----

----

**FORM      10-Q**

|   | x | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------|

|   | o | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------|

**FRANKLIN      COVEY CO.**

| Utah(State                  of incorporation)                                                                                               |   | 87-0401551(I.R.S.                  employer identification number) |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|
| 2200                  West Parkway BoulevardSalt                  Lake City, Utah(Address                  of principal executive offices)  |   | 84119-2099(Zip                  Code)                              |
| Registrant’s                  telephone number,Including                  area code                                                        |   | (801)                817-1776                                      |

| Large                accelerated filer | o |   | Accelerated                filer | x |   | Non-accelerated                filer | o |
|----------------------------------------|---|--------|----------------------------------|---|--------|--------------------------------------|---|

----

----

| Part                  I.  | Financial                  Information                                                                                          |   |   |
|---------------------------|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| Item                  1.  | Financial                  Statements                                                                                           |   |   |
| Note                  1.  | Basis                  of Presentation                                                                                          |   |   |
| Note                  2.  | Inventories                                                                                                                     |   |   |
| Note                  3.  | Canadian                  Line of Credit                                                                                        |   |   |
| Note                  4.  | Shareholders’                  Equity                                                                                     |   |   |
| Note                  5.  | Sale                  of Manufacturing Facility                                                                                 |   |   |
| Note                  6.  | Income                  Taxes                                                                                                   |   |   |
| Note                  7.  | Comprehensive                  Income                                                                                           |   |   |
| Note                  8.  | Earnings                  Per Share                                                                                             |   |   |
| Note                  9.  | Segment                  Information                                                                                            |   |   |
| Note                  10. | Subsequent                  Events                                                                                              |   |   |
|                      |                                                                                                                            |   |   |
| Item                  2.  | Management’s                  Discussion & Analysis of Financial Condition and Results of                  Operations |   |   |
| Item                  3.  | Quantitative                  and Qualitative Disclosures About Market Risk                                                     |   |   |
| Item                  4.  | Controls                  and Procedures                                                                                        |   |   |
|                      |                                                                                                                            |   |   |
| Part                  II. | Other                  Information                                                                                              |   |   |
| Item                  1A. | Risk                  Factors                                                                                                   |   |   |
| Item                  2.  | Unregistered                  Sales of Equity Securities & Use of Proceeds                                                  |   |   |
| Item                  4.  | Submission                  of Matters to a Vote of Security Holders                                                            |   |   |
| Item                  6.  | Exhibits                                                                                                                        |   |   |
|                      |                                                                                                                            |   |   |
|                      | Signatures                                                                                                                      |   |   |

|                                                                                                                                                                                                   |   | March                3,2007 |     | August                31,2006 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|----------|-------------------------------|--------|
|                                                                                                                                                                                                   |   | (unaudited)                 |     |
| ASSETS                                                                                                                                                                                                 |   |                        |     |                          |   |   |   |
| Current                assets:                                                                                                                                                                         |   |                        |     |                          |   |   |   |
| Cash                and cash equivalents                                                                                                                                                               |   | $                           | 28,620   |                          | $      | 30,587 |   |
| Accounts                receivable, less allowance for doubtful accounts                of $656 and $979                                                                                          |   |                        | 24,678   |                          |   | 24,254 |   |
| Inventories                                                                                                                                                                                            |   |                        | 23,402   |                          |   | 21,790 |   |
| Deferred                income taxes                                                                                                                                                                   |   |                        | 3,884    |                          |   | 4,130 |   |
| Other                current assets                                                                                                                                                                    |   |                        | 6,387    |                          |   | 6,359 |   |
| Total                current assets                                                                                                                                                                    |   |                        | 86,971   |                          |   | 87,120 |   |
|                                                                                                                                                                                                   |   |                        |     |                          |   |   |   |
| Property                and equipment, net                                                                                                                                                             |   |                        | 35,054   |                          |   | 33,318 |   |
| Intangible                assets, net                                                                                                                                                                  |   |                        | 77,725   |                          |   | 79,532 |   |
| Deferred                income taxes                                                                                                                                                                   |   |                        | 364      |                          |   | 4,340 |   |
| Other                assets                                                                                                                                                                            |   |                        | 13,965   |                          |   | 12,249 |   |
|                                                                                                                                                                                                   |   | $                           | 214,079  |                          | $      | 216,559 |   |
|                                                                                                                                                                                                   |   |                        |     |                          |   |   |   |
| LIABILITIES                AND SHAREHOLDERS’ EQUITY                                                                                                                                              |   |                        |     |                          |   |   |   |
| Current                liabilities:                                                                                                                                                                    |   |                        |     |                          |   |   |   |
| Current                portion of long-term debt and financing obligation                                                                                                                              |   | $                           | 598      |                          | $      | 585 |   |
| Accounts                payable                                                                                                                                                                        |   |                        | 10,211   |                          |   | 13,769 |   |
| Income                taxes payable                                                                                                                                                                    |   |                        | 2,659    |                          |   | 1,924 |   |
| Accrued                liabilities                                                                                                                                                                     |   |                        | 30,538   |                          |   | 32,170 |   |
| Total                current liabilities                                                                                                                                                               |   |                        | 44,006   |                          |   | 48,448 |   |
|                                                                                                                                                                                                   |   |                        |     |                          |   |   |   |
| Long-term                debt and financing obligation, less current portion                                                                                                                           |   |                        | 33,209   |                          |   | 33,559 |   |
| Other                liabilities                                                                                                                                                                       |   |                        | 1,017    |                          |   | 1,203 |   |
| Total                liabilities                                                                                                                                                                       |   |                        | 78,232   |                          |   | 83,210 |   |
|                                                                                                                                                                                                   |   |                        |     |                          |   |   |   |
| Shareholders’                equity:                                                                                                                                                             |   |                        |     |                          |   |   |   |
| Preferred                stock - Series A, no par value; 4,000 shares authorized, 1,494                shares issued and outstanding; liquidation preference totaling                $38,278 |   |                        | 37,345   |                          |   | 37,345 |   |
| Common                stock - $0.05 par value; 40,000 shares authorized, 27,056                shares issued and outstanding                                                                      |   |                        | 1,353    |                          |   | 1,353 |   |
| Additional                paid-in capital                                                                                                                                                              |   |                        | 186,288  |                          |   | 185,691 |   |
| Common                stock warrants                                                                                                                                                                   |   |                        | 7,611    |                          |   | 7,611 |   |
| Retained                earnings                                                                                                                                                                       |   |                        | 18,337   |                          |   | 14,075 |   |
| Accumulated                other comprehensive income                                                                                                                                                  |   |                        | 669      |                          |   | 653 |   |
| Treasury                stock at cost, 7,386 and 7,083 shares                                                                                                                                          |   |                        | (115,756 | )                             |   | (113,379 | ) |
| Total                shareholders’ equity                                                                                                                                                        |   |                        | 135,847  |                          |   | 133,349 |   |
|                                                                                                                                                                                                   |   | $                           | 214,079  |                          | $      | 216,559 |   |
|                                                                                                                                                                                                   |   |                        |     |                          |   |   |   |

----

|                                                                                 |   | Quarter                Ended |   | Two                Quarters Ended |   |
|--------------------------------------------------------------------------------------|--------|------------------------------|--------|-----------------------------------|--------|
|                                                                                 |   |                         |   |                              |   |   |   |   |   |
|                                                                                 |   | March                3,2007  |   | February                25,2006   |   | March                3,2007 |   | February                25,2006 |   |
|                                                                                 |   | (unaudited)                  |   | (unaudited)                       |   |
| Net                sales:                                                            |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Products                                                                             |   | $                            | 45,283 |                              | $      | 50,841 |   | $ | 87,391 |   | $ | 94,244 |   |
| Training                and consulting services                                      |   |                         | 31,593 |                              |   | 27,492 |   |   | 65,014 |   |   | 56,440 |   |
|                                                                                 |   |                         | 76,876 |                              |   | 78,333 |   |   | 152,405 |   |   | 150,684 |   |
| Cost                of sales:                                                        |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Products                                                                             |   |                         | 19,436 |                              |   | 22,288 |   |   | 37,910 |   |   | 40,952 |   |
| Training                and consulting services                                      |   |                         | 10,251 |                              |   | 7,872 |   |   | 20,909 |   |   | 17,152 |   |
|                                                                                 |   |                         | 29,687 |                              |   | 30,160 |   |   | 58,819 |   |   | 58,104 |   |
| Gross                profit                                                          |   |                         | 47,189 |                              |   | 48,173 |   |   | 93,586 |   |   | 92,580 |   |
|                                                                                 |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Selling,                general, and administrative                                  |   |                         | 36,666 |                              |   | 35,488 |   |   | 77,514 |   |   | 73,255 |   |
| Gain                on sale of manufacturing facility                                |   |                         | (1,227 | )                                 |   | - |   |   | (1,227 | ) |   | - |   |
| Depreciation                                                                         |   |                         | 1,366  |                              |   | 1,221 |   |   | 2,403 |   |   | 2,629 |   |
| Amortization                                                                         |   |                         | 900    |                              |   | 908 |   |   | 1,802 |   |   | 2,003 |   |
| Income                from operations                                                |   |                         | 9,484  |                              |   | 10,556 |   |   | 13,094 |   |   | 14,693 |   |
|                                                                                 |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Interest                income                                                       |   |                         | 357    |                              |   | 316 |   |   | 557 |   |   | 645 |   |
| Interest                expense                                                      |   |                         | (675   | )                                 |   | (660 | ) |   | (1,336 | ) |   | (1,303 | ) |
| Legal                settlement                                                      |   |                         | -      |                              |   | 873 |   |   | - |   |   | 873 |   |
| Income                before provision for income taxes                              |   |                         | 9,166  |                              |   | 11,085 |   |   | 12,315 |   |   | 14,908 |   |
| Provision                for income taxes                                            |   |                         | (4,452 | )                                 |   | (1,872 | ) |   | (6,186 | ) |   | (2,462 | ) |
| Net                income                                                            |   |                         | 4,714  |                              |   | 9,213 |   |   | 6,129 |   |   | 12,446 |   |
| Preferred                stock dividends                                             |   |                         | (934   | )                                 |   | (1,139 | ) |   | (1,867 | ) |   | (2,518 | ) |
| Net                income available to common shareholders                           |   | $                            | 3,780  |                              | $      | 8,074 |   | $ | 4,262 |   | $ | 9,928 |   |
|                                                                                 |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Net                income available to common shareholders                per share: |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Basic                                                                                |   | $                            | .19    |                              | $      | .40 |   | $ | .22 |   | $ | .49 |   |
| Diluted                                                                              |   | $                            | .19    |                              | $      | .39 |   | $ | .21 |   | $ | .48 |   |
|                                                                                 |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Weighted                average number of common shares:                             |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Basic                                                                                |   |                         | 19,589 |                              |   | 20,311 |   |   | 19,750 |   |   | 20,321 |   |
| Diluted                                                                              |   |                         | 20,026 |                              |   | 20,634 |   |   | 20,109 |   |   | 20,638 |   |

----

|                                                                                                                 |   | Two                Quarters Ended |   |
|----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                 |   | March                3,2007       |   | February                25,2006 |   |
|                                                                                                                 |   | (unaudited)                       |   |
| Cash                flows from operating activities:                                                                 |   |                              |   |   |   |   |   |
| Net                income                                                                                            |   | $                                 | 6,129  |   | $ | 12,446 |   |
| Adjustments                to reconcile net income to net cash provided by                operating activities: |   |                              |   |   |   |   |   |
| Depreciation                and amortization                                                                         |   |                              | 4,977  |   |   | 5,571 |   |
| Deferred                income taxes                                                                                 |   |                              | 4,218  |   |   | - |   |
| Gain                on disposals of property and equipment                                                           |   |                              | (1,210 | ) |   | - |   |
| Share-based                compensation expense                                                                      |   |                              | 622    |   |   | 235 |   |
| Changes                in assets and liabilities:                                                                    |   |                              |   |   |   |   |   |
| Increase                in accounts receivable, net                                                                  |   |                              | (433   | ) |   | (774 | ) |
| Increase                in inventories                                                                               |   |                              | (1,616 | ) |   | (1,974 | ) |
| Decrease                (increase) in other assets                                                                   |   |                              | 728    |   |   | (134 | ) |
| Decrease                in accounts payable and accrued liabilities                                                  |   |                              | (5,196 | ) |   | (5,569 | ) |
| Decrease                in other long-term liabilities                                                               |   |                              | (175   | ) |   | (102 | ) |
| Increase                in income taxes payable                                                                      |   |                              | 743    |   |   | 1,526 |   |
| Net                cash provided by operating activities                                                             |   |                              | 8,787  |   |   | 11,225 |   |
|                                                                                                                 |   |                              |   |   |   |   |   |
| Cash                flows from investing activities:                                                                 |   |                              |   |   |   |   |   |
| Purchases                of property and equipment                                                                   |   |                              | (5,377 | ) |   | (2,422 | ) |
| Curriculum                development costs                                                                          |   |                              | (3,163 | ) |   | (961 | ) |
| Proceeds                from sales of property and equipment                                                         |   |                              | 2,258  |   |   | - |   |
| Net                cash used for investing activities                                                                |   |                              | (6,282 | ) |   | (3,383 | ) |
|                                                                                                                 |   |                              |   |   |   |   |   |
| Cash                flows from financing activities:                                                                 |   |                              |   |   |   |   |   |
| Principal                payments on long-term debt and financing obligation                                         |   |                              | (297   | ) |   | (822 | ) |
| Change                in restricted cash                                                                             |   |                              | -      |   |   | 699 |   |
| Proceeds                from sales of common stock from treasury                                                     |   |                              | 137    |   |   | 173 |   |
| Proceeds                from management stock loan payments                                                          |   |                              | -      |   |   | 134 |   |
| Redemption                of preferred stock                                                                         |   |                              | -      |   |   | (20,000 | ) |
| Purchases                of treasury shares                                                                          |   |                              | (2,539 | ) |   | (224 | ) |
| Payment                of preferred stock dividends                                                                  |   |                              | (1,867 | ) |   | (3,018 | ) |
| Net                cash used for financing activities                                                                |   |                              | (4,566 | ) |   | (23,058 | ) |
|                                                                                                                 |   |                              |   |   |   |   |   |
| Effect                of foreign exchange rates on cash and cash equivalents                                         |   |                              | 94     |   |   | (120 | ) |
| Net                decrease in cash and cash equivalents                                                             |   |                              | (1,967 | ) |   | (15,336 | ) |
| Cash                and cash equivalents at beginning of the period                                                  |   |                              | 30,587 |   |   | 51,690 |   |
| Cash                and cash equivalents at end of the period                                                        |   | $                                 | 28,620 |   | $ | 36,354 |   |
|                                                                                                                 |   |                              |   |   |   |   |   |
| Supplemental                disclosure of cash flow information:                                                     |   |                              |   |   |   |   |   |
| Cash                paid for interest                                                                                |   | $                                 | 1,324  |   | $ | 1,337 |   |
| Cash                paid for income taxes                                                                            |   | $                                 | 1,270  |   | $ | 1,093 |   |
|                                                                                                                 |   |                              |   |   |   |   |   |
| Non-cash                investing and financing activities:                                                          |   |                              |   |   |   |   |   |
| Accrued                preferred stock dividends                                                                     |   | $                                 | 934    |   | $ | 934 |   |
| Capital                lease financing of property and equipment purchases                                           |   |                              | -      |   |   | 109 |   |

----

| **NOTE                 1 -** | **BASIS                OF PRESENTATION** |
|-----------------------------------|------------------------------------------|

*The      7      Habits of Highly Effective People*
*FOCUS:      Achieving Your Highest Priorities*
*The      4      Disciplines of Execution*
*The      4      Roles of Leadership*
*Building      Business Acumen: What the CEO Wants You to Know*
*Execution      Quotient*
*xQ*
*The      7      Habits of Highly Effective People*

| **NOTE              2 -** | **INVENTORIES** |
|---------------------------|-----------------|

|                           |   | March                3,2007 |   | August                31,2006 |   |
|--------------------------------|--------|-----------------------------|--------|-------------------------------|--------|
|                           |   |                        |   |                          |   |   |   |
| Finished                goods  |   | $                           | 19,994 |                          | $      | 18,464 |   |
| Work                in process |   |                        | 523    |                          |   | 706 |   |
| Raw                materials   |   |                        | 2,885  |                          |   | 2,620 |   |
|                           |   | $                           | 23,402 |                          | $      | 21,790 |   |

| **NOTE              3 -** | **CANADIAN              LINE OF CREDIT** |
|---------------------------|------------------------------------------|

| **NOTE              4 -**  | **SHAREHOLDERS’                EQUITY** |
|---------------------------------|-----------------------------------------------|

| **NOTE              5 -**  | **SALE                OF MANUFACTURING FACILITY** |
|---------------------------------|---------------------------------------------------|

*Accounting      for the Impairment or Disposal of Long-Lived Assets*

| **NOTE              6 -** | **INCOME              TAXES** |
|---------------------------|-------------------------------|

| **NOTE              7 -** | **COMPREHENSIVE                INCOME** |
|---------------------------|-----------------------------------------|

|                                                                |   | Quarter                Ended |   | Two                Quarters Ended |   |
|---------------------------------------------------------------------|--------|------------------------------|--------|-----------------------------------|--------|
|                                                                |   | March                3,2007  |   | February                25,2006   |   | March                3,2007 |   | February                25,2006 |   |
| Net                income                                           |   | $                            | 4,714  |                              | $      | 9,213 |   | $ | 6,129 |   | $ | 12,446 |   |
| Other                comprehensive income (loss) items, net of tax: |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation adjustments             |   |                         | (80    | )                                 |   | 145 |   |   | 16 |   |   | (220 | ) |
| Comprehensive                income                                 |   | $                            | 4,634  |                              | $      | 9,358 |   | $ | 6,145 |   | $ | 12,226 |   |

| **NOTE              8 -** | **EARNINGS                PER SHARE** |
|---------------------------|---------------------------------------|

*Participating      Securities and the Two-Class Method under FASB Statement No.      128*

|                                                                     |   | Quarter                Ended |   | Two                Quarters Ended |   |
|--------------------------------------------------------------------------|--------|------------------------------|--------|-----------------------------------|--------|
|                                                                     |   | March                3,2007  |   | February                25,2006   |   | March                3,2007 |   | February                25,2006 |   |
| **Numerator                for basic and diluted earnings per share:**   |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Net                income                                                |   | $                            | 4,714  |                              | $      | 9,213 |   | $ | 6,129 |   | $ | 12,446 |   |
| Preferred                stock dividends                                 |   |                         | (934   | )                                 |   | (1,139 | ) |   | (1,867 | ) |   | (2,518 | ) |
| Net                income available to common shareholders               |   | $                            | 3,780  |                              | $      | 8,074 |   | $ | 4,262 |   | $ | 9,928 |   |
|                                                                     |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| **Denominator                for basic and diluted earnings per share:** |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Basic                weighted average shares outstanding(1)              |   |                         | 19,589 |                              |   | 20,311 |   |   | 19,750 |   |   | 20,321 |   |
| Effect                of dilutive securities:                            |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Stock                options                                             |   |                         | 24     |                              |   | 45 |   |   | 29 |   |   | 46 |   |
| Unvested                stock awards                                     |   |                         | 257    |                              |   | 272 |   |   | 252 |   |   | 268 |   |
| Performance                awards                                        |   |                         | 156    |                              |   | 6 |   |   | 78 |   |   | 3 |   |
| Common                stock warrants(2)                                  |   |                         | -      |                              |   | - |   |   | - |   |   | - |   |
| Diluted                weighted average shares outstanding               |   |                         | 20,026 |                              |   | 20,634 |   |   | 20,109 |   |   | 20,638 |   |
|                                                                     |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| **Basic                and diluted EPS:**                                |   |                         |   |                              |   |   |   |   |   |   |   |   |   |
| Basic                EPS                                                 |   | $                            | .19    |                              | $      | .40 |   | $ | .22 |   | $ | .49 |   |
| Diluted                EPS                                               |   | $                            | .19    |                              | $      | .39 |   | $ | .21 |   | $ | .48 |   |

----

|   | (1)    | Since                the Company recognized net income for the quarter and two quarters                ended                March 3, 2007, basic weighted average shares for those periods include                3.5                million shares of common stock held by management stock loan participants                that were placed in escrow. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                      |
|   | (2)    | For                  the quarter and two quarters ended March 3, 2007, the conversion                  of 6.2                  million common stock warrants is not assumed because such conversion                  would                  be anti-dilutive.                                                                                             |

| **NOTE              9 -** | **SEGMENT                INFORMATION** |
|---------------------------|----------------------------------------|

| ***Consumer                Solutions Business Unit -***This                business unit is primarily focused on sales to individual customers                and                small business organizations and includes the results of our domestic                retail stores, consumer direct operations (primarily catalog, eCommerce,                and public seminar programs), wholesale operations, international                product                channels in certain countries, and other related distribution channels,                including government product sales and domestic printing and publishing                sales. The CSBU results of operations also include the financial                results                of our paper planner manufacturing operations. Although CSBU sales                primarily consist of products such as planners, binders, software,                totes,                and related accessories, virtually any component of our leadership,                productivity, and strategy execution solutions may be purchased through                our CSBU channels. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ***Organizational                Solutions Business Unit -***The                OSBU is primarily responsible for the development, marketing, sale,                and                delivery of strategic execution, productivity, leadership, sales                force                performance, and communication training and consulting solutions                directly                to organizational clients, including other companies, the government,                and                educational institutions. The OSBU includes the financial results                of our                domestic sales force and certain international operations. The domestic                sales force is responsible for the sale and delivery of our training                and                consulting services in the United States. Our international sales                group                includes the financial results of our directly owned foreign offices                and                royalty revenues from licensees.                                                                                     |

|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |
|-----------------------------------------------------------------------|--------|--------|--------------------------------------------|--------|--------|-----------------------------|--------|--------|---------|--------|--------|
| *Quarter                Ended**March                3, 2007*          |   |   | Sales                to External Customers |   |   | Gross                Profit |   |   | EBITDA  |   |   | Depreciation |   |   | Amortization |   |
| **Consumer                Solutions Business Unit:**                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| Retail                                                                |   | $      | 19,265                                     |   | $      | 11,861                      |   | $      | 4,635   |   | $      | 186 |   | $ | - |   |
| Consumer                direct                                        |   |   | 17,062                                     |   |   | 9,940                       |   |   | 7,645   |   |   | 54 |   |   | - |   |
| Wholesale                                                             |   |   | 3,581                                      |   |   | 1,932                       |   |   | 1,747   |   |   | - |   |   | - |   |
| CSBU                International                                     |   |   | 2,643                                      |   |   | 1,608                       |   |   | 709     |   |   | - |   |   | - |   |
| Other                CSBU                                             |   |   | 1,583                                      |   |   | 410                         |   |   | (6,447  | )      |   | 533 |   |   | - |   |
| Total                CSBU                                             |   |   | 44,134                                     |   |   | 25,751                      |   |   | 8,289   |   |   | 773 |   |   | - |   |
|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| **Organizational                Solutions Business Unit:**            |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| Domestic                                                              |   |   | 19,313                                     |   |   | 12,320                      |   |   | 1,730   |   |   | 151 |   |   | 900 |   |
| International                                                         |   |   | 13,429                                     |   |   | 9,118                       |   |   | 3,030   |   |   | 204 |   |   | - |   |
| Total                OSBU                                             |   |   | 32,742                                     |   |   | 21,438                      |   |   | 4,760   |   |   | 355 |   |   | 900 |   |
| Total                operating segments                               |   |   | 76,876                                     |   |   | 47,189                      |   |   | 13,049  |   |   | 1,128 |   |   | 900 |   |
| Corporate                and eliminations                             |   |   | -                                          |   |   | -                           |   |   | (2,526  | )      |   | 238 |   |   | - |   |
| Consolidated                                                          |   | $      | 76,876                                     |   | $      |  47,189                |   | $      | 10,523  |   | $      | 1,366 |   | $ | 900 |   |
|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| *Quarter                Ended**February                25, 2006*      |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| **Consumer                Solutions Business Unit:**                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| Retail                                                                |   | $      | 23,781                                     |   | $      | 14,306                      |   | $      | 5,593   |   | $      | 337 |   | $ | - |   |
| Consumer                direct                                        |   |   | 19,613                                     |   |   | 11,621                      |   |   | 9,353   |   |   | 15 |   |   | - |   |
| Wholesale                                                             |   |   | 3,138                                      |   |   | 1,675                       |   |   | 1,523   |   |   | - |   |   | - |   |
| CSBU                International                                     |   |   | 2,681                                      |   |   | 1,663                       |   |   | 776     |   |   | - |   |   | - |   |
| Other                CSBU                                             |   |   | 1,291                                      |   |   | 133                         |   |   | (7,267  | )      |   | 309 |   |   | - |   |
| Total                CSBU                                             |   |   | 50,504                                     |   |   | 29,398                      |   |   | 9,978   |   |   | 661 |   |   | - |   |
|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| **Organizational                Solutions Business Unit:**            |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| Domestic                                                              |   |   | 15,347                                     |   |   | 10,362                      |   |   | 1,471   |   |   | 88 |   |   | 907 |   |
| International                                                         |   |   | 12,482                                     |   |   | 8,413                       |   |   | 3,181   |   |   | 320 |   |   | 1 |   |
| Total                OSBU                                             |   |   | 27,829                                     |   |   | 18,775                      |   |   | 4,652   |   |   | 408 |   |   | 908 |   |
| Total                operating segments                               |   |   | 78,333                                     |   |   | 48,173                      |   |   | 14,630  |   |   | 1,069 |   |   | 908 |   |
| Corporate                and eliminations                             |   |   | -                                          |   |   | -                           |   |   | (1,945  | )      |   | 152 |   |   | - |   |
| Consolidated                                                          |   | $      | 78,333                                     |   | $      | 48,173                      |   | $      | 12,685  |   | $      | 1,221 |   | $ | 908 |   |
|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| *Two                Quarters Ended**March                3, 2007*     |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| **Consumer                Solutions Business Unit:**                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| Retail                                                                |   | $      | 33,392                                     |   | $      | 20,260                      |   | $      | 5,834   |   | $      | 377 |   | $ | - |   |
| Consumer                direct                                        |   |   | 36,998                                     |   |   | 22,218                      |   |   | 17,637  |   |   | 78 |   |   | - |   |
| Wholesale                                                             |   |   | 8,158                                      |   |   | 4,710                       |   |   | 4,409   |   |   | - |   |   | - |   |
| CSBU                International                                     |   |   | 5,029                                      |   |   | 3,093                       |   |   | 1,195   |   |   | - |   |   | - |   |
| Other                CSBU                                             |   |   | 2,877                                      |   |   | 154                         |   |   | (15,907 | )      |   | 792 |   |   | - |   |
| Total                CSBU                                             |   |   | 86,454                                     |   |   | 50,435                      |   |   | 13,168  |   |   | 1,247 |   |   | - |   |
|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| **Organizational                Solutions Business Unit:**            |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| Domestic                                                              |   |   | 37,034                                     |   |   | 23,741                      |   |   | 2,089   |   |   | 261 |   |   | 1,802 |   |
| International                                                         |   |   | 28,917                                     |   |   | 19,410                      |   |   | 6,217   |   |   | 409 |   |   | - |   |
| Total                OSBU                                             |   |   | 65,951                                     |   |   | 43,151                      |   |   | 8,306   |   |   | 670 |   |   | 1,802 |   |
| Total                operating segments                               |   |   | 152,405                                    |   |   | 93,586                      |   |   | 21,474  |   |   | 1,917 |   |   | 1,802 |   |
| Corporate                and eliminations                             |   |   | -                                          |   |   | -                           |   |   | (5,402  | )      |   | 486 |   |   | - |   |
| Consolidated                                                          |   | $      | 152,405                                    |   | $      | 93,586                      |   | $      | 16,072  |   | $      | 2,403 |   | $ | 1,802 |   |
|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| *Two                Quarters Ended**February                25, 2006* |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| **Consumer                Solutions Business Unit:**                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| Retail                                                                |   | $      | 38,424                                     |   | $      | 22,983                      |   | $      | 5,967   |   | $      | 773 |   | $ | - |   |
| Consumer                direct                                        |   |   | 38,789                                     |   |   | 23,299                      |   |   | 18,890  |   |   | 26 |   |   | - |   |
| Wholesale                                                             |   |   | 9,250                                      |   |   | 4,476                       |   |   | 4,180   |   |   | - |   |   | - |   |
| CSBU                International                                     |   |   | 5,325                                      |   |   | 3,404                       |   |   | 1,655   |   |   | - |   |   | - |   |
| Other                CSBU                                             |   |   | 2,454                                      |   |   | 512                         |   |   | (15,654 | )      |   | 657 |   |   | 57 |   |
| Total                CSBU                                             |   |   | 94,242                                     |   |   | 54,674                      |   |   | 15,038  |   |   | 1,456 |   |   | 57 |   |
|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| **Organizational                Solutions Business Unit:**            |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |
| Domestic                                                              |   |   | 31,677                                     |   |   | 20,931                      |   |   | 1,908   |   |   | 173 |   |   | 1,943 |   |
| International                                                         |   |   | 24,765                                     |   |   | 16,975                      |   |   | 6,250   |   |   | 651 |   |   | 3 |   |
| Total                OSBU                                             |   |   | 56,442                                     |   |   | 37,906                      |   |   | 8,158   |   |   | 824 |   |   | 1,946 |   |
| Total                operating segments                               |   |   | 150,684                                    |   |   | 92,580                      |   |   | 23,196  |   |   | 2,280 |   |   | 2,003 |   |
| Corporate                and eliminations                             |   |   | -                                          |   |   | -                           |   |   | (3,871  | )      |   | 349 |   |   | - |   |
| Consolidated                                                          |   | $      | 150,684                                    |   | $      | 92,580                      |   | $      | 19,325  |   | $      | 2,629 |   | $ | 2,003 |   |
|                                                                  |   |   |                                       |   |   |                        |   |   |    |   |   |   |   |   |   |   |

|                                                    |   | Quarter                Ended |   | Two                Quarters Ended |   |
|---------------------------------------------------------|--------|------------------------------|--------|-----------------------------------|--------|
|                                                    |   | March                3,2007  |   | February                25,2006   |   | March                3,2007 |   | February                25,2006 |   |
| Reportable                segment EBITDA                |   | $                            | 13,049 |                              | $      | 14,630 |   | $ | 21,474 |   | $ | 23,196 |   |
| Corporate                expenses                       |   |                         | (2,526 | )                                 |   | (1,945 | ) |   | (5,402 | ) |   | (3,871 | ) |
| Consolidated                EBITDA                      |   |                         | 10,523 |                              |   | 12,685 |   |   | 16,072 |   |   | 19,325 |   |
| Gain                on sale of manufacturing facility   |   |                         | 1,227  |                              |   | - |   |   | 1,227 |   |   | - |   |
| Depreciation                                            |   |                         | (1,366 | )                                 |   | (1,221 | ) |   | (2,403 | ) |   | (2,629 | ) |
| Amortization                                            |   |                         | (900   | )                                 |   | (908 | ) |   | (1,802 | ) |   | (2,003 | ) |
| Income                from operations                   |   |                         | 9,484  |                              |   | 10,556 |   |   | 13,094 |   |   | 14,693 |   |
| Interest                income                          |   |                         | 357    |                              |   | 316 |   |   | 557 |   |   | 645 |   |
| Interest                expense                         |   |                         | (675   | )                                 |   | (660 | ) |   | (1,336 | ) |   | (1,303 | ) |
| Legal                settlement                         |   |                         | -      |                              |   | 873 |   |   | - |   |   | 873 |   |
| Income                before provision for income taxes |   | $                            | 9,166  |                              | $      | 11,085 |   | $ | 12,315 |   | $ | 14,908 |   |

| **NOTE              10 -** | **SUBSEQUENT                EVENTS**  |
|----------------------------|--------------------------------------------|

***Line      of Credit Agreement***

***Redemption      of Series A Preferred Stock***

**RESULTS      OF OPERATIONS**

**Overview**

|  ·                   | ***Sales*****-**Consolidated                training and consulting services sales increased $4.1                million primarily due to increased sales of our new leadership program                based upon the principles found in *The                7 Habits of Highly Effective People,*                improved sales effectiveness training sales, increased strategy execution                sales, and increased international sales. Product sales declined                $5.6                million primarily due to reduced retail sales resulting from 10 fewer                retail stores being open during the quarter compared to the prior                year,                reduced sales through our consumer direct channels, and the effects                of our                modified 52/53 week fiscal calendar as discussed above.                                                                                                                                                                                                                                                                                                                                                  |
|------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|  ·                        | ***Gross                Profit***                -                Our consolidated gross profit totaled $47.2                million for the quarter ended March 3, 2007 compared to $48.2                million in the prior year. Our consolidated gross margin, which is                gross                profit in terms of a percentage of sales, remained consistent at                61.4                percent of sales in the second quarter of fiscal 2007 compared to                61.5                percent of sales in fiscal 2006. Although product sales declined                compared                to the prior year, our training and consulting service sales, which                typically have higher gross margins than the majority of our product                sales, increased as a percent of total sales when compared to fiscal                2006.                The shift toward increased training and consulting service sales                had a                favorable impact on our gross profit and gross margin during the                quarter                ended March 3, 2007.                                                                           |
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|  ·                   | ***Operating                Costs***                -                Our                operating costs increased by $1.3                million compared to the prior year, which was the result of increased                selling, general, and administrative expenses totaling $1.2                million and a $0.1                million increase in depreciation expense. Amortization expense from                our                definite-lived intangible assets remained consistent with the prior                year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|  ·                   | ***Gain                on the Sale of Manufacturing Facility -***During                the quarter ended March 3, 2007, we completed the sale of our printing                manufacturing facility and recognized a $1.2                million gain from the sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|  ·                   | ***Income                Tax Provision***                -                Our income tax provision for the quarter ended March 3, 2007 increased                to                $4.5                million compared to $1.9                million in the corresponding quarter of fiscal 2006. During the fourth                quarter of fiscal 2006, we determined that it was appropriate to                reverse                substantially all of the valuation allowances on our deferred income                tax                assets. Prior to the reversal of these valuation allowances, our                income                tax provisions were affected by reductions in our deferred income                tax                valuation allowance as we utilized net operating loss carryforwards.                Our                effective tax rate for the two quarters ended March 3, 2007 of                approximately 50 percent was higher than statutory combined rates                primarily due to the accrual of taxable interest income on the management                stock loan program and withholding taxes on royalty income from foreign                licensees. |
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|  ·                   | ***Redemption                of Preferred Stock***-                Subsequent to March 3, 2007, we redeemed all remaining shares of                Series A                Preferred Stock, which totaled $37.3                million. Although we obtained a line of credit to finance a portion                of the                preferred stock redemption and will incur interest charges on amounts                borrowed, the redemption of the remaining preferred stock will reduce                our                required cash outflows for dividends by $3.7                million per year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

**Sales**

|                                                     |   | Quarter                Ended |   | Two                Quarters Ended |   |
|----------------------------------------------------------|--------|------------------------------|--------|-----------------------------------|--------|
|                                                     |   | March                3, 2007 |   | February                25, 2006  |   | Percent                Change |   | March                3, 2007 |   | February                25, 2006 |   | Percent                Change |   |
| *Sales                by Category:*                      |   |                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Products                                                 |   | $                            | 45,283 |                              | $      | 50,841 |   |   | (11) |   | $ | 87,391 |   | $ | 94,244 |   |   | (7) |   |
| Training                and consulting services          |   |                         | 31,593 |                              |   | 27,492 |   |   | 15 |   |   | 65,014 |   |   | 56,440 |   |   | 15 |   |
|                                                     |   | $                            | 76,876 |                              | $      | 78,333 |   |   | (2) |   | $ | 152,405 |   | $ | 150,684 |   |   | 1 |   |
|                                                     |   |                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Consumer                Solutions Business Unit:*       |   |                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retail                Stores                             |   | $                            | 19,265 |                              | $      | 23,781 |   |   | (19) |   | $ | 33,392 |   | $ | 38,424 |   |   | (13) |   |
| Consumer                Direct                           |   |                         | 17,062 |                              |   | 19,613 |   |   | (13) |   |   | 36,998 |   |   | 38,789 |   |   | (5) |   |
| Wholesale                                                |   |                         | 3,581  |                              |   | 3,138 |   |   | 14 |   |   | 8,158 |   |   | 9,250 |   |   | (12) |   |
| CSBU                International                        |   |                         | 2,643  |                              |   | 2,681 |   |   | (1) |   |   | 5,029 |   |   | 5,325 |   |   | (6) |   |
| Other                CSBU                                |   |                         | 1,583  |                              |   | 1,291 |   |   | 23 |   |   | 2,877 |   |   | 2,454 |   |   | 17 |   |
|                                                     |   |                         | 44,134 |                              |   | 50,504 |   |   | (13) |   |   | 86,454 |   |   | 94,242 |   |   | (8) |   |
| *Organizational                Solutions Business Unit:* |   |                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                 |   |                         | 19,313 |                              |   | 15,347 |   |   | 26 |   |   | 37,034 |   |   | 31,677 |   |   | 17 |   |
| International                                            |   |                         | 13,429 |                              |   | 12,482 |   |   | 8 |   |   | 28,917 |   |   | 24,765 |   |   | 17 |   |
|                                                     |   |                         | 32,742 |                              |   | 27,829 |   |   | 18 |   |   | 65,951 |   |   | 56,442 |   |   | 17 |   |
| Total                Sales                               |   | $                            | 76,876 |                              | $      | 78,333 |   |   | (2) |   | $ | 152,405 |   | $ | 150,684 |   |   | 1 |   |

***Product      Sales***
**      - **

|  ·                         | **Retail                Stores**                -                The decline in retail sales was primarily due to fewer stores, which                had a                $2.4                million impact on sales, reduced demand for technology and related                products, which declined $1.0                million, and decreased traffic in our retail locations. Reduced traffic                in                our stores contributed to decreased sales of “core” products (e.g.                planners, binders, forms, and totes) during the quarter. These factors                combined to produce a 10                percent decrease in comparable store (stores which were open during                the                comparable periods) sales compared to the prior year. When calculated                on                prior year comparable weeks, our comparable store sales declined                6                percent from fiscal 2006. At March 3, 2007, we were operating 87                retail stores compared to 97                stores at February 25, 2006. We closed two store locations during                the                quarter ended March 3, 2007, and based upon our continuing analyses                of                retail store performance, we may close additional retail store locations                and continue to recognize decreases in sales resulting from closed                stores                in future periods. |
|------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|  ·                         | **Consumer                Direct**                -                Sales through our consumer direct channels (primarily catalog, eCommerce,                and public seminars) decreased $2.6                million, or 13                percent, primarily due to decreased traffic through our internet                and                catalog channels and decreased public seminar sales. Although traffic                through our eCommerce and catalog sites was unfavorably affected                by the                timing of certain shopping days during the quarter, overall traffic                in                these channels declined compared to the prior year. Public program                sales                decreased $0.5                million primarily due to a reduced number of seminars held during                the                quarter. In addition, sales through government depots decreased due                to a                decision by the government to discontinue sales of dated paper products                through these stores.                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|  ·                    | **Wholesale**-                Sales through our wholesale channel, which includes sales to office                superstores and other retail chains, increased $0.4                million primarily due to the timing of product sales to these                entities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|  ·                         | **CSBU                International**-                This channel includes the product sales of our directly owned                international offices in Canada, the United Kingdom, Mexico, and                Australia. Sales performance for the quarter through these channels                remained relatively                consistent                with the prior year. We separated the product sales operations from                the                Organizational Solutions Business Unit in these international locations                during the quarter ended December 2, 2006 to utilize existing product                sales and marketing expertise in an effort to improve overall product                sales performance at these offices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|  ·                         | **Other                CSBU**                -                Other CSBU sales consist primarily of domestic printing and publishing                sales and building sublease revenues. The increase in other CSBU                sales was                primarily due to increased external printing sales compared to the                prior                year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

***Training      and Consulting Services***
**      - **

|  ·                   | **Domestic*-***Our domestic training sales increased by $4.0 million,              or              26 percent, primarily due to increased sales of our new leadership              program              based upon principles found in *The Seven Habits of Highly Effective              People*,* *increased training effectiveness sales, and              increased strategy execution sales. Sales performance improved in nearly              all of our domestic regions as our booked days delivered increased              19              percent and our customer facilitated training sales increased 18 percent              over the prior year. Our current outlook for the remainder of fiscal              2007              continues to be strong and current training days booked have increased              compared to the prior year. We believe that the introduction of new              programs and refreshed existing programs will continue to have a favorable              impact on training and consulting service sales in future              periods. |
|------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ·                         | **International*****-***                International sales increased $0.9                million, or 8                percent, compared to the prior year. Sales increased over the prior                year                at our directly owned foreign offices located in Brazil, Japan, Canada,                and Australia, as well as from licensee royalty revenues. Sales increases                in these offices were partially offset by decreased sales at our                offices                located in Mexico and the United Kingdom. The translation of foreign                sales                to United States dollars resulted in a $0.1                million favorable impact to our consolidated sales as certain foreign                currencies strengthened against the United States dollar during the                quarter ended March 3, 2007.                                                                                                                                                                                                   |

**Gross      Profit**

**Operating      Expenses**

***Selling,      General and Administrative***
**      - **

***Gain      on Sale of Manufacturing Facility***

***Depreciation****-***

**Legal      Settlement**

**Sales**

***Product      Sales***
**      - **

|  ·                   | **Retail                Stores** - The decline in retail sales was primarily due to fewer                stores, which had a $4.0 million impact on sales, reduced demand                for                technology and related products, which declined $1.3 million, and                decreased traffic in our retail locations. Partially offsetting these                factors was increased sales of “core” products during the first two                quarters of fiscal 2007. These factors combined to produce a 3 percent                decrease in comparable store (stores which were open during the comparable                periods) sales, including the four additional business days in fiscal                2007, when compared to fiscal 2006. |
|------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|  ·                   | **Consumer                Direct** - Sales through our consumer direct channels decreased                $1.8 million, or 5 percent, primarily due to decreased traffic through                our                internet and catalog channels in the fiscal quarter ended March 3,                2007.                Public seminar sales were flat compared to the prior year. In addition,                sales through government depots decreased due to a decision by the                government to discontinue sales of dated paper products through these                stores.                                                                                                                                                                                            |
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|  ·                   | **Wholesale**- Sales through our wholesale channel, which includes sales                to                office superstores and other retail chains, decreased $1.1 million                primarily due to reduced demand for our products from one of our                wholesale                customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|  ·                   | **CSBU                International**- This channel includes the product sales of our                directly owned international offices in Canada, the United Kingdom,                Mexico, and Australia. Sales performance through these channels decreased                $0.3 million compared with the prior year due to reduced demand for                products in these countries.                                                                                                                                                                                                                                                                                                                                                                                          |
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|  ·                   | **Other                CSBU** - The increase in other CSBU sales was primarily due to                increased external printing sales compared to the prior                year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

***Training      and Consulting Services***
**      - **

|  ·                   | **Domestic*****-***Our                domestic training sales increased by $5.4                million, or 17                percent, primarily due to increased sales of our new leadership program                based upon principles found in *The                Seven Habits of Highly Effective People*,* *increased                training effectiveness sales, and increased strategy execution sales.                Our                current outlook for the remainder of fiscal 2007 continues to be                strong                and current training days booked has increased compared to the prior                year.                                                            |
|------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|  ·                   | **International*****-***                International sales increased $4.2                million, or 17                percent, compared to the prior year. Sales increased over the prior                year                at all of our directly owned foreign offices except Mexico, as well                as                from licensee royalty revenues. The translation of foreign sales                to United                States dollars produced a $0.2                million favorable impact to our consolidated sales as certain foreign                currencies strengthened against the United States dollar during the                two                quarters ended March 3, 2007. |

**Gross      Profit**

**Operating      Expenses**

***Selling,      General and Administrative***
**      - **

***Gain      on Sale of Manufacturing Facility***
**      - **

***Depreciation      and Amortization***
**      - **

**Legal      Settlement**

**Income      Taxes**

**Preferred      Stock Dividends**

**LIQUIDITY      AND CAPITAL RESOURCES**

**Cash      Flows From Operating Activities**

**Cash      Flows From Investing Activities and Capital Expenditures**

*The      7      Habits of Highly Effective People*

**Cash      Flows From Financing Activities**

**Contractual      Obligations**

|                                                                         |   | Fiscal |   | Fiscal |   | Fiscal |   | Fiscal |   | Fiscal |   |       |   |   |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|
| Contractual                Obligations                                       |   | 2007   |   | 2008   |   | 2009   |   | 2010   |   | 2011   |   | Thereafter |   | Total  |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |
| Minimum                required payments to EDS for outsourcing services     |   | $      | 17,217 |   | $      | 15,901 |   | $      | 15,927 |   | $      | 15,577     |   | $      | 15,298 |   | $ | 73,233 |   | $ | 153,153 |   |
| Required                payments on corporate campus financing obligation    |   |   | 3,045  |   |   | 3,045  |   |   | 3,045  |   |   | 3,055      |   |   | 3,115  |   |   | 49,957 |   |   | 65,262 |   |
| Minimum                operating lease payments                              |   |   | 8,475  |   |   | 7,228  |   |   | 5,564  |   |   | 4,012      |   |   | 2,402  |   |   | 6,013 |   |   | 33,694 |   |
| Line                of credit payments(5)                                    |   |   | 391    |   |   | 937    |   |   | 937    |   |   | 15,112     |   |   | -      |   |   | - |   |   | 17,377 |   |
| Preferred                stock dividend payments(1)                          |   |   | 2,215  |   |   | -      |   |   | -      |   |   | -          |   |   | -      |   |   | - |   |   | 2,215 |   |
| Other                debt payments(2)                                        |   |   | 176    |   |   | 168    |   |   | 160    |   |   | 153        |   |   | 145    |   |   | 435 |   |   | 1,237 |   |
| Contractual                computer hardware purchases(3)                    |   |   | 535    |   |   | 483    |   |   | 556    |   |   | 587        |   |   | 525    |   |   | 3,192 |   |   | 5,878 |   |
| Payments                for new printing services equipment(4)               |   |   | 3,137  |   |   | -      |   |   | -      |   |   | -          |   |   | -      |   |   | - |   |   | 3,137 |   |
| Purchase                obligations                                          |   |   | 10,523 |   |   | -      |   |   | -      |   |   | -          |   |   | -      |   |   | - |   |   | 10,523 |   |
| Monitoring                fees paid to a preferred stock investor(1)         |   |   | 97     |   |   | -      |   |   | -      |   |   | -          |   |   | -      |   |   | - |   |   | 97 |   |
| Total                expected contractual obligation                payments |   | $      | 45,811 |   | $      | 27,762 |   | $      | 26,189 |   | $      | 38,496     |   | $      | 21,485 |   | $ | 132,830 |   | $ | 292,573 |   |

----

| (1)       | Amount                reflects the redemption of all remaining Series A Preferred Stock                subsequent to March 3, 2007.                                                                                                                                                                                                                                                                                                     |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (2)  | The                Company’s variable rate debt payments include interest payments at                7.0                percent,                which was the applicable interest rate at September 29,                2006.                                                                                                                                                                                                      |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (3)  | We                are contractually obligated by our EDS outsourcing agreement to purchase                the necessary computer hardware to keep such equipment up to current                specifications. Amounts shown are estimated capital purchases of                computer                hardware under terms of the EDS outsourcing agreement and its                amendments.                                          |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (4)  | In                August 2006, we signed contracts to purchase new printing equipment                for                $3.1                million in cash as part of a plan to reconfigure our printing services                operation. The payments are due at specified times during fiscal                2007 that                coincide with the installation and successful operation of the new                equipment. |
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (5)  | Interest                expense on the line of credit payments was calculated at 6.4                percent,                which was the approximate interest rate on the date of the preferred                stock                redemption, and assumes that only interest payments will be made                until the                line of credit agreement expires in March                2010.                            |

**Other      Items**

***Management      Common Stock Loan Program***
**      - **

***Availability      of Future Capital Resources***
**      - **

**USE      OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES**

**Revenue      Recognition**

|  ·  | **Products**                -                We sell planners, binders, planner accessories, totes, handheld electronic                devices, and other related products that are primarily sold through                our                CSBU channels.                                                                                                                                                                                                            |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|  ·  | **Training                and Consulting Services**                -                We provide training and consulting services to both organizations                and                individuals in strategic execution, leadership, productivity, goal                alignment, sales force performance, and communication effectiveness                skills. These training programs and services are primarily sold through                our OSBU channels. |

*Accounting      for Revenue Arrangements with Multiple Deliverables*

*Software      Revenue Recognition *

**Share-Based      Compensation**

| Sales                Growth |  Percent                of Target Shares Awarded |
|-----------------------------|-------------------------------------------------------|
| 30.0%                       | 115%                                                  | 135% | 150% | 175% | 200% |
| 22.5%                       | 90%                                                   | 110% | 125% | 150% | 175% |
| 15.0%                       | 65%                                                   | 85% | 100% | 125% | 150% |
| 11.8                %       | 50%                                                   | 70% | 85% | 110% | 135% |
| 7.5%                        | 30%                                                   | 50% | 65% | 90% | 115% |
|                        | $36.20                                                | $56.80 | $72.30 | $108.50 | $144.60 |
|                        | Cumulative                Operating Income (millions) |

| Sales                Growth |  Percent                of Target Shares Awarded |
|-----------------------------|-------------------------------------------------------|
| 40.0%                       | 115%                                                  | 135% | 150% | 175% | 200% |
| 30.0%                       | 90%                                                   | 110% | 125% | 150% | 175% |
| 20.0%                       | 65%                                                   | 85% | 100% | 125% | 150% |
| 15.7%                       | 50%                                                   | 70% | 85% | 110% | 135% |
| 10.0%                       | 30%                                                   | 50% | 65% | 90% | 115% |
|                        | $41.30                                                | $64.90 | $82.60 | $123.90 | $165.20 |
|                        | Cumulative                Operating Income (millions) |

**Accounts      Receivable Valuation**

**Inventory      Valuation**

**Indefinite-Lived      Intangible Assets**

**Impairment      of Long-Lived Assets**

**Income      Taxes**

**NEW      ACCOUNTING PRONOUNCEMENTS**

***Sales      Tax Presentation***
*How      Taxes Collected from Customers and Remitted to Governmental Authorities Should      Be Presented in the Income Statement (That Is, Gross versus Net      Presentation)*

***Uncertain      Tax Positions***
*Accounting      for Uncertainty in Income Taxes - an Interpretation of FASB Statement No.      109*

***Evaluation      of Misstatements***
*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements*

***Fair      Value Measures***
*Fair      Value Measures*

**SAFE      HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF      1995**

**Market      Risk of Financial Instruments**

**Foreign      Currency Sensitivity**

|                                                         |   | Quarter                Ended |   | Two                Quarters Ended |   |
|--------------------------------------------------------------|--------|------------------------------|--------|-----------------------------------|--------|
|                                                         |   | March                3,2007  |   | February                25,2006   |   | March                3,2007 |   | February                25,2006 |   |
| Losses                on foreign exchange contracts          |   | $                            | (64    | )                                 | $      | (22 | ) | $ | (73 | ) | $ | (68 | ) |
| Gains                on foreign exchange contracts           |   |                         | 15     |                              |   | 5 |   |   | 33 |   |   | 222 |   |
| Net                gain (loss) on foreign exchange contracts |   | $                            | (49    | )                                 | $      | (17 | ) | $ | (40 | ) | $ | 154 |   |

|    Contract                Description |   | Notional                Amount in Foreign Currency |   |  Notional                Amount in U.S. Dollars |   |
|-------------------------------------------------------|--------|----------------------------------------------------|--------|------------------------------------------------------|--------|
|                                                  |   |                                               |   |                                                 |   |
| Mexican                Pesos                          |   |                                               | 13,576 |                                                 | $      | 1,199 |   |
| Australian                Dollars                     |   |                                               | 1,000  |                                                 |   | 788 |   |
| Japanese                Yen                           |   |                                               | 88,404 |                                                 |   | 770 |   |

**Interest      Rate Sensitivity**

**Evaluation      of Disclosure Controls and Procedures**

**Changes      in Internal Control Over Financial Reporting**

|  ·  | In                general, the Company has established and communicated to vendors,                service                providers, and associates, new policies instructing that all vendor                invoices be sent directly to the Company’s accounts payable                department.     |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                                                                                                                                                                                                          |
|  ·  | Upon                receipt of a vendor invoice, the accounts payable department records                the                vendor invoice into the accounts payable sub-ledger before the invoice                is                sent to the appropriate department for review and                approval. |
|               |                                                                                                                                                                                                                                                                                                          |
|  ·  | At                each period end, all unapproved invoices in the accounts payable                sub-ledger are reviewed and investigated to determine whether an                accrual                is necessary for services provided during the                period.                                 |

|        Period   |   |      Total                Number of Shares Purchased |      |       Average                Price Paid Per Share |   |  Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs |   | Approximate                Dollar Value of Shares That May Yet Be Purchased Under the Plans                or                Programs (in                thousands) |    |
|----------------------------------------------------|--------|-------------------------------------------------------------------------------|-----------|---------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
| Common                Shares:                      |   |                                                                          |      |                                                                            |   |                                                                                                                 |   |                                                                                                                                                                |    |
| December                3, 2006 to January 6, 2007 |   |                                                                          | -         |                                                                            | $      | -                                                                                                                    |   |                                                                                                                                                                | none    |   | $ | 4,887 |   |
|                                               |   |                                                                          |      |                                                                            |   |                                                                                                                 |   |                                                                                                                                                                |    |   |   |   |   |
| January                7, 2007 to February 3, 2007 |   |                                                                          | 6,814(2   | )                                                                               |   | 7.14                                                                                                                 |   |                                                                                                                                                                | none    |   |   | 4,887 |   |
|                                               |   |                                                                          |      |                                                                            |   |                                                                                                                 |   |                                                                                                                                                                |    |   |   |   |   |
| February                4, 2007 to March 3, 2007   |   |                                                                          | 328,000(1 | )                                                                               |   | 7.54                                                                                                                 |   |                                                                                                                                                                | 328,000 |   |   | 2,413(1 | ) |
|                                               |   |                                                                          |      |                                                                            |   |                                                                                                                 |   |                                                                                                                                                                |    |   |   |   |   |
| Total                Common Shares                 |   |                                                                          | 334,814   |                                                                            | $      | 7.53                                                                                                                 |   |                                                                                                                                                                | 328,000 |   |   |   |   |
|                                               |   |                                                                          |      |                                                                            |   |                                                                                                                 |   |                                                                                                                                                                |    |   |   |   |   |
| Total                Preferred Shares              |   |                                                                          | none      |                                                                            |   | none                                                                                                                 |   |                                                                                                                                                                |    |   |   |   |  |

----

|  (1)  | In                January 2006, our Board of Directors approved the purchase of up                to                $10.0                million of our outstanding common stock. All previous authorized                common                stock purchase plans were canceled. Following the approval of this                common                stock purchase plan, we have purchased a total of 1,009,300                shares of our common stock for $7.6                million through March 3, 2007. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|  (2)  | Amount                represents shares withheld for statutory taxes from a distribution                of                common shares in connection with the vesting of an unvested stock                award.                                                                                                                                                                                                                                                                                                   |

|   | **1.** | **Election                of Directors -**Three                directors were elected for three-year terms that expire at the Annual                Meeting of Shareholders to be held following the end of fiscal 2009,                or                until their successors are elected and qualified. The number of votes                for                each nominee for director was as                follows: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                             |   | Votes                For |   | Votes                Withheld |
|----------------------------------|--------|--------------------------|--------|-------------------------------|
| Joel                C. Peterson  |   | 18,038,977               |   | 1,063,242                     |
| E.                Kay Stepp      |   | 18,005,232               |   | 1,096,987                     |
| Robert                A. Whitman |   | 17,999,458               |   | 1,102,761                     |

|   | **2.** | **Appointment                of Independent Auditors -**The                shareholders ratified the appointment of KPMG LLP as the Company’s                independent auditors for the fiscal year ending August 31, 2007.                A total                of 18,370,014 shares voted in favor of this appointment, 730,587                shares                voted against, and 1,619 shares abstained from                voting. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (A)   | Exhibits:                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------|---------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.1                        | Revolving                Line of Credit Agreement ($18,000,000) by and between JPMorgan Chase                Bank,                N.A. and Franklin Covey Co. dated March 14, 2007 (attached as exhibit                10.1                to Current Report on Form 8-K as filed with the Securities and Exchange                Commission on March 19, 2007 and incorporated herein by                reference).                                                                                                                                                                                                                                                                                                                              |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.2                        | Secured                Promissory Note between JPMorgan Chase Bank, N.A. and Franklin Covey                Co.                dated March 14, 2007 (attached as exhibit 10.2 to Current Report                on Form                8-K as filed with the Securities and Exchange Commission on March                19, 2007                and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                              |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.3                        | Security                Agreement between Franklin Covey Co., Franklin Covey Printing, Inc.,                Franklin Development Corporation, Franklin Covey Travel, Inc., Franklin                Covey Catalog Sales, Inc., Franklin Covey Client Sales, Inc., Franklin                Covey Product Sales, Inc., Franklin Covey Services LLC, Franklin                Covey                Marketing, LTD., and JPMorgan Chase Bank, N.A. and Zions First National                Bank, dated March 14, 2007 (attached as exhibit 10.3 to Current Report                on                Form 8-K as filed with the Securities and Exchange Commission on                March 19,                2007 and incorporated herein by reference). |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.4                        | Repayment                Guaranty between Franklin Covey Co., Franklin Covey Printing, Inc.,                Franklin Development Corporation, Franklin Covey Travel, Inc., Franklin                Covey Catalog Sales, Inc., Franklin Covey Client Sales, Inc., Franklin                Covey Product Sales, Inc., Franklin Covey Services LLC, Franklin                Covey                Marketing, LTD., and JPMorgan Chase Bank N.A., dated March 14, 2007                (attached as exhibit 10.4 to Current Report on Form 8-K as filed                with the                Securities and Exchange Commission on March 19, 2007 and incorporated                herein by reference).                                               |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.5                        | Pledge                and Security Agreement between Franklin Covey Co. and JPMorgan Chase                Bank,                N.A. and Zions First National Bank, dated March 14, 2007 (attached                as                exhibit 10.5 to Current Report on Form 8-K as filed with the Securities                and Exchange Commission on March 19, 2007 and incorporated herein                by                reference).                                                                                                                                                                                                                                                                                                          |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.6                        | Revolving                Line of Credit Agreement ($7,000,000) by and between Zions First                National                Bank and Franklin Covey Co. dated March 14, 2007 (attached as exhibit                10.6                to Current Report on Form 8-K as filed with the Securities and Exchange                Commission on March 19, 2007 and incorporated herein by                reference).                                                                                                                                                                                                                                                                                                                               |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.7                        | Secured                Promissory Note between Zions First National Bank and Franklin Covey                Co.                dated March 14, 2007 (attached as exhibit 10.7 to Current Report                on Form                8-K as filed with the Securities and Exchange Commission on March                19, 2007                and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                              |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.8                        | Repayment                Guaranty between Franklin Covey Co., Franklin Covey Printing, Inc.,                Franklin Development Corporation, Franklin Covey Travel, Inc., Franklin                Covey Catalog Sales, Inc., Franklin Covey Client Sales, Inc., Franklin                Covey Product Sales, Inc., Franklin Covey Services LLC, Franklin                Covey                Marketing, LTD., and Zions First National Bank, dated March 14, 2007                (attached as exhibit 10.8 to Current Report on Form 8-K as filed                with the                Securities and Exchange Commission on March 19, 2007 and incorporated                herein by reference).                                              |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  10.9                        | Credit                Agreement between Franklin Covey Canada, Ltd. and Toronto-Dominion                Bank                dated February 19, 2007 (attached as exhibit 10.9 to Current Report                on                Form 8-K as filed with the Securities and Exchange Commission on                March 19,                2007 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                             |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  31.1                        | Rule                13a-14(a) Certifications of the Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  |  31.2                        | Rule                13a-14(a) Certifications of the Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                  |                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                  | 32                      | Section                1350 Certifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|   |                          |                                  |   |                                   |
|--------|-------------------------------|---------------------------------------|--------|----------------------------------------|
|   |                          |  FRANKLIN              COVEY CO. |
|   |                          |                                  |   |                                   |
|   |                          |                                  |   |                                   |
| Date:  | April                12, 2007 |                                  | By:    | /s/                ROBERT A. WHITMAN   |
|   |                          |                                  |   | Robert                A. Whitman       |
|   |                          |                                  |   | Chief                Executive Officer |
|   |                          |                                  |   |                                   |
|   |                          |                                  |   |                                   |
| Date:  | April                12, 2007 |                                  | By:    | /s/                STEPHEN D. YOUNG    |
|   |                          |                                  |   | Stephen                D. Young        |
|   |                          |                                  |   | Chief                Financial Officer |
|   |                          |                                  |   |                                   |