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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27, 1999
REGISTRATION NO. 333-89541
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FRANKLIN COVEY CO.
2200 WEST PARKWAY BOULEVARD
SALT LAKE CITY, UTAH 84119-2331
TELEPHONE: (801) 975-1776
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UTAH 87-0401551
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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JOHN L. THELER
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FRANKLIN COVEY CO.
2200 WEST PARKWAY BOULEVARD
SALT LAKE CITY, UTAH 84119-2331
TELEPHONE: (801) 975-1776
(AGENT FOR SERVICE)
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COPIES TO:
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VAL JOHN CHRISTENSEN, ESQ. ROBERT A. PROFUSEK, ESQ.
SECRETARY AND GENERAL COUNSEL JONES, DAY, REAVIS & POGUE
FRANKLIN COVEY CO. 599 LEXINGTON AVENUE
2200 WEST PARKWAY BOULEVARD NEW YORK, NEW YORK 10022
SALT LAKE CITY, UTAH 84119-2331 (212) 326-3939
TELEPHONE: (801) 975-1776
</TABLE>
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Approximate date of commencement of the proposed sale of the securities to
the public: As soon as practicable after this registration statement becomes
effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PRICE PER SHARE PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Series A Preferred Shares, no par value per
share 750,000 $100 $75,000,000 $20,850(1)
Common Shares, $0.05 par value per Share
(2)........................................ 5,357,143 $-- $-- $0(3)
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(1) This amount was previously paid.
(2) Represents shares issuable upon conversion of the Series A Preferred Shares.
(3) Pursuant to Rule 457(i), no registration fee is payable.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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Prospectus
NONTRANSFERABLE RIGHTS TO PURCHASE
UP TO 750,000 SERIES A PREFERRED SHARES
FRANKLIN COVEY CO.
$100 PER SHARE
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TERMS OF SUBSCRIPTION OFFERING
- Expires 5:00 p.m., Mountain time, on November 30, 1999, unless extended
- You will have the nontransferable right to purchase one of our Series A
preferred shares for every 27 of our common shares that you owned on
November 8, 1999 at a price of $100 per preferred share
- We will not issue fractional rights and we will not pay cash to you in
place of your rights
- We reserve the right to cancel the rights offering at any time before the
expiration date and once submitted, the subscription agreement may not be
revoked by you for any reason
- There is no minimum number of preferred shares that we must sell in order
to complete the subscription offering
- Shareholders who do not participate in the subscription offering will
continue to own the same number of our common shares, but will own a
smaller percentage of our total outstanding capital stock to the extent
that other shareholders participate in the subscription offering
- We do not intend to list the subscription rights or the Series A preferred
shares on any securities exchange or any automated quotation system and no
active public market for the Series A preferred shares is expected
The purpose of the subscription offering is to afford eligible common
shareholders the opportunity to acquire Series A preferred shares on
substantially the same terms under which Knowledge Capital Investment Group, a
private investor, acquired Series A preferred shares on June 2, 1999. The Board
of Directors of Franklin Covey makes no recommendation to you regarding your
decision to either exercise or refrain from exercising your subscription rights.
Holders of the Series A preferred shares will be entitled to receive
dividends at an annual rate of $10 per share, payable quarterly. Until July 1,
2002, these dividends may be paid in cash or in kind, at our option. The
Series A preferred shares are convertible into common shares at a conversion
price of $14 per share, subject to adjustment. The Series A Preferred Shares are
subject to a right of first offer in favor of Franklin Covey until June 2, 2002.
Our common shares are quoted on the New York Stock Exchange under the symbol
"FC." On October 15, 1999, the last sale price for our common shares, as
reported by the New York Stock Exchange, was $7.9375.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 5 TO READ ABOUT SOME RISKS THAT
YOU SHOULD CONSIDER BEFORE EXERCISING THE RIGHTS ISSUED IN THIS SUBSCRIPTION
OFFERING.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is October 27, 1999.
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TABLE OF CONTENTS
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PROSPECTUS SUMMARY.......................................... 1
RISK FACTORS................................................ 5
RECENT DEVELOPMENTS......................................... 10
THE SUBSCRIPTION OFFERING................................... 10
USE OF PROCEEDS............................................. 14
DESCRIPTION OF THE SERIES A PREFERRED SHARES................ 15
RELATED PARTY TRANSACTIONS AND RELATIONSHIPS................ 19
FEDERAL INCOME TAX CONSIDERATIONS........................... 20
PLAN OF DISTRIBUTION........................................ 20
SUBSCRIPTION AGENT.......................................... 21
WHERE YOU CAN FIND MORE INFORMATION......................... 21
EXPERTS..................................................... 22
LEGAL MATTERS............................................... 22
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS THE KEY INFORMATION CONTAINED IN THIS PROSPECTUS.
HOWEVER, IT DOES NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO YOU.
TO UNDERSTAND THE SUBSCRIPTION OFFERING FULLY AND FOR A MORE COMPLETE
DESCRIPTION OF THE LEGAL TERMS OF THE SUBSCRIPTION OFFERING, YOU SHOULD READ
CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS WE HAVE REFERRED YOU TO.
FRANKLIN COVEY
Franklin Covey is a professional services firm that provides management
solutions in four main areas:
- Time Management;
- Leadership Skills;
- Communication Skills; and
- Sales Skills Management.
We provide tools and services to professionals and organizations through
training seminars, our 125 retail stores, catalog operations and through the
Internet at www.franklincovey.com. Our products include the popular Franklin
Planner, best selling books such as 7 Habits of Highly Effective People and
functional electronic tools such as 3Com's Palm planning device. Our services
include consulting, assessment measurement and training to help professionals
and organizations become more effective.
Our principal executive offices are located at 2200 West Parkway Boulevard,
Salt Lake City, Utah 84119-2331, telephone (801) 975-1776.
BUSINESS STRATEGY
In an effort to increase shareholder value, we had been pursuing a two-part
strategy seeking to improve our results of operations through increased
efficiencies and increased leverage through borrowings and common share
repurchases. Despite these efforts, the market price of our common stock
declined during 1998 and 1999. In mid-1999, we adopted a new, long-term growth
strategy predicated on substantial investments in our core businesses to
maintain our position as an industry leader in providing solutions for personal
and organizational effectiveness. Although we believe that we have the
industry's best individual and organizational productivity content, learning
processes and implementation tools, we believe that there are opportunities to
develop new products and delivery channels to meet the changing needs of our
customers and to expand our geographic reach. In addition, we believe that there
are acquisition opportunities in complementary businesses. Accordingly, in
June 1999, we issued 750,000 Series A preferred shares to Knowledge Capital,
which raised $75 million to provide us with the initial capital base to pursue
this strategy.
We are in the process of further refining our growth strategy and improving
the efficiency of our operations. Our objective is to create a plan that will
produce sustainable long-term growth and build shareholder value.
RECENT DEVELOPMENTS
On October 12, 1999, we announced a strategic realignment and organizational
restructure of our core businesses to lay strategic, operational, organizational
and financial foundations for profitable growth. The restructuring aligns our
products, services and channels to focus our resources on providing integrated
solutions to individuals and organizations.
As a result of the planned associate terminations and facility closures
associated with the strategic realignment and organizational restructure, we
expect to record a $16.2 million pre-tax restructuring
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charge during the fourth quarter of fiscal 1999. We also expect to recognize a
$16.6 million pre-tax charge to write-off certain impaired assets related to
discontinued lines of services and products. See "Recent Developments."
PURPOSE OF THE SUBSCRIPTION OFFERING
The purpose of the subscription offering is to afford our eligible common
shareholders the opportunity to acquire our Series A preferred shares on
substantially the same terms under which Knowledge Capital acquired 750,000
Series A preferred shares in June 1999.
PARTICIPATION BY OFFICERS AND DIRECTORS
Franklin Covey's current officers and directors, who owned in the aggregate
2,395,192 common shares, or approximately 12% of our outstanding common shares,
as of August 31, 1999, have informed us that they do not intend to exercise
their subscription rights.
FRANKLIN COVEY COMMON SHARES
Our common stock is traded on the New York Stock Exchange under the trading
symbol "FC." On October 15, 1999, the last sale price for our common shares, as
reported on the New York Stock Exchange, was $7.9375.
YOU ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS OF OUR COMMON SHARES PRIOR
TO DETERMINING WHETHER TO ACCEPT THE SUBSCRIPTION OFFERING.
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PRINCIPAL TERMS OF THE SUBSCRIPTION OFFERING
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Eligible Shareholders.................. You will be eligible to purchase Series A preferred shares
through the subscription offering if you are a common
shareholder of Franklin Covey and owned our common shares
on November 8, 1999.
Subscription Rights.................... You have the nontransferable right to purchase one
Series A preferred share for every 27 common shares you
owned as of November 8, 1999. The total number of
Series A preferred shares for which you may subscribe is
proportional to the total number of our common shares you
held on that date. You may exercise all or any portion of
the rights granted to you to purchase our Series A
preferred shares.
In determining the number of our Series A preferred shares
that we will issue to each common shareholder, we will
round downward to the nearest whole number.
Subscription Price..................... The subscription price is $100 per preferred share. The
subscription price is payable by check, money order or
wire transfer.
Expiration Date........................ November 30, 1999, at 5:00 p.m., Mountain time, unless
extended.
Subscription Procedures................ To subscribe for Series A preferred shares, you should
carefully complete and sign the enclosed subscription
agreement and forward it, together with your full payment
and any other required documents, to the subscription
agent.
No interest will be paid on the subscription payment. Once
you have submitted subscription documents, you may not
revoke your exercise of subscription rights for any
reason.
Subscription Agent..................... Zions First National Bank, the transfer agent for our
common shares.
Persons wishing to exercise rights for
the benefit of others................ Brokers, banks, trustees, and other individuals or
entities that hold our common shares for the account of
others may, if authorized by the beneficial owner,
complete the subscription agreement and submit it to the
subscription agent with the proper payment.
Common Shares held through Franklin
Covey's Employee Stock Purchase
Plan................................. Subscription rights applicable to common shares acquired
and held through our employee stock purchase plan may be
exercised only by following the special instructions on
yellow paper included with this prospectus.
Completion of the subscription
offering............................. Certificates representing the Series A preferred shares
will be delivered to subscribers as soon as practicable
after the
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expiration date of the subscription offering. We expect
that this may take two weeks or longer, due to the need to
allow checks to clear.
Non-Transferability of rights.......... Your subscription rights are not transferable.
Termination............................ We may cancel the subscription offering at any time, in
which event we will return your subscription payment
without interest.
Use of proceeds........................ We intend to use the proceeds of the subscription offering
for working capital and general corporate purposes.
Federal Income Tax
Considerations....................... Your receipt or exercise of the subscription rights should
not be treated as a taxable event for United States
federal income tax purposes, but may have other tax
effects. See "Federal Income Tax Considerations."
Questions.............................. If you have any questions about the subscription offering,
including questions about subscription procedures and
requests for additional copies of this prospectus or other
documents, please contact Richard Putnam, our Director of
Investor Relations, by telephone at (801) 975-1776.
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RISK FACTORS
An investment in our Series A preferred shares involves a high degree of
risk. Please see "Risk Factors" beginning on page 5 before making a decision to
exercise or refrain from exercising your rights to subscribe for our Series A
preferred shares.
RATIO OF FIXED CHARGES AND PREFERRED
SHARE DIVIDENDS TO EARNINGS
The ratio of fixed charges and preferred share dividends to earnings has
been computed on a consolidated basis and should be read in conjunction with our
consolidated financial statements, including the notes thereto, set forth in our
Annual Report on Form 10-K for the fiscal year ended August 31, 1998 and our
Quarterly Reports on Form 10-Q for the quarterly periods ended November 28,
1998, February 27, 1999 and May 29, 1999. As a result of the merger of Covey
Leadership Center into our company in June 1997, our results of operations, and
therefore the ratios presented below, for the fiscal year ended August 31, 1998
and subsequent periods are not directly comparable to those for prior periods.
For purposes of computing the following ratios, fixed charges and preferred
share dividends consist of interest incurred, amortization of debt expense, that
portion of rental expense on operating leases deemed to be the equivalent of
interest and dividends payable on our preferred shares. Earnings consist of
income before income taxes and the cumulative effect of accounting changes plus
fixed charges (excluding capitalized interest).
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FISCAL YEAR ENDED AUGUST 31,
---------------------------------------------------- NINE MONTHS
1994 1995 1996 1997 1998 ENDED MAY 29,1999
-------- -------- -------- -------- -------- -----------------
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Consolidated ratio of fixed charges and preferred
share dividends to earnings.................... 0.08x 0.09x 0.14x 0.18x 0.26x 0.48x
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RISK FACTORS
THE SERIES A PREFERRED SHARES BEING OFFERED ARE SUBJECT TO A NUMBER OF RISKS
AND OTHER INVESTMENT CONSIDERATIONS. YOU SHOULD CAREFULLY CONSIDER THESE RISKS
AND INVESTMENT CONSIDERATIONS, AS WELL AS INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS, PRIOR TO YOUR EXERCISE OF THE SUBSCRIPTION RIGHT.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains and incorporates by reference forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 with respect to our business, financial condition and results of
operations, including, without limitation, statements herein under the captions
"Business Strategy" and in our annual and quarterly reports under the captions
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." You can generally identify forward-looking statements by
looking for words such as "may," "will," "expect," "intend," "estimate,"
"anticipate," "believe" or "continue." Variations on those or similar words, or
the negatives of such words, also may indicate forward-looking statements.
These forward looking statements are based on certain assumptions and are
subject to a number of risks and uncertainties. Such uncertainties include, but
are not limited to:
- unanticipated developments in the integration of acquired or merged
businesses;
- management of growth;
- dependence on products and services;
- the rate and consumer acceptance of new product introductions;
- competition;
- year 2000 issues;
- the number and nature of customers and their product orders;
- pricing;
- pending and threatened litigation; and
- other risk factors, some of which are described below, and others of which
may be detailed from time to time in our press releases, reports to
shareholders and our filings with the Securities and Exchange Commission.
These forward-looking statements are based on management's expectations as of
the date of this document, or if incorporated by reference from a document as of
an earlier date, the earlier date. Actual future performance and results could
differ materially from that contained in or suggested by these forward-looking
statements as a result of the factors described above and elsewhere in this
prospectus.
RISKS RELATED TO THE SUBSCRIPTION OFFERING
IF YOU DO NOT EXERCISE YOUR SUBSCRIPTION RIGHTS, YOUR PERCENTAGE OF OWNERSHIP OF
FRANKLIN COVEY MAY DECREASE, AND THE VALUE OF YOUR FRANKLIN COVEY COMMON SHARES
COULD DECLINE
If you chose not to exercise your subscription rights, your relative
ownership interests in Franklin Covey may be diluted by the issuance of
Series A preferred shares to those shareholders who exercise their subscription
rights. The trading price of Franklin Covey common shares could decline to
reflect the dilution.
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THE SUBSCRIPTION PRICE WAS DETERMINED BY FRANKLIN COVEY'S BOARD OF DIRECTORS AND
BEARS NO RELATIONSHIP TO THE PRESENT VALUE OF FRANKLIN COVEY'S ASSETS, FINANCIAL
CONDITION OR OTHER ESTABLISHED CRITERIA FOR VALUE
Although we were informed by Knowledge Capital that Knowledge Capital
believed that its acquisition of Series A preferred shares at $100 per unit in
June 1999 represented an attractive investment by Knowledge Capital, neither
Knowledge Capital nor our Board of Directors expresses any opinion or makes any
recommendation to you regarding your decision to exercise or refrain from
exercising your subscription rights in this subscription offering. Our Board of
Directors determined the subscription price without any independent appraisal of
the value of the Series A preferred shares. The subscription price does not
necessarily bear any relationship to the book value of our assets, past
operations, cash flow, earnings, financial condition or any other established
criteria for value and should not be considered an indication of our underlying
value. It may be impossible to sell the Series A preferred shares at or above
the subscription price.
Any analysis of the value of an investment in our Series A preferred shares
is necessarily uncertain, is based in substantial part on future events,
including our future operating performance, many of which are outside our
control, and is heavily dependent upon the particular criteria you determine to
be appropriate for purposes of your analysis. Accordingly, you must make your
own decision whether to subscribe for and purchase Series A preferred shares
pursuant to the subscription offering and should give careful consideration to
the terms of the subscription offering and such other factors as you determine
to be relevant, including, in addition to factors generally applicable to an
investment in an entity such as Franklin Covey, the risk factors below.
THERE IS NO ESTABLISHED MARKET FOR THE SERIES A PREFERRED SHARES
Prior to the offering, there has not been any market for the Series A
preferred shares. We do not intend to list the subscription rights or the
Series A preferred shares on any securities exchange or any automated quotation
system and no active public market for the Series A shares is expected. If a
trading market does not develop or is not maintained, holders of the Series A
preferred shares may experience difficulty in reselling Series A preferred
shares or may be unable to sell them at all. If a market for the Series A
preferred shares does develop, it may dissipate at any time. In addition, future
trading prices of the Series A preferred shares will depend on many factors,
including, among other things, our operating results and the market for similar
securities.
YOU CANNOT REVOKE YOUR EXERCISE OF SUBSCRIPTION RIGHTS FOR ANY REASON; THE
SUBSCRIPTION RIGHTS ARE NON-TRANSFERABLE AND FRANKLIN COVEY MAY CANCEL THE
SUBSCRIPTION OFFERING AT ANY TIME
Once you exercise your subscription rights and submit the subscription
agreement to the subscription agent, you may not revoke the exercise for any
reason. Only you may exercise your subscription rights. You may not sell, give
away or otherwise transfer the subscription rights. We may terminate the
subscription offering at any time. If we elect to withdraw or terminate the
subscription offering, we and the subscription agent will have no obligation
with respect to the subscription rights except to return, without interest, any
subscription payments.
RISKS RELATED TO FRANKLIN COVEY
FRANKLIN COVEY'S SALES DEPEND ON DEMAND FOR VERY SPECIFIC PRODUCTS AND SERVICES
We derive a substantial percentage of sales from specific products and
services, such as the What Matters Most-Registered Trademark- time management
seminar and sales of the Franklin Planner-TM- and related products. A large part
of our revenues is also derived from products and training services based on
content from the books THE 7 HABITS OF HIGHLY EFFECTIVE PEOPLE,
PRINCIPLE-CENTERED LEADERSHIP and FIRST THINGS FIRST. We cannot assure you that
sales from these products or services will continue at historical levels or that
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we will be successful in creating other products or services which will result
in future profitable operations.
FRANKLIN COVEY MAY BE UNABLE TO ADEQUATELY PROTECT ITS INTELLECTUAL PROPERTIES
We seek to protect proprietary aspects of our seminars and products through
a combination of trademarks, copyrights and confidentiality agreements. These
measures, however, may not provide sufficient protection from competitors. Our
materials, concepts, designs and products have been and may continue to be
imitated and our trademarks and copyrights may be challenged by others, which
could have a material adverse effect on future operating results. Moreover,
these materials are often translated into languages and made available in
countries where we have no physical presence or where copyright and trademark
laws are difficult to enforce. We could also incur substantial costs in seeking
enforcement of our rights against infringement or the unauthorized use of our
proprietary property by others and there can be no assurance that others may not
independently develop seminars and products that are similar or superior to the
seminars and products offered by us but which do not infringe on existing
proprietary rights.
A STOCKHOLDER'S AGREEMENT AND MANAGEMENT OWNERSHIP OF STOCK MAY LIMIT YOUR
ABILITY TO DETERMINE FRANKLIN COVEY'S MANAGEMENT
As of August 31, 1999, our officers and directors owned approximately 12% of
our outstanding common shares. In addition, Knowledge Capital currently owns
100% of our outstanding Series A preferred shares, the terms of which entitle
the holders thereof to vote separately as a class on fundamental corporate
transactions. See "The Description of the Series A Preferred Shares." Even if
this offer is fully subscribed, Knowledge Capital will continue to own at least
50% of our Series A preferred shares. On an as-converted basis, Knowledge
Capital owns approximately 24% of our outstanding common shares. By virtue of
these holdings, management and Knowledge Capital, acting alone or together, have
the ability to influence Franklin Covey's fundamental corporate transactions and
the election of our Board of Directors. Some of our shareholders have entered
into a Stockholders' Agreement which requires that Franklin Covey common shares
owned by those shareholders be voted for designated nominees to the Board of
Directors in each election of directors through August 31, 2000. Purchasers of
the Series A preferred shares in this offering will not be parties to this
Stockholders' Agreement. Therefore, the ability of your votes to determine
Franklin Covey's management may be limited.
FRANKLIN COVEY FACES WELL-ESTABLISHED COMPETITION IN ITS INDUSTRY
We compete in the training and educational services industry which is highly
fragmented and competitive. Our leadership and time management seminars compete
with a variety of similar seminars and workshops in the marketplace. In each of
our markets, there is substantial competition from a number of well-established,
well-financed companies, some of which have greater resources than us. Increased
competition by existing and future competitors could result in sales declines
and price reductions that could materially adversely affect sales and
profitability.
FRANKLIN COVEY'S INTERNATIONAL OPERATIONS COULD BE HURT BY INSTABILITY ABROAD
We currently have agreements with licensees who operate independently in 26
countries. Additionally, we operate direct operations in Canada, Australia,
Mexico, Japan, Belgium, the Middle East, New Zealand and the United Kingdom. We
believe that there are substantial opportunities to expand our geographic reach,
and expect to pursue these opportunities as part of our core business strategy.
Foreign operations, particularly licensee operations, present risks that are
different than those encountered in the United States, such as potential
political, social and economic instability. While the licensee agreements
require maintenance of particular standards, we may experience adverse results
in
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our foreign operations, and significant currency fluctuations may also adversely
affect the value of the Series A preferred shares.
FRANKLIN COVEY'S BUSINESS IS SEASONAL
Our business is seasonal, reflecting customer buying habits for calendar
related products and sales training, which is typically not scheduled during
holiday or vacation periods. As a result, our third quarter tends to be our
weakest quarter. Although a significant portion of our sales are generated
during the first and second quarters, since the acquisition of Premier School
Agendas, our fourth quarter has tended to be our strongest one. A substantial
decrease in sales during the first or second quarter or adverse results for
Premier School Agendas during the fourth quarter would have a material adverse
effect on our profitability for these quarters. In addition, our quarterly
results of operations could fluctuate significantly as a result of a variety of
factors, including cancellations, reductions or delays in customer orders, lack
of customer acceptance of new products and general economic downturns which
could adversely affect our business and financial condition.
THE PRICE OF OUR COMMON SHARES HAS BEEN AND MAY REMAIN VOLATILE, AND THE PRICE
OF OUR SERIES A PREFERRED SHARES MAY BE VOLATILE
The market price of our common shares has been, and in the future may be,
highly volatile. The same may be true of our Series A preferred shares. Factors
such as quarter-to-quarter variations in our revenues and earnings could cause
the market price of our common and preferred shares to fluctuate significantly.
In addition, in recent years, the stock markets have experienced significant
volatility which often may have been unrelated to the operating performance of
the affected companies. This volatility may adversely affect the market price of
our common and preferred shares.
FRANKLIN COVEY FACES RISKS RELATED TO THE YEAR 2000 PROBLEM
We are actively engaged in assessing and correcting potential year 2000
information system problems. During fiscal 1997, we initiated a business
reengineering and information system implementation project that affects nearly
every aspect of the our operations. In an effort to address compliance issues,
the scope of the project was expanded to ensure year 2000 compliance for newly
acquired software and hardware, as well as test existing systems for compliance.
From this process, a team was created to specifically work toward year 2000
compliance. The project has three significant phases that are designed to
improve both operating processes and information systems capabilities. Phase
one, which involved the testing and certification of hardware and software for
our financial reporting and manufacturing operations, was completed during
fiscal 1998. Phase two, which focused on payroll and human resource
applications, was completed in January 1999. The final phase addresses various
parts of our "order to collect" systems. Applications for order entry, retail
sales and invoicing have already been determined to be compliant. Applications
for seminar registration, order fulfillment and order shipping are expected to
be made compliant in various stages through the year 2000, with critical
applications expected to be compliant before the end of 1999. Although we
anticipate that the risks related to our information and non-information systems
will be mitigated by current efforts being made in conjunction with the project
as well as ongoing assessment and correction programs, no assurances can be made
as to whether our programs will be timely or successfully completed.
We believe the primary year 2000 risk to our operations is from external
vendors and service providers. As part of our assessment of year 2000 issues, we
have gathered information from suppliers and other external vendors regarding
the status of their year 2000 compliance. Based on information received to date,
the most significant risk to our operations appears to be from a few critical
international suppliers that, despite their best efforts, may be affected by
utility outages and may not be able to meet delivery deadlines. In addition, we
have not yet received year 2000 compliance certification from our two largest
shipping service providers. Although we are currently pursuing
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contingency plans to mitigate this risk, there can be no assurance that we will
be successful. Based on inquiry responses, we do not anticipate any significant
problems from our utility, telephone and financial service providers. Although
we are not aware of other external risks, we have no means of ensuring that all
external vendors and service providers will be year 2000 compliant. The
inability of external vendors or service providers to complete their year 2000
remediation efforts in a timely manner could materially affect our operations,
although the exact impact is not readily determinable. We have also assessed
year 2000 compliance issues related to our products available for sale and do
not believe that the year 2000 presents a material exposure for us related to
our products.
We have completed formal contingency plans for most critical business units.
An integrated, company-wide contingency plan, based upon business unit plans, is
expected to be completed by November 30, 1999.
As of August 31, 1999, we had spent approximately $16.3 million in the
aggregate in connection with our business reengineering and information system
implementation project, which includes year 2000 assessment and compliance, and
we expect to spend an additional $4.1 million to complete this project. However,
no assurance can be given that, due to unforseen issues or difficulties, actual
costs will not be higher.
9
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RECENT DEVELOPMENTS
STRATEGIC REALIGNMENT AND ORGANIZATION RESTRUCTURE
On October 12, 1999, we announced a strategic realignment and organizational
restructure of our core businesses to lay strategic, operational, organizational
and financial foundations for profitable growth. The restructuring aligns our
products, services and channels to focus our resources on providing integrated
strategic solutions to individuals and organizations, in the following main
areas:
- productivity;
- leadership;
- communication;
- application tools; and
- assessment measurement.
We are undertaking an intense scrutiny of every part of our business.
Non-strategic functions and products will be outsourced, sold, discontinued or
repositioned in order to focus on growing our business. We expect to recognize a
$16.6 million pre-tax restructuring charge during the fourth quarter of fiscal
1999 to write-off certain impaired assets related to discontinued lines of
services and products.
Also as part of this strategic realignment, we plan to reduce our staff from
approximately 4,200 to approximately 3,600 personnel worldwide. This headcount
reduction, approximately 30% of which has been completed to date, is expected to
result in annualized pre-tax cost savings of approximately $20 million. We are
also establishing eight regional sales offices to be closer to our customers and
achieve deeper market penetration and growth. Accordingly, we plan to
significantly reduce our leased space in Provo, Utah and consolidate most of the
remaining operations to our Salt Lake City headquarters. As a result of the
planned associate terminations and facility closures, we expect to record a
$16.2 million pre-tax restructuring charge during the fourth quarter of fiscal
1999.
FOURTH QUARTER AND YEAR-END RESULTS
We estimate that our sales for the fourth quarter of fiscal 1999 will be
$168.2, a 7% increase compared to the previous years' fourth quarter, and that
we will have a net loss for the quarter of approximately $21.6 million, compared
to net income of $15.6 million for the comparable quarter of the previous year.
For fiscal 1999, we estimate that our sales will be approximately
$554.9 million, a 2% increase from fiscal 1998, and that we will have a net loss
of approximately $8.8 million compared to net income of $40.1 million for fiscal
1998. The estimated net losses for the fourth quarter and fiscal 1999 include
the pre-tax charges for restructuring and impairments discussed above. All of
these estimates are unaudited and preliminary and we can not assure you that
actual audited results will not differ materially from the estimates.
REFINANCING OF DEBT
In September 1999 we increased our revolving line of credit from
$75 million to $110 million. Concurrently with this increase, we borrowed
$85 million under this line of credit and used the proceeds to pay off all
outstanding indebtedness in respect of our 6.64% Senior Notes due 2008.
THE SUBSCRIPTION OFFERING
SUBSCRIPTION RIGHT
We will dividend nontransferable rights to those shareholders who held
Franklin Covey common shares on November 8, 1999. You will receive one right for
every common share that you owned on
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that date. For every 27 rights that you exercise, you will be able to purchase
one of our Series A preferred shares for $100. This means that you will be able
to purchase one Series A preferred share for every 27 of our common shares that
you owned on November 8, 1999 at a price of $100 per preferred share. We will
not issue fractional shares. Instead we will round the number of Series A
preferred shares for which you are entitled to subscribe down to the nearest
whole number. We will send you certificates representing the Series A preferred
shares that you purchase pursuant to your rights as soon as practicable after
you exercise your rights.
EXPIRATION DATE
The rights will expire at 5:00 p.m., Mountain time, on November 30, 1999,
unless we decide to extend the subscription offering. If you do not exercise
your rights prior to November 30, 1999, your rights will be null and void. We
will not be required to issue Series A preferred shares to you if our
subscription agent receives your subscription agreement, your payment or any
other required documentation after that date, regardless of when you sent them.
DETERMINATION OF SHARE PRICE
Our Board of Directors decided to set a subscription price of $100 per
preferred share as a result of arms-length negotiations with Knowledge Capital,
a private investor. The $100 per preferred share price should not be considered
an indication of the actual value of our company or our Series A preferred
shares. The market price of our common shares may increase or decrease during
the subscription offering. You also may not be able to sell the Series A
preferred shares purchased during the subscription offering at a price equal to
or greater than the $100 per share subscription price.
TRANSFERABILITY OF RIGHTS
Your subscription rights are not transferable.
EXERCISE OF RIGHTS
You may exercise your rights by delivering to the subscription agent on or
prior to 5:00 p.m., Mountain time, on November 30, 1999:
- A properly completed and duly executed subscription agreement; and
- Payment in full of $100 for each Series A preferred share to be purchased
through the exercise of rights.
You should deliver your subscription agreement and payment to the address
set forth below under "--Subscription Agent."
You may exercise all or any portion of the rights granted to you to purchase
our Series A preferred shares.
METHOD OF PAYMENT
Payment for the Series A preferred shares must be made by one of the
following methods:
- check or money order payable to "Zions First National Bank, as
subscription agent"; or
- wire transfer of funds to the account maintained by the subscription agent
for such purpose at:
Zions First National Bank
ABA Number: 124000054
A/C Number: 80-00005-2
Reference: Corporate Trust
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Payment will be deemed to have been received by the subscription agent only
upon:
- clearance of any uncertified check;
- receipt by the subscription agent of any certified check or bank draft
drawn upon a U.S. bank or of any postal, telegraphic or express money
order; or
- receipt of funds by the subscription agent through the wire transfer.
PLEASE NOTE THAT FUNDS PAID BY UNCERTIFIED PERSONAL CHECK MAY TAKE AT LEAST
FIVE BUSINESS DAYS TO CLEAR. ACCORDINGLY, IF YOU WISH TO PAY BY MEANS OF AN
UNCERTIFIED PERSONAL CHECK, WE URGE YOU TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE
OF NOVEMBER 30, 1999 TO ENSURE THAT THE PAYMENT IS RECEIVED AND CLEARS BEFORE
THAT DATE. WE ALSO URGE YOU TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR
CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
SIGNATURE GUARANTEES
Signatures on the subscription agreement must be guaranteed by an eligible
guarantor institution, as defined in the federal securities laws, subject to the
standards and procedures adopted by the subscription agent. Eligible guarantor
institutions generally include banks, brokers, dealers, credit unions, national
securities exchanges and savings associations.
Signatures do not need to be guaranteed if:
- the subscription agreement provides that the Series A preferred shares to
be purchased are to be delivered directly to you, the record owner of our
common shares; or
- the subscription agreement is submitted for the account of a member firm
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.
SHARES HELD FOR OTHERS
If you held Franklin Covey common shares on November 8, 1999 for the account
of others--for example, as a broker, a trustee or a depository for
securities--you should notify the respective beneficial owners of those shares
as soon as possible to obtain instructions with respect to the rights
beneficially owned by them.
If you are a beneficial owner of common shares held by a holder of record,
such as a broker, trustee or a depository for securities, you should contact the
holder and ask him/her to effect transactions in accordance with your
instructions.
You may use the documentation accompanying this prospectus for that purpose.
COMMON SHARES HELD THOUGH OUR EMPLOYEE STOCK PURCHASE PLAN
Holders of common shares through Franklin Covey's employee stock purchase
plan, who desire to exercise their rights to purchase Series A preferred stock
in the subscription offering, must instruct Merrill Lynch Group Employee
Services, as administrator of the employee stock purchase plan, by properly
completing, duly executing and returning to Merrill Lynch the direction form
sent to such holder by Merrill Lynch as explained in the letter on yellow paper
included herewith. TO PROPERLY EXERCISE SUBSCRIPTION RIGHTS APPLICABLE TO COMMON
SHARES ACQUIRED PURSUANT TO OUR EMPLOYEE STOCK PURCHASE PLAN, A PARTICIPANT IN
THE PLAN MAY NOT DELIVER A SUBSCRIPTION AGREEMENT WITH REGARD TO SUCH SHARES.
PROPER EXERCISE OF SUBSCRIPTION RIGHTS APPLICABLE TO ANY COMMON SHARES CREDITED
TO YOUR ACCOUNT UNDER THE EMPLOYEE STOCK PURCHASE PLAN CAN ONLY BE MADE BY
MERRILL LYNCH. THE DEADLINE FOR SUBMITTING DIRECTION FORMS TO MERRILL LYNCH IS
SET BY MERRILL LYNCH AND IS EARLIER THAN NOVEMBER 30, 1999, THE EXPIRATION DATE.
In addition to following the special instructions provided by Merrill Lynch for
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directing Merrill Lynch to exercise of subscription rights applicable to any of
your employee stock purchase plan common shares, if you desire to exercise
subscription rights applicable to other common shares that you did not acquire
through the employee stock purchase plan, then you must also properly complete
and execute a subscription agreement and deliver it along with your subscription
payment to the subscription agent. Any questions regarding the subscription
offering applicable to the employee stock purchase plan common shares should be
directed to Merrill Lynch at the number provided in the separate materials.
AMBIGUITIES IN EXERCISE OF THE RIGHTS
If you do not specify the number of rights being exercised on your
subscription agreement, or if your payment is not sufficient to pay the total
purchase price for all of the Series A preferred shares that you indicated you
wished to purchase, you will be deemed to have exercised the maximum number of
rights that could be exercised for the amount of the payment that the
subscription agent receives from you.
If your payment exceeds the aggregate subscription price for the number of
Series A preferred shares shown on your subscription agreement or the maximum
number of Series A preferred shares for which you are eligible to subscribe,
your payment will be applied only for the number of shares which you indicated,
or the maximum number of Series A preferred shares for which you are eligible to
subscribe, whichever is lower. To the extent any portion of the aggregate
subscription price delivered exceeds the aggregate subscription price for the
number of shares for which you subscribed, or the maximum number of Series A
preferred shares for which you are eligible to subscribe, the subscription agent
will return such excess amount to you, without interest or deduction, as soon as
practicable.
PLEASE CAREFULLY READ THE INSTRUCTIONS ACCOMPANYING THE SUBSCRIPTION
AGREEMENT AND FOLLOW THOSE INSTRUCTIONS IN DETAIL.
DO NOT SEND YOUR SUBSCRIPTION AGREEMENT TO US.
You are responsible for choosing the payment and delivery method for your
subscription agreement and payment, and you bear the risks associated with the
delivery. If you choose to deliver your subscription agreement and payment by
mail, we recommend that you use registered mail, properly insured, with return
receipt requested. We also recommend that you allow a sufficient number of days
to ensure delivery to the subscription agent and clearance of payment prior to
November 30, 1999. Because uncertified personal checks may take at least five
business days to clear, we strongly urge you to pay, or arrange for payment, by
means of certified or cashier's check, money order or wire transfer of funds.
OUR DECISION AS TO TIMELINESS, VALIDITY, FORM AND ELIGIBILITY IS BINDING
All questions concerning the timeliness, validity, form and eligibility of
any exercise of rights will be determined by us and our determinations will be
final and binding. We may waive any defect or irregularity, or permit a defect
or irregularity to be corrected within an amount of time as we may determine, or
reject the purported exercise of any right by reason of any defect or
irregularity in the exercise. Subscriptions will not be deemed to have been
received or accepted until all irregularities have been waived or cured within
such time as we determine in our reasonable discretion. Neither we nor the
subscription agent will be under any duty to give notification of any defect or
irregularity in connection with the submission of the subscription agreement or
incur any liability for failure to give such notification.
NO REVOCATION
After you have exercised your rights and submitted your subscription
agreement to the subscription agent, you may not revoke that exercise for any
reason.
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SUBSCRIPTION AGENT
We have appointed Zions First National Bank, our transfer agent for our
common shares, as subscription agent for the subscription offering. The
subscription agent's address for packages sent by mail is:
P.O. Box 30880
Salt Lake City, Utah 84130
Attn: Corporate Trust Department
or if sent by courier or overnight delivery:
10 E. South Temple
3rd Floor
Salt Lake City, Utah 84130
Attn: Corporate Trust Department
The subscription agent's telephone number is:
(800) 789-8833, Ext. 2268
You should deliver your subscription agreement and payment of the
subscription price along with any other required documents, if any, to the
subscription agent.
We will pay the fees and expenses of the subscription agent, which we
estimate to be approximately $75,000. We have also agreed to indemnify the
subscription agent from any liability which it may incur in connection with the
subscription offering.
IF YOU HAVE QUESTIONS
If you have questions or need assistance concerning the procedure for
exercising rights, or if you would like additional copies of this prospectus or
the instructions, you should contact Richard Putnam, our Director of Investor
Relations, at the following address and telephone number:
Franklin Covey Co.
2200 West Parkway Boulevard
Salt Lake City, Utah 84119-2331
(801) 975-1776
COMPLETION OF THE SUBSCRIPTION OFFERING
Certificates representing the Series A preferred shares will be delivered to
subscribers as soon as practicable after the expiration date of the subscription
offering. We expect that this may take two weeks or longer, due to the need to
allow checks to clear.
ANNOUNCEMENT OF EXTENSION OR TERMINATION
We may cancel the subscription offering at any time, in which case we will
return your subscription payment without interest. Any extension of the
expiration date beyond November 30, 1999 or termination of the subscription
offering will be followed as promptly as practicable by making a public
announcement. In the case of an extension, the announcement will be issued no
later than 9:00 a.m., Mountain time, on the next business day after the
previously scheduled expiration date. Without limiting the manner in which we
may choose to make any public announcement, we currently intend to make
announcements by issuing a press release to the Dow Jones News Service.
USE OF PROCEEDS
The net proceeds of this subscription offering, which will be approximately
$74.9 million if all eligible shareholders purchase all of the 750,000 Series A
preferred shares offered pursuant to this offering, will be added to our working
capital and used for general corporate purposes, which could include financing
our future growth through possible acquisitions, although we have not entered
into any agreement providing for any such acquisition, developing new products
and delivery channels and expanding our geographic reach.
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DESCRIPTION OF THE SERIES A PREFERRED SHARES
We have authorized 4,000,000 preferred shares, 1,500,000 of which are
designated as Series A preferred shares. As of August 31, 1999, 750,000
Series A preferred shares were outstanding, all of which are owned by Knowledge
Capital. The following is a summary of the principal terms of our Series A
preferred shares:
<TABLE>
<S> <C>
RANKING:............................... The Series A preferred shares rank senior to our common
shares and will rank senior to any other series of
preferred shares which we may issue in the future, in each
case as to the payment of dividends or distributions or
upon liquidation or dissolution.
LIQUIDATION VALUE:..................... $100 per share plus accrued and unpaid dividends. Neither
a consolidation or merger, nor a sale of all or part of
our assets is considered a liquidation for this purpose.
DIVIDENDS PER SHARE:................... Holders of the Series A preferred shares are entitled to
receive dividends at an annual rate of $10 per share,
payable quarterly in arrears on March 15, June 15,
September 15 and December 15 of each year. Dividends
accrue whether or not declared by our Board of Directors
and whether or not there are funds legally available for
payment. Prior to July 1, 2002, dividends may be paid in
cash or in additional Series A preferred shares at the
option of Franklin Covey. Thereafter, dividends are
payable only in cash. In addition, holders of the
Series A preferred shares are entitled to receive all
dividends and other distributions paid with respect to
Franklin Covey common shares, based on the number of
common shares issuable upon conversion of the Series A
preferred shares at the time of payment of the dividend or
distribution.
VOLUNTARY CONVERSION:.................. Holders of Series A preferred shares have the right, at
any time, to convert all or a portion of their Series A
preferred shares plus accrued and unpaid dividends into
that number of common shares determined by dividing $100
plus accrued and unpaid dividends by the conversion price.
The conversion price is $14 per common share, equitably
adjusted for stock dividends, distributions, splits,
mergers consolidations and other dilutive events as
described under "--Anti-Dilution Rights" below.
FORCED CONVERSION/REDEMPTION:.......... Beginning July 1, 2004, at any time after the common
shares have traded at a price above 130% of the then
applicable conversion price for the Series A preferred
shares for at least 60 consecutive New York Stock Exchange
trading days, we may, upon 15 business days' prior written
notice, redeem all, but not less than all, outstanding
Series A preferred shares at 104% of their liquidation
value plus accrued and unpaid dividends. During the 15-day
notice period, holders of Series A preferred shares are
entitled to exercise their conversion rights.
</TABLE>
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<TABLE>
<S> <C>
ADDITIONAL REDEMPTION RIGHT:........... All, but not less than all, of the Series A preferred
shares are redeemable, at Franklin Covey's option, at 105%
of their liquidation value plus accrued and unpaid
dividends on 30 days' prior written notice if less than
100,000 Series A preferred shares remain outstanding and
our common shares trade at a price above 120% of the then
applicable conversion price for the Series A preferred
shares for 30 consecutive New York Stock Exchange trading
days. During the 30-day notice period, holders of
Series A preferred shares are entitled to exercise their
conversion rights.
VOTING RIGHTS:......................... Except as described below, holders of the Series A
preferred shares have the same voting rights as holders of
our common shares and vote together with the common shares
on an as-converted basis. In addition, holders of the
Series A preferred shares, voting separately as a class,
have the right to approve:
- Any amendment to our charter or bylaws which would
adversely effect the rights of the holders of the
Series A preferred shares;
- Any issuance of capital stock which would rank equal or
senior to the Series A preferred stock with respect to
dividends or other distributions or upon liquidation or
dissolution, or any issuance of any junior capital stock
other than common shares;
- Any subdivision, reclassification or split of the
Series A preferred shares, whether in a merger,
consolidation recapitalization, reorganization or
otherwise;
- Mergers, consolidations, recapitalizations,
reorganizations or other similar transactions, or the
sale, assignment, transfer or other disposition of all
or substantially all of Franklin Covey's assets, subject
to a narrow exception for transactions where the rights
of the holders of the Series A preferred shares are
preserved;
- The issuance of additional Series A preferred shares
other than pursuant to payment in kind of dividends;
and
- Dividends declared on our common shares and other
restricted payments in excess of 10% of our net
income during the immediately preceding 12 months,
unless approved by 80% of our Board of Directors.
</TABLE>
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<TABLE>
<S> <C>
OTHER EXTRAORDINARY ACTIONS:........... The following extraordinary actions require the
affirmative vote of 80% of our Board of Directors unless,
in the case of debt incurrence or divestitures, after
giving pro forma effect to the transaction, our net worth
would be at least $275.0 million, our fixed charge
coverage ratio for the most recent four fiscal quarters
would be at least 3.5 to l.0, and our EBITDA would be at
least $65.0 million:
- Debt incurrence other than existing debt and any
refinancing of such debt;
- Divestitures if the business or property sold
represents revenues in excess of 25% of our
consolidated revenues for the previous four fiscal
quarters and in which less than 80% of the
consideration received by Franklin Covey consists of
cash; and
- Acquisitions involving more than $50 million,
including debt assumed, where the purchase price
exceeds seven times the acquired entity's EBITDA for
the four most recent fiscal quarters.
BOARD OF DIRECTORS:.................... If we fail to pay dividends in an amount equal to six
quarterly dividends, the size of our board will be
increased by two members, with the holders of Series A
preferred shares having the right to elect the two
additional directors. This right, as well as the term of
the two additional directors so elected, terminates
immediately upon the payment in full of all accrued and
unpaid dividends.
REPURCHASE UPON CHANGE OF CONTROL:..... In the event of any change of control of Franklin Covey or
other transaction which results, within 90 days, in
Standard & Poors Corporation or Moody's Investor Service
lowering the credit rating of the Series A preferred
shares or any indebtedness of Franklin Covey, the holders
of the Series A preferred shares have the right to
receive, in exchange for their Series A preferred shares
and in preference to the holders of our common shares, a
cash amount equal to the greater of:
- the amount the holders of the Series A preferred
shares would have received had they converted their
preferred shares into common shares immediately
prior to such event; and
- 101% of their liquidation value plus accrued and
unpaid dividends.
ANTI-DILUTION RIGHTS:.................. The conversion price of the Series A preferred shares is
subject to adjustment to avoid dilution in the event that
we issue additional equity, other than issuances pursuant
to employee stock plans or shareholder rights plans, at a
price less than the volume weighted average as reported on
the BLOOMBERG NEWS SERVICE, at the time of issuance. The
conversion price is also subject to proportional
adjustments for stock splits, combinations, dividends,
recapitalizations, reorganizations, mergers,
consolidations, a sale of all or substantially all of our
assets and similar transactions or events.
</TABLE>
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<TABLE>
<S> <C>
RESTRICTION ON TRANSFER:............... Until June 2, 2002, the Series A preferred shares will not
be transferable unless the shares are offered first to
Franklin Covey, except for transfers:
- pursuant to a registered public offering or a
transaction effected on the New York Stock Exchange;
- to a qualified institutional buyer in a transaction
exempt from or not subject to the registration
requirements of the Securities Act; or
- to an affiliate of the transferor.
For a more detailed description of the right of first
offer, you should refer to the subscription agreement and,
in particular, Exhibit A thereto.
</TABLE>
The description of the Series A preferred shares provided above is a
summarization of the key terms and is not meant to be complete. This summary is
qualified in its entirety by the "Certificate of Designation of Series A
Preferred Stock" which has been filed as an exhibit to the registration
statement of which this prospectus is a part.
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RELATED PARTY TRANSACTIONS AND RELATIONSHIPS
STOCKHOLDERS' AGREEMENT
As a result of its purchase of 750,000 Series A preferred shares in
June 1999, Knowledge Capital beneficially owns approximately 6,055,343 common
shares or approximately 24% of our outstanding common shares assuming the
conversion of all 750,000 Series A preferred shares held by Knowledge Capital
into common shares. In connection with its investment, we entered into a
stockholders agreement with Knowledge Capital. The stockholders' agreement
terminates on the earliest to occur of June 2, 2009, the termination of the
agreement by Knowledge Capital under limited circumstances relating to an actual
or possible change in control of Franklin Covey, and when Knowledge Capital and
its affiliates collectively own less than 375,000 Series A preferred shares (or
any securities into which such shares were exchanged or converted). Under the
terms of the stockholders' agreement, Knowledge Capital is entitled to designate
three directors, one of whom is required to be named as our Chairman of the
Board.
Under the stockholders' agreement, until June 2, 2002, the Series A
preferred shares are not transferable unless they are first offered to Franklin
Covey, except for transfers:
- pursuant to a registered public offering or a transaction effected on the
New York Stock Exchange;
- to a qualified institutional buyer in a transaction exempt from or not
subject to the registration requirements of the Securities Act; or
- to an affiliate of Knowledge Capital.
Knowledge Capital has agreed not to purchase or otherwise acquire beneficial
ownership of any of our voting capital stock, or any securities convertible into
or exchangeable for voting capital stock, if after a purchase or acquisition,
Knowledge Capital and its permitted transferees would, collectively,
beneficially own 25% or more of our total outstanding voting capital stock,
except for any purchase or acquisition:
- pursuant to this subscription offering;
- with the prior approval of a majority of our directors who were not
nominated or elected and are not affiliates or associates of Knowledge
Capital or its permitted transferees;
- with the prior approval of a majority of the holders of our outstanding
voting capital stock;
- of common shares upon conversion of Series A preferred shares;
- of Series A preferred shares pursuant to a payment-in-kind dividend; or
- which does not increase their collective beneficial ownership of common
shares by more than 10% in any consecutive 12-month period.
Knowledge Capital has also agreed that, without the approval of a majority of
our directors who are not employees or officers of Franklin Covey or its
affiliates or nominated or elected by Knowledge Capital and its affiliates,
neither Knowledge Capital nor any of its affiliates will solicit proxies from
other shareholders, except for matters on which holders of the Series A
preferred shares are entitled to vote as a class, form a "group" for purposes of
Section 13(d)(3) of the Exchange Act, or enter into any voting agreement or
arrangement.
In July 1999, Robert A. Whitman, our Chairman of the Board and a principal
of Knowledge Capital, was named our Chief Executive Officer.
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REGISTRATION RIGHTS
In connection with its investment in the Series A preferred stock, we
granted to Knowledge Capital the right to require us, up to three times, to
register the Series A preferred shares, and any securities into which the
Series A preferred shares are exchanged or converted, owned by Knowledge
Capital, its affiliates and permitted transferees under the Securities Act. In
addition, subject to narrow limitations, we granted Knowledge Capital unlimited
rights to request inclusion of Series A preferred shares, and any securities
into which the Series A preferred shares are exchanged or converted, owned by
Knowledge Capital, its affiliates and permitted transferees in any registration
of equity securities filed by us under the Securities Act, whether or not for
our own account.
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the expected material United States federal
income tax consequences to Franklin Covey shareholders with respect to the
subscription offering for Series A preferred shares is based upon current
provisions of the Internal Revenue Code, existing temporary and final
regulations, thereunder, and current administrative rulings and court decisions.
Future legislative, judicial or administrative actions or decisions, which may
be retroactive in effect, may affect the accuracy of the statements in this
prospectus with respect to the transactions entered into or contemplated prior
to the effective date of any changes. No attempt has been made to comment on all
United States federal income tax consequences of the subscription offering for
Series A preferred shares that may be relevant to you. The tax discussion set
forth below is included for general information only and should not be construed
to be legal or tax advice to a particular shareholder. No rulings have been or
will be sought from the Internal Revenue Service. The IRS could challenge part
or all of the treatment of the transactions described below.
You should recognize no gain or loss in the receipt or exercise of rights in
the subscription offering for Series A preferred shares. A sale of your
Series A preferred shares may result in a taxable gain or loss. In addition,
disposition of your Series A preferred shares will generally result in
recognition of ordinary income to the extent of the fair market value of the
stock rights received in the subscription offering (determined as of the day you
received those rights) even if you have an overall economic loss on the
transaction. Since the exercise price of the stock rights is the same as the
per-share amount recently paid by Knowledge Capital in acquiring identical
preferred shares, Franklin Covey believes that the fair market value of the
stock rights should be nominal. No assurance can be given, however, that the IRS
will agree with this belief. If you convert your Series A preferred shares to
common stock and those shares are subsequently sold, any gain or loss thus
realized will generally be treated as capital in nature. Tax matters are very
complicated. The tax consequences of the subscription offering to you will
depend on the facts of your own situation. You should consult your tax advisor
for a full understanding of the tax consequences to you of the subscription
offering.
THIS DISCUSSION MAY NOT APPLY TO PARTICULAR CATEGORIES OF FRANKLIN COVEY
SHAREHOLDERS SUBJECT TO SPECIAL TREATMENT UNDER THE CODE, SUCH AS INSURANCE
COMPANIES, FINANCIAL INSTITUTIONS, BROKER-DEALERS, TAX-EXEMPT ORGANIZATIONS,
NON-U.S. SHAREHOLDERS AND HOLDERS WHOSE SHARES WERE ACQUIRED PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION. FRANKLIN COVEY
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX
CONSEQUENCES OF MATTERS REFERRED TO HEREIN, INCLUDING THE STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES OF THE TRANSACTIONS AND MATTERS REFERRED TO HEREIN,
AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
PLAN OF DISTRIBUTION
We are offering Series A preferred shares directly to you pursuant to this
subscription offering. We have not employed any brokers, dealers or underwriters
in connection with the solicitation or exercise of subscription privileges in
the subscription offering, and no commissions, fees or discounts will be
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paid in connection with the subscription offering. Certain of our officers and
other employees may solicit responses from you, but such officers and other
employees will not receive any commissions or compensation for such services
other than their normal employment compensation.
SUBSCRIPTION AGENT
We have appointed Zions First National Bank as subscription agent for the
subscription offering. The address to which subscription agreements and payment
of the subscription price should be delivered, is set forth on the back cover of
this prospectus.
We will pay the fees and expenses of the subscription agent and will
indemnify the subscription agent from any liability which it may incur in
connection with the subscription offering.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the U.S. Securities and Exchange Commission. You may read and
copy this information at the SEC's public reference rooms, which are located at:
<TABLE>
<S> <C> <C>
450 Fifth Street, NW 7 World Trade Center, 500 West Madison Street,
Washington, DC 20549 Suite 1300 Suite 1400
New York, NY 10048 Chicago, IL 60661-2511
</TABLE>
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. This information is also available on-line through the SEC's
Electronic Data Gathering, Analysis, and Retrieval System, commonly known as
"EDGAR," located on the SEC's web site (http://www.sec.gov.).
Also, we will provide you (free of charge) with any of our documents filed
with the SEC. To get your free copies, please call or write:
Franklin Covey Co.
Attention: Richard Putnam,
Director of Investor Relations
2200 West Parkway Boulevard
Salt Lake City, Utah 84119-2331
(801) 975-1776
We have filed a registration statement with the SEC on Form S-3 with respect
to the subscription offering. This prospectus is a part of the registration
statement, but the prospectus does not include all of the information that you
can find in the registration statement, reports and other documents that we have
filed with the SEC. The SEC allows us to "incorporate by reference" other
documents filed with the SEC, which means that we can disclose important
information to you by referring you to other documents. The documents that are
incorporated by reference are legally considered to be a part of this
prospectus. The documents incorporated by reference are:
- Annual Report on Form 10-K for the year ended August 31, 1998;
- Quarterly Report on Form 10-Q for the fiscal quarter ended May 29, 1999;
- Quarterly Report on Form 10-Q for the fiscal quarter ended February 27,
1999;
- Quarterly Report on Form 10-Q for the fiscal quarter ended November 30,
1998; and
- Any filings with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act of 1934 between the date of this prospectus and the
expiration of the subscription offering.
21
<PAGE>
As you read the above documents, you may find some inconsistencies in
information from one document to another. If you find inconsistencies between
the documents, or between a document and this prospectus, you should rely on the
statements made in the most recent document.
You should rely only on the information in this prospectus or incorporated
by reference. We have not authorized anyone to provide you with any different
information.
This prospectus is not an offer to sell nor is it seeking an offer to buy
these securities in any state where the offer or sale is not permitted. This
prospectus is not an offer to sell nor is it seeking an offer to buy securities
other than the Series A preferred shares to be issued in accordance with the
subscription offering. The information contained in this prospectus is correct
only as of the date of this prospectus, regardless of the time of the delivery
of this prospectus or any sale of these securities.
No action is being taken in any jurisdiction outside the United States to
permit a public offering of the Series A preferred shares or possession or
distribution of this prospectus in any such jurisdiction. Persons who come into
possession of this prospectus in jurisdictions outside the United States are
required to inform themselves about and to observe any restrictions as to this
offering and the distribution of this prospectus applicable in that
jurisdiction.
EXPERTS
Our audited consolidated financial statements as of August 31, 1997 and 1998
and for each of the three years in the period ended August 31, 1998 have been
incorporated by reference in this prospectus in reliance upon the report of
Arthur Andersen LLP, independent public accountants, and upon the authority of
that firm as experts in accounting and auditing.
Until we file a post-effective amendment indicating that all of the rights
to purchase Series A preferred shares have been exercised, or deregistering
Series A preferred shares that remain unsubscribed, the audited financial
statements, as of August 31, 1997 and 1998, and for each of the three years in
the period ended August 31, 1998, incorporated by reference to reports and
documents that we file in accordance with Sections 13(a), 13(c) 14, and 15(d) of
the Exchange Act are incorporated in reliance upon the reports of Arthur
Andersen LLP, and any other independent public accountants, relating to these
financial statements and upon the authority of those independent public
accountants as experts in accounting and auditing in giving such reports to the
extent that the particular firm has audited the financial statements and
consented to the use of their reports in them.
LEGAL MATTERS
Certain legal matters relating to the subscription rights and the Series A
preferred shares are being passed upon for Franklin Covey by Val John
Christensen, our General Counsel.
22
<PAGE>
Facsimile copies of the subscription agreement will be accepted. The
subscription agreement and all other required documents should be sent by each
holder or his/her broker, dealer, commercial bank, trust company or nominee to
the subscription agent at the address set forth below.
------------------------
The subscription agent is:
ZIONS FIRST NATIONAL BANK
----------------
<TABLE>
<S> <C> <C>
BY REGISTERED MAIL: BY HAND: BY OVERNIGHT
COURIER:
P.O. Box 30880 10 E. South Temple 10 E. South Temple
Salt Lake City, Utah Street Street
84130 3rd Floor 3rd Floor
Salt Lake City, Salt Lake City,
Utah 84111 Utah 84111
BY FACSIMILE:
(801) 524-4838
CONFIRM BY
TELEPHONE:
(801) 524-4696
-or-
(801) 524-2268
FOR INFORMATION
CALL:
(800) 789-8833,
Ext. 2268
</TABLE>
------------------------
Any questions or requests for assistance or additional copies of the
prospectus, the subscription agreement or any documents incorporated by
reference into the prospectus may be directed to Richard Putnam, our Director of
Investor Relations, at Franklin Covey Co., 2200 West Parkway Boulevard, Salt
Lake City, Utah 84119, telephone (801) 975-1776. You may also contact your
broker, dealer, commercial bank or trust company for assistance concerning this
subscription offering.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are expenses incurred or to be incurred by us in connection
with this offering. All of these expenses are estimated, except for the SEC
registration fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $20,850
Blue Sky fees and expenses.................................. 1,500
Printing, mailing and distribution expenses................. 15,000
Legal fees and expenses..................................... 25,000
Accounting fees and expenses................................ 7,000
Subscription Agent's fees and expenses...................... 5,000
Miscellaneous............................................... 5,650
-------
Total....................................................... $80,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article IX of our Revised Articles of Incorporation provide that a director
shall not be personally liable to us or our shareholders for monetary damages
for breach of fiduciary duty, except as expressly provided in
Section 16-10a-841 of the Utah Business Corporation Act.
Section 16-10a-841 of the Act provides that the liability of a director may
not be eliminated or limited for:
- the amount of financial benefit received by a director to which he is not
entitled;
- an intentional infliction of harm on the corporation or its shareholders;
- a violation of Section 16-10a-842 of the Act which prohibits unlawful
distributions by a corporation to its shareholders; or
- an intentional violation of criminal law.
Article VIII of our Revised Articles of Incorporation and Article VI of our
Amended and Restated Bylaws also provide for indemnification of our officers and
directors to the fullest extent permitted by the Utah Business Corporation Act,
or as otherwise permitted by law.
Section 16-10a-902 of the Act provides that a corporation may indemnify an
individual who was, is, or is threatened to be made a defendant or respondent in
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal,
because he is or was director of the corporation or is or was serving at its
request as a director, officer, partner, trustee, employee, fiduciary or agent
of another corporation or of an employee benefit plan, against any obligation
incurred with respect to a proceeding, including any judgment, settlement,
penalty, fine or reasonable expenses (including attorneys' fees), incurred in
the proceeding if:
- his conduct was in good faith;
- he reasonably believed that his conduct was in, or not opposed to, the
best interests of the corporation; and
- he had no reasonable cause to believe his conduct was unlawful;
except that
II-1
<PAGE>
- indemnification under Section 902 in connection with proceeding by or in
the right of the corporation is limited to payment of reasonable expenses
(including attorneys' fees) incurred in connection with the proceeding,
and
- the corporation may not indemnify a director in connection with a
proceeding by or in the right of the corporation in which the director was
adjudged liable to the corporation, or in connection with any other
proceeding charging that the director derived an improper personal
benefit, whether or not involving action in his official capacity, in
which proceeding he was adjudged liable on the basis that he derived an
improper personal benefit.
Section 16-10a-903 of the Act provides that, unless limited by its articles
of incorporation, a corporation shall indemnify a director who was successful,
on the merits or otherwise, in the defense of any proceeding, or in the defense
of any claim, issue or matter in the proceeding in which he was a defendant or
respondent because he is or was a director of the corporation, against
reasonable expenses (including attorneys' fees) incurred by him in connection
with the proceeding or claim with respect to which he has been successful.
In addition to the indemnification provided by Sections 902 and 903,
Section 16-10a-905 of the Act provides that, unless otherwise limited by a
corporation's articles of incorporation, a director may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application and after giving any notice
the court considers necessary:
- the court may order mandatory indemnification under Section 903, in which
case the court shall also order the corporation to pay the director's
reasonable expenses incurred to obtain court-ordered indemnification, or
- upon the court's determination that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances and
regardless of whether the director met the applicable standard of conduct
set forth in Section 902, or was adjudged liable as described in
Section 902(4), the court may order indemnification as the court
determines to be proper, except that indemnification with respect to
certain proceedings resulting in a director being found liable for certain
actions against the corporation may be limited to reasonable expenses
(including attorneys' fees) incurred by the director.
Section 16-10a-904 of the Act provides that a corporation may pay for or
reimburse the reasonable expenses (including attorneys' fees) incurred by a
director who is defendant or respondent in a proceeding in advance of the final
disposition of the proceeding if:
- the director furnishes the corporation a written affirmation of his good
faith belief that the has met the applicable standard of conduct described
in Section 902;
- the director furnishes to the corporation a written undertaking, executed
personally or in his behalf, to repay the advance if it is ultimately
determined that he did not meet the required standard of conduct; and
- a determination is made that the facts then known to those making the
determination would not preclude indemnification under Section 904.
Section 16-10a-907 of the Act provides that, unless a corporation's articles
of incorporation provide otherwise:
- an officer of the corporation is entitled to mandatory indemnification
under Section 903 and is entitled to apply for court ordered
indemnification under Section 905, in each case to the same extent as a
director;
- the corporation may indemnify and advance expenses to an officer,
employee, fiduciary or agent of the corporation to the same extent as a
director; and
II-2
<PAGE>
- a corporation may also indemnify and advance expenses to an officer,
employee, fiduciary or agent who is not a director to a greater extent
than the right of indemnification granted to directors, if not
inconsistent with public policy, and if provided for by its articles of
incorporation, bylaws, general or specific action of its board of
directors or contract.
Indemnification may be granted pursuant to any other agreement, bylaw, or
vote of shareholders or directors. In addition to the foregoing, Franklin Covey
maintains insurance from commercial carriers against certain liabilities which
may be incurred by its directors and officers.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
4.1 Revised Articles of Incorporation of the Registrant (filed
as Exhibit 3.1 to the Registrant's Registration Statement on
Form S-1 (Reg. No. 33-47283) as filed with the Commission on
April 17, 1992 and incorporated herein by reference)
4.2 Amended and Restated Bylaws of the Registrant (filed as
Exhibit 3.2 to the Registrant's Registration Statement on
Form S-1 (Reg. No. 33-47283) as filed with the Commission on
April 17, 1992 and incorporated herein by reference)
4.3 Certificate of designation of Series A Preferred Stock
(contained in the Articles of Amendment to Articles of
Incorporation of Franklin Covey Co. filed as Exhibit 2 to
Schedule 13D (CUSIP No. 353469109) as filed with the
Commission on June 2, 1999 and incorporated herein by
reference)
4.4 Stockholders Agreement, dated June 2, 1999 (filed as Exhibit
3 to Schedule 13D (CUSIP No. 353469109) as filed with the
Commission on June 2, 1999 and incorporated herein by
reference)
4.5 Registration Rights Agreement, dated June 2, 1999 (filed as
Exhibit 4 to Schedule 13D (CUSIP No. 353469109) as filed
with the Commission on June 2, 1999 and incorporated herein
by reference)
5.1 Opinion of Val John Christensen, General Counsel of Franklin
Covey Co.
12.1 Calculation of ratio of combined fixed charges and preferred
stock dividends to earnings
23.1* Consent of Independent Public Accountants
23.2 Consent of Val John Christensen, General Counsel of Franklin
Covey Co. (included in Exhibit 5.1)
24.1 Powers of Attorney
99.1 Form of Subscription Agreement
99.2 Form of Letter to Common Shareholders
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
99.5 Form of Letter to Participants in Franklin Covey's Employee
Stock Purchase Plan
</TABLE>
- ------------------------
* Filed herewith.
All other exhibits have been previously filed.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering; and
(4) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Franklin Covey
Co. certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the registration statement to be signed on its behalf by the undersigned, there
unto duly authorized, in Salt Lake City, State of Utah on October 27, 1999.
<TABLE>
<S> <C> <C>
FRANKLIN COVEY CO.
By: /s/ ROBERT A. WHITMAN
-----------------------------------------
Robert A. Whitman
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement on Form S-3 has been signed by the following
persons, in the capacities indicated, on October 27, 1999.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
* Chairman of the Board of Directors and Chief
------------------------------------------- Executive Officer (Principal Executive
Robert A. Whitman Officer)
------------------------------------------- Vice Chairman
Hyrum W. Smith
------------------------------------------- Vice Chairman
Stephen R. Covey
*
------------------------------------------- Executive Vice President, Chief Financial
John L. Theler Officer (Principal Financial Officer)
*
------------------------------------------- Chief Accounting Officer (Principal Accounting
J. Scott Nielsen Officer)
*
------------------------------------------- Executive Vice President, President--Training
Stephen M. R. Covey and Education Division and Director
*
------------------------------------------- Director
Steven C. Wheelwright
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
*
------------------------------------------- Director
Robert H. Daines
*
------------------------------------------- Director
E. J. "Jake" Garn
*
------------------------------------------- Director
Dennis G. Heiner
*
------------------------------------------- Director
Joel C. Peterson
*
------------------------------------------- Director
E. Kay Stepp
*
------------------------------------------- Director
Brian Krisak
*
------------------------------------------- Director
Donald J. McNamara
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Amendment No. 1 to the registration statement on Form S-3 pursuant to powers
of attorney executed by the above-named officers and directors and filed
herewith.
<TABLE>
<S> <C> <C>
FRANKLIN COVEY CO.
By: /s/ ROBERT A. WHITMAN
-----------------------------------------
Robert A. Whitman
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT PAGE NO.
- ----------- ------- --------
<C> <S> <C>
4.1 Revised Articles of Incorporation of the Registrant (filed
as Exhibit 3.1 to the Registrant's Registration Statement on
Form S-1 (Reg. No. 33-47283) as filed with the Commission on
April 17, 1992 and incorporated herein by reference)
4.2 Amended and Restated Bylaws of the Registrant (filed as
Exhibit 3.2 to the Registrant's Registration Statement on
Form S-1 (Reg. No. 33-47283) as filed with the Commission on
April 17, 1992 and incorporated herein by reference)
4.3 Certificate of designation of Series A Preferred Stock
(contained in the Articles of Amendment to Articles of
Incorporation of Franklin Covey Co. filed as Exhibit 2 to
Schedule 13D (CUSIP No. 353469109) as filed with the
Commission on June 2, 1999 and incorporated herein by
reference)
4.4 Stockholders Agreement, dated June 2, 1999 (filed as Exhibit
3 to Schedule 13D (CUSIP No. 353469109) as filed with the
Commission on June 2, 1999 and incorporated herein by
reference)
4.5 Registration Rights Agreement, dated June 2, 1999 (filed as
Exhibit 4 to Schedule 13D (CUSIP No. 353469109) as filed
with the Commission on June 2, 1999 and incorporated herein
by reference)
5.1 Opinion of Val John Christensen, General Counsel of Franklin
Covey Co.
12.1 Calculation of ratio of combined fixed charges and preferred
stock dividends to earnings
23.1* Consent of Independent Public Accountants
23.2 Consent of Val John Christensen, General Counsel of Franklin
Covey Co. (included in Exhibit 5.1)
24.1 Powers of Attorney
99.1 Form of Subscription Agreement
99.2 Form of Letter to Common Shareholders
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
99.5 Form of Letter to Participants in Franklin Covey's Employee
Stock Purchase Plan
</TABLE>
- ------------------------
* Filed herewith.
All other exhibits have been previously filed.
<PAGE>
EXHIBIT NO. 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
October 27, 1999
