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Franklin Covey links with EDS

About 400 workers will make switch to jobs with Texas firm

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Franklin Covey said Friday it has awarded Electronic Data Systems Corp. (EDS) a $469 million contract for customer relationship management and information technology services, which includes EDS taking over Franklin Covey's warehouse and customer call center in Salt Lake City.

Franklin Covey says the deal should save it more than $50 million in costs and free up another $15 million in assets and capital. Some 400 of its employees at the distribution center and call center will move to EDS.

On Tuesday, Franklin Covey reported a net loss of $14.6 million, or 84 cents per share, for its third fiscal quarter ended May 26, down from a loss of $18.8 million, or $1.02 per share, for the same period last year. In its second fiscal quarter it lost $800,000, or 14 cents per share.

Best known for its Franklin Planner, the company offers a variety of time management and productivity seminars and products to clients.

Val Christensen, executive vice president of legal services for Franklin Covey, said the transfer of the employees — which will reduce Franklin Covey's local work force from 3,000 to 2,600 — means no one gets hurt in the deal. "Morale is really high here. People are excited about the transition," he said.

Franklin Covey has had financial difficulties since the merger of Franklin Quest and Covey Leadership Centers in 1997, but Christensen said those issues have now been sorted out.

"Unfortunately, the economy took a dive right when we expected to get some traction from the merger, but we will weather this, and we're optimistic about our future," Christensen said.

As part of the deal EDS, which is based in Plano, Texas, has awarded Salt Lake-based Franklin Covey a $25 million contract to supply what it terms "learning and performance solutions and tools" to increase productivity at EDS.

EDS was founded in 1962 by billionaire Ross Perot in what many believe marked the birth of the information technology industry. He later sold the company, which now has 122,000 employees.

The deal calls for EDS to provide Franklin Covey warehouse and distribution services and customer interaction services to support its customer relationship management program. The contract adds to the $117 million "strategic infrastructure" agreement EDS signed earlier this year to support all of Franklin Covey's information services through distributed desktop, mid-range processing, application development and management, Web-hosting, e-commerce and network services.

The deal calls for Franklin Covey to provide learning and performance services for EDS, including its leadership and productivity curriculum, and assessment and consulting services to new EDS employees. The concept is to help them integrate into EDS' "mission and cultural values."

In early trading Friday, Franklin Covey shares were up 20 cents, or 4 percent, to $5.20 on the New York Stock Exchange. Over the last 52 weeks it has been trading in a range of $4.90 to $9.75. EDS was up 69 cents, or 1.1 percent, at $63.60 in early NYSE trading Friday.


E-MAIL: max@desnews.com