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
11, 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 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 11, 2007, Franklin Covey Co. (the Company) announced its financial
results for the fiscal quarter ended December 2, 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 January 11, 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.
|
FRANKLIN
COVEY CO.
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||||
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Date:
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January
12, 2007
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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
FIRST
QUARTER FISCAL 2007 RESULTS
Salt
Lake City, Utah -
January
11, 2007 -- FranklinCovey (NYSE:
FC)
reported
its operating results for the first quarter of fiscal 2007. The quarter ended
December 2, 2006 had five more business days than the first fiscal quarter
ended
November 26, 2006. The five additional business days resulted in increased
sales
and operating costs compared to the same quarter last year. Operating income
for
the fiscal first quarter of 2007 was $3.6 million compared to $4.1 million
of
income from operations for the first quarter of fiscal 2006. The Company
also
reported net income before preferred stock dividends for the first quarter
of
fiscal 2007 totaling $1.4 million ($0.02 earnings per share after preferred
dividends) compared to $3.2 million of net income ($0.09 earnings per share
after preferred dividends) reported for the same quarter in fiscal 2006.
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 $4.6 million
or
16% increase in sales through our Organizational Solutions Business Unit
(OSBU)
which was partially offset by a $1.4 million decline in sales (primarily
due to
store closures) through the Consumer Solutions Business Unit (CSBU) resulting
in
a net $3.2 million increase in sales, (2) steady gross margin (61.4% in both
periods) despite having a benefit to last year’s cost of sales that did not
repeat this year, which, together with the increase in sales, resulted in
a net
$2.0 million year-over-year increase in gross profit, (3) an increase in
selling, general and administrative costs of $3.1 million, primarily as a
result
of costs associated with the additional business days, increased audit costs
associated with compliance to Sarbanes Oxley and increased commissions
associated with increased sales, (4) a $0.6 million decline in depreciation
and
amortization expense, and (5) a $1.1 million increase in the tax provision.
The
Company provided the following details underlying the operating results during
the first quarter of fiscal 2007.
Revenues:
Total
sales for the first quarter of fiscal 2007 grew 4% or $3.2 million compared
to
last year’s first quarter. OSBU sales grew 16% or $4.6 million for the first
quarter of fiscal 2007 to $33.2 million compared to $28.6 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 December 2, 2006, declined $1.4 million
to
$42.3 million compared to $43.7 million for the same quarter last year. Retail
store sales declined $0.5 million, primarily as a result of having 16 fewer
stores open during the quarter this year compared to last year, to $14.1
million
compared to $14.6 million for the same quarter the prior year. Comparable
stores
sales were flat during the quarter compared to the same quarter last year.
Consumer direct sales were $19.9 million compared to $19.2 million for the
same
quarter of last year, primarily as a result of 5 more business days this
year
compared to last year’s first quarter. Product sales through the wholesale
channel during the quarter were $4.6 million compared to $6.1 million during
the
same quarter last year, primarily reflecting lower demand from entities that
represent us to the larger retailers this year compared to last year. Product
sales through international channels were $2.4 million during the quarter
compared to $2.6 million for the same quarter last year. Sales of products
through other CSBU channels were $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) increased to $40.8 million for
the quarter ended December 2, 2006, compared to $37.8 million for the same
quarter last year. The increase was primarily due to the increased number
of
business days, increased audit and consulting costs associated compliance
with
Section 404 of the Sarbanes-Oxley Act and increased commissions associated
with
higher sales in the OSBU. The Company has also increased investments into
its
sales force and 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 16 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 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 $0.6 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, retail stores, and www.franklincovey.com
.
Nearly
1,500 FranklinCovey associates provide professional services and
products for 39 offices servicing more than 100
countries.
FRANKLIN
COVEY CO.
CONDENSED
CONSOLIDATED INCOME STATEMENTS
(in
thousands, except per share amounts)
|
Quarter
Ended
|
|||||||
|
December
2,
|
November
26,
|
||||||
|
2006
|
2005
|
||||||
|
(Unaudited)
|
(Unaudited)
|
||||||
|
Sales
|
$
|
75,530
|
$
|
72,351
|
|||
|
Cost
of sales
|
29,132
|
27,945
|
|||||
|
Gross
margin
|
46,398
|
44,406
|
|||||
|
Selling,
general and administrative
|
40,849
|
37,767
|
|||||
|
Depreciation
|
1,037
|
1,408
|
|||||
|
Amortization
|
902
|
1,095
|
|||||
|
Income
from operations
|
3,610
|
4,136
|
|||||
|
Interest
income
|
201
|
330
|
|||||
|
Interest
expense
|
(661
|
)
|
(643
|
)
|
|||
|
Income
before provision of income taxes
|
3,150
|
3,823
|
|||||
|
Provision
for income taxes
|
(1,734
|
)
|
(590
|
)
|
|||
|
Net
Income
|
1,416
|
3,233
|
|||||
|
Preferred
dividends
|
(934
|
)
|
(1,379
|
)
|
|||
|
Net
income available to common shareholders
|
$
|
482
|
$
|
1,854
|
|||
|
Net
income per share available to common
shareholders
|
|||||||
|
Basic
|
$
|
0.02
|
$
|
0.09
|
|||
|
Diluted
|
$
|
0.02
|
$
|
0.09
|
|||
|
Weighted
average number of common shares
|
|||||||
|
Basic
|
19,910
|
20,331
|
|||||
|
Diluted
|
20,192
|
20,642
|
|||||
|
Sales
Detail:
|
|||||||
|
Organizational
Solutions Business Unit
|
|||||||
|
Domestic
|
17,721
|
16,330
|
|||||
|
International
|
15,487
|
12,283
|
|||||
|
Total
|
33,208
|
28,613
|
|||||
|
Consumer
Solutions Business Unit
|
|||||||
|
Consumer
Direct
|
$
|
19,936
|
$
|
19,177
|
|||
|
Retail
Stores
|
14,127
|
14,643
|
|||||
|
Wholesale
|
4,577
|
6,111
|
|||||
|
CSBU
International
|
2,386
|
2,644
|
|||||
|
Other
|
1,296
|
1,163
|
|||||
|
Total
|
42,322
|
43,738
|
|||||
|
Total
Consolidated Sales
|
$
|
75,530
|
$
|
72,351
|
|||