SALT LAKE CITY, Nov. 14 /PRNewswire-FirstCall/ -- FranklinCovey (NYSE:
FC) today announced financial results for its fiscal year and fourth
quarter ended August 31, 2006. For the fiscal year ended August 31, 2006,
the Company reported a $5.6 million improvement in operating results with
operating income of $14.0 million compared to an $8.4 million income from
operations in fiscal 2005. For the fiscal year ended August 31, 2006, the
Company reported an $18.4 million improvement in net income with $28.6
million of net income before preferred stock dividends ($1.18 earnings per
diluted common share, after accounting for preferred stock dividends)
compared to $10.2 million of net income before preferred stock dividends
($.34 loss per common share, after accounting for preferred dividends and
recapitalization valuation non-cash charge) for the fiscal year 2005. Net
income for the fiscal year ended August 31, 2006 included an income tax
benefit of $14.9 million primarily from a reversal of a valuation allowance
established in prior years against net deferred income tax assets.
The $5.6 million improvement in operating results for fiscal 2006
compared to fiscal 2005 is comprised of the following: (1) a $4.9 million
decrease in sales, much more than 100% of which was due to closed stores,
combined with an improved gross margin (60.1 % compared to 59.5%) resulting
in a net $1.3 million year-over-year decrease in gross margin, (2) a $3.6
million decrease in selling, general and administrative costs, and (3) a
$3.3 million reduction in depreciation and amortization expense.
For the fourth quarter ended August 31, 2006, the Company reported an
improvement of $1.8 million in its operating results, with $0.7 million of
operating income compared to a loss from operations of $1.0 million for the
comparable quarter of the prior year. FranklinCovey also reported an
improvement in its net results with $15.1 million of net income before
preferred stock dividends ($0.70 earnings per diluted common share, after
accounting for preferred stock dividends) for the fourth quarter ended
August 31, 2006, compared to a $1.5 million net loss before preferred stock
dividends ($.16 per common share loss, after accounting for preferred stock
dividends) for the same quarter of the prior year. The fourth quarter net
income included a $14.7 million tax benefit primarily from the reversal of
the valuation allowance described above.
The year-over-year improvement in the operating results for the quarter
is comprised of the following: (1) a $1.5 million decrease in sales, more
than 100% of which was due to closed stores, resulting in a net $0.3
million year-over-year decrease in gross margin, (2) a $1.5 million
decrease in selling, general and administrative costs, and (3) a $0.6
million reduction in depreciation and amortization expense.
The Company provided the following details underlying the continued
improvement in its operating results during the fourth quarter and full
year of fiscal 2006.
Revenues: Organizational Solutions Business Unit (OSBU) sales for the
year were $127.8 million, a 4% increase compared to $122.9 million for
fiscal year 2005. Sales in the OSBU for the fourth quarter of fiscal 2006
grew by 5% to $34.9 million, compared to $33.4 million for the same quarter
last year. International sales during the quarter were up 3% while domestic
sales grew by 6%.
Sales from the Consumer Solutions Business Unit (CSBU) for the fiscal
year were $150.8 million compared to $160.7 million for fiscal year 2005
with store closures accounting for more than 100 percent of the decline
with an impact of $12.4 million on total sales. CSBU sales for the fourth
quarter ended August 31, 2006 declined to $29.8 million compared to $32.7
million for the same quarter last year, primarily a result of stores
closures during the year. Comparable store sales increased 1% during the
quarter compared to the same quarter last year. Consumer direct sales
declined less than 1% during the fourth quarter to $13.4 million compared
to $13.5 million for the same quarter last year. Wholesale revenues were
$2.6 million during the quarter compared to $3.6 million for the same
quarter of the prior year. Other CSBU sales increased by $0.1 million to
$1.3 million compared to $1.2 million for the same quarter last year.
Selling, general and administrative expenses: Selling, general and
administrative expenses (SG&A) declined by $3.6 million for the year ended
August 31, 2006, compared to fiscal year 2005. SG&A decreased to $35.9
million during the fourth quarter of fiscal year 2006 compared to $37.3
million for the fourth quarter of fiscal 2005. The decreases were a result
of closed retail stores and continued efforts to reduce operating costs.
Depreciation and amortization: Depreciation and amortization expenses
(D&A) continued to decline during the fiscal year 2005 and fourth quarter,
reflecting lower, more focused and better-managed capital expenditures and
the effect of certain assets becoming fully depreciated and store closures.
The Company reported declines of $3.3 million and $0.6 million in D&A
during the fiscal year and fourth quarter ended August 31, 2006,
respectively, compared to the same periods of the prior year.
Liquidity: The Company had $30.6 million in cash and cash equivalents
at August 31, 2006. During fiscal 2006, the Company redeemed $20.0 million
of its outstanding Series A Preferred Stock and purchased $5.1 million or
0.7 million shares of its Common Stock during fiscal 2006 under a plan that
was approved by the Board of Directors in January 2006.
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 more than 90 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,
retail stores, and http://www.franklincovey.com . Nearly 1,500 FranklinCovey
associates provide professional services and products to clients in more
than 130 countries.
FRANKLIN COVEY CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
( in thousands, except per share amounts )
Fiscal Year Ended Quarter Ended
August 31, August 31,
2006 2005 2006 2005
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $278,623 $283,542 $64,657 $66,128
Cost of sales 111,238 114,847 26,144 27,352
Gross profit 167,385 168,695 38,513 38,776
Selling, general
and administrative 144,747 148,305 35,862 37,342
Depreciation 4,779 7,774 1,016 1,428
Amortization 3,813 4,173 902 1,043
Income (loss)
from operations 14,046 8,443 733 (1,037)
Interest expense
and other, net (415) 658 (275) (340)
Income (loss) before
income taxes 13,631 9,101 458 (1,377)
Income tax (provision)
benefit 14,942 1,085 14,650 (117)
Net income (loss) 28,573 10,186 15,108 (1,494)
Preferred dividends (4,385) (8,270) (933) (1,719)
Loss on recapitalization
of preferred stock (7,753)
Net income (loss)
available to
common shareholders $ 24,188 $ (5,837) $ 14,175 $ (3,213)
Income (loss) per share
available to
common shareholders:
Basic $ 1.20 $ (0.34) $ 0.71 $ (0.16)
Diluted $ 1.18 $ (0.34) $ 0.70 $ (0.16)
Weighted average
number of common
and common share
equivalents:
Basic 20,134 19,949 19,883 20,264
Diluted 20,554 19,949 20,206 20,264
Sales Detail:
Retail Stores $ 62,440 $ 74,331 $ 12,440 $ 14,445
Consumer Direct 63,681 62,873 13,389 13,484
Wholesale 19,783 19,691 2,635 3,584
Other 4,910 3,757 1,288 1,216
Total CSBU Sales 150,814 160,652 29,752 32,729
Domestic 71,108 68,816 21,685 20,513
International 56,701 54,074 13,220 12,886
Total OSBU Sales 127,809 122,890 34,905 33,399
Total Net Sales $278,623 $283,542 $ 64,657 $ 66,128
SOURCE FranklinCovey
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Related links:
http://www.franklincovey.com
CONTACT:
Richard R. Putnam, Investor Relations,
+1-801-817-1776
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