UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of Earliest Event Reported):
January
10, 2006
FRANKLIN
COVEY CO.
(Exact
name of registrant as specified in its charter)
Commission
File No. 1-11107
|
Utah
|
87-0401551
|
|
|
(State
or other jurisdiction of incorporation)
|
(IRS
Employer Identification Number)
|
|
2200
West Parkway Boulevard
Salt
Lake City, Utah 84119-2099
(Address
of principal executive offices)(Zip Code)
Registrant’s
telephone number, including area code: (801)
817-1776
Former
name or former address, if changed since last report: Not
Applicable
______________________
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results
of Operations and Financial Condition
On
January 10, 2006, Franklin Covey Co. (the Company) announced its financial
results for the fiscal quarter ended November 26, 2005. A copy of the earnings
release is being furnished as exhibit 99.1 to this current report on Form
8-K.
The
information in this Report (including the exhibit) is furnished pursuant
to Item
2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing made by the Company under the Securities Act of
1933,
as amended, or the Exchange Act, except as expressly set forth by specific
reference in such a filing.
Item
9.01 Financial
Statements and Exhibits
|
(c)
|
Exhibits
|
| 99.1 |
Earnings
release dated January 10, 2006
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
FRANKLIN
COVEY CO.
|
||||
|
Date:
|
January
10, 2006
|
By:
|
/s/
STEPHEN D. YOUNG
|
|
|
Stephen
D. Young
|
||||
|
Chief
Financial Officer
|
||||
Exhibit
99.1
News
Bulletin
| 2200 West Parkway Boulevard |
For
Further Information:
|
|
| Salt Lake City, Utah 84119-2331 |
Richard
R. Putnam
|
|
| www.franklincovey.com |
Investor
Relations
|
|
|
(801)
817-1776
|
FRANKLINCOVEY
ANNOUNCES
THIRTEENTH
CONSECUTIVE QUARTER OF OPERATING IMPROVEMENTS
FIRST
QUARTER FISCAL 2006 RESULTS
Salt
Lake City, Utah -
January
10, 2006 -- FranklinCovey (NYSE:
FC)
reported
its thirteenth consecutive quarter of significant improvement in operating
results with operating income of $4.1 million for the first quarter of fiscal
2006, a $1.8 million or 81% improvement, compared to $2.3 million of income
from
operations for the first quarter of fiscal 2005. The Company also reported
net
income before preferred stock dividends for the first quarter of fiscal 2006
totaling $3.2 million, a $1.7 million or 112% improvement over the $1.5 million
of net income reported for the same quarter in fiscal 2005. The Company reported
$0.09 earnings per share after accounting for preferred stock dividends for
the
quarter ended November 26, 2005 compared to a $0.03 loss per share after
accounting for preferred stock dividends for the first quarter of fiscal
2005.
The Company’s financial results during the quarter were influenced primarily by
the following as compared to the first quarter of last year: (1) a $4.0 million
increase in sales through our Organizational Solutions Business Unit (OSBU)
which was partially offset by a $0.8 million decline in sales (more than
100%
due to store closures) through the Consumer and Small Business Unit (CSBU)
resulting in a net $3.2 million increase in sales, (2) an improvement in
gross
margin (61.4% compared to 60.0%) which, together with the increase in sales,
resulted in a net $3.0 million year-over-year increase in gross margin, (3)
an
increase in selling, general and administrative costs of $1.8 million, primarily
as a result of investments in initiatives to grow the business, and (4) a
$0.7
million decline in depreciation and amortization expense. The Company provided
the following details underlying the continued improvement of its operating
results during the first quarter of fiscal 2006.
Revenues:
Total
sales for the first quarter of fiscal 2006 grew 5% or $3.2 million compared
to
last year’s first quarter. OSBU sales grew 15% or $4.0 million for the first
quarter of fiscal 2006 to $31.3 million compared to $27.3 million for the
same
quarter last year. The sales improvement was primarily the result of stronger
domestic and international sales of organizational training solutions from
a
growing sales force and increased marketing efforts.
Sales
from the CSBU for the quarter ended November 26, 2005, declined $0.8 million
to
$41.0 million compared to $41.8 million for the same quarter last year. Retail
store sales declined $3.7 million (more than 100% due to store closures,
declines in technology product sales and one less business day) to $14.7
million
compared to $18.4 million for the same quarter the prior year. Of the $3.7
million decline in retail sales, $3.3 million was a result of having 30 fewer
stores (105 compared to 135) open in the quarter and $0.7 million was the
result
of reduced technology and specialty product sales that was partially offset
by
increased sales of FranklinCovey Planner products. Comparable stores sales
declined 2% during the quarter compared to the same quarter last year, primarily
as a result of having 1 less business day in the quarter. Consumer direct
sales
were $18.6 million compared to $18.9 million for the same quarter of last
year,
reflecting continued sales declines in technology products and one less sales
day in the quarter. Product sales through the wholesale channel during the
quarter were $6.6 million compared to $3.6 million during the same quarter
last
year, primarily reflecting the timing differential of sales to these entities
this year compared to last year. Sales of products through other CSBU channels
were $1.2 million compared to $1.0 million for the same quarter last year.
Selling,
general and administrative expenses:
Selling,
general and administrative expenses (SG&A) increased to $37.8 million for
the quarter ended November 26, 2005, compared to $35.9 million for the same
quarter last year. The increase was primarily due to increased investments
for
initiatives that are designed to grow the business in the future including,
hiring additional sales people, increased advertising and marketing and
additional curriculum development. The costs associated with these initiatives
were partially offset by cost reductions associated with store closures and
other cost-saving initiatives. The Company had 30 fewer stores open during
the
quarter compared to the same quarter last year.
Depreciation
and amortization expense:
Depreciation and amortization expenses continued to decline during the first
quarter of fiscal 2006, reflecting lower, more focused and better-managed
capital expenditures and the effect of certain assets becoming fully
depreciated. The Company reported a decline of $0.7 million in depreciation
and
amortization expense during the first quarter compared to the same period
of the
prior year.
About
FranklinCovey
FranklinCovey
assists professionals and organizations to measurably increase 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
www.franklincovey.com
.
Nearly
1,500 FranklinCovey associates provide professional services and
products for 39 offices servicing more than 100
countries.
Safe-Harbor
Statement
This
announcement contains forward-looking statements that necessarily are based
on
certain assumptions and are subject to certain risks and uncertainties,
including the ability of the Company to grow revenues, general economic
conditions, competition in the Company’s targeted market place, market
acceptance of new products or services, increases or decreases in the Company’s
market share, growth or contraction of the overall market for the products
offered by the Company and its competitors, changes in the training and spending
policies of the Company’s clients, and other factors identified and discussed in
the Company’s 2005 10-K report and subsequent 8-K reports filed with the
Securities and Exchange Commission, many of which are beyond the control
or
influence of the Company. There can be no assurance that the Company’s actual
future performance will meet management’s expectations. These forward-looking
statements are based on management’s expectations as of the date hereof, and are
subject to the outcome of various factors, including those listed above,
any one
of which may cause future results to differ materially from the Company’s
current expectations.
|
FRANKLIN
COVEY CO.
|
|||||||
|
CONDENSED
CONSOLIDATED INCOME STATEMENTS
|
|||||||
|
(
in thousands, except per share amounts )
|
|||||||
|
Quarter
Ended
|
|||||||
|
November
26,
|
November
27,
|
||||||
|
2005
|
2004
|
||||||
|
(Unaudited)
|
(Unaudited)
|
||||||
|
Sales
|
$
|
72,351
|
$
|
69,104
|
|||
|
Cost
of sales
|
27,945
|
27,669
|
|||||
|
Gross
margin
|
44,406
|
41,435
|
|||||
|
Selling,
general and administrative
|
37,767
|
35,930
|
|||||
|
Depreciation
|
1,408
|
2,178
|
|||||
|
Amortization
|
1,095
|
1,043
|
|||||
|
Income
from operations
|
4,136
|
2,284
|
|||||
|
Interest
income
|
330
|
118
|
|||||
|
Interest
expense
|
(643
|
)
|
(38
|
)
|
|||
|
Income
before provision of income taxes
|
3,823
|
2,364
|
|||||
|
Provision
for income taxes
|
(590
|
)
|
(838
|
)
|
|||
|
Net
Income
|
3,233
|
1,526
|
|||||
|
Preferred
dividends
|
(1,379
|
)
|
(2,184
|
)
|
|||
|
Net
income (loss) available to common shareholders
|
$
|
1,854
|
$
|
(658
|
)
|
||
|
Net
income (loss) per share attributable to common
shareholders
|
|||||||
|
Basic
|
$
|
0.09
|
$
|
(0.03
|
)
|
||
|
Diluted
|
$
|
0.09
|
$
|
(0.03
|
)
|
||
|
Weighted
average number of common shares
|
|||||||
|
Basic
|
20,331
|
19,729
|
|||||
|
Diluted
|
20,642
|
19,729
|
|||||
|
Sales
Detail
|
|||||||
|
Consumer
Direct
|
$
|
18,588
|
$
|
18,859
|
|||
|
Retail
Stores
|
14,670
|
18,387
|
|||||
|
Wholesale
|
6,609
|
3,583
|
|||||
|
Other
|
1,163
|
985
|
|||||
|
Total
Consumer Strategic Business Unit
|
41,030
|
41,814
|
|||||
|
Organizational
Sales Group
|
16,393
|
13,406
|
|||||
|
International
|
14,928
|
13,884
|
|||||
|
Total
Organizational Strategic Business Unit
|
31,321
|
27,290
|
|||||
|
Total
|
$
|
72,351
|
$
|
69,104
|
|||