimated royalties are recorded as revenue and are adjusted, if necessary, in the subsequent period. The primary impact of ASU No 2014-09 on our financial statements is a change in the way we account for the initial license fee associated with licensing an international location. The Company previously recorded the non-refundable initial license fee from licensing an international location as revenue at the time the license period began if all other revenue requirements had been met. However, under Topic 606, we recognize revenue on the upfront fees over the course of the initial term. Contracts with Multiple Performance Obligations We enter into contracts that often include multiple performance obligations. A performance obligation is a promise in a contract to transfer products or services that are distinct, or that are distinct within the context of the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied. Determining whether products and services meet the distinct criteria that should be accounted for separately or combined as one unit of accounting requires significant judgment. When determining whether goods and services meet the distinct criteria we consider various factors for each agreement including the availability of the services and the nature of the offerings and services. We allocate the transaction price to each performance obligation on a relative standalone selling price (SSP) basis. Significant judgment is required to determine the SSP for each distinct performance obligation. The SSP is the price which the Company would sell a promised product or service separately to a customer. In determining the SSP, we consider the size and volume of transactions, the geographic location, price lists, historical sales, and contract prices. We may modify our pricing from time-to-time in the future, which could result in changes to the SSP. Contract Balances As described above, subscription revenue is generally recognized ratably over the term of the underlying contract beginning on the commencement date of each contract. The timing of when these contracts are invoiced, cash is collected, and revenue is recognized impacts our accounts receivable and deferred revenue accounts. We generally bill our clients in advance for subscription offerings or within the month that the training and products are delivered. As such, consideration due to the Company for work performed is included in accounts receivable and we do not have a significant amount of contract assets. Our receivables are generally collected within 30 to 120 days but typically no longer than 12 months. Deferred revenue primarily consists of billings or payments received in advance of revenue being recognized from our subscription offerings. Furthermore, our clients, to expend funds in a particular budget cycle, may prepay for services or products which are also a component of our consolidated deferred revenue. Our deferred revenue totaled $49.5 million at November 30, 2018 and $52.9 million at August 31, 2018, of which $3.3 million and $1.0 million were classified as components of other long-term liabilities at November 30, 2018 and August 31, 2018, respectively. The amount of deferred revenue that was generated from subscription offerings totaled $41.4 million at November 30, 2018 and $48.4 million at August 31, 2018. During the quarter ended November 30, 2018 we recognized $18.4 million of the deferred subscription revenue reported at August 31, 2018.
Remaining Performance Obligations When possible, we enter into multi-year non-cancellable contracts which are invoiced either upon execution of the contract or at the beginning of each annual contract period. Topic 606 introduced the concept of remaining transaction price which represents contracted revenue that has not yet been recognized, including unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price is influenced by factors such as seasonality, the average length of the contract term, and the ability of the Company to continue to enter multi-year non-cancellable contracts. At November 30, 2018 we had $65.8 million of remaining performance obligations, including the amount of deferred revenue related to our subscription offerings, of which approximately 75 percent will be recognized over the next 12 months. Cost Capitalized to Obtain Contracts We capitalize the incremental costs of obtaining non-cancellable subscription revenue, primarily from the All Access Pass and The Leader in Me subscription offerings. These incremental costs consist of sales commissions paid to our direct sales force and include the associated payroll taxes and fringe benefits. As the same commission rates are paid annually when the customer renews their contract, the capitalized commission costs are amortized ratably on an annual basis. At November 30, 2018 the Company has capitalized $6.1 million of direct sales force commissions, which are included as a component of other current assets on our condensed consolidated balance sheet. During the quarter, the Company capitalized $1.6 million of costs to obtain revenue contracts and amortized $2.6 million to selling, general, and administrative expense. Refer to Note 8 (Segment Information) to these condensed consolidated financial statements for our disaggregated revenues.
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Inventories |
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Inventories | NOTE 3 – INVENTORIES Inventories are stated at the lower of cost or market, cost being determined using the first-in, first-out method, and were comprised of the following (in thousands):
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Fair Value Of Financial Instruments |
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Fair Value Of Financial Instruments | NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS At November 30, 2018, the carrying value of our financial instruments approximated their fair values. The fair values of our contingent consideration liabilities from business acquisitions are considered “level 3” measurements because we use various estimates in the valuation models to project the timing and amount of future contingent payments. The valuation models described in our annual report on Form 10-K for the fiscal year ended August 31, 2018 were utilized during the current period (with updated estimates) to arrive at the estimated fair value of the contingent consideration liabilities on the reporting date. The fair value of the contingent consideration liabilities from the acquisitions of Robert Gregory Partners (RGP) and Jhana Education (Jhana) changed as follows during the quarter ended November 30, 2018 (in thousands):
Approximately $1.0 million of the Jhana contingent consideration liability was recorded as a component of accrued liabilities on our condensed consolidated balance sheet at November 30, 2018. The remainder of our contingent consideration liabilities are classified as other long-term liabilities. Adjustments to the fair value of our contingent consideration liabilities are included in selling, general, and administrative expense in the accompanying condensed consolidated statements of operations.
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Stock-Based Compensation |
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Stock-Based Compensation | NOTE 5 – STOCK-BASED COMPENSATION The cost of our stock-based compensation plans is included in selling, general, and administrative expense in the accompanying condensed consolidated statements of operations. Our stock-based compensation expense was comprised of the following for the periods presented (in thousands):
During the quarter ended November 30, 2018, we issued 11,129 shares of our common stock to employees under various stock-based compensation arrangements. Our stock-based compensation plans allow shares to be withheld to cover statutory income taxes if so elected by the award recipient. During the quarter ended November 30, 2018, we withheld 320 shares of our common stock for statutory taxes on stock-based compensation awards that vested during fiscal 2019. The following is a description of the developments in our stock-based compensation plans during the quarter ended November 30, 2018. New Long-Term Incentive Plan Award On October 1, 2018, the Organization and Compensation Committee (the Compensation Committee) of the Board of Directors granted a new long-term incentive plan (LTIP) award to our executive officers and members of senior management. The fiscal 2019 LTIP award is similar to the fiscal 2018 LTIP award and has three tranches, one of which has a time-based vesting condition and two of which have performance-based vesting conditions as described below:
The fiscal 2019 LTIP has a three-year life and expires on August 31, 2021. Compensation expense recognized during the quarter ended November 30, 2018, for long-term incentive plan awards in the table above includes expense related to awards granted in previous periods for which the performance conditions we believe are probable of being achieved. Employee Stock Purchase Plan We have an employee stock purchase plan (ESPP) that offers qualified employees the opportunity to purchase shares of our common stock at a price equal to 85 percent of the average fair market value of our common stock on the last trading day of each fiscal quarter. During the quarter ended November 30, 2018, we issued 10,488 shares of our common stock to participants in the ESPP.
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Income Taxes |
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Income Taxes [Abstract] | |
Income Taxes | NOTE 6 – INCOME TAXES The Tax Cut and Jobs Act (the 2017 Tax Act) was signed into law on December 22, 2017. The 2017 Tax Act significantly revises the U.S. corporate income tax code by, among other things, lowering the statutory corporate tax rate from 35 percent to 21 percent; eliminating certain deductions; imposing a mandatory one-time transition tax, or deemed repatriation tax, on accumulated earnings of foreign subsidiaries as of 2017 that were previously tax deferred; introducing new tax regimes; and changing how foreign earnings are subject to U.S. tax. Since we have an August 31 fiscal year end, the lower corporate income tax rate was phased in, resulting in a U.S. statutory federal rate of 25.7 percent during fiscal 2018 and a 21 percent rate for fiscal 2019 and subsequent fiscal years. Other provisions of the 2017 Tax Act, which were not effective for us in fiscal 2018, are now effective for fiscal 2019 and future years, including limitations on the deductibility of interest and executive compensation as well as anti-deferral provisions on Global Intangible Low-Taxed Income (GILTI). We recorded $0.1 million of income tax expense during the quarter ended November 30, 2018 on a pre-tax loss of $1.3 million, resulting in a negative effective tax benefit rate of (8.0) percent. Our effective benefit rate was adversely affected by GILTI tax expense, non-deductible expenses, and effective foreign tax rates which are significantly higher than the U.S. statutory rate. We recorded GILTI tax expense totaling $0.1 million for the quarter, based on the earnings of our foreign subsidiaries. Net operating loss carryforwards prevented us from using foreign tax credits against this tax. Unlike regular foreign tax credits, we permanently forego any unused foreign tax credits applicable to GILTI.
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Loss Per Share |
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Loss Per Share |
NOTE 7 – LOSS PER SHARE The following schedule shows the calculation of loss per share for the periods presented (in thousands, except per-share amounts).
Since we incurred a net loss for the quarter ended November 30, 2018, no potentially dilutive securities are included in the calculation of diluted loss per share because such effect would be anti-dilutive. The number of dilutive stock options and other stock-based awards for the quarter ended November 30, 2018 would have been approximately 183,000 shares.
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Segment Information |
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Segment Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | NOTE 8 – SEGMENT INFORMATION Segment Information Our sales are primarily comprised of training and consulting services. 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 now comprised of three reportable segments and a corporate services group. The following is a brief description of our reportable segments:
We determined that the Company’s chief operating decision maker is 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 disclosed by other companies. For reporting purposes, our consolidated Adjusted EBITDA may be calculated as our income or loss from operations excluding stock-based compensation, depreciation expense, amortization expense, and certain other charges such as adjustments for changes in the fair value of contingent 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 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).
A reconciliation of our consolidated Adjusted EBITDA to consolidated net loss is provided below (in thousands).
Revenue by Category The following table presents our revenue disaggregated by geographic region (in thousands).
The following table presents our revenue disaggregated by type of service (in thousands).
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Investment In FC Organizational Products |
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Investment In FC Organizational Products [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Investment In FC Organizational Products | NOTE 9 – INVESTMENT IN FC ORGANIZATIONAL PRODUCTS We own a 19.5 percent interest in FC Organizational Products (FCOP), an entity that purchased substantially all of our consumer solution business unit assets in fiscal 2008 for the purpose of selling planners and related organizational products under a comprehensive licensing agreement. Due to significant operating losses incurred after the establishment of FCOP, we reconsidered whether FCOP was a variable interest entity as defined under ASC 810, and determined that FCOP was a variable interest entity. We further determined that we are not the primary beneficiary of FCOP because we do not have the ability to direct the activities that most significantly impact FCOP’s economic performance, which primarily consist of the day-to-day sale of planning products and related accessories, and we do not have an obligation to absorb losses or the right to receive benefits from FCOP that could potentially be significant. We account for our investment in FCOP using the equity method of accounting. However, we have not recorded our share of FCOP’s losses in the accompanying condensed consolidated statements of operations because we have impaired and written off investment balances in previous periods, as defined within the applicable accounting guidance, in excess of our share of FCOP’s losses through November 30, 2018. The operations of FCOP are primarily financed by the sale of planning products and accessories in the normal course of business. The majority of FCOP’s sales and cash flows are seasonal and occur between October and January. Accordingly, we generally receive payment on outstanding receivables during our second and third quarters of each fiscal year. Receivables from FCOP are reported as components of other current and other long-term assets based on their expected payment dates and consisted of the following at dates indicated (in thousands):
Amounts receivable from FCOP above are presented net of $0.2 million discount at November 30, 2018 and net of $0.3 million discount at August 31, 2018.
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Subsequent Event |
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Subsequent Event [Abstract] | |
Subsequent Event | NOTE 10 – SUBSEQUENT EVENT On December 5, 2018, we entered into an agreement to purchase the outstanding equity of the existing licensee that serves Germany, Switzerland, and Austria. We intend to transition the licensee operation to a directly owned office similar to the fiscal 2017 transition of the licensee operation in China to a directly owned office. The purchase price was $0.2 million, plus additional costs for severance, legal, and other related acquisition expenses. These additional costs are expected to total approximately $0.8 million and they will be expensed as incurred in selling, general, and administrative expense. The acquisition of this licensee is not expected to generate a material amount of intangible assets and there is no contingent consideration associated with the purchase. This acquisition will provide us with the opportunity to operate directly owned offices in four of the top global economic markets and is expected to provide future growth opportunities.
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Basis Of Presentation (Policy) |
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Basis Of Presentation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General | General Franklin Covey Co. (hereafter referred to as us, we, our, or the Company) is a global company focused on organizational performance improvement. Our mission is to “enable greatness in people and organizations everywhere,” and our global structure is designed to help individuals and organizations achieve sustained superior performance through changes in human behavior. We are fundamentally a content and solutions company, and we believe that our offerings and services create the connection between capabilities and results. Our expertise extends to seven crucial areas: Leadership, Execution, Productivity, Trust, Educational Improvement, Sales Performance, and Customer Loyalty. We believe that our clients are able to utilize our content to create cultures whose hallmarks are high-performing, collaborative individuals, led by effective, trust-building leaders who execute with excellence and deliver measurably improved results for all of their key stakeholders. In the training and consulting marketplace, we believe there are three important characteristics that distinguish us from our competitors.
We are committed to, and measure ourselves by, our clients’ achievement of transformational results. We have some of the best-known offerings in the training industry, including a suite of individual-effectiveness and leadership-development training content based on the best-selling books, The 7 Habits of Highly Effective People, The Speed of Trust, and The 4 Disciplines of Execution, and proprietary content in the areas of Execution, Sales Performance, Productivity, Educational Improvement, and Customer Loyalty. Our offerings are described in further detail at www.franklincovey.com. The information posted on our website is not incorporated into this report. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods indicated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the fiscal year ended August 31, 2018. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Our fiscal year ends on August 31 of each year and our fiscal quarters end on the last day of November, February, and May of each year. The results of operations for the quarter ended November 30, 2018 are not necessarily indicative of results expected for the entire fiscal year ending August 31, 2019, or for any future periods.
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Accounting Pronouncements Issued And Adopted | Accounting Pronouncements Issued and Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). This new standard was issued in conjunction with the International Accounting Standards Board (IASB) and is designed to create a single, principles-based process by which all businesses calculate revenue. The core principle of this standard is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The new standard replaces numerous individual, industry-specific revenue rules found in generally accepted accounting principles in the United States. We adopted ASU No. 2014-09 on September 1, 2018 using the “modified retrospective” approach. Under this transition method, we applied the new standard to contracts that were not completed as of the adoption date and recognized a cumulative effect adjustment which reduced our retained earnings by $4.1 million ($3.1 million, net of tax) on September 1, 2018, which primarily consisted of initial licensing fees on international locations. The comparative prior period information has not been restated and continues to be presented according to accounting standards for revenue recognition in effect during the period presented. The primary impact of ASU No. 2014-09 on our revenue recognition policies is a change in the way we account for our initial license fee associated with licensing an international location. The Company previously recorded the non-refundable initial license fee from licensing an international location as revenue at the time the license period begins if all other revenue requirements had been met. However, under Topic 606, the Company will recognize revenue on the upfront fees over the course of the initial contract. Under Topic 606, we will account for the All Access Pass (AAP) as a single performance obligation and recognize the associated transaction price on a straight-line basis over the term of the underlying contract. This determination was reached after considering that our web-based functionality and content, in combination with our intellectual property, each represent inputs that transform into a combined output that represents the intended outcome of the AAP, which is to provide a continuously accessible, customized, and dynamic learning and development solution only accessible through the AAP platform. We do not expect the accounting for fulfillment costs or costs incurred to obtain a contract to be materially affected in any period due to the adoption of ASU 2014-09. While we do not believe the adoption of ASU 2014-09 will materially impact our annual financial statements, the change in the timing of revenue recognition of certain contracts could result in significant quarter-to-quarter fluctuations in revenue. See Note 2 for further details regarding our revenue recognition accounting policies under Topic 606. The cumulative after-tax effects of the changes made to our consolidated balance sheet from the adoption of Topic 606 were as follows (in thousands):
The following line items in our condensed consolidated statement of operations were impacted by the adoption of the new standard for the quarter ended November 30, 2018 (in thousands, except per-share data):
Selected condensed consolidated balance sheet line items as of November 30, 2018, which were impacted by the adoption of the new standard, are as follows (in thousands):
The adoption of ASC Topic 606 did not have a material impact on our cash flows from operating, investing, or financing activities.
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Accounting Pronouncements Issued Not Yet Adopted | Accounting Pronouncements Issued Not Yet Adopted On February 25, 2016, the FASB issued ASU No. 2016-02, Leases. The new lease accounting standard is the result of a collaborative effort with the IASB (similar to the new revenue standard described above), although some differences remain between the two standards. This new standard will affect all entities that lease assets and will require lessees to recognize a lease liability and a right-of-use asset for all leases (except for short-term leases that have a duration of less than one year) as of the date on which the lessor makes the underlying asset available to the lessee. For lessors, accounting for leases is substantially the same as in prior periods. For public companies, the new lease standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted for all entities. We expect to adopt the provisions of ASU 2016-02 on September 1, 2019, and we may elect to apply the new standard on a prospective basis. At November 30, 2018, our leases primarily consist of the lease on our corporate campus, which is accounted for as a financing obligation on our consolidated balance sheets and operating leases for office and warehousing space. We expect the adoption of this new standard will increase our reported assets and liabilities since we will record the lease obligation and a corresponding right of use asset on our balance sheet for leases that are currently accounted for as operating leases. However, as of November 30, 2018, we have not yet elected the transition method or determined the full impact that the adoption of ASU 2016-02 will have on our consolidated financial statements.
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Basis Of Presentation (Tables) |
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Basis Of Presentation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Cumulative After-Tax Effects On Balance Sheet |
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Schedule Of Financial Statements Impacted By Adoption Of New Accounting Standard | The following line items in our condensed consolidated statement of operations were impacted by the adoption of the new standard for the quarter ended November 30, 2018 (in thousands, except per-share data):
Selected condensed consolidated balance sheet line items as of November 30, 2018, which were impacted by the adoption of the new standard, are as follows (in thousands):
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Inventories (Tables) |
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Fair Value Of Financial Instruments (Tables) |
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Schedule Of Contingent Consideration Liability |
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Stock-Based Compensation (Tables) |
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Total Cost Of Stock-Based Compensation |
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Loss Per Share (Tables) |
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Computation Of Loss Per Share |
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Segment Information (Tables) |
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Segment Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Segment Operations |
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Reconciliation Of Adjusted EBITDA |
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Disaggregation Of Revenue | The following table presents our revenue disaggregated by geographic region (in thousands).
The following table presents our revenue disaggregated by type of service (in thousands).
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Investment In FC Organizational Products (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||
Investment In FC Organizational Products [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Components Of Other Current And Other Long-Term Assets |
|
Basis Of Presentation (Narrative) (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 30, 2018
country
item
|
Sep. 01, 2018
USD ($)
|
|
Business Acquisition [Line Items] | ||
Number of areas of expertise | item | 7 | |
Number of important distinguishing characteristics from competitors | item | 3 | |
Accounting Standards Update 2014-09 [Member] | ||
Business Acquisition [Line Items] | ||
Cumulative effect on retained earnings | $ | $ 4.1 | |
Cumulative effect on retained earnings, net of tax | $ | $ 3.1 | |
Minimum [Member] | ||
Business Acquisition [Line Items] | ||
Number of countries in which entity operates | country | 150 |
Basis Of Presentation (Schedule Of Cumulative After-Tax Effects On Balance Sheet) (Details) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Sep. 01, 2018 |
Aug. 31, 2018 |
---|---|---|---|
Assets: | |||
Deferred income tax assets | $ 4,877 | $ 3,222 | |
Liabilities and Shareholders' Equity: | |||
Deferred revenue | 46,221 | 51,888 | |
Other liabilities | 7,747 | 5,501 | |
Retained earnings | 59,069 | 63,569 | |
Accounting Standards Update 2014-09 [Member] | |||
Assets: | |||
Other current assets | $ 11,002 | 10,893 | |
Deferred income tax assets | 4,877 | 4,227 | 3,222 |
Liabilities and Shareholders' Equity: | |||
Deferred revenue | 46,221 | 53,896 | 51,888 |
Other liabilities | 7,747 | 7,750 | 5,501 |
Retained earnings | $ 59,069 | 60,426 | $ 63,569 |
ASC 606 Adjustments [Member] | Accounting Standards Update 2014-09 [Member] | |||
Assets: | |||
Other current assets | 109 | ||
Deferred income tax assets | 1,005 | ||
Liabilities and Shareholders' Equity: | |||
Deferred revenue | 2,008 | ||
Other liabilities | 2,249 | ||
Retained earnings | $ (3,143) |
Revenue Recognition (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Aug. 31, 2018 |
|
Deferred revenue | $ 49.5 | $ 52.9 |
Other long-term liabilities | 3.3 | 1.0 |
Remaining performance obligations | $ 65.8 | |
Percentage of remaining performance obligations will be recognized | 75.00% | |
Minimum [Member] | ||
Receivables collection period | 30 days | |
Maximum [Member] | ||
Receivables collection period | 120 days | |
Direct Sales Force Commissions [Member] | ||
Capitalized contract cost | $ 6.1 | |
Obtain Revenue Contracts [Member] | ||
Capitalized contract cost | 1.6 | |
Selling, General, And Administrative Expense [Member] | ||
Capitalized contract cost, amortized | 2.6 | |
Subscription [Member] | ||
Deferred revenue | 41.4 | $ 48.4 |
Deferred revenue recognized | $ 18.4 |
Inventories (Components Of Inventories) (Details) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Aug. 31, 2018 |
Aug. 31, 2017 |
---|---|---|---|
Inventories [Abstract] | |||
Finished goods | $ 2,897 | $ 3,130 | |
Raw materials | 23 | 30 | |
Inventories | $ 2,920 | $ 3,160 | $ 3,160 |
Fair Value Of Financial Instruments (Narrative) (Details) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Aug. 31, 2018 |
---|---|---|
Contingent consideration | $ 4,355 | $ 4,548 |
Jhana Education [Member] | ||
Contingent consideration | 3,771 | $ 3,942 |
Jhana Education [Member] | Accrued Liabilities [Member] | ||
Contingent consideration | $ 1,000 |
Fair Value Of Financial Instruments (Schedule Of Contingent Consideration Liability) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration liability at beginning of year | $ 4,548 | |
Change in Fair Value | 24 | $ 176 |
Payments | (217) | |
Contingent consideration liability at end of quarter | 4,355 | |
Robert Gregory Partners, LLC [Member] | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration liability at beginning of year | 606 | |
Change in Fair Value | (22) | |
Payments | ||
Contingent consideration liability at end of quarter | 584 | |
Jhana Education [Member] | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Contingent consideration liability at beginning of year | 3,942 | |
Change in Fair Value | 46 | |
Payments | (217) | |
Contingent consideration liability at end of quarter | $ 3,771 |
Stock-Based Compensation (Total Cost Of Stock-Based Compensation) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | $ 946 | $ 956 |
Long-Term Incentive Awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | 733 | 791 |
Unvested Share Awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | 175 | 131 |
Employee Stock Purchase Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation cost | $ 38 | $ 34 |
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Aug. 31, 2019 |
Aug. 31, 2018 |
Dec. 31, 2017 |
|
Income Taxes [Line Items] | |||||
Federal statutory income tax rate | 25.70% | 35.00% | |||
Income tax expense | $ 100 | $ (1,348) | |||
Pre-tax loss | $ (1,257) | $ (3,740) | |||
Negative effective tax benefit rate affected by GILTI | (8.00%) | ||||
GILTI tax expense | $ 100 | ||||
Scenario, Forecast [Member] | |||||
Income Taxes [Line Items] | |||||
Federal statutory income tax rate | 21.00% |
Loss Per Share (Narrative) (Details) |
3 Months Ended |
---|---|
Nov. 30, 2018
shares
| |
Loss Per Share [Abstract] | |
Potentially dilutive securities were included in the calculation of diluted loss per share | 0 |
Dilutive securities that would have been included in the computation of diluted EPS | 183,000 |
Loss Per Share (Computation Of Loss Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Numerator for basic and diluted loss per share: | ||
Net loss | $ (1,357) | $ (2,392) |
Denominator for basic and diluted loss per share: | ||
Basic weighted average shares outstanding | 13,917 | 13,725 |
Effect of dilutive securities: | ||
Stock options and other stock-based awards | ||
Diluted weighted average shares outstanding | 13,917 | 13,725 |
EPS Calculations: | ||
Net loss per share: Basic and diluted | $ (0.10) | $ (0.17) |
Segment Information (Narrative) (Details) |
3 Months Ended |
---|---|
Nov. 30, 2018
segment
item
| |
Segment Information [Abstract] | |
Number of divisions | 2 |
Number of operating reportable segments | segment | 3 |
Number of corporate services group | 1 |
Segment Information (Reconciliation Of Adjusted EBITDA) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||
Consolidated Adjusted EBITDA | $ 3,169 | $ 602 |
Stock-based compensation expense | (946) | (956) |
Increase in contingent consideration liabilities | (24) | (176) |
Licensee transition costs | (60) | |
ERP system implementation costs | (426) | |
Depreciation | (1,554) | (901) |
Amortization | (1,238) | (1,395) |
Loss from operations | (653) | (3,252) |
Interest income | 28 | 61 |
Interest expense | (632) | (549) |
Loss before income taxes | (1,257) | (3,740) |
Income tax benefit (provision) | (100) | 1,348 |
Net loss | (1,357) | (2,392) |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Consolidated Adjusted EBITDA | 5,776 | 3,820 |
Corporate And Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Consolidated Adjusted EBITDA | $ (2,607) | $ (3,218) |
Segment Information (Disaggregation Of Revenue By Geographic Region) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 53,829 | $ 47,932 |
Americas [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 40,918 | 35,965 |
Asia Pacific [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 9,280 | 8,780 |
Europe/Middle East/Africa [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 3,631 | $ 3,187 |
Investment In FC Organizational Products (Narrative) (Details) - FCOP [Member] - USD ($) $ in Millions |
Nov. 30, 2018 |
Aug. 31, 2018 |
---|---|---|
Related Party Transaction [Line Items] | ||
Percent ownership interest in related party | 19.50% | |
Discount on receivable from related party | $ 0.2 | $ 0.3 |
Investment In FC Organizational Products (Components Of Other Current And Other Long-Term Assets) (Details) - USD ($) $ in Thousands |
Nov. 30, 2018 |
Aug. 31, 2018 |
---|---|---|
Other Assets [Line Items] | ||
Other long-term assets | $ 12,343 | $ 12,935 |
FCOP [Member] | ||
Other Assets [Line Items] | ||
Other current assets | 1,294 | 1,123 |
Other long-term assets | 427 | 411 |
Other assets | $ 1,721 | $ 1,534 |
Subsequent Event (Details) - Subsequent Event [Member] $ in Millions |
Dec. 05, 2018
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Purchase price | $ 0.2 |
Additional costs | $ 0.8 |
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