4 Letter from the Chairmen Franklin Covey 2000 Annual Report • Aligning Focus of Management with Shareholders – Consolidating related organizational units. To reduce organizational complexity and increase the speed and effectiveness of our solutions- development efforts, all of our “content” areas (innovation, profiling, on-line learning, on-line content, etc.) and tools’ development activities (paper, binders, accessories, handheld devices, desktop software, etc.) are now organized under one unit known as “Solutions.” Other related units will also be combined in the near future.  –E x ecutive Stock Program (ESP). Last spring, we put together a program that establishes minimum ownership requirements for all of our Leadership Team – our Executive Vice Presidents and their 110 direct reports. These requirements were adopted to sharpen the alignment of the interests of these top managers with the inter- ests of you, our shareholders. To assist our leaders in fulfilling these commitments, we worked with our bankers, Zions Bank and Bank One, to help the management team to procure full-recourse personal loans to purchase the Company’s shares on the open market. More than 160 of those managers and others within the Company took advantage of the ESP and purchased 3.8 million shares through loans of more than $33 million in aggregate.  • Reducing Operating Costs and Eliminating  “Dumb Things”: –R educing Operating Costs. We have completed the initial stages of an ongoing plan to eliminate excess costs, purchases and waste throughout the Company. We have already identified significant opportunities for operating savings in travel, communications and postage expenses, and expect to identify and implement additional savings.  – Eliminating “Dumb Things”. During the past year, associates within each operating unit were asked to identify “dumb things we do,” activities which they believed should be addressed and resolved. Substantially all of these issues have been systematically addressed and resolved during the course of the various business reviews.  –R eduction of outstanding options. At the same time, we had too many stock options outstand- ing, many were in the wrong hands (many were held by former employees or associates no longer in leadership positions) and too few were in the hands of our key leaders, or were at prices which made them unmotivating. We offered to repurchase options to decrease the number of options outstanding, buying back two-thirds of the outstanding options. As a condition of participation in the ESP, our leaders were required to tender their underwater options. With our key leaders having a direct financial stake in the Company through the ESP or other stock ownership, we believe their interests are now closely aligned with those of our shareholders. At the same time the option overhang has been reduced significantly. • Scaling Employment Levels to Match  Our Business Focus: Last fall, we announced that our restructuring efforts would likely result in the elimination of approximately 600 positions. Approximately 325 positions were eliminated at that time through the “meadow” program. As business plans and budgets were finalized and a refined focus for the Company was established, essentially all of the remaining 275- 300 positions have been identified and eliminated. Though the impact of these changes on those affected has been softened economically through the “meadow” program which has helped almost all to find positions in other organizations, it has still been difficult for everyone involved. We are glad to have it behind us. To ensure that we do not repeat this process in the future, we have taken steps to ensure that the activities in which we are involved are truly creating value, that we hold ourselves to a high level of performance, and that any new positions added are truly needed.  We plan to arrest, and reverse, declining operating trends (i.e. gross margin erosion, product mix and channel shifts, etc.), and significantly increase our profitability this year, and each year over the next three years. We expect to accomplish this by focusing on improving certain high leverage business models, including driving more revenue through our current infrastructure, and substantially reducing inventory adjustments and write-offs. Camp 1: Significantly and Sustainably Increasing  Our Profitability Over the Next 3 Years. 