Letter from the Chairmen 3 Franklin Covey 2000 Annual Report Business Plan Details • Simplifying the Business: In last year’s annual report, we used a mountain climbing metaphor to outline an overall plan for turning the Company around. Since then, we have spent thousands of hours reviewing business units’ plans, evaluating alternative strategies, meeting with customers and assembling and reviewing customer information, establishing key priorities, and recruiting individuals for key positions (from inside and outside the Company). Utilizing the same mountain climbing metaphor which has become part of our internal language, we have established a detailed “climbing” plan to allow us to significantly increase our ability to meet customer needs, address negative operating trends and build a foundation for significantly increasing profitability and growth. This plan commits us to the following major objectives, identified as “camps”: The combined impact of these initiatives is expected to increase revenues and EBITDA in fiscal year 2001 compared to fiscal year 2000 by approximately $30 million and $20 million, respectively. A brief overview of the plan for each camp follows: Base Camp: To simplify our business, eliminate excess costs and to prepare for the climb ahead, we have:  (1) reduced the complexity of our business to put our full focus on a few key strategic and operational initia- tives; (2) attacked and eliminated excess operating costs; (3) scaled our staffing levels to match our objectives;  and (4) aligned the focus of management with our shareholders. – Outsourcing or eliminating functions which are not central to our “core competency.” To focus our full effort on those elements of our business which are our core competencies, we have significantly reduced the scope of many of our central services activities, and are considering the possible outsourcing of a portion of our information systems’ and technology solutions’ operations. We are extremely appreciative of the contributions, loyalty, and hard work of our associates in these areas. If a decision is ulti- mately made to outsource these operations, our goal will be to continue our close relationship with the individuals in these areas, either directly or through a contract with a quality outsourcing partner. – Selling or closing non-strategic business units. Over the past six months, we completed the sale or closure of certain non-strategic operations. Specifically, our Publisher’s Press commercial printing operation was sold, and we closed our binder manufacturing and binder repair operations. Other non-strategic operations have been identified as part of our business review process and we will be considering alternatives for these operations over the next few months. – Eliminating unprofitable and non-strategic sku’s. During fiscal year 2000, we eliminated more than 5,000 unprofitable or non-strategic sku’s from our product and training offerings world- wide, and nearly 900, or 39 percent, of our sku’s in the United States. To first test and assess the impact of this sku reduction on our customers and store operations, we implemented the sku reduction and re-merchandised the remaining sku’s in selected stores during May this past year. The results were extremely encouraging. The man- agers of these stores reported very few customer concerns (most will be addressed by the introduction of the new Forms Wizard), better merchandising of the remaining sku’s, and a better store “feel”. Sales in these stores remained as strong or stronger than they were before, and margins improved. As a result, we implemented this effort throughout all our retail stores. We expect this effort to reduce development, marketing, purchasing, manufacturing and distribution costs relating to unprofitable products, and improve the average gross margins on our remaining products and offerings. • Base Camp: To simplify and focus the Company’s business and eliminate excess activities and costs • Camp 1: To significantly and sustainably increase our profitability • Camp 2: To free-up a substantial amount of capital to support our substantial investments in new solutions and in growth • Camp 3: To significantly expand our ability to reach individuals and organizations and to provide them with solutions which will help them to become measurably more effective… thereby increasing the strength and defensibility of our position in the marketplace • Camp 4: To reestablish Franklin Covey as an exciting, highly relevant growth company.