SALT LAKE CITY, Nov. 26 /PRNewswire-FirstCall/ -- FranklinCovey (NYSE: FC)
today announced financial results for its fourth quarter and fiscal year 2002
ended August 31, 2002, and outlook for the first quarter of fiscal 2003.
Fourth Quarter Results
FranklinCovey finished its fiscal 2002 year during which it completed key
initiatives that included: (1) exiting non-core business (including the sale
of Premier Agendas); (2) paying off essentially all of its debt; (3)
significantly strengthening its cash reserves and liquidity; (4) reducing its
costs; and (5) developing new organizational offerings and products such as
PlanPlus for Microsoft Outlook(R) and TabletPlanner for the Tablet PC. While
some of these initiatives resulted in severance costs and other impairments,
the Company believes that with essentially no debt, substantial liquidity and
a leaner cost structure, coupled with new training programs and products, it
is positioned for a significant improvement in operating results during the
first quarter of fiscal 2003. For the quarter ended August 31, 2002, the
Company had a $36.9 million net loss ($1.96 per common share loss, after
accounting for preferred stock dividends) compared to net income of
$3.0 million ($0.05 earnings per common share, after accounting for preferred
stock dividends) for the same quarter in the prior year. The $39.9 million
year over year variance consisted of: (1) a $23.4 million year over year
decrease from noncash charges taken in the fourth quarter (a $13.2 million
non-cash tax variance resulting from an $8.0 million tax provision compared to
a $5.3 million tax benefit in the comparable quarter last year, $6.1 million
of non-cash management loan loss reserves compared to $1.1 million for the
fourth quarter of fiscal 2001 and $5.7 million of non-cash impairment of
assets compared to $0.5 million for the same quarter a year ago); (2) a
$13.0 million gross margin reduction due to a 22% decrease in year over year
sales, which decline in sales the Company sees narrowing substantially in the
first quarter of fiscal 2003; (3) an $11.7 million decrease from the impact of
discontinued operations; and (4) partially offsetting these declines was an
$8.3 million favorable change resulting primarily from a $4.8 million
reduction in SG&A costs associated with lower associate costs from the
Company's realignment efforts. The tax provision incurred during the fourth
quarter of fiscal 2002 offset previously recorded deferred tax benefits, which
were deemed impaired based upon the trend of recent losses.
Sales during the fiscal 2002 fourth quarter were $74.2 million compared to
$94.6 million for the same quarter the prior year. Consumer Strategic
Business Unit (CSBU) sales totaled $40.1 million, a 15% decline, compared to
$47.4 million for the same quarter last year. The Company had 12 additional
retail stores open in the quarter compared to the same quarter last year to
bring the total to 173 stores nationwide. Comparable store sales for the
quarter declined 20% compared to the same period last year. The decline is
partially attributable to a decline in sales of handheld electronic organizers
compared to the prior year and an increase in the number of stores open during
the fourth quarter compared to same quarter of the prior year, since some of
the new stores cannibalized existing store sales. The comparable store sales
decrease is an improvement compared to declines of 36%, 27% and 26% of
comparable store sales in the first, second and third quarters of fiscal year
2002, respectively. The Company believes that the gap in comparable store
sales will continue to narrow during the first quarter of fiscal 2003 and
expects to see continued progress toward revenue stabilization in overall CSBU
revenues in the first quarter. Organizational Strategic Business Unit (OSBU)
sales in the fourth quarter were $34.2 million compared to $47.2 million for
the same quarter last year and were primarily reflective of weak bookings of
the Company's organizational offerings during the third quarter of fiscal
2002. Toward the end of the fourth quarter, the Company saw the booking pace
begin to strengthen, and the improvement has continued in the first quarter of
fiscal 2003. OSBU has also seen a significant improvement in facilitator-led
revenues in the first quarter of fiscal 2003.
Fiscal 2002 Results
Sales for fiscal 2002 were $333.0 million compared to $439.8 million for
fiscal 2001. The Company incurred a net loss for fiscal 2002 of
$100.6 million ($5.49 loss per common share, after accounting for preferred
stock dividends) compared to a net loss of $11.1 million ($0.95 loss per
common share, after accounting for preferred dividends) for fiscal 2001.
Non-recurring gains and non-cash charges recorded during fiscal 2002, not
affecting fiscal 2001, included: (1) a $64.9 million net gain from the sale
of Premier Agendas completed in the fiscal second quarter; (2) a $61.4 million
net non-cash cumulative effect of change in accounting principle loss relating
to the accounting for goodwill and indefinitive lived assets; (3) a
$26.5 million non-cash impairment of long-lived assets; and (4) a
$24.8 million non-cash provision for management stock loan losses compared to
$1.1 million in fiscal 2001.
First Quarter Fiscal 2003 Outlook
FranklinCovey also discussed current trends that show its initiatives are
beginning to bear fruit. The Company expects that year over year revenue gaps
will narrow to approximately 5% during the first quarter of fiscal 2003, due
to better operations in both of its business units and the effect of having
five additional business days during the first quarter of fiscal 2003. The
Company also expects operating results to improve in the first quarter
reflecting smaller decreases in revenues and a substantial reduction in
operating costs.
Other Announcements
The Company also announced January 24, 2003, as the date for its Annual
Shareholders Meeting. Proxy materials and the annual report will be mailed to
shareholders of record as of November 22, 2002, on approximately December 13,
2002.
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 170 retail stores,
http://www.franklincovey.com . More than 2,000 FranklinCovey 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 and 8-K 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 Twelve Months Ended
August 31, August 31,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Sales $74,241 $94,630 $332,998 $439,781
Cost of sales 34,169 41,536 149,369 189,982
Gross margin 40,072 53,094 183,629 249,799
Selling, general and
administrative 52,304 57,113 216,910 224,458
Provision for losses
on management stock
loans 6,072 1,052 24,775 1,052
Impairment of investment
in unconsolidated
subsidiary 16,323
Loss on impaired assets 5,668 500 10,185 801
Depreciation 8,677 7,915 33,342 27,441
Amortization 1,171 2,657 4,667 10,840
Loss from operations (33,820) (16,143) (122,573) (14,793)
Equity in earnings of
unconsolidated
subsidiary 1,151 46 4,316 2,088
Interest income 1,024 2,688 3,112 3,180
Interest expense (34) (3,366) (2,784) (7,671)
Loss on settlement of
interest rate swap (4,894)
Other income, net 8 644
Loss before
income taxes (31,671) (16,775) (122,179) (17,196)
Benefit (provision)
for income taxes (7,979) 5,253 25,713 4,000
Net loss from continuing
operations (39,650) (11,522) (96,466) (13,196)
Income (loss) from
discontinued operations,
net of taxes (1,314) 14,500 (7,584) 2,113
Gain on sale of
discontinued
operations,
net of taxes 4,077 64,851
Cumulative effect of
accounting change,
net of taxes (61,386)
Net income (loss) (36,887) 2,978 (100,585) (11,083)
Preferred dividends (2,184) (2,069) (8,681) (8,153)
Net income (loss)
attributable to
common shareholders $(39,071) $909 $(109,266) $(19,236)
Earnings (loss) from
continuing operations
and preferred stock
dividends (basic and
diluted) $(2.10) $(0.68) $(5.29) $(1.06)
Earnings (loss) per share
attributable to common
shareholders (basic and
diluted) $(1.96) $0.05 $(5.49) $(0.95)
Weighted average number
of common and common
equivalent shares
(basic and diluted) 19,967 19,856 19,895 20,199
Sales Detail:
Retail Stores $25,728 $31,391 $122,496 $156,299
Catalog / e-commerce 12,461 15,334 63,291 90,450
Other 1,873 682 4,921 7,881
Total CSBU Sales 40,062 47,407 190,708 254,630
Organizational Solutions
Group 23,892 36,683 97,519 134,450
International 10,287 10,540 44,771 50,701
Total OSBU Sales 34,179 47,223 142,290 185,151
Total $74,241 $94,630 $332,998 $439,781
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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