32 Management’s Discussion and Analysis Franklin Covey 2000 Annual Report stock during fiscal 1999. The primary source of cash from financing activities during fiscal 1999 was the issuance of 750,000 shares of preferred stock to a private investor for $75.0 million. At August 31, 2000, the Company had unsecured bank lines of credit available for working capital needs totaling $103.0 million. The Company’s lines of credit consisted of a $10.0 million short-term line of credit, a $20.0 million short-term line of credit, and a $73.0 million long-term credit facility. On August 31, 2000, the Company had $17.9 million outstanding on the short- term lines of credit and $55.0 million outstanding on the long-term line of credit. The line of credit agreements require the Company to maintain certain financial ratios and working capital levels, excluding the impact of stock option repurchases during fiscal 2000. At August 31, 2000, the Company was in compliance with the terms of the line of credit agreements. The Company’s line of credit agreements expire on December 1, 2001. During fiscal 2000, the Company announced the implementation of an incentive based compensation program that includes a loan program from external lenders to certain managers for the purpose of purchas- ing shares of the Company’s common stock. The pro- gram gives management of the Company the opportunity to purchase shares of the Company’s common stock on the open market, and from shares purchased by the Company, by borrowing on a full-recourse basis from the external lenders. The Company has facilitated the loans by providing a guarantee to the lenders. The program will total approximately $33.0 million and the Company has facilitated the purchase of open-market shares to ensure compliance with appropriate SEC trading rules and regulations. As of August 31, 2000, the Company had facilitated the purchase of 3,559,000 shares with a cost of $30.0 million for the loan program. Going forward, the Company will continue to incur costs necessary for the development of on-line products, electronic commerce channels, strategic acquisitions and joint ventures, retail store buildouts and renovations, regional office leasehold improvements, and other costs related to the growth of the business. Cash provided by operations, available lines of credit, and other financing alternatives will be used for these expenditures. Manage- ment anticipates that its existing capital resources will be sufficient to enable the Company to maintain its current level of operations and its planned internal growth for the foreseeable future. The Company also continues to pursue additional financing alternatives as it positions itself for future growth. While the Company has a broad customer base, it is subject to variables over which it has no direct control such as innovations in competing products, the general transition from paper-based products to electronic or internet based products, changing corporate policies on the part of the Company’s customers, and competition from others in the industry. In addition, the Company is subject to changes in costs of supplies necessary to produce its products and distribution of those products. The Company’s business is subject to seasonal variations and including sales in non-United States countries. Sales outside the United States potentially present additional risks such as political, social, and economic instability. With the exception of historical information (information relating to the Company’s financial condition and results of operations at historical dates or for historical periods), the matters discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere are forward-looking statements that necessarily are based on certain assumptions and are subject to certain risks and uncertainties. Such uncertainties include, but are not limited to, unantici- pated developments in any one or more of the following areas: the integration of acquired or merged businesses, management of growth, unanticipated costs, delays or outcomes relating to the Company’s restructuring plan, availability of financing sources, dependence on products or services, the rate and consumer acceptance of new product introductions, competition, the number and nature of customers and their product orders, pricing, pending and threatened litigation, and other risk factors which may be detailed from time to time in the Company’s press releases, reports to shareholders and in filings with the Securities and Exchange Commission (“SEC”). The Company is registered in all states that have a sales tax and collects and remits sales or use tax on retail sales made through its stores and catalog sales. Compli- ance with environmental laws or regulations has not had a material effect on the Company’s operations. Inflation has not had a material effect on the Company’s opera- tions. However, future inflation may have an impact on the price of materials used in planners and related products, including paper and leather materials. The Company may not be able to pass on such increased costs to its customers. Regulatory Compliance “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995