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):
April
12, 2005
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 April
12, 2005, Franklin Covey Co. (the Company) announced its financial results for
the quarter ended February 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 April 12, 2005 |
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: |
April
12, 2005 |
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
Putnam |
| www.franklincovey.com |
Investor
Relations |
|
(801)
817-1776 |
FRANKLINCOVEY
ANNOUNCES
l TENTH CONSECUTIVE
QUARTER OF SIGNIFICANT OPERATING IMPROVEMENTS
l SECOND CONSECUTIVE
QUARTER OF POSITIVE NET INCOME
l SECOND QUARTER FISCAL
2005 RESULTS
Salt
Lake City, Utah - April
12, 2005 - FranklinCovey (NYSE:
FC) reported
net income before preferred stock dividends for the fiscal 2005 second quarter
of $7.1 million, a $6.9 million improvement compared to $0.2 million in net
income for the second quarter of fiscal 2004. The Company reported earnings of
$0.19 per share (basic and diluted) after accounting for preferred stock
dividends for the quarter ended February 26, 2005 compared to a $0.10 loss per
share after accounting for preferred stock dividends for the second quarter of
fiscal 2004. The Company also reported its tenth consecutive quarter of
significant improvement in its operating results with a $6.9 million increase in
operating income to $7.9 million for its second quarter ended February 26, 2005,
compared to operating income of $1.0 million for the comparable quarter of the
prior year. The Company’s year-over-year financial results during the quarter
were influenced primarily by the following: (1) a $3.8 million increase in sales
(5% growth rate), with a 400 basis point gross margin improvement (60.7%
compared to 56.7% for the same quarter last year) resulting in a net $5.4
million year-over-year increase in gross profit with gross margin improvement
accounting for $3.1 million of the increase, (2) a $0.6 million decrease in
selling, general and administrative (SG&A) costs including store closures
and recapitalization expense, and (3) a $0.9 million decline in depreciation and
amortization expense.
For the
first two quarters of fiscal 2005, the Company reported a $11.6 million
improvement in net income, with $8.6 million of earnings before preferred stock
dividends ($0.16 earnings per share after preferred stock dividends) compared to
a loss of $2.9 million before preferred stock dividends ($0.37 per common share
loss after preferred stock dividends) for the first two quarters of fiscal 2004.
The Company reported a $11.4 million improvement in operating results with
operating income of $10.2 million compared to an operating loss of $1.2 million
for the first two quarters of last year. The Company provided the following
details underlying the continued improvement of operating and net results during
the second quarter and first two quarters of fiscal 2005.
Revenues: Total
sales for the second quarter of fiscal 2005 increased $3.8 million compared to
last year’s second quarter. Organizational Solutions Business Unit (OSBU) sales
grew $6.6 million or 26% for the second quarter of fiscal 2005 to $32.0 million
compared to $25.5 million for the same quarter last year. The Company’s efforts
to grow its domestic and international organizational training and consulting
solutions over the past several quarters has led to three consecutive quarters
of growth in OSBU sales. These growth initiatives have contributed to sales
growth in both international and domestic revenues.
Sales
from the Consumer and Small Business Unit (CSBU) for the quarter ended February
26, 2005, declined $2.7 million to $50.5 million compared to $53.2 million for
the same quarter last year. Retail store sales accounted for $4.6 million of the
CSBU revenue decline and were $28.1 million during the quarter compared to $32.7
million (5.4% comparable store sales decline) for the same quarter the prior
year. There were 23 fewer domestic stores open during the quarter compared to
the second quarter last year; these stores accounted for $3.0 million of sales
in the second quarter of fiscal 2004. The retail store sales decline was
primarily attributed to the smaller number of stores open in the quarter and to
a 41% decline in PDA’s and related products sold during the quarter this year
compared to the same quarter last year. Consumer Direct sales sales grew 3% to
$16.8 million compared to $16.3 million for the same quarter of last year. Sales
of products through the wholesale channel to office superstores, increased 34%
to $4.9 million compared to $3.7 million for the same quarter last year.
Selling,
general and administrative expenses: SG&A
costs decreased slightly by $0.6 million during the quarter, including
additional costs associated with the recapitalization plan approved by
shareholders, costs associated with changes in the CEO’s compensation, costs
associated with store closures and increased commission costs associated with
increased training sales. SG&A as a percentage of sales declined as sales
grew and efforts to trim expenses continued. Store closing costs are included in
SG&A expense and have a one-time impact in the current period, but decrease
costs going forward. The Company had 23 fewer stores open at the end of the
quarter compared to the same period last year. The Company anticipates that it
will close additional stores as future analysis demonstrates that operating
performance may be improved through further retail store closures.
Depreciation
and amortization:
Depreciation and amortization expenses continued to decline during the second
quarter of fiscal 2005, reflecting lower, more focused and better-managed
capital expenditures and the effect of certain assets becoming fully
depreciated. The Company reported a decline of $0.9 million in these expenses
during the second quarter and $2.3 million during the first two quarters of
fiscal 2005, compared to the respective periods of the prior year.
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, more than 120 retail stores, and www.franklincovey.com
. Nearly
1,500 FranklinCovey associates provide professional services and products in 36
offices in 129 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 stabilize and 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 2004 10-K report and subsequent 8-K and 10-Q 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 CONSOLICATED INCOME
STATEMENT
(in thousands, except per share amounts)
|
Quarter
Ended |
Two
Quarters Ended |
||||||||||||
|
February
26, 2005 |
February
28, 2004 |
February
26, 2005 |
February
28 2004, |
||||||||||
|
(unaudited) |
(unaudited) |
||||||||||||
|
Sales |
$ |
82,523 |
$ |
78,715 |
$ |
151,627 |
$ |
153,746 |
|||||
|
Cost
of sales |
32,458
|
34,090
|
60,403
|
66,595
|
|||||||||
|
Gross
margin |
50,065
|
44,625
|
91,224
|
87,151
|
|||||||||
|
Selling,
general and administrative |
38,787
|
39,410
|
74,440
|
79,426
|
|||||||||
|
Depreciation
|
2,320
|
3,222
|
4,498
|
6,813
|
|||||||||
|
Amortization |
1,043
|
1,043
|
2,087
|
2,087
|
|||||||||
|
Operating
income (loss) |
7,915
|
950
|
10,199
|
(1,175 |
) | ||||||||
|
Interest
income |
165
|
141
|
282
|
227
|
|||||||||
|
Interest
expense |
(29 |
) |
(56 |
) |
(66 |
) |
(167 |
) | |||||
|
Income
(loss) before provision for taxes |
8,051
|
1,035
|
10,415
|
(1,115 |
) | ||||||||
|
Provision
for income taxes |
965
|
803
|
1,803
|
1,833
|
|||||||||
|
Net
income (loss) |
7,086
|
232
|
8,612
|
(2,948 |
) | ||||||||
|
Preferred
stock dividends |
(2,184 |
) |
(2,184 |
) |
(4,368 |
) |
(4,368 |
) | |||||
|
Net
income (loss) attributable to common shareholders |
$ |
4,902 |
$ |
(1,952 |
) |
$ |
4,244 |
$ |
(7,316 |
) | |||
|
Net
income (loss) attributable to common shareholders per
share |
$ |
0.19 |
$ |
(0.10 |
) |
$ |
0.16 |
$ |
(0.37 |
) | |||
|
Sales
Detail: |
|||||||||||||
|
Retail
Stores |
$ |
28,055 |
$ |
32,668 |
$ |
46,443 |
$ |
55,336 |
|||||
|
Consumer
Direct |
16,765
|
16,265
|
33,901
|
34,477
|
|||||||||
|
Wholsale |
4,897
|
3,663
|
8,480
|
10,126
|
|||||||||
|
Other |
765
|
634
|
1,750
|
1,222
|
|||||||||
|
Total
Consumer and Small Business Unit |
50,482
|
53,230
|
90,574
|
101,161
|
|||||||||
|
Organizations
Solutions Group |
17,784
|
13,110
|
32,912
|
27,058
|
|||||||||
|
International |
14,257
|
12,375
|
28,141
|
25,527
|
|||||||||
|
Total
Organizational Solutions Business Unit |
32,041
|
25,485
|
61,053
|
52,585
|
|||||||||
|
Total
|
$ |
82,523 |
$ |
78,715 |
$ |
151,627 |
$ |
153,746 |
|||||