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):
June
30, 2009
FRANKLIN
COVEY CO.
(Exact
name of registrant as specified in its charter)
Commission
File No. 1-11107
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Utah
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87-0401551
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|
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(State
or other jurisdiction of incorporation)
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(IRS
Employer Identification Number)
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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:
[
] Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
[
] Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))
[
] Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))
Item
1.01 Entry into a Material Definitive
Agreement
On June
30, 2009, Franklin Covey Co. (the Company) entered into a second modification
agreement with JPMorgan Chase Bank, N.A. (the Lender) on its line of credit
facility (the Second Modification Agreement). The Lender also
provides the majority of the Company’s day-to-day banking
services. Under terms of the Second Modification Agreement, the
Company’s borrowing capacity will reduced as follows (dollars in
thousands):
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Effective
Date
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Borrowing
Capacity
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|||
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June
30, 2009
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$ | 20,000 | ||
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August
31, 2009
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18,000 | |||
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November
30, 2009
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13,500 | |||
In
addition, any payments made to the Company by Franklin Covey Products, LLC from
the working capital settlement and reimbursable costs associated with the sale
transaction note receivable are required to be paid on the line of credit and
will also reduce the available borrowing capacity as shown above by the amount
of the payments. For example, a $2.0 million payment received from
Franklin Covey Products, LLC prior to August 31, 2009 would reduce the borrowing
capacity on the line of credit at August 31, 2009 to $16.0 million.
The
Second Modification Agreement also increases the effective interest rate on the
line of credit facility from LIBOR plus 1.50 percent to LIBOR plus 2.00 percent,
effective on the date of the Second Modification Agreement.
In
addition to customary non-financial terms and conditions, the line of credit
requires the Company to be in compliance with specified financial covenants,
including: (i) a funded debt to earnings ratio; (ii) a fixed charge coverage
ratio; (iii) a limitation on annual capital expenditures; and (iv) a defined
amount of minimum net worth. In the event of noncompliance with these
financial covenants and other defined events of default, the Lender is entitled
to certain remedies, including acceleration of the repayment of amounts
outstanding on the line of credit. The Second Modification Agreement
also modified the funded debt to earnings ratio and fixed charged coverage ratio
over the quarterly periods ended August 2009 and November 2009.
The
foregoing description of the Second Modification Agreement does not purport to
be complete and is qualified in its entirety by reference to the text of the
Second Modification Agreement, which is filed as Exhibit 10.1 attached
hereto.
The
original credit agreements with the Lender are described in further detail, and
the corresponding agreements are attached as exhibits to the Form 8-K filed with
the Securities and Exchange Commission on March 19, 2007.
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Item
2.03
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Creation
of a Direct Financial Obligation or an Obligation Under an Off-Balance
Sheet Arrangement
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On June
30, 2009, the Company entered into a second modification agreement with the
Lender on its line of credit facility as described above in Item
1.01. The information in Item 1.01 is incorporated by reference
herein.
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Item
9.01
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Financial
Statements and Exhibits
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(d)
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Exhibits:
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10.1
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Second
Modification Agreement by and among Franklin Covey Co. and JPMorgan Chase
Bank, N.A., dated June 30, 2009.
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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.
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FRANKLIN
COVEY CO.
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Date:
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July 7, 2009
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By:
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/s/ Stephen D.
Young
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Stephen D.
Young
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Chief Financial
Officer
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