Third Quarter Financial Results
The Company’s consolidated sales increased to $41.3 million in the third quarter of fiscal 2012 compared with $40.9 million in the same quarter of fiscal 2011. Sales increased through all of the Company’s major sales channels when compared with the prior year. Excluding the impact of anticipated revenue declines from contracts with a governmental agency, sales through the Company’s U.S./Canada direct offices increased 5% over fiscal 2011. International direct office sales increased during the quarter, driven by a $0.6 million improvement in sales in Japan, and many of the Company’s international licensee partners also recognized stronger sales during the quarter, resulting in a 6% increase in royalty revenues. The Company’s National Account practices reported a 13% increase in revenues, driven by a $0.9 million increase in revenues from the Education practice. Self-funded marketing revenues, which include public training programs, book sales, audio sales, publication royalties, and delivered speeches, decreased by $1.3 million primarily due to royalties related to new books received in fiscal 2011 that did not repeat in the third quarter of fiscal 2012.
Gross profit increased to $26.1 million compared with $25.8 million, primarily due to increased consolidated sales. The Company’s gross margin improved slightly to 63.3% of sales compared with 63.0% of sales in the prior year.
Selling, general and administrative expenses (SG&A) increased by $0.4 million primarily due to a $0.7 million increase in advertising and promotion expense primarily for new strategic marketing initiatives and a $0.6 million increase in non-cash share-based compensation expense primarily resulting from performance awards granted in fiscal 2011. These increases were partially offset by a $0.6 million decrease in associate costs primarily due to reduced bonuses and commissions compared with prior year bonuses and commissions generated by the significant increase in sales during fiscal 2011 and by ongoing cost reduction efforts in various areas of the Company’s operations. Depreciation expense decreased by $0.3 million due to the full depreciation of certain assets during the quarter and amortization expense declined by $0.3 million compared with the prior year due to the full amortization of certain intangible assets in late fiscal 2011.
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