SALT LAKE CITY, March 24 /PRNewswire/ -- Franklin Covey (NYSE: FC)
reported today sales and earnings for the second quarter ended February 28,
1998. Sales for the quarter increased 3l% to $138 million from
$106.0 million, an increase of $32.6 million over the same quarter in fiscal
1997. Earnings for the second quarter were $12.5 million compared to
$13.0 million in the comparable quarter of fiscal 1997, a 4% decrease.
Earnings per share for the second quarter of fiscal 1998 were $0.49 per share
compared to $0.63 per share for the second quarter of fiscal 1997. Lower
earnings and earnings per share are due primarily to additional SG&A costs
associated with the Premier School Agendas acquisition effective March 1997
and higher share count associated with the merger of Covey Leadership Center
effective June 1997. Premier School Agendas, due to its highly seasonal
business, had no material revenues in the quarter to offset the incurred
operating expenses.
Product sales reached $91.6 million, up 14% from the comparable quarter
last year. Comparable store sales increased 6% for the quarter ended February
28, 1998, attributable in part to the additional "7 Habits" product line. The
Company currently has 117 stores in 38 states and plans to open 5 to 10
additional stores in the remainder of fiscal 1998. Training sales increased
99% during the quarter to reach $41.0 million compared to the same quarter
last year. Training sales' increase included non-comparable revenues from the
"7 Habits" and "Principle-Centered Leadership" training from the merger with
Covey Leadership Center. Services sales were $6.0 million for the quarter
compared to $5.1 million in the comparable quarter last year.
Sales for the first six months of fiscal 1998 increased 36% to
$282.5 million, an increase of $74.1 million over the same period of fiscal
1997. Earnings decreased to $24.0 million, compared to $26.1 million for the
first six months of fiscal 1997. Earnings per share for the first six months
of fiscal 1998 were $0.94 compared to $1.25 per share for the same period of
fiscal 1997, including a cumulative change in accounting charge of
$2.1 million or $.08 per share taken in the first quarter of fiscal 1998.
The Company also announced that, effective today, Hyrum W. Smith will
relinquish the title of Chief Executive Officer. He will remain as Chairman
of the Board of Directors and will continue to be deeply involved in the
affairs of the Company. Mr. Smith said, "This adjustment in our
organizational structure will allow me to focus on what I do best, which is
working directly with our clients, and visiting our associates in the field.
I expect to be much busier in this regard than I have been in recent years."
The Board of Directors has appointed Jon H. Rowberry to succeed Mr. Smith
as Chief Executive Officer. Mr. Rowberry has been serving for the past year
as President and Chief Operating Officer. Commenting on the change, Mr.
Rowberry said, "I enjoy working closely with Hyrum. We have operated
effectively as a team as we helped effect the merger between Franklin Quest
and Covey Leadership Center, and I expect that relationship will continue into
the future. These are exciting times for our Company and having Hyrum even
more visible to our clients will be a significant benefit to us."
Franklin Covey also announced the repurchase of 260,000 shares of the
Company's common stock during the quarter at an average price of $22.31 per
share under the Company's shared buyback plan. Additionally, the Company
announced an expansion of the Company's common stock repurchase program by
3,000,000 shares. The board approved the resolution on March 21, 1998, and it
is effective as of that date. The Company has entered into an agreement to
purchase 500,000 shares of the Company's common stock from Hyrum W. Smith, the
Chairman of the Board. Mr. Smith's sale of the shares is a result of previous
personal commitments. The purchase price is expected to be no more than
$24.00 per share. The Company currently has 3,412,200 shares available to
repurchase under the recently expanded plan.
Franklin Covey is the leading global provider of leadership development
and productivity service and product solutions based on proven principles.
More than 15 million individuals use Franklin Covey's agendas, organizers and
planners, and its training products and related materials are printed in 28
languages throughout the world. Franklin Covey has more than 12 million books
in print with more than 1.5 million being sold each year. Business Week
magazine listed Franklin Covey's "The 7 Habits of Highly Effective People" as
the #1 best selling paperback trade business book for the year 1997. A new
title, "The 7 Habits of Highly Effective Families," released on October 1,
1997 has already hit the best-seller list. Franklin Covey has more than
14,000 licensed client facilitators teaching its curriculum within their
organizations and trains in excess of 750,000 participants annually in
training seminars teaching principles to help them become more effective.
FRANKLIN COVEY CO.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
February 28 February 28
1998 1997 1998 1997
(unaudited) (unaudited)
Sales $138,564 $105,958 $282,483 $208,335
Cost of sales 53,496 43,066 110,146 86,341
Gross margin 85,068 62,892 172,337 121,994
Selling, general
and administrative 54,208 37,133 109,458 70,740
Depreciation and
amortization 8,292 4,250 15,676 8,024
Income from operations 22,568 21,509 47,203 43,230
Interest income 533 492 892 719
Interest expense (1,798) (170) (3,525) (322)
Income before provision
for income taxes 21,303 21,831 44,570 43,627
Provision for income taxes 8,841 8,787 18,497 17,559
Income before cumulative change
in accounting principle 12,462 13,044 26,073 26,068
Cumulative change in accounting
principle, net of tax 0 0 (2,080) 0
Net income $12,462 $13,044 $23,993 $26,068
Earnings per share
Basic $0.50 $0.66 $0.97 $1.31
Diluted $0.49 $0.63 $0.94 $1.25
Weighted average common shares
Basic 24,774 19,735 24,769 19,869
Diluted 25,423 20,779 25,480 20,845
Sales Detail:
Product $91,575 $80,190 $181,590 $155,124
Training 40,994 20,641 86,838 41,308
Services 5,995 5,127 14,055 11,903
Total Sales $138,564 $105,958 $282,483 $208,335
SOURCE Franklin Covey
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Related links:
http://www.franklincovey.com
CONTACT:
Jon H. Rowberry, President and CEO, or John
L. Theler, Chief Financial Officer, or Richard R. Putnam,
Investor Relations, all of Franklin Covey, 801-975-1776
CNOC: http://www.prnewswire.com or fax, 800-758-5804, ext.
107086
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