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

Non-GAAP Financial Information

Refer to the attached table for the reconciliation of a non-GAAP financial measure, “Adjusted EBITDA,” to consolidated net income, the most comparable GAAP financial measure. The Company defines Adjusted EBITDA as net income or loss from operations excluding the impact of interest expense, income tax expense, amortization, depreciation, share-based compensation expense, and other non-recurring items. The Company references this non-GAAP financial measure in its decision making because it provides supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods and the Company believes it provides investors with greater transparency to evaluate operational activities and financial results.

About Franklin Covey Co.

Franklin Covey Co. (NYSE:FC) ( www.franklincovey.com), is a global provider of training and consulting services in the areas of leadership, productivity, strategy execution, customer loyalty, trust, sales performance, government, education and individual effectiveness. Over its history, Franklin Covey has worked with 90 percent of the Fortune 100, more than 75 percent of the Fortune 500, and thousands of small and mid-sized businesses, as well as numerous government entities and educational institutions. Franklin Covey has more than 40 direct and licensee offices providing professional services in over 140 countries.

FRANKLIN COVEY CO.
       
CONDENSED CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share amounts)

 
Quarter Ended
November 26, November 27,
2011 2010
(unaudited)
 
Net sales $ 39,540 $ 39,416
 
Cost of sales   12,998     14,340  
Gross profit 26,542 25,076
 
Selling, general, and administrative 21,373 19,789
Depreciation 834 910
Amortization   631     929  
Income from operations 3,704 3,448
 
Interest expense, net   (630 )   (707 )
Income before income taxes 3,074 2,741
 
Income tax provision   (1,412 )   (1,947 )
Net income $ 1,662   $ 794  
 
Net income per common share:
Basic and diluted $ 0.09 $ 0.05
 
Weighted average common shares:
Basic 17,733 17,032
Diluted 17,998 17,115
 
Other data:
Adjusted EBITDA (1) $ 6,360   $ 5,668  

 

 

(1)   The term Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, and share-based compensation expense) is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results. For a reconciliation of this non-GAAP measure to the most comparable GAAP equivalent, refer to the Reconciliation of Net Income to Adjusted EBITDA as shown below.

FRANKLIN COVEY CO.
               
Reconciliation of Net Income to Adjusted EBITDA
(in thousands)
 
 
Quarter Ended Four-Quarter Period Ended
November 26, November 27, November 26, November 27,
2011 2010 2011 2010
Reconciliation of net income to Adjusted EBITDA: (unaudited) (unaudited)
Net Income $ 1,662 $ 794 $ 5,675 $ 28
Adjustments:
Income from discontinued operations, net of tax - - - (416 )
Gain from sale of discontinued operations, net of tax - - - (238 )
Interest expense, net 630 707 2,589 2,850
Income tax provision 1,412 1,947 3,104 3,853
Amortization 631 929 3,242 3,727
Depreciation 834 910 3,491 3,605
Share-based compensation 1,191 381 3,598 1,346
Severance costs - - 150 920
Reimbursed travel costs - - - 686
Management stock loan costs   -     -     -   268  
 
Adjusted EBITDA $ 6,360   $ 5,668   $ 21,849 $ 16,629  
 
Adjusted EBITDA margin 16.1 % 14.4 %
 
 
 
 
FRANKLIN COVEY CO.
 
Additional Sales Information
(in thousands and unaudited)
 
Quarter Ended
November 26, November 27,
2011 2010
Sales Detail by Category:
Training and consulting services

 

$ 36,382 $ 37,555
Products

 

2,463 1,276
Leasing

 

  695     585  
 
Total

 

$ 39,540   $ 39,416  
 
Sales Detail by Region/Type:
U.S./Canada direct

 

$ 18,398 $ 21,085
International direct

 

7,573 7,499
Licensees

 

3,921 3,193
National account practices

 

5,479 4,425
Self-funded marketing

 

2,926 2,167
Other

 

  1,243     1,047  
 
Total

 

$ 39,540   $ 39,416  




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