SALT LAKE CITY, Nov. 13 /PRNewswire/ -- Franklin Covey (NYSE: FC) today
announced financial results for its fiscal fourth quarter and fiscal year
ended August 31, 2001.
Fiscal Fourth Quarter 2001 Results
EBITDA for the quarter decreased to $28.4 million compared to
$29.9 million for the same quarter of fiscal 2000. Fourth quarter EBITDA for
fiscal year 2000 included a $4.0 million reversal of severance restructuring
charges accrued in fiscal year 1999. Excluding the non-cash charges and
reversal benefits from both fiscal years, the Company's EBITDA increased 14%
to $29.5 million during the quarter ended August 31, 2001 compared to
$25.8 million for the same quarter last year. EBITDA during the fiscal 2001
fourth quarter included a $1.1 million non-cash charge resulting from a loan
loss provision established in connection with the Company's management stock
loan program. Earnings for the quarter were $0.9 million ($0.05 earnings per
share) compared to earnings of $2.4 million ($0.12 earnings per share) for the
same period last year.
The Company reported $172.2 million in sales for the quarter ended August
31, 2001, compared to $191.0 million for the same quarter a year ago. Fiscal
2000 sales included $5.1 million in non-comparable Personal Coaching sales,
which assets the Company contributed to Franklin Covey Coaching, LLC, a 50%
owned joint venture. The Company's comparable store sales for the fourth
quarter decreased 29% compared to the same quarter of fiscal 2000, primarily
as a result of lower sales of hand-held electronic organizers and related
products, reduced foot traffic in its mall locations and from the initial-year
cannibalization of the 29 additional stores open during the quarter compared
to the prior year. The Company had 164 retail stores open at the end of the
quarter compared to 135 retail stores in the prior year. Decreases in the
Company's retail operations, catalog/e-commerce operations and wholesale
product sales were partially offset by growth in its education and
organizational sales businesses. Sales from the Company's education related
activities increased 8% compared to the same quarter of fiscal 2000. The
Company delivered more than 20 million school agendas through its education
business during fiscal 2001 year. Organizational sales increased 10% as a
result of some large contractual training programs that were delivered during
the fourth quarter of 2001.
Fiscal Year 2001 Results
EBITDA for fiscal year 2001 was $40.7 million compared to $55.4 million
for fiscal 2000. The Company recorded a $19.2 million net loss ($0.95 loss
per share) for the fiscal year compared to a net loss of $12.4 million
($0.61 loss per share) for fiscal year 2000, including the noncomparable non-
cash adjustments to EBITDA discussed above. However, on an operating cash
flow basis, Franklin Covey had generated approximately $38 million in positive
cash flow during fiscal year 2001. Sales for fiscal year 2001 were
$525.3 million compared to $603.0 million for fiscal year 2000. Fiscal year
2000 sales included $18 million in sales from Personal Coaching, which were
not included in fiscal 2001. Comparable store sales were down 17% compared to
fiscal year 2000. Comparable store sales for fiscal 2000 increased 13%
compared to fiscal 1999 as a result of strong handheld electronics sales. The
strong comparable store sales of fiscal 2000 and the initial-year
cannibalization of the 29 additional stores contributed to the decline in
comparable store sales for fiscal 2001.
Additional Information
The Company has elected the early adoption of SFAS 142, a new accounting
pronouncement dealing with the treatment of amortization and valuation of
goodwill and other intangibles. The Company adopted this accounting standard
effective September 1, 2001, and expects that the amortization of goodwill
will decrease and, therefore, have a positive impact on EPS in future periods.
As part of the initial adoption of this new accounting standard, the Company
must have an independent appraisal of its goodwill and other intangible
assets. As a result of this appraisal, the Company expects that there could
be a material adjustment to the value of its goodwill and other intangibles.
If required, this adjustment would be recorded as a "change in accounting
principle" and would likely be made during the first two quarters of fiscal
year 2002.
The Company also gave general guidance of expected sales and earnings for
the fiscal year 2002. Given the slowing in the economy during the Company's
fiscal third and fourth quarters and the effects of September 11, 2001, on
seminar cancellations and postponements, the Company believes that sales and
profitability during the first quarter of fiscal 2002 will be substantially
lower than the prior year. The Company expects to see continued softness in
the second quarter of fiscal 2002. However, the Company expects that the
effect of substantial cost reductions implemented during the fourth quarter of
fiscal 2001 and during the first quarter of fiscal 2002 would be, on an
annualized basis from recurring operations, sufficient to maintain or grow
EBITDA during the fiscal 2002 year and beyond.
About Franklin Covey
Franklin Covey is a leading global professional services firm offering
learning and performance solutions to assist 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 midsize businesses,
as well as numerous government entities. Organizations and professionals
access Franklin Covey services and products through consulting services,
licensed client facilitators, public workshops, catalogs, over 160 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 in 33 languages.
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 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, general economic conditions,
and other factors identified and discussed in the Company's 2000 10-K 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 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 Fiscal Year Ended
August 31, August 31,
2001 2000 2001 2000
(unaudited) (unaudited) (unaudited) (unaudited)
Sales $172,236 $191,009 $525,333 $602,985
Cost of sales 75,355 89,012 226,760 275,127
Gross margin 96,881 101,997 298,573 327,858
Selling, general
and administrative 68,573 76,179 259,987 266,170
Provision for
restructuring (4,039) 6,281
Equity in earnings
of subsidiary 46 2,088
EBITDA 28,354 29,857 40,674 55,407
Depreciation 7,430 8,024 26,181 24,190
Amortization 5,077 5,682 19,698 20,977
Income (loss) from
operations 15,847 16,151 (5,205) 10,240
Interest income 2,713 736 3,467 1,665
Interest expense (3,975) (1,587) (9,078) (6,178)
Other expense (569) (174)
Income (loss) before
provision for
income taxes 14,585 14,731 (10,816) 5,553
Provision for
income taxes 11,607 10,313 267 9,962
Net income (loss) 2,978 4,418 (11,083) (4,409)
Preferred dividends (2,070) (2,027) (8,153) (8,005)
Income (loss) available
to shareholders $908 $2,391 $(19,236) $(12,414)
Earnings per share
Basic $0.05 $0.12 $(0.95) $(0.61)
Diluted $0.05 $0.12 $(0.95) $(0.61)
Weighted average
o/s shares
Basic 19,856 20,617 20,199 20,437
Diluted 19,856 20,676 20,199 20,437
Sales Detail:
Retail Stores $30,582 $36,914 $151,943 $163,305
Catalog / e-commerce 15,334 22,949 90,450 110,543
Organizational
Solutions Group 25,167 22,851 84,723 85,977
Educational 79,286 73,313 91,037 85,348
International 11,353 11,548 51,851 50,870
Other 10,514 23,434 55,329 106,942
Total $172,236 $191,009 $525,333 $602,985
SOURCE Franklin Covey
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Related links:
http://www.franklincovey.com
Company News On-Call:
http://www.prnewswire.com/comp/107086.html
CONTACT:
Richard R. Putnam, Investor Relations, of
Franklin Covey, +1-801-975-1776
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