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Franklin Covey Announces Strong Financial Results For Its First Quarter Of Fiscal 2012

Gross profit margins increased 6% to $26.5 million primarily due to increased royalty revenues from new publications and from the Company’s international licensees. Book and international licensee royalty sales have higher gross margins than the majority of the Company’s other offerings. As a result of these increases, the Company’s gross margin for the quarter improved to 67.1% of sales compared to 63.6% of sales in the first quarter of fiscal 2011.

Selling, general and administrative expenses (SG&A) increased by $1.6 million primarily due to a $0.8 million increase in non-cash share-based compensation expense and $0.8 million of increased promotion and travel expenses associated with the world-wide launch of the Company’s new productivity offering, The 5 Choices to Extraordinary Productivity. Depreciation and amortization charges declined compared to the prior year primarily due to the full depreciation and amortization of certain assets, contributing to improved income from operations during the first quarter of fiscal 2012.

Net income improved to $1.7 million, or $0.09 per diluted share, compared with $0.8 million, or $.05 per diluted share in fiscal 2011. The Company’s net income benefited from a significant decrease in the effective tax rate from 71% in fiscal 2011 to 46% in fiscal 2012, primarily due to the recognition of foreign tax credits in the first quarter of fiscal 2012.

As of November 26, 2011, the Company had $2.6 million in cash and cash equivalents, compared with $3.0 million at August 31, 2011. Net working capital increased to $19.1 million at November 26, 2011 compared with $16.7 million on August 31, 2011 and the Company had $1.1 million outstanding on its line of credit facility at November 26, 2011.

First Quarter Financial Highlights
  • Sales grew in a majority of the Company’s offices, practices, and from its licensee partners.
  • Adjusted EBITDA increased 12% to $6.4 million, compared with $5.7 million in the prior year.
  • Net income increased to $1.7 million compared with $0.8 million in the first quarter of fiscal 2011.
  • EPS in the quarter growth of 95%, to $0.09 per diluted share, from $0.05 per diluted share in the first quarter of fiscal 2011.
  • Gross profit increased 6% to $26.5 million.
  • Gross margin for the quarter expanded to 67.1% of sales compared to 63.6% of sales in the first quarter of fiscal 2011.
  • Adjusted EBITDA/Sales Percentage increased to 16.1% from 14.4% last year.

Fiscal 2012 Outlook

The Company reaffirmed its projections that Adjusted EBITDA for fiscal 2012 is expected to range from $24 million to $26 million, and expressed commitment to work to be at the higher end of that range.

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