SALT LAKE CITY, Utah, Jan. 13 /PRNewswire-FirstCall/ -- FranklinCovey
(NYSE: FC) today announced financial results for its first quarter of fiscal
year 2003 ended November 30, 2002. The Company reported a significant
narrowing in its net loss for the quarter with a net loss of $8.1 million
($0.51 loss per share, after accounting for preferred dividends) compared to a
net loss of $87.0 million ($4.49 loss per share, after accounting for
preferred dividends and discontinued operations) for the same quarter in the
prior year. These results represent a significant improvement in its loss
from operations to $7.3 million for the quarter ended November 30, 2002,
compared to a loss from operations of $30.3 million for the same quarter of
fiscal 2002. The first quarter net loss in fiscal 2002 included noncomparable
items of $5.1 million charge for interest rate swap settlement, $4.2 million
loss from discontinued operations and $61.4 million net of tax charge for the
cumulative effect of an accounting change related to the valuation of
intangible assets. The first quarter of fiscal 2003 benefited from an $8.5
million reduction in SG&A expenses, a $9.8 million reduction in provision for
management stock loan losses, a $2.5 million reduction in depreciation and
amortization expense and a $2.0 million reduction in interest expense compared
to the same quarter of the prior year. Partially offsetting these reduced
expenses was a lower gross margin (55.2% compared to 56.3%) and a tax
provision of $0.7 million for the first quarter of fiscal 2003 compared to a
tax benefit of $14.3 million for the same quarter of the prior year. Sales
from continuing operations for the first quarter of fiscal 2003 increased 1%
to $85.0 million compared to $84.3 million for the first quarter of fiscal
2002. Because of the Company's modified 5-4-4 reporting schedule, the
increase in sales for the first quarter of fiscal 2003 partially resulted from
five more business days as compared to the same quarter in fiscal 2002. On a
same-day basis, sales, gross margin and SG&A would have been lower than actual
amounts reported for the quarter ended November 24, 2001.
With five more business days during the quarter, total Consumer Strategic
Business Unit (CSBU) sales were $52.6 million during the first quarter of
fiscal 2003 compared to $52.7 million for the same quarter of fiscal 2002.
Included in the CSBU, retail store sales were $28.2 million during the quarter
compared to $28.6 million for the same quarter of fiscal 2002. Comparable
store sales, on a same day equivalent basis, decreased 11% during the quarter
compared to a 36% decline in comparable store sales during the first quarter
in fiscal 2002. As of November 30, 2002, the Company operated 175 retail
stores domestically compared to 172 a year ago. The Company noted that the
combination of declines in mall foot traffic leading to lower transactions,
together with smaller average purchases due to lower technology sales impacted
the Company's retail store sales. Catalog/e-commerce revenues decreased 4% to
$19.1 million compared to $19.9 million for the same quarter a year ago. The
decrease was primarily attributable to lower call volume, partially off-set by
higher internet sessions and orders through the Company's website. Total
Organizational Strategic Business Unit (OSBU) sales for the quarter were $32.4
million compared to $31.6 million during the first quarter of fiscal 2002.
Included in the OSBU, domestic sales increased 2% to $20.6 million compared to
$20.2 million for the same quarter of fiscal 2002. The increased revenues
were attributed to stronger booking rates during the fourth quarter of fiscal
2002 and the first quarter of fiscal 2003, an increase in facilitator revenues
and five more business days this year compared to the same quarter last year.
OSBU sales internationally, including direct and licensee operations, were
$11.8 million during the quarter compared to $11.4 million for the same
quarter last year.
The Company also indicated that revenue in its CSBU was weaker than
expected in the weeks leading up to Christmas reflecting lower foot traffic in
mall locations. These foot traffic trends improved in the post Christmas
weeks. Despite the pre-Christmas results, the Company still believes it will
show a marked improvement in loss from operations during the fiscal 2003
second quarter compared to the second quarter of fiscal 2002.
About Franklin Covey
FranklinCovey is a leading learning and performance services firm
assisting professionals and organizations in measurably increasing 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 180 retail stores and
http://www.franklincovey.com . More than 2,000 FranklinCovey associates
provide professional services and products in 39 offices in 95 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 general economic conditions, the effects of the
adoption of certain new accounting policies, 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 2002 10-K
report 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 based on factors that may cause future results to
differ materially from the Company's current expectations.
FRANKLIN COVEY CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
( in thousands, except per share amounts )
Quarter Ended
November 30, November 24,
2002 2001
(Unaudited) (Unaudited)
Sales $85,046 $84,340
Cost of sales 38,118 36,853
Gross margin 46,928 47,487
Selling, general and administrative 47,908 56,362
Provision for losses on management
stock loans 157 9,971
Impairment (recovery) of investment
in unconsolidated subsidiary (890) 1,861
Depreciation 5,914 8,246
Amortization 1,173 1,328
Loss from operations (7,334) (30,281)
Equity in earnings (loss) of
unconsolidated subsidiary (46) 863
Interest income 267 851
Interest expense (73) (2,106)
Other expense (172) (5,126)
Loss from continuing operations
before income taxes (7,358) (35,799)
Benefit (provision) for income taxes (748) 14,320
Loss from continuing operations (8,106) (21,479)
Loss from discontinued operations,
net of tax benefit (4,173)
Cumulative effect of accounting
change, net of tax (61,386)
Net loss (8,106) (87,038)
Preferred dividends (2,184) (2,130)
Net loss attributable to common
shareholders $(10,290) $(89,168)
Loss per share from continuing
operations and preferred dividends $(0.51) $(1.19)
Net loss per share attributable to
common shareholders $(0.51) $(4.49)
Weighted average number of common and common
equivalent shares basic and diluted 20,009 19,856
Sales Detail
Retail Stores $28,198 $28,639
Catalog / e-Commerce 19,133 19,854
Other 5,312 4,235
Total Consumer Strategic Business
Unit 52,643 52,728
Organizational Sales Group 20,627 20,230
International 11,776 11,382
Total Organizational Strategic
Business Unit 32,403 31,612
Total $85,046 $84,340
SOURCE FranklinCovey
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Related links:
http://www.franklincovey.com
CONTACT:
Richard R. Putnam, Investor Relations of
FranklinCovey, +1-801-975-1776
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