Franklin Covey 2000 Annual Report 6 Letter from the Chairmen –T o increase the profitability of our Handheld Devices business. Personal Digital Assistants (PDA’s), like the PALM® and iPAQ™ Pocket PC®, have become an increasingly important part of our business. The introduction of these devices has grown our market and created opportunities to capture new users into our channels. We welcome this. Franklin Covey is committed to being the expert in helping people to be productive and effective in the new digital age, and to offering the latest devices as part of its productivity system to meet these needs. However, we don’t want to be just a seller of devices (whether paper or electronic). We always want to add intellectual property value to everything we offer, and to sell a full solution. To address these needs, we have assembled a software “value suite” which has been loaded onto all of the PDA devices we sell. This suite includes: our Franklin Planning software (as always); some of Franklin Covey’s best selling books (digital); together with more than 20 of the most popular and useful applications which have been developed for PDA’s. In addition, we expect to add relevant training offerings to enable individuals to get more out of their productivity system. We believe that the inclusion of software and training with PDA’s we sell will both set us apart from the crowd, and generate greater value for both our customers and shareholders. –T o significantly improve our knowledge of, and ability to reach our customers. One of our greatest assets is the size, quality and loyalty of our customer base. Historically, however, our Company has not done a good job of knowing our customers’ names, needs, preferences and purchasing behaviors. During fiscal year 2000 our Customer Relationship Management (CRM) and database marketing teams made good progress in building the foundation for improving this effort. During fiscal year 2001 we expect both to continue our investment in building our CRM capabilities, and to utilize those capabilities already established to strengthen our relationship with our customers and drive increases in revenue and profitability. • Reducing Inventory Levels: Implementing the “Sku Optimization Plan”, managing the life-cycle of sku’s, increasing our inventory terms, and improving our supply chain processes, should allow us to increase our inventory turns sufficiently that, over the next twelve months, we will require less inventory to support our current level of sales.  • Reducing Receivables: We also plan to reduce the level of receivables necessary to support current sales levels through the implementation of better front-end and back-end processes. Since this focus began in the spring of this past year, DSO (Days Sales Outstanding) on corporate credit accounts has dropped from 85 days to 50 days. • Reducing our inventory write-offs by at least $2.5 million through improved supply chain manage- ment: Over the past three years, the Company incurred substantial inventory write-offs due to inventory control problems. Inventory levels relative to sales also increased. Through daily inventory tracking and weekly inventory reconciliation, unplanned inventory adjustments have been greatly reduced. Through new supply chain leadership and processes, we believe that inventory obsolescence, inventory levels, and cost of goods sold can be meaningfully improved. –T o strengthen Premier’s strategic positioning and profitability model. Premier has grown rapidly and profitably over the past several years. During fiscal year 2000, Premier delivered its agendas to approximately 17 million students in more than 30,000 schools. During fiscal year 2000, Premier tested the Student Achievement Workshop Program (S.A.W.) (training designed to increase student achievement). Utilizing prin- ciples from  7 Habits for Highly Effective Teens, the S.A.W. program test has been received enthusiastically by schools, school districts, teachers, students, and parents. During fiscal year 2001, Premier plans to introduce the S.A.W. program into a number of selected schools. We believe this will increase the profitability of Premier’s business model, and help to reposition Premier as not only the quality provider of productivity tools, but as a partner in increasing student achievement within its client schools.  Camp 2: Free Up Capital to Support Growth. Through fiscal years 2001 and 2002, we plan to free-up and profitably reinvest a significant amount of capital currently tied-up in inventories, receivables and property, plant and equipment. We have already begun this process through several initiatives, including: