Franklin Covey 2000 Annual Report Quarterly Financial Information: Interest Expense Income Taxes Preferred Stock Dividends QUARTERLY RESULTS Interest expense increased $1.6 million, primarily due to increased borrowing on the Company’s long-term line of credit to purchase shares of the Company’s common stock during fiscal 1999. During fiscal 1999, the Company recognized income tax expense of $4.5 million. Although the Company had a loss before income taxes of $4.2 million, non-deductible goodwill amortization from the merger with Covey Leadership Center and other acquisitions, foreign income tax expense, and losses in foreign countries resulted in a net taxable position for the year. The effect of foreign losses is primarily comprised of losses sustained in Japan for which no offsetting tax benefit could be recognized due to uncertain future taxable income to offset such losses.  During the fourth quarter of fiscal 1999, the Company issued 750,000 shares of Series A Preferred Stock for $75.0 million in cash to a private investor. The preferred stock dividends accrue at an annual rate of 10 percent and are payable quarterly in cash or additional shares of preferred stock until July 1, 2002. Accordingly, the Company accrued $1.9 million in preferred stock dividends as of August 31, 1999. Subsequent to August 31, 1999, the Company paid the accrued dividend with additional shares of preferred stock. The following tables set forth selected unaudited quarterly consolidated financial data for the most recent eight quarters. The quarterly consolidated financial data reflects, in the opinion of management, all adjustments necessary to fairly present the results of operations for such periods. Results of any one or more quarters are not necessarily indicative of continuing trends. Management’s Discussion and Analysis 29 Q1 Q2 Q3 Q4 In thousands, except per share amounts Sales $144,078 $145,023 $110,759 $185,339 Gross margin 85,053 83,098 57,710 105,130 Restructuring  costs (402) (4,544) Stock option  purchase and  relocation  costs 491 1,668 8,361 707 Income (loss)  before provision  for income taxes 13,093 5,430 (27,701) 14,731 Net income (loss) 7,188 2,819 (18,834) 4,418 Preferred dividends 1,914 2,036 2,028 2,027 Income (loss)  available  to common  shareholders $ 5,274 $ 783 $ (20,862) $ 2,391 Diluted income  (loss) per share $ .26 $ .04 $ (1.02) $ .12 Q1 Q2 Q3 Q4 In thousands, except per share amounts Sales $140,362 $137,089 $109,267 $168,205 Gross margin 86,431 79,128 58,522 87,710 Restructuring  costs 16,282 Loss on impaired  assets 16,559 Income (loss) before  provision for  income taxes 18,815 11,305 (7,922) (26,424) Net income (loss) 10,913 6,557 (4,595) (21,647) Preferred dividends 1,875 Income (loss)  available  to common  shareholders $ 10,913 $ 6,557 $ (4,595) $ (23,522) Diluted income  (loss) per share $ .50 $ .31 $ (.22) $ (1.15) YEAR ENDED AUGUST 31, 2000 YEAR ENDED AUGUST 31, 1999