----

**FORM      10-Q**

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

|   | [   ] | 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 |
|----------------------------------------|---|--------|----------------------------------|---|--------|--------------------------------------|---|

----

|                                                                                                                                                                                                                                               |   | June                2,2007 |     |   | August                31,2006 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|----------|--------|-------------------------------|--------|
|                                                                                                                                                                                                                                               |   | (unaudited)                |     |
| ASSETS                                                                                                                                                                                                                                             |   |                       |     |   |                          |   |
| Current                assets:                                                                                                                                                                                                                     |   |                       |     |   |                          |   |
| Cash                and cash equivalents                                                                                                                                                                                                           |   | $                          | 5,170    |   |                          | $      | 30,587 |   |
| Accounts                receivable, less                allowance for doubtful accounts of $602 and $979                                                                                                                                           |   |                       | 28,026   |   |                          |   | 24,254 |   |
| Inventories                                                                                                                                                                                                                                        |   |                       | 24,245   |   |                          |   | 21,790 |   |
| Deferred                income taxes                                                                                                                                                                                                               |   |                       | 3,863    |   |                          |   | 4,130 |   |
| Other                current assets                                                                                                                                                                                                                |   |                       | 6,503    |   |                          |   | 6,359 |   |
| Assets                held for sale                                                                                                                                                                                                                |   |                       | 1,794    |   |                          |   | - |   |
| Total                current assets                                                                                                                                                                                                                |   |                       | 69,601   |   |                          |   | 87,120 |   |
|                                                                                                                                                                                                                                               |   |                       |     |   |                          |   |   |   |
| Property                and equipment, net                                                                                                                                                                                                         |   |                       | 35,563   |   |                          |   | 33,318 |   |
| Intangible                assets, net                                                                                                                                                                                                              |   |                       | 76,821   |   |                          |   | 79,532 |   |
| Deferred                income taxes                                                                                                                                                                                                               |   |                       | 84       |   |                          |   | 4,340 |   |
| Other                assets                                                                                                                                                                                                                        |   |                       | 14,129   |   |                          |   | 12,249 |   |
|                                                                                                                                                                                                                                               |   | $                          | 196,198  |   |                          | $      | 216,559 |   |
|                                                                                                                                                                                                                                               |   |                       |     |   |                          |   |   |   |
| LIABILITIES                AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                          |   |                       |     |   |                          |   |   |   |
| Current                liabilities:                                                                                                                                                                                                                |   |                       |     |   |                          |   |   |   |
| Current                portion of long-term debt and financing obligation                                                                                                                                                                          |   | $                          | 619      |   |                          | $      | 585 |   |
| Accounts                payable                                                                                                                                                                                                                    |   |                       | 12,301   |   |                          |   | 13,769 |   |
| Income                taxes payable                                                                                                                                                                                                                |   |                       | 2,318    |   |                          |   | 1,924 |   |
| Accrued                liabilities                                                                                                                                                                                                                 |   |                       | 28,483   |   |                          |   | 32,170 |   |
| Line                of credit                                                                                                                                                                                                                      |   |                       | 17,844   |   |                          |   | - |   |
| Liabilities                held for sale                                                                                                                                                                                                           |   |                       | 828      |   |                          |   | - |   |
| Total                current liabilities                                                                                                                                                                                                           |   |                       | 62,393   |   |                          |   | 48,448 |   |
|                                                                                                                                                                                                                                               |   |                       |     |   |                          |   |   |   |
| Long-term                debt and financing obligation, less current portion                                                                                                                                                                       |   |                       | 33,235   |   |                          |   | 33,559 |   |
| Other                liabilities                                                                                                                                                                                                                   |   |                       | 1,213    |   |                          |   | 1,203 |   |
| Total                liabilities                                                                                                                                                                                                                   |   |                       | 96,841   |   |                          |   | 83,210 |   |
|                                                                                                                                                                                                                                               |   |                       |     |   |                          |   |   |   |
| Shareholders’                equity:                                                                                                                                                                                                         |   |                       |     |   |                          |   |   |   |
| Preferred                stock – Series A, no                par value; 4,000 shares authorized, zero and 1,494 shares issued                and                outstanding; liquidation preference totaling zero and                $38,278 |   |                       | -        |   |                          |   | 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                                                                                                                                                                                           |   |                       | 186,091  |   |                          |   | 185,691 |   |
| Common                stock                warrants                                                                                                                                                                                                |   |                       | 7,602    |   |                          |   | 7,611 |   |
| Retained                earnings                                                                                                                                                                                                                   |   |                       | 18,876   |   |                          |   | 14,075 |   |
| Accumulated                other comprehensive                income                                                                                                                                                                               |   |                       | 1,319    |   |                          |   | 653 |   |
| Treasury                stock at cost, 7,344 and                7,083 shares                                                                                                                                                                       |   |                       | (115,204 | )      |                          |   | (113,379 | ) |
| Other                comprehensive loss held for                sale                                                                                                                                                                               |   |                       | (680     | )      |                          |   | - |   |
| Total                shareholders’                equity                                                                                                                                                                                     |   |                       | 99,357   |   |                          |   | 133,349 |   |
|                                                                                                                                                                                                                                               |   | $                          | 196,198  |   |                          | $      | 216,559 |   |
|                                                                                                                                                                                                                                               |   |                       |     |   |                          |   |   |   |

|                                                                                               |   | Quarter                Ended |   |   | Three                Quarters Ended |   |
|----------------------------------------------------------------------------------------------------|--------|------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                               |   |                         |   |   |                                |   |   |   |   |   |   |   |
|                                                                                               |   | June                2,2007   |   |   | May                27,2006          |   |   | June                2,2007 |   |   | May                27,2006 |   |
|                                                                                               |   | (unaudited)                  |   |   | (unaudited)                         |   |
| Net                sales:                                                                          |   |                         |   |   |                                |   |   |   |   |   |   |   |
| Products                                                                                           |   | $                            | 30,857 |   |                                | $      | 32,184 |   |   | $ | 118,248 |   |   | $ | 126,428 |   |
| Training                and consulting services                                                    |   |                         | 33,652 |   |                                |   | 31,098 |   |   |   | 98,666 |   |   |   | 87,538 |   |
|                                                                                               |   |                         | 64,509 |   |                                |   | 63,282 |   |   |   | 216,914 |   |   |   | 213,966 |   |
| Cost                of sales:                                                                      |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Products                                                                                           |   |                         | 14,619 |   |                                |   | 15,584 |   |   |   | 52,528 |   |   |   | 56,536 |   |
| Training                and consulting services                                                    |   |                         | 10,254 |   |                                |   | 11,406 |   |   |   | 31,163 |   |   |   | 28,558 |   |
|                                                                                               |   |                         | 24,873 |   |                                |   | 26,990 |   |   |   | 83,691 |   |   |   | 85,094 |   |
| Gross                profit                                                                        |   |                         | 39,636 |   |                                |   | 36,292 |   |   |   | 133,223 |   |   |   | 128,872 |   |
|                                                                                               |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                general, and administrative                                                |   |                         | 35,287 |   |                                |   | 35,629 |   |   |   | 112,803 |   |   |   | 108,885 |   |
| Gain                on sale of manufacturing facility                                              |   |                         | -      |   |                                |   | - |   |   |   | (1,227 | ) |   |   | - |   |
| Depreciation                                                                                       |   |                         | 1,060  |   |                                |   | 1,134 |   |   |   | 3,463 |   |   |   | 3,763 |   |
| Amortization                                                                                       |   |                         | 906    |   |                                |   | 908 |   |   |   | 2,708 |   |   |   | 2,911 |   |
| Income                (loss) from operations                                                       |   |                         | 2,383  |   |                                |   | (1,379 | ) |   |   | 15,476 |   |   |   | 13,313 |   |
|                                                                                               |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                                                     |   |                         | 124    |   |                                |   | 307 |   |   |   | 682 |   |   |   | 953 |   |
| Interest                expense                                                                    |   |                         | (867   | )      |                                |   | (663 | ) |   |   | (2,203 | ) |   |   | (1,966 | ) |
| Legal                settlement                                                                    |   |                         | -      |   |                                |   | - |   |   |   | - |   |   |   | 873 |   |
| Income                (loss) before income taxes                                                   |   |                         | 1,640  |   |                                |   | (1,735 | ) |   |   | 13,955 |   |   |   | 13,173 |   |
| Income                tax (expense) benefit                                                        |   |                         | (753   | )      |                                |   | 2,754 |   |   |   | (6,939 | ) |   |   | 292 |   |
| Net                income                                                                          |   |                         | 887    |   |                                |   | 1,019 |   |   |   | 7,016 |   |   |   | 13,465 |   |
| Preferred                stock dividends                                                           |   |                         | (348   | )      |                                |   | (934 | ) |   |   | (2,215 | ) |   |   | (3,452 | ) |
| Net                income available to common shareholders                                         |   | $                            | 539    |   |                                | $      | 85 |   |   | $ | 4,801 |   |   | $ | 10,013 |   |
|                                                                                               |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net                income available to commonshareholders                per                share: |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                              |   | $                            | .03    |   |                                | $      | .00 |   |   | $ | .24 |   |   | $ | .50 |   |
| Diluted                                                                                            |   | $                            | .03    |   |                                | $      | .00 |   |   | $ | .24 |   |   | $ | .48 |   |
|                                                                                               |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average number of common shares:                                           |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                              |   |                         | 19,412 |   |                                |   | 20,060 |   |   |   | 19,637 |   |   |   | 20,234 |   |
| Diluted                                                                                            |   |                         | 19,969 |   |                                |   | 20,734 |   |   |   | 20,062 |   |   |   | 20,670 |   |

|                                                                                                            |   | Three                Quarters Ended |    |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                                                            |   | June                2,2007          |    |   | May                27,2006 |   |
|                                                                                                            |   | (unaudited)                         |    |
| Cash                flows from operating activities:                                                            |   |                                |    |   |   |   |
| Net                income                                                                                       |   | $                                   | 7,016   |   |   | $ | 13,465 |   |
| Adjustments                to reconcile net                income to net cash provided by operating activities: |   |                                |    |   |   |   |   |   |
| Depreciation                and amortization                                                                    |   |                                | 7,503   |   |   |   | 8,046 |   |
| Deferred                income taxes                                                                            |   |                                | 4,824   |   |   |   | - |   |
| Gain                on disposals of property and equipment                                                      |   |                                | (1,283  | ) |   |   | - |   |
| Share-based                compensation expense                                                                 |   |                                | 894     |   |   |   | 567 |   |
| Changes                in assets and liabilities:                                                               |   |                                |    |   |   |   |   |   |
| Increase                in accounts receivable, net                                                             |   |                                | (4,408  | ) |   |   | (4,264 | ) |
| Increase                in inventories                                                                          |   |                                | (2,951  | ) |   |   | (1,388 | ) |
| Decrease                in other assets                                                                         |   |                                | 1,236   |   |   |   | 856 |   |
| Decrease                in accounts payable and accrued liabilities                                             |   |                                | (4,357  | ) |   |   | (4,628 | ) |
| Decrease                in other long-term liabilities                                                          |   |                                | (188    | ) |   |   | (192 | ) |
| Increase                (decrease) in income taxes payable                                                      |   |                                | 411     |   |   |   | (2,535 | ) |
| Net                cash provided by operating activities                                                        |   |                                | 8,697   |   |   |   | 9,927 |   |
|                                                                                                            |   |                                |    |   |   |   |   |   |
| Cash                flows from investing activities:                                                            |   |                                |    |   |   |   |   |   |
| Purchases                of property and equipment                                                              |   |                                | (7,855  | ) |   |   | (3,318 | ) |
| Curriculum                development costs                                                                     |   |                                | (4,234  | ) |   |   | (1,812 | ) |
| Proceeds                from sales of property and equipment                                                    |   |                                | 2,596   |   |   |   | - |   |
| Net                cash used for investing activities                                                           |   |                                | (9,493  | ) |   |   | (5,130 | ) |
|                                                                                                            |   |                                |    |   |   |   |   |   |
| Cash                flows from financing activities:                                                            |   |                                |    |   |   |   |   |   |
| Proceeds                from line of credit borrowing                                                           |   |                                | 30,429  |   |   |   | - |   |
| Payments                on line of credit borrowing                                                             |   |                                | (12,585 | ) |   |   | - |   |
| Principal                payments on long-term debt and financing obligation                                    |   |                                | (402    | ) |   |   | (965 | ) |
| Change                in restricted cash                                                                        |   |                                | -       |   |   |   | 699 |   |
| Proceeds                from sales of common stock from treasury                                                |   |                                | 206     |   |   |   | 333 |   |
| Proceeds                from management stock loan payments                                                     |   |                                | 27      |   |   |   | 134 |   |
| Redemptions                of preferred stock                                                                   |   |                                | (37,345 | ) |   |   | (20,000 | ) |
| Purchases                of treasury shares                                                                     |   |                                | (2,561  | ) |   |   | (3,982 | ) |
| Payment                of preferred stock dividends                                                             |   |                                | (2,215  | ) |   |   | (3,952 | ) |
| Net                cash used for financing activities                                                           |   |                                | (24,446 | ) |   |   | (27,733 | ) |
|                                                                                                            |   |                                |    |   |   |   |   |   |
| Effect                of foreign exchange rates on cash and cash equivalents                                    |   |                                | (175    | ) |   |   | 50 |   |
| Net                decrease in cash and cash equivalents                                                        |   |                                | (25,417 | ) |   |   | (22,886 | ) |
| Cash                and cash equivalents at beginning of the period                                             |   |                                | 30,587  |   |   |   | 51,690 |   |
| Cash                and cash equivalents at end of the period                                                   |   | $                                   | 5,170   |   |   | $ | 28,804 |   |
|                                                                                                            |   |                                |    |   |   |   |   |   |
| Supplemental                disclosure of cash flow information:                                                |   |                                |    |   |   |   |   |   |
| Cash                paid for interest                                                                           |   | $                                   | 2,048   |   |   | $ | 2,001 |   |
| Cash                paid for income taxes                                                                       |   | $                                   | 1,804   |   |   | $ | 2,284 |   |
|                                                                                                            |   |                                |    |   |   |   |   |   |
| Non-cash                investing and financing activities:                                                     |   |                                |    |   |   |   |   |   |
| Accrued                preferred stock dividends                                                                |   | $                                   | -       |   |   | $ | 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 – OPERATIONS HELD FOR SALE**

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

| Description                                    |   | Mexico |   |   | Brazil |   |   | Total  |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Accounts                receivable, net        |   | $      | 156    |   |   | $      | 515    |   |   | $ | 671 |   |
| Inventories                                    |   |   | 345    |   |   |   | 123    |   |   |   | 468 |   |
| Other                current assets            |   |   | 50     |   |   |   | 190    |   |   |   | 240 |   |
| Property                and equipment, net     |   |   | 115    |   |   |   | 212    |   |   |   | 327 |   |
| Other                assets                    |   |   | 28     |   |   |   | 60     |   |   |   | 88 |   |
| Total                assets held for sale      |   | $      | 694    |   |   | $      | 1,100  |   |   | $ | 1,794 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                payable                |   | $      | 61     |   |   | $      | 173    |   |   | $ | 234 |   |
| Accrued                liabilities             |   |   | 199    |   |   |   | 395    |   |   |   | 594 |   |
| Total                liabilities held for sale |   | $      | 260    |   |   | $      | 568    |   |   | $ | 828 |   |

**NOTE      3 – INVENTORIES**

|                           |   | June                2,2007 |   |   | August                31,2006 |   |
|--------------------------------|--------|----------------------------|--------|--------|-------------------------------|--------|
|                           |   |                       |   |   |                          |   |
| Finished                goods  |   | $                          | 20,946 |   |                          | $      | 18,464 |   |
| Work                in process |   |                       | 503    |   |                          |   | 706 |   |
| Raw                materials   |   |                       | 2,796  |   |                          |   | 2,620 |   |
|                           |   | $                          | 24,245 |   |                          | $      | 21,790 |   |

**NOTE      4 – LINE OF CREDIT AGREEMENTS**

**NOTE      5 – SHAREHOLDERS’ EQUITY**

***Redemption      of Preferred Stock***

***Board      of Director Unvested Share Award***

|                                                  |   | Preferred                Stock |   |   |   |   |    |                                      |   |   | Treasury                Stock |   |
|-------------------------------------------------------|--------|--------------------------------|--------|--------|--------|--------|---------|-------------------------------------------|--------|--------|-------------------------------|--------|
|                                                  |   | Shares                         |   |   | Amount |   |    | Additional                Paid-In Capital |   |   | RetainedEarnings              |   |   | Shares |   |   | Amount |   |
| **Balance                at August 31, 2006**         |   |                           | 1,494  |   |   | $      | 37,345  |                                      |   | $      | 185,691                       |   |   | $ | 14,075 |   |   |   | (7,083 | ) |   | $ | (113,379 | ) |
| Preferred                stock dividends              |   |                           |   |   |   |   |    |                                      |   |   |                          |   |   |   | (2,215 | ) |   |   |   |   |   |   |   |   |
| Redemption                of preferred stock          |   |                           | (1,494 | )      |   |   | (37,345 | )                                         |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase                of treasury shares            |   |                           |   |   |   |   |    |                                      |   |   |                          |   |   |   |   |   |   |   | (338 | ) |   |   | (2,539 | ) |
| Issuance                of common stock from treasury |   |                           |   |   |   |   |    |                                      |   |   | (6                            | )      |   |   |   |   |   |   | 45 |   |   |   | 213 |   |
| Unvested                stock award                   |   |                           |   |   |   |   |    |                                      |   |   | (501                          | )      |   |   |   |   |   |   | 32 |   |   |   | 501 |   |
| Share-based                compensation               |   |                           |   |   |   |   |    |                                      |   |   | 894                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                             |   |                           |   |   |   |   |    |                                      |   |   |                          |   |   |   | 7,016 |   |   |   |   |   |   |   |   |   |
| Other                                                 |   |                           |   |   |   |   |    |                                      |   |   | 13                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                at June 2, 2007**            |   |                           | -      |   |   | $      | -       |                                      |   | $      | 186,091                       |   |   | $ | 18,876 |   |   |   | (7,344 | ) |   | $ | (115,204 | ) |

**NOTE      6 – SALE OF MANUFACTURING FACILITY**

**NOTE      7 – INCOME TAXES**

**NOTE      8 – COMPREHENSIVE INCOME**

|                                                                |   | Quarter                Ended |   |   | Three                Quarters Ended |   |
|---------------------------------------------------------------------|--------|------------------------------|--------|--------|-------------------------------------|--------|
|                                                                |   | June                2,2007   |   |   | May                27,2006          |   |   | June                2,2007 |   |   | May                27,2006 |   |
| Net                income                                           |   | $                            | 887    |   |                                | $      | 1,019 |   |   | $ | 7,016 |   |   | $ | 13,465 |   |
| Other                comprehensive income (loss) items, net of tax: |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation adjustments             |   |                         | (30    | )      |                                |   | 434 |   |   |   | (14 | ) |   |   | 214 |   |
| Comprehensive                income                                 |   | $                            | 857    |   |                                | $      | 1,453 |   |   | $ | 7,002 |   |   | $ | 13,679 |   |

**NOTE      9 – EARNINGS PER SHARE**

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

|                                                                     |   | Quarter                Ended |   |   | Three                Quarters Ended |   |
|--------------------------------------------------------------------------|--------|------------------------------|--------|--------|-------------------------------------|--------|
|                                                                     |   | June                2,2007   |   |   | May                27,2006          |   |   | June                2,2007 |   |   | May                27,2006 |   |
| **Numerator                for basic and diluted earnings per share:**   |   |                         |   |   |                                |   |   |   |   |   |   |   |
| Net                income                                                |   | $                            | 887    |   |                                | $      | 1,019 |   |   | $ | 7,016 |   |   | $ | 13,465 |   |
| Preferred                stock dividends                                 |   |                         | (348   | )      |                                |   | (934 | ) |   |   | (2,215 | ) |   |   | (3,452 | ) |
| Net                income available to common shareholders               |   | $                            | 539    |   |                                | $      | 85 |   |   | $ | 4,801 |   |   | $ | 10,013 |   |
|                                                                     |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| **Denominator                for basic and diluted earnings per share:** |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                weighted average shares outstanding(1)              |   |                         | 19,412 |   |                                |   | 20,060 |   |   |   | 19,637 |   |   |   | 20,234 |   |
| Effect                of dilutive securities:                            |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Stock                options                                             |   |                         | 34     |   |                                |   | 75 |   |   |   | 31 |   |   |   | 55 |   |
| Unvested                stock awards                                     |   |                         | 292    |   |                                |   | 303 |   |   |   | 265 |   |   |   | 280 |   |
| Performance                awards                                        |   |                         | 231    |   |                                |   | 100 |   |   |   | 129 |   |   |   | 35 |   |
| Common                stock warrants(2)                                  |   |                         | -      |   |                                |   | 196 |   |   |   | - |   |   |   | 66 |   |
| Diluted                weighted average shares outstanding               |   |                         | 19,969 |   |                                |   | 20,734 |   |   |   | 20,062 |   |   |   | 20,670 |   |
|                                                                     |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| **Basic                and diluted EPS:**                                |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                EPS                                                 |   | $                            | .03    |   |                                | $      | .00 |   |   | $ | .24 |   |   | $ | .50 |   |
| Diluted                EPS                                               |   | $                            | .03    |   |                                | $      | .00 |   |   | $ | .24 |   |   | $ | .48 |   |

----

| (1)    | Since                the Company recognized net income for the quarter and three quarters                ended                June 2, 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 three quarters ended June 2, 2007, the conversion                of 6.2                million common stock warrants is not assumed because such conversion                would                be anti-dilutive.                                                                                                       |

**NOTE      10 – 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 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.                                                                                                                                                            |

| (in                thousands)                                      |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |
|--------------------------------------------------------------------|--------|--------------------------------------------|---------|--------|-----------------------------|--------|---------|--------|--------|--------|--------------|--------|--------|--------------|--------|
|  *Quarter                Ended**June                2, 2007*  |   | Sales                to External Customers |    |   | Gross                Profit |   |    | EBITDA |   |   | Depreciation |   |   | Amortization |   |
| **Consumer                Solutions Business Unit:**               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |
| Retail                                                             |   | $                                          | 10,010  |   |                        | $      | 5,706   |   |   | $      | (715         | )      |   | $            | 169    |   |   | $ | - |   |
| Consumer                direct                                     |   |                                       | 10,715  |   |                        |   | 6,377   |   |   |   | 4,477        |   |   |         | 58     |   |   |   | - |   |
| Wholesale                                                          |   |                                       | 6,901   |   |                        |   | 3,851   |   |   |   | 3,704        |   |   |         | -      |   |   |   | - |   |
| CSBU                International                                  |   |                                       | 1,125   |   |                        |   | 628     |   |   |   | (176         | )      |   |         | -      |   |   |   | - |   |
| Other                CSBU                                          |   |                                       | 1,544   |   |                        |   | 302     |   |   |   | (6,106       | )      |   |         | 202    |   |   |   | - |   |
| Total                CSBU                                          |   |                                       | 30,295  |   |                        |   | 16,864  |   |   |   | 1,184        |   |   |         | 429    |   |   |   | - |   |
|                                                               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| **Organizational                Solutions Business Unit:**         |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| Domestic                                                           |   |                                       | 20,297  |   |                        |   | 13,241  |   |   |   | 2,092        |   |   |         | 181    |   |   |   | 899 |   |
| International                                                      |   |                                       | 13,917  |   |                        |   | 9,531   |   |   |   | 3,375        |   |   |         | 215    |   |   |   | 7 |   |
| Total                OSBU                                          |   |                                       | 34,214  |   |                        |   | 22,772  |   |   |   | 5,467        |   |   |         | 396    |   |   |   | 906 |   |
| Total                operating segments                            |   |                                       | 64,509  |   |                        |   | 39,636  |   |   |   | 6,651        |   |   |         | 825    |   |   |   | 906 |   |
| Corporate                and eliminations                          |   |                                       | -       |   |                        |   | -       |   |   |   | (2,302       | )      |   |         | 235    |   |   |   | - |   |
| Consolidated                                                       |   | $                                          | 64,509  |   |                        | $      | 39,636  |   |   | $      | 4,349        |   |   | $            | 1,060  |   |   | $ | 906 |   |
|                                                               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| *Quarter                Ended**May                27, 2006*        |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| **Consumer                Solutions Business Unit:**          |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| Retail                                                             |   | $                                          | 11,414  |   |                        | $      | 6,307   |   |   | $      | (733         | )      |   | $            | 269    |   |   | $ | - |   |
| Consumer                direct                                     |   |                                       | 12,912  |   |                        |   | 7,669   |   |   |   | 5,676        |   |   |         | 16     |   |   |   | - |   |
| Wholesale                                                          |   |                                       | 6,523   |   |                        |   | 3,336   |   |   |   | 3,177        |   |   |         | -      |   |   |   | - |   |
| CSBU                International                                  |   |                                       | 1,148   |   |                        |   | 621     |   |   |   | (395         | )      |   |         | -      |   |   |   | - |   |
| Other                CSBU                                          |   |                                       | 1,168   |   |                        |   | 118     |   |   |   | (6,870       | )      |   |         | 300    |   |   |   | - |   |
| Total                CSBU                                          |   |                                       | 33,165  |   |                        |   | 18,051  |   |   |   | 855          |   |   |         | 585    |   |   |   | - |   |
|                                                               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| **Organizational                Solutions Business Unit:**    |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| Domestic                                                           |   |                                       | 17,875  |   |                        |   | 11,026  |   |   |   | 457          |   |   |         | 90     |   |   |   | 902 |   |
| International                                                      |   |                                       | 12,242  |   |                        |   | 7,215   |   |   |   | 810          |   |   |         | 288    |   |   |   | 6 |   |
| Total                OSBU                                          |   |                                       | 30,117  |   |                        |   | 18,241  |   |   |   | 1,267        |   |   |         | 378    |   |   |   | 908 |   |
| Total                operating segments                            |   |                                       | 63,282  |   |                        |   | 36,292  |   |   |   | 2,122        |   |   |         | 963    |   |   |   | 908 |   |
| Corporate                and eliminations                          |   |                                       | -       |   |                        |   | -       |   |   |   | (1,459       | )      |   |         | 171    |   |   |   | - |   |
| Consolidated                                                       |   | $                                          | 63,282  |   |                        | $      | 36,292  |   |   | $      | 663          |   |   | $            | 1,134  |   |   | $ | 908 |   |
|                                                               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| *Three                Quarters Ended**June                2, 2007* |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| **Consumer                Solutions Business Unit:**               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| Retail                                                             |   | $                                          | 43,402  |   |                        | $      | 25,966  |   |   | $      | 5,195        |   |   | $            | 546    |   |   | $ | - |   |
| Consumer                direct                                     |   |                                       | 47,713  |   |                        |   | 28,596  |   |   |   | 22,113       |   |   |         | 137    |   |   |   | - |   |
| Wholesale                                                          |   |                                       | 15,059  |   |                        |   | 8,561   |   |   |   | 8,114        |   |   |         | -      |   |   |   | - |   |
| CSBU                International                                  |   |                                       | 6,153   |   |                        |   | 3,721   |   |   |   | 1,020        |   |   |         | -      |   |   |   | - |   |
| Other                CSBU                                          |   |                                       | 4,422   |   |                        |   | 456     |   |   |   | (22,014      | )      |   |         | 993    |   |   |   | - |   |
| Total                CSBU                                          |   |                                       | 116,749 |   |                        |   | 67,300  |   |   |   | 14,428       |   |   |         | 1,676  |   |   |   | - |   |
|                                                               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| **Organizational                Solutions Business Unit:**         |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| Domestic                                                           |   |                                       | 57,331  |   |                        |   | 36,982  |   |   |   | 4,105        |   |   |         | 440    |   |   |   | 2,701 |   |
| International                                                      |   |                                       | 42,834  |   |                        |   | 28,941  |   |   |   | 9,592        |   |   |         | 625    |   |   |   | 7 |   |
| Total                OSBU                                          |   |                                       | 100,165 |   |                        |   | 65,923  |   |   |   | 13,697       |   |   |         | 1,065  |   |   |   | 2,708 |   |
| Total                operating segments                            |   |                                       | 216,914 |   |                        |   | 133,223 |   |   |   | 28,125       |   |   |         | 2,741  |   |   |   | 2,708 |   |
| Corporate                and eliminations                          |   |                                       | -       |   |                        |   | -       |   |   |   | (7,705       | )      |   |         | 722    |   |   |   | - |   |
| Consolidated                                                       |   | $                                          | 216,914 |   |                        | $      | 133,223 |   |   | $      | 20,420       |   |   | $            | 3,463  |   |   | $ | 2,708 |   |
|                                                               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| *Three                Quarters Ended**May                27, 2006* |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| **Consumer                Solutions Business Unit:**          |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| Retail                                                             |   | $                                          | 49,837  |   |                        | $      | 29,290  |   |   | $      | 5,360        |   |   | $            | 1,042  |   |   | $ | - |   |
| Consumer                direct                                     |   |                                       | 51,701  |   |                        |   | 30,968  |   |   |   | 24,566       |   |   |         | 43     |   |   |   | - |   |
| Wholesale                                                          |   |                                       | 15,773  |   |                        |   | 7,812   |   |   |   | 7,357        |   |   |         | -      |   |   |   | - |   |
| CSBU                International                                  |   |                                       | 6,473   |   |                        |   | 4,025   |   |   |   | 1,260        |   |   |         | -      |   |   |   | - |   |
| Other                CSBU                                          |   |                                       | 3,623   |   |                        |   | 630     |   |   |   | (22,524      | )      |   |         | 957    |   |   |   | 57 |   |
| Total                CSBU                                          |   |                                       | 127,407 |   |                        |   | 72,725  |   |   |   | 16,019       |   |   |         | 2,042  |   |   |   | 57 |   |
|                                                               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| **Organizational                Solutions Business Unit:**    |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |
| Domestic                                                           |   |                                       | 49,552  |   |                        |   | 31,957  |   |   |   | 2,240        |   |   |         | 263    |   |   |   | 2,845 |   |
| International                                                      |   |                                       | 37,007  |   |                        |   | 24,190  |   |   |   | 7,059        |   |   |         | 940    |   |   |   | 9 |   |
| Total                OSBU                                          |   |                                       | 86,559  |   |                        |   | 56,147  |   |   |   | 9,299        |   |   |         | 1,203  |   |   |   | 2,854 |   |
| Total                operating segments                            |   |                                       | 213,966 |   |                        |   | 128,872 |   |   |   | 25,318       |   |   |         | 3,245  |   |   |   | 2,911 |   |
| Corporate                and eliminations                          |   |                                       | -       |   |                        |   | -       |   |   |   | (5,331       | )      |   |         | 518    |   |   |   | - |   |
| Consolidated                                                       |   | $                                          | 213,966 |   |                        | $      | 128,872 |   |   | $      | 19,987       |   |   | $            | 3,763  |   |   | $ | 2,911 |   |
|                                                               |   |                                       |    |   |                        |   |    |   |   |   |         |   |   |         |   |   |   |   |   |   |

|                                                  |   | Quarter                Ended |   |   | Three                Quarters Ended |   |
|-------------------------------------------------------|--------|------------------------------|--------|--------|-------------------------------------|--------|
|                                                  |   | June                2,2007   |   |   | May                27,2006          |   |   | June                2,2007 |   |   | May                27,2006 |   |
| Reportable                segment EBITDA              |   | $                            | 6,651  |   |                                | $      | 2,122 |   |   | $ | 28,125 |   |   | $ | 25,318 |   |
| Corporate                expenses                     |   |                         | (2,302 | )      |                                |   | (1,459 | ) |   |   | (7,705 | ) |   |   | (5,331 | ) |
| Consolidated                EBITDA                    |   |                         | 4,349  |   |                                |   | 663 |   |   |   | 20,420 |   |   |   | 19,987 |   |
| Gain                on sale of manufacturing facility |   |                         | -      |   |                                |   | - |   |   |   | 1,227 |   |   |   | - |   |
| Depreciation                                          |   |                         | (1,060 | )      |                                |   | (1,134 | ) |   |   | (3,463 | ) |   |   | (3,763 | ) |
| Amortization                                          |   |                         | (906   | )      |                                |   | (908 | ) |   |   | (2,708 | ) |   |   | (2,911 | ) |
| Income                (loss) from operations          |   |                         | 2,383  |   |                                |   | (1,379 | ) |   |   | 15,476 |   |   |   | 13,313 |   |
| Interest                income                        |   |                         | 124    |   |                                |   | 307 |   |   |   | 682 |   |   |   | 953 |   |
| Interest                expense                       |   |                         | (867   | )      |                                |   | (663 | ) |   |   | (2,203 | ) |   |   | (1,966 | ) |
| Legal                settlement                       |   |                         | -      |   |                                |   | - |   |   |   | - |   |   |   | 873 |   |
| Income                (loss) before income taxes      |   | $                            | 1,640  |   |                                | $      | (1,735 | ) |   | $ | 13,955 |   |   | $ | 13,173 |   |

**RESULTS      OF OPERATIONS**

**Overview**

| · | ***Sales*****–**Consolidated training and consulting                services sales increased $2.6 million, or 8 percent, 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 $1.3                million, or 4 percent, primarily due to reduced retail and consumer                direct                channel (primarily catalog, eCommerce, and public programs)                sales.                                                                                                                                                                                                                                                                                                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| · | ***Gross                Profit***– Our consolidated gross profit totaled $39.6 million                for the quarter ended June 2, 2007 compared to $36.3 million in the                same                quarter of the prior year.  Our consolidated gross margin, which                is gross profit in terms of a percentage of sales, increased to 61.4                percent of sales for the quarter ended June 2, 2007 compared to 57.3                percent of sales in fiscal 2006.  The increase was primarily                attributable to the continuing shift toward increased training and                consulting sales, which generally have higher margins than the majority                of                our product sales, and the fiscal 2006 correction of misstated sales                at                our Mexico subsidiary.  Training and consulting service sales                increased to 52 percent of total sales in fiscal 2007 compared to                49                percent of total sales in the prior year. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| · | ***Operating                Costs***– Our operating costs decreased by $0.4 million                compared to the prior year, which was the result of decreased selling,                general, and administrative expenses totaling $0.3 million and decreased                depreciation expense of $0.1 million.  Amortization expense from                our definite-lived intangible assets remained consistent with the                prior                year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| · | ***Income                Taxes***– Our income tax expense for the quarter ended June 2,                2007 was $0.8 million compared to a $2.8 million benefit in the prior                year.  The increase in our current year tax expense was                primarily the result of taxable income.  The fiscal 2006 benefit                resulted primarily from the expiration of the statute of limitations                on                various tax exposures.  No reversals of valuation allowance or                tax contingency reserves occurred during fiscal 2007.  Our                effective tax rate for the three quarters ended June 2, 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***– During the quarter ended June 2, 2007,                we redeemed all remaining outstanding shares of Series A preferred                stock,                which totaled $37.3 million plus $0.3 million of accrued                dividends.  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 |   |   | Three                Quarters Ended |   |
|----------------------------------------------------------|--------|------------------------------|--------|--------|-------------------------------------|--------|
|                                                     |   | June                2,2007   |   |   | May                27,2006          |   |   | Percent                Change |   |   | June                2,2007 |   |   | May                27,2006 |   |   | Percent                Change |   |
| *Sales                by Category:*                      |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Products                                                 |   | $                            | 30,857 |   |                                | $      | 32,184 |   |   |   | (4) |   |   | $ | 118,248 |   |   | $ | 126,428 |   |   |   | (6) |   |
| Training                and consulting services          |   |                         | 33,652 |   |                                |   | 31,098 |   |   |   | 8 |   |   |   | 98,666 |   |   |   | 87,538 |   |   |   | 13 |   |
|                                                     |   | $                            | 64,509 |   |                                | $      | 63,282 |   |   |   | 2 |   |   | $ | 216,914 |   |   | $ | 213,966 |   |   |   | 1 |   |
|                                                     |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Consumer                Solutions Business Unit:*       |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retail                Stores                             |   | $                            | 10,010 |   |                                | $      | 11,414 |   |   |   | (12) |   |   | $ | 43,402 |   |   | $ | 49,837 |   |   |   | (13) |   |
| Consumer                Direct                           |   |                         | 10,715 |   |                                |   | 12,912 |   |   |   | (17) |   |   |   | 47,713 |   |   |   | 51,701 |   |   |   | (8) |   |
| Wholesale                                                |   |                         | 6,901  |   |                                |   | 6,523 |   |   |   | 6 |   |   |   | 15,059 |   |   |   | 15,773 |   |   |   | (5) |   |
| CSBU                International                        |   |                         | 1,125  |   |                                |   | 1,148 |   |   |   | (2) |   |   |   | 6,153 |   |   |   | 6,473 |   |   |   | (5) |   |
| Other                CSBU                                |   |                         | 1,544  |   |                                |   | 1,168 |   |   |   | 32 |   |   |   | 4,422 |   |   |   | 3,623 |   |   |   | 22 |   |
|                                                     |   |                         | 30,295 |   |                                |   | 33,165 |   |   |   | (9) |   |   |   | 116,749 |   |   |   | 127,407 |   |   |   | (8) |   |
| *Organizational                Solutions Business Unit:* |   |                         |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                 |   |                         | 20,297 |   |                                |   | 17,875 |   |   |   | 14 |   |   |   | 57,331 |   |   |   | 49,552 |   |   |   | 16 |   |
| International                                            |   |                         | 13,917 |   |                                |   | 12,242 |   |   |   | 14 |   |   |   | 42,834 |   |   |   | 37,007 |   |   |   | 16 |   |
|                                                     |   |                         | 34,214 |   |                                |   | 30,117 |   |   |   | 14 |   |   |   | 100,165 |   |   |   | 86,559 |   |   |   | 16 |   |
| Total                Sales                               |   | $                            | 64,509 |   |                                | $      | 63,282 |   |   |   | 2 |   |   | $ | 216,914 |   |   | $ | 213,966 |   |   |   | 1 |   |

***Product      Sales***
**– **

| · | **Retail                Stores**– The decline in retail sales was primarily due to fewer                stores, which had a $0.6 million impact on sales, reduced demand                for                technology and related products, which declined $0.5 million, and                decreased traffic in our other retail locations.  Reduced                traffic in our stores contributed to decreased sales of “core” products                (e.g. planners, binders, forms, and totes) during the                quarter.  However, declining traffic in our retail stores was                partially offset by improved conversion rates among those                shoppers.  These factors combined to produce a 7 percent                decrease in comparable store (stores which were open during the comparable                periods) sales compared to the prior year.  At June 2, 2007, we                were operating 87 retail stores compared to 93 stores at May 27,                2006.  Based upon our continuing analyses of retail store                performance, we may close additional retail store locations and continue                to experience decreased sales resulting from closed stores in future                periods. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| · | **Consumer                Direct**– Sales through our consumer direct channels (primarily                catalog, eCommerce, and public programs) decreased $2.2 million,                or 17                percent, due to decreased sales in each of the consumer direct                channels.  Catalog sales decreased primarily due to decreased                traffic and eCommerce sales declined due to both decreased traffic                and                lower conversion rates from web site visitors.  Public program                sales decreased $0.8 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 seasonal 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 fiscal 2007 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                domestic printing sales compared to the prior                year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

***Training      and Consulting Services***
**– **

| · | **Domestic*****–***Our domestic training, consulting,                and related sales reported through the OSBU continued to show improvement                over the prior year and increased by $2.4 million, or 14                percent.  The improvement was 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 compared to the prior                year.  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.  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                $1.7                million, or 14 percent, compared to the prior year.  Sales                increased over the prior year at all of our directly owned foreign                offices                except Canada, as well as from licensee royalty revenues.  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 June 2, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

**Gross      Profit**

**Operating      Expenses**

***Selling,      General and Administrative***
**– **

**Interest      Income and Expense**

***Interest      Income –***

***Interest      Expense –***

**Sales**

***Product      Sales***
**– **

| · | **Retail                Stores**– The decline in retail sales was primarily due to fewer                stores, which had a $4.8 million impact on sales, reduced demand                for                technology and related products, which declined $1.7 million, and                decreased traffic in our retail locations.  Partially offsetting                these factors was a slight increase in sales of “core” products during the                first three quarters of fiscal 2007.  These factors combined to                produce a 4 percent decrease in comparable store (stores which were                open                during the comparable periods) sales, including the impact of four                additional business days in fiscal 2007, when compared to fiscal                2006. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| · | **Consumer                Direct**– Sales through our consumer direct channels decreased                $4.0 million, or 8 percent, primarily due to decreased traffic and                conversion rates experienced in our internet and catalog                channels.  Public seminar sales decreased $0.8 million primarily                due to decreased programs and participation during the quarter ended                June                2, 2007.  In addition, sales through government depots continue                to decrease 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 $0.7 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 $0.8 million 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 $7.8 million, or 16 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 our training days booked have increased                compared to the prior year.                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | **International*****–*** International sales increased                $5.8                million, or 16 percent, compared to the prior year.  Sales                increased over the prior year at all of our directly owned foreign                offices, as well as from licensee royalty revenues.  The                translation of foreign sales to United States dollars produced a                $0.3                million favorable impact to our consolidated sales as certain foreign                currencies strengthened against the United States dollar during the                three                quarters ended June 2, 2007. |

**Gross      Profit**

**Operating      Expenses**

***Selling,      General and Administrative***
**– **

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

***Depreciation      and Amortization***
**– **

**Legal      Settlement**

**Interest      Income and Expense**

***Interest      Income –***

***Interest      Expense –***

**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    |   |   |   | 18,417 |   |   |   | -      |   |   |   | -      |   |       |   | -      |   |   |   | - |   |   |   | 18,808 |   |
| 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 contractualobligation                payments |   | $      | 45,811 |   |   | $      | 45,242 |   |   | $      | 25,252 |   |   | $      | 23,384 |   |       | $      | 21,485 |   |   | $ | 132,830 |   |   | $ | 294,004 |   |

----

| (1)    | Amount                reflects the redemption of all remaining Series A Preferred Stock                during                the quarter ended June 2, 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 were due at specified times                during fiscal 2007 that coincided 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 interest rate on the date of the preferred stock redemption,                and assumes that the June 2, 2007 line of credit balance and corresponding                interest will be repaid evenly through the fiscal year ended August                31,                2008.           |

**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**

***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*

***Fair      Value of Financial Instruments***
*The Fair Value Option for Financial Assets and Financial      Liabilities, Including an Amendment of FASB Statement No.      115*

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

**Market      Risk of Financial Instruments**

**Foreign      Currency Sensitivity**

|                                                    |   | Quarter                Ended |   |   | Three                Quarters Ended |   |
|---------------------------------------------------------|--------|------------------------------|--------|--------|-------------------------------------|--------|
|                                                    |   | June                2,2007   |   |   | May                27,2006          |   |   | June                2,2007 |   |   | May                27,2006 |   |
| Losses                on foreign exchange contracts     |   | $                            | (137   | )      |                                | $      | (208 | ) |   | $ | (210 | ) |   | $ | (276 | ) |
| Gains                on foreign exchange contracts      |   |                         | 49     |   |                                |   | 33 |   |   |   | 82 |   |   |   | 256 |   |
| Net                losses on foreign exchange contracts |   | $                            | (88    | )      |                                | $      | (175 | ) |   | $ | (128 | ) |   | $ | (20 | ) |

|    Contract                Description |   | Notional                Amount in Foreign Currency |    |   | Notional                Amount in U.S. Dollars |   |
|-------------------------------------------------------|--------|----------------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                                  |   |                                               |    |   |                                           |   |
| Japanese                Yen                           |   |                                               | 100,000 |   |                                           | $      | 821 |   |
| Mexican                Pesos                          |   |                                               | 7,600   |   |                                           |   | 717 |   |
| Australian                Dollars                     |   |                                               | 480     |   |                                           |   | 398 |   |

**Interest      Rate Sensitivity**

**Evaluation      of Disclosure Controls and Procedures**

***Our      cash balances have significantly decreased, which may reduce our ability to      adequately respond to future adverse changes in our business and      operations***

***Failure      to comply with the terms and conditions of our credit facility may have an      adverse effect upon our business and operations***

|        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:                    |   |                                            |      |   |                                        |   |   |                                                                                                           |   |   |                                                                                                                                                               |   |
| March                4, 2007 to April 7, 2007    |   |                                            | -         |   |                                        | $      | -      |                                                                                                           |   | none   |                                                                                                                                                               |   | $ | 2,413 |   |
|                                             |   |                                            |      |   |                                        |   |   |                                                                                                           |   |   |                                                                                                                                                               |   |   |   |   |
| April                8, 2007 to May 5, 2007 |   |                                            | 54        | (2)    |                                        |   | 7.01   |                                                                                                           |   | none   |                                                                                                                                                               |   |   | 2,413 |   |
|                                             |   |                                            |      |   |                                        |   |   |                                                                                                           |   |   |                                                                                                                                                               |   |   |   |   |
| May                6, 2007 to June 2, 2007       |   |                                            | -         |   |                                        |   | -      |                                                                                                           |   | none   |                                                                                                                                                               |   |   | 2,413 | (1) |
|                                             |   |                                            |      |   |                                        |   |   |                                                                                                           |   |   |                                                                                                                                                               |   |   |   |   |
| Total                Common Shares               |   |                                            | 54        |   |                                        | $      | 7.01   |                                                                                                           |   |   | -                                                                                                                                                                  |   |   |   |   |   |
|                                             |   |                                            |      |   |                                        |   |   |                                                                                                           |   |   |                                                                                                                                                               |   |   |   |   |   |
| Total                Preferred Shares            |   |                                            | 1,493,776 | (3)    |                                        | $      | 25.00  |                                                                                                           |   |   |                                                                                                                                                               |   |   |   |   |   |

----

| (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                June 2,                2007. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (2)    | Amount                represents shares withheld for statutory taxes from a distribution                of                common shares to a participant in our non-qualified deferred compensation                plan.                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (3)    | On                April 4, 2007, we redeemed the remaining outstanding shares of Series                A                Preferred Stock at its liquidation preference of $25.00 per share                plus                accrued dividends through the redemption                date.                                                                                                                                                                                                                                |

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