SALT LAKE CITY, Jan. 11 /PRNewswire-FirstCall/ -- FranklinCovey (NYSE:
FC) reported its operating results for the first quarter of fiscal 2007.
The quarter ended December 2, 2006 had five more business days than the
first fiscal quarter ended November 26, 2006. The five additional business
days resulted in increased sales and operating costs compared to the same
quarter last year. Operating income for the fiscal first quarter of 2007
was $3.6 million compared to $4.1 million of income from operations for the
first quarter of fiscal 2006.
The Company also reported net income before preferred stock dividends
for the first quarter of fiscal 2007 totaling $1.4 million ($0.02 earnings
per share after preferred dividends) compared to $3.2 million of net income
($0.09 earnings per share after preferred dividends) reported for the same
quarter in fiscal 2006. 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 $4.6 million or 16% increase in sales through our
Organizational Solutions Business Unit (OSBU) which was partially offset by
a $1.4 million decline in sales (primarily due to store closures) through
the Consumer and Small Business Unit (CSBU) resulting in a net $3.2 million
increase in sales, (2) steady gross margin (61.4% in both periods) despite
having a benefit to last year's cost of sales that did not repeat this
year, which, together with the increase in sales, resulted in a net $2.0
million year-over-year increase in gross profit, (3) an increase in
selling, general and administrative costs of $3.1 million, primarily as a
result of costs associated with the additional business days, increased
audit costs associated with compliance to Sarbanes Oxley and increased
commissions associated with increase sales, (4) a $0.6 million decline in
depreciation and amortization expense, and (5) a $1.1 million increase in
the tax provision. The Company provided the following details underlying
the operating results during the first quarter of fiscal 2007.
Revenues: Total sales for the first quarter of fiscal 2007 grew 4% or
$3.2 million compared to last year's first quarter. OSBU sales grew 16% or
$4.6 million for the first quarter of fiscal 2007 to $33.2 million compared
to $28.6 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 December 2, 2006, declined
$1.4 million to $42.3 million compared to $43.7 million for the same
quarter last year. Retail store sales declined $0.5 million, primarily as a
result of having 16 fewer stores open during the quarter this year compared
to last year, to $14.1 million compared to $14.6 million for the same
quarter the prior year. Comparable stores sales were flat during the
quarter compared to the same quarter last year. Consumer direct sales were
$19.9 million compared to $19.2 million for the same quarter of last year,
primarily as a result of 5 more business days this year compared to last
year's first quarter. Product sales through the wholesale channel during
the quarter were $4.6 million compared to $6.1 million during the same
quarter last year, primarily reflecting lower demand from entities that
represent us to the larger retailers this year compared to last year.
Product sales through international channels were $2.4 million during the
quarter compared to $2.6 million for the same quarter last year. Sales of
products through other CSBU channels were $1.3 million compared to $1.2
million for the same quarter last year.
Selling, general and administrative expenses: Selling, general and
administrative expenses (SG&A) increased to $40.8 million for the quarter
ended December 2, 2006, compared to $37.8 million for the same quarter last
year. The increase was primarily due to the increased number of business
days, increased audit and consulting costs associated compliance with
Section 404 of the Sarbanes-Oxley Act and increased commissions associated
with higher sales in the OSBU. The Company has also increased investments
into its sales force and 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 16 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 2007,
reflecting lower, more focused and better-managed capital expenditures and
the effect of certain assets becoming fully depreciated. The Company
reported a decline of $0.6 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, 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.
FRANKLIN COVEY CO.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
Quarter Ended
December 2, November 26,
2006 2005
(Unaudited) (Unaudited)
Sales $75,530 $72,351
Cost of sales 29,132 27,945
Gross margin 46,398 44,406
Selling, general and administrative 40,849 37,767
Depreciation 1,037 1,408
Amortization 902 1,095
Income from operations 3,610 4,136
Interest income 201 330
Interest expense (661) (643)
Income before provision of income taxes 3,150 3,823
Provision for income taxes (1,734) (590)
Net Income 1,416 3,233
Preferred dividends (934) (1,379)
Net income (loss) available to common
shareholders $482 $1,854
Net income (loss) per share attributable to
common shareholders
Basic $0.02 $0.09
Diluted $0.02 $0.09
Weighted average number of common shares 19,910 20,331
Diluted 20,192 20,642
Sales Detail
Oganizational Solutions Business Unit
Domestic 17,721 16,330
International 15,487 12,283
Total 33,208 28,613
Consumer Solutions Business Unit
Consumer Direct $19,936 $19,177
Retail Stores 14,127 14,643
Wholesale 4,577 6,111
CSBU International 2,386 2,644
Other 1,296 1,163
Total 42,322 43,738
Total $75,530 $72,351
SOURCE FranklinCovey
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Related links:
http://www.franklincovey.com
CONTACT:
Investor Relations, Richard R. Putnam of
FranklinCovey, +1-801-817-1776
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