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):
July
12, 2007
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
CFR240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR240.13e-4(c))
Item
2.02 Results of Operations and Financial
Condition
On
July
12, 2007, Franklin Covey Co. (the Company) announced its financial results
for
the fiscal quarter and three quarters ended June 2, 2007. A copy of
the earnings release is being furnished as exhibit 99.1 to this current report
on Form 8-K.
Certain
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
8.01 Other Events
The
Company will host a discussion on Friday, July 13, 2007 at 11:30 a.m. Eastern
Daylight Savings Time (9:30 a.m. Mountain Daylight Savings Time) for
shareholders and the financial community to review the Company’s fiscal 2007
third quarter financial results.
Interested
parties may participate in the discussion by calling 1-866-383-8108, access
code: 10957569 and by logging on to
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=102601&eventID=1591478.
Item
9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Earnings
release dated July 12, 2007
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 hereunto
duly authorized.
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FRANKLIN
COVEY CO.
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||||
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Date:
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July
12, 2007
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By:
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/s/
STEPHEN D.
YOUNG
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Stephen
D.
Young
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||||
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Chief
Financial
Officer
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||||
News
Bulletin
2200
West
Parkway Boulevard
Salt
Lake
City, Utah 84119-2331
www.franklincovey.com
FRANKLINCOVEY
ANNOUNCES
THIRD
QUARTER AND FISCAL 2007 YEAR TO DATE RESULTS
Salt
Lake City, Utah – July 12, 2007 – FranklinCovey
(NYSE: FC) today announced its financial results for its
fiscal
third quarter ended June 2, 2007. The Company reported income from
operations of $2.4 million in the third quarter of fiscal 2007 compared to
an
operating loss of $1.4 million for the comparable quarter of last
year. Due primarily to the change in tax rate, FranklinCovey reported
net income of $0.9 million before preferred stock dividends ($0.03 earnings
per
common share after preferred stock dividends) for the quarter ended June
2,
2007, compared to $1.0 million before preferred stock dividends ($0.00 earnings
per common share after preferred stock dividends) for the same quarter of
the
prior year.
The
Company’s year-over-year operating results during the third quarter were
influenced primarily by the following: (1) A $4.1 million increase or a 14%
growth rate in the Organizational Solutions Business Unit (OSBU) sales combined
with a 600 basis point increase in gross margin lead to a $4.5 million increase
in OSBU gross profit; (2) a $2.9 million decrease in Consumer Solutions Business
Unit (CSBU) sales mainly attributable to store closures ($0.6 million), lower
technology product sales ($0.5 million) in the retail stores and sales decreases
in the consumer direct channel ($2.2 million), and a 130 basis point increase
in
gross margin resulted in a $1.2 million decrease in CSBU gross profit; (3)
a
$0.3 million decrease in selling, general and administrative (SG&A) costs;
and (4) a $0.1 million decline in depreciation expense. Operating
results in the third quarter of fiscal 2006 were impacted by corrections
made to
the financial statements of our wholly-owned Mexico subsidiary which resulted
in
a decrease of $0.5 million in international sales and a $0.5 million increase
in
SG&A expense.
For
the
first three quarters of fiscal 2007, the Company reported a $2.2 million
improvement in operating results to $15.5 million of operating income on
revenues of $216.9 million compared to operating income of $13.3 million
on
revenues of $214.0 million for the first three quarters of last
year. The Company also reported $7.0 million of net income before
preferred dividends ($0.24 per diluted common share after preferred stock
dividends), compared to $13.5 million of net income before preferred stock
dividends ($0.48 per diluted common share after preferred stock dividends)
for
the first three quarters of fiscal 2006, reflecting the higher effective
tax
rate in fiscal 2007, much of which is non cash due to the utilization of
net
operating loss carry forwards. The Company provided the following
details underlying the continued improvement of operating results during
the
fiscal third quarter and first three quarters of fiscal 2007.
Revenues: Total
sales for the third quarter of fiscal 2007 grew $1.2 million. OSBU
sales for the third quarter of fiscal 2007 grew 14% to $34.2 million compared
to
$30.1 million for the same quarter last year. Both Domestic and
International OSBU sales grew by 14% reflecting the continued success of
the
growing sales force and continued strong booking rates.
Sales
in
the CSBU for the quarter ended June 2, 2007 were $30.3 million compared to
$33.2
million for the same quarter last year. Retail stores sales declined
$1.4 million with store closures accounting for $0.6 million of the decline
and
decreased technology sales accounting for $0.5 million during the quarter
ended
June 2, 2007. Comparable store sales decreased 7% during the quarter
compared to the same quarter last year. There were 6 fewer domestic
stores open during the quarter compared to the third quarter of last
year. Consumer direct sales were $10.7 million compared to $12.9
million for the same quarter of last year. Wholesale sales were $6.9
million compared to $6.5 million for the same quarter last year.
Selling,
general and administrative expenses: SG&A costs
decreased by $0.3 million during the quarter primarily as a result of the
$0.5
million SG&A charge correcting the financials of the Mexico subsidiary last
year that was not repeated this year. SG&A costs increased by
$3.9 million for the first three quarters ended June 2, 2007, compared to
the
same periods last year primarily as a result of benefits taken last year
that
were not repeated in the first three quarters of this year and increased
commissions due to higher training sales.
Depreciation
and amortization: Depreciation expenses continued to decline
during the third quarter of fiscal 2007, reflecting lower, more focused and
better-managed capital expenditures and the effect of certain assets becoming
fully depreciated. The Company reported a decline of $0.1 million in
depreciation during the third quarter and $0.5 million decline of depreciation
and amortization during the first three quarters of fiscal 2007, compared
to the
respective periods of the prior year.
Other
developments: The Company also announced that during the
third quarter of fiscal 2007 it had redeemed the remaining $37.3 million
of its
Series A Preferred Stock resulting in a $0.6 million decrease in dividends
paid
during the quarter. The Company borrowed $17.8 million on its line of
credit to pay for the redemption.
About
FranklinCovey
FranklinCovey
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 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, retail stores, and www.franklincovey.com . Nearly
1,500 FranklinCovey associates provide professional services and products
in 41
offices servicing more than 100 countries.
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Investor
Contact:
FranklinCovey
Richard Putnam
801-817-1776
richard.putnam@franklincovey.com
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Media
Contact:
FranklinCovey
Debra Lund
801-817-6440
debra.lund@franklincovey.com
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FRANKLIN
COVEY CO.
CONDENSED
CONSOLIDATED INCOME
STATEMENTS
(in
thousands, except per share
amounts)
|
Quarter
Ended
|
Three
Quarters Ended
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|||||||||||||||
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June
2,
|
May
27,
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June
2,
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May
27,
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|||||||||||||
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2007
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2006
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2007
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2006
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|||||||||||||
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(unaudited)
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(unaudited)
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|||||||||||||||
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Net
sales
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$ |
64,509
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$ |
63,282
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$ |
216,914
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$ |
213,966
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||||||||
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Cost
of sales
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24,873
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26,990
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83,691
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85,094
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||||||||||||
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Gross
profit
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39,636
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36,292
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133,223
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128,872
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||||||||||||
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Selling,
general and administrative
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35,287
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35,629
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112,803
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108,885
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||||||||||||
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Gain
on sale of manufacturing facility
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(1,227 | ) | ||||||||||||||
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Depreciation
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1,060
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1,134
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3,463
|
3,763
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||||||||||||
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Amortization
|
906
|
908
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2,708
|
2,911
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||||||||||||
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Income
(loss) from operations
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2,383
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(1,379 | ) |
15,476
|
13,313
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|||||||||||
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Interest
expense, net
|
(743 | ) | (356 | ) | (1,521 | ) | (1,013 | ) | ||||||||
|
Legal
settlement
|
873
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|||||||||||||||
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Income
(loss) before income taxes
|
1,640
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(1,735 | ) |
13,955
|
13,173
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|||||||||||
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Income
tax provision (benefit)
|
753
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(2,754 | ) |
6,939
|
(292 | ) | ||||||||||
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Net
income
|
887
|
1,019
|
7,016
|
13,465
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||||||||||||
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Preferred
stock dividends
|
(348 | ) | (934 | ) | (2,215 | ) | (3,452 | ) | ||||||||
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Net
income available to common shareholders
|
$ |
539
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$ |
85
|
$ |
4,801
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$ |
10,013
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||||||||
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Net
income per share available to common shareholders -
diluted
|
$ |
0.03
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$ |
0.00
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$ |
0.24
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$ |
0.48
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||||||||
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Weighted
average common shares - diluted
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19,969
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20,734
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20,062
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20,670
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||||||||||||
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Sales
Detail:
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||||||||||||||||
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Retail
Stores
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$ |
10,010
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$ |
11,414
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$ |
43,402
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$ |
49,837
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||||||||
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Catalog
/ e-commerce
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10,715
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12,912
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47,713
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51,701
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||||||||||||
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Wholesale
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6,901
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6,523
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15,059
|
15,773
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||||||||||||
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CSBU
International
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1,125
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1,148
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6,153
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6,473
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||||||||||||
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Other
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1,544
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1,168
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4,422
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3,623
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||||||||||||
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Total
Consumer Solutions Business Unit
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30,295
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33,165
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116,749
|
127,407
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||||||||||||
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Domestic
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20,297
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17,875
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57,331
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49,552
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||||||||||||
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International
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13,917
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12,242
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42,834
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37,007
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||||||||||||
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Total
Organizational Solutions Business Unit
|
34,214
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30,117
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100,165
|
86,559
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||||||||||||
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Total
|
$ |
64,509
|
$ |
63,282
|
$ |
216,914
|
$ |
213,966
|
||||||||