Management’s Discussion and Analysis 31 Franklin Covey 2000 Annual Report Net cash provided by operating activities during fiscal 2000 and 1999 was $50.6 million and $36.0 million, respectively. Adjustments to net loss for fiscal 2000 included $48.5 million of depreciation and amortization charges. The primary sources of cash from operations resulted from improved collections of accounts receiv- able and reduced inventories. In contrast with recent fiscal years, the collection of accounts receivable resulted in a net source of cash to the Company in spite of con- tinued fourth quarter sales growth at Premier Agendas. During fiscal 2000, the Company implemented new accounts receivable collection policies and procedures at its core operations, which reduced the number of receivable days outstanding and improved cash flows. The Company also implemented new inventory proce- dures designed to optimize inventory levels, which contributed to reduced inventory levels compared with the prior year. Additionally, the Company utilized certain income tax benefits and various tax strategies to minimize required income tax payments throughout the year. The primary uses of cash in fiscal 2000 were payments related to the Company’s restructuring plan for severance and building exit costs, and the purchase of stock options and payments for sales associate relocation expenses. For the fiscal year ended August 31, 1999, adjustments to net loss included $43.5 million of amortization and depreciation, $16.6 million for losses on impaired assets and a net increase of $10.5 million in deferred tax assets. The change in deferred taxes primarily represents an increase in current deferred tax assets generated in fiscal 1999. The primary uses of cash for operational activities were increases in inventory of $12.0 million and increased receivables totaling $8.9 million. Inventories increased primarily due to an increase in the number of Franklin Planner designs, new binder models in stock and higher costs associated with electronic products. Accounts receivable increased due to increased sales at Premier, which has seasonal sales that occur primarily during the Company’s fourth quarter. In connection with its restructuring plan, the Company recorded a $16.2 million accrual in fiscal 1999 for expected costs to reduce the workforce and exit certain leased office space, which is included as a component of cash flows from operations. Cash used to pay income taxes is the result of quarterly payments on expected taxable earnings that exceeded actual taxable income for the year. The increase in payables and accrued liabilities is primarily due to the timing of goods and services received and corresponding payments. Net cash used for investing activities during fiscal years 2000 and 1999 was $38.9 million and $40.7 million, respectively. For the year ended August 31, 2000, the Company used $24.5 million of cash to purchase com- puter hardware and software, manufacturing equipment, leasehold improvements, and other property and equip- ment. The Company used $16.3 million to pay contingent earnout payments to the former owners of Premier Agendas and personal coaching. In addition, the opera- tions of Professional Resources Organization and Daytracker.com were acquired during fiscal 2000 for $4.5 million in cash. The Company also sold the assets of the commercial division of Publishers Press, a printing services subsidiary, for $11.0 million in cash and a $2.4 million secured note receivable. Net cash proceeds to the Company from the sale totaled $6.4 million. During fiscal 1999, the Company paid $14.8 million in contin- gent earnout payments and spent an additional $4.2 million to acquire other businesses during the year, including Khalsa Associates, a sales training company. Capital expenditures during fiscal 1999 totaled $23.0 million and consisted primarily of an addition to one of the Company’s buildings, new store leasehold improve- ments, computer hardware and software, and other manufacturing equipment. The Company also received $1.3 million in cash from the sale of certain land and a non-business related building. Net cash used for financing activities during fiscal 2000 was $18.0 million, compared to net cash proceeds of $2.4 million in fiscal 1999. The primary source and use of cash was related to the expansion of the Company’s line of credit and the retirement of certain notes payable. At August 31, 1999, the Company had $85.0 million of senior unsecured notes payable (the “Notes Payable”) outstanding. The Notes Payable required the Company to maintain certain financial ratios and net worth levels until the Notes Payable were paid in full. Due to restructuring charges in the fourth quarter of fiscal 1999, the Company was not in compliance with the terms of the Notes Payable. The Company did not obtain a waiver of the terms of the Notes Payable, and during the first quarter of fiscal 2000, the Notes Payable were retired at par plus accrued interest. Also during the first quarter of fiscal 2000, the Company obtained a new line of credit from existing lenders that maintained the Company’s $10.0 million short-term line of credit, but expanded the long-term line to $100.0 million. The $100.0 million long-term line was subsequently scaled back to $73.0 million as a result of the Company’s guarantee related to the management stock loan program. The Company used existing cash and its expanded line of credit to retire the Notes Payable. During fiscal 1999, the Company used $40.7 million for payments on long-term debt, primarily on its long-term line of credit. In addition, the Company used $32.7 million to purchase 2,126,000 shares of its common