SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
FRANKLIN COVEY CO.
(Name of Subject Company and Filing Person)
COMMON STOCK, PAR VALUE $0.05 PER SHARE
(Title of Class of Securities)
353469109
(CUSIP Number of Class of Securities)
VAL JOHN CHRISTENSEN, ESQ.
Secretary and General Counsel
2200 West Parkway Boulevard
Salt Lake City, Utah 84119-2331
Telephone: (801) 975-1776
(Name, Address and Telephone Number of
Person Authorized to Receive notices
and Communications on Behalf of the
Filing Person)
COPY TO:
KEITH L. POPE, ESQ.
Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111-1537
(801) 532-7840
CALCULATION OF FILING FEE
================================================================================
TRANSACTION VALUATION AMOUNT OF FILING FEE
$44,000,000* $8,800
================================================================================
* This amount assumes the purchase of 7,333,333 shares of common stock, par
value $0.05 per share, at the tender offer price of $6.00.
|X| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount previously paid: $8,800 Filing party: Franklin Covey Co.
Form or registration No.: Schedule TO Date filed: November 26, 2001
|_| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
|_| third-party tender offer subject to Rule 14d-1.
|X| issuer tender offer subject to Rule 13e-4.
|_| going-private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: |_|
This Amendment No. 3 to Tender Offer Statement is being filed to include in the
communications regarding Franklin Covey's Tender Offer the press release dated
January 9, 2002, concerning Franklin Covey's operating results for its first
quarter of fiscal 2002 and updating its current financial position and general
outlook for the near term.
ITEM 12. EXHIBITS.
(a)(1) (A) Offer to Purchase, dated November 26, 2001, as amended on
November 28, 2001, and December 21, 2001.*
(B) Form of Letter of Transmittal.*
(C) Form of Notice of Guaranteed Delivery.*
(D) Form of Letter to brokers, dealers, commercial banks,
trust companies, and other nominees.*
(E) Form of Letter to client for use by brokers, dealers,
commercial banks, trust companies, and other nominees.*
(a)(2)-(4) Not applicable.
(a)(5) (A) Press Release, dated November 13, 2001.*
(B) Summary Advertisement, dated November 26, 2001.*
(C) Press Release, dated November 26, 2001.*
(D) Press Release, dated December 21, 2001.*
(E) Press Release, dated January 9, 2002.
(b) Not applicable.
(d) Not applicable.
(g) Not applicable.
(h) Not applicable.
* Previously filed on Schedule TO
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Amendment No. 3 to Tender Offer Statement
on Schedule TO is true, complete, and correct.
FRANKLIN COVEY CO.
January 9, 2002 By /s/ Robert A. Whitman
---------------------------------
Robert A. Whitman
Chief Executive Officer
Exhibit (a)(5)(E) to Amendment 3 to Schedule TO
NEWS BULLETIN
For Further Information:
RICHARD R. PUTNAM
[ L O G O](franklin covey) Investor Relations
(801) 975-1776
2200 West Parkway Boulevard
Salt Lake City, Utah 84119-2331
www.franklincovey.com
================================================================================
FRANKLIN COVEY REPORTS
FIRST QUARTER SALES AND EARNINGS
SALT LAKE CITY, UTAH (NYSE: FC) - January 9, 2002 -- Franklin Covey today
announced financial results for its first quarter of fiscal year 2002 ended
November 24, 2001. Sales from continuing operations for the first quarter of
fiscal 2002 decreased 33% to $84.3 million compared to $125.6 million for the
first quarter of fiscal 2001. The Company reported an after-tax loss of $21.7
million and a $27.8 million loss attributable to the common stock ($1.40 loss
per share, after accounting for preferred dividends and discontinued operations)
compared to $4.4 million in net income and a $0.7 million loss attributable to
the common stock ($0.03 loss per share, after accounting for preferred dividends
and discontinued operations) for the same quarter in the prior year. EBITDA for
the quarter was a negative $20.0 million compared to positive EBITDA of $20.4
million for the same quarter of fiscal 2001. The Company's fiscal first quarter
of 2002 EBITDA and net loss included an $11.8 million non-cash charge consisting
of a $10.0 million provision for losses on the management stock loans and $1.8
million impairment of investment in Franklin Covey Coaching, LLC. Due to the
sale of Premier Agendas on December 21, 2001, the operating results of Premier
have been classified as discontinued operations.
The Company identified three major factors that impacted sales and EBITDA during
the quarter: 1) the direct impact of the events of September 11; 2) an already
weak economy that worsened during the quarter; and 3) a decline in sales of
handheld electronic organizers (PDA's) and related accessories of approximately
$10 million. Also, because of the Company's modified 5-4-4 reporting calendar,
the first quarter of fiscal year 2002 had one less business day compared to the
first quarter of fiscal year 2001. This difference will be picked up in the last
quarter of fiscal 2002.
As a direct consequence of the events of September 11, the Company experienced a
number of cancellations and postponements of scheduled training business. In
addition, the booking pace for future organizational training business declined
due to concerns related to travel and economic conditions. Retail sales were
also negatively impacted with comparable store sales down 28% prior to September
11, but an overall 35% for the quarter. In addition, the sales from the
Company's historically strong fall catalog mailing, which was mailed just days
prior to September 11 and the subsequent anthrax scares associated with the
mail, declined more than 40% during the quarter compared to the same quarter
last year. This decline is consistent with those reported for many other
catalog-based businesses during the same time period.
Total Consumer Business Unit sales were $49.5 million during the first quarter
of fiscal 2002 compared to $74.9 million for the same quarter of fiscal 2001.
Included in the Consumer Business Unit, retail store sales were $28.6 million
during the quarter compared to $39.6 million for the same quarter of fiscal
2001. Comparable store sales decreased 35% during the quarter. The lower
comparable store sales were a function of dramatically lower sales of PDA's,
some cannibalization of existing store sales by the new stores that opened in
the same markets, the impact of September 11 (where more than 100 of the
Company's stores in malls or shopping centers were closed for at least one day)
and the general unfavorable economy. The Company opened 6 new stores during the
quarter bringing the total number of its stores to 172 compared to 149 a year
ago. The Company noted that the combination of nationwide declines in mall foot
traffic leading to fewer transactions, together with smaller average purchases
due to lower technology sales adversely impacted the Company's
retail store sales. Catalog/e-commerce revenues decreased 38% to $19.4 million
compared to $31.6 million for the same quarter a year ago. The decrease was
primarily attributed to lower call volume.
Total Organizational Business Unit sales for the quarter were $34.9 million
compared to $50.7 million during the first quarter of fiscal 2001. Included in
the Organizational Business Unit, OSG sales decreased 38% to $22.0 million
compared to $35.2 million for the same quarter of fiscal 2001. Lower revenues
were attributed to postponed or canceled training seminars due to difficulties
and concerns related to travel and the overall economy as well as restructuring
activities within the business unit that were undertaken and completed during
the first quarter of fiscal 2002. Organizational sales internationally,
including direct and licensee operations, were $12.9 million during the quarter
compared to $15.5 million for the same quarter last year.
Commencing in January 2001, the Company began to feel the impact of a weakening
economy. Prior to then, the Company had benefited from a growing economy and
strong demand for handheld electronic organizers. The Company believes, however,
that many of its customers view the products and services offered by the Company
as discretionary spending and, as general economic conditions worsened, total
revenues for fiscal 2001 were down 13% from fiscal 2000. This trend was
accelerated by the events that occurred in the first quarter of fiscal 2002 and
the Company does not anticipate that revenues will significantly increase from
current levels unless and until the Company's customers regain confidence in
improving economic conditions and increase their productivity and training
budgets.
The significant decrease in revenues from prior year periods continued through
the Christmas buying season. While the Company has taken significant steps to
decrease costs in order to address continuing lower revenues and currently has a
very strong balance sheet after the benefit of the Premier sale, with
essentially no debt and more than $60 million ($3 per share) of cash and cash
equivalents, the Company is considering whether or not it should conserve this
cash position to provide it with adequate resources to maintain flexibility in
uncertain economic conditions. As a consequence, the Company is considering the
possible cutback, delay or termination of its previously announced tender offer
to purchase its common stock at $6 per share and expects to announce a decision
in the next week. The Company wants to be confident that under any scenario it
is maintaining sufficient resources to fund initiatives aimed at strengthening
its sales and profitability during fiscal 2002 and beyond.
ABOUT FRANKLIN COVEY
Franklin Covey Co. is a leading, learning and performance services firm
assisting professionals and organizations in measurably increasing their
effectiveness in leadership, productivity, communication and sales. Clients
include 80 of the Fortune 100, more than three quarters of the Fortune 500,
thousands of small and mid-sized businesses, as well as numerous government
entities. Organizations and professionals access Franklin Covey services and
products through consulting services, licensed client facilitators, public
workshops, catalogs, 173 retail stores, WWW.FRANKLINCOVEY.COM and
WWW.FRANKLINPLANNER.COM. More than 3,000 Franklin Covey associates provide
professional services and products in 44 offices in 38 countries.
SAFE-HARBOR STATEMENT
This announcement contains forward-looking statements that necessarily are based
on certain assumptions and are subject to certain risks and uncertainties,
including general economic conditions, the effects of the adoption of certain
new accounting policies, competition in the Company's targeted market place,
market acceptance of new products or services, increases or decreases in the
Company's market share, growth or contraction of the overall market for the
products offered by the Company and its competitors, changes in the training and
spending policies of the Company's clients, and other factors identified and
discussed in the Company's 2001 10-K report filed with the Securities and
Exchange Commission, many of which are beyond the control or influence of the
Company. There can be no assurance that the Company's actual future performance
will meet management's expectations. These forward-looking statements are based
on management's expectations as of the date hereof, and are based on factors
that may cause future results to differ materially from the Company's current
expectations.
FRANKLIN COVEY CO.
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
-----------------------------------------------
( in thousands, except per share amounts )
Quarter Ended
November 24, November 25,
2001 2000
---- ----
(UNAUDITED)
Sales $ 84,340 $ 125,616
Cost of sales 36,853 50,144
---------------- ----------------
Gross margin 47,487 75,472
Selling, general and administrative 56,504 56,002
Equity in earnings of a subsidiary 863 885
Provision for losses on management stock loans (9,971)
Impairment of investment in unconsolidated subsidiary (1,861)
---------------- ----------------
EBITDA (19,986) 20,355
Depreciation 8,277 6,065
Amortization 1,396 3,249
---------------- ----------------
EBIT (29,659) 11,041
Interest income 851 164
Interest expense (2,166) (1,779)
Other expense 5,126
---------------- ----------------
Income (loss) before provision for income taxes (36,100) 9,426
Benefit for income taxes 14,440 (5,005)
---------------- ----------------
NET INCOME (LOSS) $ (21,660) $ 4,421
Loss from discontinued operations, net of tax benefit (3,992) (3,091)
Preferred dividends (2,130) (2,028)
---------------- ----------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (27,782) $ (698)
================ ================
Earnings per share (basic and diluted) $ (1.40) $ (0.03)
================ ================
Weighted average number of common and
common equivalent shares basic and diluted 19,856 20,648
SALES DETAIL
Retail Stores $ 28,639 $ 39,631
Catalog / e-Commerce 19,444 31,586
Other 1,392 3,705
---------------- ----------------
Total Consumer Business Unit 49,475 74,922
---------------- ----------------
Organizational Sales Group 21,987 35,232
International 12,878 15,462
---------------- ----------------
Total Organizational Business Unit 34,865 50,694
---------------- ----------------
Total $ 84,340 $ 125,616
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