SALT LAKE CITY, July 10 /PRNewswire/ -- Franklin Covey (NYSE: FC) today
announced financial results for its fiscal year 2001 third quarter ended
May 26, 2001. The Company reported a $14.6 million net loss ($0.84 per share
loss, after accounting for preferred stock dividends) compared to a
$18.8 million net loss ($1.02 per share loss, after accounting for preferred
stock dividends) for the same quarter in the prior year. The Company's third
quarter is seasonally its slowest quarter and it normally reports a loss in
the quarter. The Company's EBITDA improved to a $12.8 million loss during the
quarter compared to a loss of $16.1 million for the same quarter of the prior
year. The earnings and EBITDA improvements were primarily due to an
improvement in gross margin percentage (54.8% compared to 50.7%), a
$2.3 million decrease in SG&A costs mainly associated with the lower associate
costs and an $8.4 million charge taken last year during the quarter for option
repurchases and employee reduction efforts. These gains were off-set by lower
sales reported in the quarter.
Sales for the third quarter of fiscal year 2000 included sales from
Personal Coaching, whose net assets were contributed to Franklin Covey
Coaching, LLC, a joint venture in which the Company owns a 50% interest. This
noncomparable sales channel accounted for $4.5 million in sales during the
same period last year. The Company now reports an interest in net income for
this business. Sales for the third quarter of fiscal year 2001 were
$90.6 million, a 17% decrease compared to the third quarter of fiscal year
2000, after accounting for the noncomparable sales item. The Company opened
31 retail stores during the past 12 months to bring the total to 159 stores
nationwide. Many of the new stores opened targeted major markets with
existing Company stores. Comparable store sales for the quarter declined 30%
compared to the same period last year. The decline is partially attributable
to a 24% increase in the number of stores open this year compared to last year
at the same time, many of which cannibalized existing stores, and to
renovations of the Company's older retail stores during the quarter.
Additionally, the strong sales of handheld organizers during the third quarter
of last year helped to produce 23% growth in comparable store sales compared
to the fiscal 1999 third quarter. The new stores partially off-set the
comparable store decline in certain major markets. The Company expects that
the average store will exceed $550 per square foot in sales for fiscal 2001.
Slowing in the overall economy has also affected sales in the Company's
Retail, Catalog/eCommerce and wholesale channels and training business sold
through the OSG channel. Sales declines in the Company's Retail,
Catalog/eCommerce and OSG channels were partially off-set by sales growth in
the Company's International and Education channels.
Sales for the first nine months of fiscal 2001 were $353.1 million
compared to $412.0 million for the same period of fiscal 2000. Fiscal year
2000 sales included sales from Personal Coaching as well as Publishers Press,
which was sold in February 2000. The noncomparable sales channels accounted
for approximately $25 million of last year's sales. The Company's reportable
earnings for the first nine months were a loss of $14.1 million ($0.99 loss
per share, after accounting for preferred stock dividends) compared to a net
loss of $8.8 million ($0.73 loss per share, after accounting for preferred
dividends) for the same period of the prior year.
The Company also provided an updated outlook for the fourth quarter and
full fiscal year. Based on year to date results, the overall economic
slowdown and other performance trends in the fiscal fourth quarter, the
Company expects to generate approximately $55 million in EBITDA for fiscal
2001. The Company's Education division, which includes Premier School
Agendas, and is expected to produce most of the EBITDA in the fourth quarter,
continues to be on track for meeting its objectives.
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 80 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 150 retail stores,
http://www.franklincovey.com and http://www.franklinplanner.com. More than 3,500 Franklin
Covey associates provide professional services and products in 44 offices in
38 countries.
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 2000 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 )
Three Months Ended Nine Months Ended
May 26, May 27, May 26, May 27,
2001 2000 2001 2000
(unaudited) (unaudited)
Sales $90,610 $113,732 $353,098 $411,976
Cost of sales 40,939 56,022 151,406 186,113
Gross margin 49,671 57,710 201,692 225,863
Selling, general and
administrative 63,095 65,399 191,414 189,795
Stock option repurchase
and relocation costs 8,361 10,519
Equity in earnings of
subsidiary 607 2,042
EBITDA (12,817) (16,050) 12,320 25,549
Depreciation 7,292 5,655 18,751 16,166
Amortization 4,825 5,387 14,621 15,295
EBIT (24,934) (27,092) (21,052) (5,912)
Interest expense and
other - net (1,588) (609) (4,349) (3,265)
Income (loss) before
provision for income
taxes (26,522) (27,701) (25,401) (9,177)
Provision (benefit) for
income taxes (11,935) (8,867) (11,340) (350)
Net income (loss) $(14,587) $(18,834) $(14,061) $(8,827)
Preferred stock
dividends 2,028 2,028 6,083 5,978
Income (loss)
attributable to
common
shareholders $(16,615) $(20,862) $(20,144) $(14,805)
Earnings (loss) per
share $(0.84) $(1.02) $(0.99) $(0.73)
Weighted average common
shares 19,872 20,413 20,323 20,377
Sales Detail:
Retail Stores $26,952 $33,480 $121,363 $126,390
Catalog / e-commerce 15,184 20,613 75,115 87,593
Organizational
Solutions Group 19,458 21,979 59,557 63,125
Educational 3,808 3,495 11,731 12,123
International 11,256 10,113 40,505 39,331
Other 13,952 24,052 44,827 83,414
Total 90,610 113,732 353,098 411,976
SOURCE Franklin Covey Co.
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Related links:
http://www.franklincovey.com
CONTACT:
Richard R. Putnam, Investor Relations of
Franklin Covey Co., 801-817-1776
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