10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

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

For the quarterly period ended November 26, 2011

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file no. 1-11107

FRANKLIN COVEY CO.

(Exact name of registrant as specified in its charter)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past

90 days.  Yes   TNo   £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   TNo   £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer £ Accelerated filer T

Non-accelerated filer £ (Do not check if a smaller reporting company) Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes£No   T

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock as of the latest practicable date:

17,749,414 shares of Common Stock as of December 31, 2011

EXPLANATORY NOTE

The sole purpose of this amendment to Franklin Covey Co.’s quarterly report on Form 10-Q (the Form 10-Q) for the period ended November 26, 2011, which was filed with the Securities and Exchange Commission on January 5, 2012, is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T, and no other changes have been made to that Form 10-Q.  Exhibit 101 to this report provides the following items from the Form 10-Q formatted in eXtensible Business Reporting Language (XBRL):  (i) the unaudited Condensed Consolidated Balance Sheets, (ii) the unaudited Condensed Consolidated Income Statements, (iii) the unaudited Condensed Consolidated Cash Flows Statements, and (iv) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.

Users of this data are advised that pursuant to Rule 406T of Regulation S-T these interactive files are not deemed filed for purposes of Sections 11 or 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.  This Form 10-Q/A speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

PART II.     OTHER INFORMATION

Item 6.         EXHIBITS

Exhibit No.	Description
3.1	Amended and Restated Bylaws of Franklin Covey Co., as amended by the First Amendment to the Amended and Restated Bylaws, dated December 16, 2011.*
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.*
101	The following materials from the Franklin Covey Co. Quarterly Report on Form 10-Q for the period ended November 26, 2011 are formatted in eXtensible Business Reporting Language (XBRL): (i) the unaudited Condensed Consolidated Balance Sheets, (ii) the unaudited Condensed Consolidated Income Statements, (iii) the unaudited Condensed Consolidated Cash Flows Statements, and (iv) the Notes to Condensed Consolidated Financial Statements.**

_________________

* Previously filed with Franklin Covey Co.’s Form 10-Q for the period ended November 26, 2011 on January 5, 2012.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		FRANKLIN COVEY CO.
Date:	January 25, 2012	By:	/s/ Robert A. Whitman
			Robert A. Whitman
			Chief Executive Officer
Date:	January 25, 2012	By:	/s/ Stephen D. Young
			Stephen D. Young
			Chief Financial Officer

XML

Share-Based Compensation

3 Months Ended

Nov. 26, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

NOTE 4 – SHARE-BASED COMPENSATION

We utilize various share-based compensation plans as integral components of our overall compensation and associate retention strategy. The compensation cost of our share-based compensation plans was included in selling, general, and administrative expenses in the accompanying condensed consolidated income statements and no share-based compensation was capitalized during the quarter ended November 26, 2011. The total cost of our share-based compensation plans was as follows for the periods presented (in thousands):

		Quarter Ended
		November 26,	November 27,
		2011		2010
Performance awards	$	925	$	50
Stock option vesting		168		112
Unvested share awards		80		102
Employee stock purchase plan		18		13
Fully vested stock awards		-		104
	$	1,191	$	381

The following is a description of recent developments in our share-based compensation plans.

Performance Awards

During the quarter ended November 26, 2011, the Compensation Committee of the Board of Directors granted a new performance based equity award for the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and the Chief People Officer (CPO). A total of 106,101 shares may be awarded to the participants based on six individual vesting conditions that are divided into two performance measures, Adjusted EBITDA and Productivity Practice sales. Three tranches of 24,757 shares will immediately vest to the participants when consolidated trailing four-quarter Adjusted EBITDA totals $26.0 million, $33.0 million, and $40.0 million. Another three tranches of 10,610 shares will immediately vest when trailing four-quarter Productivity Practice sales total $20.5 million, $23.5 million, and $26.5 million. These performance awards have a maximum life of six years. Compensation expense is recognized as the Company determines that it is probable that the shares will vest. Adjustments to compensation expense to reflect the number of shares expected to be awarded will be made on a cumulative basis at the date of the adjustment.

There were no other performance awards granted or modified during the quarter ended November 26, 2011. Compensation expense recognized during the quarter ended November 26, 2011 for performance awards includes expense related to awards granted in previous periods.

Stock Options

We have an incentive stock option plan whereby options to purchase shares of our common stock are issued to key employees at an exercise price not less than the fair market value of our common stock on the date of grant. During the quarter ended November 26, 2011 we did not grant any new stock options or modify existing awards and there were no significant changes to the stock option information disclosed as of August 31, 2011. At November 26, 2011 we had no remaining unrecognized compensation expense related to our stock option awards.

Unvested Share Awards

Our annual unvested share awards granted to non-employee members of our Board of Directors is administered under the terms of the Franklin Covey Co. Second Amended and Restated 1992 Stock Incentive Plan, and is designed to provide our non-employee directors, who are not eligible to participate in our employee stock incentive plan, an opportunity to obtain an interest in the Company through the acquisition of shares of our common stock. The annual unvested award is generally granted in January (following the Annual Shareholders' Meeting) of each year. In fiscal 2011, each eligible director was entitled to receive a whole-share grant equal to $40,000 with a one-year vesting period, which resulted in a total of 37,960 shares issued to members of the Board of Directors under this program. At November 26, 2011, there was approximately $27,000 of unrecognized compensation expense associated with the fiscal 2011 Board of Director unvested share award.

Employee Stock Purchase Plan

We have an employee stock purchase plan that offers qualified employees the opportunity to purchase shares of our common stock at a price equal to 85 percent of the average fair market value of our common stock on the last trading day of the calendar month in each fiscal quarter. During the quarter ended November 26, 2011, a total of 12,155 shares were issued to participants in the ESPP.

XML

Inventories

3 Months Ended

Nov. 26, 2011

Inventories [Abstract]

Inventories

NOTE 3 – INVENTORIES

Inventories are stated at the lower of cost or market, cost being determined using the first-in, first-out method, and were comprised of the following (in thousands):

		November 26,		August 31,
		2011		2011
Finished goods	$	4,396	$	4,158
Raw materials		136		143
	$	4,532	$	4,301

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Nov. 26, 2011	Aug. 31, 2011
Current assets:
Cash and cash equivalents	$ 2,591	$ 3,016
Accounts receivable, less allowance for doubtful accounts of $747 and $798	29,739	32,412
Receivable from related party	6,381	5,717
Inventories	4,532	4,301
Deferred income taxes	2,992	3,005
Prepaid expenses and other assets	3,786	3,605
Total current assets	50,021	52,056
Property and equipment, net	19,093	19,143
Intangible assets, net	61,072	61,703
Goodwill	9,172	9,172
Other assets	9,847	9,353
Total assets	149,205	151,427
Current liabilities:
Current portion of financing obligation	890	857
Line of credit	1,131
Current portion of bank note payable	2,500	2,292
Accounts payable	8,226	9,154
Income taxes payable	692	285
Accrued liabilities	17,444	22,813
Total current liabilities	30,883	35,401
Financing obligation, less current portion	29,269	29,507
Bank note payable, less current portion	2,083	2,708
Other liabilities	412	411
Deferred income tax liabilities	4,467	4,084
Total liabilities	67,114	72,111
Shareholders' equity:
Common stock - $0.05 par value; 40,000 shares authorized, 27,056 shares issued and outstanding	1,353	1,353
Additional paid-in capital	180,609	179,515
Common stock warrants	5,260	5,260
Retained earnings	19,931	18,269
Accumulated other comprehensive income	3,416	3,592
Treasury stock at cost, 9,372 and 9,386 shares	(128,478)	(128,673)
Total shareholders' equity	82,091	79,316
Total liabilities and shareholders' equity	$ 149,205	$ 151,427

XML

Basis Of Presentation

3 Months Ended

Nov. 26, 2011

Basis Of Presentation [Abstract]

Basis Of Presentation

NOTE 1 – BASIS OF PRESENTATION

Franklin Covey Co. (hereafter referred to as us, we, our, or the Company) is a leading global provider of execution, leadership, and personal-effectiveness training. We operate globally with one common brand and set of offerings designed to enable us to provide clients around the world with the same high level of service. To achieve this level of service, we operate four regional sales offices in the United States; wholly owned subsidiaries in Australia, Japan, and the United Kingdom; and contract with licensee partners who deliver our curriculum and provide services in over 140 other countries and territories around the world. Our business-to-business service builds on our expertise in training, consulting, and technology that is designed to help our clients define great performance and engage their leaders and front-line employees to execute at the highest levels. We also help clients accelerate great performance through education in management skills, relationship skills, and individual effectiveness, and can provide personal-effectiveness literature and electronic educational solutions to our clients as needed. Our services and products are available through professional consulting services, training on-site at client locations by Franklin Covey consultants, training on-site at client locations by client employees who have been certified to deliver our content (facilitators), public workshops, and through a series of offerings delivered via the Internet. These offerings are described in further detail at www.franklincovey.com.

We have some of the best-known offerings in the training industry, including a suite of individual-effectiveness and leadership-development training products based on the best-selling book, The 7 Habits of Highly Effective People and its execution process, The 4 Disciplines of Execution.

The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods indicated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the fiscal year ended August 31, 2011.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

The Company utilizes a modified 52/53-week fiscal year that ends on August 31 of each year. Corresponding quarterly periods generally consist of 13-week periods that end on November 26, 2011, February 25, 2012, and May 26, 2012 during fiscal 2012. Under the modified 52/53-week fiscal year, the quarter ended November 26, 2011 had one less business day than the quarter ended November 27, 2010. Unless otherwise noted, references to fiscal years apply to the 12 months ended on August 31 of the specified year.

The results of operations for the quarter ended November 26, 2011 are not necessarily indicative of results expected for the entire fiscal year ending August 31, 2012, or for any future periods.

At November 26, 2011, the carrying value of our financial instruments approximated their fair values.

XML

Accounts Receivable

3 Months Ended

Nov. 26, 2011

Accounts Receivable [Abstract]

Accounts Receivable

NOTE 2 – ACCOUNTS RECEIVABLE

During the normal course of business, we may extend credit to our customers for their purchases of our services and products, which results in accounts receivable. Our trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents our best estimate of the amount of probable credit losses in the existing accounts receivable balance. We determine the allowance for doubtful accounts based upon historical write-off experience and current economic conditions, and we review the adequacy of the allowance for doubtful accounts on a regular basis. Receivable balances past due over 90 days, which exceed a specified dollar amount, are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Activity in our allowance for doubtful accounts was comprised of the following for the quarter ended November 26, 2011 (in thousands):

		Allowance for
		Doubtful
		Accounts
Balance at August 31, 2011	$	798
Additions: charged to expense		23
Deductions: amounts written off		(74	)
Balance at November 26, 2011	$	747

Recoveries of amounts previously written off were insignificant during the quarter ended November 26, 2011.

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Nov. 26, 2011	Aug. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 747	$ 798
Common stock, par value	$ 0.05	$ 0.05
Common stock, shares authorized	40,000	40,000
Common stock, shares issued	27,056	27,056
Common stock, shares outstanding	27,056	27,056
Treasury stock, shares	9,372	9,386

XML

Document And Entity Information	3 Months Ended
	Nov. 26, 2011	Dec. 31, 2011
Document And Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Nov. 26, 2011
Amendment Flag	false
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2012
Entity Registrant Name	FRANKLIN COVEY CO
Entity Central Index Key	0000886206
Current Fiscal Year End Date	--08-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		17,749,414

XML

Condensed Consolidated Income Statements (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Nov. 26, 2011	Nov. 27, 2010
Net sales:
Training and consulting services	$ 36,382	$ 37,555
Products	2,463	1,276
Leasing	695	585
Total net sales	39,540	39,416
Cost of sales:
Training and consulting services	11,859	13,250
Products	735	681
Leasing	404	409
Total cost of sales	12,998	14,340
Gross profit	26,542	25,076
Selling, general, and administrative	21,373	19,789
Depreciation	834	910
Amortization	631	929
Income from operations	3,704	3,448
Interest income	3	4
Interest expense	(633)	(711)
Income before income taxes	3,074	2,741
Provision for income taxes	(1,412)	(1,947)
Net income	$ 1,662	$ 794
Net income per share:
Basic and diluted	$ 0.09	$ 0.05
Weighted average number of common shares:
Basic	17,733	17,032
Diluted	17,998	17,115

XML

Earnings Per Share

3 Months Ended

Nov. 26, 2011

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 7 – EARNINGS PER SHARE

Basic earnings per common share (EPS) is calculated by dividing net income or loss by the weighted-average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net income or loss by the weighted-average number of common shares outstanding plus the assumed exercise of all dilutive securities using the treasury stock method or the "if converted" method, as appropriate. Due to modifications to our management stock loan program, we determined that the shares of management stock loan participants that were placed in the escrow account are participating securities because they continue to have equivalent common stock dividend rights. Accordingly, these management stock loan shares are included in our basic EPS calculation during periods of net income and excluded

from the basic EPS calculation in periods of net loss. Our unvested share-based compensation awards are not entitled to participate in dividends until they vest and are excluded from our EPS calculation.

The following table presents the computation of our EPS for the periods indicated (in thousands, except per share amounts):

		Quarter Ended
		November 26,		November 27,
		2011			2010
Numerator for basic and diluted
earnings per share:
Income before income taxes	$	3,074		$	2,741
Income tax provision		(1,412	)		(1,947	)
Net income	$	1,662		$	794
Denominator for basic and
diluted earnings per share:
Basic weighted average shares
outstanding(1)		17,733			17,032
Effect of dilutive securities:
Stock options and other share-
based awards		30			83
Common stock warrants(2)		235			-
Diluted weighted average shares
outstanding		17,998			17,115
EPS Calculations:
Net income per share:
Basic and diluted	$	.09		$	.05

(1) Since we recognized net income for the quarters ended November 26, 2011 and November 27, 2010, basic weighted average shares for those periods include 3.3 million shares and 3.4 million shares, respectively, of common stock held by management stock loan participants that were placed in escrow.

(2) For the quarter ended November 27, 2010, the conversion of 6.2 million common stock warrants was not assumed because such conversion would be anti-dilutive.

At November 26, 2011 and November 27, 2010, we had approximately 0.7 million and 0.5 million stock options outstanding, which were not included in the computation of diluted EPS because the options' exercise prices were greater than the average market price of our common shares for the respective periods. Although these shares were not included in our calculation of diluted EPS, these stock options, and other dilutive securities, including performance share-based compensation instruments, may have a dilutive effect on our EPS calculation in future periods if the price of our common stock increases.

XML

Comprehensive Income

3 Months Ended

Nov. 26, 2011

Comprehensive Income [Abstract]

Comprehensive Income

NOTE 6 – COMPREHENSIVE INCOME

Comprehensive income or loss is based on net income or net loss and includes charges and credits to equity accounts that are not the result of transactions with shareholders. Our comprehensive income was calculated as follows for the periods indicated (in thousands):

		Quarter Ended
		November 26,		November 27,
		2011			2010
Net income	$	1,662		$	794
Other comprehensive income
(loss) items, net of tax:
Foreign currency translation
adjustments		(176	)		52
Comprehensive income	$	1,486		$	846

XML

Segment Information

3 Months Ended

Nov. 26, 2011

Segment Information [Abstract]

Segment Information

NOTE 8 – SEGMENT INFORMATION

Our sales are primarily comprised of training and consulting sales and related products. Based on the consistent nature of our services and products and the types of customers for these services, we function as a single operating segment. However, to improve comparability with previous periods, operating information for our U.S./Canada, international, and corporate services operations is presented below. Our U.S./Canada operations are responsible for the sale and delivery of our training and consulting services in the United States and Canada. Our international sales group includes the financial results of our directly owned foreign offices and royalty revenues from licensees. Our corporate services information includes leasing income and certain corporate operating expenses.

The Company's chief operating decision maker is the CEO, and the primary measurement tool used in business unit performance analysis is earnings before interest, taxes, depreciation, and amortization (EBITDA), which is a non-GAAP measure and may not be calculated as similarly titled amounts calculated by other companies. For segment reporting purposes, our consolidated EBITDA can be calculated as our income or loss from operations excluding depreciation and amortization charges.

In the normal course of business, we may make structural and cost allocation revisions to our segment information to reflect new reporting responsibilities within the organization. There were no significant organizational or structural changes during the quarter ended November 26, 2011. We account for our segment information on the same basis as the accompanying condensed consolidated financial statements.

ENTERPRISE INFORMATION

(in thousands)

		Sales to
Quarter Ended		External
November 26, 2011		Customers		Gross Profit		EBITDA			Depreciation		Amortization
U.S./Canada	$	27,446	$	17,145	$	2,434		$	419	$	627
International		11,399		9,106		5,119			90		4
Total		38,845		26,251		7,553			509		631
Corporate and eliminations		695		291		(2,384	)		325		-
Consolidated	$	39,540	$	26,542	$	5,169		$	834	$	631
Quarter Ended
November 27, 2010
U.S./Canada	$	28,170	$	16,391	$	3,071		$	457	$	926
International		10,661		8,510		4,340			72		3
Total		38,831		24,901		7,411			529		929
Corporate and eliminations		585		175		(2,124	)		381		-
Consolidated	$	39,416	$	25,076	$	5,287		$	910	$	929

A reconciliation of our U.S./Canada and international EBITDA to consolidated income from continuing operations before taxes is provided below (in thousands):

		Quarter Ended
		November 26,		November 27,
		2011			2010
U.S./Canada and international
EBITDA	$	7,553		$	7,411
Corporate expenses		(2,384	)		(2,124	)
Consolidated EBITDA		5,169			5,287
Depreciation		(834	)		(910	)
Amortization		(631	)		(929	)
Income from operations		3,704			3,448
Interest income		3			4
Interest expense		(633	)		(711	)
Income before taxes	$	3,074		$	2,741

XML

Subsequent Event

3 Months Ended

Nov. 26, 2011

Subsequent Event

Subsequent Event

NOTE 9 – SUBSEQUENT EVENT

On April 20, 2010, Moore Wallace North America, Inc. doing business as TOPS filed a complaint against FC Organizational Products, LLC (FCOP) in the Circuit Court of Cook County, Illinois, for breach of contract. The complaint also named us as a defendant and alleged that we should be liable for FCOP's debts under the doctrine of alter ego or fraudulent transfer. On December 23, 2011, Moore Wallace North America, Inc., FCOP, and the Company entered into a settlement agreement and mutual release. Under the terms of this agreement, FCOP paid Moore Wallace North America, Inc. a specified sum to settle the complaint.

XML

Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Nov. 26, 2011	Nov. 27, 2010
Cash flows from operating activities:
Net income	$ 1,662	$ 794
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization	1,489	1,839
Share-based compensation expense	1,191	381
Amortization of capitalized curriculum costs	478	423
Deferred income taxes	394	1,263
Changes in assets and liabilities:
Decrease (increase) in accounts receivable, net	2,530	(5,195)
Decrease (increase) in inventories	(268)	507
Decrease (increase) in receivable from related party, prepaid expenses, and other assets	(762)	102
Increase (decrease) in accounts payable and accrued liabilities	(6,502)	(2,701)
Decrease in other long-term liabilities	(2)
Increase in income taxes payable	410	438
Net cash provided by (used for) operating activities	620	(2,149)
Cash flows from investing activities:
Purchases of property and equipment	(554)	(303)
Curriculum development costs	(1,097)	(1,001)
Net cash used for investing activities	(1,651)	(1,304)
Cash flows from financing activities:
Proceeds from line of credit borrowing	5,942	16,265
Payments on line of credit borrowing	(4,811)	(14,449)
Principal payments on bank note payable	(417)
Principal payments on financing obligation	(213)	(178)
Proceeds from sales of common stock from treasury	99	77
Purchase of treasury shares		(4)
Net cash provided by financing activities	600	1,711
Effect of foreign exchange rates on cash and cash equivalents	6	(38)
Net decrease in cash and cash equivalents	(425)	(1,780)
Cash and cash equivalents at beginning of the period	3,016	3,484
Cash and cash equivalents at end of the period	2,591	1,704
Supplemental disclosure of cash flow information:
Cash paid for interest	630	703
Cash paid for income taxes	511	288
Non-cash investing and financing activities:
Acquisition of property and equipment through accounts payable	$ 428	$ 177

XML

Income Taxes

3 Months Ended

Nov. 26, 2011

Income Taxes [Abstract]

Income Taxes

NOTE 5 – INCOME TAXES

In order to determine our quarterly provision for income taxes, we use an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which we operate. Certain discrete items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

Our effective tax rate for the quarter ended November 26, 2011 of approximately 46 percent was somewhat higher than statutory combined rates primarily due to taxable interest income on outstanding management common stock loans and the tax differential on income subject to both foreign and U.S. taxation. The effective tax rate for the quarter ended November 26, 2011 includes the benefit of foreign tax credits to be claimed on our U.S. federal income tax returns. The effective tax rate for the quarter ended November 27, 2010 of approximately 71 percent did not include the benefit of such foreign tax credits because we did not initially believe the Company would be able to utilize the benefits during fiscal 2011.

However, due to the utilization of net loss carryforwards and other deferred income tax assets, our cash paid for income taxes will remain significantly less than our income tax provision during the foreseeable future. During the quarter ended November 26, 2011, we paid $0.5 million of cash for income taxes.