SALT LAKE CITY, Jan. 10 /PRNewswire-FirstCall/ -- FranklinCovey (NYSE: FC)
reported its thirteenth consecutive quarter of significant improvement in
operating results with operating income of $4.1 million for the first quarter
of fiscal 2006, a $1.8 million or 81% improvement, compared to $2.3 million of
income from operations for the first quarter of fiscal 2005. The Company also
reported net income before preferred stock dividends for the first quarter of
fiscal 2006 totaling $3.2 million, a $1.7 million or 112% improvement over the
$1.5 million of net income reported for the same quarter in fiscal 2005. The
Company reported $0.09 earnings per share after accounting for preferred stock
dividends for the quarter ended November 26, 2005 compared to a $0.03 loss per
share after accounting for preferred stock dividends for the first quarter of
fiscal 2005. The Company's financial results during the quarter were
influenced primarily by the following as compared to the first quarter of last
year: (1) a $4.0 million increase in sales through our Organizational
Solutions Business Unit (OSBU) which was partially offset by a $0.8 million
decline in sales (more than 100% due to store closures) through the Consumer
and Small Business Unit (CSBU) resulting in a net $3.2 million increase in
sales, (2) an improvement in gross margin (61.4% compared to 60.0%) which,
together with the increase in sales, resulted in a net $3.0 million year-over-
year increase in gross margin, (3) an increase in selling, general and
administrative costs of $1.8 million, primarily as a result of investments in
initiatives to grow the business, and (4) a $0.7 million decline in
depreciation and amortization expense. The Company provided the following
details underlying the continued improvement of its operating results during
the first quarter of fiscal 2006.
Revenues: Total sales for the first quarter of fiscal 2006 grew 5% or
$3.2 million compared to last year's first quarter. OSBU sales grew 15% or
$4.0 million for the first quarter of fiscal 2006 to $31.3 million compared to
$27.3 million for the same quarter last year. The sales improvement was
primarily the result of stronger domestic and international sales of
organizational training solutions from a growing sales force and increased
marketing efforts.
Sales from the CSBU for the quarter ended November 26, 2005, declined
$0.8 million to $41.0 million compared to $41.8 million for the same quarter
last year. Retail store sales declined $3.7 million (more than 100% due to
store closures, declines in technology product sales and one less business
day) to $14.7 million compared to $18.4 million for the same quarter the prior
year. Of the $3.7 million decline in retail sales, $3.3 million was a result
of having 30 fewer stores (105 compared to 135) open in the quarter and
$0.7 million was the result of reduced technology and specialty product sales
that was partially offset by increased sales of FranklinCovey Planner
products. Comparable stores sales declined 2% during the quarter compared to
the same quarter last year, primarily as a result of having 1 less business
day in the quarter. Consumer direct sales were $18.6 million compared to
$18.9 million for the same quarter of last year, reflecting continued sales
declines in technology products and one less sales day in the quarter.
Product sales through the wholesale channel during the quarter were
$6.6 million compared to $3.6 million during the same quarter last year,
primarily reflecting the timing differential of sales to these entities this
year compared to last year. Sales of products through other CSBU channels
were $1.2 million compared to $1.0 million for the same quarter last year.
Selling, general and administrative expenses: Selling, general and
administrative expenses (SG&A) increased to $37.8 million for the quarter
ended November 26, 2005, compared to $35.9 million for the same quarter last
year. The increase was primarily due to increased investments for initiatives
that are designed to grow the business in the future including, hiring
additional sales people, increased advertising and marketing and additional
curriculum development. The costs associated with these initiatives were
partially offset by cost reductions associated with store closures and other
cost-saving initiatives. The Company had 30 fewer stores open during the
quarter compared to the same quarter last year.
Depreciation and amortization expense: Depreciation and amortization
expenses continued to decline during the first quarter of fiscal 2006,
reflecting lower, more focused and better-managed capital expenditures and the
effect of certain assets becoming fully depreciated. The Company reported a
decline of $0.7 million in depreciation and amortization expense during the
first quarter compared to the same period of the prior year.
About FranklinCovey
FranklinCovey assists professionals and organizations to measurably
increase their effectiveness in leadership, productivity, communication and
sales. Clients include 91 of the Fortune 100, more than three-quarters of the
Fortune 500, thousands of small and mid-sized businesses, as well as numerous
government entities. Organizations and professionals access FranklinCovey
services and products through consulting services, licensed client
facilitators, one-on-one coaching, public workshops, catalogs, more than
100 retail stores, and http://www.franklincovey.com . Nearly 1,500 FranklinCovey
associates provide professional services and products for 39 offices servicing
more than 100 countries.
Safe-Harbor Statement
This announcement contains forward-looking statements that necessarily are
based on certain assumptions and are subject to certain risks and
uncertainties, including the ability of the Company to grow revenues, general
economic conditions, competition in the Company's targeted market place,
market acceptance of new products or services, increases or decreases in the
Company's market share, growth or contraction of the overall market for the
products offered by the Company and its competitors, changes in the training
and spending policies of the Company's clients, and other factors identified
and discussed in the Company's 2005 10-K report and subsequent 8-K reports
filed with the Securities and Exchange Commission, many of which are beyond
the control or influence of the Company. There can be no assurance that the
Company's actual future performance will meet management's expectations.
These forward-looking statements are based on management's expectations as of
the date hereof, and are subject to the outcome of various factors, including
those listed above, any one of which may cause future results to differ
materially from the Company's current expectations.
FRANKLIN COVEY CO.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
Quarter Ended
November 26, November 27,
2005 2004
(Unaudited) (Unaudited)
Sales $72,351 $69,104
Cost of sales 27,945 27,669
Gross margin 44,406 41,435
Selling, general and administrative 37,767 35,930
Depreciation 1,408 2,178
Amortization 1,095 1,043
Income from operations 4,136 2,284
Interest income 330 118
Interest expense (643) (38)
Income before provision of income taxes 3,823 2,364
Provision for income taxes (590) (838)
Net Income 3,233 1,526
Preferred dividends (1,379) (2,184)
Net income (loss) available to common
shareholders $1,854 $(658)
Net income (loss) per share attributable
to common shareholders
Basic $0.09 $(0.03)
Diluted $0.09 $(0.03)
Weighted average number of common shares
Basic 20,331 19,729
Diluted 20,642 19,729
Sales Detail
Consumer Direct $18,588 $18,859
Retail Stores 14,670 18,387
Wholesale 6,609 3,583
Other 1,163 985
Total Consumer Strategic Business Unit 41,030 41,814
Organizational Sales Group 16,393 13,406
International 14,928 13,884
Total Organizational Strategic Business Unit 31,321 27,290
Total $72,351 $69,104
SOURCE FranklinCovey
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Related links:
http://www.franklincovey.com
CONTACT:
Richard R. Putnam, Investor Relations,
FranklinCovey, +1-801-817-1776
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