Tigrent Inc. Reports 2010 Results

Apr 04, 2011, 19:32 ET from Tigrent Inc.

CAPE CORAL, Fla., April 4, 2011 /PRNewswire/ -- Tigrent Inc. (OTC: TIGE) today announced that it filed its Annual Report on Form 10-K for the fiscal year ended December 30, 2010 (the "10-K") with the Securities and Exchange Commission (the "SEC") on March 31, 2011 reporting its 2010 financial results.

Highlights of the reported results include revenue in 2010 of $102.6 million (under generally accepted accounting principles or "GAAP") compared with revenue of $170.9 million in 2009, a decrease of 40%. Cash sales (a non-GAAP financial measure, defined below) decreased 38%, from $136.1 million to $83.9 million.  The decrease in sales was primarily due to the reduction in the number of live events held in an effort to improve the profitability of each event in the face of continued soft demand. Other factors contributing to the decreased GAAP revenue recognized in 2010 included a decline in breakage revenue (approximately $19.0 million) and a decline in electronic media deliveries due to production delays (approximately $17.6 million).

The Company reported operating income of $0.5 million and a net loss of $0.9 million in 2010.  Adjusted EBITDA (a non-GAAP financial measure, defined below) for 2010 improved to a negative $6.7 million from a negative $7.3 million in 2009.  This reflects the favorable impact of staff reductions and other cost-cutting measures, as well as improved media-spending efficiency.  Declines from the prior year's GAAP operating income of $11.9 million and net income of $10.1 million were primarily due to the recording of significantly lower breakage revenue and reduced electronic media deliveries in 2010, as discussed above.

"In 2010, we right-sized the business to align with the demand in the marketplace, which required deep cuts in our overhead costs and significant reductions in our live event schedule," said Steven C. Barre, Tigrent's Chief Executive Officer.  "Headcount fell by 46%, representing an annual estimated cost savings of approximately $5.8 million, excluding the one-time impact of severance expense of approximately $1.0 million.  We anticipate our 2011 cash sales to remain relatively flat with 2010.  We expect that a full year's benefit from the staffing and other cost reduction efforts that were implemented throughout 2010, as more fully discussed in our 10-K, will drive improved profitability in 2011."

The foregoing discussion of 2010 financial results is a summary.  For a full discussion of 2010 year end results, please refer to the 10-K which is available through the Company's website at http://investors.tigrent.com.


The Company's 2011 operating plan, as approved by the Board of Directors, calls for total cash sales of $81.5 million and adjusted EBITDA of $4.0 million, as those terms are defined below. The 2011 operating plan assumes, among other things, that the Company can effectively execute the business initiatives outlined in the 10-K and does not encounter material negative outcomes as a result of the risks and uncertainties implicit in any plan or those described in the Risk Factors section contained in the 10-K.  For the first quarter of 2011, the Company currently estimates that its cash sales were in the range of $21.0 to $22.0 million and that its Adjusted EBITDA was in the range of $2.1 to $2.6 million; however, the results are subject to quarter-end review, and there is no assurance that the actual results will be within the indicated ranges. The Company believes that its year-to-date performance against the plan indicates that the anticipated full-year results are achievable; however, there can be no assurance that this will be the case.  Investors should note that the estimated first quarter results for 2011 may not be indicative of the results for the entire year due to seasonal effects and the risks and uncertainties discussed in this press release.  For further information about the Company's outlook for 2011 and the risks of investing in the Company's securities, please refer to the 10-K.  Please also see below our Special Note Regarding Forward Looking Statements.

About Tigrent Inc.

Tigrent Inc. (OTC: TIGE, http://www.tigrent.com) provides practical, high-quality training, technology-based tools and mentoring to help its customers become financially knowledgeable. The Company offers comprehensive instruction on real estate and financial instruments investing and entrepreneurship in the United States, the United Kingdom, and Canada.

Special Note Regarding Forward Looking Statements

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to, among other things, the future performance of Tigrent and its consolidated subsidiaries that are based on the company's current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, those contained in the Outlook section of this press release, statements about our 2011 Annual Operating Plan, and statements regarding expected financial results for the first quarter and full year 2011. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. The Company's actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance.  Factors that could cause or contribute to such differences or present potential risks to an investor, include, but are not limited to, the following: any continuation of the significant negative cash flows from operations experienced in fiscal 2010 and 2009 could impair our ability to fund our working capital needs and adversely affect our financial condition; failure to remain in compliance with the 2010 License Agreement with Rich Dad could result in the termination of our license to the Rich Dad brand; quotation of our common stock on the Pink Sheets® may adversely affect the liquidity, trading market and price of our common stock and our ability to raise capital; deregistration of our common stock under the Securities and Exchange Act of 1934 could negatively affect the liquidity and trading prices of our common stock and result in less disclosure about the Company; our uses of cash are restricted under the Rich Dad 2010 License Agreement; our failure to maintain a satisfactory relationship with Rich Dad's licensed third party provider of coaching services could have a material adverse impact on our business and financial results; pending litigation and governmental investigations and inquiries could adversely affect our business, financial condition, results of operations and growth prospects; our potential inability to obtain additional capital on favorable terms; ineligibility of our common stock  to be publicly sold under Rule 144; uncertain economic conditions and other changes experienced by our customers, including their willingness to trade or invest in securities or real estate, could influence their willingness to spend their discretionary income on our course offerings; significant competition in our markets; laws and regulations can affect the operation of our business and may limit our ability to operate in certain jurisdictions; liability or reputational damage could result if we do not protect customer data or if our information systems are breached; natural disasters, strikes or other unpredictable events may affect our ability to offer courses; our operations outside the United States subject us to additional risks inherent in international operations; our Board of Directors, without stockholder approval, may issue preferred stock that could dilute the voting power or other rights of our other stockholders and make it more difficult for a third party to acquire a majority of our outstanding voting stock; our loss of any of our key executive personnel, or high performing trainers, could disrupt our operations and reduce our profitability; any decrease in the popularity of the Rich Dad® Education Brand would have an adverse impact on our financial condition; a material change in our relationships with our customers, or in the demand by potential customers for our services, could have a significant impact on our business; our negative per share book value; and our  material weaknesses in our internal control over financial reporting could adversely affect our ability to report our financial condition and results of operations accurately and on a timely basis.  

The forward-looking statements in this press release should be evaluated in light of these important factors. Although we believe that these statements are based upon reasonable assumptions, we cannot provide any assurances regarding future results. We undertake no obligation to revise or update any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

More information about factors that could affect the company's operating results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's most recent annual report on Form 10-K copies of which may be obtained by visiting the company's Investor Relations web site at http://investors.tigrent.com or the SEC's web site at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the company on the date hereof. Tigrent assumes no obligation to update such statements.

Non-GAAP Financial Measures

Adjusted EBITDA

As used in our operating data, EBITDA is defined as net income (loss) excluding the impact of: interest expense; interest income; income tax provision; and depreciation and amortization.  We define "Adjusted EBITDA" as EBITDA adjusted for: asset impairments; special items (including the costs associated with the SEC and the Department of Justice investigations and the related class action and derivative lawsuits); litigation settlement and related legal expenses related to non-core business activities; other income, net; stock-based compensation expense; equity loss from investments in real estate; severance expenses; the net change in deferred revenue; and the net change in deferred course expenses.  Adjusted EBITDA is not a financial performance measurement according to GAAP.

We use Adjusted EBITDA as a key measure in evaluating our operations and decision making. We feel it is a useful measure in determining our performance since it takes into account the change in deferred revenue and deferred course expenses in combination with our operating expenses. We reference Adjusted EBITDA frequently, since it provides supplemental information that facilitates internal comparisons to historical operating performance of prior periods and external comparisons to competitors' historical operating performance in our industry. We plan and forecast our business using Adjusted EBITDA, with comparisons of actual to planned and forecasted Adjusted EBITDA and we provide incentives to management based on Adjusted EBITDA goals. In addition, we provide Adjusted EBITDA because we believe investors and security analysts find it to be a useful measure for evaluating our performance.

Many costs to acquire customers have been expended before a customer attends any basic or advanced training. Those costs include media, travel, facilities and instructor fees for the preview workshops and are expensed when incurred. Rich Dad licensing fees and telemarketing and speaker commissions are deferred and recognized when the related revenue is recognized. Revenue recognition of course fees paid by customers to enroll in any basic or advanced training courses at registration is deferred until (i) the course is attended by the customer, (ii) the customer has received the course content in an electronic format, (iii) the contract expires, or (iv) revenue is recognized through course breakage. It is only after one of those four occurrences that revenue is considered earned. Thus, reporting in accordance with GAAP creates significant timing differences between the receipt and disbursement of cash with the recognition of the related revenue and expenses, both in our Condensed Consolidated Statements of Cash Flows and Condensed Consolidated Statements of Operations. As a result of these factors, our operating cash flows can vary significantly from our results of operations for the same period. For this reason, we believe Adjusted EBITDA is an important non-GAAP financial measure.

Adjusted EBITDA has material limitations and should not be considered as an alternative to net income (loss), cash flows provided by operations, investing or financing activities or other financial statement data presented in the Condensed Consolidated Financial Statements as indicators of financial performance or liquidity. Items excluded from Adjusted EBITDA are significant components in understanding our financial performance. Because Adjusted EBITDA is not a financial measurement calculated in accordance with GAAP and is subject to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of performance used by other companies.

The table below is a reconciliation of our net income to EBITDA and Adjusted EBITDA for the periods set forth below (in thousands):

Years ended
December 31,



Net income (loss)



Interest income



Interest expense



Income tax provision



Depreciation and amortization






Impairment of assets



Special items



Litigation settlement and related legal expenses



Other income, net



Stockbased compensation expense



Equity losses from investment in real estate



Severance expense



Net change in deferred revenue



Net change in deferred course costs



Adjusted EBITDA



Cash Sales

The following table provides a reconciliation of our cash sales by segment to our reported revenue. Cash sales performance is a metric used by management in assessing the performance of each of our business segments. We believe that our total cash sales of $83.9 million in 2010 is a reasonable reflection of our resized business model, as more fully discussed below. Deferred revenue represents the difference between our cash sales and the impact of applying our revenue recognition policies to those cash sales. Cash sales are not a financial performance measurement in accordance with GAAP; therefore we are presenting a table to reconcile the cash sales to revenue reported in accordance with GAAP (table presented in thousands):

Years ended
December 31,



Cash received from course and product sales:

Proprietary brands

Real estate training

$ 3,731

$ 6,368

Financial markets training



Rich Dad™ Education

Real estate training



Financial markets training



Total consolidated cash received from course and product sales



Change in deferred revenue

(Increase)/decrease to deferred revenue:

Proprietary brands

Real estate training



Financial markets training



Rich Dad™ Education

Real estate training



Financial markets training



Total consolidated change in deferred revenue




Proprietary brands

Real estate training



Financial markets training



Rich Dad™ Education

Real estate training



Financial markets training



Total consolidated revenue for financial reporting purposes

$ 102,635

$ 170,924

SOURCE Tigrent Inc.