Franklin Covey Reports Second Quarter Sales and Earnings

Apr 10, 2001, 01:00 ET from Franklin Covey Co.

    SALT LAKE CITY, April 10 /PRNewswire/ -- Franklin Covey (NYSE:   FC) today
 announced financial results for its fiscal year 2001 second quarter ended
 February 24, 2001.  The Company reported a net loss of $0.8 million
 ($0.14 loss per share, after accounting for preferred dividends) compared to
 earnings of $2.8 million ($0.04 earnings per share, after accounting for
 preferred dividends) for the same quarter in the prior year.  Sales for the
 second quarter of fiscal year 2001 were $133.4 million compared to
 $149.4 million in the second quarter of fiscal year 2000.  Sales and earnings
 were primarily impacted by lower traffic and sales in the Company's retail
 stores and catalog operations.
     Sales for the second quarter of fiscal year 2000 included sales from
 Publishers Press, which was sold at the end of fiscal year 2000 and sales from
 Personal Coaching, whose net assets were contributed to Franklin Covey
 Coaching, LLC, a partnership in which the Company owns 50% in joint venture
 with AMS Direct.  These two noncomparable sales channels accounted for
 $10.4 million in sales during the same period last year.  Last year's sales
 during the second fiscal quarter included a 14% comparable store sales
 increase, due in large part to a very successful launch of Palm handheld
 products during the quarter.  While the delayed launch this year had an impact
 on comparable store sales during the second quarter of fiscal 2001, the
 recently announced introduction of new handheld products is anticipated to
 help this year's third and fourth quarters.  During the quarter ended
 February 24, 2001, the Company reported a comparable store sales decline of
 10% mainly in connection with the strong sales during the prior year, an
 economic slow-down which generated lower foot traffic in 2001, renovations in
 a number of existing stores and the opening of 24 new retail stores.  Many of
 the new stores opened during the year have been in comparable store sales
 markets, cannibalizing sales from the existing stores, yet growing comparable
 market sales.  The Company ended the quarter with 151 retail stores in the
 United States.  Retail store sales were $55.8 million for the second quarter
 of fiscal 2001 compared to $55.1 million for the same quarter a year ago.
 Catalog/e-commerce sales were $28.3 million for the quarter compared to
 $29.9 million for the second quarter of fiscal 2000.  Organizational Solution
 Group (OSG) sales were $17.4 million during the second quarter of fiscal 2001
 compared to $19.2 million for the same quarter last year.  Educational sales
 were $3.1 million during the quarter compared to $2.3 million for the second
 quarter of fiscal 2000.  International sales were $14.5 million compared to
 $14.2 million for the same quarter last year.  Other sales were $14.2 million
 compared to $28.7 million for the same quarter of fiscal 2000, which included
 sales from Personal Coaching and Publishers Press.  In addition, Other sales
 declined as a result of decreased volume through the Company's Wholesale
 channel.
     The Company's EBITDA for the quarter was $10.0 million compared to
 $17.4 million for the same quarter of the prior year resulting primarily from
 reduced revenue and the opening new stores during the quarter as well as
 renovations of older stores which resulted in higher costs without the
 incremental revenues to off-set these expenses.  Partially off-setting the
 decline in EBITDA was a reduction in associate costs compared to the same
 quarter of the prior year.  Economic factors also contributed to lower sales
 and earnings.  Commenting on the quarter's results, Robert Whitman, Chairman
 and CEO said, "At the beginning of the year, we budgeted for approximately
 $75 million in EBITDA this year compared to $55 million of EBITDA during
 fiscal year 2000.  To date, our e-commerce, International, Franklin Covey
 Coaching, LLC and corporate support functions are all performing above that
 budget.  Other channels that are performing slightly below that budget but
 ahead of last year are OSG, Public Programs, Education and our Solutions
 groups.  Although, through the first six months, we are $2 million behind our
 budgeted level, we expect that the opportunities during the next two quarters
 in Educational sales, new handheld product launches and additional strategic
 alliances will form a strong enough base to allow the Company to reach $70 to
 $75 million in EBITDA this year."
     Sales for the first six months of fiscal 2001 were $262.5 million compared
 to $298.2 million for the same period of fiscal 2000.  Net income was
 $0.5 million ($0.17 loss per share, after accounting for preferred dividends)
 compared to $10.0 million ($0.30 earnings per share, after accounting for
 preferred dividends) for the first six months of fiscal 2000.
     Franklin Covey also announced that it had purchased to date $7.1 million
 or 888,029 shares of its common stock on the open market, $5.0 million or
 632,300 shares during the quarter ended February 24, 2001.  The Company is not
 currently pursuing the purchase of additional shares in connection with its
 buyback program.  The Company anticipates it will make a public announcement
 prior to resuming any buyback program.
 
     About Franklin Covey Co.
     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, www.franklincovey.com and 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 economic factors, 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 and subsequent 10-Q reports filed with the Securities and
 Exchange Commission.  There can be no assurance that the Company's actual
 future performance will achieve 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           Six Months Ended
                           February 24, February 26, February 24, February 26,
                                2001         2000          2001        2000
                                   (unaudited)                (unaudited)
 
     Sales                    $133,366     $149,365     $262,488    $298,244
 
     Cost of sales              58,959       66,267      110,467     130,092
 
     Gross margin               74,407       83,098      152,021     168,152
 
     Selling, general
      and administrative        64,994       64,013      128,319     124,396
     Other restructuring
      costs                                   1,668                    2,158
     Equity in earnings
      of subsidiary                550                     1,435
     EBITDA                      9,963       17,417       25,137      41,598
 
     Depreciation                5,692        5,368       11,459      10,510
     Amortization                4,859        5,160        9,796       9,909
     EBIT                         (588)       6,889        3,882      21,179
 
     Interest income               281          305          521         634
     Interest expense           (1,408)      (1,764)      (3,282)     (3,290)
     Income before
      provision for
      income taxes              (1,715)       5,430        1,121      18,523
 
     Provision for income
      taxes                       (911)       2,611          595       8,516
     Net income (loss)           $(804)      $2,819         $526     $10,007
 
     Preferred dividends        (2,028)      (2,036)      (4,056)     (3,950)
     Income (loss) available
      to common shareholders   $(2,832)        $783      $(3,530)     $6,057
 
     Earnings per share
      (basic and diluted)       $(0.14)       $0.04       $(0.17)      $0.30
 
     Weighted average number
      of common and common
      equivalent shares
      (basic and diluted)       20,450       20,285       20,546      20,445
 
 
     Sales Detail:
      Retail Stores            $55,833      $55,075      $94,410     $92,911
      Catalog / e-commerce      28,346       29,878       59,932      66,980
      Organizational
       Sales Group              17,358       19,248       40,099      41,147
      Educational                3,134        2,250        7,943       8,627
      International             14,480       14,249       29,242      29,217
      Other                     14,215       28,665       30,862      59,362
     Total                    $133,366     $149,365     $262,488    $298,244
 
 

SOURCE Franklin Covey Co.
    SALT LAKE CITY, April 10 /PRNewswire/ -- Franklin Covey (NYSE:   FC) today
 announced financial results for its fiscal year 2001 second quarter ended
 February 24, 2001.  The Company reported a net loss of $0.8 million
 ($0.14 loss per share, after accounting for preferred dividends) compared to
 earnings of $2.8 million ($0.04 earnings per share, after accounting for
 preferred dividends) for the same quarter in the prior year.  Sales for the
 second quarter of fiscal year 2001 were $133.4 million compared to
 $149.4 million in the second quarter of fiscal year 2000.  Sales and earnings
 were primarily impacted by lower traffic and sales in the Company's retail
 stores and catalog operations.
     Sales for the second quarter of fiscal year 2000 included sales from
 Publishers Press, which was sold at the end of fiscal year 2000 and sales from
 Personal Coaching, whose net assets were contributed to Franklin Covey
 Coaching, LLC, a partnership in which the Company owns 50% in joint venture
 with AMS Direct.  These two noncomparable sales channels accounted for
 $10.4 million in sales during the same period last year.  Last year's sales
 during the second fiscal quarter included a 14% comparable store sales
 increase, due in large part to a very successful launch of Palm handheld
 products during the quarter.  While the delayed launch this year had an impact
 on comparable store sales during the second quarter of fiscal 2001, the
 recently announced introduction of new handheld products is anticipated to
 help this year's third and fourth quarters.  During the quarter ended
 February 24, 2001, the Company reported a comparable store sales decline of
 10% mainly in connection with the strong sales during the prior year, an
 economic slow-down which generated lower foot traffic in 2001, renovations in
 a number of existing stores and the opening of 24 new retail stores.  Many of
 the new stores opened during the year have been in comparable store sales
 markets, cannibalizing sales from the existing stores, yet growing comparable
 market sales.  The Company ended the quarter with 151 retail stores in the
 United States.  Retail store sales were $55.8 million for the second quarter
 of fiscal 2001 compared to $55.1 million for the same quarter a year ago.
 Catalog/e-commerce sales were $28.3 million for the quarter compared to
 $29.9 million for the second quarter of fiscal 2000.  Organizational Solution
 Group (OSG) sales were $17.4 million during the second quarter of fiscal 2001
 compared to $19.2 million for the same quarter last year.  Educational sales
 were $3.1 million during the quarter compared to $2.3 million for the second
 quarter of fiscal 2000.  International sales were $14.5 million compared to
 $14.2 million for the same quarter last year.  Other sales were $14.2 million
 compared to $28.7 million for the same quarter of fiscal 2000, which included
 sales from Personal Coaching and Publishers Press.  In addition, Other sales
 declined as a result of decreased volume through the Company's Wholesale
 channel.
     The Company's EBITDA for the quarter was $10.0 million compared to
 $17.4 million for the same quarter of the prior year resulting primarily from
 reduced revenue and the opening new stores during the quarter as well as
 renovations of older stores which resulted in higher costs without the
 incremental revenues to off-set these expenses.  Partially off-setting the
 decline in EBITDA was a reduction in associate costs compared to the same
 quarter of the prior year.  Economic factors also contributed to lower sales
 and earnings.  Commenting on the quarter's results, Robert Whitman, Chairman
 and CEO said, "At the beginning of the year, we budgeted for approximately
 $75 million in EBITDA this year compared to $55 million of EBITDA during
 fiscal year 2000.  To date, our e-commerce, International, Franklin Covey
 Coaching, LLC and corporate support functions are all performing above that
 budget.  Other channels that are performing slightly below that budget but
 ahead of last year are OSG, Public Programs, Education and our Solutions
 groups.  Although, through the first six months, we are $2 million behind our
 budgeted level, we expect that the opportunities during the next two quarters
 in Educational sales, new handheld product launches and additional strategic
 alliances will form a strong enough base to allow the Company to reach $70 to
 $75 million in EBITDA this year."
     Sales for the first six months of fiscal 2001 were $262.5 million compared
 to $298.2 million for the same period of fiscal 2000.  Net income was
 $0.5 million ($0.17 loss per share, after accounting for preferred dividends)
 compared to $10.0 million ($0.30 earnings per share, after accounting for
 preferred dividends) for the first six months of fiscal 2000.
     Franklin Covey also announced that it had purchased to date $7.1 million
 or 888,029 shares of its common stock on the open market, $5.0 million or
 632,300 shares during the quarter ended February 24, 2001.  The Company is not
 currently pursuing the purchase of additional shares in connection with its
 buyback program.  The Company anticipates it will make a public announcement
 prior to resuming any buyback program.
 
     About Franklin Covey Co.
     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, www.franklincovey.com and 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 economic factors, 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 and subsequent 10-Q reports filed with the Securities and
 Exchange Commission.  There can be no assurance that the Company's actual
 future performance will achieve 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           Six Months Ended
                           February 24, February 26, February 24, February 26,
                                2001         2000          2001        2000
                                   (unaudited)                (unaudited)
 
     Sales                    $133,366     $149,365     $262,488    $298,244
 
     Cost of sales              58,959       66,267      110,467     130,092
 
     Gross margin               74,407       83,098      152,021     168,152
 
     Selling, general
      and administrative        64,994       64,013      128,319     124,396
     Other restructuring
      costs                                   1,668                    2,158
     Equity in earnings
      of subsidiary                550                     1,435
     EBITDA                      9,963       17,417       25,137      41,598
 
     Depreciation                5,692        5,368       11,459      10,510
     Amortization                4,859        5,160        9,796       9,909
     EBIT                         (588)       6,889        3,882      21,179
 
     Interest income               281          305          521         634
     Interest expense           (1,408)      (1,764)      (3,282)     (3,290)
     Income before
      provision for
      income taxes              (1,715)       5,430        1,121      18,523
 
     Provision for income
      taxes                       (911)       2,611          595       8,516
     Net income (loss)           $(804)      $2,819         $526     $10,007
 
     Preferred dividends        (2,028)      (2,036)      (4,056)     (3,950)
     Income (loss) available
      to common shareholders   $(2,832)        $783      $(3,530)     $6,057
 
     Earnings per share
      (basic and diluted)       $(0.14)       $0.04       $(0.17)      $0.30
 
     Weighted average number
      of common and common
      equivalent shares
      (basic and diluted)       20,450       20,285       20,546      20,445
 
 
     Sales Detail:
      Retail Stores            $55,833      $55,075      $94,410     $92,911
      Catalog / e-commerce      28,346       29,878       59,932      66,980
      Organizational
       Sales Group              17,358       19,248       40,099      41,147
      Educational                3,134        2,250        7,943       8,627
      International             14,480       14,249       29,242      29,217
      Other                     14,215       28,665       30,862      59,362
     Total                    $133,366     $149,365     $262,488    $298,244
 
 SOURCE  Franklin Covey Co.

RELATED LINKS

http://www.franklincovey.com