SALT LAKE CITY, Nov. 29 /PRNewswire-FirstCall/ -- FranklinCovey (NYSE: FC)
today announced financial results for its fiscal year and fourth quarter ended
August 31, 2005. For the fiscal year ended August 31, 2005, the Company
reported an $18.0 million improvement in operating results with operating
income of $8.9 million compared to a $9.1 million loss from operations in
fiscal 2004. For the fiscal year ended August 31, 2005, the Company reported
a $20.3 million improvement in net income with $10.2 million of net income
before preferred stock dividends ($.34 loss per common share, after accounting
for preferred stock dividends and recapitalization valuation non-cash charge)
compared to a net loss of $10.1 million before preferred stock dividends
($.96 loss per common share, after accounting for preferred dividends) for the
fiscal year 2004.
The $18.0 million improvement in operating results for fiscal 2005
compared to fiscal 2004 is comprised of the following: (1) an $8.1 million
increase in sales combined with an improved gross margin (59.5% compared to
56.6%) resulting in a net $12.9 million year-over-year increase in gross
margin, (2) a $0.6 million decrease in selling, general and administrative
costs, (3) a $4.0 million reduction in depreciation and amortization expense,
and (4) a $0.5 million gain on the disposal of an unconsolidated subsidiary.
For the fourth quarter ended August 31, 2005, the Company reported an
improvement in its operating results, reducing its loss from operations to
$1.0 million compared to a loss from operations of $1.9 million for the
comparable quarter of the prior year. FranklinCovey also reported an
improvement in its net results with a $1.5 million net loss before preferred
stock dividends ($0.16 per common share loss, after accounting for preferred
stock dividends) for the fourth quarter ended August 31, 2005, compared to a
$2.1 million net loss before preferred stock dividends ($.21 per common share
loss, after accounting for preferred stock dividends) for the same quarter of
the prior year.
The year-over-year improvement in the operating results for the quarter is
comprised of the following: (1) a $5.7 million increase in sales, resulting in
a net $3.3 million year-over-year increase in gross margin, (2) a $3.5 million
increase in selling, general and administrative costs primarily a result of
expense off-sets recorded in the fourth quarter of fiscal year 2004, but not
repeated in the fiscal fourth quarter of 2005, and (3) a $1.0 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 2005.
Revenues: Organizational Solutions Business Unit (OSBU) sales for the
year were $130.2 million, a 19% increase compared to $109.4 million for fiscal
year 2004. Sales in the OSBU for the fourth quarter of fiscal 2005 grew by
23% to $35.3 million, compared to $28.7 million for the same quarter last
year. International sales during the quarter were up 22% while domestic sales
grew by 24%. This marks the fifth consecutive quarter of year-over-year
quarterly growth in OSBU revenues, and reflects the overall strengthening of
the Company's training, consulting and sales force performance offerings.
Sales from the Consumer and Small Business Unit (CSBU) for the fiscal year
were $153.4 million compared to $166.1 million for fiscal year 2004. More
than 100% of the decrease resulted from store closures and declines in
technology product sales during fiscal year 2005. CSBU sales for the fourth
quarter ended August 31, 2005 declined 3% to $30.8 million compared to $31.8
million for the same quarter last year. More than 100% of the decrease
resulted from store closures and declines in technology product sales during
fiscal year 2005. Comparable store sales increased 1% during the quarter
compared to the same quarter last year. Retail store sales in total declined
13% or $2.1 million during the fourth quarter compared to the same quarter of
the prior year as a result of having 30 fewer stores open this year compared
to last year. Consumer direct sales grew 6% during the fourth quarter to
$11.6 million compared to $10.9 million for the same quarter last year.
Wholesale revenues were $3.6 million during the quarter compared to
$4.1 million for the same quarter of the prior year. Other CSBU sales
increased by $1.0 million to $1.2 million compared $0.2 million for the same
quarter last year.
Selling, general and administrative expenses: Selling, general and
administrative expenses (SG&A) declined by $0.6 million for the year ended
August 31, 2005, compared to fiscal year 2004. SG&A increased to
$37.3 million during the fourth quarter of fiscal year 2005 compared to
$33.9 million for the fourth quarter of fiscal 2004. SG&A expenses during the
fourth quarter of fiscal year 2004 included expense off-sets that were not
repeated in the fourth quarter of fiscal 2005. SG&A expense in the fourth
quarter of fiscal 2005 also included increased commissions, bonuses and
investments in growth initiatives that were partially off-set by cost
reductions from store closures and other on-going cost saving initiatives.
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 $4.0 million and $1.0 million in D&A during the
fiscal year and fourth quarter ended August 31, 2005, respectively, compared
to the same periods of the prior year.
Liquidity: The Company had $51.7 million in cash and cash equivalents and
short-term investments at August 31, 2005, compared to $41.9 million at
August 31, 2004. The increase in cash was a result of more efficient net
working capital management and stronger earnings. During fiscal 2005, the
Company redeemed $30 million of its Series A Preferred Stock outstanding and
redeemed an additional $10 million in November 2005 reducing the outstanding
Series A Preferred Stock balance to approximately $47 million.
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 100 retail stores, and
http://www.franklincovey.com . Nearly 1,500 FranklinCovey associates provide
professional services and products in 36 offices in 129 countries.
FRANKLIN COVEY CO.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
( in thousands, except per share amounts )
Fiscal Year Ended Quarter Ended
August 31, August 31,
2005 2004 2005 2004
(unaudited) (unaudited) (unaudited) (unaudited)
Net Sales $283,542 $275,434 $66,127 $60,440
Cost of sales 114,847 119,633 27,352 24,945
Gross margin 168,695 155,801 38,775 35,495
Selling, general and
administrative 148,305 148,918 37,341 33,870
Gain on disposal of
unconsolidated subsidiary (500)
Depreciation 7,774 11,774 1,428 2,452
Amortization 4,173 4,173 1,044 1,044
Income (loss) from
operations 8,943 (9,064) (1,038) (1,871)
Interest income 944 481 351 169
Interest expense (786) (218) (690) (23)
Income (loss) before
income taxes 9,101 (8,801) (1,377) (1,725)
Income tax (provision)
benefit 1,085 (1,349) (118) (328)
Net income (loss) 10,186 (10,150) (1,495) (2,053)
Preferred dividends (8,270) (8,735) (1,718) (2,183)
Loss on recapitalization
of Preferred Stock (7,753)
Net loss attributable to
common shareholders $(5,837) $(18,885) $(3,213) $(4,236)
Loss per share
attributable to
common shareholders
(basic and diluted) $(0.34) $(0.96) $(0.16) $(0.21)
Weighted average number
of common and common
equivalent shares
(basic and diluted) 19,949 19,734 20,264 19,726
Sales Detail:
Retail Stores $74,331 $87,922 $14,445 $16,580
Consumer Direct 55,575 55,059 11,560 10,898
Wholesale 19,691 21,081 3,584 4,135
Other 3,757 2,007 1,215 156
Total CSBU Sales 153,354 166,069 30,804 31,769
Domestic 76,114 61,047 22,437 18,127
International 54,074 48,318 12,886 10,544
Total OSBU Sales 130,188 109,365 35,323 28,671
Total Net Sales $283,542 $275,434 $66,127 $60,440
SOURCE FranklinCovey
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Related links:
http://www.franklincovey.com
CONTACT:
Investor Relations, Richard R. Putnam of
FranklinCovey, +1-801-817-1776
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