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
14, 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
November 14, 2006, Franklin Covey Co. (the Company) announced its financial
results for the quarter and fiscal year ended August 31, 2006. 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
| (d) | Exhibits | |
| 99.1 | Earnings release dated Novmeber 14, 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 hereunto
duly authorized.
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FRANKLIN
COVEY CO.
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||||
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Date:
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November
15, 2006
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By:
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/s/
STEPHEN D. YOUNG
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|
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Stephen
D. Young
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||||
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Chief
Financial Officer
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||||
News
Bulletin
|
For
Further Information:
|
||
| 2200 West Parkway Boulevard |
Richard
Putnam
|
|
| Salt Lake City, Utah 84119-2331 |
Investor
Relations
|
|
| www.franklincovey.com |
(801)
817-1776
|
FRANKLINCOVEY
ANNOUNCES
FOURTH
QUARTER AND
FISCAL
2006 YEAR-END OPERATING RESULTS
Salt
Lake City, Utah -
November 14, 2006 -- FranklinCovey (NYSE:
FC)
today
announced financial results for its fiscal year and fourth quarter ended
August
31, 2006. For the fiscal year ended August 31, 2006, the Company reported
a $5.6
million improvement in operating results with operating income of $14.0 million
compared to an $8.4 million income from operations in fiscal 2005. For the
fiscal year ended August 31, 2006, the Company reported an $18.4 million
improvement in net income with $28.6 million of net income before preferred
stock dividends ($1.18 earnings per diluted common share, after accounting
for
preferred stock dividends) compared to $10.2 million of net income before
preferred stock dividends ($.34 loss per common share, after accounting for
preferred dividends and recapitalization valuation non-cash charge) for the
fiscal year 2005. Net income for the fiscal year ended August 31, 2006 included
an income tax benefit of $14.9 million primarily from a reversal of a valuation
allowance established in prior years against net deferred income tax assets.
The
$5.6
million improvement in operating results for fiscal 2006 compared to fiscal
2005
is comprised of the following: (1) a $4.9 million decrease in sales, much
more
than 100% of which was due to closed stores, combined with an improved gross
margin (60.1 % compared to 59.5%) resulting in a net $1.3 million year-over-year
decrease in gross margin, (2) a $3.6 million decrease in selling, general
and
administrative costs, and (3) a $3.3 million reduction in depreciation and
amortization expense.
For
the
fourth quarter ended August 31, 2006, the Company reported an improvement
of
$1.8 million in its operating results, with $0.7 million of operating income
compared to a loss from operations of $1.0 million for the comparable quarter
of
the prior year. FranklinCovey also reported an improvement in its net results
with $15.1 million of net income before preferred stock dividends ($0.70
earnings per diluted common share, after accounting for preferred stock
dividends) for the fourth quarter ended August 31, 2006, compared to a $1.5
million net loss before preferred stock dividends ($.16 per common share
loss,
after accounting for preferred stock dividends) for the same quarter of the
prior year. The fourth quarter net income included a $14.7 million tax benefit
primarily from the reversal of the valuation allowance described
above.
The
year-over-year improvement in the operating results for the quarter is comprised
of the following: (1) a $1.5 million decrease in sales, more than 100% of
which
was due to closed stores, resulting in a net $0.3 million year-over-year
decrease in gross margin, (2) a $1.5 million decrease in selling, general
and
administrative costs, and (3) a $0.6 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 2006.
Revenues:
Organizational Solutions Business Unit (OSBU) sales for the year were $127.8
million, a 4% increase compared to $122.9 million for fiscal year 2005. Sales
in
the OSBU for the fourth quarter of fiscal 2006 grew by 5% to $34.9 million,
compared to $33.4 million for the same quarter last year. International sales
during the quarter were up 3% while domestic sales grew by 6%.
Sales
from the Consumer Solutions Business Unit (CSBU) for the fiscal year were
$150.8
million compared to $160.7 million for fiscal year 2005 with store closures
accounting for more than 100 percent of the decline with an impact of $12.4
million on total sales. CSBU sales for the fourth quarter ended August 31,
2006
declined to $29.8 million compared to $32.7 million for the same quarter
last
year, primarily a result of stores closures during the year. Comparable store
sales increased 1% during the quarter compared to the same quarter last year.
Consumer direct sales declined less than 1% during the fourth quarter to
$13.4
million compared to $13.5 million for the same quarter last year. Wholesale
revenues were $2.6 million during the quarter compared to $3.6 million for
the
same quarter of the prior year. Other CSBU sales increased by $0.1 million
to
$1.3 million compared to $1.2 million for the same quarter last
year.
Selling,
general and administrative expenses:
Selling,
general and administrative expenses (SG&A) declined by $3.6 million for the
year ended August 31, 2006, compared to fiscal year 2005. SG&A decreased to
$35.9 million during the fourth quarter of fiscal year 2006 compared to $37.3
million for the fourth quarter of fiscal 2005. The decreases were a result
of
closed retail stores and continued efforts to reduce operating
costs.
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 $3.3
million and $0.6 million in D&A during the fiscal year and fourth quarter
ended August 31, 2006, respectively, compared to the same periods of the
prior
year.
Liquidity:
The
Company had $30.6 million in cash and cash equivalents at August 31, 2006.
During fiscal 2006, the Company redeemed $20.0 million of its outstanding
Series
A Preferred Stock and purchased $5.1 million or 0.7 million shares of its
Common
Stock during fiscal 2006 under a plan that was approved by the Board of
Directors in January 2006.
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 more than 90 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
to
clients in more than 130 countries.
FRANKLIN
COVEY CO.
CONSOLIDATED
CONDENSED STATEMENTS OF INCOME
(
in
thousands, except per share amounts )
|
Fiscal
Year Ended
|
Quarter
Ended
|
||||||||||||
|
August
31,
|
August
31,
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
(unaudited)
|
(unaudited)
|
||||||||||||
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Net
sales
|
$
|
278,623
|
$
|
283,542
|
$
|
64,657
|
$
|
66,128
|
|||||
|
Cost
of sales
|
111,238
|
114,847
|
26,144
|
27,352
|
|||||||||
|
Gross
profit
|
167,385
|
168,695
|
38,513
|
38,776
|
|||||||||
|
Selling,
general and administrative
|
144,747
|
148,305
|
35,862
|
37,342
|
|||||||||
|
Depreciation
|
4,779
|
7,774
|
1,016
|
1,428
|
|||||||||
|
Amortization
|
3,813
|
4,173
|
902
|
1,043
|
|||||||||
|
Income
(loss) from operations
|
14,046
|
8,443
|
733
|
(1,037
|
)
|
||||||||
|
Interest
expense and other, net
|
(415
|
)
|
658
|
(275
|
)
|
(340
|
)
|
||||||
|
Income
(loss) before income taxes
|
13,631
|
9,101
|
458
|
(1,377
|
)
|
||||||||
|
Income
tax (provision) benefit
|
14,942
|
1,085
|
14,650
|
(117
|
)
|
||||||||
|
Net
income (loss)
|
28,573
|
10,186
|
15,108
|
(1,494
|
)
|
||||||||
|
Preferred
dividends
|
(4,385
|
)
|
(8,270
|
)
|
(933
|
)
|
(1,719
|
)
|
|||||
|
Loss
on recapitalization of preferred stock
|
(7,753
|
)
|
|||||||||||
|
Net
income (loss) available to common shareholders
|
$
|
24,188
|
$
|
(5,837
|
)
|
$
|
14,175
|
$
|
(3,213
|
)
|
|||
|
Income
(loss) per share available to common shareholders:
|
|||||||||||||
|
Basic
|
$
|
1.20
|
$
|
(0.34
|
)
|
$
|
0.71
|
$
|
(0.16
|
)
|
|||
|
Diluted
|
$
|
1.18
|
$
|
(0.34
|
)
|
$
|
0.70
|
$
|
(0.16
|
)
|
|||
|
Weighted
average number of common and common share equivalents:
|
|||||||||||||
|
Basic
|
20,134
|
19,949
|
19,883
|
20,264
|
|||||||||
|
Diluted
|
20,554
|
19,949
|
20,206
|
20,264
|
|||||||||
|
Sales
Detail:
|
|||||||||||||
|
Retail
Stores
|
$
|
62,440
|
$
|
74,331
|
$
|
12,440
|
$
|
14,445
|
|||||
|
Consumer
Direct
|
63,681
|
62,873
|
13,389
|
13,484
|
|||||||||
|
Wholesale
|
19,783
|
19,691
|
2,635
|
3,584
|
|||||||||
|
Other
|
4,910
|
3,757
|
1,288
|
1,216
|
|||||||||
|
Total
CSBU Sales
|
150,814
|
160,652
|
29,752
|
32,729
|
|||||||||
|
Domestic
|
71,108
|
68,816
|
21,685
|
20,513
|
|||||||||
|
International
|
56,701
|
54,074
|
13,220
|
12,886
|
|||||||||
|
Total
OSBU Sales
|
127,809
|
122,890
|
34,905
|
33,399
|
|||||||||
|
Total
Net Sales
|
$
|
278,623
|
$
|
283,542
|
$
|
64,657
|
$
|
66,128
|
|||||