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):
November
29, 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
November 29, 2005, Franklin Covey Co. (the Company) announced its financial
results for the quarter and fiscal year ended August 31, 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 November 29, 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:
|
November
30, 2005
|
By:
|
/s/
STEPHEN D. YOUNG
|
|
|
Stephen
D. Young
|
||||
|
Chief
Financial Officer
|
||||
News
Bulletin
| 2200 West Parkway Boulevard |
For
Further Inforamtion:
|
|
|
Salt
Lake City, Utah 84119-2331
|
|
Richard
R. Putnam
|
| www.franklincovey.com |
Investor
Relations
(801)
817-1776
|
FRANKLINCOVEY
ANNOUNCES
TWELFTH
CONSECUTIVE QUARTER OF OPERATING IMPROVEMENTS
FOURTH
QUARTER AND
FISCAL
2005 YEAR-END OPERATING RESULTS
Salt
Lake City, Utah -
November 29, 2005 -- FranklinCovey (NYSE:
FC)
today
announced financial results for its fiscal year and fourth quarter ended August
31, 2005. For the fiscal year ended August 31, 2005, the Company reported an
$18.0 million improvement in operating results with operating income of $8.9
million compared to a $9.1 million loss from operations in fiscal 2004. For
the
fiscal year ended August 31, 2005, the Company reported a $20.3 million
improvement in net income with $10.2 million of net income before preferred
stock dividends ($.34 loss per common share, after accounting for preferred
stock dividends and recapitalization valuation non-cash charge) compared to
a
net loss of $10.1 million before preferred stock dividends ($.96 loss per common
share, after accounting for preferred dividends) for the fiscal year 2004.
The
$18.0
million improvement in operating results for fiscal 2005 compared to fiscal
2004
is comprised of the following: (1) an $8.1 million increase in sales combined
with an improved gross margin (59.5% compared to 56.6%) resulting in a net
$12.9
million year-over-year increase in gross margin, (2) a $0.6 million decrease
in
selling, general and administrative costs, (3) a $4.0 million reduction in
depreciation and amortization expense, and (4) a $0.5 million gain on the
disposal of an unconsolidated subsidiary.
For
the
fourth quarter ended August 31, 2005, the Company reported an improvement in
its
operating results, reducing its loss from operations to $1.0 million compared
to
a loss from operations of $1.9 million for the comparable quarter of the prior
year. FranklinCovey also reported an improvement in its net results with a
$1.5
million net loss before preferred stock dividends ($0.16 per common share loss,
after accounting for preferred stock dividends) for the fourth quarter ended
August 31, 2005, compared to a $2.1 million net loss before preferred stock
dividends ($.21 per common share loss, after accounting for preferred stock
dividends) for the same quarter of the prior year.
The
year-over-year improvement in the operating results for the quarter is comprised
of the following: (1) a $5.7 million increase in sales, resulting in a net
$3.3
million year-over-year increase in gross margin, (2) a $3.5 million increase
in
selling, general and administrative costs primarily a result of expense off-sets
recorded in the fourth quarter of fiscal year 2004, but not repeated in the
fiscal fourth quarter of 2005, and (3) a $1.0 million reduction in depreciation
and amortization expense.
The
Company provided the following details underlying the continued improvement
in
its operating results during the fourth quarter and full year of fiscal 2005.
Revenues:
Organizational Solutions Business Unit (OSBU) sales for the year were $130.2
million, a 19% increase compared to $109.4 million for fiscal year 2004. Sales
in the OSBU for the fourth quarter of fiscal 2005 grew by 23% to $35.3 million,
compared to $28.7 million for the same quarter last year. International sales
during the quarter were up 22% while domestic sales grew by 24%. This marks
the
fifth consecutive quarter of year-over-year quarterly growth in OSBU revenues,
and reflects the overall strengthening of the Company’s training, consulting and
sales force performance offerings.
Sales
from the Consumer and Small Business Unit (CSBU) for the fiscal year were $153.4
million compared to $166.1 million for fiscal year 2004. More than 100% of
the
decrease resulted from store closures and declines in technology product sales
during fiscal year 2005. CSBU sales for the fourth quarter ended August 31,
2005
declined 3% to $30.8 million compared to $31.8 million for the same quarter
last
year. More than 100% of the decrease resulted from store closures and declines
in technology product sales during fiscal year 2005. Comparable store sales
increased 1% during the quarter compared to the same quarter last year. Retail
store sales in total declined 13% or $2.1 million during the fourth quarter
compared to the same quarter of the prior year as a result of having 30 fewer
stores open this year compared to last year. Consumer direct sales grew 6%
during the fourth quarter to $11.6 million compared to $10.9 million for the
same quarter last year. Wholesale revenues were $3.6 million during the quarter
compared to $4.1 million for the same quarter of the prior year. Other CSBU
sales increased by $1.0 million to $1.2 million compared $0.2 million for the
same quarter last year.
Selling,
general and administrative expenses:
Selling,
general and administrative expenses (SG&A) declined by $0.6 million for the
year ended August 31, 2005, compared to fiscal year 2004. SG&A increased to
$37.3 million during the fourth quarter of fiscal year 2005 compared to $33.9
million for the fourth quarter of fiscal 2004. SG&A expenses during the
fourth quarter of fiscal year 2004 included expense off-sets that were not
repeated in the fourth quarter of fiscal 2005. SG&A expense in the fourth
quarter of fiscal 2005 also included increased commissions, bonuses and
investments in growth initiatives that were partially off-set by cost reductions
from store closures and other on-going cost saving initiatives.
Depreciation
and amortization:
Depreciation and amortization expenses (D&A) continued to decline during the
fiscal year 2005 and fourth quarter, reflecting lower, more focused and
better-managed capital expenditures and the effect of certain assets becoming
fully depreciated and store closures. The Company reported declines of $4.0
million and $1.0 million in D&A during the fiscal year and fourth quarter
ended August 31, 2005, respectively, compared to the same periods of the prior
year.
Liquidity:
The
Company had $51.7 million in cash and cash equivalents and short-term
investments at August 31, 2005, compared to $41.9 million at August 31, 2004.
The increase in cash was a result of more efficient net working capital
management and stronger earnings. During fiscal 2005, the Company redeemed
$30
million of its Series A Preferred Stock outstanding and redeemed an additional
$10 million in November 2005 reducing the outstanding Series A Preferred Stock
balance to approximately $47 million.
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 100 retail stores, and www.franklincovey.com
.
Nearly
1,500 FranklinCovey associates provide professional services and products in
36
offices in 129 countries.
|
FRANKLIN
COVEY CO.
|
|||||||||||||
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
|||||||||||||
|
(
in thousands, except per share amounts )
|
|||||||||||||
|
Fiscal
Year Ended
|
Quarter
Ended
|
||||||||||||
|
August
31,
|
August
31,
|
||||||||||||
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|||||||
|
|
(unaudited)
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
||||||
|
Net
Sales
|
$
|
283,542
|
$
|
275,434
|
$
|
66,127
|
$
|
60,440
|
|||||
|
Cost
of sales
|
114,847
|
119,633
|
27,352
|
24,945
|
|||||||||
|
Gross
margin
|
168,695
|
155,801
|
38,775
|
35,495
|
|||||||||
|
Selling,
general and administrative
|
148,305
|
148,918
|
37,341
|
33,870
|
|||||||||
|
Gain
on disposal of unconsolidated subsidiary
|
(500
|
)
|
|||||||||||
|
Depreciation
|
7,774
|
11,774
|
1,428
|
2,452
|
|||||||||
|
Amortization
|
4,173
|
4,173
|
1,044
|
1,044
|
|||||||||
|
Income
(loss) from operations
|
8,943
|
(9,064
|
)
|
(1,038
|
)
|
(1,871
|
)
|
||||||
|
Interest
income
|
944
|
481
|
351
|
169
|
|||||||||
|
Interest
expense
|
(786
|
)
|
(218
|
)
|
(690
|
)
|
(23
|
)
|
|||||
|
Income
(loss) before income taxes
|
9,101
|
(8,801
|
)
|
(1,377
|
)
|
(1,725
|
)
|
||||||
|
Income
tax (provision) benefit
|
1,085
|
(1,349
|
)
|
(118
|
)
|
(328
|
)
|
||||||
|
Net
income (loss)
|
10,186
|
(10,150
|
)
|
(1,495
|
)
|
(2,053
|
)
|
||||||
|
Preferred
dividends
|
(8,270
|
)
|
(8,735
|
)
|
(1,718
|
)
|
(2,183
|
)
|
|||||
|
Loss
on recapitalization of Preferred Stock
|
(7,753
|
)
|
|||||||||||
|
Net
loss attributable to common shareholders
|
$
|
(5,837
|
)
|
$
|
(18,885
|
)
|
$
|
(3,213
|
)
|
$
|
(4,236
|
)
|
|
|
Loss
per share attributable to common shareholders (basic and
diluted)
|
$
|
(0.34
|
)
|
$
|
(0.96
|
)
|
$
|
(0.16
|
)
|
$
|
(0.21
|
)
|
|
|
Weighted
average number of common and common equivalent shares (basic and
diluted)
|
19,949
|
19,734
|
20,264
|
19,726
|
|||||||||
|
Sales
Detail:
|
|||||||||||||
|
Retail
Stores
|
$
|
74,331
|
$
|
87,922
|
$
|
14,445
|
$
|
16,580
|
|||||
|
Consumer
Direct
|
55,575
|
55,059
|
11,560
|
10,898
|
|||||||||
|
Wholesale
|
19,691
|
21,081
|
3,584
|
4,135
|
|||||||||
|
Other
|
3,757
|
2,007
|
1,215
|
156
|
|||||||||
|
Total
CSBU Sales
|
153,354
|
166,069
|
30,804
|
31,769
|
|||||||||
|
Domestic
|
76,114
|
61,047
|
22,437
|
18,127
|
|||||||||
|
International
|
54,074
|
48,318
|
12,886
|
10,544
|
|||||||||
|
Total
OSBU Sales
|
130,188
|
109,365
|
35,323
|
28,671
|
|||||||||
|
Total
Net Sales
|
$
|
283,542
|
$
|
275,434
|
$
|
66,127
|
$
|
60,440
|
|||||