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):
May
22, 2008
FRANKLIN
COVEY CO.
(Exact
name of registrant as specified in its charter)
Commission
File No. 1-11107
|
Utah
|
87-0401551
|
|
|
(State
or other jurisdiction of incorporation)
|
(IRS
Employer Identification Number)
|
|
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))
[X] 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 May
22, 2008, Franklin Covey Co. (the Company) announced that it will join with
Peterson Partners V, L.P. to create a new limited liability company, Franklin
Covey Products, LLC (Franklin Covey Products), to pursue the strategic objective
of expanding the sales of Franklin Covey branded consumer products throughout
the world. In connection with the creation of Franklin Covey
Products, on May 22, 2008 the Company entered into a definitive agreement to
sell substantially all of the assets of its Consumer Solutions Business Unit
(CSBU) to Franklin Covey Products (the Sale Agreement). The sale
price is $32.0 million in cash plus the amount, if any, by which the closing
date net current assets exceeds a specified amount of current net assets or
minus the amount, if any, by which the specified current net assets exceeds the
actual current net assets at the closing date.
Pursuant
to the terms of the Sale Agreement, the Company will contribute (i)
approximately $1.7 million on the closing date of the sale as consideration for
a 19.5 percent voting interest in Franklin Covey Products plus (ii) a $1.0
million interest-bearing preferred contribution that provides no additional
ownership or voting rights. The remaining interest in Franklin Covey
Products will be primarily held by Peterson Partners V, L.P., an affiliate of
Peterson Partners, Inc., a Salt Lake City, Utah based investment firm that
specializes in small to mid-size companies. Founded in 1995, Peterson
Partners has a track record of successful investments including JetBlue, Making
Memories, EnergySolutions, Winder Farms, MITY Enterpises, Inc. and Diamond
Rental. A founding general partner of Peterson Partners and a
significant investor in Peterson Partners V, L.P. is Joel C. Peterson, a member
of the Company’s Board of Directors. Due to this relationship, Mr.
Peterson recused himself from the negotiations and Board of Director discussions
regarding the sale of CSBU.
The CSBU
is primarily focused on sales of the Company’s products to individual customers
and small business organizations and includes the operations of the Company’s
domestic retail stores, consumer direct channels (primarily eCommerce and call
center), wholesale operations, international product channels in certain
countries, and other related distribution channels, including government product
sales and domestic printing and publishing operations. Some of the
Company’s best-known consumer products include the FranklinCovey Planner™ as
well as a variety of binders, totes, and other productivity and organizational
tools and accessories.
The sale
of CSBU assets is expected to be completed approximately 60 days from the
signing of the Sale Agreement. The closing of the transaction is
subject to a number of customary conditions stated in the Sale Agreement, which
also contains representations and warranties of both parties, indemnification
agreements, and other customary covenants.
In
addition to the Sale Agreement, the Company expects to complete a licensing
agreement, shared services agreement, and lease agreements with Franklin Covey
Products prior to the closing of the sale. The management and
operations of CSBU are expected to remain on the Company’s campus located in
Salt Lake City, Utah for the foreseeable future.
The
proposed sale of the CSBU has been approved by the Company’s Board of Directors
and does not require shareholder approval. The Company also obtained
a fairness opinion from ThinkPanmure, LLC (San Francisco), which served as the
Company’s financial advisor in connection with the transaction.
The
Company anticipates using a portion of the proceeds from the sale of CSBU to
acquire shares of its common stock through a Dutch auction tender offer, which
is expected to begin shortly after the closing of the sale
transaction.
The
foregoing description of the Sale Agreement does not purport to be complete and
is qualified in its entirety by reference to the Sale Agreement, which the
Company expects to file as part of an amendment to this Form 8-K as soon as
practicable.
CAUTIONARY
STATEMENT
The Sale
Agreement will be included to provide investors and shareholders with
information regarding its terms and conditions. Except for its status
as a contractual document that establishes and governs the legal relations among
the parties thereto with respect to the transaction described in this Form 8-K,
the Sale Agreement is not intended to be a source of factual, business, or
operational information about the parties.
Certain
of the contractual representations or warranties made by the parties in the Sale
Agreement are subject to a standard of materiality that may be different from
what shareholders of the Company may view as material to their
interests. Representations and warranties may be used as a tool to
allocate risks between the respective parties to the Sale Agreement, including
where the parties do not have complete knowledge of all the
facts. Investors in the Company’s securities are not third-party
beneficiaries under the Sale Agreement and should not rely on the
representations, warranties, and covenants or any description thereof as
characterizations of the actual state of facts or condition of the parties or
any of their affiliates.
FORWARD
LOOKING STATEMENTS
This
current report and the exhibits furnished herewith contain forward-looking
statements related to, among other things, the completion of the sale of CSBU,
the tender offer, and the other transactions contemplated by the Sale
Agreement. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that forward-looking statements
inherently involve risks and uncertainties that could cause actual results to
differ materially from those contemplated in the forward-looking
statements. Such risks and uncertainties include, but are not limited
to, the ability of the parties to the Sale Agreement to satisfy the conditions
to closing specified in the Sale Agreement, and other risks and uncertainties
outlined in the Company’s documents filed with the SEC, including the Company’s
most recent annual report on Form 10-K for the fiscal year ended August 31, 2007
as filed with the Securities and Exchange Commission. All
forward-looking statements and other information in this current report are
based upon information available as of the date of this report. Such
information may change or become invalid after the date of this report, and, by
making these forward-looking statements, the Company undertakes no obligation to
update these statements after the date of this report, except as required by
law.
TENDER
OFFER STATEMENT
This
communication is for informational purposes only and is not an offer to buy, or
the solicitation of an offer to sell, any shares. The full details of
any tender offer, including complete instructions on how to tender shares, will
be included in the offer to purchase, the letter of transmittal and related
materials, which would be mailed to shareholders promptly following commencement
of the offer. Shareholders should read carefully the offer to
purchase, the letter of transmittal and other related materials when they are
available because
they will contain important information. Shareholders may obtain free
copies, when available, of the offer to purchase and other related materials
that will be filed by Franklin Covey Co. with the Securities and Exchange
Commission at the Commission’s website at www.sec.gov. When
available, shareholders also may obtain a copy of these documents, free of
charge, from the Company’s information agent to be appointed in connection with
the offer.
Item
2.04 Triggering Events That Accelerate or Increase
a Direct FinancialObligation or an Obligation under an Off-Balance Sheet
Arrangement
The Sale
Agreement described in Item 1.01 above creates an instance of non-compliance
with certain covenants related to material changes and transfers of assets in
the Company’s $25.0 million revolving line of credit agreements. The
Company has obtained the necessary consents from the lending institutions to
waive these instances of non-compliance with the applicable loan covenants and
thus prevent the acceleration of payments on amounts outstanding on the line of
credit agreements.
Item
7.01 Regulation FD Disclosure
On May
22, 2008, the Company issued a press release announcing that it had entered into
the Sale Agreement as described in Item 1.01 above. A copy of the
press release is attached hereto as Exhibit 99.1 and incorporated by reference
herein.
The Company will hold an investor web
cast on Friday, May 23, 2008 at 9:00 a.m. (Mountain Daylight Time) to discuss
the Sale Agreement and other business matters. Interested parties may
participate in the web cast by calling (800) 435-1398, participant code:
38649130; or by logging on to http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=102601&eventID=1857100.
Item
9.01 Financial Statements and
Exhibits
|
(d)
|
Exhibits:
|
|
|
99.1
|
Press
release announcing the sale of Consumer Solutions Business Unit dated May
22, 2008.
|
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.
|
FRANKLIN
COVEY CO.
|
||||
|
Date:
|
May 22, 2008
|
By:
|
/s/ Stephen D.
Young
|
|
|
Stephen D.
Young
|
||||
|
Chief Financial
Officer
|
||||