SALT LAKE CITY, March 23 /PRNewswire/ -- Franklin Covey (NYSE: FC) today
announced financial results for its fiscal year 2000 second quarter ended
February 26, 2000. The Company reported earnings of $2.8 million ($0.04 per
share, after accounting for preferred dividends) compared to $6.6 million
($0.31 per share) for the same quarter in the prior year. Sales for the
second quarter of fiscal year 2000 were $145.0 million, a 6% increase compared
to the second quarter of fiscal year 1999. An aggressive investment in new
online training and application tools and channels, margin mix of products
sold and exiting the mass-market channel factored in the lower year to year
earnings. Additionally, the Company's continued restructuring efforts
included moving associates from the Provo offices to the Salt Lake City
headquarters and repurchases of outstanding options on its common stock.
Sales growth of electronic application tools, contract channel product
sales and organizational training sales were partially offset by lower volume
through Publishers Press, network marketing sales and lower public training
sales that were impacted by recent organizational changes. Electronic
training and implementation tools sales growth fueled much of the 14% growth
in same store sales and the growth in the catalog/e-commerce sales during the
quarter. Mahan Khalsa organizational sales training acquisition fueled the
sales growth in the organizational training business.
Gross margin increased $4.0 million resulting from the increased growth in
sales volume but still lagged sales growth due primarily to the increase in
lower margin electronic training and implementation tools.
EBITDA of the Company's core businesses benefited from the previously
announced headcount reduction in connection with its restructuring, but was
offset by increased catalog and promotion costs and the previously mentioned
costs associated with moving offices and the option buyback program. SG&A for
Franklin Covey's growth businesses were higher due to an acceleration in
electronic solutions investments and growth at Premier School Agendas, which
accompanying revenue growth is anticipated to be realized later this fiscal
year.
The Company reported its core headcount was lower by 317 compared to the
same period in the prior year, primarily as a result of its previously
announced restructuring program. The remaining reductions under the plan are
expected to be completed by the end of its fiscal year.
Sales for the first six months of fiscal 2000 were $289.1 million compared
to $277.5 million for the same period of fiscal 1999. Net income was
$10.0 million ($0.30 diluted earnings per share after preferred dividends
paid) compared to $17.5 million ($0.81 diluted earnings per share).
Franklin Covey also announced a tender offer to buy all of its options on
its common stock priced at $12.25 and higher. The offer is open through April
12, 2000. The buying of its options is expected to result in a significant
charge to compensation during the third quarter of fiscal 2000. Franklin
Covey expects that by significantly reducing its 4 million currently
outstanding options, it will realize a benefit in reduction of dilution of
earnings in its fully diluted EPS calculation as share prices increase.
The Company also announced the implementation of incentive-based
compensation programs which include a loan program through Bank One and Zions
Bank. The program gives management in the Company the opportunity to purchase
shares on the open market and from shares recently purchased by the Company by
borrowing on a full-recourse basis from Bank One and Zions Bank. The Company
has facilitated the loans by providing a guarantee to the banks. The program
is anticipated to be approximately $30 million, which shares will be purchased
according to appropriate SEC rules and regulations.
Franklin Covey is the leading global professional services firm offering
learning and performance solutions to assist professionals and organizations
to increase their effectiveness in Productivity, Leadership, Communication and
Sales. Organizational clients include 80 of the Fortune 100, more than
three-quarters of the Fortune 500, thousands of smaller and mid-sized
businesses as well as numerous government entities. Organizations and their
professionals access Franklin Covey's products and services through
professional consulting services, licensed client facilitators, public
workshops, catalogs, retail stores and the Internet (franklincovey.com). More
than 3,500 Franklin Covey associates provide professional services and
products for nearly 18 million individuals through 44 offices in 33 countries
in 32 languages. Franklin Covey trains in excess of 750,000 participants
annually in training seminars teaching principles to help them achieve "What
Matters Most."
This announcement contains forward-looking statements that necessarily are
based on certain assumptions and are subject to certain risks and
uncertainties, including the effects of competition, lack of market acceptance
of new products or services, failure to gain market share in target markets
and other factors identified and discussed in the Company's 1999 10-K and
subsequent 10-Q reports filed with the Securities Exchange Commission. There
can be no assurance that the Company's actual future performance will meet the
Company'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.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
( in thousands, except per share amounts )
Quarter Ended Six Months Ended
February 26, February 27, February 26, February 27,
2000 1999 2000 1999
(unaudited) (unaudited)
Sales $145,023 $137,089 $289,101 $277,451
Cost of sales 61,925 57,961 120,949 111,892
Gross margin 83,098 79,128 168,152 165,559
Selling, general and
administrative 64,013 56,100 124,396 112,521
Other restructuring
costs 1,668 2,158
Depreciation 5,368 4,779 10,510 9,424
Amortization 5,160 4,619 9,909 9,009
Income from operations 6,889 13,630 21,179 34,605
Interest income 305 382 634 743
Interest expense (1,764) (2,707) (3,290) (5,228)
Income before provision
for income taxes 5,430 11,305 18,523 30,120
Provision for
income taxes 2,611 4,748 8,516 12,650
Net income 2,819 6,557 10,007 17,470
Preferred dividend 2,036 3,950
Income available to
common shareholders $783 $6,557 $6,057 $17,470
Earnings per share:
Basic $0.04 $0.31 $0.30 $0.82
Diluted $0.04 $0.31 $0.30 $0.81
Weighted average
common shares:
Basic 20,187 21,194 20,358 21,304
Diluted 20,285 21,352 20,445 21,552
Sales Detail:
Consumer Product $91,005 $81,906 $172,315 $159,312
Training and
Education 32,555 34,105 73,731 74,160
International 13,963 14,010 28,647 28,711
Other 7,500 7,068 14,408 15,268
Total Sales $145,023 $137,089 $289,101 $277,451
SOURCE Franklin Covey
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Related links:
http://www.franklincovey.com
Company News On-Call:
http://www.prnewswire.com/comp/107086.html or fax,
800-758-5804, ext. 107086
CONTACT:
Richard R. Putnam, Investor Relations of
Franklin Covey, 801-975-1776
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