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Franklin Covey Reports Strong Second Quarter Fiscal 2012 Financial Results

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 Two Quarters Ended
February 25, February 26, February 25, February 26,

2012

2011

2012

2011

(unaudited)

 
Net sales $ 38,627 $ 35,478 $ 78,167 $ 74,895
 
Cost of sales   13,646     12,367     26,644     26,708  
Gross profit 24,981 23,111 51,523 48,187
 
Selling, general, and administrative 20,714 19,915 42,087 39,704
Depreciation 860 788 1,694 1,698
Amortization   626     920     1,256     1,850  
Income from operations 2,781 1,488 6,486 4,935
 
Interest expense, net   (622 )   (636 )   (1,253 )   (1,340 )
Income before income taxes 2,159 852 5,233 3,595
 
Income tax provision   (997 )   (547 )   (2,409 )   (2,494 )
Net income $ 1,162   $ 305   $ 2,824   $ 1,101  
 

Net income per common share:

Basic $ 0.07 $ 0.02 $ 0.16 $ 0.06
Diluted 0.06 0.02 0.16 0.06
 
Weighted average common shares:
Basic 17,764 16,990 17,748 17,011
Diluted 18,287 17,379 18,142 17,247
 
Other data:

Adjusted EBITDA (1)

$ 5,321   $ 3,623   $ 11,681   $ 9,291  
 
(1)  

The term Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share-based compensation, and certain other items) 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 Two Quarters Ended
February 25, February 26, February 25, February 26,
2012 2011 2012 2011
Reconciliation of net income to Adjusted EBITDA: (unaudited) (unaudited)
Net Income $ 1,162 $ 305 $ 2,824 $ 1,101
Adjustments:
Interest expense, net 622 636 1,253 1,340
Income tax provision 997 547 2,409 2,494
Amortization 626 920 1,256 1,850
Depreciation 860 788 1,694 1,698
Share-based compensation  

1,054

    427     2,245     808  
 
Adjusted EBITDA $ 5,321   $ 3,623   $ 11,681   $ 9,291  
 
Adjusted EBITDA margin 13.8 % 10.2 % 14.9 % 12.4 %
 
 
 

FRANKLIN COVEY CO.

 

Additional Sales Information

(in thousands and unaudited)
 
Quarter Ended Two Quarters Ended
February 25, February 26, February 25, February 26,
2012 2011 2012 2011
Sales Detail by Category:
Training and consulting services $ 35,606 $ 33,337 $ 71,988 $ 70,893
Products 2,303 1,543 4,766 2,819
Leasing   718     598     1,413     1,183  
 
Total $ 38,627   $ 35,478   $ 78,167   $ 74,895  
 
Sales Detail by Region/Type:
U.S./Canada direct $ 19,107 $ 19,024 $ 37,505 $ 40,109
International direct 7,507 6,605 15,081 14,104
Licensees 3,291 2,899 7,212 6,092
National account practices 5,801 4,338 11,280 8,763
Self-funded marketing 1,812 1,759 4,739 3,926
Other   1,109     853     2,350     1,901  
 
Total $ 38,627   $ 35,478   $ 78,167   $ 74,895  




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