* Second Consecutive Quarter of Positive Net Income
* Second Quarter Fiscal 2005 Results
SALT LAKE CITY, April 12 /PRNewswire-FirstCall/ -- FranklinCovey
(NYSE: FC) reported net income before preferred stock dividends for the fiscal
2005 second quarter of $7.1 million, a $6.9 million improvement compared to
$0.2 million in net income for the second quarter of fiscal 2004. The Company
reported earnings of $0.19 per share (basic and diluted) after accounting for
preferred stock dividends for the quarter ended February 26, 2005 compared to
a $0.10 loss per share after accounting for preferred stock dividends for the
second quarter of fiscal 2004. The Company also reported its tenth
consecutive quarter of significant improvement in its operating results with a
$6.9 million increase in operating income to $7.9 million for its second
quarter ended February 26, 2005, compared to operating income of $1.0 million
for the comparable quarter of the prior year. The Company's year-over-year
financial results during the quarter were influenced primarily by the
following: (1) a $3.8 million increase in sales (5% growth rate), with a
400 basis point gross margin improvement (60.7% compared to 56.7% for the same
quarter last year) resulting in a net $5.4 million year-over-year increase in
gross profit with gross margin improvement accounting for $3.1 million of the
increase, (2) a $0.6 million decrease in selling, general and administrative
(SG&A) costs including store closures and recapitalization expense, and
(3) a $0.9 million decline in depreciation and amortization expense.
For the first two quarters of fiscal 2005, the Company reported a
$11.6 million improvement in net income, with $8.6 million of earnings before
preferred stock dividends ($0.16 earnings per share after preferred stock
dividends) compared to a loss of $2.9 million before preferred stock dividends
($0.37 per common share loss after preferred stock dividends) for the first
two quarters of fiscal 2004. The Company reported a $11.4 million improvement
in operating results with operating income of $10.2 million compared to an
operating loss of $1.2 million for the first two quarters of last year. The
Company provided the following details underlying the continued improvement of
operating and net results during the second quarter and first two quarters of
fiscal 2005.
Revenues: Total sales for the second quarter of fiscal 2005 increased
$3.8 million compared to last year's second quarter. Organizational Solutions
Business Unit (OSBU) sales grew $6.6 million or 26% for the second quarter of
fiscal 2005 to $32.0 million compared to $25.5 million for the same quarter
last year. The Company's efforts to grow its domestic and international
organizational training and consulting solutions over the past several
quarters has led to three consecutive quarters of growth in OSBU sales. These
growth initiatives have contributed to sales growth in both international and
domestic revenues.
Sales from the Consumer and Small Business Unit (CSBU) for the quarter
ended February 26, 2005, declined $2.7 million to $50.5 million compared to
$53.2 million for the same quarter last year. Retail store sales accounted
for $4.6 million of the CSBU revenue decline and were $28.1 million during the
quarter compared to $32.7 million (5.4% comparable store sales decline) for
the same quarter the prior year. There were 23 fewer domestic stores open
during the quarter compared to the second quarter last year; these stores
accounted for $3.0 million of sales in the second quarter of fiscal 2004. The
retail store sales decline was primarily attributed to the smaller number of
stores open in the quarter and to a 41% decline in PDA's and related products
sold during the quarter this year compared to the same quarter last year.
Consumer Direct sales grew 3% to $16.8 million compared to $16.3 million for
the same quarter of last year. Sales of products through the wholesale
channel to office superstores, increased 34% to $4.9 million compared to
$3.7 million for the same quarter last year.
Selling, general and administrative expenses: SG&A costs decreased
slightly by $0.6 million during the quarter, including additional costs
associated with the recapitalization plan approved by shareholders, costs
associated with changes in the CEO's compensation, costs associated with store
closures and increased commission costs associated with increased training
sales. SG&A as a percentage of sales declined as sales grew and efforts to
trim expenses continued. Store closing costs are included in SG&A expense and
have a one-time impact in the current period, but decrease costs going
forward. The Company had 23 fewer stores open at the end of the quarter
compared to the same period last year. The Company anticipates that it will
close additional stores as future analysis demonstrates that operating
performance may be improved through further retail store closures.
Depreciation and amortization: Depreciation and amortization expenses
continued to decline during the second quarter of fiscal 2005, reflecting
lower, more focused and better-managed capital expenditures and the effect of
certain assets becoming fully depreciated. The Company reported a decline of
$0.9 million in these expenses during the second quarter and $2.3 million
during the first two quarters of fiscal 2005, compared to the respective
periods of the prior year.
About FranklinCovey
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 120 retail stores, and
http://www.franklincovey.com . Nearly 1,500 FranklinCovey associates provide
professional services and products in 36 offices in 129 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 stabilize and 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 2004 10-K report and subsequent 8-K
and 10-Q 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 STATEMENT
(in thousands, except per share amounts)
Quarter Ended Two Quarters Ended
Feb. 26, Feb. 28, Feb. 26, Feb. 28,
2005 2004 2005 2004
(unaudited) (unaudited)
Sales $82,523 $78,715 $151,627 $153,746
Cost of sales 32,458 34,090 60,403 66,595
Gross margin 50,065 44,625 91,224 87,151
Selling, general and
administrative 38,787 39,410 74,440 79,426
Depreciation 2,320 3,222 4,498 6,813
Amortization 1,043 1,043 2,087 2,087
Operating income (loss) 7,915 950 10,199 (1,175)
Interest income 165 141 282 227
Interest expense (29) (56) (66) (167)
Income (loss) before provision
for taxes 8,051 1,035 10,415 (1,115)
Provision for income taxes 965 803 1,803 1,833
Net income (loss) 7,086 232 8,612 (2,948)
Preferred stock dividends (2,184) (2,184) (4,368) (4,368)
Net income (loss) attributable
to common shareholders $4,902 $(1,952) $4,244 $(7,316)
Net income (loss) attributable
to common shareholders per share $0.19 $(0.10) $0.16 $(0.37)
Sales Detail:
Retail Stores $28,055 $32,668 $46,443 $55,336
Consumer Direct 16,765 16,265 33,901 34,477
Wholesale 4,897 3,663 8,480 10,126
Other 765 634 1,750 1,222
Total Consumer and Small
Business Unit 50,482 53,230 90,574 101,161
Organizations Solutions Group 17,784 13,110 32,912 27,058
International 14,257 12,375 28,141 25,527
Total Organizational Solutions
Business Unit 32,041 25,485 61,053 52,585
Total $82,523 $78,715 $151,627 $153,746
SOURCE FranklinCovey
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Related links:
http://www.franklincovey.com
CONTACT:
Richard R. Putnam, Investor Relations of
FranklinCovey, +1-801-817-1776
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