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):
December
1, 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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(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 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement
On
February 25, 2010, Franklin Covey Co. (the Company) entered into a fourth
modification agreement with JPMorgan Chase Bank, N.A. (the Lender) on its line
of credit facility (the Fourth Modification Agreement). The Lender
also provides the majority of the Company’s day-to-day banking
services.
Under
provisions of the Fourth Modification Agreement, the following terms of the line
of credit agreements were modified:
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1.
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Loan Amount – The line
of credit will continue to allow up to $13.5 million of borrowing capacity
until December 31, 2010, when the loan amount will be reduced to $10.0
million.
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2.
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Maturity Date – The
maturity date of the credit facility has been extended one year to March
14, 2011.
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3.
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Interest Rate – The
effective interest rate will be based upon the calculation of the Funded
Debt to EBITDAR Ratio and the Fixed Charge Coverage Ratio. If
the Company’s Funded Debt to EBITDAR Ratio is less than 2.5 to 1.0 and the
Fixed Charge Coverage Ratio is greater than 2.0 to 1.0, the interest rate
will be LIBOR plus 2.6 percent. If the ratios are in excess of
these amounts, but still in compliance with the terms of the line of
credit facility, the interest rate will be LIBOR plus 3.5
percent.
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4.
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Financial Covenants –
The Funded Debt to EBITDAR Ratio was modified for the twelve (12)
month periods then ending, to be less than (a) 3.75 to 1.00 as of the
end of the fiscal quarter ending on February 28, 2010, (b) 3.50 to 1.00 as
of the end of the fiscal quarter ending on May 29, 2010, and (c) 3.00 to
1.00 as of the end of the fiscal quarter ending on August 31, 2010 and
each fiscal quarter thereafter. The Fixed Charge Coverage Ratio
is required to be greater than 1.5 to 1.0 for all periods and the minimum
net worth was revised to $67.0 million. The capital expenditure
limitations remain unchanged. 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.
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On
December 1, 2009, the Company obtained an unsecured short-term loan from a bank
in Japan for 100.0 million yen. The United States dollar equivalent
of the loan exceeded the allowable $1.0 million, which resulted in an
instance of non-compliance with the Company’s line of credit
agreement. This instance of non-compliance has since been cured and
did not increase the outstanding obligation on the line of credit
agreement. The Fourth Modification Agreement waived the instance of
non-compliance with regard to the Japan loan.
The
foregoing description of the Fourth Modification Agreement does not purport to
be complete and is qualified in its entirety by reference to the text of the
Fourth Modification Agreement, which is filed as Exhibit 10.1 attached
hereto.
The
original credit agreements with the Lender are described in further detail in,
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
February 25, 2010, the Company entered into the Fourth 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
2.04
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Triggering
Events That Accelerate or Increase a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet
Arrangement
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On
December 1, 2009, the Company entered into a short-term loan with a bank in
Japan, which resulted in an instance of non-compliance with certain terms of the
line of credit agreement. The Fourth Modification waived the instance
of non-compliance as described 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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Fourth
Modification Agreement by and among Franklin Covey Co. and JPMorgan Chase
Bank, N.A., dated February 25, 2010.
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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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March 2, 2010
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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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