SALT LAKE CITY, Dec. 20 /PRNewswire/ -- Franklin Covey (NYSE: FC) today
announced financial results for its fiscal year 2001 first quarter ended
November 25, 2000. Sales for the first quarter decreased 13% to
$125.2 million compared to $144.1 million for the first quarter of fiscal
2000. The Company reported net income of $1.3 million and a loss of
$0.7 million available to shareholders ($0.03 loss per share, after accounting
for preferred dividends) compared to $7.2 million of net income and
$5.3 million of earnings available to shareholders ($0.26 per share, after
accounting for preferred dividends) for the same quarter in the prior year.
EBITDA for the quarter was $15.2 million compared to $24.2 million for the
same quarter of fiscal 2000.
The Company identified five noncomparable factors that affected the first
quarter's EBITDA: 1) under the Company's modified 5-4-4 reporting calendar,
the first quarter of fiscal year 2001 had two fewer business days compared to
the first quarter of fiscal year 2000. This difference will be picked up in
the last quarter of fiscal 2001; 2) the Company reported currency gains during
the first quarter of fiscal 2000 due to relatively strong foreign currency
exchange rates, while reporting a loss due to weaker currency exchange rates
during the first quarter of fiscal 2001; 3) a delivery of planners to
At-A-Glance normally scheduled for May 2000 was accelerated and shipped in
September 1999, during the first quarter of fiscal 2000. The normal delivery
schedule is expected to resume for fiscal 2001, sending the major shipment to
At-A-Glance in May 2001; 4) the Company was unable to ship all of the
1999/2000 Premier agenda order during the fourth quarter of fiscal 1999. As a
result, some of those agendas were delivered during the first quarter of
fiscal 2000. The Company was able to ship its 2000/2001 Premier agenda order
during its fourth quarter of fiscal 2000 which minimized spill-over sales into
the first quarter of fiscal 2001; and 5) the Company reported 14 store
renovations during the quarter causing these stores to be closed during part
of the quarter. These noncomparable items cumulatively accounted for
approximately $6 million of the lower EBITDA comparison. The remaining EBITDA
variance was primarily a result of higher SG&A growth initiative investments,
costs from folding in licensee companies into International operations and an
aggressive campaign to open 15 new retail stores during the quarter. EBITDA
was also impacted by lower call volume and foot traffic through the Company's
catalog operations and retail stores.
In addition to the noncomparable factors, SG&A (selling, general and
administrative) expenses related to the Company's comparable operations were
down approximately $5 million for the quarter due to employee workforce
reductions made during fiscal 2000 as well as the reduction of catalog
marketing expenses and the sale of Publishers Press and Personal Coaching.
The decrease was more than off-set by investments made in the Company's growth
initiatives which included new regional sales offices, 27 more client partners
domestically and 17 more internationally this quarter compared to the same
quarter last year, 23 additional new stores opened in the last 6 months that
are in the ramp-up phase, outside consulting services and the start up of
outsourcing contracts for some of the Company's nonstrategic operations. The
Company noted that SG&A was below its internal projections for the quarter.
The Company's Chairman and CEO, Robert A. Whitman, said, "Taking into
consideration the noncomparable and growth items, we are pleased with this
quarter and the effort put forth by our associates. Though this is only the
first quarter, we believe we are on track to meet our projected EBITDA
increase of $20 million over last year's EBITDA level of $55 million. We
still have much to do to achieve our goals, but we are confident that the many
changes we have made to our business over the past two years are starting to
gain traction and will lead us to stronger results."
Franklin Covey reported sales through an expanded channel view of the
Company for the first time this quarter. Including the impact of two fewer
business days in the first quarter of fiscal 2001, Retail stores reported
$38.6 million of revenues for the quarter compared to $37.8 million for the
same quarter of fiscal 2000. Comparable store sales decreased 5% during the
quarter. The lower comparable store sales was a function of some
cannibalization of existing store sales by the newer stores that have been
opened in the same market as well as a number or existing stores being
remodeled during the quarter. The Company opened 15 new stores during the
quarter bringing the total number of its stores to 146 compared to 128 a year
ago. The Company noted that nationwide declines in mall foot traffic have
also impacted the Company's retail store sales. Catalog/e-commerce revenues
decreased 14% to $28.4 million compared to $33.2 million for the same quarter
a year ago. The decrease, primarily attributed to lower call volume, was
partially offset by higher volumes of website visits and purchases.
Organizational Sales Group, consisting of the eight regional field sales
offices, which provide effectiveness solutions to organizations and
institutions, reported a 3% increase in sales to $22.4 million compared to
$21.7 million for the same quarter of fiscal 2000. Higher revenues were
attributed to relocation and restructuring activities completed during the
first half of fiscal 2000. Educational sales, consisting primarily of Premier
School Agendas, were $4.6 million during the quarter compared to $6.2 million
for the same quarter a year ago. The noncomparable sales of Premier discussed
above were the major cause of the decline in this channel's revenues.
International sales, including direct and licensee operations, were
$14.5 million compared to $14.7 million for the same quarter last year. Other
revenues include sales from the At-A-Glance alliance, Public Seminars,
Personal Coaching and Publishers Press. Other sales decreased from
$30.6 million in the first quarter of fiscal 2000 to $16.6 million for the
quarter ended November 25, 2000. The decrease is primarily due to the sale of
the commercial printing division of Publishers Press and the contribution of
assets of Personal Coaching into the new Franklin Covey Coaching, LLC joint
venture which took place in fiscal 2000. The noncomparable revenues of those
two divisions resulted in a sales decrease of $10.3 million. The revenues of
Franklin Covey Coaching, LLC are no longer reported since the Company owns 50%
of the joint venture. The Company's share of earnings in the LLC is reported
separately as equity in the earnings of a subsidiary.
Franklin Covey also announced a $10 million buyback program for its
outstanding Common Stock. In connection with this buyback program, all
existing buyback authorizations were canceled. The buyback is open-ended and
will be reviewed by the Board at its next meeting in January.
The Company also announced the appointment of Pam Walsh as Executive Vice
President of Leadership Development and Human Resources. Pam comes from a
strong background and career of leadership development and human resources and
most recently owned her own executive coaching firm.
With a new set of tools and learning solutions aimed at increasing
productivity in the digital age, 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, 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 Form 10-K
report filed with the Securities and 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 )
Quarter Ended
November 25, November 27,
2000 1999
(Unaudited)
Sales $125,226 $144,078
Cost of sales 47,612 59,025
Gross margin 77,614 85,053
Selling, general and administrative 63,325 60,873
Equity in earnings of a subsidiary 885
EBITDA 15,174 24,180
Depreciation 5,767 5,141
Amortization 4,936 4,749
EBIT 4,471 14,290
Interest income 240 329
Interest expense (1,874) (1,526)
Income before provision for income taxes 2,837 13,093
Provision for income taxes 1,507 5,905
Net income $1,330 $7,188
Preferred dividends (2,028) (1,914)
Net Income (loss) available to
common shareholders $(698) $5,274
Earnings per share (basic and diluted) $(0.03) $0.26
Weighted average number of common and
common equivalent shares basic and diluted 20,647 20,411
Sales Detail
Retail Stores $38,592 $37,848
Catalog / e-Commerce 28,449 33,163
Organizational Sales Group 22,395 21,655
Educational 4,616 6,163
International 14,538 14,683
Other 16,636 30,566
Total $125,226 $144,078
SOURCE Franklin Covey
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Related links:
http://www.franklincovey.com
Company News On-Call:
http://www.prnewswire.com/comp/107086.html or fax,
800-758-5804, ext. 107086
CONTACT:
Richard R. Putnam, Investor Relations of
Franklin Covey, 801-975-1776
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