Form 10-K 19 Franklin Covey 2000 Annual Report CLIENTS COMPETITION Products. The paper-based time management and personal organization products market is intensely competitive and subject to rapid change. Franklin Covey competes directly with other companies that manufac- ture and market calendars, planners, personal organizers, Consulting. Franklin Covey’s PCOC change management methodology, which it initiated in 1996, is directly linked to organization and culture change. Effective change is achieved through creating a principle-centered founda- tion within an organization and by aligning systems and structures with that foundation. Franklin Covey believes its approach to organization and culture change is distinguishable from the approach taken by more traditional change management and reengineering firms, as Franklin Covey’s approach complements rather than competes with the offerings of such firms. Training. Competition in the performance skills organizational training industry is highly fragmented with few large competitors. Franklin Covey estimates that the industry represents more than $6 billion in annual revenues and that the largest traditional organizational training firms have sales in the $200 million range. Based upon Franklin Covey’s fiscal 2000 domestic training and education sales of approximately $214 million, the Company believes it is a leading competitor in the organizational training market. Other significant competitors in the leadership training market are Development Dimensions International, Achieve Global (formerly Zenger Miller), Organizational Dynamics Inc., Provant, Forum Corporation, EPS Solutions and the Center for Creative Leadership. Franklin Covey has developed a broad base of institu- tional and individual clients. The Company has more than 8,000 institutional clients consisting of corpora- tions, governmental agencies, educational institutions and other organizations. The Company believes its products, workshops and seminars encourage strong client loyalty. Employees in each of Franklin Covey’s distribution channels focus on providing timely and courteous responses to client requests and inquiries. Institutional clients may choose to receive assistance in designing and developing customized forms, tabs, page- finders and binders necessary to satisfy specific needs. Given the relative ease of entry in Franklin Covey’s product markets, the number of competitors could increase, many of whom may imitate the Company’s methods of distribution, products and seminars, or offer similar products and seminars at lower prices. Some of these companies may have greater financial and other resources than the Company. Franklin Covey believes that the Franklin Planner and related products compete primarily on the basis of user appeal, client loyalty, design, product breadth, quality, price, functionality and client service. Franklin Covey also believes that the Franklin Planner has obtained market acceptance primarily as a result of the concepts embodied in its Franklin Planner, the high quality of materials, innova- tive design, the Company’s attention to client service, and the strong loyalty and referrals of its existing clients. Franklin Covey believes that its integration of training services with products has become a competitive advantage. Moreover, management believes that the Company is a market leader in the United States among a small number of integrated providers of time manage- ment products and services. Increased competition from existing and future competitors could, however, have a material adverse effect on the Company’s sales and profitability. appointment books, diaries and related products through retail, mail order and other direct sales channels. In this market, several competitors have widespread name recog- nition. The Company believes its principal competitors include DayTimer®, At-A-Glance® and Day Runner®. Franklin Covey also competes, to a lesser extent, with companies that market substitutes for paper-based products, such as electronic organizers, software PIMs and handheld computers. The Company’s Franklin Planner Software competes directly with numerous other PIMs. Many of Franklin Covey’s competitors have significant marketing, product development, financial and other resources. An emerging potential source of competition is the appearance of calendars and event- planning services available at no charge on the Web. There is no indication that the current level of features has proven to be attractive to the traditional planner customer as a stand-alone service, but as these products evolve and improve, they are likely to pose a competitive threat. In response, Franklin Covey intends to combine on-line planning services with PALM® Computing and Compaq’s iPAQ™ Pocket PC®, Software, web-based and paper planners to provide a competitive, complete planning solution to its clients.