SALT LAKE CITY, Dec. 22 /PRNewswire/ -- Franklin Covey (NYSE: FC) today
announced financial results for its fiscal year 2000 first quarter ended
November 27, 1999. The Company reported earnings of $7.2 million ($0.26 per
share, after accounting for preferred dividends) compared to $10.9 million
($0.50 per share) for the same quarter in the prior year. Sales for the first
quarter of fiscal year 2000 were $144.1 million, a 3% increase compared to the
first quarter of fiscal year 1999. An aggressive investment in new online
training and application tools and channels, margin mix of products sold and
exiting the mass market channel factored in the lower year to year earnings.
Sales growth of electronic application tools, Contract Channel and Premier
School Agendas were partially offset by lower volume through Publishers Press,
discontinued mass market channel and lower core training sales that were
impacted by recent sales force organizational changes. Electronic training
and implementation tools sales growth fueled much of the 7% growth in same
store sales and the 8% growth in the catalog/e-commerce sales during the
quarter. The Company opened three new stores during the quarter to bring the
total to 128 stores in 38 states.
Gross margin declined $1.4 million as the result of the discontinuance of
the mass market channel and a volume decline in higher margin training sales
and an increase in lower margin electronic training and implementation tools.
Also, inventory reserves were increased as the result of a pre-holiday
inventory buildup of new planners.
EBITDA of the Company's core businesses benefited from the previously
announced headcount reduction in connection with its restructuring, but was
offset by increased catalog and promotion costs. SG&A for Franklin Covey's
growth businesses were higher due to acceleration in electronic solutions
investments and growth at Premier School Agendas.
The Company reported its core headcount was lower by 340 compared to the
same period in the prior year, primarily as a result of its previously
announced restructuring program. The remaining reductions under the plan are
expected to be completed by the end of this fiscal year's third quarter. The
Company also reported that the move of its sales force into the announced
eight regional sales offices will be completed in January, 2000. The Provo,
Utah Riverwoods campus, which housed much of the centralized sales force, is
still anticipated to be closed and sublet by the end of the fiscal year.
Franklin Covey also announced today a major milestone in its strategy to
extend industry-leading productivity solutions to the Internet with the
acquisition of a top Internet calendaring and scheduling property,
DayTracker.com. The acquisition effectively combines the offline brand
leadership, cust and personal productivity expertise of Franklin
Covey with the Internet application design, development and marketing
expertise of DayTracker.com. Franklin Planner online will be a complementary
extension of the industry-leading Franklin Planner currently available in
print and on popular desktop applications (such as Franklin Planner for
Microsoft Outlook and Franklin Planner Software) and handheld devices (such as
the Palm Pilot and Windows CE). Synchronization and print capabilities will
unify paper, desktop, device and Web platforms into a single planning system.
According to Douglas G. Smith, Executive Vice President of Franklin
Covey's e-Commerce, Online and Electronic Products, "There are dozens of
calendaring and scheduling applications vying for leadership on the Internet
today. Franklin Covey does not intend to position the online version of the
Franklin Planner as yet another online calendar, but as the Internet's first
complete personal planner application." Franklin Planner online will soon be
available to individual customers and to institutional clients as a co-branded
application.
Franklin Covey is the leading global professional services firm offering
learning and performance solutions to assist professionals and organizations
to increase their effectiveness in Productivity, Leadership, Communication and
Sales. Organizational clients include 80 of the Fortune 100, more than three-
quarters of the Fortune 500, thousands of smaller and mid-sized businesses as
well as numerous government entities. Organizations and their professionals
access Franklin Covey's products and services through professional consulting
services, licensed client facilitators, public workshops, catalogs, retail
stores and the Internet (franklincovey.com). More than 3,500 Franklin Covey
associates provide professional services and products for nearly 20 million
individuals through 44 offices in 33 countries in 32 languages. Franklin
Covey trains in excess of 750,000 participants annually in training seminars
teaching principles to help them achieve "What Matters Most."
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 1999 10-K report
filed with the Securities 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 27, November 28,
1999 1998
(unaudited)
Sales $144,078 $140,362
Cost of sales 59,025 53,931
Gross margin 85,053 86,431
Selling, general and administrative 60,873 56,421
EBITDA 24,180 30,010
Depreciation 5,141 4,645
Amortization 4,749 4,390
EBIT 14,290 20,975
Interest income 329 362
Interest expense (1,526) (2,522)
Income before provision
for income taxes 13,093 18,815
Provision for income taxes 5,905 7,902
Net income $7,188 $10,913
Preferred Dividends (1,914)
Income available to common shareholders $5,274 $10,913
Earnings per share (Diluted) $0.26 $0.50
Weighted average number
of common and common
equivalent shares (Diluted) 20,595 21,751
Sales Detail
Consumer Products $81,311 $76,880
Training and Education 41,176 40,582
International 14,683 14,701
Other 6,908 8,199
Total $144,078 $140,362
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:
John L. Theler, Chief Financial Officer, or
Richard R. Putnam, Investor Relations, both of Franklin Covey,
801-975-1776
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