SALT LAKE CITY, June 18 /PRNewswire-FirstCall/ --
Franklin Covey (NYSE: FC) today announced financial results for its third
quarter of fiscal year 2002 ended May 25, 2002. The Company reported an
$11.8 million net loss ($0.70 per common share loss, after accounting for
preferred stock dividends) compared to a $14.6 million net loss ($0.84 per
common share loss, after accounting for preferred stock dividends) for the
same quarter in the prior year, which included a $3.9 million loss from
discontinued operations. The Company's EBITDA was a $9.4 million loss during
the quarter compared to a loss of $7.1 million for the same quarter of the
prior year. The $2.1 million decline in EBITDA (excluding non-cash provision
for management loan losses) was a marked improvement from the $28.5 million
and $16.9 million declines in EBITDA (excluding non-cash reserves and
impairment charges) in the first and second quarters of fiscal year 2002,
respectively. The third quarter's decline in EBITDA was primarily
attributable to a 19% decline in sales during the comparable period. Sales
during the fiscal 2002 third quarter were $71.1 million compared to
$88.0 million for the same quarter the prior year. Partially offsetting the
effect of lower sales were an improvement in gross margin percentage
(55.3% compared to 54.5%) and a $6.0 million decrease in selling, general and
administrative costs mainly associated with lower associate costs from the
Company's realignment efforts.
Sales for the quarter included $34.2 million in the Consumer Business
Unit, a 20% decline compared to $43.0 million for the same quarter last year.
Total store sales for the third quarter declined 19%, primarily reflecting a
15% decline in average order size due to higher technology sales last year.
Strong technology sales during the first three quarters of fiscal year 2001
resulted in higher average retail order size compared to the first three
quarters of this year. Beginning in the fourth quarter of last year,
technology sales declined significantly resulting in a lower average retail
order size. The Company opened 15 retail stores during the past 12 months to
bring the total to 174 stores nationwide. Comparable store sales for the
quarter declined 26% compared to the same period last year. The decline is
partially attributable to the increase in the number of stores open this year
compared to last year at the same time, since some of the new stores
cannibalized existing store sales. The comparable store sales decrease is an
improvement following declines of 36% and 27% of comparable store sales in the
first and second quarters of fiscal year 2002, respectively. Organizational
Business Unit sales were $36.9 million compared to $45.0 million for the same
quarter last year and were impacted by the continued economic weakness in the
training industry.
Sales for the first nine months of fiscal 2002 were $258.8 million
compared to $345.2 million for the same period of fiscal 2001. The Company
incurred a net loss for the first nine months of $63.7 million ($3.53 loss per
common share, after accounting for preferred stock dividends) compared to a
net loss of $14.1 million ($0.99 loss per common share, after accounting for
preferred dividends) for the same period of the prior year. Non-recurring
gains and non-cash charges recorded during the first nine months of 2002
included: a $60.8 million gain from the sale of Premier Agendas during the
fiscal second quarter, a $61.4 million non-cash cumulative change in
accounting principle loss relating to the accounting for goodwill and related
amortization, a $20.8 million non-cash expense for impairment of long-lived
assets and an $18.7 million non-cash provision for estimated management stock
loan losses.
About Franklin Covey Co.
Franklin Covey Co. 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 Franklin Covey services and
products through consulting services, licensed client facilitators, one-on-one
coaching, public workshops, catalogs, more than 170 retail stores,
http://www.franklincovey.com and http://www.franklinplanner.com . More than 2,500 Franklin
Covey 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, 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
2001 10-K report and subsequent 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.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
( in thousands, except per share amounts )
Three Months Ended Nine Months Ended
May 25, May 26, May 25, May 26,
2002 2001 2002 2001
(unaudited) (unaudited)
Sales $71,091 $88,035 $258,757 $345,150
Cost of sales 31,786 40,041 115,201 148,445
Gross margin 39,305 47,994 143,556 196,705
Selling, general and
administrative 49,770 55,740 164,951 169,502
Provision for estimated
management stock loan
losses 247 18,703
Impairment of investment
in unconsolidated
subsidiary 16,323
Impairment of other assets 4,518
Equity in earnings of
unconsolidated
subsidiary (1,274) (607) (3,165) (2,042)
EBITDA (9,438) (7,139) (57,774) 29,245
Depreciation 8,283 7,536 25,620 19,556
Amortization 1,193 3,143 3,701 9,563
EBIT (18,914) (17,818) (87,095) 126
Gain (loss) on interest
swap settlement (4,894)
Interest income
(expense) and
other - net 153 (1,615) (86) (4,413)
Income (loss) before
provision or benefit for
income taxes (18,761) (19,433) (92,075) (4,287)
Provision (benefit)
for income taxes (6,998) (8,745) (34,271) (702)
Net income (loss) from
continuing operations $(11,763) $(10,688) $(57,804) $(3,585)
Gain (loss) from
discontinued
operations, net of tax (3,899) (5,282) (10,476)
Gain on sale of
discontinued operation,
net of tax 60,774
Net income (loss) before
change in accounting
principle (11,763) (14,587) (2,312) (14,061)
Cumulative effect of
change in accounting
principle, net of tax (61,386)
Net income (loss) $(11,763) $(14,587) $(63,698) $(14,061)
Preferred stock
dividends (2,184) (2,028) (6,497) (6,083)
Net income (loss)
attributable to
common shareholders $(13,947) $(16,615) $(70,195) $(20,144)
Earnings (loss) per
share from continuing
operations less
preferred dividends $(0.70) $(0.64) $(3.24) $(0.48)
Earnings (loss) per
share attributable
to common share
holders $(0.70) $(0.84) $(3.53) $(0.99)
Weighted average
common shares -
basic and diluted 19,929 19,872 19,869 20,323
Sales Detail:
Retail Stores $22,336 $27,745 $96,769 $124,908
Catalog / e-commerce 11,016 15,183 50,830 75,116
Other 822 106 3,047 7,198
Total Consumer Business
Unit 34,174 43,034 150,646 207,222
Organizational Solutions
Group 26,865 34,512 73,627 97,767
International 10,052 10,489 34,484 40,161
Total Organizations
Business Unit 36,917 45,001 108,111 137,928
Total $71,091 $88,035 $258,757 $345,150
SOURCE Franklin Covey Co.
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Related links:
http://www.franklinplanner.com
http://www.franklincovey.com
CONTACT:
Richard R. Putnam, Investor Relations of
Franklin Covey Co., +1-801-817-1776
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