FRANKLIN COVEY CO. (NYSE:FC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
into the Sixth Modification Agreement to its existing amended and
restated secured credit agreement (the Restated Credit Agreement)
with JPMorgan Chase Bank, N.A. (the Lender). The Lender also
provides the majority of the Companys day-to-day banking
services.
adjust the definition of the fixed charge coverage ratio to
include 85% of the change in the Companys deferred revenue during
the measurement period in calculated earnings before interest,
taxes, depreciation, amortization, and rent expense (EBITDAR).
During fiscal 2016, the Company released the All Access Pass
(AAP), which allows its clients to access the Companys
intellectual property through an electronic portal for a
contracted period. The accounting guidance for AAP sales requires
the Company to recognize the revenue ratably over the life of the
contract with the client. However, the Company invoices the
client at the inception of the agreement and the receivable is
due within normal terms. Accordingly, the Companys recognized
revenues have been reduced during the transition to the AAP
business model, while cash flows remain relatively unaffected.
The Sixth Modification Agreement is designed to reflect this
change in the Companys business and income from operations during
the transition period.
covenants that include (i) a Funded Debt to EBITDAR ratio of less
than 3.0 to 1.0; (ii) a Fixed Charge Coverage ratio greater than
1.15 to 1.0 as discussed above; (iii) an annual limit on capital
expenditures (excluding capitalized curriculum development) of
$8.0 million; and (iv) outstanding borrowings on the revolving
line of credit may not exceed 150 percent of consolidated
accounts receivable. The other key terms and conditions of the
Sixth Modification Agreement are substantially the same as those
defined in the Restated Credit Agreement. The Restated Credit
Agreement was described in the Companys Form 8-K filed on March
17, 2011, which information is incorporated by reference herein.
and certain of its subsidiaries entered into a new Consent and
Agreement of Guarantor.
Restated Credit Agreement does not purport to be complete and is
qualified in its entirety by reference to the text of the Sixth
Modification Agreement to the Restated Credit Agreement, the
Consent and Agreement of Guarantor, and the new promissory note,
which are filed as Exhibits 10.1 and 10.2 attached hereto.
|
Item 2.03
|
Creation of a Direct Financial Obligation or an
Obligation Under an Off-Balance Sheet Arrangement |
entered into the Sixth Modification Agreement and Consent and
Agreement of Guarantor with its primary Lender as described above
in Item 1.01. The information in Item 1.01 is incorporated by
reference herein.
|
Item 9.01
|
Financial Statements and Exhibits
|
|
(d)
|
Exhibits:
|
|
10.1
|
Sixth Modification Agreement by and among JPMorgan Chase
Bank, N.A., Franklin Covey Co., and the subsidiary guarantors signatory thereto, dated February 28, 2017. |
|
10.2
|
Consent and Agreement of Guarantor by and between
JPMorgan Chase Bank, N.A., Franklin Covey Co., and the subsidiary guarantors signatory thereto, dated February 28, 2017. |
About FRANKLIN COVEY CO. (NYSE:FC)
Franklin Covey Co. is a global company specializing in performance improvement. The Company’s segments are Direct Offices, Strategic Markets, Education practice and International Licensees. The Direct Offices segment consists of its geographic sales offices that serve the United States and Canada, its international sales offices located in Japan, the United Kingdom and Australia, and its public programs group. The Strategic Markets segment includes its government services office, the Sales Performance practice, the Customer Loyalty practice, and a new Global 50 group, which is specifically focused on sales to large, multi-national organizations. The Education practice segment consists of its domestic and international Education practice operations, which are centered on sales to educational institutions, such as elementary schools, high schools, and colleges and universities. The International Licensees segment consists of its international licensees’ royalty revenues. FRANKLIN COVEY CO. (NYSE:FC) Recent Trading Information
FRANKLIN COVEY CO. (NYSE:FC) closed its last trading session down -0.20 at 17.60 with 26,004 shares trading hands.