The Manual of Ideas: The Magic Formula 100 by BeyondProxy LLC

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THE “MAGIC FORMULA” 100 ► Joel Greenblatt’s winning investment approach – why it works ► Analysis of Top 100 companies passing “Magic Formula” screen ► Proprietary selection of Top 10 investment opportunities Companies include Accenture, Acme Packet, Aladdin Knowledge, Allegheny, Ambassadors Group, American Eagle Outfitters, AmerisourceBergen, Bare Escentuals, Barrett Business Services, Biovail, Boeing, Broadridge Financial, BSQUARE, Cadence Design, CF Industries, Coach, CTC Media, Darling, Dell, Deluxe, DepoMed, Diamond Mgmt & Technology, DISH Network, Double-Take Software, Dynacq Healthcare, EarthLink, eBay, EMCOR, Emulex, First Advantage, Forest Labs, Foster Wheeler, Gannett, Garmin, Hansen Natural, Heidrick & Struggles, Herbalife, Herman Miller, Hurco, iBasis, ICF International, Iconix, infoGROUP, Jackson Hewitt, KBR, Kenexa, KHD Humboldt Wedag, King Pharma, Korn/Ferry, Lam Research, LCA-Vision, Lear, Lincare, Lorillard, Manitowoc, McGraw-Hill, Medicis Pharma, MEMC Electronic Materials, Meredith, Mesabi Trust, Microsoft, Monster, Mosaic, Net 1 Ueps, New Frontier Media, NutriSystem, NVIDIA, Pacer, Perini, Pre-Paid Legal, Precision Castparts, Premier Exhibitions, PRIMEDIA, Questcor Pharma, R.G. Barry, RadioShack, Robert Half, Rockwell Automation, Seagate, Sierra Wireless, Sigma Designs, Spark Networks, SPSS, Syneron Medical, Take-Two Interactive, Tempur-Pedic, TheStreet.com, Total System Services, Travelzoo, USA Mobility, VAALCO Energy, Value Line, ValueClick, Varian Semiconductor, Verigy, Versant, Viacom, ViroPharma, Western Digital, and more. Special Section, pages 4-259

Also inside:

Proprietary Stock Screens

Proprietary Investment Idea Lists

Searching for equities with asymmetrical risk-reward profiles… “shunned by the market, but not by insiders”  “biggest losers”  “biggest losers (deleveraged)”  “biggest losers (deleveraged, likely profitable)”  “lots of revenue, but little enterprise value”  “neglected gross profiteers”  “companies with strong, liquid balance sheets”  “underperformers”  “sale, liquidation or recap opportunities”  “good businesses at good prices”… based on LTM EBIT… this FY EPS estimates… next FY EPS estimates… 2012 EPS estimates

Top 10… best of the best  companies with hidden assets  superinvestor ideas  tax-selling bargains  stocks you’ve never heard of  bargains in financial sector  heavily shorted stocks  Renaissance Technologies ideas  foreign companies listed in U.S. or Canada  branded businesses  explosive stocks Top 10 ideas for… activist value investors  deep value investors  cash flow investors  GARP investors  special situation investors  nano cap investors  micro cap investors  small cap investors  mid cap investors  large cap investors Portfolios With “Signal Value” Top ideas of top investors… Ackman  Berkowitz  Buffett  Cumming & Steinberg  Einhorn  Greenberg  Hawkins  Icahn  Klarman  Lichtenstein  Loeb  Mandel  Pabrai  Pzena  Lampert  Hohn  Watsa  Whitman

Industry Browsers Snapshots of sectors including… basic materials  capital goods  consumer cyclical  consumer noncyclical  energy  financial  healthcare  services  technology  transportation  utilities Beyond the MOI… Best free ideas and opinion on the Internet

Copyright Warning: It is a violation of federal copyright law to reproduce all or part of this publication for any purpose without the prior written consent of BeyondProxy LLC. The Copyright Act imposes liability of up to $150,000 per issue for such infringement, and violators will be prosecuted to the full extent of the law. See last page for subscription information, including having multiple copies sent to you. © 2008 by BeyondProxy LLC. All rights reserved.

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EDITORS’ COMMENTARY Dislocations Galore

collection of Titanic artifacts. 16% shareholder Mark Sellers launched a push to fire the CEO earlier this month.

Syneron (ELOS), an aesthetic medical products company, has substantial earning power yet trades below net cash and investments. Baupost is a major shareholder.

deas are the lifeblood of the investment business. To be sure, many investors have failed despite good ideas, but few have succeeded without them. Our goal is to put you in the best possible position by consistently delivering high-quality analysis and winning ideas. It’s a good time to be in the ideas business. The dislocations over the past few months have been truly extraordinary. The deleveraging wave sweeping markets and the blowup of specific pools of capital have left an unprecedented number of securities trading with little regard for intrinsic value. We’ve uncovered some compelling opportunities among the 100 “magic formula” companies analyzed in this issue. While our Top 10 picks are most noteworthy, you are likely to find many more companies deserving of further investigation. So, make yourself comfortable and get ready for a rewarding journey into idea land. Our Top 10 magic formula selections are high-ROIC businesses misunderstood by investors and, therefore, mispriced. American Eagle (AEO), the youth fashion brand, has been shunned despite one of the best business models in retail, featuring strong brand loyalty, efficient sourcing and excellent store economics.

Tempur-Pedic (TPX), the non-innerspring mattress leader, has been heavily shorted due to its discretionary, high-ticket product, input cost pressures and financial leverage. The short thesis grossly underestimates the company’s highly variable cost structure and ability to service the debt, potentially setting up a short squeeze. Travelzoo (TZOO), an online distributor of travel deals, has been dismissed as a casualty of weak consumer spending. However, the company’s solid U.S. profitability is masked by startup losses related to global expansion. With large insider ownership and insider buying, the market appears to have hugely misjudged intrinsic value. Barely missing our Top 10 selections are fellow magic formula stocks Barrett (BBSI), Dell (DELL), New Frontier (NOOF), and Versant (VSNT).

THIS IS CURIOUS… Volkswagen (VOW.DE) briefly became the most highly valued stock in the world, hitting 1,000 euros per share even as intrinsic value remained well below 100.

Garmin (GRMN), the leading provider of personal navigation devices, has lost the momentum that had attracted speculators; yet, the company continues to enjoy a large market opportunity and trades at 6x 2009E EPS.

Playboy (PLA) trades at an adjusted enterprise value of $90 million, despite ownership of the Playboy Mansion (on the books for $1 million but worth well north of $50 million) and annualized EBIT of more than $25 million from the growing brand licensing segment alone.

KHD Humboldt Wedag (KHD), a global cement plant engineering firm, is run by an unusually adept CEO and has massive under-appreciated non-core assets, including cash, preferred stock and an iron ore interest.

Tree.com (TREE), an InterActiveCorp spinoff, has a market value of $21 million, despite more than $40 million of net cash, recent buying by the CEO and CFO, and a takeout value five years ago of $700+ million.

MEMC Electronic Materials (WFR), a wafer maker for semiconductor and solar applications, is valued as a commodity semi cap equipment firm, ignoring the company’s leadership in the growing solar industry.

Cresud (CRESY), a leading Argentinian agricultural company, trades at $6 per share, below the value of its public company holdings and the net cash raised in a Leucadia-backed $16 per-share rights offering in March. The market ascribes no value to Cresud’s ownership of more than one million acres of productive land.

Microsoft (MSFT) has finally said “no” to Yahoo and embarked on a $40 billion accretive stock buyback, yet it continues to trade at a major discount to the sum-ofthe-parts value of its business units. Net 1 (UEPS), a provider of payment cards to the unbanked in South Africa and elsewhere, continues to grow and has recently removed major uncertainty, yet it trades at 5x forward earnings.

Enjoy — and be sure to keep the good ideas coming by subscribing today (see subscription form on last page). Do also let us know how we can make the MOI more valuable to you. Email us at editor@manualofideas.com.

Premier Exhibitions (PRXI), a developer of museum-quality exhibitions and the salvor-in-possession of the Tianic shipwreck site, has misstepped and is now valued not only at a low single digit multiple of normalized EPS but also below the appraised value of its © 2008 by BeyondProxy LLC. All rights reserved.

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—The Manual of Ideas Editorial Team

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employed). The two rankings are given equal weight in the final compilation of the MFI Top 100. This simple process stands in stark contrast to most quantitative screening methods, which rely on multiple variables and are difficult to replicate.

Magic Formula 100 Greenblatt’s Approach – Why It Works Our Top 10 Magic Formula Selections Profiles of Magic Formula 100

agic Formula investing is based on a simple yet powerful way of searching for undervalued stocks. According to Joel Greenblatt’s The Little Book That Beats The Market, portfolios of stocks selected quantitatively based on MFI criteria have handily outperformed the S&P 500 over the past couple of decades.

Makes sense. Few investors would prefer a bad business to a good one, and few would purposely ignore the price they pay for a stock. MFI seeks out good companies that are available at good prices. The result is a list of businesses that offer both a high earnings yield and a relatively high probability that capital reinvested in the business will generate high returns. It makes intuitive sense that such stocks should outperform.

WHY MAGIC FORMULA WILL CONTINUE TO WORK Magic Formula Performance vs. S&P 500, 1988-2004 80%

60%

40%

20%

-20% MF (all companies)

MF (largest 1000 companies)

S&P 500

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

-40%

CAGR, 1988-2004 Magic Formula (all companies) 31% Magic Formula (largest 1000 companies) 23% S&P 500 12% Source: Joel Greenblatt, The Little Book That Beats the Market.

WHY WE LIKE MAGIC FORMULA INVESTING* Advocated by “super investor” Joel Greenblatt. Greenblatt invented MFI as a do-it-yourself version of the approach he has espoused while amassing one of the most impressive investment track records of all time. While reliable data on Greenblatt’s complete track record is not available, some estimates put his annualized returns over the past couple of decades at well north of 20%. From 1985-1994, Greenblatt managed the Gotham Partners hedge fund, reporting annualized returns of 50% (after expenses, before performance fees). Gotham returned all outside capital in January 1995. Simple. The MFI screen ranks companies based on only two variables: “cheapness” (pre-tax unlevered earnings yield) and “goodness” (return on capital *

(besides the fact that it makes money)

“Institutional imperative” makes adherence to MFI difficult. Institutional managers care not only about investment risk but, perhaps more acutely, about career risk. Many managers cannot afford to follow a winning strategy if it involves enduring long stretches of relative underperformance. It is much safer from a career standpoint to be “wrong” when everyone else is losing money than to be “wrong” when everyone is making money. During the 1988-2004 period studied by Greenblatt, MFI handily outperformed the S&P 500, yet the strategy experienced two non-overlapping three-year periods of underperformance. While most fund managers may be able to endure a quarter or a year of underperformance, they may be left with few investors after a two- or three-year period of subpar results. It is therefore extremely difficult to stick with MFI when the going gets tough. Investors have a hard time turning off their emotional biases. Even a quick peek at the list of candidates generated by the MFI screen – available at www.magicformulainvesting.com – is likely to make an investor’s stomach churn. Many companies on the list are either in out-of-favor industries or have major companyspecific issues, such as regulatory scrutiny, accounting problems, executive turnover, or deteriorating operating momentum. While many investors may agree conceptually that buying good companies when they are out of favor is a path to long-term outperformance, a much smaller number would actually be willing to follow such a strategy. As a quantitative method, the MFI screen is perfectly sanguine about picking a headhunting firm during a recession or a laser eye surgery provider when the media is calling into question the safety of laser eye surgery. Professional investors legitimately want to use the MFI list as a starting point from which to do further research and ultimately make a subjective judgment

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regarding an investment opportunity. Unfortunately, the subjective judgment is frequently tainted by emotional bias. As a result, the investor may dismiss the headhunting firm by thinking, “Of course it’s cheap, we’re in a recession!” Similarly, the investor may dismiss the laser eye surgery company by thinking, “Of course it’s cheap, they might go out of business!” MFI never runs out of investment candidates. Several value investment strategies have become de facto obsolete over time. For example, whereas Ben Graham successfully searched for so-called “net nets” more than a half-century ago, such companies have become virtually extinct today. The few companies whose current assets exceed the sum of their equity market value and total liabilities are typically either depleting those current assets at a rapid pace or there are other reasons why theoretical liquidation values might not be realized. As a result, today’s professional investors cannot build their businesses around “net nets.” By contrast, MFI simply ranks public companies relative to each other. There is no absolute cheapness requirement, whether it be “net net” or that book value exceed market value. As a result, MFI will always provide investors with an investable list of relatively attractive public companies. Investors tend to remain skeptical of winning strategies even after long periods of outperformance. Investors have been taught – you might say “brainwashed” – that markets are efficient and there is no free lunch. As a result, they struggle with the notion that a simple quantitative strategy can systematically outperform the best efforts of large numbers of securities analysts and portfolio managers. For example, stocks that trade at a low multiple of price to book value have outperformed the broader market in a statistically significant way for a long period of time. Economists Eugene Fama and Kenneth French have studied this phenomenon extensively (latest data is available at www.kennethfrench.com). Ironically, even after having observed this contradiction of the efficient markets hypothesis (EMH) for many years, Fama, in true professorial fashion, tried to explain it away by invoking the EMH adherents’ favorite axiom: If a strategy outperforms, it must be riskier! Unfortunately for Fama, the strategy of buying stocks with low price-to-book multiples also exhibited relatively low volatility. Volatility, of course, is the EMH adherents’ favorite definition of risk. Undeterred, Fama concluded that low price-to-book stocks must be riskier in other ways… The continuing lack of disappearance of the low price-to-book “anomaly” suggests that investors may not flock to MFI even after many years of demonstrated outperformance.

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OUR PROPRIETARY TOP 10 SELECTION PROCESS The Manual of Ideas has developed a process that seeks to improve upon the already impressive performance of the magic formula screen. The MF 100 is an unranked list of the 100 most attractive companies based on earnings yield and return on capital employed. We highly recommend Joel Greenblatt’s MFI website, www.magicformulainvesting.com. MOI’s methodology recognizes that not every equity investment should be approached with the same set of questions. Security analysis should be tailored to the type of opportunity examined. For example, an investor analyzing a company that trades at a large discount to net cash and tangible book value might inquire whether the company can be liquidated without major asset impairments, not whether the company’s long-term competitive position is favorable. On the other hand, an investor analyzing a company that trades well above book value and at a high multiple of earnings must examine prospects for sustained rapid earnings growth. The performance of the MFI screen can be improved if one asks questions that take into account the nature of magic formula selections. Of particular concern is the fact that MFI favors firms exhibiting high returns on capital employed. Such companies are generally not cheap based on the liquidation value of their assets. Instead, they might be cheap based on current and prospective earning power. As a result, a crucial determination when evaluating MF selections is whether they exhibit above-average returns on capital for transitory reasons or for reasons that have some permanence. Warren Buffett calls this moat; others may know it as sustainable competitive advantage. It is also crucial whether a business operates in a growing industry that allows the company to reinvest a portion of free cash flow at high rates of return. The MOI seeks out companies whose earnings yield is likely to increase over time if the stock price remains unchanged. Such companies not only sustain high returns on capital, but also grow earnings by reinvesting cash in the business. As they generate high returns, such companies need to reinvest only a portion of FCF in order to achieve respectable growth. As a result, they generally have cash available for dividends and stock repurchases. Buybacks executed at “good” prices accelerate EPS growth and value creation. In order to narrow down the list of 100 MF companies to the ten most promising investments, we use a scoring methodology to rank the companies. We then consider the scoring results and a number of increasingly subjective criteria to narrow down the list to

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ten investments. In addition to “positive” criteria, such as sustainability of competitive advantage, management quality and industry growth, our selection methodology takes into account the following negative criteria, among others (as Charlie Munger might say, “Invert!”): •

Pro forma adjustments: We eliminate companies that would not be on the MF list if their financial statements were adjusted to reflect true operating performance (may include companies recently engaged in large M&A).

•

Capital reinvestment: We avoid companies with virtually no opportunity for high-return reinvestment of capital (typically companies in industries in long-term decline).

•

Threats to key revenue source: We avoid companies dependent on a specific customer or contract, if loss of latter has become a real possibility (circumstances may include acquisition of major customer, ongoing re-bid process for large contract, or loss of patent protection).

•

Cyclicality: We avoid capital-intensive businesses that generate high ROIC only during cyclical upswings in their respective industries.

•

Faddishness: We avoid companies providing a product or service that has a reasonably high likelihood of being a fad.

•

Insider selling: We avoid companies with heavy recent insider selling, particularly if such selling

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occurred at prices roughly equal to or below the current market price. •

Alignment of interests: We avoid companies with major CEO conflicts of interest or corporate governance abuses.

•

Value proposition: We avoid companies that offer a questionable value proposition to their end customers.

•

M&A rollups: We avoid companies that have meaningful integration risks due to major reliance on acquisition-driven growth.

MAGIC FORMULA TOP 10 — MOI SELECTIONS

(in alphabetical order) • • • • • • • • • •

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American Eagle Outfitters (AEO) Garmin (GRMN) KHD Humboldt Wedag (KHD) MEMC Electronic Materials (WFR) Microsoft (MSFT) Net 1 UEPS (UEPS) Premier Exhibitions (PRXI) Syneron (ELOS) Tempur-Pedic International (TPX) Travelzoo (TZOO)

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American Eagle Outfitters (NYSE: AEO) Price: $8.88 ($8.44-$23.84) Market value: $1.8 billion Enterprise value: $1.5 billion Shares out: 205.9 million Institutional ownership: 80% Insider ownership: 10% Insider buys/sales: 4/2

P/E FYE 2/2/08: P/E FYE 1/31/09: P/E FYE 1/31/10: P/E FYE 1/31/11: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Branded Apparel Retail (www.ae.com) 4.9x 7.0x 7.2x 6.5x 0.5x 3.0x 1.3x

Business: American Eagle Outfitters sells its own brand of laidback, current clothing targeting 15-25 year-olds, providing quality merchandise at affordable prices. The collection includes standards like jeans and graphic Ts as well as accessories, outerwear, and footwear. AEO operates ~875 stores in the U.S. and ~75 in Canada. AEO also markets a girls’ underwear collection, aerie, available in 81 standalone and AE stores. Martin + Osa targets 28-40 year-olds and offers Refined Casual clothing and accessories in 22 stores. Thesis: American Eagle is a well-managed specialty retailer with a strong, proprietary brand and good alignment of interests (insiders own 12%; chairman Schottenstein bought one million shares at $23-24 last year). While investors are acutely aware of the macro headwinds facing the average AEO customer, the market is not giving AEO enough credit for continuing to deliver strong returns on capital invested in AE stores. At the recent trading price, AEO shares offer a rare opportunity to buy a great company with no net debt at a small premium to tangible book. We value AEO at $17-27 per share, based on a range of 6x trailing EBIT to 8x estimated normalized EBIT (detailed analysis herein).

Garmin (Nasdaq: GRMN) Price: $19.04 ($18.00-$112.68) Market value: $3.9 billion Enterprise value: $3.3 billion Shares out: 202.5 million Institutional ownership: 31% Insider ownership: 46% Insider buys/sales: 6/0

2/3/07 2,794 1,340 587 387 1.70 226 523 814 1,189 465 10 1,417 1,980 >100%

2/2/08 3,055 1,423 599 400 1.82 250 214 620 1,021 376 12 1,341 1,868 >100%

8/2/08 3,069 1,361 514 344 1.61 288 201 305 859 386 11 1,405 1,945 65%

$40 $30 $20 $10 $0 99 00

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Personal and Specialty Navigation Devices (www.garmin.com) P/E FYE 12/29/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

4.9x 5.1x 5.7x 5.8x 0.9x 3.5x 2.0x

Business: Garmin provides GPS-enabled navigation, communication and information devices and applications. Garmin’s products serve automotive, mobile, wireless, outdoor recreation, marine, aviation, and OEM applications. Large dealers and distributors include Best Buy and Wal-Mart, but no customer accounts for 10% or more of revenue. Thesis: Garmin shares are unjustifiably cheap. The company is the worldwide leader in personal navigation devices, ahead of Dutch provider TomTom, which has a leveraged balance sheet and appears to be struggling to survive the current downturn. Garmin continues to grow revenue, and while unit growth has slowed, the market for personal navigation devices continues to benefit from increasing consumer adoption. Profits have stagnated due to rapid ASP erosion. However, price declines appear likely to moderate, enabling the company to continue reasonably strong operating performance even in a weak economic environment. The stock has been “orphaned” as momentum investors have exited. We value Garmin at $35-65 per share, based on a range of 10x estimated 2009 earnings to 10x estimated normalized earnings (detailed analysis herein).

1/28/06 2,322 1,078 459 294 1.26 82 384 752 1,077 352 10 1,156 1,606 >100%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 1,028 535 338 311 1.43 27 220 367 801 196 36 1,157 1,362 92%

12/30/06 1,774 882 555 514 2.35 93 269 410 1,169 338 68 1,558 1,897 >100%

12/29/07 3,180 1,463 907 855 3.89 157 525 745 2,333 802 196 2,351 3,292 99%

9/27/08 3,663 1,632 939 882 4.08 143 496 540 2,037 697 214 2,140 3,015 88%

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KHD Humboldt Wedag (NYSE: KHD) Price: $9.10 ($7.26-$35.79) Market value: $278 million Enterprise value: -$118 million Shares out: 30.5 million Institutional ownership: 44% Insider ownership: 22% Insider buys/sales: 0/0

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Cement Plant Engineering (www.khdhumboldt.com) 6.4x 4.3x 5.1x 7.7x n/m n/m 0.8x

Business: KHD Humboldt Wedag operates in two segments: Industrial plant engineering and equipment supply provides technologies, equipment, and engineering services for cement, coal, and minerals processing. The segment also builds plants that produce clinker, cement, clean coal, and minerals. The resource property segment consists of a mining sublease on which the Wabush iron ore mine is situated that commenced in 1956 and expires in 2055. Thesis: KHD is a rare cyclical magic formula stock we find compelling. The business has existed for more than a century, and KHD has proven itself an innovator. Growth exploded in recent years, as cement plant engineering services and equipment experienced strong global demand. Chairman Michael Smith has a proven track record of efficient capital allocation at several public companies. The market is myopically focused on the outlook for cement engineering while completely ignoring KHD’s excess assets. We value KHD at $25-37 per share, based on a sum-of-the-parts valuation analysis that considers the company’s $481 million in net cash, investments and Mass Financial preferred shares; the Wabush iron ore interest; and the core cement engineering business (detailed analysis herein).

MEMC Electronic Materials (NYSE: WFR) Price: $15.34 ($13.79-$96.08) Market value: $3.4 billion Enterprise value: $2.4 billion Shares out: 224.5 million Institutional ownership: 89% Insider ownership: 1% Insider buys/sales: 1/0

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

12/31/05 384 52 31 25 1.01 3 65 102 462 249 0 285 610 52%

12/31/06 459 72 43 30 1.04 3 40 221 513 316 0 319 748 >100%

12/31/07 580 86 53 34 1.42 4 127 356 634 396 0 307 789 n/m

9/30/08 638 116 86 70 2.31 3 111 395 709 412 0 352 848 n/m

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Wafers for Semiconductor and Solar Applications (www.memc.com) 4.3x 4.3x 3.7x 3.3x 1.1x 2.5x 1.7x

Business: MEMC provides silicon wafers for semiconductor and solar applications. It has global R&D and manufacturing facilities. Customers include semi device and solar cell makers. MEMC sells wafers from 100-300mm and intermediate products such as polysilicon and silane gas. The company has 200+ U.S. and 450+ foreign patents. Samsung and Yingli Green Energy each accounted for 10%+ of revenue in 2007. Thesis: MEMC is a technology company tapping into long-term semiconductor industry growth and global adoption of solar cells. Shares have declined as the outlook for semi cap equipment makers has deteriorated and management has slashed guidance (the CEO resigned in late October). We believe momentum-oriented investors have overreacted to the slowdown in growth. While semi cap equipment is highly cyclical, solar represents a major secular growth opportunity, which the market is currently ignoring. We value MEMC at $30-36 per share, based on a range of 6x trailing EBIT to 10x estimated 2009 EPS (detailed analysis herein).

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 1,107 367 257 249 1.10 163 158 101 436 225 0 711 1,148 46%

12/31/06 1,541 689 558 369 1.61 148 379 551 900 258 0 1,167 1,766 90%

12/31/07 1,922 1,001 850 826 3.56 276 641 1,286 1,590 444 0 2,035 2,887 >100%

9/30/08 2,115 1,105 943 694 3.00 346 410 1,089 1,429 523 0 2,080 2,985 >100%

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Microsoft (Nasdaq: MSFT) Price: $20.06 ($18.74-$36.72) Market value: $178.4 billion Enterprise value: $159.7 billion Shares out: 8,895.6 million Institutional ownership: 61% Insider ownership: 13% Insider buys/sales: 1/28

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Operating Systems, Business Software, Games & Online Services (www.microsoft.com) P/E FYE 6/30/08: P/E FYE 6/30/09: P/E FYE 6/30/10: P/E FYE 6/30/11: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

10.7x 9.9x 8.8x 7.7x 2.6x 7.2x 9.2x

Business: Microsoft, founded in 1975, is the world’s largest software firm. It operates in five segments: Client (Windows OS), Server and Tools (Windows & SQL Server), Online Services (MSN), Business (Office, Project, Visio, Exchange, Live Meeting), and Entertainment and Devices (Xbox, Zune, Windows Mobile, Windows Embedded). Thesis: Microsoft is quite possibly the world’s best business, as reflected by the company’s global ubiquity, virtually unassailable market position in operating systems, strong management, and ability to generate enormous profits while employing no capital in the business. While Microsoft is cheap based on 10x estimated FY09 headline EPS, the undervaluation becomes even more apparent if one considers that the company’s balance sheet remains deleveraged and that valuable businesses, such as MSN and Xbox, are not yet contributing to headline EPS. We value Microsoft at $41-54 per share, based on the sum-of-the-parts valuation analysis presented herein. Our estimate ascribes no value to the company’s recently announced $40 billion stock repurchase plan, which should be highly accretive to EPS.

P/E FYE 6/30/08: P/E FYE 6/30/09: P/E FYE 6/30/10: P/E FYE 6/30/11: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

6/30/08 60,420 48,822 22,180 17,681 1.87 3,182 18,430 23,662 43,242 29,886 14,081 36,286 72,793 n/m

9/30/08 61,719 49,948 22,204 17,765 1.90 3,450 15,654 18,747 37,202 24,383 14,190 33,594 65,117 n/m

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06 07

Electronic Payment Processing (www.net1ueps.co.za) 7.3x 5.8x 5.1x 4.8x 1.9x 4.6x 4.2x

Business: Net 1 provides a proprietary universal electronic payment system (UEPS) to the underbanked in developing economies. It operates in four segments, primarily in South Africa: The transactionbased activities segment earns fee income from a state welfare distribution service. The smart card segment derives revenue from the provision of smart card accounts. The financial services segment provides short-term loans on a principal basis and life insurance on an agency basis. The hardware, software and technology segment derives revenue from sales of hardware, SIM cards/licenses, and cryptography. Thesis: Net 1 has developed a workable electronic payment solution for the underbanked in developing countries. The company’s system addresses the needs of four billion people, an enormous addressable market. While Net 1 faces the long-term risk of losing governmentrelated revenue in South Africa (two-thirds of revenue), a competitive bidding process was terminated in early November, with Net 1 retaining all contracts on existing terms. Revenue and earnings continue to grow despite global macroeconomic weakness. We value the company at $20-30 per share, based on a range of 10x trailing EBIT to 15x forward EPS (detailed analysis herein).

6/30/07 51,122 40,429 18,499 14,065 1.42 2,264 15,532 23,411 40,168 23,754 5,638 31,097 63,171 n/m

$80

Net 1 Ueps Technologies (Nasdaq: UEPS) Price: $10.97 ($9.88-$33.28) Market value: $641 million Enterprise value: $509 million Shares out: 58.4 million Institutional ownership: 67% Insider ownership: 16% Insider buys/sales: 0/2

6/30/06 44,282 36,632 16,064 12,599 1.20 1,578 12,826 34,161 49,010 22,442 4,405 40,104 69,597 n/m

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

6/30/06 196 146 90 59 1.03 2 74 190 241 43 20 209 270 >100%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

6/30/07 224 170 97 64 1.11 4 62 168 248 55 118 281 376 >100%

6/30/08 254 187 110 87 1.50 4 115 269 346 77 99 340 454 >100%

9/30/08 262 190 112 95 1.65 6 39 131 370 185 207 358 588 >100%

$80 $60 $40 $20 $0

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Premier Exhibitions (Nasdaq: PRXI) Price: $0.78 ($0.74-$12.08) Market value: $23 million Enterprise value: $14 million Shares out: 29.2 million Institutional ownership: 34% Insider ownership: 13% Insider buys/sales: 4/0

P/E FYE 2/29/08: P/E FYE 2/28/09: P/E FYE 2/28/10: P/E FYE 2/28/11: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Recreational Activities – Exhibitions (www.prxi.com) 2.1x 19.5x 4.3x n/a 0.2x 3.0x 0.7x

Business: Premier develops touring, museum-quality exhibitions. The exhibitions, including Bodies and Titanic, have attracted 20 million visitors. Since 1994, Premier subsidiary RMS Titanic has been salvorin-possession of the wreck of the Titanic, as ordered by a federal district court. RMS has conducted multiple expeditions, recovering 5,500 artifacts. Revenue sources include exhibition ticket sales, merchandise sales, licensing activities, and sponsorship agreements. Thesis: Premier’s revenue has exploded in recent years, primarily due to the success of the Bodies exhibitions. The company has misstepped recently, allowing the cost structure to get out of hand. However, with involvement by 16% shareholder Mark Sellers, Premier should be able to improve execution. While the company may not remain salvor-inpossession of the Titanic wreck site in the long term, it owns 2,000 recovered artifacts, appraised at $46 million but on the books for only $3 million. We value Premier at $1.50-7.50 per share, reflecting high earnings uncertainty. At the low end, we ascribe zero value to the company’s ongoing business, zero value to the net cash position of $9 million, and $46 million to the Titanic assets (detailed analysis herein).

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

2/29/08 62 41 18 12 0.37 5 12 18 28 4 10 47 51 >100%

8/31/08 64 35 5 4 0.10 11 (4) 9 24 6 12 46 53 29%

$15 $10 $5 $0 00 00

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Aesthetic Medical Products (www.syneron.com) 6.9x 8.7x 10.8x 6.1x 0.7x 3.9x 0.9x

Business: Syneron provides aesthetic medical products based on proprietary Electro-Optical Synergy (Elos) technology, which uses electrical and optical energy to provide effective and safe aesthetic treatments. The products are primarily sold to physicians and target non-invasive procedures, including hair removal, wrinkle reduction, treatment of superficial vascular and pigmented lesions, and treatment of leg veins. The company has an installed base of 10,000 products. Thesis: Syneron offers innovative products in the growing global market for aesthetic medical procedures. Investors appear to be ignoring the company’s existing earning power and emerging growth prospects, including new recurring revenue opportunities related to the LipoLite Energy Access Program and a potentially meaningful partnership with P&G. We value Syneron at $14-18 per share, based on a sum-of-the-parts analysis that considers the company’s $219 million in net cash and investments and values the aesthetic products business based on a range of 8x trailing EBIT to 8x estimated normalized EBIT (detailed analysis herein).

2/28/07 30 22 12 7 0.24 2 9 17 25 2 3 33 35 >100%

$20

Syneron Medical (Nasdaq: ELOS) Price: $7.74 ($7.71-$18.04) Market value: $215 million Enterprise value: $95 million Shares out: 27.7 million Institutional ownership: 65% Insider ownership: 10% Insider buys/sales: 0/0

2/28/06 13 10 3 5 0.19 2 0 3 10 3 4 20 22 83%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 87 76 39 41 1.48 1 30 133 166 21 0 145 170 >100%

12/31/06 117 99 35 40 1.44 1 36 103 153 26 1 194 225 >100%

12/31/07 141 114 25 31 1.12 2 46 168 222 33 5 231 269 98%

9/30/08 139 108 24 26 0.94 2 41 120 179 30 5 254 290 70%

$50 $40 $30 $20 $10 $0

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Tempur-Pedic International (NYSE: TPX) Price: $6.72 ($6.04-$33.08) Market value: $503 million Enterprise value: $934 million Shares out: 74.8 million Institutional ownership: n/a Insider ownership: 9% Insider buys/sales: 0/0

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Mattresses and Pillows (www.tempurpedic.com) 3.9x 7.2x 7.6x 6.5x 0.9x 5.3x n/m

Business: Tempur-Pedic provides premium, branded, non-innerspring mattresses and pillows. The company operates in two segments: Domestic consists of two U.S. factories and a distribution subsidiary. International consists of a factory in Denmark and distribution subs. Thesis: Tempur-Pedic enjoys a wide competitive moat, fortified by strong brand equity, pricing power, industry-leading cost structure, high returns on capital, and favorable long-term growth prospects. We believe investors underestimate the variability of the company’s cost structure and the company’s ability to service debt in a difficult market environment. The discretionary nature of Tempur-Pedic’s high-ticket products makes the stock an easily conceptualized short. The high short interest could, however, result in explosive stock price upside once the market refocuses on the company’s significant normalized earnings power. We value Tempur-Pedic at $11-18 per share, based on 7x trailing EBIT and 12x estimated normalized EPS.

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 837 424 186 99 0.97 87 15 (327) 228 121 274 226 702 68%

9/30/08 1,028 461 176 98 1.29 17 149 (431) 320 146 267 84 782 59%

$30 $20 $10 $0

Travelzoo Inc. (Nasdaq: TZOO) P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

12/31/07 1,107 535 244 142 1.74 17 109 (569) 327 127 267 48 806 70%

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Price: $4.48 ($4.11-$17.20) Market value: $64 million Enterprise value: $48 million Shares out: 14.3 million Institutional ownership: 29% Insider ownership: 45% Insider buys/sales: 129/0

12/31/06 945 461 199 112 1.28 38 128 (345) 238 132 269 213 726 62%

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Travel-related Internet Media (www.travelzoo.com) 7.9x n/m n/m n/a 0.6x 9.4x 2.9x

Business: Travelzoo’s free Internet media properties reach 12 million consumers in the U.S., Europe and Asia. The properties include the Travelzoo website, the Top 20 list of weekly deals, email alerts, and a travel search engine. Travelzoo publishes offers from 900 advertisers, with deal experts reviewing offers to find the best travel deals. Thesis: Travelzoo is a good business run by capable insiders who have loaded up on shares this year. The market values Travelzoo’s international startup operations materially below zero even though the company has a proven model and management knows Europe well (founder Ralph Bartel was educated in Germany and Switzerland). The downside appears limited as the Bartel brothers are heavily incentivized to create shareholder value. If international operations do not achieve desired profitability, management could shut them down and sell the U.S. business to a competitor such as Priceline.com. We value Travelzoo at $25-26 per share, based on a probability-weighted scenario analysis that includes estimated ranges of annualized EBIT for North America and the rest of the world (detailed analysis herein).

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 51 50 15 8 0.45 0 8 44 55 7 0 49 56 >100%

12/31/06 70 69 30 17 1.01 0 17 34 43 7 0 37 44 >100%

12/31/07 79 77 21 9 0.57 1 9 23 36 10 0 26 37 >100%

9/30/08 81 78 5 (4) (0.28) 3 (6) 16 30 12 0 22 35 >100%

$150 $100 $50 $0 00 00 00 02 03 04 05 06 07 08

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The “Magic Formula” 100 ► Review of Top 100 companies passing “Magic Formula” screen The “Magic Formula” 100 — Overview of Companies Analyzed

Company / Ticker Accenture Ltd. / ACN Acme Packet, Inc. / APKT Aladdin Knowledge Systems Ltd. / ALDN Allegheny Technologies Incorpo / ATI Ambassadors Group, Inc. / EPAX American Eagle Outfitters / AEO AmerisourceBergen Corp. / ABC Bare Escentuals, Inc. / BARE Barrett Business Services, Inc / BBSI Biovail Corporation (USA) / BVF Boeing Company, The / BA Broadridge Financial Solutions / BR BSQUARE Corporation / BSQR Cadence Design Systems, Inc. / CDNS CF Industries Holdings, Inc. / CF Coach, Inc. / COH COMSYS IT Partners, Inc. / CITP CTC Media, Inc. / CTCM Darling International Inc. / DAR Dell Inc. / DELL Deluxe Corporation / DLX DepoMed, Inc. / DEPO Diamond Mgt. & Technology Cons / DTPI DISH Network Corp. / DISH Double-Take Software, Inc. / DBTK Dynacq Healthcare, Inc. / DYII EarthLink, Inc. / ELNK eBay Inc. / EBAY EMCOR Group, Inc. / EME Emulex Corporation / ELX Energen Corporation / EGN First Advantage Corporation / FADV Forest Laboratories, Inc. / FRX Foster Wheeler Ltd. / FWLT Gannett Co., Inc. / GCI Garmin Ltd. / GRMN Hansen Natural Corporation / HANS Heidrick & Struggles Internati / HSII Herbalife Ltd. / HLF Herman Miller, Inc. / MLHR Hurco Companies, Inc. / HURC iBasis, Inc. / IBAS ICF International, Inc. / ICFI Iconix Brand Group, Inc. / ICON infoGROUP Inc / IUSA Jackson Hewitt Tax Service Inc / JTX KBR, Inc. / KBR

Recent Price ($) 28.67 3.69 9.44 21.20 8.40 8.88 29.98 4.45 10.14 8.57 41.04 11.10 2.93 3.93 54.97 16.20 4.14 4.45 4.57 10.89 10.89 1.64 3.96 11.00 7.07 3.39 6.36 12.36 13.80 7.22 28.40 12.02 22.97 19.94 8.15 19.04 25.36 21.24 17.56 14.61 17.17 2.15 18.00 8.72 3.38 11.76 13.11

Market Value ($mn) 20,919 204 131 2,041 160 1,828 4,751 407 108 1,360 30,076 1,570 30 1,023 3,126 5,296 84 677 374 21,327 557 84 101 4,918 156 53 689 15,783 904 593 2,037 715 6,923 2,667 1,859 3,856 2,344 347 1,121 784 110 153 266 508 192 339 2,118

Enterprise Value ($mn) 17,304 77 120 2,285 98 1,523 5,062 629 57 1,134 32,906 1,639 20 864 1,978 4,889 153 747 371 14,263 1,424 19 54 9,466 88 22 501 12,139 763 299 2,609 720 5,033 1,581 5,645 3,317 2,074 164 1,298 1,002 77 122 353 1,098 494 620 1,008

(in alphabetical order) LTM EBIT / * EV 17% 22% 3% 41% 23% 34% 16% 29% 18% 6% 16% 21% 18% 21% 52% 23% 23% 35% 37% 23% 15% 96% 12% 20% 20% 69% 42% 19% 38% 21% 22% 14% 24% 39% nm 28% 13% 42% 28% 25% 49% 10% 17% 13% 8% 10% 47%

LTM EBIT / Capital >99% 0-25% 0-25% 25-50% 25-50% 25-50% >99% >99% 25-50% 25-50% >99% 50-99% 50-99% 50-99% 50-99% >99% 50-99% >99% 50-99% >99% >99% 25-50% 25-50% 50-99% 50-99% 50-99% >99% >99% >99% 0-25% >99% 50-99% 25-50% >99% nm 50-99% >99% >99% >99% 50-99% 50-99% >99% >99% >99% >99% >99% >99%

Date of Latest Quarter 8/31/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 6/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 5/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 8/31/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08

FY End Date 8/31/09 12/31/08 12/31/08 12/31/08 12/31/08 1/31/09 9/30/09 12/31/08 12/31/08 12/31/08 12/31/08 6/30/09 12/31/08 12/31/08 12/31/08 6/30/09 12/31/08 12/31/08 12/31/08 1/31/09 12/31/08 12/31/08 3/31/09 12/31/08 12/31/08 8/31/08 12/31/08 12/31/08 12/31/08 6/30/09 12/31/08 12/31/08 3/31/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 5/31/09 10/31/08 12/31/08 12/31/08 12/31/08 12/31/08 4/30/09 12/31/08

[MFI100 ● Top100_browser ● MOI_macros_100.xls, MOI100A]

Numbers shown are based on GAAP data, while the screening process uses EBIT adjusted for non-recurring items.

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The “Magic Formula” 100 — Overview of Companies Analyzed

Company / Ticker Kenexa Corporation / KNXA KHD Humboldt Wedag Internation / KHD King Pharmaceuticals, Inc. / KG Korn/Ferry International / KFY Lam Research Corporation / LRCX LCA-Vision Inc. / LCAV Lear Corporation / LEA Lincare Holdings Inc. / LNCR Lorillard Inc. / LO Manitowoc Company, Inc. / MTW McGraw-Hill Companies, Inc., T / MHP Medicis Pharmaceutical Corpora / MRX MEMC Electronic Materials, Inc / WFR Meredith Corporation / MDP Mesabi Trust / MSB Microsoft Corporation / MSFT Monster Worldwide, Inc. / MWW Mosaic Company, The / MOS Net 1 Ueps Technologies Inc / UEPS New Frontier Media, Inc. / NOOF NutriSystem Inc. / NTRI NVIDIA Corporation / NVDA Pacer International, Inc. / PACR Perini Corporation / PCR Precision Castparts Corp. / PCP Premier Exhibitions, Inc. / PRXI Pre-Paid Legal Services, Inc. / PPD PRIMEDIA Inc. / PRM Questcor Pharmaceuticals, Inc. / QCOR R.G. Barry Corp. / DFZ RadioShack Corporation / RSH Robert Half International Inc. / RHI Rockwell Automation / ROK Seagate Technology / STX Sierra Wireless, Inc. (USA) / SWIR Sigma Designs, Inc. / SIGM Spark Networks Inc / LOV SPSS Inc. / SPSS Syneron Medical Ltd. / ELOS Take-Two Interactive Software, / TTWO Tempur-Pedic International Inc / TPX TheStreet.com, Inc. / TSCM Total System Services, Inc. / TSS Travelzoo Inc. / TZOO USA Mobility, Inc. / USMO VAALCO Energy, Inc. / EGY Value Line, Inc. / VALU ValueClick, Inc. / VCLK Varian Semiconductor / VSEA Verigy Ltd. / VRGY Versant Corporation / VSNT Viacom, Inc. / VIA.B ViroPharma Incorporated / VPHM

Recent Price ($) 5.59 9.10 9.64 11.61 17.99 3.91 1.40 25.03 60.78 6.92 23.36 11.24 15.34 16.11 8.89 20.06 11.62 32.47 10.97 1.80 13.22 7.17 10.27 14.42 55.04 0.78 35.92 1.37 8.15 5.28 9.65 17.81 26.08 4.87 7.88 8.79 3.05 24.30 7.74 10.76 6.72 3.17 12.16 4.48 9.55 4.39 32.88 5.71 17.47 10.96 14.46 16.78 11.70

Market Value ($mn) 126 278 2,376 553 2,248 73 108 1,862 10,215 902 7,347 638 3,443 727 117 178,445 1,432 14,425 641 41 391 3,991 359 726 7,674 23 417 61 529 56 1,207 2,762 3,797 2,378 244 232 65 441 215 835 503 97 2,393 64 260 256 328 495 1,269 646 54 10,295 921

Enterprise Value ($mn) 100 -118 1,472 344 1,488 32 1,925 2,452 9,007 974 8,366 500 2,354 1,163 103 159,698 1,040 13,725 509 26 333 2,686 395 387 7,585 14 449 287 489 49 1,145 2,392 4,219 3,255 42 111 61 284 95 496 934 19 2,348 48 156 157 204 406 1,063 261 27 18,722 502

Thanksgiving 2008 (in alphabetical order) (continued) LTM EBIT / * EV 30% nm 24% 26% 22% 22% 16% 16% 14% 60% 17% 14% 40% 19% 32% 14% 19% 28% 22% 46% 29% 14% 28% 43% 21% 34% 22% 18% 12% 21% 34% 20% 21% 33% >99% 56% 16% 18% 26% 27% 19% 36% 15% 11% nm 79% 16% 19% 14% 36% 36% 16% 20%

LTM EBIT / Capital 25-50% >99% 25-50% >99% 50-99% 0-25% 25-50% 50-99% >99% 50-99% >99% 0-25% >99% 50-99% >99% >99% >99% 50-99% >99% >99% 50-99% 25-50% >99% >99% 50-99% 25-50% >99% >99% >99% 0-25% 50-99% >99% 50-99% 25-50% 25-50% 50-99% >99% >99% 0-25% >99% 50-99% 25-50% 50-99% >99% nm >99% 25-50% 50-99% 25-50% 25-50% >99% >99% 25-50%

Date of Latest Quarter 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 6/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 8/31/08 9/30/08 9/30/08 9/30/08 10/31/08 9/30/08 9/30/08 9/30/08 8/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 7/31/08 7/31/08 9/30/08 9/30/08

FY End Date 12/31/08 12/31/08 12/31/08 4/30/09 6/30/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 6/30/09 1/31/09 6/30/09 12/31/08 5/31/09 6/30/09 3/31/09 12/31/08 1/31/09 12/31/08 12/31/08 3/31/09 2/28/09 12/31/08 12/31/08 12/31/08 6/30/09 12/31/08 12/31/08 9/30/09 6/30/09 12/31/08 1/31/09 12/31/08 12/31/08 12/31/08 10/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 4/30/09 12/31/08 9/30/09 10/31/08 10/31/08 12/31/08 12/31/08

[MFI100 ● Top100_browser ● MOI_macros_100.xls, MOI100A]

Numbers shown are based on GAAP data, while the screening process uses EBIT adjusted for non-recurring items.

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Page 14 of 401

The “Magic Formula” 100 — Overview of Companies Analyzed

Company / Ticker Microsoft Corporation / MSFT Boeing Company, The / BA Dell Inc. / DELL Accenture Ltd. / ACN eBay Inc. / EBAY Mosaic Company, The / MOS Viacom, Inc. / VIA.B Lorillard Inc. / LO Precision Castparts Corp. / PCP McGraw-Hill Companies, Inc., T / MHP Forest Laboratories, Inc. / FRX Coach, Inc. / COH DISH Network Corp. / DISH AmerisourceBergen Corp. / ABC NVIDIA Corporation / NVDA Garmin Ltd. / GRMN Rockwell Automation / ROK MEMC Electronic Materials, Inc / WFR CF Industries Holdings, Inc. / CF Robert Half International Inc. / RHI Foster Wheeler Ltd. / FWLT Total System Services, Inc. / TSS Seagate Technology / STX King Pharmaceuticals, Inc. / KG Hansen Natural Corporation / HANS Lam Research Corporation / LRCX KBR, Inc. / KBR Allegheny Technologies Incorpo / ATI Energen Corporation / EGN Lincare Holdings Inc. / LNCR Gannett Co., Inc. / GCI American Eagle Outfitters / AEO Broadridge Financial Solutions / BR Monster Worldwide, Inc. / MWW Biovail Corporation (USA) / BVF Varian Semiconductor / VSEA RadioShack Corporation / RSH Herbalife Ltd. / HLF Cadence Design Systems, Inc. / CDNS ViroPharma Incorporated / VPHM EMCOR Group, Inc. / EME Manitowoc Company, Inc. / MTW Take-Two Interactive Software, / TTWO Herman Miller, Inc. / MLHR Meredith Corporation / MDP Perini Corporation / PCR First Advantage Corporation / FADV

Recent Price ($) 20.06 41.04 10.89 28.67 12.36 32.47 16.78 60.78 55.04 23.36 22.97 16.20 11.00 29.98 7.17 19.04 26.08 15.34 54.97 17.81 19.94 12.16 4.87 9.64 25.36 17.99 13.11 21.20 28.40 25.03 8.15 8.88 11.10 11.62 8.57 17.47 9.65 17.56 3.93 11.70 13.80 6.92 10.76 14.61 16.11 14.42 12.02

Market Value ($mn) 178,445 30,076 21,327 20,919 15,783 14,425 10,295 10,215 7,674 7,347 6,923 5,296 4,918 4,751 3,991 3,856 3,797 3,443 3,126 2,762 2,667 2,393 2,378 2,376 2,344 2,248 2,118 2,041 2,037 1,862 1,859 1,828 1,570 1,432 1,360 1,269 1,207 1,121 1,023 921 904 902 835 784 727 726 715

Enterprise Value ($mn) 159,698 32,906 14,263 17,304 12,139 13,725 18,722 9,007 7,585 8,366 5,033 4,889 9,466 5,062 2,686 3,317 4,219 2,354 1,978 2,392 1,581 2,348 3,255 1,472 2,074 1,488 1,008 2,285 2,609 2,452 5,645 1,523 1,639 1,040 1,134 1,063 1,145 1,298 864 502 763 974 496 1,002 1,163 387 720

Thanksgiving 2008 (sorted by market value) LTM EBIT / EV 14% 16% 23% 17% 19% 28% 16% 14% 21% 17% 24% 23% 20% 16% 14% 28% 21% 40% 52% 20% 39% 15% 33% 24% 13% 22% 47% 41% 22% 16% nm 34% 21% 19% 6% 14% 34% 28% 21% 20% 38% 60% 27% 25% 19% 43% 14%

LTM EBIT / Capital >99% >99% >99% >99% >99% 50-99% >99% >99% 50-99% >99% 25-50% >99% 50-99% >99% 25-50% 50-99% 50-99% >99% 50-99% >99% >99% 50-99% 25-50% 25-50% >99% 50-99% >99% 25-50% >99% 50-99% nm 25-50% 50-99% >99% 25-50% 25-50% 50-99% >99% 50-99% 25-50% >99% 50-99% >99% 50-99% 50-99% >99% 50-99%

Date of Latest Quarter 9/30/08 9/30/08 7/31/08 8/31/08 9/30/08 8/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 10/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 6/30/08 9/30/08 9/30/08 9/30/08 7/31/08 8/31/08 9/30/08 9/30/08 9/30/08

FY End Date 6/30/09 12/31/08 1/31/09 8/31/09 12/31/08 5/31/09 12/31/08 12/31/08 3/31/09 12/31/08 3/31/09 6/30/09 12/31/08 9/30/09 1/31/09 12/31/08 9/30/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 6/30/09 12/31/08 12/31/08 6/30/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 1/31/09 6/30/09 12/31/08 12/31/08 9/30/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 10/31/08 5/31/09 6/30/09 12/31/08 12/31/08

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Page 15 of 401

The “Magic Formula” 100 — Overview of Companies Analyzed

Company / Ticker EarthLink, Inc. / ELNK CTC Media, Inc. / CTCM Verigy Ltd. / VRGY Net 1 Ueps Technologies Inc / UEPS Medicis Pharmaceutical Corpora / MRX Emulex Corporation / ELX Deluxe Corporation / DLX Korn/Ferry International / KFY Questcor Pharmaceuticals, Inc. / QCOR Iconix Brand Group, Inc. / ICON Tempur-Pedic International Inc / TPX ValueClick, Inc. / VCLK SPSS Inc. / SPSS Pre-Paid Legal Services, Inc. / PPD Bare Escentuals, Inc. / BARE NutriSystem Inc. / NTRI Darling International Inc. / DAR Pacer International, Inc. / PACR Heidrick & Struggles Internati / HSII Jackson Hewitt Tax Service Inc / JTX Value Line, Inc. / VALU KHD Humboldt Wedag Internation / KHD ICF International, Inc. / ICFI USA Mobility, Inc. / USMO VAALCO Energy, Inc. / EGY Sierra Wireless, Inc. (USA) / SWIR Sigma Designs, Inc. / SIGM Syneron Medical Ltd. / ELOS Acme Packet, Inc. / APKT infoGROUP Inc / IUSA Ambassadors Group, Inc. / EPAX Double-Take Software, Inc. / DBTK iBasis, Inc. / IBAS Aladdin Knowledge Systems Ltd. / ALDN Kenexa Corporation / KNXA Mesabi Trust / MSB Hurco Companies, Inc. / HURC Barrett Business Services, Inc / BBSI Lear Corporation / LEA Diamond Mgt. & Technology Cons / DTPI TheStreet.com, Inc. / TSCM COMSYS IT Partners, Inc. / CITP DepoMed, Inc. / DEPO LCA-Vision Inc. / LCAV Spark Networks Inc / LOV Travelzoo Inc. / TZOO PRIMEDIA Inc. / PRM R.G. Barry Corp. / DFZ Versant Corporation / VSNT Dynacq Healthcare, Inc. / DYII New Frontier Media, Inc. / NOOF BSQUARE Corporation / BSQR Premier Exhibitions, Inc. / PRXI

Recent Price ($) 6.36 4.45 10.96 10.97 11.24 7.22 10.89 11.61 8.15 8.72 6.72 5.71 24.30 35.92 4.45 13.22 4.57 10.27 21.24 11.76 32.88 9.10 18.00 9.55 4.39 7.88 8.79 7.74 3.69 3.38 8.40 7.07 2.15 9.44 5.59 8.89 17.17 10.14 1.40 3.96 3.17 4.14 1.64 3.91 3.05 4.48 1.37 5.28 14.46 3.39 1.80 2.93 0.78

Market Value ($mn) 689 677 646 641 638 593 557 553 529 508 503 495 441 417 407 391 374 359 347 339 328 278 266 260 256 244 232 215 204 192 160 156 153 131 126 117 110 108 108 101 97 84 84 73 65 64 61 56 54 53 41 30 23

Enterprise Value ($mn) 501 747 261 509 500 299 1,424 344 489 1,098 934 406 284 449 629 333 371 395 164 620 204 -118 353 156 157 42 111 95 77 494 98 88 122 120 100 103 77 57 1,925 54 19 153 19 32 61 48 287 49 27 22 26 20 14

Thanksgiving 2008 (sorted by market value) (continued) LTM EBIT / EV 42% 35% 36% 22% 14% 21% 15% 26% 12% 13% 19% 19% 18% 22% 29% 29% 37% 28% 42% 10% 16% nm 17% nm 79% >99% 56% 26% 22% 8% 23% 20% 10% 3% 30% 32% 49% 18% 16% 12% 36% 23% 96% 22% 16% 11% 18% 21% 36% 69% 46% 18% 34%

LTM EBIT / Capital >99% >99% 25-50% >99% 0-25% 0-25% >99% >99% >99% >99% 50-99% 50-99% >99% >99% >99% 50-99% 50-99% >99% >99% >99% 25-50% >99% >99% nm >99% 25-50% 50-99% 0-25% 0-25% >99% 25-50% 50-99% >99% 0-25% 25-50% >99% 50-99% 25-50% 25-50% 25-50% 25-50% 50-99% 25-50% 0-25% >99% >99% >99% 0-25% >99% 50-99% >99% 50-99% 25-50%

Date of Latest Quarter 9/30/08 9/30/08 7/31/08 9/30/08 6/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 5/31/08 9/30/08 9/30/08 8/31/08

FY End Date 12/31/08 12/31/08 10/31/08 6/30/09 12/31/08 6/30/09 12/31/08 4/30/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 4/30/09 4/30/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 1/31/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 1/31/09 10/31/08 12/31/08 12/31/08 3/31/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 6/30/09 10/31/08 8/31/08 3/31/09 12/31/08 2/28/09

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The “Magic Formula” 100 — Stock Price Performance

Company / Ticker Lear Corporation / LEA Premier Exhibitions, Inc. / PRXI Manitowoc Company, Inc. / MTW CTC Media, Inc. / CTCM Sigma Designs, Inc. / SIGM PRIMEDIA Inc. / PRM MEMC Electronic Materials, Inc / WFR Bare Escentuals, Inc. / BARE Seagate Technology / STX LCA-Vision Inc. / LCAV Garmin Ltd. / GRMN TheStreet.com, Inc. / TSCM Gannett Co., Inc. / GCI NVIDIA Corporation / NVDA Cadence Design Systems, Inc. / CDNS Allegheny Technologies Incorpo / ATI Foster Wheeler Ltd. / FWLT Tempur-Pedic International Inc / TPX ValueClick, Inc. / VCLK COMSYS IT Partners, Inc. / CITP Kenexa Corporation / KNXA Meredith Corporation / MDP Acme Packet, Inc. / APKT KHD Humboldt Wedag Internation / KHD DISH Network Corp. / DISH Double-Take Software, Inc. / DBTK New Frontier Media, Inc. / NOOF Travelzoo Inc. / TZOO Deluxe Corporation / DLX KBR, Inc. / KBR Mosaic Company, The / MOS Perini Corporation / PCR Monster Worldwide, Inc. / MWW Aladdin Knowledge Systems Ltd. / ALDN Jackson Hewitt Tax Service Inc / JTX eBay Inc. / EBAY Net 1 Ueps Technologies Inc / UEPS Rockwell Automation / ROK infoGROUP Inc / IUSA Viacom, Inc. / VIA.B Hurco Companies, Inc. / HURC Darling International Inc. / DAR Precision Castparts Corp. / PCP Verigy Ltd. / VRGY Lam Research Corporation / LRCX iBasis, Inc. / IBAS American Eagle Outfitters / AEO

Recent Price ($) 1.40 0.78 6.92 4.45 8.79 1.37 15.34 4.45 4.87 3.91 19.04 3.17 8.15 7.17 3.93 21.20 19.94 6.72 5.71 4.14 5.59 16.11 3.69 9.10 11.00 7.07 1.80 4.48 10.89 13.11 32.47 14.42 11.62 9.44 11.76 12.36 10.97 26.08 3.38 16.78 17.17 4.57 55.04 10.96 17.99 2.15 8.88

Thanksgiving 2008 (sorted by price decline since 12/31/07)

∆ to 52-Wk Low High ($) ($) -16% >999% -5% >999% -1% 644% -22% 613% -10% 730% -42% 637% -10% 526% -17% 572% -11% 481% -45% 446% -5% 492% -3% 428% -4% 393% -17% 408% -38% 351% -13% 365% -11% 330% -10% 392% -4% 333% -9% 324% -3% 330% -6% 263% -11% 260% -20% 293% -5% 316% -13% 275% -11% 241% -8% 284% -31% 209% -10% 239% -26% 403% -19% 305% -14% 222% -12% 185% -10% 193% -8% 184% -10% 203% -18% 178% -13% 195% -14% 171% -9% 204% -10% 283% -14% 181% -4% 155% -7% 167% -35% 176% -5% 168%

Price Performance Since Since Since 12/31/07 12/30/05 12/31/03 -95% -95% -98% -93% -82% na -86% -45% -11% -85% na na -84% -43% 17% -84% -86% -92% -83% -31% 59% -82% na na -81% -76% -74% -80% -92% -72% -80% -43% -30% -80% -56% -22% -79% -87% -91% -79% -41% -7% -77% -77% -78% -75% -41% 60% -74% 8% 94% -74% -42% -57% -74% -68% -37% -74% -63% na -71% -74% na -71% -69% -67% -71% na na -70% -18% -1% -68% -55% -64% -67% na na -67% -72% -81% -67% -80% -49% -67% -64% -74% -66% na na -66% 122% na -65% -40% na -64% -72% -47% -64% -45% 6% -63% -58% na -63% -71% -62% -63% -62% -66% -62% -56% -27% -62% -69% -54% -62% -59% na -61% -44% 221% -60% 15% 66% -60% 6% 142% -60% na na -58% -50% -44% -58% -61% -55% -57% -42% 62% [MFI100 ● Top100_browser ● MOI_macros_100.xls, MOI100A]

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Page 17 of 401

The “Magic Formula” 100 — Stock Price Performance

Company / Ticker Mesabi Trust / MSB BSQUARE Corporation / BSQR Medicis Pharmaceutical Corpora / MRX Total System Services, Inc. / TSS Herbalife Ltd. / HLF Energen Corporation / EGN Emulex Corporation / ELX Iconix Brand Group, Inc. / ICON Dell Inc. / DELL Herman Miller, Inc. / MLHR Ambassadors Group, Inc. / EPAX Boeing Company, The / BA Varian Semiconductor / VSEA NutriSystem Inc. / NTRI Broadridge Financial Solutions / BR Versant Corporation / VSNT CF Industries Holdings, Inc. / CF DepoMed, Inc. / DEPO Coach, Inc. / COH Sierra Wireless, Inc. (USA) / SWIR McGraw-Hill Companies, Inc., T / MHP Diamond Mgt. & Technology Cons / DTPI Barrett Business Services, Inc / BBSI Microsoft Corporation / MSFT Heidrick & Struggles Internati / HSII RadioShack Corporation / RSH Hansen Natural Corporation / HANS Syneron Medical Ltd. / ELOS Take-Two Interactive Software, / TTWO EMCOR Group, Inc. / EME Spark Networks Inc / LOV Korn/Ferry International / KFY Forest Laboratories, Inc. / FRX Biovail Corporation (USA) / BVF Pre-Paid Legal Services, Inc. / PPD Robert Half International Inc. / RHI USA Mobility, Inc. / USMO AmerisourceBergen Corp. / ABC SPSS Inc. / SPSS Pacer International, Inc. / PACR Lincare Holdings Inc. / LNCR ICF International, Inc. / ICFI First Advantage Corporation / FADV R.G. Barry Corp. / DFZ Accenture Ltd. / ACN Value Line, Inc. / VALU EarthLink, Inc. / ELNK Dynacq Healthcare, Inc. / DYII King Pharmaceuticals, Inc. / KG VAALCO Energy, Inc. / EGY Questcor Pharmaceuticals, Inc. / QCOR ViroPharma Incorporated / VPHM Lorillard Inc. / LO

Recent Price ($) 8.89 2.93 11.24 12.16 17.56 28.40 7.22 8.72 10.89 14.61 8.40 41.04 17.47 13.22 11.10 14.46 54.97 1.64 16.20 7.88 23.36 3.96 10.14 20.06 21.24 9.65 25.36 7.74 10.76 13.80 3.05 11.61 22.97 8.57 35.92 17.81 9.55 29.98 24.30 10.27 25.03 18.00 12.02 5.28 28.67 32.88 6.36 3.39 9.64 4.39 8.15 11.70 60.78

Thanksgiving 2008 (sorted by price decline since 12/31/07) (continued)

∆ to 52-Wk Low High ($) ($) -4% 257% -22% 136% -12% 147% -9% 146% -5% 191% -13% 180% -5% 148% -25% 170% -19% 161% -6% 132% -12% 148% -5% 131% -5% 149% -24% 139% -10% 118% -2% 132% -31% 215% -4% 176% -10% 136% -11% 169% -27% 110% -54% 107% -11% 92% -7% 83% -11% 79% -4% 111% -19% 98% 0% 133% -7% 160% -7% 161% -11% 97% -15% 79% -13% 86% -22% 102% -16% 60% -20% 68% -33% 63% -7% 62% -10% 78% -12% 145% -9% 51% -19% 57% -42% 95% -2% 67% -14% 50% -9% 44% -4% 60% -9% 115% -28% 31% -20% 105% -55% 10% -34% 30% -12% 30%

Price Performance Since Since Since 12/31/07 12/30/05 12/31/03 -57% -47% 27% -57% -10% -48% -57% -65% -68% -57% -39% -61% -56% -46% na -56% -22% 38% -56% -64% -73% -56% -14% 315% -56% -64% -68% -55% -48% -40% -54% -63% -29% -53% -42% -3% -53% -11% -10% -51% -63% 669% -51% na na -50% 164% -7% -50% 260% na -50% -73% -77% -47% -51% -14% -47% -29% -49% -47% -55% -33% -46% -50% -61% -44% -59% 17% -44% -23% -27% -43% -34% -3% -43% -54% -69% -43% 29% >999% -42% -76% na -42% -39% -44% -42% -18% 26% -39% na na -38% -38% -13% -37% -44% -63% -36% -64% -60% -35% -6% 38% -34% -53% -24% -33% -66% na -33% -25% 10% -32% -21% 36% -30% -61% -49% -29% -40% -17% -29% na na -27% -55% -37% -25% -14% 20% -20% -1% 9% -19% -7% -34% -10% -43% -36% -8% 40% -56% -6% -43% -37% -6% 4% 214% 41% 684% >999% 47% -37% 322% na na na [MFI100 ● Top100_browser ● MOI_macros_100.xls, MOI100A]

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Page 18 of 401

The “Magic Formula” 100 — P/E Multiples

Company / Ticker PRIMEDIA Inc. / PRM Manitowoc Company, Inc. / MTW Mosaic Company, The / MOS Gannett Co., Inc. / GCI Seagate Technology / STX CTC Media, Inc. / CTCM CF Industries Holdings, Inc. / CF MEMC Electronic Materials, Inc / WFR Bare Escentuals, Inc. / BARE Deluxe Corporation / DLX Premier Exhibitions, Inc. / PRXI Kenexa Corporation / KNXA DISH Network Corp. / DISH EarthLink, Inc. / ELNK infoGROUP Inc / IUSA Sigma Designs, Inc. / SIGM Perini Corporation / PCR Foster Wheeler Ltd. / FWLT Allegheny Technologies Incorpo / ATI Net 1 Ueps Technologies Inc / UEPS KHD Humboldt Wedag Internation / KHD Herbalife Ltd. / HLF New Frontier Media, Inc. / NOOF EMCOR Group, Inc. / EME Garmin Ltd. / GRMN R.G. Barry Corp. / DFZ Precision Castparts Corp. / PCP RadioShack Corporation / RSH Meredith Corporation / MDP Pacer International, Inc. / PACR Forest Laboratories, Inc. / FRX Boeing Company, The / BA Energen Corporation / EGN Viacom, Inc. / VIA.B Darling International Inc. / DAR Jackson Hewitt Tax Service Inc / JTX Coach, Inc. / COH Iconix Brand Group, Inc. / ICON Broadridge Financial Solutions / BR American Eagle Outfitters / AEO NutriSystem Inc. / NTRI Herman Miller, Inc. / MLHR KBR, Inc. / KBR Rockwell Automation / ROK eBay Inc. / EBAY Tempur-Pedic International Inc / TPX Dell Inc. / DELL

Recent Price ($) 1.37 6.92 32.47 8.15 4.87 4.45 54.97 15.34 4.45 10.89 0.78 5.59 11.00 6.36 3.38 8.79 14.42 19.94 21.20 10.97 9.10 17.56 1.80 13.80 19.04 5.28 55.04 9.65 16.11 10.27 22.97 41.04 28.40 16.78 4.57 11.76 16.20 8.72 11.10 8.88 13.22 14.61 13.11 26.08 12.36 6.72 10.89

Thanksgiving 2008

(sorted by P/E based on estimated EPS for next fiscal year) Market Value ($mn) 61 902 14,425 1,859 2,378 677 3,126 3,443 407 557 23 126 4,918 689 192 232 726 2,667 2,041 641 278 1,121 41 904 3,856 56 7,674 1,207 727 359 6,923 30,076 2,037 10,295 374 339 5,296 508 1,570 1,828 391 784 2,118 3,797 15,783 503 21,327

P/E (A) Last FY nm 3x 7x 2x 2x 5x 8x 4x 5x 4x 2x 6x 7x nm 5x 4x 4x 7x 3x 7x 6x 7x 5x 7x 5x 6x 8x 6x 6x 7x 8x 8x 7x 7x 8x 11x 7x 8x 8x 5x 4x 6x 12x 7x 49x 4x 8x

This FY 2x 2x 3x 2x 5x 4x 4x 4x 4x 4x 20x 4x 5x 3x 12x 5x 4x 5x 4x 6x 4x 5x 7x 5x 5x 8x 7x 6x 7x 6x 7x 9x 7x 7x 5x 8x 7x 8x 8x 7x 7x 7x 8x 7x 7x 7x 8x

P/E (Estimated) Next FY 2x 2x 3x 3x 3x 4x 4x 4x 4x 4x 4x 5x 5x 5x 5x 5x 5x 5x 5x 5x 5x 5x 5x 5x 6x 6x 6x 6x 6x 6x 6x 6x 7x 7x 7x 7x 7x 7x 7x 7x 7x 7x 7x 7x 7x 8x 8x

In 2 Yrs na 2x 3x 3x 2x 3x 4x 3x 4x 4x na 5x 4x 9x na na 5x 5x 4x 5x 8x 5x na 6x 6x na 6x 7x 5x 6x 6x 6x 6x 6x 5x 6x 6x na na 6x 6x 7x 7x 6x 7x 7x 8x

FY End Date 12/31/08 12/31/08 5/31/09 12/31/08 6/30/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 2/28/09 12/31/08 12/31/08 12/31/08 12/31/08 1/31/09 12/31/08 12/31/08 12/31/08 6/30/09 12/31/08 12/31/08 3/31/09 12/31/08 12/31/08 6/30/09 3/31/09 12/31/08 6/30/09 12/31/08 3/31/09 12/31/08 12/31/08 12/31/08 12/31/08 4/30/09 6/30/09 12/31/08 6/30/09 1/31/09 12/31/08 5/31/09 12/31/08 9/30/09 12/31/08 12/31/08 1/31/09

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Page 19 of 401

The “Magic Formula” 100 — P/E Multiples

Company / Ticker Medicis Pharmaceutical Corpora / MRX Take-Two Interactive Software, / TTWO VAALCO Energy, Inc. / EGY Emulex Corporation / ELX AmerisourceBergen Corp. / ABC USA Mobility, Inc. / USMO Total System Services, Inc. / TSS Microsoft Corporation / MSFT McGraw-Hill Companies, Inc., T / MHP Barrett Business Services, Inc / BBSI Accenture Ltd. / ACN ValueClick, Inc. / VCLK Ambassadors Group, Inc. / EPAX COMSYS IT Partners, Inc. / CITP Korn/Ferry International / KFY Double-Take Software, Inc. / DBTK Syneron Medical Ltd. / ELOS Lorillard Inc. / LO Monster Worldwide, Inc. / MWW NVIDIA Corporation / NVDA Lincare Holdings Inc. / LNCR King Pharmaceuticals, Inc. / KG Hansen Natural Corporation / HANS SPSS Inc. / SPSS First Advantage Corporation / FADV ICF International, Inc. / ICFI Acme Packet, Inc. / APKT Heidrick & Struggles Internati / HSII Lam Research Corporation / LRCX Questcor Pharmaceuticals, Inc. / QCOR Varian Semiconductor / VSEA ViroPharma Incorporated / VPHM Verigy Ltd. / VRGY Aladdin Knowledge Systems Ltd. / ALDN Robert Half International Inc. / RHI iBasis, Inc. / IBAS Diamond Mgt. & Technology Cons / DTPI TheStreet.com, Inc. / TSCM Cadence Design Systems, Inc. / CDNS Hurco Companies, Inc. / HURC Mesabi Trust / MSB BSQUARE Corporation / BSQR Versant Corporation / VSNT Sierra Wireless, Inc. (USA) / SWIR Spark Networks Inc / LOV Biovail Corporation (USA) / BVF Pre-Paid Legal Services, Inc. / PPD Value Line, Inc. / VALU Dynacq Healthcare, Inc. / DYII Lear Corporation / LEA LCA-Vision Inc. / LCAV Travelzoo Inc. / TZOO DepoMed, Inc. / DEPO

Recent Price ($) 11.24 10.76 4.39 7.22 29.98 9.55 12.16 20.06 23.36 10.14 28.67 5.71 8.40 4.14 11.61 7.07 7.74 60.78 11.62 7.17 25.03 9.64 25.36 24.30 12.02 18.00 3.69 21.24 17.99 8.15 17.47 11.70 10.96 9.44 17.81 2.15 3.96 3.17 3.93 17.17 8.89 2.93 14.46 7.88 3.05 8.57 35.92 32.88 3.39 1.40 3.91 4.48 1.64

Thanksgiving 2008

(sorted by P/E based on estimated EPS for next fiscal year) (continued) Market Value ($mn) 638 835 256 593 4,751 260 2,393 178,445 7,347 108 20,919 495 160 84 553 156 215 10,215 1,432 3,991 1,862 2,376 2,344 441 715 266 204 347 2,248 529 1,269 921 646 131 2,762 153 101 97 1,023 110 117 30 54 244 65 1,360 417 328 53 108 73 64 84

P/E (A) Last FY 10x nm 14x nm 10x nm 10x 11x 8x 7x 11x 8x 5x 2x 8x 8x 7x 12x 10x 5x 10x 13x 17x 15x 6x 7x 12x 7x 5x 16x 13x 10x 7x 9x 10x 7x 12x 3x 4x 5x 6x 11x 7x 7x 10x 7x 9x 13x 14x 0x 2x 8x 2x

P/E (Estimated) This Next FY FY 9x 8x 5x 8x 5x 8x 9x 8x 10x 9x 7x 9x 9x 9x 10x 9x 9x 9x 10x 9x 10x 9x 10x 9x 9x 10x 4x 10x 10x 10x 12x 11x 9x 11x 12x 11x 8x 11x 9x 11x 8x 11x 8x 12x 14x 12x 13x 12x 13x 13x 10x 13x 15x 14x 9x 14x >99x 15x 18x 16x >99x 22x 12x 22x 9x 22x >99x 24x 11x 25x 43x 31x 57x 33x 29x 53x >99x 66x na na na na na na na na na na na na na na na na na na na na 1x nm nm nm nm nm nm nm

In 2 Yrs 6x 6x na na 8x 13x 8x 8x 8x 9x 8x 9x na na 6x 10x 6x 10x 9x 8x 9x 13x 10x 13x 12x 11x 12x 11x 9x 13x 15x >99x 14x 13x 22x 31x na 17x 11x na na na na na na na na na na 1x 11x na nm

FY End Date 12/31/08 10/31/08 12/31/08 6/30/09 9/30/09 12/31/08 12/31/08 6/30/09 12/31/08 12/31/08 8/31/09 12/31/08 12/31/08 12/31/08 4/30/09 12/31/08 12/31/08 12/31/08 12/31/08 1/31/09 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 12/31/08 6/30/09 12/31/08 9/30/09 12/31/08 10/31/08 12/31/08 12/31/08 12/31/08 3/31/09 12/31/08 12/31/08 10/31/08 1/31/09 12/31/08 10/31/08 12/31/08 12/31/08 12/31/08 12/31/08 4/30/09 8/31/08 12/31/08 12/31/08 12/31/08 12/31/08

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Page 20 of 401

The “Magic Formula” 100 — Historical and Prospective EPS

Thanksgiving 2008 (in alphabetical order)

EPS (Actual) 2 Yrs Last Ago FY 1.97 2.65 0.50 0.30 0.93 1.02 5.61 7.26 1.25 1.55 1.70 1.82 2.53 2.89 0.65 0.95 1.40 1.44 1.35 1.22 2.84 5.26 1.42 1.36 (0.05) 0.27 0.46 1.00 0.60 6.57 1.69 2.17 1.10 1.66 0.69 0.86 0.07 0.56 1.14 1.31 1.95 2.76 (0.97) 1.05 0.21 0.33 1.37 1.68 (0.03) 0.87 (0.21) 0.24 0.19 (0.45) 0.79 0.25 1.30 1.86 0.34 (0.09) 3.73 4.28 1.13 2.10 1.41 3.06 1.86 2.72 4.81 4.17 2.35 3.89 0.99 1.51 1.81 2.97 1.92 2.63 1.98 2.56 2.42 3.24 1.06 0.33 1.10 2.72 0.72 1.04 0.60 0.73 1.93 1.09 0.39 1.08

EPS (Estimated) This Next In FY FY 2 Yrs 2.84 3.13 3.40 0.24 0.26 0.31 0.08 0.40 0.70 5.48 4.15 5.02 0.98 0.86 na 1.27 1.23 1.37 3.15 3.51 3.86 1.04 1.07 1.22 0.97 1.11 1.18 na na na 4.72 6.32 6.82 1.48 1.55 na na na na 0.01 0.06 0.35 13.98 15.06 12.25 2.21 2.34 2.79 1.00 0.41 na 1.19 1.27 1.60 1.00 0.68 0.86 1.36 1.44 1.36 2.48 2.52 2.84 (0.52) (0.85) (0.50) 0.07 0.12 na 2.11 2.43 2.54 0.61 0.66 0.74 na na na 1.83 1.40 0.71 1.70 1.67 1.77 2.61 2.53 2.20 0.83 0.86 na 4.34 4.33 4.97 0.95 0.93 1.01 3.28 3.57 3.99 3.72 3.91 3.97 3.44 2.60 2.58 3.74 3.36 3.29 1.77 2.08 2.47 2.36 1.47 1.87 3.56 3.25 3.58 2.08 2.01 2.11 na na na 0.05 0.07 0.07 1.88 1.38 1.57 1.15 1.23 na 0.28 0.73 na 1.51 1.71 2.05 1.71 1.80 1.99 [MFI100 ● Top100_browser ● MOI_macros_100.xls, MOI100A]

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Page 21 of 401

The “Magic Formula” 100 — Historical and Prospective EPS

Thanksgiving 2008 (in alphabetical order) (continued)

EPS (Actual) 2 Yrs Last Ago FY 0.78 0.93 1.04 1.42 1.19 0.75 1.24 1.46 4.85 3.47 1.34 1.64 (10.35) 3.09 2.16 2.58 4.75 5.16 1.33 2.62 2.40 2.94 (0.88) 1.08 1.61 3.56 3.44 2.82 1.31 1.39 1.42 1.87 1.16 1.15 0.95 4.67 1.11 1.50 0.51 0.36 2.31 2.98 0.76 1.31 1.80 1.51 1.54 3.54 4.42 6.88 0.24 0.37 3.51 3.88 (1.48) (1.26) (0.18) 0.51 2.46 0.92 0.54 1.74 1.65 1.81 3.53 3.90 1.56 2.36 0.38 1.16 0.24 2.46 0.21 0.31 0.73 1.65 1.44 1.12 (2.60) (1.93) 1.28 1.74 0.47 0.99 1.26 1.20 1.01 0.57 1.46 (0.19) 0.67 0.32 2.47 2.56 0.62 0.70 1.73 1.32 0.00 1.62 1.01 1.98 2.19 2.41 0.95 1.21

EPS (Estimated) This Next In FY FY 2 Yrs 1.31 1.24 1.18 2.12 1.77 1.18 1.19 0.83 0.75 1.15 1.11 1.82 0.13 1.23 2.01 (0.17) (0.17) 0.37 1.08 (0.39) 1.47 3.14 2.26 2.76 5.05 5.63 6.04 3.24 3.11 3.24 2.63 2.65 3.00 1.29 1.48 1.80 3.57 4.13 4.63 2.45 2.53 3.05 na na na 2.02 2.29 2.60 1.37 1.07 1.32 10.40 11.37 9.91 1.90 2.14 2.29 0.26 0.33 na 1.81 1.82 2.07 0.84 0.66 0.87 1.67 1.60 1.79 3.67 2.95 2.92 7.65 8.72 9.52 0.04 0.18 na na na na 0.64 0.80 na 0.45 0.52 0.61 0.66 0.90 na 1.75 1.52 1.35 1.64 0.72 0.82 3.53 3.58 4.20 0.89 1.42 1.97 na na na 1.79 1.84 na na na na 1.90 1.96 1.92 0.89 0.72 1.27 2.12 1.37 1.83 0.93 0.89 1.03 0.11 0.06 0.19 1.31 1.41 1.53 (0.40) (0.06) na 1.42 1.11 0.75 0.84 0.54 na na na na 0.56 0.61 0.63 0.07 0.81 1.15 1.22 0.49 0.80 na na na 2.49 2.53 2.90 0.98 0.54 0.10 [MFI100 ● Top100_browser ● MOI_macros_100.xls, MOI100A]

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Page 22 of 401

The “Magic Formula” 100 — Latest Quarterly EPS Surprise

Company / Ticker Diamond Mgt. & Technology Cons / DTPI Premier Exhibitions, Inc. / PRXI Varian Semiconductor / VSEA Take-Two Interactive Software, / TTWO NVIDIA Corporation / NVDA COMSYS IT Partners, Inc. / CITP KHD Humboldt Wedag Internation / KHD ViroPharma Incorporated / VPHM King Pharmaceuticals, Inc. / KG Broadridge Financial Solutions / BR EarthLink, Inc. / ELNK SPSS Inc. / SPSS Emulex Corporation / ELX Energen Corporation / EGN Monster Worldwide, Inc. / MWW Korn/Ferry International / KFY Pacer International, Inc. / PACR VAALCO Energy, Inc. / EGY Questcor Pharmaceuticals, Inc. / QCOR Seagate Technology / STX Deluxe Corporation / DLX Sigma Designs, Inc. / SIGM Heidrick & Struggles Internati / HSII Barrett Business Services, Inc / BBSI Medicis Pharmaceutical Corpora / MRX Double-Take Software, Inc. / DBTK Forest Laboratories, Inc. / FRX eBay Inc. / EBAY PRIMEDIA Inc. / PRM Perini Corporation / PCR Rockwell Automation / ROK USA Mobility, Inc. / USMO EMCOR Group, Inc. / EME Herman Miller, Inc. / MLHR RadioShack Corporation / RSH Iconix Brand Group, Inc. / ICON Lincare Holdings Inc. / LNCR Allegheny Technologies Incorpo / ATI McGraw-Hill Companies, Inc., T / MHP Lam Research Corporation / LRCX Garmin Ltd. / GRMN American Eagle Outfitters / AEO Verigy Ltd. / VRGY Herbalife Ltd. / HLF Kenexa Corporation / KNXA AmerisourceBergen Corp. / ABC

Recent Price ($) 3.96 0.78 17.47 10.76 7.17 4.14 9.10 11.70 9.64 11.10 6.36 24.30 7.22 28.40 11.62 11.61 10.27 4.39 8.15 4.87 10.89 8.79 21.24 10.14 11.24 7.07 22.97 12.36 1.37 14.42 26.08 9.55 13.80 14.61 9.65 8.72 25.03 21.20 23.36 17.99 19.04 8.88 10.96 17.56 5.59 29.98

Market Value ($mn) 101 23 1,269 835 3,991 84 278 921 2,376 1,570 689 441 593 2,037 1,432 553 359 256 529 2,378 557 232 347 108 638 156 6,923 15,783 61 726 3,797 260 904 784 1,207 508 1,862 2,041 7,347 2,248 3,856 1,828 646 1,121 126 4,751

Date of Latest Quarter 9/30/08 8/31/08 9/30/08 7/31/08 10/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 6/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 8/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 7/31/08 9/30/08 9/30/08 9/30/08

Thanksgiving 2008 (sorted by magnitude of surprise)

Date 11/6/08 10/7/08 10/30/08 9/4/08 11/6/08 11/5/08 11/12/08 10/29/08 11/6/08 11/6/08 10/28/08 11/4/08 10/23/08 10/22/08 10/30/08 9/9/08 10/28/08 11/10/08 10/30/08 10/22/08 10/23/08 8/28/08 10/28/08 10/28/08 8/5/08 10/28/08 10/21/08 10/15/08 11/6/08 11/6/08 11/10/08 10/29/08 10/23/08 9/17/08 10/23/08 11/3/08 10/20/08 10/22/08 10/28/08 10/22/08 10/29/08 8/26/08 8/21/08 11/3/08 11/3/08 10/30/08

Latest EPS Surprise EPS EPS (Actual) (Estimated) 0.02 0.01 0.03 0.01 0.05 0.01 0.93 0.54 0.20 0.12 0.30 0.20 0.80 0.55 0.33 0.23 0.33 0.26 0.25 0.20 0.50 0.40 0.55 0.44 0.22 0.18 1.01 0.83 0.40 0.33 0.36 0.30 0.49 0.41 0.38 0.32 0.13 0.11 0.26 0.22 0.65 0.55 0.47 0.40 0.80 0.69 0.38 0.33 0.40 0.35 0.16 0.14 0.80 0.71 0.46 0.41 0.20 0.18 1.01 0.91 1.08 0.98 0.35 0.32 0.72 0.66 0.60 0.55 0.39 0.36 0.30 0.28 0.76 0.72 1.45 1.38 1.28 1.22 0.26 0.25 0.87 0.84 0.29 0.28 0.29 0.28 0.89 0.86 0.36 0.35 0.73 0.71

% Diff. >99% >99% >99% 72% 67% 50% 45% 43% 27% 25% 25% 25% 22% 22% 21% 20% 20% 19% 18% 18% 18% 18% 16% 15% 14% 14% 13% 12% 11% 11% 10% 9% 9% 9% 8% 7% 6% 5% 5% 4% 4% 4% 4% 3% 3% 3%

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Page 23 of 401

Thanksgiving 2008

The “Magic Formula” 100 — Latest Quarterly EPS Surprise

Company / Ticker Coach, Inc. / COH KBR, Inc. / KBR Lorillard Inc. / LO Microsoft Corporation / MSFT Hansen Natural Corporation / HANS Accenture Ltd. / ACN Gannett Co., Inc. / GCI Acme Packet, Inc. / APKT Cadence Design Systems, Inc. / CDNS ICF International, Inc. / ICFI Meredith Corporation / MDP New Frontier Media, Inc. / NOOF Robert Half International Inc. / RHI Tempur-Pedic International Inc / TPX Viacom, Inc. / VIA.B Precision Castparts Corp. / PCP Manitowoc Company, Inc. / MTW Foster Wheeler Ltd. / FWLT MEMC Electronic Materials, Inc / WFR Total System Services, Inc. / TSS Darling International Inc. / DAR Bare Escentuals, Inc. / BARE Boeing Company, The / BA NutriSystem Inc. / NTRI Mosaic Company, The / MOS Ambassadors Group, Inc. / EPAX Dell Inc. / DELL Net 1 Ueps Technologies Inc / UEPS First Advantage Corporation / FADV CTC Media, Inc. / CTCM iBasis, Inc. / IBAS Syneron Medical Ltd. / ELOS R.G. Barry Corp. / DFZ DISH Network Corp. / DISH CF Industries Holdings, Inc. / CF ValueClick, Inc. / VCLK infoGROUP Inc / IUSA TheStreet.com, Inc. / TSCM Aladdin Knowledge Systems Ltd. / ALDN Biovail Corporation (USA) / BVF BSQUARE Corporation / BSQR DepoMed, Inc. / DEPO Dynacq Healthcare, Inc. / DYII Hurco Companies, Inc. / HURC Jackson Hewitt Tax Service Inc / JTX LCA-Vision Inc. / LCAV Lear Corporation / LEA Mesabi Trust / MSB Pre-Paid Legal Services, Inc. / PPD Sierra Wireless, Inc. (USA) / SWIR Spark Networks Inc / LOV Travelzoo Inc. / TZOO Value Line, Inc. / VALU Versant Corporation / VSNT

Recent Price ($) 16.20 13.11 60.78 20.06 25.36 28.67 8.15 3.69 3.93 18.00 16.11 1.80 17.81 6.72 16.78 55.04 6.92 19.94 15.34 12.16 4.57 4.45 41.04 13.22 32.47 8.40 10.89 10.97 12.02 4.45 2.15 7.74 5.28 11.00 54.97 5.71 3.38 3.17 9.44 8.57 2.93 1.64 3.39 17.17 11.76 3.91 1.40 8.89 35.92 7.88 3.05 4.48 32.88 14.46

Market Value ($mn) 5,296 2,118 10,215 178,445 2,344 20,919 1,859 204 1,023 266 727 41 2,762 503 10,295 7,674 902 2,667 3,443 2,393 374 407 30,076 391 14,425 160 21,327 641 715 677 153 215 56 4,918 3,126 495 192 97 131 1,360 30 84 53 110 339 73 108 117 417 244 65 64 328 54

Date of Latest Quarter 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 8/31/08 9/30/08 9/30/08 6/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 8/31/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 9/30/08 5/31/08 7/31/08 7/31/08 9/30/08 9/30/08 7/31/08 9/30/08 9/30/08 9/30/08 9/30/08 7/31/08 7/31/08

(sorted by magnitude of surprise) (continued)

Date 10/21/08 10/31/08 10/27/08 10/23/08 11/6/08 9/25/08 10/24/08 11/6/08 7/23/08 11/5/08 10/29/08 11/5/08 10/22/08 10/16/08 11/3/08 10/21/08 10/28/08 11/5/08 10/23/08 10/9/08 11/6/08 10/30/08 10/22/08 10/22/08 10/1/08 10/28/08 8/28/08 11/6/08 10/27/08 10/30/08 10/21/08 11/11/08 11/3/08 11/10/08 10/27/08 10/29/08 10/27/08 10/29/08 10/16/08 na na 10/30/08 na na 9/4/08 10/28/08 10/30/08 na na na na 10/27/08 na na

Latest EPS Surprise EPS EPS (Actual) (Estimated) 0.44 0.43 0.44 0.43 1.38 1.35 0.48 0.47 0.54 0.53 0.67 0.66 0.76 0.75 0.05 0.05 0.14 0.14 0.45 0.45 0.41 0.41 0.06 0.06 0.43 0.43 0.32 0.32 0.55 0.55 1.89 1.91 0.80 0.81 0.89 0.91 0.86 0.88 0.33 0.34 0.28 0.29 0.25 0.26 0.94 0.98 0.45 0.48 2.65 2.94 0.70 0.79 0.31 0.36 0.42 0.49 0.24 0.29 0.13 0.18 0.05 0.08 0.08 0.13 0.10 0.24 0.20 0.58 0.82 3.57 0.02 0.14 (0.07) 0.16 (0.04) 0.06 (0.02) (0.21) na na na na (0.12) (0.15) na na na na (0.69) (0.69) (0.25) (0.07) (0.75) (0.04) na na na na na na na na (0.13) (0.09) na na na na

% Diff. 2% 2% 2% 2% 2% 2% 1% 0% 0% 0% 0% 0% 0% 0% 0% -1% -1% -2% -2% -3% -3% -4% -4% -6% -10% -11% -14% -14% -17% -28% -38% -38% -58% -66% -77% -86% <-99% <-99% nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm

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Page 24 of 401

The “Magic Formula” 100 — Revenue and EPS Growth

Company / Ticker Aladdin Knowledge Systems Ltd. / ALDN Premier Exhibitions, Inc. / PRXI Varian Semiconductor / VSEA infoGROUP Inc / IUSA Lam Research Corporation / LRCX Cadence Design Systems, Inc. / CDNS Diamond Mgt. & Technology Cons / DTPI Seagate Technology / STX iBasis, Inc. / IBAS R.G. Barry Corp. / DFZ Boeing Company, The / BA New Frontier Media, Inc. / NOOF PRIMEDIA Inc. / PRM Hansen Natural Corporation / HANS MEMC Electronic Materials, Inc / WFR Questcor Pharmaceuticals, Inc. / QCOR DISH Network Corp. / DISH Medicis Pharmaceutical Corpora / MRX Barrett Business Services, Inc / BBSI Precision Castparts Corp. / PCP Microsoft Corporation / MSFT Jackson Hewitt Tax Service Inc / JTX Net 1 Ueps Technologies Inc / UEPS Lorillard Inc. / LO AmerisourceBergen Corp. / ABC Accenture Ltd. / ACN Mosaic Company, The / MOS ValueClick, Inc. / VCLK Forest Laboratories, Inc. / FRX Acme Packet, Inc. / APKT Double-Take Software, Inc. / DBTK CF Industries Holdings, Inc. / CF Total System Services, Inc. / TSS Iconix Brand Group, Inc. / ICON CTC Media, Inc. / CTCM Coach, Inc. / COH Dell Inc. / DELL KBR, Inc. / KBR Foster Wheeler Ltd. / FWLT Broadridge Financial Solutions / BR Emulex Corporation / ELX Meredith Corporation / MDP SPSS Inc. / SPSS Bare Escentuals, Inc. / BARE Sigma Designs, Inc. / SIGM Deluxe Corporation / DLX Viacom, Inc. / VIA.B

Revenue Growth 5-Year Last FY CAGR 16% 19% 84% >99% 18% -21% 18% 58% 27% -4% 5% 9% 6% 8% 14% 12% 42% 15% -2% 4% 4% 8% 9% -12% -25% 2% 58% 49% 23% 25% 28% >99% 18% 13% 13% 16% 21% 12% 31% 29% 13% 18% 10% -5% 28% 13% nm 6% 7% 7% 14% 18% 43% 70% 59% 18% 11% 11% nm 34% nm 36% 22% 36% 14% 1% 0% 98% nm 27% 27% 22% 12% 6% 11% -1% 8% 46% nm 3% 10% 4% 8% -2% 7% 11% nm 30% 65% >99% 5% -2% 17% 18%

Thanksgiving 2008 (sorted by next FY EPS growth)

LTM 16% 41% -21% 19% -16% -5% -6% 5% 69% 1% -1% 2% -10% 27% 17% >99% 8% 22% 9% 14% 14% -6% 13% 35% 7% 18% 87% 9% 9% 11% 21% 52% 3% 51% 44% 18% 10% 22% 38% 4% 0% -5% 9% 16% 91% -6% 15%

Last FY (Actual) 10% 54% -24% 22% -28% >99% 57% 51% -69% -63% 85% -29% nm 53% >99% nm 23% nm 3% 56% 32% -44% 35% 9% 14% 35% >99% 13% >99% -40% nm >99% -5% 44% 25% 28% 15% >99% 46% -4% nm -18% >99% 46% >99% 42% 10%

EPS Growth This FY Next FY (Estimated) (Estimated) -92% >99% -89% >99% -95% >99% -62% >99% -96% >99% -99% >99% -79% 71% -62% 60% -85% 40% -28% 36% -10% 34% -28% 27% nm 25% 17% 18% 0% 16% -12% 16% 26% 15% 19% 15% -33% 14% 11% 14% 8% 13% 39% 13% 27% 13% -2% 11% 9% 11% 7% 10% >99% 9% -20% 9% 7% 9% -20% 8% -30% 8% >99% 8% 9% 8% 11% 7% 38% 7% 2% 6% 4% 6% 58% 5% 37% 5% 9% 5% nm 4% -13% 3% 15% 3% 9% 3% -27% 3% -10% 2% 3% 2%

LTGR (Estimated) 17% 18% 15% na 12% 11% 11% 12% na na 11% 10% na 15% 18% 18% 8% 19% 15% 17% 11% 9% 18% 8% 12% 10% na 11% 9% 16% 21% 4% 12% 17% 19% 14% 12% 15% 20% 10% 10% na 12% 14% 17% 5% 12%

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Page 25 of 401

The “Magic Formula” 100 — Revenue and EPS Growth

Company / Ticker Rockwell Automation / ROK McGraw-Hill Companies, Inc., T / MHP NutriSystem Inc. / NTRI Energen Corporation / EGN eBay Inc. / EBAY First Advantage Corporation / FADV EMCOR Group, Inc. / EME American Eagle Outfitters / AEO Herman Miller, Inc. / MLHR Korn/Ferry International / KFY Manitowoc Company, Inc. / MTW Pacer International, Inc. / PACR Tempur-Pedic International Inc / TPX Kenexa Corporation / KNXA Herbalife Ltd. / HLF Garmin Ltd. / GRMN Ambassadors Group, Inc. / EPAX RadioShack Corporation / RSH KHD Humboldt Wedag Internation / KHD Syneron Medical Ltd. / ELOS Perini Corporation / PCR NVIDIA Corporation / NVDA USA Mobility, Inc. / USMO Monster Worldwide, Inc. / MWW EarthLink, Inc. / ELNK Allegheny Technologies Incorpo / ATI Gannett Co., Inc. / GCI ICF International, Inc. / ICFI Lincare Holdings Inc. / LNCR King Pharmaceuticals, Inc. / KG Darling International Inc. / DAR Take-Two Interactive Software, / TTWO VAALCO Energy, Inc. / EGY Heidrick & Struggles Internati / HSII ViroPharma Incorporated / VPHM TheStreet.com, Inc. / TSCM Robert Half International Inc. / RHI COMSYS IT Partners, Inc. / CITP Verigy Ltd. / VRGY Biovail Corporation (USA) / BVF BSQUARE Corporation / BSQR DepoMed, Inc. / DEPO Dynacq Healthcare, Inc. / DYII Hurco Companies, Inc. / HURC LCA-Vision Inc. / LCAV Lear Corporation / LEA Mesabi Trust / MSB Pre-Paid Legal Services, Inc. / PPD Sierra Wireless, Inc. (USA) / SWIR Spark Networks Inc / LOV Travelzoo Inc. / TZOO Value Line, Inc. / VALU Versant Corporation / VSNT

Revenue Growth 5-Year Last FY CAGR 7% 14% 8% 8% 95% 37% 17% 3% 45% 29% 21% 6% 8% 21% 17% 9% 9% 5% 20% 21% 24% 37% 4% 4% 30% 17% 41% 62% 14% 14% 47% 79% 26% 29% -1% -11% 15% 27% 65% 21% 34% 52% 17% 34% -12% -15% 15% 23% -2% -7% 23% 10% 3% -5% nm >99% 11% 13% 14% 7% 20% 59% 4% -5% 66% 27% 11% 29% >99% 22% 26% 28% 20% 16% 14% 1% nm -2% 1% -21% 10% 19% >99% >99% -8% 19% 22% 27% 36% 22% 2% -10% 30% 6% 5% 3% 42% 99% 32% -5% 52% 14% 0% -1% 1% 27%

Thanksgiving 2008 (sorted by next FY EPS growth) (continued)

LTM 14% -4% -8% 6% 20% -4% 25% 3% 2% 18% 29% 10% -4% 21% 18% 42% -15% 0% 11% 1% 23% 10% -15% 11% -19% -2% -10% 10% 7% -17% 40% 58% 83% 6% 18% 26% 8% -1% -1% -18% 11% -52% 43% 25% -14% -10% >99% 3% 53% -10% 4% -1% 23%

Last FY (Actual) 10% 23% 29% 15% -68% 86% 43% 7% 29% 18% 97% -16% 36% 19% 37% 66% 24% >99% 37% -22% >99% 72% nm -1% nm 29% -13% >99% 19% -37% >99% nm -52% 64% 27% >99% 10% 51% nm -10% nm nm nm 34% 22% nm 6% 11% >99% 48% -44% 4% 96%

EPS Growth This FY Next FY (Estimated) (Estimated) -9% 1% -11% 1% -39% 1% 1% 0% >99% -2% -55% -2% 40% -3% -30% -3% -19% -3% -21% -3% 24% -4% 11% -4% -47% -4% 41% -5% 35% -9% -4% -10% -37% -12% 1% -13% 49% -17% -21% -19% 4% -20% -36% -21% nm -22% 19% -22% nm -23% -25% -24% -18% -24% -31% -27% 22% -28% 59% -30% 79% -32% nm -35% >99% -36% -21% -38% -19% -45% -89% -45% -9% -56% -40% -59% -25% -60% nm nm nm nm nm nm nm nm nm nm nm nm -65% nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm

LTGR (Estimated) 14% na 17% 6% 14% 13% 15% 13% 2% 14% 13% 10% 13% 19% 14% 13% 15% 10% 33% 14% 11% 14% na 20% na 15% 3% 15% 17% -13% na 13% 8% 14% 25% 18% 15% 15% 20% na na na na na 14% 9% na na na na na na na

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Page 26 of 401

The “Magic Formula” 100 — Percentile Rank within Industry

Company / Ticker Mesabi Trust / MSB Iconix Brand Group, Inc. / ICON Questcor Pharmaceuticals, Inc. / QCOR VAALCO Energy, Inc. / EGY DepoMed, Inc. / DEPO MEMC Electronic Materials, Inc / WFR ViroPharma Incorporated / VPHM Net 1 Ueps Technologies Inc / UEPS CTC Media, Inc. / CTCM Value Line, Inc. / VALU Energen Corporation / EGN Versant Corporation / VSNT Microsoft Corporation / MSFT Coach, Inc. / COH Bare Escentuals, Inc. / BARE Lorillard Inc. / LO Mosaic Company, The / MOS Forest Laboratories, Inc. / FRX Hansen Natural Corporation / HANS CF Industries Holdings, Inc. / CF eBay Inc. / EBAY Sigma Designs, Inc. / SIGM Garmin Ltd. / GRMN Lincare Holdings Inc. / LNCR Dynacq Healthcare, Inc. / DYII Precision Castparts Corp. / PCP Jackson Hewitt Tax Service Inc / JTX Ambassadors Group, Inc. / EPAX New Frontier Media, Inc. / NOOF McGraw-Hill Companies, Inc., T / MHP Pre-Paid Legal Services, Inc. / PPD Viacom, Inc. / VIA.B EarthLink, Inc. / ELNK King Pharmaceuticals, Inc. / KG Total System Services, Inc. / TSS Varian Semiconductor / VSEA Double-Take Software, Inc. / DBTK SPSS Inc. / SPSS Tempur-Pedic International Inc / TPX Syneron Medical Ltd. / ELOS Allegheny Technologies Incorpo / ATI PRIMEDIA Inc. / PRM DISH Network Corp. / DISH American Eagle Outfitters / AEO Darling International Inc. / DAR Hurco Companies, Inc. / HURC Spark Networks Inc / LOV

Market Value ($mn) 117 508 529 256 84 3,443 921 641 677 328 2,037 54 178,445 5,296 407 10,215 14,425 6,923 2,344 3,126 15,783 232 3,856 1,862 53 7,674 339 160 41 7,347 417 10,295 689 2,376 2,393 1,269 156 441 503 215 2,041 61 4,918 1,828 374 110 65

Thanksgiving 2008 (sorted by LTM EBIT margin rank)

Percentile Rank within Industry Revenue Growth EPS Growth 5-Year LTM LTM Estimated 81 93 91 na 18 85 68 70 79 97 na 74 95 91 82 16 98 4 82 na 73 66 62 75 98 67 47 88 79 60 73 74 na 83 74 78 18 32 53 na 63 46 53 11 19 73 69 na 55 62 64 37 79 67 63 56 na 64 67 54 na 80 65 16 89 91 98 na 49 53 88 22 93 76 71 58 72 86 94 3 89 70 na 53 94 92 95 72 90 83 64 51 48 49 65 68 8 83 na na 82 62 47 71 46 24 32 21 78 15 30 58 42 38 43 25 38 27 40 na 31 40 63 na 65 63 52 45 14 13 96 na 58 14 75 0 56 40 40 44 66 12 36 57 na 70 45 83 36 53 77 40 81 27 39 47 94 36 34 54 74 30 39 58 3 20 19 na 66 50 61 16 64 40 43 47 69 82 92 na 72 74 65 na 83 20 95 na

LTM EBIT Margin 100 97 96 96 95 90 90 89 89 88 87 87 86 86 85 84 84 84 82 82 82 81 81 81 81 80 80 80 79 79 79 78 78 78 77 76 76 75 75 75 75 74 74 74 74 74 74

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The “Magic Formula” 100 — Percentile Rank within Industry

Company / Ticker Lam Research Corporation / LRCX Acme Packet, Inc. / APKT Broadridge Financial Solutions / BR Kenexa Corporation / KNXA Herbalife Ltd. / HLF Meredith Corporation / MDP Deluxe Corporation / DLX Rockwell Automation / ROK Monster Worldwide, Inc. / MWW NutriSystem Inc. / NTRI KHD Humboldt Wedag Internation / KHD Medicis Pharmaceutical Corpora / MRX Emulex Corporation / ELX First Advantage Corporation / FADV Cadence Design Systems, Inc. / CDNS Herman Miller, Inc. / MLHR Verigy Ltd. / VRGY Accenture Ltd. / ACN ValueClick, Inc. / VCLK Korn/Ferry International / KFY Heidrick & Struggles Internati / HSII Robert Half International Inc. / RHI R.G. Barry Corp. / DFZ Foster Wheeler Ltd. / FWLT Boeing Company, The / BA RadioShack Corporation / RSH NVIDIA Corporation / NVDA Take-Two Interactive Software, / TTWO TheStreet.com, Inc. / TSCM Seagate Technology / STX ICF International, Inc. / ICFI Biovail Corporation (USA) / BVF Sierra Wireless, Inc. (USA) / SWIR Premier Exhibitions, Inc. / PRXI Travelzoo Inc. / TZOO BSQUARE Corporation / BSQR Dell Inc. / DELL Pacer International, Inc. / PACR COMSYS IT Partners, Inc. / CITP KBR, Inc. / KBR EMCOR Group, Inc. / EME Barrett Business Services, Inc / BBSI Diamond Mgt. & Technology Cons / DTPI Perini Corporation / PCR LCA-Vision Inc. / LCAV Aladdin Knowledge Systems Ltd. / ALDN iBasis, Inc. / IBAS Lear Corporation / LEA Manitowoc Company, Inc. / MTW Gannett Co., Inc. / GCI infoGROUP Inc / IUSA AmerisourceBergen Corp. / ABC USA Mobility, Inc. / USMO

Market Value ($mn) 2,248 204 1,570 126 1,121 727 557 3,797 1,432 391 278 638 593 715 1,023 784 646 20,919 495 553 347 2,762 56 2,667 30,076 1,207 3,991 835 97 2,378 266 1,360 244 23 64 30 21,327 359 84 2,118 904 108 101 726 73 131 153 108 902 1,859 192 4,751 260

Thanksgiving 2008 (sorted by LTM EBIT margin rank) (continued)

Percentile Rank within Industry Revenue Growth EPS Growth 5-Year LTM LTM Estimated 78 15 28 44 na 57 28 67 na 42 40 25 88 70 48 78 58 67 75 56 39 25 37 na 28 24 37 4 37 61 24 54 58 56 56 78 97 22 31 69 60 57 67 96 55 71 32 77 44 33 13 25 71 27 87 50 28 25 45 35 41 39 54 1 na 33 63 79 56 67 70 31 93 52 37 33 69 67 54 56 50 47 41 56 69 50 54 57 14 37 24 na 38 82 68 78 27 32 48 37 15 33 58 25 63 55 29 56 27 87 95 47 77 75 21 74 58 45 40 41 na 55 38 58 20 14 20 na 88 86 74 na 97 83 22 72 92 43 14 na 44 56 76 na 50 55 55 40 27 55 69 31 56 31 42 58 49 72 56 58 40 74 74 58 72 52 27 58 33 24 74 32 84 72 57 35 86 16 21 53 63 64 26 68 88 89 22 na 21 20 90 21 75 77 60 45 24 20 7 2 66 68 28 na 37 48 35 41 6 15 3 na

LTM EBIT Margin 72 72 72 72 72 71 71 71 71 70 70 69 69 69 68 68 68 67 66 65 65 64 63 63 62 62 62 62 62 61 61 61 61 58 56 54 53 53 53 52 51 50 49 49 49 48 45 45 31 29 28 25 22

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The “Magic Formula” 100 — Selected Metrics

Company / Ticker KHD Humboldt Wedag Internation / KHD DepoMed, Inc. / DEPO Sierra Wireless, Inc. (USA) / SWIR TheStreet.com, Inc. / TSCM Acme Packet, Inc. / APKT Verigy Ltd. / VRGY Dynacq Healthcare, Inc. / DYII Syneron Medical Ltd. / ELOS LCA-Vision Inc. / LCAV Heidrick & Struggles Internati / HSII KBR, Inc. / KBR Sigma Designs, Inc. / SIGM Versant Corporation / VSNT Emulex Corporation / ELX Barrett Business Services, Inc / BBSI Diamond Mgt. & Technology Cons / DTPI Perini Corporation / PCR ViroPharma Incorporated / VPHM Double-Take Software, Inc. / DBTK Foster Wheeler Ltd. / FWLT Take-Two Interactive Software, / TTWO USA Mobility, Inc. / USMO Premier Exhibitions, Inc. / PRXI Ambassadors Group, Inc. / EPAX VAALCO Energy, Inc. / EGY King Pharmaceuticals, Inc. / KG Korn/Ferry International / KFY Value Line, Inc. / VALU New Frontier Media, Inc. / NOOF CF Industries Holdings, Inc. / CF SPSS Inc. / SPSS Lam Research Corporation / LRCX BSQUARE Corporation / BSQR Dell Inc. / DELL NVIDIA Corporation / NVDA MEMC Electronic Materials, Inc / WFR Hurco Companies, Inc. / HURC Monster Worldwide, Inc. / MWW Forest Laboratories, Inc. / FRX EarthLink, Inc. / ELNK Travelzoo Inc. / TZOO eBay Inc. / EBAY Medicis Pharmaceutical Corpora / MRX Net 1 Ueps Technologies Inc / UEPS iBasis, Inc. / IBAS Kenexa Corporation / KNXA ValueClick, Inc. / VCLK

Recent Price ($) 9.10 1.64 7.88 3.17 3.69 10.96 3.39 7.74 3.91 21.24 13.11 8.79 14.46 7.22 10.14 3.96 14.42 11.70 7.07 19.94 10.76 9.55 0.78 8.40 4.39 9.64 11.61 32.88 1.80 54.97 24.30 17.99 2.93 10.89 7.17 15.34 17.17 11.62 22.97 6.36 4.48 12.36 11.24 10.97 2.15 5.59 5.71

Thanksgiving 2008

(sorted by net cash to market value)

EV / LTM Revenue nm 0.3x 0.1x 0.3x 0.7x 0.3x 0.5x 0.7x 0.1x 0.3x 0.1x 0.5x 1.3x 0.6x 0.2x 0.3x 0.1x 2.5x 1.1x 0.3x 0.5x 0.4x 0.2x 0.9x 1.3x 0.7x 0.4x 2.5x 0.5x 0.7x 1.0x 0.6x 0.3x 0.2x 0.7x 1.2x 0.4x 0.8x 1.3x 0.4x 0.6x 1.6x 1.1x 2.0x 0.1x 0.6x 0.6x

Price / Tangible Book 0.8x 2.7x 0.9x 1.0x 1.4x 1.2x 0.8x 0.9x 0.8x 1.8x 1.4x 0.9x 2.2x 1.5x 1.7x 1.4x 2.1x 2.0x 2.6x 3.2x 2.5x 1.5x 0.7x 2.3x 1.5x 1.2x 1.6x 3.8x 1.3x 1.8x 3.4x 1.6x 1.5x 57.3x 2.0x 1.7x 1.0x 4.3x 2.1x 3.6x 2.9x 3.9x 2.3x 4.2x nm 1.8x 5.2x

Net Debt / Equity nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm

Net Cash / MV 142% 91% 83% 80% 62% 60% 58% 56% 55% 53% 52% 52% 51% 50% 47% 47% 47% 45% 44% 41% 41% 40% 40% 39% 39% 38% 38% 38% 37% 37% 36% 34% 33% 33% 33% 32% 30% 27% 27% 27% 25% 23% 22% 21% 20% 20% 18%

Dividend Yield 3.2% 2.4% 1.5% 3.2% 8.8% 10.5% 5.5% 4.9% 27.8% 0.7% 1.4% -

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The “Magic Formula” 100 — Selected Metrics

Company / Ticker Accenture Ltd. / ACN American Eagle Outfitters / AEO Biovail Corporation (USA) / BVF Varian Semiconductor / VSEA Cadence Design Systems, Inc. / CDNS EMCOR Group, Inc. / EME NutriSystem Inc. / NTRI Garmin Ltd. / GRMN Robert Half International Inc. / RHI R.G. Barry Corp. / DFZ Lorillard Inc. / LO Mesabi Trust / MSB Hansen Natural Corporation / HANS Microsoft Corporation / MSFT Aladdin Knowledge Systems Ltd. / ALDN Questcor Pharmaceuticals, Inc. / QCOR Coach, Inc. / COH Spark Networks Inc / LOV RadioShack Corporation / RSH Mosaic Company, The / MOS Total System Services, Inc. / TSS Precision Castparts Corp. / PCP Darling International Inc. / DAR First Advantage Corporation / FADV Broadridge Financial Solutions / BR AmerisourceBergen Corp. / ABC Pre-Paid Legal Services, Inc. / PPD Manitowoc Company, Inc. / MTW Boeing Company, The / BA Pacer International, Inc. / PACR CTC Media, Inc. / CTCM Rockwell Automation / ROK Allegheny Technologies Incorpo / ATI McGraw-Hill Companies, Inc., T / MHP Herbalife Ltd. / HLF Herman Miller, Inc. / MLHR Energen Corporation / EGN Lincare Holdings Inc. / LNCR ICF International, Inc. / ICFI Seagate Technology / STX Bare Escentuals, Inc. / BARE Meredith Corporation / MDP COMSYS IT Partners, Inc. / CITP Viacom, Inc. / VIA.B Jackson Hewitt Tax Service Inc / JTX Tempur-Pedic International Inc / TPX DISH Network Corp. / DISH Iconix Brand Group, Inc. / ICON Deluxe Corporation / DLX infoGROUP Inc / IUSA Gannett Co., Inc. / GCI PRIMEDIA Inc. / PRM Lear Corporation / LEA

Recent Price ($) 28.67 8.88 8.57 17.47 3.93 13.80 13.22 19.04 17.81 5.28 60.78 8.89 25.36 20.06 9.44 8.15 16.20 3.05 9.65 32.47 12.16 55.04 4.57 12.02 11.10 29.98 35.92 6.92 41.04 10.27 4.45 26.08 21.20 23.36 17.56 14.61 28.40 25.03 18.00 4.87 4.45 16.11 4.14 16.78 11.76 6.72 11.00 8.72 10.89 3.38 8.15 1.37 1.40

Thanksgiving 2008

(sorted by net cash to market value) (continued)

EV / LTM Revenue 0.7x 0.5x 1.3x 1.3x 0.5x 0.1x 0.4x 1.0x 0.5x 0.4x 2.3x 5.5x 2.3x 2.6x 1.1x 9.8x 1.5x 0.9x 0.3x 1.4x 1.3x 1.1x 0.6x 0.9x 0.7x 0.1x 1.0x 0.2x 0.5x 0.2x 1.6x 0.7x 0.4x 1.2x 0.6x 0.5x 1.8x 1.5x 0.5x 0.3x 1.2x 0.7x 0.2x 1.4x 2.2x 0.8x 0.9x 6.9x 0.9x 0.7x 0.8x 0.9x 0.1x

Price / Tangible Book 12.3x 1.3x 4.3x 2.5x 2.0x 5.4x 3.2x 2.0x 3.3x 1.2x 14.1x nm 4.8x 9.2x 1.1x 12.5x 4.9x nm 1.5x 2.5x 4.9x 3.8x 2.3x 10.8x 6.3x 1.8x 16.3x 1.0x 10.1x 6.9x nm 7.3x 0.9x nm nm nm 1.2x nm nm 1.1x nm nm nm nm nm nm nm nm nm nm nm nm nm

Net Debt / Equity nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm 1% 9% 11% >99% 5% 32% 11% 10% 25% 10% 62% 64% >99% 35% 66% 45% 19% nm 56% 41% >99% >99% >99% nm 98% >99% >99% 57% nm >99%

Net Cash / MV 17% 17% 17% 16% 16% 16% 15% 14% 13% 13% 12% 12% 12% 11% 8% 8% 8% 6% 5% 5% 2% 1% 1% -1% -4% -7% -8% -8% -9% -10% -10% -11% -12% -14% -16% -28% -28% -32% -33% -37% -54% -60% -81% -82% -83% -86% -92% -116% -156% -157% -204% -374% -1682%

Dividend Yield 1.7% 4.5% 17.5% 5.3% 3.9% 2.5% 6.1% 56.2% 2.6% 2.6% 0.6% 2.3% 0.2% 2.5% 1.0% 1.2% 3.9% 5.8% 4.4% 3.4% 3.8% 4.6% 2.4% 1.7% 9.9% 5.3% 6.1% 9.2% 10.4% 19.6% 20.4% -

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Thanksgiving 2008

The “Magic Formula” 100 — Insider Ownership, Open Market Activity

Company / Ticker Travelzoo Inc. / TZOO PRIMEDIA Inc. / PRM Deluxe Corporation / DLX New Frontier Media, Inc. / NOOF Diamond Mgt. & Technology Cons / DTPI Perini Corporation / PCR Garmin Ltd. / GRMN Ambassadors Group, Inc. / EPAX CF Industries Holdings, Inc. / CF Dell Inc. / DELL Coach, Inc. / COH Precision Castparts Corp. / PCP Herbalife Ltd. / HLF Foster Wheeler Ltd. / FWLT Premier Exhibitions, Inc. / PRXI Monster Worldwide, Inc. / MWW ValueClick, Inc. / VCLK American Eagle Outfitters / AEO Mosaic Company, The / MOS Iconix Brand Group, Inc. / ICON Mesabi Trust / MSB Spark Networks Inc / LOV Allegheny Technologies Incorpo / ATI ICF International, Inc. / ICFI Meredith Corporation / MDP Jackson Hewitt Tax Service Inc / JTX Gannett Co., Inc. / GCI Sigma Designs, Inc. / SIGM BSQUARE Corporation / BSQR eBay Inc. / EBAY R.G. Barry Corp. / DFZ First Advantage Corporation / FADV Dynacq Healthcare, Inc. / DYII KBR, Inc. / KBR Barrett Business Services, Inc / BBSI ViroPharma Incorporated / VPHM VAALCO Energy, Inc. / EGY Korn/Ferry International / KFY Lam Research Corporation / LRCX MEMC Electronic Materials, Inc / WFR Medicis Pharmaceutical Corpora / MRX iBasis, Inc. / IBAS Microsoft Corporation / MSFT Boeing Company, The / BA Pacer International, Inc. / PACR Bare Escentuals, Inc. / BARE Lear Corporation / LEA

Market Value ($mn) 64 61 557 41 101 726 3,856 160 3,126 21,327 5,296 7,674 1,121 2,667 23 1,432 495 1,828 14,425 508 117 65 2,041 266 727 339 1,859 232 30 15,783 56 715 53 2,118 108 921 256 553 2,248 3,443 638 153 178,445 30,076 359 407 108

Recent Price ($) 4.48 1.37 10.89 1.80 3.96 14.42 19.04 8.40 54.97 10.89 16.20 55.04 17.56 19.94 0.78 11.62 5.71 8.88 32.47 8.72 8.89 3.05 21.20 18.00 16.11 11.76 8.15 8.79 2.93 12.36 5.28 12.02 3.39 13.11 10.14 11.70 4.39 11.61 17.99 15.34 11.24 2.15 20.06 41.04 10.27 4.45 1.40

YTD Change -67% -84% -67% -67% -46% -65% -80% -54% -50% -56% -47% -60% -56% -74% -93% -64% -74% -57% -66% -56% -57% -39% -75% -29% -71% -63% -79% -84% -57% -63% -25% -27% -8% -66% -44% 47% -6% -38% -58% -83% -57% -58% -44% -53% -30% -82% -95%

Insider Ownership 45% 1% 1% 2% 15% 1% 46% 5% 1% 11% 1% 1% 2% 1% 13% 5% 1% 10% 65% 7% 1% 0% 2% 51% 11% 1% 1% 4% 2% 16% 9% 82% 57% 1% 21% 1% 4% 2% 1% 1% 1% 57% 13% 1% 1% 14% 0%

(sorted by # of buys) Last Six Months Insider Insider Buys Sales 129 12 2 9 8 4 7 5 7 6 5 3 5 17 5 3 5 1 5 5 5 5 4 4 4 4 4 4 2 4 2 4 3 3 3 3 7 3 2 3 3 2 2 2 8 2 7 2 5 1 1 3 1 1 3 1 1 1 1 1 1 2 1 1 28 1 1 9 1 1 3 [MFI100 ● Top100_browser ● MOI_macros_100.xls, MOI100A]

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Thanksgiving 2008

The “Magic Formula” 100 — Insider Ownership, Open Market Activity

Company / Ticker KHD Humboldt Wedag Internation / KHD DepoMed, Inc. / DEPO Sierra Wireless, Inc. (USA) / SWIR TheStreet.com, Inc. / TSCM Acme Packet, Inc. / APKT Verigy Ltd. / VRGY Syneron Medical Ltd. / ELOS LCA-Vision Inc. / LCAV Heidrick & Struggles Internati / HSII Versant Corporation / VSNT Emulex Corporation / ELX Double-Take Software, Inc. / DBTK Take-Two Interactive Software, / TTWO USA Mobility, Inc. / USMO King Pharmaceuticals, Inc. / KG Value Line, Inc. / VALU SPSS Inc. / SPSS NVIDIA Corporation / NVDA Hurco Companies, Inc. / HURC Forest Laboratories, Inc. / FRX EarthLink, Inc. / ELNK Net 1 Ueps Technologies Inc / UEPS Kenexa Corporation / KNXA Accenture Ltd. / ACN Biovail Corporation (USA) / BVF Varian Semiconductor / VSEA Cadence Design Systems, Inc. / CDNS EMCOR Group, Inc. / EME NutriSystem Inc. / NTRI Robert Half International Inc. / RHI Lorillard Inc. / LO Hansen Natural Corporation / HANS Aladdin Knowledge Systems Ltd. / ALDN Questcor Pharmaceuticals, Inc. / QCOR RadioShack Corporation / RSH Total System Services, Inc. / TSS Darling International Inc. / DAR Broadridge Financial Solutions / BR AmerisourceBergen Corp. / ABC Pre-Paid Legal Services, Inc. / PPD Manitowoc Company, Inc. / MTW CTC Media, Inc. / CTCM Rockwell Automation / ROK McGraw-Hill Companies, Inc., T / MHP Herman Miller, Inc. / MLHR Energen Corporation / EGN Lincare Holdings Inc. / LNCR Seagate Technology / STX COMSYS IT Partners, Inc. / CITP Viacom, Inc. / VIA.B Tempur-Pedic International Inc / TPX DISH Network Corp. / DISH infoGROUP Inc / IUSA

Market Value ($mn) 278 84 244 97 204 646 215 73 347 54 593 156 835 260 2,376 328 441 3,991 110 6,923 689 641 126 20,919 1,360 1,269 1,023 904 391 2,762 10,215 2,344 131 529 1,207 2,393 374 1,570 4,751 417 902 677 3,797 7,347 784 2,037 1,862 2,378 84 10,295 503 4,918 192

Recent Price ($) 9.10 1.64 7.88 3.17 3.69 10.96 7.74 3.91 21.24 14.46 7.22 7.07 10.76 9.55 9.64 32.88 24.30 7.17 17.17 22.97 6.36 10.97 5.59 28.67 8.57 17.47 3.93 13.80 13.22 17.81 60.78 25.36 9.44 8.15 9.65 12.16 4.57 11.10 29.98 35.92 6.92 4.45 26.08 23.36 14.61 28.40 25.03 4.87 4.14 16.78 6.72 11.00 3.38

YTD Change -70% -50% -47% -80% -71% -60% -42% -80% -43% -50% -56% -67% -42% -33% -6% -19% -32% -79% -61% -37% -10% -63% -71% -20% -36% -53% -77% -42% -51% -34% na -43% -64% 41% -43% -57% -60% -51% -33% -35% -86% -85% -62% -47% -55% -56% -29% -81% -74% -62% -74% -68% -62%

Insider Ownership 22% 12% 1% 31% 52% 1% 10% 1% 2% 9% 2% 21% 1% 1% 1% 87% 1% 5% 10% 1% 8% 16% 7% 1% 10% 1% 0% 2% 7% 3% 61% 17% 19% 7% 0% 5% 4% 0% 1% 35% 4% 62% 0% 2% 2% 0% 0% 2% 9% 12% 9% 80% 41%

(sorted by # of buys) (continued) Last Six Months Insider Insider Buys Sales 9 19 1 3 1 1 1 1 7 12 5 32 2 5 1 10 17 7 15 5 17 3 1 12 3 1 6 3 2 1 17 [MFI100 ● Top100_browser ● MOI_macros_100.xls, MOI100A]

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Thanksgiving 2008

Accenture Ltd. (NYSE: ACN)

Hamilton, Bermuda, 441-296-8262 http://www.accenture.com

Services: Business Services Trading Data

Consensus EPS Estimates

Price: $28.67 (as of 11/14/08) 52-week range: $24.76 - $43.04 Market value: $20.9 billion Enterprise value: $17.3 billion Shares out: 729.6 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.69 0.63

Month Ago $0.70 0.64

# of Ests 16 14

FYE 8/31/09

2.84

2.89

EV / LTM revenue

0.7x

FYE 8/31/10 FYE 8/31/11

3.13 3.40

3.18 3.45

17 4

EV / LTM EBITDA EV / LTM EBIT

n/a 5.7x

P / tangible book 12.3x Greenblatt Criteria

LT EPS growth 10.3% 11.3% Latest Quarterly EPS Surprise

Insider sales (last six months): 5 Institutional ownership: 65% # of institutional owners: 1233

Date

Actual

Estimate

9/25/08

$0.67

$0.66

P/E FYE 8/31/08 P/E FYE 8/31/09 P/E FYE 8/31/10 P/E FYE 8/31/11

10.8x 10.1x 9.2x 8.4x

LTM EBIT yield

17%

LTM pre-tax ROC

n/m

Operating Performance and Financial Position ($ millions, except per share data) Revenue Gross profit EBIT Net income Diluted EPS Cash from ops Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity

8/31/02 13,105 4,677 1,385 245 0.56 1,090 263 828 1,317 4,052 168 5,479 63 3,327 3 5,040 0 439

8/31/03 13,397 4,310 1,551 498 1.05 1,544 212 1,333 2,332 5,037 189 6,459 46 3,308 14 5,628 0 832

EBIT/capital employed

>100%

Fiscal Years Ended 8/31/04 8/31/05 8/31/06 15,114 17,094 18,228 4,616 5,092 4,994 1,759 2,111 1,841 691 941 973 1.22 1.56 1.59 1,756 1,887 2,668 282 318 306 1,474 1,569 2,362 2,838 2,948 3,420 6,139 6,685 7,191 215 379 528 8,014 8,957 9,498 37 31 25 4,394 4,931 5,773 32 44 27 6,542 7,261 7,603 0 0 0 1,472 1,697 1,894 n/m

n/m

8/31/07 21,453 6,041 2,493 1,243 1.97 2,631 364 2,266 3,546 7,971 644 10,747 24 6,879 3 8,684 0 2,063

8/31/08 25,314 7,186 3,012 1,692 2.65 2,803 320 2,483 3,623 9,159 840 12,399 7 6,848 2 9,858 0 2,541

LTME 8/31/08 25,314 7,186 3,012 1,692 2.65 2,803 320 2,483 3,623 9,159 840 12,399 7 6,848 2 9,858 0 2,541

FQE 8/31/07 5,573 1,594 642 317 0.50 777 139 638 3,546 7,971 644 10,747 24 6,879 3 8,684 0 2,063

FQE 8/31/08 6,561 1,905 785 435 0.67 1,031 87 944 3,623 9,159 840 12,399 7 6,848 2 9,858 0 2,541

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Jan 00

Jan 00

Oct 01

Oct 02

Oct 03

Oct 04

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Page 33 of 401

BUSINESS OVERVIEW Accenture is a global management consulting, IT services and outsourcing company. It has 186,000 employees in 49 countries and operates in five segments: communications and high tech, financial services, government, products, and resources. Outsourcing contracts (40% of revenue) typically have longer terms than consulting contracts (60% of revenue) and generally have lower gross margins than consulting.

SELECTED OPERATING DATA

Reflects management guidance provided on September 25, 2008.

•

Guiding for revenue growth of 9-12% (constant currency) and EPS growth of 8-11% in FY09. The company expects new bookings of $26-29 billion in FY09, compared to $26.8 in FY08. EBIT margin is expected to expand by 10-40 bps in FY09, and management forecasts FCF of $2.6-2.8 billion. Strong balance sheet; share buybacks. Accenture had $3.6 billion of net cash as of August 31, having repurchased 61 million shares for $2.3 billion in FY08 (another $2.5 billion remains authorized). The company paid an annual dividend of $0.50 per share in November, up from $0.42 per share a year earlier. Share price implies 12% trailing FCF yield, 11x trailing P/E and 10x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

Dependent on technology and related services spending by enterprises, with 21% of FY08 revenue from the financial services sector. The company is vulnerable to a global recession, as EMEA and Asia Pacific contribute 58% of revenue. Majority of revenue derived on project-byproject basis, with many consulting engagements less than 12 months in duration. Backlog is typically a small portion of expected annual revenue. People business with fairly low barriers to entry. While Accenture has scale advantages, particularly in outsourcing, IT and management consulting is subject to constant entry by new competitors. The company had a 16% attrition rate in FY08.

COMPARABLE PUBLIC COMPANY ANALYSIS MV

BE CSC DTPI IBM

13 4,322 101 107,920

ACN

20,919

($mn)

n/m 7.7x 1.4x 19.2x

08 P/E n/m 7x 57x 9x

09 P/E n/m 6x 33x 9x

12.3x

10x

EV/Rev

P/TB

703 7,354 54 132,577

.2x .4x .3x 1.3x

17,304

.7x

MAJOR HOLDERS Insiders <1% │ Barclays 8% │ Wellington 5%

INVESTMENT HIGHLIGHTS •

•

FYE August 31 2006 2007 2008 2009E % of net revenue by type of work: Consulting 59% 60% 60% -Outsourcing 41% 40% 40% -% of net revenue by operating group: Communications & tech 25% 23% 23% -Financial services 21% 22% 21% -Products 24% 25% 26% -Public service 13% 13% 12% -Resources 16% 16% 17% -Net revenue growth by operating group (constant currency basis): Communications & tech 6% 5% 10% -Financial services 7% 16% 6% -Products 15% 18% 17% -Public service 4% 12% 7% -Resources 12% 17% 14% -∆ net revenue 9% 13% 11% 9-12% % of net revenue by geography: Americas 47% 43% 42% -EMEA 46% 48% 49% -Asia Pacific 8% 9% 9% -EBIT margin by operating group: Communications & tech 15.1% 12.6% 12.1% -Financial services 10.9% 11.3% 13.2% -Products 10.0% 13.6% 14.2% -Public service 3.8% 10.6% 9.1% -Resources 12.7% 14.8% 14.4% -Total EBIT margin 11.1% 12.7% 12.9% 13-13.3% Other financial data: New bookings ($bn) 20.4 22.0 26.8 26.0-28.0 Net revenue ($bn) 16.6 19.7 23.4 -FCF ($bn) 2.4 2.3 2.5 2.6-2.8 Effective tax rate 26% 34% 29% 30-32% Diluted EPS growth 2% 24% 35% 8-11% Other operating metrics: Utilization na 85% 84% -Attrition 18% 18% 16% -1

Thanksgiving 2008

Top global technology-focused consulting firm. Accenture has one of the broadest service offerings in the industry. Competitors include IBM Global Services, EDS (HP), and Computer Sciences Corp. Management expressed “continued confidence” in the business following strong FQ4 results. While CEO Green noted “uncertainty in the economic environment,” he expressed confidence that revenue and income would increase in FY09.

THE BOTTOM LINE Accenture is a global leader in helping businesses improve processes and maximize return on their technology investments. At the current valuation, Accenture shares should yield a long-term return that meaningfully exceeds long-term growth in technology capex by global enterprises. However, management’s guidance regarding FY09 bookings and EBIT margin appears quite vulnerable to continued macroeconomic deterioration. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 34 of 401

Thanksgiving 2008

Acme Packet, Inc. (Nasdaq: APKT)

Burlington, MA, 781-328-4400 http://www.acmepacket.com

Technology: Communications Equipment Trading Data

Consensus EPS Estimates

Price: $3.69 (as of 11/14/08) 52-week range: $3.30 - $13.30 Market value: $204 million Enterprise value: $77 million

This quarter Next quarter

Latest $0.07 0.05

FYE 12/31/08

0.24

0.23

EV / LTM revenue

0.7x

FYE 12/31/09 FYE 12/31/10

0.26 0.31

0.28 n/a

9 1

EV / LTM EBITDA EV / LTM EBIT

n/a 4.4x

LT EPS growth 16.0% 16.5% Latest Quarterly EPS Surprise

P / tangible book 1.4x Greenblatt Criteria

Shares out: 55.3 million Ownership Data Insider ownership: 52% Insider buys (last six months): 0 Insider sales (last six months): 9 Institutional ownership: 47% # of institutional owners: 202

Valuation

Month Ago $0.06 0.05

Date

Actual

Estimate

11/6/08

$0.05

# of Ests 9 9

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

12.3x 15.4x 14.2x 11.9x

LTM EBIT yield

22%

LTM pre-tax ROC

80%

12/31/03 3 2 (8) (8) (0.16) (7) 1 (8) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EBIT/capital employed

n/a

Fiscal Years Ended 12/31/04 12/31/05 16 36 10 27 (7) (0) (7) 0 (0.15) 0.00 (5) 2 2 4 (7) (1) 17 15 23 26 0 0 26 30 0 0 8 12 0 0 8 13 0 0 18 18 -789%

12/31/06 84 67 23 29 0.50 26 6 20 119 146 0 154 0 23 0 23 0 131

12/31/07 113 91 25 20 0.30 16 6 11 136 176 0 187 0 23 0 23 0 163

LTME 9/30/08 117 94 17 13 0.20 30 5 25 127 168 0 178 0 30 0 30 0 149

FQE 9/30/07 30 24 7 6 0.08 (1) 1 (3) 128 165 0 174 0 19 0 20 0 154

FQE 9/30/08 28 23 3 2 0.03 3 1 1 127 168 0 178 0 30 0 30 0 149

>100%

80%

n/m

-25%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$25

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$15

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BUSINESS OVERVIEW

Thanksgiving 2008

•

Acme Packet provides session border controllers (SBCs), which enable service providers and enterprises to deliver secure interactive communications—voice, video and other real-time multimedia sessions—across defined border points where Internet Protocol (IP) networks connect, known as network borders. Service providers include wireline, wireless, cable and Internet telephony service providers. Acme has 540 customers in 85 countries, including 29 of the world’s top 30 communications service providers. Direct sales accounted for 39% of revenue in 2007. Product and service revenue accounted for 84% and 16% of revenue, respectively, in 2007. Acme was founded in 2000 and completed an IPO at $9.50 per share in October 2006.

•

INVESTMENT RISKS & CONCERNS •

•

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by geography: North America 59% Rest of the world 41% Revenue growth by geography: North America 165% Rest of the world 86% Total revenue growth 126%

2006

2007

YTD 9/30/08

57% 43%

48% 52%

50% 50%

125% 145% 133%

12% 64% 34%

8% 2% 5%

•

INVESTMENT HIGHLIGHTS •

• •

• • •

Explosive revenue growth from 2004-07, but sharp slowdown this year. Growth has been driven by demand for session border controllers (SBCs) in next-generation networks being deployed by service providers. The global market for SBCs in service provider networks is expected to increase from $215 million in 2007 to $1.1 billion by 2012.1 Leader in session border controllers (SBCs). The company has roughly 50% market share in SBCs, twice as much as the next largest competitor. Experienced, entrepreneurial management. Cofounder and CEO Andrew Ory (41) was previously co-founder and CEO of Priority Call Management, a company with a similar customer base to that of Acme. Ory sold Priority for $162 million in 1999. International represented 52% of revenue in 2007, up from 43% in 2006 and 41% in 2005. Manufacturing outsourced to third parties (Jabil, Benchmark Electronics, and TTM Technologies). Expanded stock repurchase program from $20 million to $55 million in August. The company has repurchased $36 million of stock so far this year.

Strong balance sheet, with $127 million of cash and no debt as of September 30. Stock price implies 12% trailing FCF yield, 18x trailing P/E and 14x forward P/E. Lowered 2008 revenue guidance from $142-$147 million to $116-$118 million and non-GAAP EPS from $0.38-$0.42 to $0.23-$0.25. In July, Acme blamed Q2 weakness on order pushouts and late shipments, suggesting than no deals had been lost. The subsequent guidance revision is not consistent with the explanation of the Q2 shortfall. Dependent on technological edge in SBCs. Acme’s key competitive advantage is the leadingedge family of Net-Net session border controllers. A loss of technology leadership, or a change in service providers’ need for SBCs, might threaten the firm. Competition from startups and large players, including NexTone, Newport, DiTech, Juniper, AudioCodes, Sonus, and Ericsson. Cisco recently launched a new product for the SBC market. Customer concentration. Alcatel Lucent, Nokia Siemens Networks, Sprint, and Ericsson accounted for 17%, 15%, 13% and 11% of 2007 revenue, respectively. Acme acknowledges that its key customers “have substantial negotiating leverage.”

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ALU CSCO JNPR

MV 5,241 97,853 7,935

EV 6,063 77,961 5,914

APKT

204

EV/Rev .3x 1.9x 1.7x

P/TB n/m 4.8x 3.8x

08 P/E n/m 12x 13x

09 P/E 9x 11x 11x

.7x

1.4x

15x

14x

MAJOR HOLDERS CEO Andrew Ory 8% │ Other insiders 46% (includes Menlo Ventures 22% and Advanced Technology Ventures 6%)

Source: Company, Dell’Oro Group.

THE BOTTOM LINE Acme experienced impressive growth through FY07 but has stumbled recently. We are not entirely satisfied with management’s explanation of the sharp slowdown in growth in 2008, and find it difficult to assess whether the slowdown is temporary. While CEO Ory has founded and sold a business before, and while Acme investors may ultimately be rewarded in similar fashion, we cannot gain enough comfort with the company’s operating direction. Longer term, we believe a sale may be the only outcome that provides satisfactory shareholder value, as we see no sustainable competitive advantage here.

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Page 36 of 401

Thanksgiving 2008

Aladdin Knowledge Systems Ltd. (Nasdaq: ALDN)

Petach Tikva, Israel, 212-564-5678 http://www.aladdin.com

Technology: Software & Programming Trading Data

Consensus EPS Estimates

Price: $9.44 (as of 11/14/08) 52-week range: $8.29 - $26.94 Market value: $131 million Enterprise value: $120 million Shares out: 13.9 million Ownership Data Insider ownership: 19% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest -$0.17 0.05

Month Ago -$0.05 n/a

# of Ests 7 3

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

9.3x 118.0x 23.6x 13.5x

FYE 12/31/08

0.08

0.00

EV / LTM revenue

1.0x

FYE 12/31/09 FYE 12/31/10

0.40 0.70

0.38 0.87

7 2

EV / LTM EBITDA EV / LTM EBIT

n/a 37.5x

P / tangible book 1.1x Greenblatt Criteria

LT EPS growth 16.5% 18.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 43% # of institutional owners: 68

Date

Actual

Estimate

10/16/08

-$0.02

-$0.21

LTM EBIT yield

LTM pre-tax ROC

18%

12/31/01 47 37 (10) (15) (1.32) (5) 1 (6) 13 33 8 53 0 8 0 11 0 43

12/31/02 50 39 (2) (7) (0.59) 4 1 3 15 32 8 49 0 9 0 12 0 36

-66%

-16%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 55 69 82 45 55 65 2 10 13 3 9 12 0.23 0.68 0.85 6 9 15 1 1 2 5 8 12 20 26 77 38 48 103 8 10 10 56 71 126 0 0 0 11 14 18 0 0 0 15 18 21 0 0 0 41 53 105 23%

98%

>100%

12/31/06 89 69 13 14 0.93 19 5 14 91 120 12 149 0 20 0 26 0 123

12/31/07 106 79 14 15 1.02 22 3 19 95 128 9 150 0 24 0 31 0 119

LTME 9/30/08 117 86 3 6 0.44 9 3 6 11 59 0 182 0 37 0 58 0 124

FQE 9/30/07 26 20 4 4 0.30 7 1 6 83 117 0 146 0 25 0 30 0 116

FQE 9/30/08 31 22 (1) (0) (0.02) (1) 1 (2) 11 59 0 182 0 37 0 58 0 124

>100%

89%

18%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

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Oct 03

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Thanksgiving 2008

BUSINESS OVERVIEW

•

Aladdin is an information security company specializing in authentication, software digital rights management (DRM) and content security. It operates in two segments: Software Security DRM provides software and hardware that helps software publishers manage licensing and distribution of their software to prevent theft and piracy. Enterprise Security provides USB-based hardware and onetime-password devices for user authentication and content security solutions that protect computers against intrusion.

•

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by segment: Software security (DRM) 69% 1 31% Enterprise security Revenue growth by segment: Software security (DRM) 12% Enterprise security 36% Total revenue growth 18% Gross profit margin by segment: Software security (DRM) 83% Enterprise security 72% Total gross margin 79% EBIT margin by segment: Software security (DRM) 36% Enterprise security -32% Total EBIT margin 15% % of revenue by product line: HASP tokens 68% eSafe 14% eToken 17% % of revenue by geography: U.S. 33% Europe ex. Germany 26% Germany 21% Asia incl. Japan 13% Israel and others 7% 1

2006

2007

YTD 9/30/08

68% 32%

62% 38%

58% 42%

7% 13% 9%

9% 40% 19%

4% 32% 14%

85% 62% 78%

82% 61% 74%

n/a n/a 74%

40% -38% 15%

38% -28% 13%

n/a n/a 3%

68% 14% 18%

62% 14% 24%

n/a n/a n/a

26% 30% 22% 15% 7%

23% 32% 23% 15% 7%

n/a n/a n/a n/a n/a

Enterprise security revenue in 2007 includes 2% from educational products.

INVESTMENT HIGHLIGHTS •

•

• • 1

Leading software rights management products, used by software publishers to protect their IP and reduce piracy losses. Software DRM is a ~$200 million market globally, growing in the low teens.1 eToken is leader in USB authentication, a $150 million market growing at 30%+. Aladdin also competes in the one-time-password authentication, a $450 million market growing at roughly 20%.1 eSafe secure Web gateway competes in $650 million market growing at 20%+.1 eSafe provides advanced protection against Web-based threats. CEO Jacob Margalit (45) founded company in 1985. CFO Shemer (38) joined Aladdin in 2007.

•

Active M&A strategy, including 39% investment in Athena Smartcard, €10 million purchase of Eutronsec, and $65 million acquisition of SafeWord product line from Secure Computing (SCUR). SafeWord offers one-time-password authentication. Guiding for revenue growth of 15-25% and EPS decline from $1.02 in 2007 to $0.04-0.10 in 2008; non-GAAP EPS to decline from $1.20 in 2007 to $0.74-0.84 in 2008. The guidance includes the SafeWord acquisition. A slowdown in revenue growth, M&A expenses and the strengthening of the Israeli shekel are behind the likely decline in EPS. Received $14.50 per share acquisition proposal from Vector Capital in October, following rejection of $13 per share Vector proposal in August. The company also rejected a proposal by Vector to buy Aladdin’s DRM business for $125-135 million. Vector owns 14% of Aladdin shares. Stock price implies 5% trailing FCF yield, 21x trailing P/E and 24x forward P/E.

INVESTMENT RISKS & CONCERNS • •

M&A strategy with “focus on market share.” Second criterion is “technology,” with value creation apparently in third place. Competitors include SafeNet, Macrovision and Wibu in software DRM; RSA in authentication; Trend Micro in content security for gateways; as well as McAfee, Symantec, Blue Coat, Secure Computing, IronPort, Websense, and SurfControl.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) MFE MVSN SYMC

MV 4,350 1,169 10,208

EV 3,570 1,768 10,003

ALDN

131

120

EV/Rev 2.3x 6.7x 1.6x

P/TB 6.3x n/m n/m

08 P/E 14x 17x 9x

09 P/E 13x 10x 8x

1.0x

1.1x

118x

24x

MAJOR HOLDERS CEO Margalit 13% │ Other insiders 7% │ Vector 14% │ Galleon 12% │ Manning & Napier 10% │ RenTech 5%

Source: Frost & Sullivan, Company, The Manual of Ideas.

THE BOTTOM LINE Aladdin has a strong product offering in the growing software digital rights management, authentication and secure Web gateway markets. The shares may be cheaper than they appear, as the enterprise security segment has posted losses, masking the strong profitability of software DRM. However, we question the company’s acquisition strategy, as it appears to have negatively affected earnings even while boosting growth and strengthening the product offerings. Nonetheless, the current enterprise value may be less than the intrinsic value of just the software DRM segment, making this an interesting prospect. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 38 of 401

Thanksgiving 2008

Allegheny Technologies Incorpo (NYSE: ATI)

Pittsburgh, PA, 412-394-2800 http://www.alleghenytechnologies.co…

Basic Materials: Misc. Fabricated Products, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $21.20 (as of 11/14/08) 52-week range: $18.42 - $98.49 Market value: $2.0 billion Enterprise value: $2.3 billion Shares out: 96.3 million Ownership Data Insider ownership: 2% Insider buys (last six months): 3

Valuation

This quarter Next quarter

Latest $1.02 0.89

Month Ago $1.36 1.23

# of Ests 9 4

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

2.9x 3.9x 5.1x 4.2x

FYE 12/31/08

5.48

5.65

EV / LTM revenue

0.4x

FYE 12/31/09 FYE 12/31/10

4.15 5.02

5.40 5.77

11 5

EV / LTM EBITDA EV / LTM EBIT

2.5x 2.5x

P / tangible book 0.9x Greenblatt Criteria

LT EPS growth 15.0% 15.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 81% # of institutional owners: 768

Date

Actual

Estimate

10/22/08

$1.45

$1.38

LTM EBIT yield

41%

LTM pre-tax ROC

39%

12/31/01 2,128 266 (7) (25) (0.31) 123 104 19 34 926 188 2,643 9 333 573 1,699 0 945

12/31/02 1,908 163 (68) (66) (0.82) 204 49 156 59 796 194 2,093 10 342 509 1,644 0 449

-1%

-5%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,937 2,733 3,540 64 245 654 (247) 52 355 (315) 20 362 (3.88) 0.22 3.61 82 24 224 74 50 91 8 (26) 133 80 251 363 743 1,160 1,484 198 205 200 1,903 2,316 2,732 28 29 13 395 493 561 504 553 547 1,729 1,890 1,932 0 0 0 175 426 800 -23%

12/31/06 4,937 1,196 901 574 5.61 312 238 73 502 1,988 207 3,281 24 643 530 1,778 0 1,503

12/31/07 5,453 1,449 1,153 747 7.26 710 447 262 623 2,249 210 4,096 21 704 507 1,872 0 2,224

LTME 9/30/08 5,471 1,224 928 604 5.95 524 532 (8) 273 2,141 204 4,312 21 798 495 1,947 0 2,365

FQE 9/30/07 1,335 367 293 194 1.88 294 130 165 664 2,348 210 3,917 17 704 513 1,844 0 2,073

FQE 9/30/08 1,392 307 232 144 1.45 248 110 139 273 2,141 204 4,312 21 798 495 1,947 0 2,365

60%

59%

39%

n/m

29%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$140 $120 $100 $80 $60 $40 $20 $0 Oct 99

Oct 00

Oct 01

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Page 39 of 401

BUSINESS OVERVIEW Allegheny is a diversified specialty metals producer. Target markets include aerospace and defense, oil and gas, electrical energy, medical, auto, food equipment, machine tools, and construction. The company operates in three segments: High Performance Metals provides titanium-, nickel- and cobalt-based alloys and superalloys, and exotic alloys such as zirconium, hafnium and niobium, primarily in long product forms such as ingot, billet, bar, rod, wire, and seamless tube. Flat-Rolled Products provides stainless steel, nickel-based alloys and titanium alloys in a variety of forms, including plate, sheet, engineered strip, and precision-rolled strip. Engineered Products produces tungsten powder, heavy alloys and carbide materials, and carbide cutting tools.

•

• •

•

2005

2006

2007

YTD 9/30/08

35% 54% 11%

37% 55% 9%

38% 54% 8%

36% 56% 8%

57% 16% 33% 30% 75%

45% 42% 10% 39% 23%

14% 9% 0% 10% -17%

-4% 2% 9% 0%

27% 8% 12% -2% 13% 2% 3%

36% 13% 13% -2% 20% 2% 5%

35% 17% 7% -2% 22% 2% 8%

28% 13% 6% -1% 17% 2% 9%

59% 41%

61% 39%

54% 46%

n/a n/a

INVESTMENT HIGHLIGHTS •

•

Includes sales from U.S. operations to international customers.

Chairman and CEO Patrick Hassey (62) joined in 2003. He previously served in various roles at Alcoa, including as group president of Industrial Components. Richard Harshman (51) has served as CFO since 2000, having joined from Teledyne. Repurchased 5.4 million shares for $303 million under $500 million program authorized in late 2007. Stock price implies negative trailing FCF yield, 4x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 % of revenue by segment: High performance metals Flat-rolled products Engineered products Revenue growth by segment: High performance metals Flat-rolled products Engineered products ∆ revenue ∆ backlog (period end) EBIT margin by segment: High performance metals Flat-rolled products Engineered products Corporate and other Total EBIT margin D&A as % of revenue Capex as % of revenue Revenue by geography: U.S. 1 International

Thanksgiving 2008

Guiding for earnings decline of 23-24% in 2008, with estimated EPS of $5.51-5.61. Q3 saw “more competitive pricing” for most products and lower demand for standard stainless sheet and plate. Specialty metals customers operate in cyclical industries, including aerospace and defense, oil and gas, electrical energy, and infrastructure. Annual capex to range from $500-600 million over four years, following decision to invest $1.2 billion in flat-rolled products segment. The company intends to build a specialty metals hot rolling and processing facility and consolidate a grain-oriented electrical steel melt into the Brackenridge, PA melt shop. Management’s estimate of a 20% ROI by 2014 may prove wrong. Retirement benefits liability of $465 million related to the company’s U.S. defined-benefit pension plan. The plan appears to be well funded.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) CRS NUE RTI TIE X ATI

Transformed business through renewed profit focus, implementing $590 million of gross cost reductions from 2005-07. The company has formed market sector teams to target more effectively verticals such as aerospace, defense and oil and gas. Poised to benefit from interest in nuclear energy. The company is forming a market sector team to target this opportunity. Specialty metals that address this market include zirconium and hafnium for fuel bundles, titanium and corrosion-resistant alloys for condenser units, and condenser tubing. “Steady” demand from aerospace and “growing” demand from global industrial markets is partly offsetting weakness in U.S. auto and housing.

MV 704 10,276 253 1,389 3,459

EV 632 11,878 206 1,369 5,891

EV/Rev .2x .5x .3x 1.2x .2x

P/TB 1.0x 1.9x 0.5x 1.2x 0.8x

08 P/E 5x 5x 4x 9x 2x

09 P/E 4x 6x 5x 9x 3x

2,041

2,285

.4x

0.9x

MAJOR HOLDERS CEO Hassey <1% │ Other insiders 2% │ TCW 7% │ Singleton 6%

THE BOTTOM LINE Allegheny has transformed itself in recent years, refocusing on profitability and boosting returns on capital into the mid 20s, a highly respectable level for a capital-intensive industrial business. We are concerned that weak macro trends may put pressure on revenue and margins, depressing returns on capital into the teens or even lower. As a result, we are not convinced that Allegheny is a “good enough” business to make it one of the more compelling magic formula selections. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 40 of 401

Thanksgiving 2008

Ambassadors Group, Inc. (Nasdaq: EPAX)

Spokane, WA, 509-568-7800 http://www.ambassadorsgroup.com

Services: Personal Services Trading Data

Consensus EPS Estimates

Price: $8.40 (as of 11/14/08) 52-week range: $7.42 - $20.80 Market value: $160 million Enterprise value: $98 million Shares out: 19.0 million Ownership Data Insider ownership: 5% Insider buys (last six months): 5

Valuation

This quarter Next quarter

Latest -$0.34 n/a

Month Ago -$0.37 -0.31

# of Ests 2 0

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

5.4x 8.6x 9.8x n/a

FYE 12/31/08

0.98

1.04

EV / LTM revenue

1.0x

FYE 12/31/09 FYE 12/31/10

0.86 n/a

1.14 1.11

2 0

EV / LTM EBITDA EV / LTM EBIT

n/a 4.3x

P / tangible book 2.3x Greenblatt Criteria

LT EPS growth 15.0% 15.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 3 Institutional ownership: 89% # of institutional owners: 203

Date

Actual

Estimate

10/28/08

$0.70

$0.79

LTM EBIT yield

23%

LTM pre-tax ROC

>100%

12/31/01 43 0 13 10 0.48 7 1 6 40 42 0 46 0 21 0 21 0 25

12/31/02 36 0 15 11 0.53 21 0 21 51 55 0 59 0 31 0 31 0 28

n/m

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 38 52 69 0 0 67 15 23 31 10 16 22 0.50 0.75 1.05 17 28 38 1 2 2 16 26 36 68 88 117 75 93 119 0 0 0 79 98 125 0 0 0 38 48 58 1 1 0 39 48 59 0 0 0 41 50 67 n/m

n/m

12/31/06 89 78 34 27 1.25 37 7 31 133 140 0 154 0 70 0 70 0 84

12/31/07 115 96 42 31 1.55 16 19 (3) 85 93 0 122 0 49 0 49 0 72

LTME 9/30/08 97 77 23 18 0.91 16 5 11 62 73 9 115 0 36 0 36 0 78

FQE 9/30/07 52 46 32 23 1.12 (47) 5 (52) 86 96 0 126 0 39 0 39 0 87

FQE 9/30/08 40 33 19 13 0.70 (30) 2 (32) 62 73 9 115 0 36 0 36 0 78

n/m

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Jan 00

Jan 00

Oct 02

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BUSINESS OVERVIEW

•

Ambassadors Group is an educational travel company focused on international travel for students. The company’s programs, including “Student Ambassador Programs” and “Student Leader Programs,” help grade and high school students learn about the history and culture of other places. The majority of travel is scheduled in June and July. The company has the exclusive right from People to People, a non-profit organization founded by President Eisenhower and originally administered by the U.S. State Department, to develop and conduct student programs through 2020. Eight U.S. presidents have served as honorary chairman of People to People, including President George W. Bush. Since 1963, the company has organized programs for 400,000+ students, adults and athletes. In 2007, 50,000+ “delegates” traveled to 44 countries. The company acquired education website BookRags for $18 million in May 2008.

1 2

•

• •

2007 52,661 22%

YTD 9/30/08 38,930 -22%

50% 21% 12% 15% 2%

54% 15% 12% 16% 3%

•

Primarily Australia and New Zealand. Primarily China.

INVESTMENT HIGHLIGHTS •

•

Competitive edge due to association with People to People, 41 years of travel experience, and academic credit granted for the programs by high schools and colleges. The company also benefits from the perception that its programs improve students’ chance of admission to top colleges. Academically accredited since 2004 through Northwest Association of Accredited Schools. The company’s Washington School of World Studies has granted close to 140,000 academic and service-learning credits to students since inception. Marketing under People to People name, with heavy emphasis on White House connections. Ambassadors operates the travel programs in the background, benefiting from the unique credibility bestowed on the programs by People to People. Strong reputation. While results have faltered recently, Ambassadors remains the envy of its peers, with little direct competition. Lower-end competitors include EF Tours and World Stride.

Enrolled revenue of $173 million (up 10% y-y) as of October 26 for 2009 travel relating to 29,580 net enrolled participants (down 4% y-y). Chairman John Ueberroth and CEO Jeffrey Thomas assumed their current roles in 2001. Both executives have extensive travel industry experience and own 4-5% of the company each. Ueberroth is a business leader honored on the cover of Time for his role in the 1984 L.A. Olympics. Repurchased $24 million of stock in past twelve months, with another $20 million authorized. Stock price implies 7% trailing FCF yield, 9x trailing P/E and 10x forward P/E.

INVESTMENT RISKS & CONCERNS

•

SELECTED OPERATING DATA FYE December 31 2005 2006 Traveling delegates 37,800 43,075 Change (y-y) 22% 14% % of revenue by travel destination: Europe 46% 43% 1 30% 26% South Pacific 2 11% 13% Asia U.S. 12% 13% Other 1% 5%

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•

Hurt by weak dollar and high fuel prices, as travel abroad has become less affordable. The company has “seen enrollments begin to slow.” Dependent on agreements with People to People, which expire in 2010 but may be extended through 2020 at the company’s option. Ambassadors has the exclusive right to conduct programs for K-12 students using the People to People name, and the non-exclusive right to conduct programs for professionals, college students, and athletes. EBIT margins of 40%+ may not be sustainable. The margins are significantly higher than those of most other travel-related firms. The company’s margin profile depends on its ability to market the student programs as highly reputable and selective. Marketing practices might be construed as misleading. Direct mail materials may give prospective participants the impression that the company is a non-profit affiliated with the U.S. government. Participation in the programs may be less selective than assumed by some students.

MAJOR HOLDERS Chairman Ueberroth 4% │ CEO Thomas 5% │ Other insiders <1% │ Punch Card 12% │ Morgan Stanley 10% │ Schroder 7% │ Eaton Vance 6% │ Timucuan 5%

THE BOTTOM LINE Ambassadors has achieved impressive growth and returns on capital over a long period of time due to a unique affiliation with the non-profit People to People (contracted through 2020). Recent results have suffered due to a confluence of factors, including higher overseas travel costs and missteps in marketing execution. Longer term, the growth opportunity may be limited, as the company may find it difficult to enroll meaningfully more than 50,000 student travelers annually. As a result, we do not believe the share price is sufficiently low to offset near-term execution risks and long-term market saturation risks. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

American Eagle Outfitters (NYSE: AEO)

Pittsburgh, PA, 412-432-3300 http://www.ae.com

Services: Retail (Apparel), Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $8.88 (as of 11/14/08) 52-week range: $8.44 - $23.84 Market value: $1.8 billion Enterprise value: $1.5 billion Shares out: 205.9 million Ownership Data Insider ownership: 10% Insider buys (last six months): 4

Valuation

This quarter Next quarter

Latest $0.30 0.47

Month Ago $0.32 0.53

# of Ests 28 25

FYE 1/31/09

1.27

1.36

EV / LTM revenue

0.5x

FYE 1/31/10 FYE 1/31/11

1.23 1.37

1.42 1.47

29 6

EV / LTM EBITDA EV / LTM EBIT

2.4x 3.0x

P / tangible book 1.3x Greenblatt Criteria

LT EPS growth 12.8% 13.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 2 Institutional ownership: 80% # of institutional owners: 667

Date

Actual

Estimate

8/26/08

$0.29

$0.28

P/E FYE 2/2/08 P/E FYE 1/31/09 P/E FYE 1/31/10 P/E FYE 1/31/11

4.9x 7.0x 7.2x 6.5x

LTM EBIT yield

34%

LTM pre-tax ROC

65%

2/2/02 1,372 547 167 106 0.48 175 119 56 226 377 24 674 4 151 19 172 0 502

2/1/03 1,383 541 159 88 0.46 122 79 43 242 427 24 741 4 142 16 164 0 578

64%

55%

Fiscal Years Ended 1/31/04 1/29/05 1/28/06 1,435 1,881 2,322 550 878 1,078 133 363 459 60 213 294 0.38 0.99 1.26 204 378 466 78 97 82 126 281 384 338 590 752 531 865 1,077 10 10 10 932 1,329 1,606 5 0 0 209 283 352 14 0 0 295 365 450 0 0 0 637 964 1,156 41%

>100%

2/3/07 2,794 1,340 587 387 1.70 749 226 523 814 1,189 10 1,980 0 465 0 562 0 1,417

2/2/08 3,055 1,423 599 400 1.82 464 250 214 620 1,021 12 1,868 0 376 0 527 0 1,341

LTME 8/2/08 3,069 1,361 514 344 1.61 489 288 201 380 859 11 1,945 75 386 0 540 0 1,405

FQE 8/4/07 703 317 123 81 0.37 92 55 37 617 1,074 10 1,837 0 313 0 462 0 1,375

FQE 8/2/08 689 289 89 60 0.29 90 84 6 380 859 11 1,945 75 386 0 540 0 1,405

>100%

65%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

Oct 02

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Thanksgiving 2008

BUSINESS OVERVIEW

•

American Eagle Outfitters (AEO) sells its own brand of laidback clothing for 15-25 year-olds, providing quality merchandise at affordable prices. The collection includes jeans and graphic Ts as well as accessories, outerwear, and footwear. AEO operates 875 stores in the U.S. and 76 in Canada. AEO also markets a girls’ underwear collection, aerie, available in 81 standalone and AE stores. Martin + Osa, a concept targeting 28-40 year-olds, offers Refined Casual clothing and accessories in 22 Martin + Osa stores.

•

SELECTED OPERATING DATA FYE February 1 2006 Same store sales growth +16% 1 Stores (period end) 869 Net sales per gross sq. ft. $471 Net sales per selling sq. ft. $577 Gross sq. ft. (period end) (mn) 4.8 Square footage growth 5% 2 $127 Internet sales ($mn) Internet sales growth 72% % of sales by merchandise group: Men’s 35% Women’s (incl. intimates) 60% Footwear 5% % of sales by geography: U.S. 92% Foreign 8%

2007 +12% 911 $524 $642 5.2 8% $188 48%

2008 +1% 987 $517 $638 5.7 10% $243 29%

1H09 -7% 1,054 n/a n/a 6.1 14% n/a n/a

35% 60% 5%

37% 59% 4%

n/a n/a n/a

92% 8%

91% 9%

n/a n/a

Store breakdown as of August 2: 951 AE, 81 aerie, and 22 Martin + Osa. AEO Direct (includes ae.com, aerie.com, and martinandosa.com). The company has released the following data for the first three quarters of FY09, i.e., through October 30, 2008: sales up 1%, SSS down 7%. 2

•

INVESTMENT RISKS & CONCERNS •

•

INVESTMENT HIGHLIGHTS • •

• • • • •

Ranked top two clothing brand by teenagers. Top competitors include Abercrombie (higher price points), Aéropostale (lower price points) and Gap. Strong new store economics. Based on AEO data, a new AE store requires investment of $630K and generates first-year four-wall profit of $661K (27% of sales), a pre-tax ROI of 105%. New store size is 6,000 sq. ft., with $410 sales per sq. ft. in year one. Strong remodeling economics, with payback period of 16 months. Data on 57 remodeled stores shows sales and profit increases of 30-40%. Expects to grow square footage 12% in 2008. Net new store targets: 40 AE, 76 aerie, 9 Martin + Osa. Expects to have 115 aerie stores at yearend 2008, up from 39 at yearend 2007. The concept has shown “strong initial productivity” and is profitable. Website sales grew 29% to $243 million in 2007. The company is targeting $500 million by 2010. Launched children’s brand at 77kids.com, with stores planned for 2010. The new brand, 77kids, offers on-trend, high-quality clothing for ages 2-10.

Strong management. Chairman Jay Schottenstein (53; owns 7% of AEO) has been with AEO and predecessors since 1980. CEO James O’Donnell (67; owns 1.5% of AEO) joined the company in 2000. The team has grown the business profitably. Repurchased no shares YTD, $438 million in FY08, $154 million in FY07 and $172 million in FY06. Chairman Schottenstein bought one million shares at $23-24 last year. Stock price implies 11% trailing FCF yield, 6x trailing P/E and 7x forward P/E.

Missed fashion cycle in women’s jeans (~15% of sales), causing women’s comp store sales to decline 16% in 2Q09 while men’s comps rose 2%. 3Q09 SSS declined 7% (vs. 3% drop in 3Q08), with EPS guidance revised from $0.31-0.36 to $0.30. Chief merchandising officer McGalla resigned in August. Challenging retail environment. The company targets 15-25 year-olds, a demographic whose discretionary spending may decrease significantly in the current downturn. AEO has a conservative inventory position and expense controls in place to mitigate the negative impact of lower spending. aerie success uncertain; Martin + Osa may shut down. Management may opt to close Martin + Osa in Q1 CY09 if sales per sq. ft. do not improve.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ANF ARO GPS JCG PSUN

MV 1,548 1,070 8,217 701 80

EV 1,350 999 6,725 687 89

EV/Rev .4x .6x .4x .5x .1x

P/TB 0.9x 4.4x 1.9x 3.3x 0.2x

08 P/E 5x 7x 9x 8x 41x

09 P/E 6x 7x 8x 7x 9x

AEO

1,828

1,523

.5x

1.3x

MAJOR HOLDERS Chairman Schottenstein 7% │ CEO O’Donnell 1% │ Other insiders 5% │ Wellington 6% │ Lone Pine 6%

THE BOTTOM LINE American Eagle is a well-managed retailer with a strong brand and good alignment of interests (insiders own 12%; chairman Schottenstein bought one million shares at $23-24 last year). While investors are acutely aware of the macro headwinds facing the average AEO customer, the market is not giving AEO credit for continuing to deliver strong returns on capital invested in AE stores. AEO shares offer a rare opportunity to buy a great company with no net debt at a small premium to tangible book. We value AEO at $17-27 per share, based on a range of 6x trailing EBIT to 8x estimated normalized EBIT. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

…additional insight into AEO:

REVENUE, PRODUCTIVITY AND PROFIT MARGINS

WHAT ARE THE SHARES WORTH?

AEO – Revenue, Gross Profit and EBIT, FY 1994-2008

We value AEO at $17-27 per share, based on the valuation analysis summarized below. We note that the company has roughly $400-500 million in excess marketable assets; however, the vast majority of value resides in the capitalized earnings of the core American Eagle retail business.

American Eagle — Valuation Summary Low Value

High Value

$353 27 309 (75) $614 (200) $414

$353 27 309 (75) $614 (100) $514

WHY THE SHARES MAY BE MISPRICED

10% 0% 08

-10% 05

Based on balance sheet values as of August 2, 2008. Represents MOI estimate. Represents MOI estimate. On the low end, the concepts are conservatively worth zero. On the high end, we value 77kids at zero, while ascribing $2 million of business value to each of aerie and Martin + Osa’s 103 stores. Source: Company filings, The Manual of Ideas estimates and analysis. 2

20%

30%

$5,520 $27

40%

$3,414 $17

Source: Company, The Manual of Ideas.

Indiscriminate selling of retailers. With consumer spending hurt by the real estate downturn, lower credit availability and rising unemployment, it is impossible to predict how weak consumer spending may get and when it may rebound. As a result, many investors prefer to stay on the sidelines or to sell short U.S. retailer stocks. However, American Eagle stands out due to its strong market position, strong management, excellent returns on capital, and a rock-solid financial position. While near-term results are likely to continue to be affected by macro weakness, we have little doubt that the company’s earning power will be restored — and will grow — once consumer spending turns the corner. Core AE store profitability modestly higher than suggested by overall EPS, as new concepts are still losing money. As a result, the market is valuing core AE earnings at a slightly lower multiple than may be apparent.

EBIT

50%

Estimated fair value of AEO per share

500 6x

$3,000

600 8x $4,800

•

Gross Profit

The company has posted remarkably strong growth for more than a decade, driven by an ability to reinvest capital at high rates of return. Even so, growth has not been smooth, with multi-year cycles of relatively stagnant results, followed by years of rapid growth.

$206

Value of AE core business: Estimated LTM EBIT ex. startup concepts Fair value multiple of LTM EBIT Estimated EBIT power in 2-3 years Fair value multiple of EBIT power Total

•

Revenue Source: Company, The Manual of Ideas.

AEO – Y-Y Revenue Growth, FY 1994-YTD 2008

Value of startup concepts: aerie, Martin + Osa, 77kids

94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Value of excess marketable assets: Cash and equivalents Short-term investments Long-term investments Notes payable Net cash and investments 2 Cash needed to run business Total

$3,500mn $3,000mn $2,500mn $2,000mn $1,500mn $1,000mn $500mn $0mn

($ in millions, except per share data)

The company has moved from microcap to near-midcap status over the past fifteen years as the American Eagle brand has gained in polularity, with revenue growing nearly twenty-fold from $169 million in FY93 to $3 billion in FY08. Gross profit and operating income have increased even more dramatically during the same period.

•

AEO – Sales per Average Gross Square Foot, FY 2000-08 Sales productivity has roughly doubled since 1995, albeit along an uneven path. Sales per square foot declined in the early part of this decade, only to rebound strongly since 2005. Perhaps the most significant risk to the bullish thesis on AEO is the possibility of sales productivity falling sharply once again in coming years.

$550 $500 $450 $400 $350 $300 $250 $200 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Source: Company, The Manual of Ideas.

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AEO – Gross and Operating Margins, FY 1995-2008

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•

The company has achieved record margins in recent years, reflecting the operating leverage inherent in same-store sales growth. Profit margins remained quite strong even in years, such as 2003-04, in which revenue growth ground to a halt.

50% 40% 30% 20% 10% 0% 95 96 97 98 99 00 01 02 03 04 05 06 07 08

• •

Source: Company, The Manual of Ideas.

•

AEO CORE STORE METRICS A new American Eagle store generates a “four-wall” return on invested capital of 91% in year one, based on our calculations and data provided by the company. Company data is based on 40 stores opened since early 2006. We note that four-wall returns for new stores opened in the current economic environment are likely significantly lower than the return shown here. Nonetheless, we believe the company can sustain reasonable returns on capital in a difficult economy, with returns like to rebound substantially when consumer spending trends improve.

•

New American Eagle Stores – First-Year Economics New AE store size 1 Investment to open new store Sales per square foot Sales Four-wall profit margin Four-wall profit Pre-tax return on investment

6,000 square feet $730,000 $410 $2,460,000 27% $664,200 91%

•

Includes opening inventory of ~$100K but excludes tennant allowances. Source: The Manual of Ideas, American Eagle.

•

MANAGEMENT’S VIEW OF BUSINESS CEO O’Donnell and CFO Hilson provided the following commentary on the 2Q09 earnings call on August 26: • Operating environment: “store traffic and consumer demand have been down compared to prior years;” “traffic… has been relatively choppy” • Promotional front: “we do expect… third quarter markdowns to be higher than last year” • Management focus: “managing the business conservatively, with tight inventories, and we continue to pursue expense opportunities” • AE brand: “strong, well positioned, and top of mind with our 15 to 25-year-old customers”

•

Women’s business: “has been very challenging;” “denim business has been the one category that has hurt us;” “changes that we’ve made in fashion have definitely started to resonate with the customer;” “we have not held our position of strength… in denim, and the whole denim assortment is not a catastrophe. We just have a few styles, and they did not resonate very well with the customer and there were a couple of misses, to be honest with you. We have addressed those, and we expect to be in a very strong denim position, trend-wise for holiday this year;” “very encouraged by spring ’09;” “not… writing off holiday ‘08” Men’s business: “has been good” Accessories business: “have struggled with accessories for some time now, and although we’ve had periodic improvements, …the category is not where we want it to be” Direct business (aeo.com, etc.): “continues to demonstrate strength;” “increase in conversion as well as an increase in unique site visits;” “direct to consumer processing costs per unit declined by over 25% [in FQ3];” “ship to 62 countries;” “continuing to see the global appetite for our brand grow”aerie: “performing well;” “stores are ramping up ahead of our plan;” “really been turning on over the last quarter… very pleased with the performance;” “undies have taken off… strong bra performance;” “AUR is somewhat lower than the AE brand” Martin + Osa: “continue to see an improvement;” “our targets for the brand to reach an annual run rate of $375 per square foot, and a four wall break even in the fourth quarter of this year, are the parameters for keeping the business ongoing” New stores: “profitable in their very first year;” “running out of new store locations, so I expect over the next handful of years, two to three years, to see our new store opening cadence probably get somewhere around 15 to 20 stores, and we’re going to cap out at approximately 1,100 [AE] stores” Relief from landlords? “very definitely;” “between 35 and 45 stores [come up for lease renewal] a year” Share repurchases: “…as auction rates loosen up, we will continue to evaluate share repurchase. We still have our authorization out there. So it’s really dependent on the auction rate market.” Chief merchandising officer replacement: “very pleased at the caliber of individuals we’re speaking with;” “I would think that we would have someone identified, and hopefully announced by year’s end”

RECOMMENDED READING •

Value Investors Club write-ups dated November 2, 2007 and July 7, 2008.

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Thanksgiving 2008

AmerisourceBergen Corp. (NYSE: ABC)

Chesterbrook, PA, 610-727-7000 http://www.amerisourcebergen.com

Health Care: Biotechnology & Drugs, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $29.98 (as of 11/14/08) 52-week range: $27.80 - $48.60 Market value: $4.8 billion Enterprise value: $5.1 billion Shares out: 158.5 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.69 0.89

Month Ago $0.72 0.90

# of Ests 14 12

FYE 9/30/09

3.15

3.20

EV / LTM revenue

0.1x

FYE 9/30/10 FYE 9/30/11

3.51 3.86

3.60 4.01

13 5

EV / LTM EBITDA EV / LTM EBIT

5.4x 6.1x

P / tangible book Greenblatt Criteria

1.8x

LTM EBIT yield

16%

LT EPS growth 12.0% 13.3% Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 95% # of institutional owners: 903

Date

Actual

Estimate

10/30/08

$0.73

$0.71

P/E FYE 9/30/08 P/E FYE 9/30/09 P/E FYE 9/30/10 P/E FYE 9/30/11

10.4x 9.5x 8.5x 7.8x

LTM pre-tax ROC

>100%

9/30/02 45,235 2,025 718 345 1.58 536 64 472 663 8,350 2,205 11,213 61 6,100 1,757 7,897 0 3,316

9/30/03 49,584 2,226 882 441 1.95 355 91 264 800 8,859 2,391 12,040 61 6,256 1,723 8,035 0 4,005

37%

43%

Fiscal Years Ended 9/30/04 9/30/05 9/30/06 53,121 54,577 61,203 2,166 1,980 2,232 877 525 749 468 265 468 2.06 1.37 2.26 825 1,527 807 189 203 113 636 1,323 694 871 1,316 1,329 8,295 7,988 9,210 2,448 2,432 2,589 11,654 11,381 12,784 281 1 2 6,104 6,052 7,459 1,157 952 1,094 7,315 7,101 8,643 0 0 0 4,339 4,280 4,141 41%

33%

72%

9/30/07 65,672 2,219 789 469 2.53 1,208 111 1,097 1,108 8,938 0 12,310 1 7,864 1,227 9,210 0 3,100

9/30/08 70,190 2,047 828 251 2.89 737 137 600 878 8,605 0 12,153 2 8,103 1,187 9,443 0 2,710

LTME 9/30/08 70,190 2,047 828 360 2.89 737 137 600 878 8,605 0 12,153 2 8,103 1,187 9,443 0 2,710

FQE 9/30/07 16,293 502 177 88 0.62 128 32 95 1,108 8,938 2,743 12,310 1 7,864 1,227 9,210 0 3,100

FQE 9/30/08 17,158 527 203 115 0.73 514 57 457 878 8,605 0 12,153 2 8,103 1,187 9,443 0 2,710

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW

INVESTMENT RISKS & CONCERNS

AmerisourceBergen is a large drug wholesaler. Services range from pharmacy automation and pharmaceutical packaging to reimbursement and pharmaceutical consulting. All continuing operations are reported in the Pharmaceutical Distribution segment, which includes AmerisourceBergen Drug Corporation (ABDC), AmerisourceBergen Specialty Group (ABSG) and the AmerisourceBergen Packaging Group (ABPG). The company spun off the PharMerica Long-Term Care business in July 2007, combining it with Kindred HealthCare’s institutional pharmacy to create PharMerica Corp. (NYSE: PMC). AmerisourceBergen’s top ten customers account for one-third of operating revenue.

SELECTED OPERATING DATA FYE September 30 1 Pharmaceutical distribution data: Revenue growth EBIT growth EBIT margin 1

Thanksgiving 2008

2006

2007

2008

13% 21% 1.15%

17% 13% 1.12%

7% 15% 1.19%

•

Pharmaceutical distribution accounts for 99% of revenue.

INVESTMENT HIGHLIGHTS •

•

• •

•

Industry expected to grow in mid single digits in the U.S. in coming years, despite likely slower growth in FY09. Growth drivers include an aging population, new drugs, increased use of generics, and increased use of drug therapies. Achieved respectable performance in FY08, due to slight share gains, “excellent contribution” from the PRxO Generics program, a diverse mix, and cost control. The company reported growth in operating revenue of 7% and growth in diluted EPS from continuing operations of 14% in FY08. EBIT margin expanded by 7 bps. FCF was $600 million, while share repurchases amounted to $680 million. Sold underperforming workers’ comp business. The company sold PMSI in the June quarter, recording a $222 million non-cash charge. Guiding for revenue growth of 1-3% and EPS growth of 7-12% in FY09 against a backdrop of low single digit market growth. Management will focus on expense management, EBIT margin expansion, and FCF generation ($460-535 million). Authorized $500 million buyback in November; to spend $350 million in next twelve months. Stock price implies 13% trailing FCF yield, 10x trailing P/E and 10x forward P/E.

Low-margin business. The company achieves pharmaceutical distribution operating margins of less than 1.5%, leaving it with little maneuvering room should the cost of doing business rise quickly. Gross margin has eroded due to competitive pressure, from 5.42% in FY01 to 3.38% in FY08. Integration of acquisitions. AmerisourceBergen has spent close to $700 million on the purchase of several businesses in the past three years, including Trent, Asenda, Rep-Pharm, Health Advocates, Bellco Health, NMCR, IgG America, AMD, Xcenda, and Brecon. While these purchases have improved AmerisourceBergen’s market position, they also raise execution and integration risks. Goal of 15% long-term EPS growth aggressive. AmerisourceBergen targets revenue growth at market rates while aiming for faster EPS growth, driven by margin expansion and share repurchases (30%+ of FCF to be returned to shareholders). Few companies achieve 15% EPS growth over the long term, and we are skeptical that AmerisourceBergen can deliver on this goal. However, the company does not need to grow EPS anywhere close to its goal in order to justify the current valuation.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) CAH MCK OMI PSSI

MV 12,978 9,643 1,622 1,040

EV 16,070 10,315 1,805 1,248

EV/Rev .2x .1x .3x .6x

P/TB 7.9x 5.1x 4.2x 5.4x

08 P/E 9x 9x 17x 18x

09 P/E 8x 8x 15x 15x

ABC

4,751

5,062

.1x

1.8x

10x

MAJOR HOLDERS CEO Yost 1% │ Other insiders 2% │ AXA 12% │ Goldman Sachs 10% │ State Street 6% │ Pzena 6% │ Vanguard 6%

THE BOTTOM LINE AmerisourceBergen is not cheap enough to warrant serious consideration. The company operates in a steady-as-you-go business that is neither likely to deliver impressive rewards nor result in permanent loss of capital. The question becomes whether the opportunity cost of capital is too great to tie it up in shares of the company. Given some of the other ideas on the magic formula list, we believe the answer is yes.

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Page 48 of 401

Thanksgiving 2008

Bare Escentuals, Inc. (Nasdaq: BARE)

San Francisco, CA, 415-489-5000 http://www.bareescentuals.com

Services: Retail (Specialty Non-Apparel) Trading Data

Consensus EPS Estimates

Price: $4.45 (as of 11/14/08) 52-week range: $3.70 - $29.90 Market value: $407 million Enterprise value: $629 million Shares out: 91.5 million Ownership Data Insider ownership: 14% Insider buys (last six months): 1 Insider sales (last six months): 0 Institutional ownership: 93% # of institutional owners: 386

Valuation

This quarter Next quarter

Latest $0.26 0.27

Month Ago $0.32 0.30

FYE 12/31/08

1.04

1.13

EV / LTM revenue

1.1x

FYE 12/31/09 FYE 12/31/10

1.07 1.22

1.27 1.51

11 7

EV / LTM EBITDA EV / LTM EBIT

3.3x 3.5x

LT EPS growth 13.9% 18.3% Latest Quarterly EPS Surprise

P / tangible book Greenblatt Criteria

n/m

Date

Actual

Estimate

10/30/08

$0.25

$0.26

# of Ests 11 8

P/E FYE 12/30/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

4.7x 4.3x 4.2x 3.6x

LTM EBIT yield

29%

LTM pre-tax ROC

>100%

12/31/03 95 64 22 12 0.17 7 0 6 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EBIT/capital employed

Fiscal Years Ended 1/2/05 1/1/06 142 259 102 185 17 61 (1) 24 (0.01) 0.34 13 40 2 8 11 33 4 19 52 77 6 6 64 95 9 13 30 42 81 377 113 422 0 0 (49) (327)

n/a

60%

>100%

12/31/06 395 282 133 50 0.65 30 14 16 21 126 6 156 18 59 322 384 0 (229)

12/30/07 511 363 169 88 0.95 97 26 71 32 152 25 224 18 68 247 328 0 (105)

LTME 9/28/08 554 400 181 100 1.08 59 33 26 23 182 23 273 17 57 227 297 0 (25)

FQE 9/30/07 127 91 39 21 0.22 24 8 15 26 146 27 214 15 70 265 346 0 (132)

FQE 9/28/08 130 95 39 23 0.25 5 11 (5) 23 182 23 273 17 57 227 297 0 (25)

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Jan 00

Jan 00

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Thanksgiving 2008

BUSINESS OVERVIEW

•

Bare Escentuals is a prestige beauty brand and a leader in mineral-based cosmetics. It makes branded cosmetics, skin care and body care and professional skin care. Distribution consists of infomercials, home shopping TV, specialty beauty retailers, Bare boutiques, spas and salons, and online.

•

SELECTED OPERATING DATA

•

YTD 9/30/08

FYE December 31 2005 2006 2007 % of revenue by distribution channel and segment: Retail – infomercial 37% 33% 25% 19% 14% 17% 20% Retail – boutiques 14% Total retail 51% 47% 41% 39% Wholesale – premium 19% 28% 32% 32% Wholesale – shopping TV 15% 13% 12% 12% Wholesale – spas and salons 9% 8% 11% 12% 4% 3% 4% Wholesale – international 6% Total wholesale 49% 53% 59% 61% Revenue growth by distribution channel and segment: Retail – infomercial 77% 33% -2% -18% 58% 53% 39% Retail – boutiques 51% Total retail growth 69% 40% 14% 4% Wholesale – premium 253% 121% 49% 11% Wholesale – shopping TV 39% 31% 22% 22% Wholesale – spas and salons 27% 38% 71% 26% 11% 7% 29% Wholesale – international 71% 65% 43% 17% Total wholesale growth 84% Total revenue growth 83% 52% 30% 12% Gross margin by distribution channel: Retail 77% 80% 80% 80% Wholesale 65% 64% 65% 67% Total gross margin 71% 72% 71% 72% EBIT margin by distribution channel and corporate overhead: Retail 31% 36% 35% 33% Wholesale 57% 60% 59% 61% Corporate -14% -13% -16% -18% Total EBIT margin 30% 35% 33% 32% % of revenue by geography: U.S. 94% 96% 92% 88% International 6% 4% 8% 12% 1 Revenue concentration by major customer: Customer A 15% 13% 12% 12% Customer B <10% 13% 13% 12% Customer C <10% 14% 16% 15% 1

•

• • •

Large opportunity in “extension” markets, with only 2% share of $4.9 billion U.S. color market and 1% share of $7.8 billion U.S. skin care market. To grow distribution to 786 U.S. doors by yearend 2008, up from 559 in 2007 (potential of 2,300). International only 8% of revenue, but Bare is pursuing growth in Europe, Japan, and Canada. Bare Escentuals was the top-selling cosmetics brand at specialty retailers Sephora and Ulta in 2005, 2006 and 2007. The company has strong brand awareness and consumer loyalty. No-celebrity marketing lowers cost. Bare spends 7-8% of sales on ads and promotion, while L’Oreal and Estee Lauder spend ~30% and ~25% each. Guidance for 10% revenue and EPS growth in 2008, with guidance lowered from 20-25% to 1520% in July and to 10% in late October. Stock price implies 6% trailing FCF yield, 4x trailing P/E and 4x forward P/E.

INVESTMENT RISKS & CONCERNS • • •

Are mineral-based cosmetics a fad? Bare’s explosive growth in an emerging category suggests that the company has benefited from the “in” factor. Aggressive long-term growth targets. Even if Bare performs well, it may not meet its long-term targets of 20-25% sales and 25% EPS growth. Management turnover in several high-level positions may heighten growth and execution risks.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AVP EL RDEN REV

MV 9,605 5,884 390 424

EV 11,048 6,987 816 1,691

BARE

407

629

EV/Rev 1.0x .9x .7x 1.2x

P/TB 13.8x 3.4x 3.4x n/m

08 P/E 11x 13x 9x 10x

09 P/E 11x 12x 8x 8x

1.1x

n/m

Top three customers are QVC, Sephora, Ulta.

MAJOR HOLDERS

INVESTMENT HIGHLIGHTS •

•

74% of target consumers are aware of mineral makeup, but only 23% of those have tried it. 45% of consumers say they are likely to try mineral makeup in the next year, according to Bare. bareMinerals core foundation products offer healthy, lightweight alternative to conventional liquid- or cream-based cosmetics while providing light to maximum coverage for all skin types. 12% share of $3.6 billion U.S. facial makeup market. Bare continues to gain share.

CEO Leslie Blodget 6% │ Other insiders 7% │ Berkshire P. 20% │ Capital World 10% │ Artisan 5% │ Thornburg 5%

THE BOTTOM LINE Revenue growth has slowed sharply this year, crawling to a 3% rate in Q3. Nonetheless, we expect the top and bottom lines to grow in 2009. We do have some concerns regarding the long-term growth of the minerals-based cosmetics category, and we are unsure whether the company can maintain EBIT margin around 30%. However, the adverse implications of these long-term issues should not be overweighted in light of continued growth and a valuation of less than 5x 2009E earnings. Bare shares may be too cheap to ignore. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Biovail Corporation (USA) (NYSE: BVF)

Mississauga, ON, Canada, 905-286-3000 http://www.biovail.com

Health Care: Biotechnology & Drugs Trading Data

Consensus EPS Estimates

Price: $8.57 (as of 11/14/08) 52-week range: $6.65 - $17.29 Market value: $1.4 billion Enterprise value: $1.1 billion Shares out: 158.7 million Ownership Data Insider ownership: 10% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 12/31/07 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

7.0x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

1.5x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

10.0x 17.3x

n/a

P / tangible book 4.3x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 59% # of institutional owners: 255

Date

Actual

Estimate

n/a

LTM EBIT yield

LTM pre-tax ROC

35%

12/31/01 583 457 172 87 0.58 284 72 212 435 577 653 1,332 13 149 34 205 0 1,126

12/31/02 788 623 134 88 0.55 334 437 (103) 56 322 1,183 1,834 123 345 625 988 0 846

>100%

99%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 812 879 938 680 657 737 18 221 313 (27) 160 246 (0.17) 1.04 1.61 282 277 498 279 28 64 3 249 434 133 39 446 413 315 688 1,150 1,078 1,011 1,923 1,711 2,037 59 34 24 263 190 274 764 446 413 1,041 657 808 0 0 0 882 1,054 1,228 8%

80%

>100%

12/31/06 1,068 857 239 212 1.35 522 45 477 835 1,058 798 2,192 11 410 399 890 0 1,302

12/31/07 843 619 188 196 1.22 341 35 306 438 707 731 1,782 0 368 0 484 0 1,298

LTME 9/30/08 780 572 66 48 0.30 177 38 139 227 416 846 1,501 0 188 0 337 0 1,164

FQE 9/30/07 189 138 61 66 0.41 43 11 33 417 615 755 1,712 0 228 0 332 0 1,379

FQE 9/30/08 181 134 48 48 0.31 (62) 4 (66) 227 416 846 1,501 0 188 0 337 0 1,164

>100%

35%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

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BUSINESS OVERVIEW Biovail is a specialty pharma company. Its core competency lies in developing and manufacturing products incorporating oral drug-delivery technologies. Therapeutic areas include central nervous system disorders, pain management, and cardiovascular disease. Branded products include Wellbutrin for the treatment of depression, Ultram/ Ralivia for moderate to moderately severe chronic pain, Zovirax for herpes, and Cardizem/ Tiazac for hypertension and angina.

2006 14%

2007 -21%

YTD 9/30/08 -10%

33% 47% 11% 5% 96% 2% 2%

35% 32% 17% 10% 95% 3% 2%

n/a n/a n/a n/a 94% 3% 2%

44% 5% 11% 6% 14% 14% 7%

27% 11% 18% 9% 17% 11% 8%

19% 12% 20% 6% 21% 11% 10%

42% 12% 12% 5% 6% 23%

25% 20% 11% 10% 10% 24%

n/a n/a n/a n/a n/a n/a

8% 90% 1%

9% 90% 1%

n/a n/a n/a

1 Cardiovascular includes Cardizem, Tiazac, Vasotec, Vaseretic, Isordil, Glumetza; bioequivalent versions of Cardizem CD, Procardia XL, Adalat CC. 2 Central nervous system products consist of Wellbutrin, Zyban, and Ativan. 3 Antiviral products consist of Zovirax. 4 Pain management products consist of Ultram and Ralivia.

•

In process of closing Puerto Rico manufacturing facilities. The closures are expected to be completed within two years and are intended to reduce the cost structure. Biovail also plans to close its R&D facility in Dublin, Ireland. The closure of these the facilities “will result in a reduction of headcount of about 300 employees – representing approximately 20% of Biovail’s total headcount – without any anticipated impact to the … existing revenue base.” Recently hired new CFO, VP of medical and scientific affairs, VP of neurologic and psychiatric development, and chief scientific officer. Stock price implies 10% trailing FCF yield and 29x trailing P/E.

INVESTMENT RISKS & CONCERNS •

• •

• • •

Generic competition to 300mg Wellbutrin XL since December 2006. With financials negatively impacted, Biovail reduced its cost structure by restructuring U.S. operations, among other actions. Sales to fall for “several quarters,” due to generic competition to 150mg Wellbutrin XL (since June 1). On-going business challenges include intellectual property protection, increasing competition for Biovail’s marketed and pipeline products, and greater scrutiny of clinical trials by drug regulators. “Additional charges to earnings” likely over next several quarters due to strategic repositioning. “Does not anticipate meaningful revenue” from development pipeline until 2010-11. Covenants restrict buyback to $50 million a year.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) LLY TEVA WPI BVF

MV 36,451 35,015 2,470

EV 34,944 36,420 2,946

EV/Rev 1.7x 3.4x 1.2x

P/TB 3.2x 7.8x 3.9x

08 P/E 8x 15x 12x

09 P/E 7x 14x 11x

1,360

1,134

1.5x

4.3x

n/a

MAJOR HOLDERS

INVESTMENT HIGHLIGHTS •

•

SELECTED OPERATING DATA FYE December 31 2005 Revenue growth 7% % of revenue by therapeutic area: 1 Cardiovascular 41% 2 44% Central nervous system 3 10% Antiviral 4 0% Pain Total product sales 95% R&D revenue 3% Royalty and other 2% % of product revenue by drug: Wellbutrin XL 40% Ultram ER 0% Zovirax 11% Cardizem 7% Legacy 15% Generic 15% Biovail Canada, other 12% % of revenue by customer: GSK 38% McKesson 14% Teva 15% OMI 0% Cardinal Health 6% Other customers 27% % of revenue by geography: Canada 12% U.S. 87% Other countries 1%

Thanksgiving 2008

New strategic focus targets specialty central nervous system (CNS) disorders, includes M&A pursuit. The shift, announced in May, was needed given changes in the global pharma market, including “heightened cost-containment pressures and intellectual-property regulations, and shorter product lifecycles.” Biovail is reviewing inlicensing and acquisition deals, including “a number of private and public pharmaceutical companies active in the specialty CNS market.” Biovail plans to spend $600 million on CNS R&D through 2012.

Insiders <1% │ Eugene Melnick 12%

THE BOTTOM LINE Biovail is a company in transition. With revenue continuing to decline due to generic competition to the top-selling Wellbutrin depression drug, Biovail has embarked on a new strategy to focus on specialty central nervous system disorders. Executing on this strategy poses a number of risks and will likely involve acquisitions. As a result, it is too difficult to anticipate the future course of Biovail’s financial performance, and we are inclined to pass. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Boeing Company (NYSE: BA)

Chicago, IL, 312-544-2000 http://www.boeing.com

Capital Goods: Aerospace and Defense, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $41.04 (as of 11/14/08) 52-week range: $39.07 - $94.60 Market value: $30.1 billion Enterprise value: $32.9 billion Shares out: 732.8 million Ownership Data Insider ownership: 1% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.92 1.52

Month Ago $1.24 1.57

# of Ests 20 8

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

7.8x 8.7x 6.5x 6.0x

FYE 12/31/08

4.72

5.00

EV / LTM revenue

0.5x

FYE 12/31/09 FYE 12/31/10

6.32 6.82

6.66 7.48

23 18

EV / LTM EBITDA EV / LTM EBIT

n/a 6.1x

P / tangible book 10.1x Greenblatt Criteria

LT EPS growth 11.3% 12.4% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 68% # of institutional owners: 1815

Date

Actual

Estimate

10/22/08

$0.94

$0.98

LTM EBIT yield

16%

LTM pre-tax ROC

n/m

12/31/01 58,198 9,110 3,586 2,827 3.41 3,735 6,089 (2,354) 633 16,845 6,447 48,978 1,399 20,566 10,866 38,153 0 10,825

12/31/02 53,831 8,027 3,426 492 2.84 2,336 1,001 1,335 2,333 16,855 3,888 52,342 1,814 19,810 12,589 44,646 0 7,696

65%

63%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 50,256 51,400 53,621 6,106 7,432 8,637 398 2,007 2,812 718 1,872 2,572 0.85 2.24 3.19 2,776 3,504 7,000 836 1,246 1,547 1,940 2,258 5,453 4,633 3,523 5,966 19,291 17,361 21,906 2,948 2,903 2,799 52,986 56,224 59,996 1,144 1,321 1,189 18,399 23,096 28,126 13,299 10,879 9,538 44,847 44,938 48,937 0 0 0 8,139 11,286 11,059 7%

62%

12/31/06 61,530 11,093 3,014 2,215 2.84 7,499 1,681 5,818 6,386 22,983 4,745 51,794 1,381 29,701 8,157 47,055 0 4,739

12/31/07 66,387 12,985 5,830 4,074 5.26 9,584 1,731 7,853 9,308 27,280 5,174 58,986 762 31,538 7,455 49,982 0 9,004

LTME 9/30/08 65,722 12,314 5,426 3,791 5.07 3,133 1,678 1,455 4,777 24,341 5,738 56,519 390 29,362 7,217 47,805 0 8,714

FQE 9/30/07 16,517 3,310 1,499 1,114 1.43 3,329 417 2,912 9,464 26,628 4,846 54,787 1,025 30,867 7,555 48,381 0 6,406

FQE 9/30/08 15,293 2,752 1,147 695 0.95 (442) 422 (864) 4,777 24,341 5,738 56,519 390 29,362 7,217 47,805 0 8,714

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$120 $100 $80 $60 $40 $20 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW

INVESTMENT RISKS & CONCERNS •

Boeing is the leading aerospace company and a manufacturer of commercial jets and military aircraft. Boeing also makes rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced info and communication systems. Boeing also operates NASA’s Space Shuttle and International Space Station. The company is one of the largest U.S. exporters in terms of sales and employs more than 160,000 people. Boeing was founded in 1916. Boeing has acquired or merged with a number of aerospace pioneers, including McDonnell Douglas, Hughes Space & Communications, and Rockwell’s space/defense business.

•

SELECTED OPERATING DATA FYE December 31 % of revenue by segment: Commercial Airplanes Integrated Defense Systems Boeing Capital & Other EBIT margin by segment: Commercial Airplanes Integrated Defense Systems 1 Overall EBIT margin Contractual backlog ($bn): Commercial Airplanes Integrated Defense Systems Total backlog ∆ backlog % of revenue by geography: U.S. Canada & Latin America Asia & Oceania EMEA

2005

2006

2007

YTD 9/30/08

40% 58% 2%

46% 53% 1%

50% 48% 1%

49% 50% 1%

7% 13% 5%

10% 9% 6%

11% 11% 9%

9% 10% 9%

$124 $37 $161 53%

$174 $42 $217 35%

$255 $42 $297 37%

$276 $73 $349 18%

71% 3% 18% 9%

63% 3% 20% 14%

59% 5% 23% 13%

n/a n/a n/a n/a

1 Includes Boeing Capital & Other and unallocated corporate expenses. Does not include $571 million expense related to DoJ settlement in 2006.

• •

•

• • •

Largest aerospace/defense company, competing in near-duopolistic commercial aircraft market against Europe’s Airbus. Key defense competitors include Lockheed Martin, Northrop and Raytheon. Backlog amounts to 5+ years of revenue. Backlog stood at a record $349 billion on September 30, reflecting strong near-term demand and a strikerelated delivery pushout. Commercial deliveries of 325 aircraft decreased 1% YTD versus the same period a year ago due to the machinists’ strike. First flight of 787 in 2009, with deliveries likely in 2010 (pushed back from 4Q08 and 3Q09), with net orders for 895 airplanes from 58 customers. Repurchased 35 million shares for $2.6 billion YTD; pays annual dividends of $1.60 per share. Stock price implies 5% trailing FCF yield, 8x trailing P/E and 6x forward P/E.

Machinists’ strike and supplier issues on galleys for wide-body planes reduced commercial airplane deliveries by 35 units and EPS by $0.60 in Q3, causing Q3 EPS to decline to $0.94 from $1.43 y-y. Suspended guidance due to strike. Management had previously guided for revenue of $67-68 billion in 2008 and $72-73 billion in 2009; and EPS of $5.70-5.85 in 2008 and $6.80-4.70 in 2009. Cash from operations is expected to be more than $2.5 billion in 2008 and more than $6 billion in 2009. Engineers and technical workers may strike. Boeing is engaged in contentious contract negotiations with unions representing both groups. Expects defense spending growth to moderate, remains focused on keeping individual programs operationally healthy and relevant. “May need to finance some deliveries in 2009,” reversing policy of not providing manufacturer financing from 2006-08. The company has made backstop commitments for 3% of the commercial backlog associated with deliveries through 2019. High oil prices may reduce demand for commercial airplanes. A mitigating factor is the fact that 70% of airplane sales (by value) go to customers outside of the U.S., and global demand for commercial aviation remains strong. May be exposed to deferral or cancellation of scheduled new deliveries.

COMPARABLE PUBLIC COMPANY ANALYSIS1

INVESTMENT HIGHLIGHTS •

Thanksgiving 2008

($mn) ERJ LMT NOC RTN

MV 2,591 28,948 13,189 19,838

EV 2,626 30,219 16,117 19,350

EV/Rev .4x .7x .5x .8x

P/TB 1.2x n/m n/m 19.1x

08 P/E 5x 9x 8x 12x

09 P/E 4x 9x 7x 10x

30,076

32,906

.5x

10.1x

Boeing’s primary direct competitor is Europe’s privately-held Airbus.

MAJOR HOLDERS Insiders <1% │ BofA 8% │ State Street 4% │ Cap Re 4%

THE BOTTOM LINE Boeing is a unique company in terms of scale of operations and delivery capabilities, with a sustainable competitive moat. The company will continue to win a large share of business in aerospace and defense, so the key question might be how demand in those markets will evolve over time. While Boeing’s backlog is at a record high and covers more than five years of trailing revenue, aviation will undoubtedly be affected by weaker consumer spending and high oil prices. Despite these risks, Boeing shares might be too cheap to ignore. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Barrett Business Services, Inc (Nasdaq: BBSI)

Vancouver, WA, 360-828-0700 http://www.barrettbusiness.com

Services: Business Services Trading Data

Consensus EPS Estimates

Price: $10.14 (as of 11/14/08) 52-week range: $9.00 - $19.45 Market value: $108 million Enterprise value: $57 million Shares out: 10.7 million Ownership Data Insider ownership: 21% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.32 0.03

Month Ago $0.31 0.05

# of Ests 4 3

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

7.0x 10.5x 9.1x 8.6x

FYE 12/31/08

0.97

0.94

EV / LTM revenue

0.2x

FYE 12/31/09 FYE 12/31/10

1.11 1.18

1.15 n/a

4 2

EV / LTM EBITDA EV / LTM EBIT

4.9x 5.7x

P / tangible book 1.7x Greenblatt Criteria

LT EPS growth 15.0% 16.7% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 54% # of institutional owners: 118

Date

Actual

Estimate

10/28/08

$0.38

$0.33

LTM EBIT yield

18%

LTM pre-tax ROC

80%

12/31/01 139 18 (4) (2) (0.26) 6 0 5 1 19 19 53 4 16 1 22 0 31

12/31/02 109 15 (2) (1) (0.16) (1) 0 (1) 0 17 19 47 4 14 1 19 0 29

-34%

-19%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 123 195 231 21 35 46 3 12 19 2 7 13 0.24 0.79 1.21 7 13 25 0 2 10 7 11 15 8 17 65 30 46 100 19 23 23 59 80 144 0 0 0 21 29 44 0 1 1 28 41 58 0 0 0 31 39 86 40%

>100%

12/31/06 259 56 23 16 1.40 15 2 14 73 111 28 162 0 47 0 59 0 104

12/31/07 289 59 23 17 1.44 17 4 13 65 107 42 173 0 48 0 60 0 114

LTME 9/30/08 298 53 10 8 0.70 18 1 17 51 103 47 180 0 57 0 69 0 111

FQE 9/30/07 83 19 9 6 0.54 3 3 (0) 60 112 40 177 0 53 0 63 0 114

FQE 9/30/08 78 15 1 1 0.06 7 0 7 51 103 47 180 0 57 0 69 0 111

>100%

80%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$35 $30 $25 $20 $15 $10 $5 $0 Oct 99

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BUSINESS OVERVIEW BBSI provides human resource (HR) management solutions to small and medium-sized businesses primarily in the Western U.S. BBSI derives 85% of revenue from professional employer organization (PEO) contracts and 15% of revenue from temporary/ supplemental staffing, with 50% gross margins in each segment. The HR industry ($170 billion size) breaks down into 35% PEO, 52% temporary/ supplemental, and 13% search and placement. BBSI target clients in the PEO segment are businesses with 20 to 200 employees; in the staffing segment, the company targets large employers with seasonal fluctuations. BBSI operates out of 45 branch offices in ten states.

Thanksgiving 2008

•

• •

BBSI PEO SERVICES (85% of revenue)—VALUE PROPOSITION HR responsibilities without BBSI:

•

Payroll Admin

Human Resources

Employee Benefits

Safety Services

Workers’ Comp

Report Hours Compute W/H Deductions Garnishments Issue Checks Direct Payroll Deposit Federal, multistate P/R tax compliance Account Reconciliation Reports Vacation Pay Sick Pay Check Delivery Cost Accounting W-2s New Hire Reporting

Advertising Recruiting Screening References Hiring Job Descriptions Reviews I-9 W-4 ADA FMLA DOL INS Employee Manuals Written Warnings Workplace Conduct Terminations Unemployment Claims Supplemental Staffing

401(k) Cafeteria Plan Credit Unions Health Insurance COBRA Claims Management Rate Negotiation Regulatory Compliance Supplemental Life Disability Dental Vision EAP

OSHA Federal & State Compliance Environmental Regs Safety Training Safety Manuals Safety WalkThroughs Job-site Visits Supervisor Training Safety Meetings Hazard Training Accident Investigation

Insurance Fraudulent Claims Large Premium Deposits Costly Premiums Claims Management Loss Runs

Human Resources

Payroll Admin Report Hours

•

Employee Benefits

New Employee Reporting Reviews Written Warnings Disciplinary Notices

Safety Services Safety Meetings OSHA

Workers’ Comp Report Incidents to BBSI

Outsourcing HR function allows clients to reduce the liability of being an employer, focus on the core business, develop a “just-in-time” workforce, and improve efficiencies. BBSI addresses workplace safety, lowers workers’ comp premiums, recruits and screens employees, manages turnover, handles employee claims, implements benefit programs, and complies with regulatory filing requirements. Recurring revenue stream. PEO contracts are annual with automatic renewals (30-day cancellation). BBSI has a 90% client retention rate.

Source: BBSI.

Operates in cyclical business, the recurring revenue nature of PEO contracts notwithstanding. BBSI’s workers’ comp loss reserves may be inadequate to cover claims. The company may suffer from adverse developments related to medical and administrative costs, inflation, and legislation. M&A integration. BBSI has acquired three firms with combined sales of $60 million since mid-2007 (5 offices in Utah, 2 in Colorado, 2 in Arizona).

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ASF KELYA MAN BBSI

INVESTMENT HIGHLIGHTS •

INVESTMENT RISKS & CONCERNS •

ERISA HIPAA

HR responsibilities with BBSI:

•

HR function becoming more critical, complex. Employment regulations have grown 60% over the past couple of decades, and small businesses spend up to 25% of time on HR paperwork. Homeland security concerns have also increased HR burdens. Organic and acquired growth. BBSI intends to expand the geographic footprint by following the expansion pattern of key clients. Recent staffing acquisitons also contribute to growth. Hands-on client approach. BBSI serves each client from a nearby branch office. Offices provide both HR and risk management professionals. Experienced management. Each top executive has at least a dozen years industry experience, with CEO Bill Sherertz in the industry for 37 years. Strong balance sheet, with $51 million of cash and investments and no debt as of September 30. Shares trade at 16% trailing FCF yield, 14x trailing P/E and 9x forward P/E.

MV 410 432 2,166

EV 221 433 2,506

108

EV/Rev .1x .1x .1x

P/TB 2.0x 0.7x 1.9x

08 P/E 9x 15x 6x

09 P/E 9x 24x 9x

.2x

1.7x

10x

MAJOR HOLDERS CEO Sherertz 26% │ Other insiders 2% │ Royce 13% │ Manulife 8%

THE BOTTOM LINE BBSI is one of several HR services companies currently on the magic formula list, a sign of the market’s pessimism regarding the economic outlook. We believe investors misperceive BBSI, however, as only 15% of revenue comes from staffing, while 85% comes from HR outsourcing (professional employer organization contracts), a business that is characterized by recurring revenue and, in the case of BBSI, 90% client retention. The PEO business deserves a meaningfully higher multiple than a traditional staffing business, which is why we view BBSI as quite attractive at current prices. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Broadridge Financial Solutions (NYSE: BR)

LAKE SUCCESS, NY, 516-472-5400 http://www.broadridge.com

Services: Business Services, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $11.10 (as of 11/14/08) 52-week range: $9.95 - $24.21 Market value: $1.6 billion Enterprise value: $1.6 billion

This quarter Next quarter

Latest $0.18 0.26

FYE 6/30/09

1.48

EV / LTM revenue

0.7x

FYE 6/30/10 FYE 6/30/11

1.55 n/a

1.59 n/a

3 0

EV / LTM EBITDA EV / LTM EBIT

n/a 4.7x

LT EPS growth 10.0% 10.0% Latest Quarterly EPS Surprise

P / tangible book Greenblatt Criteria

6.3x

Shares out: 141.4 million Ownership Data Insider ownership: 0% Insider buys (last six months): 0 Insider sales (last six months): 3 Institutional ownership: 75% # of institutional owners: 599

Valuation

Month Ago $0.20 0.28

# of Ests 3 3

Date

Actual

Estimate

11/6/08

$0.25

$0.20

P/E FYE 6/30/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

8.2x 7.5x 7.2x n/a

LTM EBIT yield

21%

LTM pre-tax ROC

85%

6/30/04 1,526 393 250 146 1.06 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EBIT/capital employed

Fiscal Years Ended 6/30/05 6/30/06 1,717 1,933 444 500 274 303 165 167 1.20 1.30 8 426 39 41 (31) 385 n/a 90 n/a 1,406 n/a 537 n/a 2,135 n/a 116 n/a 990 n/a 0 n/a 1,092 n/a 0 n/a 1,043

n/a

6/30/07 2,138 550 321 197 1.42 161 38 123 155 1,960 512 2,678 109 1,429 618 2,147 0 531

6/30/08 2,208 601 326 192 1.36 482 47 436 232 2,079 514 2,834 0 1,525 448 2,088 0 746

LTME 9/30/08 2,229 594 349 192 1.35 116 43 73 493 2,942 520 3,691 238 2,479 324 2,921 0 769

FQE 9/30/07 451 117 59 36 0.26 120 6 114 113 1,845 517 2,575 109 1,375 533 2,010 0 565

FQE 9/30/08 472 109 58 36 0.25 (246) 3 (249) 493 2,942 520 3,691 238 2,479 324 2,921 0 769

59%

67%

85%

n/m

58%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Jan 00

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BUSINESS OVERVIEW

Thanksgiving 2008

•

Broadridge provides technology outsourcing to the financial services industry and operates in three segments: Investor Communication Solutions processes and distributes proxy materials to equity and mutual fund investors and facilitates related vote processing. Securities Processing Solutions offers real-time transaction processing that automates the securities transaction lifecycle, including order capture and execution, trade confirmation, settlement, and accounting. Clearing and Outsourcing Solutions provides securities clearing, operations outsourcing, and margin lending. Seasonality is strongest in FQ4 (June), when the company processes and distributes the most proxy materials. FQ4 typically accounts for roughly one-half of annual EPS. With operations dating back to 1962, the company is the former brokerage services division of ADP. Broadridge was spun off in an IPO in March 2007.

• •

•

• •

SELECTED OPERATING DATA FYE June 30 2006 1 % of revenue by segment: Investor communication 71% Securities processing 25% Clearing & outsourcing 4% Revenue growth by segment: Investor communication 15% Securities processing 6% Clearing & outsourcing 31% 2 13% Total revenue growth Pre-tax margin by segment: Investor communication 15% Securities processing 28% Clearing & outsourcing -31% Other & currency -1% Total pre-tax margin 16% Total EBIT margin 16% % of revenue by geography: U.S. 89% Canada, U.K., other 11% 1 2

2007

2008

1Q09

72% 24% 4%

67% 28% 5%

11% 4% 16% 11%

1% 1% 2% 3%

5% 7% -6% 5%

15% 29% -13% -2% 15% 16%

16% 27% -5% -3% 15% 16%

7% 28% -13% 0% 12% 11%

89% 11%

88% 12%

n/a n/a

INVESTMENT RISKS & CONCERNS • •

•

INVESTMENT HIGHLIGHTS

•

Weakness in customer base. Broadridge derives the vast majority of revenue from financial services clients, including brokerage firms and banks. FY09E EPS weighted to second half. “As a result of the timing of expense buildups” in FY08, the company expects EPS to decline in 1H09 and increase in 2H09, “with a strong exit rate.” Financial services consolidation could result in clients moving more operations in-house. The company’s top five clients comprised 22% of revenue in FY08 (largest client was 5-6% of sales).

COMPARABLE PUBLIC COMPANY ANALYSIS

Excludes "other" and foreign exchange. FY08 revenue grew faster than segment revenue due to currency and other.

•

Highly recurring revenue, as illustrated by fact that FY08 revenue was $2.2 billion while closed sales were “only” $149 million (up 19% y-y). CEO Richard Daly (55) has led Broadridge for 12+ years, including a decade during which the company was ADP’s Brokerage Services Group. Guiding for 0-3% revenue growth and nonGAAP EPS of $1.45-1.55 in FY09 vs. $1.42 in FY08, representing earnings growth of 2-9%. The guidance assumes EBIT margin of 15.9-16.8%, versus 16.2% in FY08, and 143 million shares out. Boosted quarterly dividend from $0.06 to $0.07 per share in August, and authorized repurchase of two million shares, albeit in order to “offset any share dilution” related to stock compensation. Anticipates to become “more acquisitive” and to look for acquisitions with “an international focus.” Stock price implies 5% trailing FCF yield, 8x trailing P/E and 8x forward P/E.

Large-scale operations. In FY08, Broadridge processed 74% of the outstanding shares in the U.S. in the performance of its proxy services; distributed over one billion investor communications in paper or electronic form; and processed $3 trillion daily in fixed income trades for large banks. Investor communication business (72% of FY08 revenue) leads industry in proxy solutions such as “notice and access.” FY09 product opportunities include “investor mailbox” and “investor network.” The company expects this segment to grow 2-4% in FY09, with fee-only revenue growth of 5-9%.

($mn) DST FIS

MV 1,748 3,011

EV 2,927 5,392

EV/Rev 1.3x 1.4x

P/TB 6.6x n/m

08 P/E 9x 10x

09 P/E 8x 9x

1,570

1,639

.7x

6.3x

MAJOR HOLDERS CEO Daly <1% │ Other insiders 2% │ Barclays 6% │ Blue Ridge 5% │ Ziff 5%

THE BOTTOM LINE Broadridge shares many operating characteristics with its former parent, ADP, including highly recurring, predictable revenue streams and sustainably high returns on capital. Unfortunately, the company lacks meaningful opportunities for highROIC reinvestment in its current businesses, as it is already a market share leader. While acquisitions are likely to generate EPS accretion, they will also involve risks. As a result, Broadridge is interesting but no “slam dunk.” © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

BSQUARE Corporation (Nasdaq: BSQR)

Bellevue, WA, 425-519-5900 http://www.bsquare.com

Technology: Software & Programming Trading Data

Consensus EPS Estimates

Price: $2.93 (as of 11/14/08) 52-week range: $2.30 - $6.91 Market value: $30 million Enterprise value: $20 million Shares out: 10.1 million Ownership Data Insider ownership: 2% Insider buys (last six months): 2

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 12/31/07 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

10.9x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

0.3x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

5.5x 5.5x

n/a

P / tangible book 1.5x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 43% # of institutional owners: 42

Date

Actual

Estimate

n/a

LTM EBIT yield

18%

LTM pre-tax ROC

>100%

12/31/01 62 29 (17) (10) (1.20) 3 5 (2) 70 89 18 116 0 14 0 17 0 99

12/31/02 38 7 (49) (74) (5.73) (36) 2 (38) 29 44 1 54 0 16 0 21 0 33

-143%

-729%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 38 39 43 6 9 10 (6) (1) (2) (14) (7) (1) (0.49) (0.08) (0.14) (17) (2) (2) 0 1 1 (17) (3) (2) 14 12 10 27 17 17 0 0 0 30 19 20 0 0 0 11 6 8 0 0 0 11 6 8 0 0 0 19 13 12 -224%

-56%

12/31/06 50 12 (1) (1) (0.05) 0 0 0 10 18 0 20 0 7 0 8 0 12

12/31/07 59 16 2 3 0.27 4 1 3 14 23 0 25 0 8 0 8 0 17

LTME 9/30/08 64 18 4 4 0.37 4 1 3 10 21 0 28 0 8 0 9 0 20

FQE 9/30/07 14 4 0 0 0.03 1 0 1 12 22 0 24 0 8 0 9 0 15

FQE 9/30/08 16 4 1 1 0.11 0 0 0 10 21 0 28 0 8 0 9 0 20

-90%

>100%

n/m

-291%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$250

$200

$150

$100

$50

$0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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Page 59 of 401

Thanksgiving 2008

BUSINESS OVERVIEW

•

BSQUARE provides engineering services and productionready software to the smart device market. Its software enables manufacturers of personal navigation devices, pointof-sale terminals, handheld data terminals and smart phones to get to market more quickly and cost effectively.

•

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by type: 1 Third-party software 67% Proprietary software 6% Service 27% Revenue growth by type: 1 Third-party software 11% Proprietary software -2% Service 11% Total revenue growth 10% % of revenue by geography: North America 95% Asia and other 5% Gross margin by type: Software 21% Service 29% Total gross margin 23%

2006

2007

YTD 9/30/08

61% 5% 34%

58% 7% 35%

55% 5% 40%

6% -1% 44% 16%

13% 62% 24% 19%

6% -18% 25% 11%

95% 5%

94% 6%

91% 9%

21% 31% 24%

25% 29% 27%

22% 33% 26%

• •

INVESTMENT RISKS & CONCERNS •

1 The resale of Microsoft Embedded operating systems and related products accounts for substantially all third-party software revenue.

•

INVESTMENT HIGHLIGHTS • •

•

Brian Crowley (47) became CEO in 2003 after serving as VP of product development for a year. He was previously VP of engineering and VP of marketing at DataChannel, and served in various roles at other technology companies. Posted solid Q3 and guided for 5-10% sequential revenue growth in Q4. Service revenue rose 60% y-y in Q3, driven in part by 70-person incremental staffing on a project with Ford. Excluding Ford, the company did see “some softness in demand.” NOL of $65+ million, with entire $30 million deferred tax asset off the balance sheet. Stock price implies 9% trailing FCF yield and 8x trailing P/E (no EPS estimates available).

Focuses on smart devices that run on Microsoft Windows operating systems, i.e., Windows CE, Windows XP Embedded and Windows Mobile. Acquisition of rights to Adobe Flash technology from NEC enables the company to support customers who are using Flash in non-Windows operating systems such as Linux or Symbian. Software and engineering services address device life cycle, including design, development, customization, quality assurance, and deployment. Customers include OEMs, ODMs, silicon vendors, peripheral vendors, and enterprises that develop, market and distribute smart devices. Itends to grow proprietary software revenue through product development and royalty-bearing service contracts. Proprietary software enjoys gross margins of close to 90%, while third-party software is associated with gross margins in the mid teens. Positive business trend due to new service deals, including a large non-Microsoft deal. The company has also scored several SDIO (secure digital input output) design wins, with royalties tied to customer shipments. In addition, customer interest in OMAP technology should result in incremental revenue. Services backlog and pipeline remain strong.

Dependent on Microsoft’s success in operating systems for smart devices. The vast majority of BSQUARE’s business is tied to adoption of the Windows operating system by device makers. If Windows’ market share declines, BSQUARE would be negatively affected. The company must also maintain its OEM distribution deal with Microsoft. Windows-based embedded software market is competitive. Participants include engineering service firms such as Intrinsyc, Vanteon, Teleca, and Wipro; ODMs, particularly in Taiwan; contract manufacturers; and Microsoft Embedded operating system distributors such as Arrow and Avnet.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ARW AVT WIT

MV 1,737 2,263 10,345

EV 2,752 3,095 10,211

BSQR

EV/Rev .2x .2x 2.2x

P/TB 1.0x 1.1x 6.7x

08 P/E 5x 6x 13x

09 P/E 7x 6x 11x

.3x

1.5x

n/a

MAJOR HOLDERS CEO Crowley 3% │ Other insiders 8% │ S Squared 10% │ Bjurman Barry 10% │ H Partners 9% │ RenTech 6%

THE BOTTOM LINE BSQUARE has historically sold Windows software and related services to smart device manufacturers, carving out a niche with attractive growth. More recently, the company has emphasized development of proprietary software, the sale of which carries ~90% gross margins versus mid teens margins for the resale of Microsoft software. Proprietary software revenue is a small part of the mix, but is growing and driving overall margin expansion. BSQUARE’s market value does not give the company credit for the value of the proprietary software income stream, in our view. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Cadence Design Systems, Inc. (Nasdaq: CDNS)

San Jose, CA, 408-943-1234 http://www.cadence.com

Technology: Software & Programming, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $3.93 (as of 11/14/08) 52-week range: $2.42 - $17.74 Market value: $1.0 billion Enterprise value: $864 million Shares out: 260.3 million Ownership Data Insider ownership: 0% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest -$0.11 -0.06

Month Ago -$0.11 -0.04

# of Ests 9 7

P/E FYE 12/29/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

3.9x 393.0x 65.5x 11.2x

FYE 12/31/08

0.01

0.04

EV / LTM revenue

0.6x

FYE 12/31/09 FYE 12/31/10

0.06 0.35

0.07 0.45

9 5

EV / LTM EBITDA EV / LTM EBIT

4.3x 4.8x

P / tangible book 2.0x Greenblatt Criteria

LT EPS growth 11.0% 11.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 77% # of institutional owners: 556

Date

Actual

Estimate

7/23/08

$0.14

LTM EBIT yield

21%

LTM pre-tax ROC

67%

12/29/01 1,430 1,076 240 141 0.55 411 154 257 275 635 426 1,730 1 472 2 609 0 1,121

12/28/02 1,288 1,010 161 60 0.23 348 125 223 396 759 883 2,427 2 504 53 783 0 1,644

78%

54%

EBIT/capital employed

Fiscal Years Ended 1/3/04 1/1/05 12/31/05 1,120 1,198 1,329 903 971 1,098 (26) 100 108 (18) 75 49 (0.07) 0.25 0.16 171 373 426 112 62 72 59 311 355 418 593 895 842 1,070 1,276 1,190 1,191 1,387 2,818 2,990 3,401 0 0 32 482 549 606 420 420 548 1,246 1,290 1,557 0 0 0 1,572 1,700 1,845 -8%

30%

45%

12/30/06 1,484 1,257 181 143 0.46 421 68 354 958 1,312 1,391 3,443 28 548 730 1,744 0 1,699

12/29/07 1,615 1,401 315 296 1.00 402 82 321 1,078 1,530 1,443 3,871 230 786 500 1,791 0 2,080

LTME 6/28/08 1,476 1,256 179 179 0.61 340 107 233 889 1,328 1,426 3,626 230 725 500 1,698 0 1,929

FQE 6/30/07 391 339 73 60 0.20 101 18 84 1,149 1,520 1,361 3,764 0 469 730 1,712 0 2,052

FQE 6/28/08 330 270 17 5 0.02 77 36 40 889 1,328 1,426 3,626 230 725 500 1,698 0 1,929

>100%

67%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

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Oct 03

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Page 61 of 401

BUSINESS OVERVIEW Cadence provides electronic design automation (EDA) software and services to assist in the design, verification, and preparation of semiconductors for manufacturing. Solutions include digital design (convert high-level IC specification into physical blueprint); custom design for ICs designed at the transistor level; system interconnect; functional verification (ensures correctness of high-level logical design specification); and design for manufacturing (ensures that ICs will be manufacturable with high yields).

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by type: Products 64% Maintenance 26% Services 9% Revenue growth by type: Products 17% Maintenance 157% Services -62% ∆ revenue 11% ∆ backlog (period end) 6% % of revenue by product group: Functional verification 21% Digital IC design 28% Custom IC design 25% System interconnect design 8% Design for manufacturing 9% Services and other 9% % of revenue by geography: Americas 48% EMEA 18% Japan and Asia 34% EBIT margin 9% D&A as % of revenue 14% Capex as % of revenue 6% 1

•

• •

•

2007

66% 25% 9%

68% 24% 8%

n/a n/a n/a

15% 4% 7% 12% 6%

12% 5% -7% 9% 5%

n/a n/a n/a n/a n/a

•

24% 24% 27% 9% 7% 9%

24% 27% 27% 8% 6% 8%

n/a n/a n/a n/a n/a n/a

•

54% 19% 27% 15% 10% 5%

48% 18% 34% 20% 8% 5%

n/a n/a n/a n/a n/a n/a

A leading provider of EDA solutions in major horizontals, including systems, semiconductors, and silicon (ASIC vendors, foundries, FPGA firms). Cadence solutions help semiconductor makers address two key trends: increasing silicon capacity (Moore’s Law) and the convergence of multiple applications in a wide range of digital devices. Target verticals are computers, communications and consumer electronics. These industries globally account for 75% of electronics equipment revenue and 90% of semiconductor revenue. Projecting cash from operations of $175 million in 2008 and $250 million in 2009. Cash flow metrics are particularly relevant in the short term, as Cadence is moving to a higher ratable license mix, which is affecting GAAP-basis comparisons.

12% workforce and opex cuts to save $150+ million (2H08 expected charge of $65-70 million). Net stock repurchases of $455 million from 200507, with $900 million authorized as of mid-August. CEO Mike Fister (53) joined in 2004 from Intel, where he had served from 1987, most recently as GM of enterprise platforms. William Porter (53) joined Cadence in 1994 and became CFO in 1999. Stock price implies 23% trailing FCF yield, 6x trailing P/E and 66x forward P/E.

INVESTMENT RISKS & CONCERNS

2006

INVESTMENT HIGHLIGHTS

•

YTD 1 9/30/08

The 10-Q for Q3 was not filed on time due to an accounting restatement.

•

Thanksgiving 2008

• •

Q3 results postponed due to premature revenue recognition in 1H08 (will require restatement). Guiding for non-GAAP EPS of $0.01-0.05 and GAAP loss of $0.50-0.54 per share on revenue of $1.1 billion (down 30% y-y) in 2008. Driving the decline in operating performance are a challenging business environment and a shift to ratable licenses. Transition to 90% ratable license mix will hurt near-term revenue, due to revenue recognition over time rather than up front (as is the case with perpetual licenses). Ratable licenses will result in more predictable revenue and earnings over time. Offered $1.6 billion for Mentor in June; quit pursuit in August. Cadence cited the ability to offer a broader portfolio as rationale for the $16 per share cash offer. Cadence withdrew the bid after being rebuffed and upped its buyback plan by $500 million. (Mentor recently traded at $5 per share.)

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) LAVA MENT SPSS

MV 94 494 441

EV 126 599 284

EV/Rev .8x .7x .9x

P/TB n/m 2.7x 3.4x

08 P/E n/m 11x 13x

09 P/E 6x 6x 12x

CDNS

1,023

864

.6x

2.0x

393x

66x

MAJOR HOLDERS CEO Fister 2% │ Other insiders 2% │ Franklin 10% │ Wellington 9% │ Barclays 7% │ Lord Abbett 7%

THE BOTTOM LINE Cadence is one of a handful of companies with strong positions in EDA software, a niche segment of the semiconductor industry. Cadence is impacted by the cyclical nature of spending by semiconductor makers, occasionally offering investors an opportunity to buy into this high-ROIC business at a low multiple of cycle-average earnings. We like the company’s share repurchase program and believe it adds more value than a purchase of Mentor would have done. The shares appear attractive. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

CF Industries Holdings, Inc. (NYSE: CF)

Deerfield, IL, 847-405-2400 http://www.cfindustries.com

Basic Materials: Chemical Manufacturing, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $54.97 (as of 11/14/08) 52-week range: $37.71 - $172.99 Market value: $3.1 billion Enterprise value: $2.0 billion Shares out: 56.9 million Ownership Data Insider ownership: 1% Insider buys (last six months): 5 Insider sales (last six months): 17 Institutional ownership: 90% # of institutional owners: 982

Valuation

This quarter Next quarter

Latest $4.65 2.00

Month Ago $5.64 4.04

# of Ests 10 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

8.4x 3.9x 3.7x 4.5x

FYE 12/31/08

13.98

16.82

EV / LTM revenue

0.5x

FYE 12/31/09 FYE 12/31/10

15.06 12.25

21.96 18.93

9 3

EV / LTM EBITDA EV / LTM EBIT

n/a 1.9x

LT EPS growth 3.5% n/a Latest Quarterly EPS Surprise

P / tangible book 1.8x Greenblatt Criteria

Date

Actual

Estimate

10/27/08

$0.82

$3.57

LTM EBIT yield

52%

LTM pre-tax ROC

>100%

12/31/02 1,014 28 (19) (28) (0.51) 77 26 51 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

12/31/03 1,370 34 (6) (18) (0.33) 137 29 108 169 526 1 1,405 39 350 255 671 734 (1)

n/a

-1%

EBIT/capital employed

Fiscal Years Ended 12/31/04 12/31/05 1,651 1,968 216 209 148 110 68 (39) 1.23 (0.66) 344 137 34 69 311 68 419 217 799 553 1 1 1,557 1,228 20 0 435 341 239 4 769 472 734 0 53 756 22%

12/31/06 2,033 147 71 33 0.60 204 59 144 326 633 1 1,290 0 353 4 523 0 767

12/31/07 2,757 670 602 373 6.57 690 105 585 861 1,279 1 2,013 0 629 5 826 0 1,187

LTME 9/30/08 3,702 1,098 1,021 630 10.98 800 139 662 1,152 2,042 1 3,019 0 960 5 1,322 0 1,696

FQE 9/30/07 583 151 138 87 1.52 201 38 163 730 1,139 1 1,825 0 564 5 797 0 1,028

FQE 9/30/08 1,021 121 103 47 0.82 97 39 59 1,152 2,042 1 3,019 0 960 5 1,322 0 1,696

12%

>100%

n/m

18%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

CF provides nitrogen/phosphate fertilizers and operates the largest nitrogen fertilizer complex in North America. It also conducts phosphate mining and manufacturing in Central Florida. It distributes fertilizer products through terminals and warehouses in the Midwest. 100% of nitrogen and 75%80% of phosphate fertilizer output is sold in the U.S.

•

2005

2006

2007

77% 23%

75% 25%

74% 26%

66% 34%

15% 16% 17%

1% 11% 3%

34% 40% 36%

34% 95% 50%

•

22% 32% 22% 18% 5%

22% 32% 21% 20% 5%

20% 32% 21% 21% 5%

13% 32% 21% 29% 5%

•

11% 8% 11% 5% 4%

6% 10% 7% 5% 3%

22% 31% 24% 3% 4%

26% 39% 30% 3% 4%

83% 10% 7%

82% 10% 8%

84% 10% 6%

n/a n/a n/a

29% 13% 8% 50%

26% 12% 11% 51%

24% 10% 9% 57%

n/a n/a n/a n/a

INVESTMENT HIGHLIGHTS

•

YTD 9/30/08

Urea ammonium nitrate. 2 Diammonium phosphate. 3 Monoammonium ph.

•

Repurchased $500 million of stock in Q4 (8.5 million at $59 per share), reducing shares by 15%. Net cash of $1.3 billion as of September 30. The company has generated LTM FCF of $503 million. Stock price implies 21% trailing FCF yield, 5x trailing P/E and 4x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 % of revenue by segment: Nitrogen Phosphate Revenue growth by segment: Nitrogen Phosphate Total revenue growth % of revenue by product type: Ammonia Urea 1 UAN 2 DAP 3 MAP Gross margin by segment: Nitrogen Phosphate Total gross margin DD&A as % of revenue Capex as % of revenue % of revenue by geography: U.S. Canada Export % of revenue by customer: CHS Growmark ConAgra Others

Thanksgiving 2008

Fertilizer demand driven by Ethanol production and grain demand. CF’s nitrogen fertilizer ASP rose 65% and phosphate fertilizer ASP rose 138% in Q3. A likely increase in spring 2009 corn acreage bodes well for near-term (nitrogen fertilizer) prices. Extensive U.S. Corn Belt distribution system, with 26% market share of nitrogen and 19% share of phosphate fertilizers. CF is self-sufficient in phosphate rock, with 24 years of proven reserves. Planned capex: (1) gasification at Donaldsonville would reduce natural gas dependence by utilizing low-cost petcoke/coal ($1+ billion cost); (2) earlystage development of nitrogen complex in Peru ($1+ billion); (3) extract uranium from phosphate fertilizer production at Plant City ($200+ million)

• •

At cyclical peak? CF is a commodity producer dependent on the gap between fertilizer prices and input costs. Selling prices have benefited from transitory factors, including a Chinese export tax, Ethanol demand, and a lack of capacity. In Q3, nitrogen volumes fell 5% and phosphate fell 8%. Future of Ethanol may depend mostly on political winds, a risky prospect for the fertilizer industry. Ethanol has driven recent corn demand. Input price risk. While CF sells forward 70%+ of nitrogen fertilizer production and hedges natural gas costs, hedging is a temporary reprieve. Sulfur costs have jumped, putting phosphate margins at risk. U.S. comparative advantage hardly in fertilizers. Countries with unskilled labor and stranded natural gas resources ought to produce nitrogen fertilizers. Explosive stock price fed hubris. An investor asserted, “maybe the first time in a long time you are going to be able to make money through the cycle…” CF CEO: “I wish I was as confident as you are that we will be profitable through the cycle.”

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AGU MON MOS POT TRA CF

MV 5,157 40,603 14,425 21,064 1,665

EV 7,534 40,806 13,725 23,575 1,535

EV/Rev .8x 3.6x 1.1x 2.6x .6x

P/TB 2.9x 8.6x 2.5x 4.1x 1.8x

08 P/E n/a 16x 3x n/a 3x

09 P/E n/a 14x 3x n/a 4x

3,126

1,978

.5x

1.8x

MAJOR HOLDERS CEO Wilson 2% │ Other insiders <1% │ Goldman Sachs 9% │ Wellington 6% │ D.E. Shaw 5% │ Barclays 5%

THE BOTTOM LINE CF was a phenomenal buy in 2005 when David Einhorn purchased a large stake following a broken IPO. While shares have declined precipitously from their high and trade at a low multiple of estimated 2009 earnings, we are not convinced they offer compelling value. If CF reports a loss in the down-cycle, the shares might trade down to book value or below, implying a potentially unsatisfactory return from current levels. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Coach, Inc. (NYSE: COH)

New York, NY, 212-594-1850 http://www.coach.com

Consumer Cyclical: Apparel/Accessories, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $16.20 (as of 11/14/08) 52-week range: $14.52 - $38.17 Market value: $5.3 billion Enterprise value: $4.9 billion Shares out: 326.9 million Ownership Data Insider ownership: 1% Insider buys (last six months): 5

Valuation

This quarter Next quarter

Latest $0.76 0.48

Month Ago $0.75 0.49

# of Ests 17 15

FYE 6/30/09

2.21

EV / LTM revenue

1.5x

FYE 6/30/10 FYE 6/30/11

2.34 2.79

2.44 2.89

17 6

EV / LTM EBITDA EV / LTM EBIT

n/a 4.3x

P / tangible book Greenblatt Criteria

4.9x

LTM EBIT yield

23%

LT EPS growth 14.3% 14.9% Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 94% # of institutional owners: 1357

Date

Actual

Estimate

10/21/08

$0.44

$0.43

P/E FYE 6/28/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

7.5x 7.3x 6.9x 5.8x

LTM pre-tax ROC

>100%

6/29/02 719 483 134 86 0.24 108 43 65 94 288 22 441 34 159 4 180 0 260

6/28/03 953 677 244 147 0.39 226 62 165 229 449 22 618 27 162 4 191 0 427

84%

>100%

Fiscal Years Ended 7/3/04 7/2/05 7/1/06 1,321 1,652 2,035 990 1,268 1,582 405 536 715 238 359 494 0.62 0.86 1.19 359 476 596 74 95 133 286 381 463 434 383 538 706 709 975 23 249 238 1,044 1,370 1,627 2 12 0 170 266 342 3 3 3 262 314 438 0 0 0 782 1,056 1,189 >100%

>100%

6/30/07 2,613 2,023 993 664 1.69 781 141 641 1,186 1,740 224 2,450 0 408 3 539 0 1,910

6/28/08 3,181 2,407 1,147 783 2.17 923 175 749 699 1,386 259 2,274 0 451 3 758 0 1,516

LTME 9/27/08 3,257 2,447 1,142 774 2.21 878 182 697 410 1,211 263 2,111 0 461 2 760 0 1,351

FQE 9/29/07 677 518 239 155 0.41 122 39 83 1,235 1,861 0 2,655 0 402 3 672 0 1,982

FQE 9/27/08 753 558 234 146 0.44 77 46 31 410 1,211 263 2,111 0 461 2 760 0 1,351

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$60 $50 $40 $30 $20 $10 $0 Jan 00

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW

•

Coach is a leading American marketer of handbags (62% of FY08 sales), women’s and men’s accessories (29%), and related products (9%). Coach is sold through companyowned stores (80% of sales) and department stores (20%). U.S. and Japan account for 75% and 19% of global sales, respectively. The business model features 74% gross margin and 34% operating margin (based on FY09 guidance). The compay operates on a June fiscal year end, with strongest seasonality in FQ2. Coach was founded in 1941.

• •

2006 23% 38%

2007 28% 42%

2008 22% 22%

2009E 10% 10%

218 13% 86 5%

259 19% 93 8% 22%

297 15% 102 10% 10%

+40 13% +6 6% 3-4%

118 15%

137 16% 19%

149 9% 14%

+10-15 -3% 5-10%

23% 23%

30% 20%

21% 25%

n/a n/a

•

• •

Based on company guidance provided on October 21. Avg. square footage of North American retail stores was 2,678 in FY08. 3 Avg. square footage of North American factory stores was 4,053 in FY08. 4 Avg. square footage of Japanese locations was 1,745 in FY08. 5 Based on constant-currency sales results. 6 Direct includes retail and factory stores in N.A./Japan (80% of FY sales). 7 Indirect includes U.S. and international wholesale (20% of FY sales). 2

•

• •

•

Slowdown. FY09 guidance calls for revenue of $3.5 billion (+10% y-y) and EPS of $2.25 (+10% y-y), sharp deceleration from 20% constant-currency revenue growth and 17% EPS growth in FY08. “Very difficult” environment. Management has noted “weak traffic trends” in retail and department stores. The company may experience a reversal of the trend of higher-end consumers buying more handbags per year than in the past. While pricing actions may prevent a reversal, they will hurt gross margin. Rising input costs are another concern. Fashion risk. The company is exposed to changing fashion trends. Inventory levels appear adequate. Highly relevant today, but does it have Tiffanylike staying power? A high-end jewelry brand may have a longer “shelf life” than a similar brand in handbags. Coach’s growth also raises the concern of brand overexposure (management believes North American can “easily support” 500 stores).

COMPARABLE PUBLIC COMPANY ANALYSIS

INVESTMENT HIGHLIGHTS •

One of the best managements in retail. CEO Lew Frankfort (61) has been with Coach for 25+ years and has built an impressive track record. Repurchased 40 million shares for $1.3 billion (average price of $34 per share) in FY08, and another 11 million shares at $29 per share in 1Q09. Stock price implies 13% trailing FCF yield, 7x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS •

SELECTED OPERATING METRICS FYE June 30 Revenue growth Recurring EPS growth North America metrics: 2 Retail stores Change (y-y) 3 Factory stores Change (y-y) Same-store sales growth Japan metrics: 4 Locations Change (y-y) 5 Sales growth Sales growth by channel: 6 Direct to consumer 7 Indirect

Thanksgiving 2008

Leading U.S. fine accessories brand. Coach has grown quickly by combining luxury and relative affordability in handbags and other accessories. Gaining market share in all geographies. Coach enjoys #1 position in U.S., with bag sales recently growing 15% vs. 5% for the category. Coach is #2 in Japan with 13% share (up 200 bps y-y). Attractive store economics. New retail and factory stores have payback periods of less than two years and less than one year, respectively. Growing aggressively in Greater China. Coach expects to open 50 new locations over the next five years, aiming to boost sales from $30 million (3% market share) to $250 million (10% share) by FY13. Strategy will be dilutive by $0.03-$0.04 in FY09. Flexible sourcing model. Production is outsourced, with no vendor providing more than 13% of units. New designs can be sourced quickly: 68% of FY08 sales came from same-year product introductions.

($mn) ANN KCP RL TIF

MV 363 152 4,160 2,519

EV 256 79 4,090 3,006

EV/Rev .1x .2x .8x 1.0x

P/TB 0.7x 0.8x 3.4x 1.4x

08 P/E 8x n/m 10x 7x

09 P/E 10x 37x 10x 7x

COH

5,296

4,889

1.5x

4.9x

MAJOR HOLDERS CEO 3% │ Other insiders 1% │ Barclays 5% │ Jennison 2% │ Glenview 1% │ Gardner Lewis 1% │ Highside 1%

THE BOTTOM LINE Coach combines a number of attractive attributes, including best-in-class management, a distinctive brand, excellent unit economics, and a P/E multiple near the bottom of the company’s historical range. We are concerned, however, that Coach’s industry-leading margins have not yet been “stress-tested” for a range of adverse economic and competitive scenarios.

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Thanksgiving 2008

COMSYS IT Partners, Inc. (Nasdaq: CITP)

Houston, TX, 713-386-1400 http://www.comsys.com

Services: Business Services Trading Data

Consensus EPS Estimates

Price: $4.14 (as of 11/14/08) 52-week range: $3.76 - $17.57 Market value: $84 million Enterprise value: $153 million Shares out: 20.4 million Ownership Data Insider ownership: 9% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.15 0.09

Month Ago $0.17 0.14

# of Ests 2 2

P/E FYE 12/30/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

2.5x 4.1x 10.1x n/a

FYE 12/31/08

1.00

0.91

EV / LTM revenue

0.2x

FYE 12/31/09 FYE 12/31/10

0.41 n/a

0.69 n/a

2 0

EV / LTM EBITDA EV / LTM EBIT

3.5x 4.3x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 15.0% 15.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 2 Institutional ownership: 75% # of institutional owners: 219

Date

Actual

Estimate

11/5/08

$0.30

$0.20

LTM EBIT yield

23%

LTM pre-tax ROC

85%

12/31/01 732 192 (58) (67) (62.90) 56 3 53 18 135 478 634 1 62 234 336 0 298

12/31/02 387 95 (2) (193) (47.84) 49 4 45 23 128 104 247 39 111 180 300 0 (52)

-79%

-3%

EBIT/capital employed

Fiscal Years Ended 12/28/03 1/2/05 1/1/06 333 437 662 81 106 157 1 (9) 20 (57) (55) 2 0.00 (14.20) 0.14 22 (14) 15 3 2 8 19 (16) 7 0 1 3 66 139 177 81 161 168 168 323 367 47 8 5 116 122 153 423 156 137 541 287 296 0 0 0 (373) 36 71 3%

-39%

12/31/06 737 179 31 21 1.10 47 3 44 2 195 164 375 5 183 94 280 0 95

12/30/07 743 185 43 33 1.66 59 3 56 2 197 184 403 5 189 67 258 0 145

LTME 9/28/08 734 181 36 26 1.27 46 7 39 2 247 188 457 1 219 69 292 0 165

FQE 9/30/07 187 47 13 10 0.48 27 0 27 2 201 163 384 5 178 68 249 0 135

FQE 9/28/08 184 45 9 6 0.30 4 2 2 2 247 188 457 1 219 69 292 0 165

98%

>100%

85%

n/m

52%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

Comsys is the 6th-largest IT staffing company in the U.S. with 52 offices. Service offerings include contingent and direct hire placement of IT professionals (76% of revenue) as well as a wide range of technical services and solutions addressing requirements across the enterprise (19% of revenue). Tapfin Process Solutions (5% of revenue) delivers critical management solutions across the resource spectrum from contingent workers to outsourced services. Comsys was formed via the merger of Comsys Holding and Venturi Partners in 2004. CEO Larry Enterline (55) was formely CEO of Venturi Partners. The company has 5,000 consultants and a proprietary database of 650,000 candidates.

Thanksgiving 2008

• • •

INVESTMENT RISKS & CONCERNS • •

SELECTED OPERATING METRICS FYE December 31 2006 ∆ revenue 51% ∆ consultants (period end) 2% Selected items as % of revenue: EBIT 3.4% D&A 1.4% Capex 1.1%

2007 11% 0%

2008 1% 0%

YTD 9/30/08 -2% -5%

4.7% 1.2% 0.4%

5.8% 0.9% 0.4%

4.6% 1.1% 0.9%

INVESTMENT HIGHLIGHTS •

•

• •

•

$23 billion IT staffing industry has experienced high single-digit growth in recent years. The industry remains fragmented, with top ten players holding 44% share. Comsys is #6, behind TEKsystems (Allegis Group), Volt Services, Ajilon (Adecco), Sapphire (Vedior), and MPS; and ahead of Kforce, Sapient, Robert Half, and Spherion. Favorable long-term prospects of IT staffing. Drivers include need for productivity improvement, fast pace of technological change, transitional nature of assignments, strong value proposition of “expertise on demand,” and changing industries. Diverse capabilities in staffing (76% of revenue), including project management, business analysis, network infrastructure services, application development, and quality assurance and testing. Branch office-driven structure, with localized P&L accountability, sales and recruiting teams. Managed solutions (19% of revenue) complement staffing and serve to entrench Comsys with clients. Solutions provided through six specialized practices, including ERP and business intelligence. Process solutions (5% of revenue) enable clients to outsource business processes related to resource fulfillment. Comsys is a leading provider of recruitment process outsourcing (RPO) in the Northeastern U.S., and the fifth-largest provider of vendor management services (VMS) in the U.S.

Organic growth complements M&A, with new offices opened in San Antonio, San Diego, North L.A., Cincinnati, and San Juan in recent years. NOL of roughly $200 million should shield company from income taxes for many years. Stock price implies 46% trailing FCF yield, 3x trailing P/E and 10x forward P/E.

• •

In the eye of the storm? Comsys’ IT staffing services are highly cyclical and may suffer major demand erosion in the current downcycle. Revenue likely down 3% and EPS down 39-42% in 2008, with guided revenue of $719-724 million and EPS of $0.96-1.01 ($0.12-0.17 in Q4). 30% of revenue from financial services, making Comsys vulnerable to declines in IT spending. Acquired six businesses since Venturi merger in 2004; appears likely to continue pursuing accretive deals (SVP David Kerr was an M&A partner at KPMG). While Comsys focuses on tuck-in deals, integration is a risk in staffing. In 2005, gross profit was impacted by integration-related disruptions. Moderate returns associated with M&A. Prices paid imply moderate ROIC from acquisitions. No tangible book, with equity of $165 million and intangibles of $188 million as of September 30, implying limited downside protection.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) CDI KFRC MAN MPS RHI SFN CITP

MV 199 262 2,166 578 2,762 140

EV 123 278 2,506 523 2,392 211

153

EV/Rev .1x .3x .1x .2x .5x .1x

P/TB 0.8x 3.4x 1.9x 2.3x 3.3x 0.5x

08 P/E 8x 10x 6x 8x 11x 9x

09 P/E 11x 14x 9x 15x 25x 12x

.2x

n/m

10x

MAJOR HOLDERS CEO Enterline 2% │ Other insiders 8% │ Amalgamated Gadget 20% │ Wachovia 18% │ Barclays 6% │ Links 6%

THE BOTTOM LINE Comsys has performed well in recent years, growing both organically and via M&A while expanding operating margins and benefiting from large NOL carryforwards. Unfortunately, the company’s gains appear reversible due to an absence of sustainable competitive advantage and a tough operating environment for IT staffing. Given the company’s lack of tangible book value, we view the prospective risk-reward tradeoff as unfavorable. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

CTC Media, Inc. (Nasdaq: CTCM)

Moscow, Russia, 7-495-785-6333 http://www.ctcmedia.ru

Services: Broadcasting & Cable TV Trading Data

Consensus EPS Estimates

Price: $4.45 (as of 11/14/08) 52-week range: $3.47 - $31.75 Market value: $677 million Enterprise value: $747 million

This quarter Next quarter

Latest $0.35 0.16

FYE 12/31/08

1.19

1.24

EV / LTM revenue

1.2x

FYE 12/31/09 FYE 12/31/10

1.27 1.60

1.48 1.74

9 6

EV / LTM EBITDA EV / LTM EBIT

1.5x 2.9x

LT EPS growth 19.4% 25.8% Latest Quarterly EPS Surprise

P / tangible book Greenblatt Criteria

n/m

Shares out: 152.2 million Ownership Data Insider ownership: 62% Insider buys (last six months): 0 Insider sales (last six months): 0 Institutional ownership: 22% # of institutional owners: 262

Valuation

Month Ago $0.57 n/a

Date

Actual

Estimate

10/30/08

$0.13

$0.18

# of Ests 1 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

5.2x 3.7x 3.5x 2.8x

LTM EBIT yield

35%

LTM pre-tax ROC

>100%

12/31/03 96 89 36 5 0.10 20 3 18 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EBIT/capital employed

n/a

Fiscal Years Ended 12/31/04 12/31/05 156 238 146 225 63 90 26 31 0.30 0.37 33 39 6 6 28 33 30 15 120 92 143 138 293 274 40 4 83 45 20 37 118 95 0 0 175 179 97%

>100%

12/31/06 371 355 154 86 0.69 117 4 113 177 279 156 485 0 46 0 64 0 421

12/31/07 472 453 193 136 0.86 158 6 152 307 438 201 695 0 58 0 83 0 612

LTME 9/30/08 615 585 259 171 1.08 152 11 142 54 243 793 1,112 68 182 57 389 0 723

FQE 9/30/07 94 89 24 17 0.11 21 1 20 249 371 198 624 0 70 0 94 0 530

FQE 9/30/08 143 135 51 21 0.13 27 2 25 54 243 793 1,112 68 182 57 389 0 723

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

Thanksgiving 2008

•

CTC Media is a TV broadcaster in Russia. It owns the CTC TV network, whose signal is carried by 350 affiliate stations, including 21 owned stations; the Domashny TV network, whose signal is carried by 230 affiliate stations, including 13 owned stations; and the smaller DTV television network. The company also owns two production firms and operates Channel 31 in Kazakhstan and a TV company in Uzbekistan.

•

SELECTED OPERATING DATA FYE December 31 2005 1 % of revenue by segment: CTC network 71% CTC station group 22% Domashny network 4% Domashny station group 3% Revenue growth by segment: CTC network 46% CTC station group 37% Domashny network nm Domashny station group 163% Total revenue growth 53% EBIT margin by segment: CTC network 50% CTC station group 54% Domashny network -78% Domashny station group -83% Production and other -3% Total EBIT margin 38% Selected items as % of revenue: Capex 3% D&A 6% Acquisitions of media rights 41% Amortization of media rights 33%

2006

2007

YTD 9/30/08

71% 20% 6% 3%

68% 20% 8% 4%

67% 15% 10% 3%

57% 44% 121% 49% 56%

21% 29% 89% 51% 27%

39% 17% 78% 6% 46%

53% 64% -22% -82% -5% 42%

52% 59% 14% -46% -6% 41%

48% 58% 24% 7% -5% 38%

1% 5% 36% 34%

1% 6% 37% 35%

1% 2% 46% 38%

1 YTD revenue breakdown does not show contribution from Channel 31 (acquired in February), DTV (April), and production companies Costafilm and Soho Media (April), which combined accounted for 6% of YTD revenue.

INVESTMENT HIGHLIGHTS •

•

$9 billion Russian advertising market (6th-largest in Europe), up from $1 billion in 2000 (20th). Ad spending is expected to grow 26% (in dollars) in 2008, with TV ads growing 32%.2 Ad spending is 0.8% of Russian GDP, compared to 0.9% in the EU. Russian TV CPM is $2, versus $9 in Germany. Strong six-year track record, having grown from a single free-to-air channel to a public company with five channels in three countries and production assets (25% of fall ‘08 programming produced inhouse). The company continues to grow at or above the growth rate of the Russian advertising market. Anton Kudryashov (40) became CEO in August, replacing Alexander Rodnyansky who remains president. Kudryashov was one of the founding partners of Moscow-based Renaissance Capital.

Source: Russian Assoc. of Comm. Agencies, Video Int’l, Company.

•

CTC is fourth most-watched channel in Russia, with 9% audience share, behind Channel One (21%), Rossiya (18%) and NTV (13%).3 The company’s Channel 31 is the second most-watched channel in Kazakhstan, behind Channel One.3 Revenue up 46% YTD, driven by (1) higher ad rates, due to a decrease in broadcast ads permitted in Russia effective January; (2) acquisitions, including DTV in April and regional stations in 2H07; and (3) appreciation of the ruble, which has added 760 bps to growth YTD. Organic revenue is up 36% YTD. Guiding for revenue growth of 33-40% to $630660 million in 2008. Adjusted EBITDA margin is expected to range from 40-44%. Previous guidance called for revenue growth of 38-48% to $650-500 million and adjusted EBITDA margin of 42-46%. Stock price implies 21% trailing FCF yield, 4x trailing P/E and 4x forward P/E.

INVESTMENT RISKS & CONCERNS • •

•

Reduction in 2008 guidance on October 30 reflects “unfavorable macroeconomic outlook in Russia.” Political risk related to Russia, including fragile state of media independence. It is conceivable the government could drastically reshape the Russian media landscape in the future, hurting shareholders. Strategic shareholder control. Top holders include Modern Times Group (40%), Alfa Group (26%) and Access Industries (6%), leaving a float of 28%. U.S. minority shareholders may have little recourse in the case of potential abuses by majority holders.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) CETV EVC TV

MV 689 61 8,480

EV 1,559 416 8,490

CTCM

677

747

EV/Rev 1.5x 1.9x 2.4x

P/TB n/m n/m 3.5x

08 P/E n/a n/m 11x

09 P/E n/a 10x 10x

1.2x

n/m

MAJOR HOLDERS Insiders 67% (including MTG Russia 39% and Alfa CTC 26%) │ Access Industries 6% │ FMR 6%

Source: TNS Gallup Media, Company.

THE BOTTOM LINE CTC Media has been a solid performer in the Russian media market, having shown explosive growth due to Russian ad spending growth, strong execution and multiple acquisitions. We have little reason to doubt that the company will continue to execute skillfully, but we are mindful of the risk of investing in a media firm in a country with little media independence. In addition, minority shareholders may also be exposed to potential non arms-length transactions by insiders. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 70 of 401

Thanksgiving 2008

Darling International Inc. (NYSE: DAR)

Irving, TX, 972-717-0300 http://www.darlingii.com

Consumer Non-Cyclical: Food Processing, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $4.57 (as of 11/14/08) 52-week range: $4.13 - $17.52 Market value: $374 million Enterprise value: $371 million Shares out: 81.9 million Ownership Data Insider ownership: 4% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.16 0.14

Month Ago $0.25 0.25

# of Ests 6 5

P/E FYE 12/29/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

8.2x 4.6x 6.7x 5.3x

FYE 12/31/08

1.00

1.08

EV / LTM revenue

0.4x

FYE 12/31/09 FYE 12/31/10

0.68 0.86

0.98 n/a

6 1

EV / LTM EBITDA EV / LTM EBIT

2.3x 2.7x

P / tangible book 2.3x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 17 Institutional ownership: 94% # of institutional owners: 516

Date

Actual

Estimate

11/6/08

$0.28

$0.29

LTM EBIT yield

37%

LTM pre-tax ROC

83%

12/29/01 243 58 5 (12) (0.71) 6 9 (4) 4 42 32 159 120 159 0 169 0 (10)

12/28/02 261 68 21 8 0.18 34 13 21 16 56 28 163 8 43 69 127 0 36

27%

EBIT/capital employed

Fiscal Years Ended 1/3/04 1/1/05 12/31/05 323 320 309 78 82 67 27 31 16 18 14 8 0.28 0.22 0.12 28 38 25 12 14 22 16 24 3 25 37 36 72 81 83 24 20 17 175 183 191 8 5 5 41 41 43 57 50 45 119 116 117 0 0 0 55 67 74 33%

36%

12/30/06 407 86 19 5 0.07 29 12 17 5 75 106 321 5 57 78 170 0 151

12/29/07 645 162 81 46 0.56 66 16 50 16 115 101 351 6 81 38 150 0 201

LTME 9/27/08 835 222 137 83 1.01 93 27 66 43 157 111 413 5 82 35 141 0 273

FQE 9/29/07 172 41 21 12 0.15 14 5 9 6 103 102 340 5 74 50 156 0 184

FQE 9/27/08 236 59 37 23 0.28 25 8 17 43 157 111 413 5 82 35 141 0 273

16%

53%

83%

n/m

18%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Oct 99

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BUSINESS OVERVIEW Darling provides rendering, recycling and recovery services to the food industry. It operates in two segments: Rendering collects and processes animal by-products from butchers, grocery stores, food service, and meat processors, converting these by-products into oils and proteins used by the agricultural, leather and oleo-chemical industries. Restaurant Services collects used cooking oil from food service establishments and recycles it into products such as high-energy animal feed and industrial oil. The segmet also provides grease trap servicing and includes the NSC subsidiary. NSC schedules services such as fat and bone and used cooking oil collection as well as trap cleaning.

Thanksgiving 2008

•

• • • •

SELECTED OPERATING DATA FYE December 31 % of revenue by segment: Rendering Restaurant services Revenue growth by segment: Rendering Restaurant services Total revenue growth EBIT margin by segment: Rendering Restaurant services Corporate Total EBIT margin D&A as % of revenue Capex as % of revenue % of revenue by geography: Domestic International

2005

2006

2007

YTD 9/30/08

64% 36%

70% 30%

73% 27%

na na -4%

46% 8% 32%

64% 42% 59%

41% 41% 40%

10% 13% -8% 4% 5.1% 6.9%

11% 11% -9% 3% 5.1% 2.9%

17% 19% -11% 8% 3.6% 2.4%

20% 18% -11% 11% 2.6% 3.2%

75% 25%

72% 28%

73% 27%

n/a n/a

INVESTMENT HIGHLIGHTS •

•

By-product recycling is critical to food supply chain. Meat packers, poultry processors and retail stores generate 50 billion pounds annually of inedible by-products, which need to be disposed of in an environmentally sound way. Macro factors include finished product prices, energy costs and raw material supply (number of cattle slaughtered grows at a low- to mid-single digit annual rate). Food industry by-products have wide range of uses. Tallow (animal fat) can be recycled into soap, bio-fuels, pet food, and animal feed; meat and bones into hog food, poulty feed and pet food; grease into animal feed and bio-fuels; and hides into leather. Largest U.S. provider of rendering, recycling and recovery, with network of 39 processing facilities and 38 reload/transfer stations nationwide. Darling operates a fleet of 1,000 trucks to collect raw materials from 115,000 supplier locations.

Pays for roughy 55% of raw material volume based on published finished product prices. Remaining volume is either fixed price, free of cost to Darling, or generates revenue to the company. Darling sells finished products worldwide. Demand for protein meal and oil remain strong, continuing a favorable outlook for Darling. Well positioned to capitalize on biofuel adoption. Darling supplies 13% of U.S. fats and greases, a lower-cost feedstock than vegetable oils. Randy Stuewe (45) joined as chairman and CEO in 2003, after serving as ConAgra EVP for six years and in various roles with Cargill for twelve years. Stock price implies 18% trailing FCF yield, 5x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

Dependent on finished product prices, which rose more than 50% in 2007 and are up substantially in 2008. The finished product commodities include meat and bone meal (MBM), bleachable fancy tallow (BFT) and yellow grease (YG); their prices are quoted daily on the Jacobsen index. Vulnerable to increases in natural gas and diesel fuel prices. The company consumes natural gas to operate boilers to generate steam to heat raw materials. It also consumes diesel fuel to operate tractors and trucks used to collect raw materials. CEO Stuewe sold one-quarter of holdings in May at ~$14.50 per share, representing his first sale of stock in more than five years.

COMPARABLE PUBLIC COMPANY ANALYSIS Darling does not have direct public comps. Private comps in rendering and restaurant services are Baker Commodities in the West and Griffin Industries in Texas and the Southeast. Restaurant Technologies competes in restaurant services.

MAJOR HOLDERS CEO Stuewe 1% │ Other insiders 3% │ Goldman Sachs 7% │ Fidelity 7% │ Barclays 6%

THE BOTTOM LINE Darling operates a mundane business that has seen revenue and EBIT explode over the past couple of years due to price increases for the finished products it sells (meat and bone meal, bleachable fancy tallow and yellow grease). While it is impossible to judge how product prices may evolve, the company operates in a capital-intensive business that should see returns on capital return to “normal” over time. This could happen either through input price increases or declines in selling prices due to capacity expansion in the industry. Either way, we believe the shares do not offer sufficient value. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 72 of 401

Thanksgiving 2008

DepoMed, Inc. (Nasdaq: DEPO)

Menlo Park, CA, 650-462-5900 http://www.depomedinc.com

Health Care: Biotechnology & Drugs Trading Data

Consensus EPS Estimates

Price: $1.64 (as of 11/14/08) 52-week range: $1.57 - $4.52 Market value: $84 million Enterprise value: $19 million Shares out: 51.0 million Ownership Data Insider ownership: 12% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest -$0.26 -0.25

Month Ago -$0.26 n/a

# of Ests 1 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

1.6x n/m n/m n/m

FYE 12/31/08

-0.52

-0.65

EV / LTM revenue

0.6x

FYE 12/31/09 FYE 12/31/10

-0.85 -0.50

1 1

EV / LTM EBITDA EV / LTM EBIT

n/a 1.0x

P / tangible book 2.7x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 55% # of institutional owners: 142

Date

Actual

Estimate

10/30/08

-$0.12

-$0.15

LTM EBIT yield

96%

LTM pre-tax ROC

n/m

12/31/01 4 0 (14) (18) (1.72) (12) 1 (14) 5 6 0 9 1 5 6 10 12 (14)

12/31/02 2 0 (10) (14) (0.92) (4) 1 (5) 20 21 0 23 0 9 9 18 12 (6)

n/m

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1 0 4 0 0 4 (29) (26) (26) (30) (27) (25) (1.23) (0.78) (0.64) (33) (23) 29 1 3 1 (34) (26) 28 44 18 59 45 19 63 0 0 0 48 23 66 0 0 0 4 4 8 10 10 0 13 15 60 12 12 12 23 (4) (5) n/m

-8767%

12/31/06 10 8 (42) (40) (0.97) (28) 1 (29) 32 48 0 53 0 22 0 80 12 (39)

12/31/07 66 63 48 49 1.05 15 0 15 54 63 0 81 0 14 0 35 12 34

LTME 9/30/08 31 26 19 20 0.41 31 0 30 85 96 0 97 3 16 7 54 12 31

FQE 9/30/07 53 52 44 44 0.92 10 0 10 30 38 0 56 0 15 0 37 12 8

FQE 9/30/08 14 12 (1) (1) (0.01) 9 0 9 85 96 0 97 3 16 7 54 12 31

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Thanksgiving 2008

INVESTMENT RISKS & CONCERNS

BUSINESS OVERVIEW Depomed is a specialty pharma company with two approved products on the market and other product candidates in the pipeline. GLUMETZA is approved for use in adults with type 2 diabetes and promoted by Santarus in the U.S. ProQuin XR is approved in the U.S. for the once-daily treatment of uncomplicated urinary tract infections and is being marketed by Watson Pharma. Product candidate Gabapentin GR is currently in clinical development for the treatment of neuropathic pain and menopausal hot flashes.

•

DRUG PIPELINE OVERVIEW Preclinical Ph. 1 Ph. 2 Ph. 3 Marketed GLUMETZA1 U.S. / Canada 2 Proquin XR U.S. Gabapentin GR3 Phase 3 ongoing Gabapentin GR4 Phase 3 ongoing Omeprazole GR5 Levodopa6 Proof of concept Undisclosed7 1 For Type 2 diabetes. Canadian rights held by Biovail. 2 For uncomplicated urinary tract infections. Sold in U.S. and Europe. 3 For postherpetic neuralgia. 4 6 For menopausal hot flashes. For Parkinson’s disease. 7 5 For nighttime acid breakthrough. Two undisclosed compounds.

•

INVESTMENT HIGHLIGHTS •

•

• •

Differentiated drug delivery technology. The company utilizes proprietary AcuForm delivery technology to improve existing oral medications, allowing for extended, controlled release of medications to the upper gastrointestinal tract. Benefits include convenience of once-daily administration, improved treatment tolerability and enhanced compliance and efficacy. Litigation-tested IP. DepoMed’s AcuForm patents expire in 2016-21, with numerous applications pending. The company has won two separate settlements amounting to a total of $28 million. Superior development model. AcuForm provides new chemical entity (NCE)-like differentiation to existing pharmaceuticals (KCEs). Development timeframes and costs range from 4-6 years and $20$40 million vs. 8+ years and $1+ billion for NCEs. GLUMETZA targets large market. Metformin for diabetes is 5th most prescribed U.S. drug with 49 million transcriptions. Depomed has so far targeted only 13K out of 73K metforming prescribers. Strong cash position. Depomed had net cash of $76 million as of September 30, 2008, providing ample liquidity to pursue pipeline development. Stock price implies 36% trailing FCF yield and 4x trailing P/E (forward loss projected).

•

Losing money in recurring operations. Depomed has appeared as cheap on an earnings basis due to non-recurring gains. The company expects to continue to post adjusted operating losses in the foreseeable future. Failed Phase 3 trial for Gabapentin GR. Depomed announced in July 2007 that the drug candidate failed to meet the primary efficacy endpoint in a trial for postherpetic neuralgia (PHN). New GLUMETZA partner yet to be identified. A promotion agreement with King Pharmaceuticals was terminated in October 2007, following a strategic shift by King. Depomed has yet to identify a new marketing partner for GLUMETZA. Limited in-house sales and marketing resources. The company has engaged a contract sales organization to promote GLUMETZA on a temporary basis, as Depomed has no sales force and limited marketing and sales staff. Dependent on Watson Pharma for ProQuin XR. Depomed depends on Watson to successfully promote the drug. The company’s prior marketing partner for ProQuin XR, Esprit Pharma, was unable to successfully commercialize the drug. Should not be on “Magic Formula” list. Depomed became an MF selection due to one-time items. It has recorded $42 million of termination fees and litigation settlement proceeds over the past year.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) BMY TEVA

MV 38,651 35,015

EV 37,475 36,420

DEPO

EV/Rev 1.8x 3.4x

P/TB 5.6x 7.8x

08 P/E 12x 15x

09 P/E 10x 14x

.6x

2.7x

n/m

MAJOR HOLDERS CEO Smith <1% │ Other insiders 5% │ Third Point 15% │ Tang 10% │ JP Morgan 10% │ Biovail 10% │ Polygon 6%

N/A

THE BOTTOM LINE Depomed’s reported profitability depends entirely on one-time gains. The company therefore fails to meet a basic requirement for consideration as an investment prospect in the context of the magic formula screen — ongoing operating profitability. While Depomed’s two approved drugs and drug pipeline may have significant embedded value, we have no basis on which to make such a judgment. As a result, we pass.

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Page 74 of 401

Thanksgiving 2008

Dell Inc. (Nasdaq: DELL)

Round Rock, TX, 512-338-4400 http://www.dell.com

Technology: Computer Hardware, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $10.89 (as of 11/14/08) 52-week range: $8.85 - $28.40 Market value: $21.3 billion Enterprise value: $14.3 billion Shares out: 1,958.4 million Ownership Data Insider ownership: 11% Insider buys (last six months): 5

Valuation

This quarter Next quarter

Latest $0.32 0.34

Month Ago $0.34 0.37

# of Ests 24 22

FYE 1/31/09

1.36

1.41

EV / LTM revenue

0.2x

FYE 1/31/10 FYE 1/31/11

1.44 1.36

1.61 1.79

26 7

EV / LTM EBITDA EV / LTM EBIT

n/a 4.3x

P / tangible book 57.3x Greenblatt Criteria

LT EPS growth 11.8% 11.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 3 Institutional ownership: 70% # of institutional owners: 1624

Date

Actual

Estimate

8/28/08

$0.31

$0.36

P/E FYE 2/1/08 P/E FYE 1/31/09 P/E FYE 1/31/10 P/E FYE 1/31/11

8.3x 8.0x 7.6x 8.0x

LTM EBIT yield

23%

LTM pre-tax ROC

n/m

2/1/02 31,168 5,507 1,789 1,246 0.46 3,797 303 3,494 3,914 7,877 0 13,535 0 7,519 520 8,841 0 4,694

1/31/03 35,404 6,349 2,844 2,122 0.80 3,538 305 3,233 4,638 8,924 0 15,470 0 8,933 506 10,597 0 4,873

n/m

Fiscal Years Ended 1/30/04 1/28/05 2/3/06 41,444 49,121 55,788 7,552 9,018 9,891 3,544 4,206 4,382 2,645 3,018 3,602 1.01 1.18 1.47 3,670 5,821 4,751 965 515 747 2,705 5,306 4,004 5,152 9,807 9,070 10,633 16,897 17,794 0 0 0 19,311 23,215 23,252 0 0 65 10,896 14,136 16,173 505 505 625 13,031 16,730 19,205 0 0 0 6,280 6,485 4,047 n/m

n/m

2/2/07 57,420 9,516 3,070 2,583 1.14 3,969 896 3,073 10,298 19,939 155 25,635 188 17,791 569 21,196 0 4,439

2/1/08 61,133 11,671 3,440 2,947 1.31 3,949 831 3,118 7,972 19,880 2,428 27,561 225 18,526 362 23,732 0 3,829

LTME 8/1/08 64,146 11,674 3,323 2,845 1.34 3,446 631 2,815 9,033 21,776 2,534 28,407 129 18,187 1,840 25,501 0 2,906

FQE 8/3/07 14,776 2,951 902 746 0.33 1,853 293 1,560 11,862 22,214 163 28,054 328 17,248 378 22,010 0 6,044

FQE 8/1/08 16,434 2,827 819 616 0.31 1,108 142 966 9,033 21,776 2,534 28,407 129 18,187 1,840 25,501 0 2,906

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW Dell is the #1 supplier of PCs in the U.S. and the #2 supplier globally, behind HP. Product categories include desktop PCs, servers, networking, software, mobility, peripherals, and storage. The company was founded in 1984 by Michael Dell.

Thanksgiving 2008

• • • •

SELECTED OPERATING DATA FYE February 1 2006 % of revenue by product group: Desktop PCs 39% Mobility 26% Software and peripherals 15% Servers and networking 10% Enhanced services 8% Storage 3% Revenue growth by product group: Desktop PCs 2% Mobility 20% Software and peripherals 26% Servers and networking 12% Enhanced services 35% Storage 38% Total revenue growth 14% % of revenue by segment: Americas — Business 51% Americas — Consumer 14% EMEA 23% Asia Pacific and Japan 12% EBIT margin by segment: Americas — Business 10.4% Americas — Consumer 5.7% EMEA 6.8% Asia Pacific and Japan 8.0% Total EBIT margin 7.9%

2007

2008

YTD 8/1/08

35% 27% 16% 10% 9% 4%

32% 29% 16% 11% 9% 4%

30% 30% 17% 10% 9% 4%

-8% 8% 8% 7% 20% 21% 3%

-1% 13% 10% 12% 5% 8% 6%

-3% 24% 17% 4% 13% 13% 10%

51% 12% 24% 13%

51% 10% 25% 14%

n/a n/a n/a n/a

8.1% 1.9% 4.3% 4.5% 5.3%

8.2% -0.9% 6.6% 5.5% 5.6%

n/a n/a n/a n/a 5.3%

INVESTMENT HIGHLIGHTS •

•

• •

•

Continues to gain market share. Dell grew unit volumes in the high teens in 1H09, roughly 1.5x the industry growth rate. While growth slowed in 3Q09, management expects continued market share gains. Turnaround progressing; more work remains. In Q3, the company attained its goal of reducing headcount by 8,900. COGS are still too high, with management focused on reducing product costs as more efficiently produced products come to market. Pursuing five key growth initatives: enterprise, notebook, consumer, SMB, and emerging countries. Dell’s growth is outpacing the industry in each area. Focused on growing higher-margin services (~10% of revenue), both organically and through digestable acquisitions; a large combination, such as HP/EPS, appears unlikely. Dell uses the client business as an “achor tenant,” allowing it to win incremental services business over time. Maintains strong cash cycle dynamics (-29 days), though retail presence has increased inventory.

Michael Dell returned as CEO in January 2007. Strong balance sheet, with $7 billion of net cash. Bought $2.5 billion of stock in 1H09. Michael Dell has purchased ~$200 million in recent months. Stock price implies 13% trailing FCF yield, 8x trailing P/E and 8x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

• • •

Weakness in U.K., southern Europe, select Asian countries, U.S. (SMB, government). Enterprise, servers, storage remain resilient while “client” has weakened. Dell is a year into a three-year, $3 billion cost reduction program, with most reductions tied to new products (7 introduced so far, 17 remaining). Consumer EBIT margin less than 1%, vs. 5-6% at HP (might include some printing). Dell believes it can achieve “reasonable” profitability. Retail is not yet profitable, with Dell present in 15,000 stores. The company likely needs more scale in retail. Direct model is evolving as Dell enters storefronts and as notebooks gain share versus desktops (customers may want to “touch” notebooks before purchasing). Warranty is a high-margin business in which Dell’s “attach rate” is below average. European margins have not met expectations, but margins may bounce back in next two quarters. EMC partnership may be impacted by Dell’s purchase of EqualLogic, though Dell management remains “committed” to both offerings. CTO Kevin Kettler is leaving in January after 13 years with Dell; a marketing VP left in November.

COMPARABLE PUBLIC COMPANY ANALYSIS MV

CAJ HPQ IBM SNE

37,390 74,600 107,920 21,193

DELL

21,327

($mn)

1.2x 6.3x 19.2x 0.7x

08 P/E 10x 8x 9x 12x

09 P/E 10x 8x 9x 9x

57.3x

EV/Rev

P/TB

29,926 69,972 132,577 20,396

.7x .6x 1.3x .2x

14,263

.2x

MAJOR HOLDERS Michael Dell 11% │ Other insiders <1% │ Southeastern 7%

THE BOTTOM LINE Dell is a global technology products leader with capable, properly incentivized management. The company is addressing challenges in the consumer business amid slowing growth and greater competition. Some have questioned Dell’s direct model, and the company has felt a need to partner with retailers to expand distribution. Nonetheless, we like the company’s long-term focus (no quarterly guidance), strong FCF generation, share buybacks, insider buying, and cost leadership. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 76 of 401

Thanksgiving 2008

Deluxe Corporation (NYSE: DLX)

Shoreview, MN, 651-483-7111 http://www.deluxe.com

Consumer Non-Cyclical: Office Supplies, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $10.89 (as of 11/14/08) 52-week range: $7.55 - $33.62 Market value: $557 million Enterprise value: $1.4 billion Shares out: 51.1 million Ownership Data Insider ownership: 1% Insider buys (last six months): 9

Valuation

This quarter Next quarter

Latest $0.69 0.51

Month Ago $0.78 0.56

# of Ests 5 2

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

3.9x 4.4x 4.3x 3.8x

FYE 12/31/08

2.48

2.46

EV / LTM revenue

0.9x

FYE 12/31/09 FYE 12/31/10

2.52 2.84

2.71 n/a

5 1

EV / LTM EBITDA EV / LTM EBIT

6.5x 6.5x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 4.5% 4.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 517

Date

Actual

Estimate

10/23/08

$0.65

$0.55

LTM EBIT yield

15%

LTM pre-tax ROC

>100%

12/31/01 1,278 825 302 186 2.69 271 29 242 10 84 197 538 151 367 10 459 0 79

12/31/02 1,284 848 345 214 3.36 257 41 216 125 200 188 669 2 215 307 605 0 64

>100%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,242 1,567 1,716 816 1,031 1,108 319 348 305 193 198 158 3.49 3.93 3.10 182 311 174 22 44 56 160 268 118 3 16 7 79 240 214 160 878 839 563 1,499 1,426 214 290 264 388 571 491 381 954 903 861 1,678 1,508 0 0 0 (298) (179) (82) >100%

>100%

12/31/06 1,640 1,026 198 101 1.95 239 41 198 12 202 769 1,267 439 665 577 1,333 0 (66)

12/31/07 1,606 1,020 268 144 2.76 245 32 212 22 192 734 1,211 69 298 775 1,170 0 41

LTME 9/30/08 1,529 953 221 118 2.24 212 37 176 18 181 815 1,252 112 331 774 1,188 0 65

FQE 9/30/07 389 245 61 32 0.62 73 6 67 245 419 738 1,450 327 555 776 1,426 0 25

FQE 9/30/08 366 226 30 14 0.27 79 7 72 18 181 815 1,252 112 331 774 1,188 0 65

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

Thanksgiving 2008

•

Deluxe operates in three segments: Small Business Services sells business checks, printed forms, promotional products, and marketing materials to small businesses. Financial Services sells personal and business checks and stored value gift cards to financial institutions. Direct Checks sells personal and business checks directly to consumers. Checks and related services were two-thirds of revenue in 2007.

•

SELECTED OPERATING DATA FYE December 31 % of revenue by segment: Small business services Financial services Direct checks Revenue growth by segment: Small business services Financial services Direct checks Total revenue growth 1 EBIT margin by segment: Small business services Financial services Direct checks Total EBIT margin D&A as % of revenue Capex as % of revenue % of revenue by product type: Checks and related services Other printed products Accessories and promotional Packaging supplies and other % of revenue by geography: U.S. Canada 1

2005

2006

2007

YTD 9/30/08

54% 31% 14%

59% 28% 13%

58% 28% 13%

58% 29% 13%

51% -19% -14% 10%

4% -15% -14% -4%

-3% 0% -1% -2%

-6% -5% -10% -6%

11% 22% 32% 18% 6% 3%

9% 10% 31% 12% 5% 3%

14% 16% 30% 17% 4% 2%

13% 17% 29% 16% 4% 2%

65% 22% 8% 5%

64% 23% 8% 5%

65% 24% 8% 3%

n/a n/a n/a n/a

97% 3%

96% 4%

n/a n/a

Excludes YTD restructuring and impairment charges of $33 million.

INVESTMENT HIGHLIGHTS •

•

Leading provider of paper checks. With 33 billion checks written annually (including checks converted to ACH), they still account for 35% of non-cash payments in the U.S., down from 45% in 2004. Check volume is declining at a mid-single digit rate. Recent tuck-in acquisitions include PartnerUp, Hostopia, Logo Mojo, and Johnson Group. Deluxe is attempting to shift from traditionally mature, print-related markets to business services markets. Despite the decline in checks, management remains committed to “sustainable top and bottom line growth for Deluxe in the medium term.” C$124 million Hostopia deal, announced in June, adds web services offerings and a web-enabled platform to launch additional business services.

Price increase in Financial Services will go into effect in Q4. The company is also cutting costs. CEO Lee Schram (46) joined Deluxe in 2006 from NCR, where he had served as SVP of the retail solutions division. CFO Richard Greene (43) joined Deluxe in 2006 from Tyco, where he had been CFO of the plastics and adhesives segment. Stock price implies 32% trailing FCF yield, 5x trailing P/E and 4x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

Guiding for revenue decline of 6-7% and EPS decline of 21-25% for full-year 2008, significantly worse than previous EPS guidance. Management expects 2008 revenue of $1.5 billion and EPS of $2.07-2.17. In January, management had provided EPS guidance of $3.00-3.20. The company has blamed economic softness for the weak outlook. Paper checks headed for obsolescence. Adoption of payment cards and online bill-payment is slowly but surely obsoleting checks, both at the point of sale and as a means of bill payment. Two-thirds of Deluxe revenue comes from checks, with another one-quarter also related to various printed products. Deluxe’s two primary check printing competitors merged in 2007 and now operate as Harland Clarke. Potential for bad capital allocation as “cash cow” business declines and management attempts to reignite growth. Deluxe faces a dilemma: maximize FCF and pay it out, or invest in growth capex and acquisitions that may offset the decline in checks. The company currently pays a $1 annual dividend while pursuing acquisitions. Management has stressed the importance of “transformational efforts.” Capex is estimated at $30 million in 2008.

MAJOR HOLDERS CEO Schram 1% │ Other insiders 1% │ Barclays 12%

THE BOTTOM LINE Deluxe faces an irreversible long-term decline in the usage of paper checks. As a leading provider of checks, the company has done a good job limiting annual revenue erosion to the low- to mid-single digits and maintaining fairly robust margins. We believe shareholder value may be maximized through larger dividend payments or share repurchases rather than the “transformation” undertaken by management. The company runs the risk of making acquisitions primarily as a way of stemming revenue declines rather than putting capital to optimal use. For instance, we are unconvinced that Deluxe is in the best position to maximize the opportunity of a business social networking company such as PartnerUp, which Deluxe recently acquired. With insiders owning only 2% of Deluxe, their interests may not be aligned with those of shareholders. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Diamond Mgt. & Technology (Nasdaq: DTPI)

Chicago, IL, 312-255-5000 http://www.diamondconsultants.com

Services: Business Services Trading Data

Consensus EPS Estimates

Price: $3.96 (as of 11/14/08) 52-week range: $1.84 - $8.21 Market value: $101 million Enterprise value: $54 million Shares out: 25.4 million Ownership Data Insider ownership: 15% Insider buys (last six months): 7

Valuation

This quarter Next quarter

Latest $0.02 0.02

Month Ago $0.01 0.01

# of Ests 4 4

FYE 3/31/09

0.07

0.05

EV / LTM revenue

0.3x

FYE 3/31/10 FYE 3/31/11

0.12 n/a

0.13 n/a

5 0

EV / LTM EBITDA EV / LTM EBIT

8.4x 8.4x

P / tangible book Greenblatt Criteria

1.4x

LT EPS growth 10.5% 10.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 5 Institutional ownership: 68% # of institutional owners: 131

Date

Actual

Estimate

11/6/08

$0.02

$0.01

P/E FYE 3/31/08 P/E FYE 3/31/09 P/E FYE 3/31/10 P/E FYE 3/31/11

12.0x 56.6x 33.0x n/a

LTM EBIT yield

12%

LTM pre-tax ROC

47%

3/31/02 203 49 (146) (134) (4.34) (46) 7 (53) 97 130 235 401 0 26 0 26 0 375

3/31/03 152 24 (198) (360) (6.95) (22) 2 (24) 75 97 0 110 0 30 0 37 0 72

EBIT/capital employed

-648%

-1598%

Fiscal Years Ended 3/31/04 3/31/05 3/31/06 119 162 164 30 59 46 (0) 25 10 (5) 33 (11) 0.05 1.09 0.06 8 33 12 1 2 2 7 31 10 81 98 70 116 136 108 0 0 0 123 154 128 0 0 0 36 32 31 0 0 0 42 36 36 0 0 0 81 118 92 -8%

>100%

3/31/07 190 50 10 31 0.21 22 3 19 84 103 0 121 0 21 0 25 0 96

3/31/08 205 57 16 21 0.33 26 3 23 53 71 0 92 0 16 0 18 0 75

LTME 9/30/08 190 47 6 16 0.16 24 3 21 47 69 0 87 0 14 0 16 0 71

FQE 9/30/07 51 14 5 2 0.09 4 1 3 67 95 0 114 0 16 0 22 0 92

FQE 9/30/08 46 11 2 1 0.02 5 1 5 47 69 0 87 0 14 0 16 0 71

>100%

47%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$120 $100 $80 $60 $40 $20 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW

Thanksgiving 2008

•

Diamond is a management and technology consulting firm whose teams work across functional boundaries to help clients leverage IT. The company serves clients in six verticals: financial services, insurance, healthcare, telecom, public sector, and enterprise. The enterprise practice includes the manufacturing, retail, distribution, travel, and packaged goods industries. Diamond generated 91% of revenue in North America in FY08. Diamond was founded in 1994. In 2006, the company sold operations in Barcelona, Dubai, Madrid, Munich, Paris, and Sao Paulo, while retaining consulting practices in North America, the U.K., and India.

•

INVESTMENT RISKS & CONCERNS •

•

SELECTED OPERATING DATA FYE March 31 2006 2007 Consultants (avg) 428 474 Fees per consultant $339K $356K Utilization rate 63% 63% 1 17% 18% Voluntary attrition 1 23% 22% Total attrition ∆ net revenue 0% 16% ∆ gross profit -21% 9% Gross margin 32% 30% % of revenue by client type: 2 New clients 24% 12% Existing clients 76% 88% Top 5 clients / revenue 39% 39% % of revenue by industry or major client: Goldman Sachs 13% 13% Other financial services 24% 19% Insurance 22% 26% Healthcare 15% 19% Enterprise 13% 13% Telecommunications 9% 6% Public sector 4% 4% 2 % of new client revenue by industry: Financial services 32% 37% Insurance 22% 7% Healthcare 17% 22% Enterprise 22% 12% Telecommunications 5% 10% Public sector 2% 12% ∆ diluted shares out (avg) -4% -2%

2008 509 $358K 62% 16% 22% 8% 13% 31%

1H09 503 $316K 63% 17% 34% -15% -33% 24%

14% 86% 37%

6% 94% n/a

12% 18% 23% 21% 17% 6% 3%

} 29%

20% 12% 19% 44% 2% 3% -8%

26% 19% 5% 39% 4% 7% -18%

23% 19% 22% 4% 3%

Represents attrition of consulting staff only. New clients are defined as clients that generated revenue in the current period but were absent from the prior period. 2

INVESTMENT HIGHLIGHTS •

•

Serves c-level executives of large companies. Fees are sourced from clients’ operating and IT budgets. A senior partner is assigned revenue and profit responsibility for each vertical. Long-tenured management. Adam Gutstein (45) joined Diamond in 1994 and became CEO in 2006. He was previously with Andersen (now Accenture). Karl Bupp (46) joined Diamond in 1994 and became CFO in 1998. He was previously with MCI.

Repurchased $11 million of stock in 1H09, $52 million in FY08, $36 million in FY07, and $34 million in FY06. Stock price implies 21% trailing FCF yield, 25x trailing P/E and 33x forward P/E.

•

Results down sharply in 1H09, driven by more cautious client spending. The company is guiding for FQ3 revenue of $39-41 million (down 12-17% y-y), EPS of $0.01-0.02 and FCF of $4-6 million. Absence of long-term contracts. Clients may typically cancel use of Diamond without penalty and, “in some circumstances,” with little notice. 22% annualized attrition. Diamond’s voluntary and involuntary attrition of consulting staff was 16% and 6%, respectively, in FY08. This implies a total staff turnover every 4-5 years, on average. Top competitors generally have scale advantages. Technology-oriented professional services firms include Accenture, CSC, EDS, and IBM. Diamond also competes against management consulting firms such as A. T. Kearney, Bain, BCG, and Booz. Typical professional services risks. Diamond’s key assets “walk out the door” every evening. In addition, the firm must maintain a certain utilization rate of consulting staff in order to remain profitable.

COMPARABLE PUBLIC COMPANY ANALYSIS MV

BE ACN CSC IBM ICFI

13 20,919 4,322 107,920 266

DTPI

101

($mn)

n/m 12.3x 7.7x 19.2x n/m

08 P/E n/m 10x 7x 9x 10x

09 P/E n/m 9x 6x 9x 13x

1.4x

57x

33x

EV/Rev

P/TB

703 17,304 7,354 132,577 353

.2x .7x .4x 1.3x .5x

.3x

MAJOR HOLDERS CEO Gutstein 2% │ Other insiders 15% │ Fidelity 16% │ Artisan 13% │ BlackRock 10% │ Luther King 6%

THE BOTTOM LINE Diamond is a recognized player in the high-end IT consulting industry. While profitability has been wiped out by lower client spending, the company is likely to restore prior profit levels when demand returns. Diamond also is likely to capture longterm growth opportunities in the industry, driven by continued adoption of IT within large enterprises. Management has shown a desire to return value to shareholders through repurchases, and we believe the shares deserve attention.

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Thanksgiving 2008

DISH Network Corp. (Nasdaq: DISH)

Englewood, CO, 303-723-1000 http://www.dishnetwork.com

Services: Broadcasting & Cable TV Trading Data

Consensus EPS Estimates

Price: $11.00 (as of 11/14/08) 52-week range: $10.49 - $45.73 Market value: $4.9 billion Enterprise value: $9.5 billion Shares out: 447.1 million Ownership Data Insider ownership: 80% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.53 0.56

Month Ago $0.60 0.61

# of Ests 17 4

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.5x 5.2x 4.5x 4.3x

FYE 12/31/08

2.11

2.47

EV / LTM revenue

0.8x

FYE 12/31/09 FYE 12/31/10

2.43 2.54

2.67 2.76

18 12

EV / LTM EBITDA EV / LTM EBIT

3.1x 4.9x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 8.0% 7.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 17 Institutional ownership: 45% # of institutional owners: 613

Date

Actual

Estimate

11/10/08

$0.20

$0.58

LTM EBIT yield

20%

LTM pre-tax ROC

>100%

12/31/01 4,001 1,438 212 (216) (0.45) 490 638 (148) 2,828 3,512 696 6,520 15 1,488 5,707 7,298 0 (778)

12/31/02 4,821 1,884 (238) (415) (0.86) 67 436 (369) 2,687 3,214 696 6,261 388 1,990 5,359 7,437 0 (1,176)

19%

-24%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 5,739 7,159 8,447 2,251 2,677 3,797 708 703 1,167 225 215 1,515 0.46 0.46 3.22 576 1,001 1,774 322 981 1,541 254 21 233 3,973 1,156 1,181 4,573 2,113 2,397 725 980 975 7,585 6,029 7,410 1,438 34 37 2,972 2,072 2,150 5,499 5,758 5,899 8,618 8,108 8,277 0 0 0 (1,033) (2,078) (867) 77%

56%

12/31/06 9,819 4,439 1,217 608 1.37 2,279 1,396 883 3,033 4,600 946 9,769 1,039 3,592 5,929 9,988 0 (219)

12/31/07 11,090 5,008 1,573 756 1.68 2,617 1,542 1,075 2,788 4,245 1,321 10,087 1,551 4,225 4,575 9,447 0 640

LTME 9/30/08 11,587 5,070 1,939 861 1.89 2,546 1,259 1,287 1,433 2,857 685 7,177 1,008 4,175 4,973 9,307 0 (2,130)

FQE 9/30/07 2,794 1,267 397 200 0.44 707 330 377 2,802 4,270 915 9,746 48 2,725 6,086 9,286 0 460

FQE 9/30/08 2,937 1,195 418 92 0.20 484 316 168 1,433 2,857 685 7,177 1,008 4,175 4,973 9,307 0 (2,130)

45%

56%

>100%

n/m

56%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

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BUSINESS OVERVIEW

Thanksgiving 2008

INVESTMENT RISKS & CONCERNS •

DISH Network provides satellite television in the U.S., offering hundreds of channels, digital video recording and HDTV. The company began subscription TV services in 1996 and had 14 million subscribers at yearend 2007. DISH utilizes a satellite fleet that enables it to offer 2,700 video and audio channels, including local programming. On January 1, 2008, DISH spun off technology and certain infrastructure assets into EchoStar Corporation (SATS).

•

SELECTED OPERATING DATA YTD FYE December 31 2005 2006 2007 9/30/08 Selected growth rates: Subscriber revenue 19% 17% 13% 8% ARPU 6% 8% 5% 6% Subscribers (average) 13% 10% 7% 3% Subscribers (period end) 10% 9% 5% 1% Subscriber acq. cost (SAC) 13% -1% -4% 10% Selected items as % of subscriber revenue: Subscriber gross profit 49% 49% 49% 49% SAC 19% 17% 15% 14% EBIT 15% 13% 15% 18% D&A 10% 12% 12% 9% Capex 19% 15% 14% 10% FCF 3% 9% 11% 11% DISH Network subscriber data (mn, except if stated otherwise): Subscribers (period end) 12.0 13.1 13.8 13.8 Subscribers (average) 11.5 12.6 13.4 13.8 Gross additions 3.4 3.5 3.4 2.3 Net additions 1.1 1.1 0.7 0.0 Monthly churn 1.65% 1.64% 1.70% 1.86% Monthly ARPU ($) 58 63 66 69 SAC ($) 693 686 656 715 SAC / ARPU (months) 11.9 10.9 10.0 10.4

INVESTMENT HIGHLIGHTS •

•

• •

•

• •

LIQUIDITY SNAPSHOT1 Balance sheet items ($mn) Cash and ST investments LT cash and investments Capital leases, mortgages, notes 3% convertible note due 2010/11 1 5 3/4% senior notes due 2008 6 3/8% senior notes due 2011 6 5/8% senior notes due 2014 7 1/8% senior notes due 2016 7% senior notes due 2013 7 3/4% senior notes due 2015 Capital leases, mortgages, notes Net cash and investments 1

Positioned as low-cost provider of multi-channel pay TV services, competitive on price and programming versus cable television providers and DirecTV. Subscriber growth is driven by equipment subsidies and promotional pricing on programming. Utilizes twelve satellites in geostationary orbit 22,300 miles above the equator, five of which are owned by DISH, six are leased from EchoStar and one is leased from a third party. Purchased 700 MHz spectrum for $712 million in an FCC auction in March. The acquired spectrum covers 76% of the U.S. population. Chairman and CEO Charlie Ergen (54) is a wellrespected satellite entrepreneur who has led DISH since co-founding it with James DeFranco in 1980. DeFranco (55) serves as EVP of marketing and sales. CFO Bernard Han (43) joined in 2006 from Northwest Airlines, where he had served as CFO. Stock price implies 26% trailing FCF yield, 6x trailing P/E and 5x forward P/E.

Lost 10,000 subscribers in Q3 due to “weak economic conditions, aggressive promotional offerings by our competition, our relative discipline in the amount of discounted programming or equipment we currently offer, the heavy marketing of HD service by our competition, the growth of fiber-based pay TV providers, signal theft and other forms of fraud, and operational inefficiencies.” Opex grew faster than revenue in Q3, as SAC and retention costs rose. Increased upgrades are likely to continue at least through 1H09. AT&T deal to terminate on January 31. AT&T accounted for 17% of gross subscriber additions YTD. The one million subscribers acquired through AT&T may churn faster than others. Competition from DirecTV and cable. Net debt of $4.3 billion, purchase obligations of $1.5 billion, satellite obligations of $924 million. 12/31/07 $2,788 173 (50) (525) (1,000) (1,000) (1,000) (1,500) (500) (0) (550) ($3,165)

ST LT ST ST ST LT LT LT LT LT LT

9/30/08 $1,537 176 (12) (25) (972) (1,000) (1,000) (1,500) (500) (750) (223) ($4,268)

Redeemed $972 million of notes on October 1.

COMPARABLE PUBLIC COMPANY ANALYSIS MV

EV/Rev

P/TB

08 P/E

09 P/E

DTV

21,678

24,540

1.3x

25.1x

15x

12x

DISH

4,918

9,466

.8x

n/m

($mn)

MAJOR HOLDERS Class A common shares (209 million out): CEO Ergen 50% │ Other insiders 8% │ Fairholme 10% │ Barclays 8% │ Dodge & Cox 6%; Class B common shares (238 million out): CEO Ergen 87% │ Other insiders 11%

THE BOTTOM LINE While DISH continues to generate strong free cash flow, the weak economy has negatively affected gross subscriber additions and boosted churn. We find the company’s balance sheet a bit precarious given the difficulty of predicting consumer spending. We can see a scenario in which equity value continues to erode due to claims by creditors. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Double-Take Software, Inc. (Nasdaq: DBTK)

Southborough, MA, 877-335-5674 http://www.doubletake.com

Technology: Software & Programming Trading Data

Consensus EPS Estimates

Price: $7.07 (as of 11/14/08) 52-week range: $6.16 - $26.54 Market value: $156 million Enterprise value: $88 million

This quarter Next quarter

Latest $0.16 0.14

FYE 12/31/08

0.61

EV / LTM revenue

0.9x

FYE 12/31/09 FYE 12/31/10

0.66 0.74

0.75 n/a

11 1

EV / LTM EBITDA EV / LTM EBIT

4.2x 4.9x

LT EPS growth 21.0% 21.0% Latest Quarterly EPS Surprise

P / tangible book 2.6x Greenblatt Criteria

Shares out: 22.0 million Ownership Data Insider ownership: 21% Insider buys (last six months): 0 Insider sales (last six months): 1 Institutional ownership: 74% # of institutional owners: 206

Valuation

Month Ago $0.17 0.17

Date

Actual

Estimate

10/28/08

$0.16

$0.14

# of Ests 11 6

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

8.1x 11.6x 10.7x 9.6x

LTM EBIT yield

20%

LTM pre-tax ROC

n/m

12/31/03 24 19 (8) (16) (0.77) (4) 1 (5) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EBIT/capital employed

Fiscal Years Ended 12/31/04 12/31/05 30 41 26 36 (7) (4) (15) (12) (0.75) (0.58) (1) 4 1 1 (2) 3 6 8 12 17 0 0 13 19 0 0 11 19 43 51 56 73 0 0 (43) (54)

n/a

n/m

12/31/06 61 53 7 (1) (0.03) 14 2 12 55 70 4 77 0 27 0 32 0 45

12/31/07 83 75 17 20 0.87 21 2 18 65 91 17 115 0 34 0 39 0 76

LTME 9/30/08 95 85 18 14 0.60 25 3 22 68 93 26 124 0 34 0 39 0 85

FQE 9/30/07 21 19 5 3 0.14 4 1 4 67 89 6 99 0 27 0 32 0 67

FQE 9/30/08 24 22 4 3 0.11 5 1 5 68 93 26 124 0 34 0 39 0 85

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW Double-Take provides data protection software and is the leading supplier of replication software for Microsoft server environments. It has 15,000 customers and generates roughly 70% of revenue from resellers such as Dell.

2005

2006

2007

YTD 9/30/08

64% 36%

63% 37%

59% 41%

54% 46%

31% 46% 36% 51%

47% 55% 49% 54%

28% 50% 36% 38%

11% 34% 20% 19%

77% 18% 6%

71% 26% 3%

65% 32% 3%

63% 31% 5%

45% 11% 30%

38% 121% -14%

25% 69% 24%

23% 15% 24%

19% 13% 31% 30% 7%

20% 13% 14% 47% 6%

18% 12% 15% 48% 7%

n/a 12% n/a n/a 11%

•

• •

Guiding for revenue growth of 16-18%, nonGAAP EBIT growth of 7-11% and non-GAAP EPS decline of 36-38% in 2008 (down from prior guidance for revenue growth of 23-25%, EBIT growth of 14-16% and EPS decline of 32-34%). Software industry veteran Dean Goodermote (54) became CEO in 2005. VP of Engineering Robert Beeler (42) has been with the company since the initial release of Double-Take software in 1995. CFO Craig Huke (46) joined the company in 2003 after serving in CFO roles at two technology firms. Stock price implies 14% trailing FCF yield, 12x trailing P/E and 11x forward P/E.

INVESTMENT RISKS & CONCERNS •

• • •

At period end.

INVESTMENT HIGHLIGHTS

•

SELECTED OPERATING DATA FYE December 31 % of revenue by type: Software Maintenance and services Revenue growth by type: Software Maintenance and services ∆ revenue 1 ∆ deferred revenue % of revenue by geography: North America EMEA Asia Pacific Revenue growth by geography: North America EMEA Asia Pacific % of revenue by customer: Dell Sunbelt Software Distribution Next three largest customers Other indirect customers Direct sales

Thanksgiving 2008

Missed Q3 revenue guidance by 7% due to license push-outs. The miss was most pronounced in the U.S. Management expects weak IT spending to persist, noting that “investors should not expect the growth rate that they have seen from us in the past.” ~70% of revenue from resellers such as Dell and another 15-20% of revenue from distributors/OEMs. Strategic bet on Microsoft technology may make it difficult to expand into large enterprises, many of which still rely heavily on Unix-based systems. Primary competitors include EMC (Legato), Neverfail, Symantec (Veritas) and CA (XOsoft).

COMPARABLE PUBLIC COMPANY ANALYSIS

Leader in $700 million Windows replication software market, expected to grow to $1.2 billion in 2011, a 21% CAGR.1 Replication software is expected to reach $4.3 billion in 2011, while the broader storage software market is $10 billion. Sells primarily to SMB market. Growth in data creation and collection, new regulations and the threat of disruption from disasters have increased data protection requirements for many businesses. Double-Take software continuously replicates changes made to application data on a primary server to a duplicate server located on- or off-site. The company’s software was first released in 1995. $8 million TimeSpring acquisition (December 2007) enables data recovery from almost any point in time from a repository located on- or off-site. $10 million emBoost acquisition (July 2008) enables assignment and re-assignment of workloads to any Windows or Linux physical servers or desktops or a virtual machine in their environment.

($mn) BMC CA EMC FALC SYMC

MV 4,691 8,821 20,367 126 10,208

EV 4,077 8,660 17,950 79 10,003

DBTK

156

EV/Rev 2.2x 2.0x 1.2x .9x 1.6x

P/TB n/m n/m 3.9x 2.0x n/m

08 P/E 11x 11x 13x 17x 9x

09 P/E 10x 10x 12x 12x 8x

.9x

2.6x

12x

11x

MAJOR HOLDERS CEO Goodermote 3% │ Other insiders 17% │ ABS Capital 15% │ Copper Rock 7% │ Oberweis 6%

Source: Company, IDC.

THE BOTTOM LINE Double-Take is an attractively priced, growing software company in the data storage industry, which enjoys favorable longterm trends due to the explosion of digital data and rising concerns about data protection. However, the company has a comparatively narrow product offering, and it could become marginalized. We are reminded of companies such as StorageNetworks and McData, both of which were too narrowly focused to survive as independent firms. As a result, Double-Take may realize shareholder value through a sale to a larger competitor. We note that the company’s top customer, Dell, has stated a strategic interest in growing its software and services revenue as a percentage of overall revenue. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Dynacq Healthcare, Inc. (Nasdaq: DYII)

Houston, TX, 713-378-2000 http://www.dynacq.com

Health Care: Healthcare Facilities Trading Data

Consensus EPS Estimates

Price: $3.39 (as of 11/14/08) 52-week range: $3.10 - $7.30 Market value: $53 million Enterprise value: $22 million

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 8/31/07 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

14.1x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

0.4x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

1.3x 1.4x

n/a

P / tangible book Greenblatt Criteria

0.8x

Shares out: 15.7 million Ownership Data Insider ownership: 57% Insider buys (last six months): 1

Valuation

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 5% # of institutional owners: 26

Date

Actual

Estimate

n/a

LTM EBIT yield

69%

LTM pre-tax ROC

59%

8/31/01 44 29 14 8 0.51 3 1 2 5 25 1 36 0 5 1 8 0 28

8/31/02 65 40 26 15 0.96 12 4 8 8 25 1 54 0 4 0 7 0 47

57%

95%

Fiscal Years Ended 8/31/03 8/31/04 8/31/05 90 39 42 59 18 19 36 (6) (3) 21 (2) (5) 1.27 (0.30) (0.20) 16 12 5 17 5 4 (2) 7 1 4 6 3 32 32 19 1 1 0 88 83 73 7 7 5 20 17 12 0 0 0 23 20 14 0 0 0 65 63 59 86%

-11%

-7%

8/31/06 36 18 (4) (6) (0.21) (3) 0 (3) 3 19 0 71 6 16 0 17 0 54

8/31/07 43 22 4 4 0.24 6 1 5 5 26 0 79 8 18 1 20 0 59

LTME 5/31/08 60 32 15 15 0.62 21 1 20 32 56 0 85 1 14 0 15 0 70

FQE 5/31/07 13 7 3 3 0.16 (0) 0 (1) 6 21 0 74 8 18 1 19 0 55

FQE 5/31/08 14 6 2 1 0.07 9 0 9 32 56 0 85 1 14 0 15 0 70

-13%

13%

59%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW Dynacq manages acute care hospitals that provide bariatric, orthopedic, neuro-spine, and other specialized surgeries. The hospitals include operating rooms, pre- and post-op space, ICUs, nursing units, and diagnostic facilities, as well as adjacent buildings that lease space to physicians. Dynacq owns a hospital in Pasadena, TX (near Houston) and another in Garland, TX (near Dallas). Most surgeries are covered by workers’ comp or out-of-network commercial insurance. The company participates minimally in managed care contracts. Dynacq sold a hospital in Baton Rouge, LA in FY08 and a surgery center in West Houston, TX in FY07.

Thanksgiving 2008

•

SELECTED OPERATING DATA FYE August 31 2005 2006 Calculation of net revenue: Gross billed charges $100 $87 51 Contractual allowance 58 Net revenue $42 $36 Net revenue growth 6% -14% Allowance percentage 58% 59% % of net patient revenue by facility: Pasadena facility 72% 57% Garland facility 27% 43%

2007

YTD 5/31/08

$96 53 $43 19% 55%

$100 51 $49 54% 51%

38% 62%

n/a n/a

•

INVESTMENT HIGHLIGHTS •

• • •

Contractual allowance declined from FY05FY07, boosting revenue and returning Dynacq to profitability. The allowance fell from 58% in FY05 to 51% in the first nine months of FY08, though it rose to 61% in the quarter ended May 31. Strong balance sheet, with $34 million of net cash and $4 million of net assets held for sale on May 31. Repurchased 280,000 shares at average cost of $5.60 per share from March through July. Stock price implies 38% trailing FCF yield and 5x trailing P/E (no EPS estimates available).

•

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AMSG CYH HMA LPNT MDTH RHB UHS THC DYII

INVESTMENT RISKS & CONCERNS •

Difference between gross billed charges and net revenue. The company had gross billed charges of $100 million in the nine months ended May 31, yet it recorded net revenue of only $49 million. The delta represents a “contractual allowance,” which Dynacq estimates based on subjective and hard-tofollow criteria. The allowance as a percentage of gross billings has a large impact on profitability and has exhibited large volatility. For example, the allowance was 51% for the nine months ended May 31, yet it rose to 61% for the quarter ended May 31. Low visibility into capital dealings. The company formed Dynacq Huai Bei Healthcare (DHBH) as a Chinese corporation. The company recently capitalized DHBH with $10 million, making it potentially difficult for shareholders to “follow the money” now that it is at the Chinese subsidiary level. In July, the company sold its interest in a property owned by a Chinese joint venture company (DeAn) for $4.6 million. It is unclear whether the company obtained fair market value in the sale. The JV management contract was to be transferred to DHBH. We cannot ascertain the rationale for these dealings and find them murky. COO Alan Beauchamp resigned in July. He was not immediately replaced.

Moved corporate domicile from Delaware to Nevada in August 2007. It is unclear why the company chose to reincorporate in Nevada. The company indemnifies directors against damages for breach of their fiduciary duty and advance expenses “to the full extent permitted by Nevada law.” Uncertainty regarding recoveries on accounts receivable in Medical Dispute Resolution (MDR) process. The company has attempted to collect on MDR accounts receivable and has recorded a total of $20 million in settlements for service dates ranging from 2001-2005. It is impossible to predict the level of future MDR process recoveries.

MV 685 1,721 439 1,233 151 262 1,977 931

EV 854 10,287 3,558 2,695 207 302 2,913 5,150

EV/Rev 1.4x 1.0x .8x 1.0x .3x .4x .6x .6x

P/TB n/m n/m n/m n/m 0.5x 3.9x 2.4x n/m

08 P/E 14x 8x 4x 9x 8x 15x 10x n/m

09 P/E 13x 7x 4x 9x 6x 12x 10x 98x

.4x

0.8x

n/a

MAJOR HOLDERS CEO Chan 54% │ Other insiders 5%

THE BOTTOM LINE Dynacq is a cheap company by almost any measure, with significant excess cash and real estate assets. However, operating performance is exceedingly difficult to analyze due to major accounts receivable reserves and reimbursement issues. In addition, we dislike the company’s murky dealings in China, including the movement of cash to Chinese subsidiaries.

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Thanksgiving 2008

EarthLink, Inc. (Nasdaq: ELNK)

Atlanta, GA, 404-815-0770 http://www.earthlink.net

Technology: Computer Services Trading Data

Consensus EPS Estimates

Price: $6.36 (as of 11/14/08) 52-week range: $6.12 - $10.16 Market value: $689 million Enterprise value: $501 million Shares out: 108.4 million Ownership Data Insider ownership: 8% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.37 0.37

Month Ago $0.36 n/a

# of Ests 6 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

n/m 3.5x 4.5x 9.0x

FYE 12/31/08

1.83

1.78

EV / LTM revenue

0.5x

FYE 12/31/09 FYE 12/31/10

1.40 0.71

1.28 0.78

6 1

EV / LTM EBITDA EV / LTM EBIT

2.2x 2.4x

P / tangible book 3.6x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 32 Institutional ownership: 95% # of institutional owners: 461

Date

Actual

Estimate

10/28/08

$0.50

$0.40

LTM EBIT yield

42%

LTM pre-tax ROC

n/m

12/31/01 1,245 735 (367) (371) (2.73) 47 110 (63) 555 640 264 1,183 12 329 2 332 0 851

12/31/02 1,357 813 (161) (168) (1.11) 19 54 (35) 491 584 239 1,024 3 318 1 331 0 692

n/m

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,402 1,382 1,290 883 951 923 (67) 111 165 (67) 111 143 (0.42) 0.70 1.02 102 188 189 40 32 41 61 156 148 439 473 381 501 530 445 157 125 117 827 806 749 1 0 0 267 247 212 0 0 0 283 258 227 0 0 0 544 548 522 n/m

n/m

12/31/06 1,301 878 96 5 0.19 115 48 68 373 457 262 968 0 231 259 509 0 459

12/31/07 1,216 788 48 (135) (0.45) 89 61 28 267 337 249 735 0 188 259 474 0 262

LTME 9/30/08 1,022 642 208 153 1.72 209 17 192 447 498 223 823 0 132 259 411 0 412

FQE 9/30/07 298 192 (5) (79) (0.39) 21 22 (1) 304 383 256 843 0 236 259 518 0 325

FQE 9/30/08 231 144 59 55 0.49 67 2 64 447 498 223 823 0 132 259 411 0 412

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$30 $25 $20 $15 $10 $5 $0 Jan 00

Oct 00

Oct 01

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Oct 03

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BUSINESS OVERVIEW EarthLink is a U.S. Internet service provider (ISP) operating in two segments: Consumer Services provides Internet access and value-added services to individuals. Business Services provides Internet access and value-added services to businesses and communications carriers.

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by type of service: Access 94% Value-added services 6% % of revenue by segment: Consumer services 95% Business services 5% Revenue growth by segment: Consumer services n/a Business services n/a Total revenue growth -7% EBIT margin by segment: Consumer services 15% Business services 68% Corporate and other -5% Total EBIT margin 13% Subscriber growth (period end): Dial-up consumers -8% Broadband consumers 17% Businesses 10% Total subscriber growth -1% 1 5.2 Consumer subscribers (mn) Consumer monthly ARPU ($) 20 2 4.6% Consumer net churn 1 Business subscribers (mn) 0.2 Business monthly ARPU ($) 38 2 2.6% Business net churn

• • •

91% 9%

89% 11%

•

88% 12%

84% 16%

82% 18%

-7% 130% 1%

-10% 18% -7%

-23% -6% -21%

14% 14% -6% 7%

19% 7% -13% 4%

40% 14% -9% 26%

-8% 14% 39% 0% 5.1 19 4.6% 0.2 64 2.8%

-20% -42% -13% -27% 4.3 20 5.2% 0.2 77 2.6%

-33% -14% -15% -27% 3.3 21 4.6% 0.2 81 2.8%

INVESTMENT HIGHLIGHTS

•

YTD 9/30/08

Represents period-average subscribers. 2 Churn rate for 2007 excludes impact of loss of Embarq-related subscribers.

•

2007

2006

•

Thanksgiving 2008

Reduced back-office costs and new subscriber marketing due to declining sales and changes in the Internet access industry. EarthLink now focuses on maximizing income from more tenured subscribers. Aims to retain subscribers and grow business services through New Edge, a CLEC that provides secure managed data networks and dedicated Internet access. EarthLink acquired New Edge for $109 million and 1.7 million shares in 2006. Raised guidance in July and again in October, driven by better-than-expected passive subscriber additions, lower churn and reduced opex. Management is guiding for adjusted EBITDA of $290-300 million, FCF of $270-290 million and income from continuing operations of $200-210 million in 2008. Preliminary 2009 guidance calls for adjusted EBITDA of $210-225 million, FCF of $180-205 million, and income from continuing operations of $135-155 million.

Founder Sky Dayton retired from Board in October. Rolla Huff (51) joined EarthLink as CEO in June 2007. He was previously CEO of Mpower. Gain “flexibility to pursue strategic alternatives” by terminating convert hedge in September. Solid balance sheet, with $226 million of net cash. Large NOL, with $678 million of federal and $291 million of state loss carryforwards at yearend 2007. Repurchased 3.8 million shares for $32 million YTD. $169 million remained authorized at Q3-end. Stock price implies 28% trailing FCF yield, 4x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

Business in runoff? Revenue has declined, and management appears focused on maximizing cash flow from existing subscribers while keeping reinvestment modest. The company has returned cash to shareholders through large buybacks. Internet access a commodity. While EarthLink provides value-added services, commoditized dialup and broadband Internet access account for close to 90% of revenue. Declining consumer access pricing reflects the commodity nature of the service. Stopped investing in Helio in 2007, after capital contributions of $210 million. Helio, a JV with SK Telecom, is a U.S. mobile virtual network operator. EarthLink owned 31% of Helio at yearend 2007.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) LVLT MSFT Q S T VZ YHOO ELNK

1,402 178,445 4,936 6,571 162,942 85,215 14,994 689

n/m 9.2x 14.3x n/m n/m n/m 2.1x

08 P/E n/m 10x 7x 29x 10x 12x 26x

09 P/E n/m 9x 7x n/m 9x 11x 23x

3.6x

EV/Rev

P/TB

7,578 159,698 18,405 25,095 238,122 128,316 11,780

1.7x 2.6x 1.4x .7x 1.9x 1.3x 1.6x

501

.5x

MAJOR HOLDERS CEO Huff 1% │ Other insiders 2% │ Steel Partners 11% │ Sterling 10% │ Coghill 9% │ Artisan 6% │ Barclays 5%

THE BOTTOM LINE EarthLink is a “cash cow” offering commoditized Internet access to consumers and businesses. Management has made a strategic decision to cut backend costs and marketing expenses in order to maximize FCF generated by existing customers. The shares deserve a look, but investors should make conservative assumptions about future ARPU and churn. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

eBay Inc. (Nasdaq: EBAY)

San Jose, CA, 408-376-7400 http://www.ebay.com

Services: Retail (Specialty Non-Apparel), Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $12.36 (as of 11/14/08) 52-week range: $11.39 - $35.12 Market value: $15.8 billion Enterprise value: $12.1 billion Shares out: 1,276.9 million Ownership Data Insider ownership: 16% Insider buys (last six months): 2

Valuation

This quarter Next quarter

Latest $0.40 0.42

Month Ago $0.41 0.42

# of Ests 24 11

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

49.4x 7.3x 7.4x 7.0x

FYE 12/31/08

1.70

EV / LTM revenue

1.4x

FYE 12/31/09 FYE 12/31/10

1.67 1.77

1.70 1.79

26 10

EV / LTM EBITDA EV / LTM EBIT

4.9x 5.4x

P / tangible book 3.9x Greenblatt Criteria

LT EPS growth 13.8% 13.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 8 Institutional ownership: 69% # of institutional owners: 1682

Date

Actual

Estimate

10/15/08

$0.46

$0.41

LTM EBIT yield

19%

LTM pre-tax ROC

>100%

12/31/01 749 614 124 90 0.08 252 57 195 724 884 199 1,679 16 180 12 249 0 1,429

12/31/02 1,214 1,000 350 250 0.21 480 139 341 1,199 1,469 1,736 4,040 3 386 14 484 0 3,557

90%

>100%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 2,165 3,271 4,552 1,749 2,657 3,734 628 1,059 1,442 442 778 1,082 0.34 0.57 0.78 874 1,285 2,010 365 293 338 509 993 1,672 1,722 2,012 2,088 2,146 2,911 3,183 1,993 3,073 6,943 5,820 7,991 11,789 3 124 0 647 1,085 1,485 125 0 0 924 1,263 1,741 0 0 0 4,896 6,728 10,048 >100%

>100%

12/31/06 5,970 4,713 1,423 1,126 0.79 2,248 515 1,732 3,205 4,971 7,227 13,494 0 2,518 0 2,589 0 10,905

12/31/07 7,672 5,909 613 348 0.25 2,641 454 2,187 4,898 7,123 6,853 15,366 200 3,100 0 3,661 0 11,705

LTME 9/30/08 8,686 6,532 2,248 1,943 1.46 2,991 535 2,456 3,644 6,008 6,640 14,240 0 2,855 0 3,547 0 10,694

FQE 9/30/07 1,889 1,443 (938) (936) (0.69) 630 119 510 3,989 6,362 6,823 14,787 0 3,273 0 3,914 0 10,873

FQE 9/30/08 2,118 1,557 524 492 0.38 693 150 543 3,644 6,008 6,640 14,240 0 2,855 0 3,547 0 10,694

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

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BUSINESS OVERVIEW eBay enables person-to-person ecommerce and provides technology-driven services. It operates in three segments: Marketplaces facilitates commerce through eBay.com and other online platforms, including classifieds sites, Half.com, Rent.com, Shopping.com, and StubHub. Payments consists of payment platform PayPal. Communications consists of VoIP service provider Skype. Seasonality is strongest in Q4.

Thanksgiving 2008

•

SELECTED OPERATING DATA YTD FYE December 31 2005 2006 2007 9/30/08 % of revenue by segment: Marketplaces 77% 73% 70% 66% Payments 23% 24% 25% 27% Communications 1% 3% 5% 6% Revenue growth by segment: Marketplaces 36% 24% 24% 12% Payments 47% 40% 34% 31% Communications nm 686% 96% 52% Total revenue growth 39% 31% 29% 18% EBIT margin by segment: Marketplaces 43% 42% 44% 43% Payments 29% 23% 20% 20% Communications -4% -14% 12% 20% 1 -8% -12% -10% -11% Corporate and other 1 32% 24% 26% 25% Total EBIT margin % of revenue by geography: U.S. 54% 52% 49% 47% Germany 16% 15% 13% U.K. 13% 13% 14% 53% Rest of world 17% 20% 24% Marketplaces segment — growth of selected metrics: Active users 28% 14% 2% 3% Number of listings 33% 26% -1% 18% Gross merchandise volume 30% 18% 13% 7% Payments segment — growth of selected metrics: Active registered accounts 39% 20% 16% 19% Net total payment volume 45% 37% 33% 32% Communications segment — growth of selected metric: Registered users nm 129% 61% 51%

•

• •

INVESTMENT RISKS & CONCERNS •

}

Excludes $1.4 billion goodwill impairment in 2007.

INVESTMENT HIGHLIGHTS •

•

Online auctions leader; operates market-leading eBay website, with 14% share of global ecommerce and 85 million active users. The company enjoys high barriers to entry due to network effects. PayPal payment volume and revenue up 28% and 27%, respectively, in Q3. Recently launched merchant services deals include Walmart.com, American Eagle and OfficeMax. PayPal accounts for more than 8% of global ecommerce payments. Skype has grown to 13 million concurrent users at certain peak times, with 370 million total registered users. Skype-to-Skype minutes grew 63% to 16 billion in Q3, while revenue increased 46%.

Acqusitions of Bill Me Later and two classifieds websites in Denmark for $1.3 billion in October suggest continued M&A appetite, despite perception that the company may have overpaid in the $2.6 billion acquisition of Skype in 2005. Other acquisitions included Shopping.com for $634 million in 2005 and PayPal for $1.5 billion in 2002. Guiding for revenue growth of 11-13% and nonGAAP EPS growth of 10-12% in 2008, with expected revenue of $8.53-8.68 billion, GAAP EPS of $1.32-1.34 and non-GAAP EPS of $1.69-1.71. John Donahoe succeeded long-time CEO Meg Whitman in March. Donahoe previously served as president of eBay Marketplaces for three years. Prior to eBay, he was a managing director at Bain. Repurchased $5.3 billion of stock since program inception in 3Q06, including $2.2 billion in 2008. Stock price implies 16% trailing FCF yield, 8x trailing P/E and 7x forward P/E.

•

Core eBay.com marketplace may have reached steady-state growth phase, with Marketplaces revenue up only 4% to $1.4 billion in Q3 on a 1% decline in gross merchandise volume to $14 billion. Interestingly, revenue equals 10% of gross volume, not an insignificant “toll” levied on eBay users. Sensitive to consumer spending, as most items bought and sold on eBay are discretionary items. In addition, PayPal’s performance correlates with ecommerce spending at online merchants.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AMZN GOOG YHOO

MV 17,904 97,580 14,994

EV 16,015 83,168 11,780

EV/Rev .9x 4.0x 1.6x

P/TB 8.4x 4.5x 2.1x

08 P/E 29x 16x 26x

09 P/E 26x 14x 23x

EBAY

15,783

12,139

1.4x

3.9x

MAJOR HOLDERS CEO Donahoe <1% │ Other insiders 16% │ Barclays 5% │ Legg Mason 4%

THE BOTTOM LINE eBay has grown over the years to include not only the flagship ecommerce community but also online payments and communications innovators PayPal and Skype. Merchandise volume growth has acquired a cyclical component as the company has grown larger, with volume stagnating recently due to the weak economy. Despite the slowdown in growth, however, eBay remains a business with high returns on capital and high barriers to entry. We consider the shares attractive. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

EMCOR Group, Inc. (NYSE: EME)

Norwalk, CT, 203-849-7800 http://www.emcorgroup.com

Capital Goods: Construction Services, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $13.80 (as of 11/14/08) 52-week range: $12.84 - $36.05 Market value: $904 million Enterprise value: $763 million Shares out: 65.5 million Ownership Data Insider ownership: 2% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.76 0.49

Month Ago $0.76 0.51

# of Ests 7 3

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

7.4x 5.3x 5.5x 6.3x

FYE 12/31/08

2.61

2.59

EV / LTM revenue

0.1x

FYE 12/31/09 FYE 12/31/10

2.53 2.20

2.74 2.42

7 3

EV / LTM EBITDA EV / LTM EBIT

2.7x 2.7x

P / tangible book 5.4x Greenblatt Criteria

LT EPS growth 15.0% 15.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 10 Institutional ownership: 95% # of institutional owners: 681

Date

Actual

Estimate

10/23/08

$0.72

$0.66

LTM EBIT yield

38%

LTM pre-tax ROC

>100%

12/31/01 3,420 392 89 50 0.85 81 18 63 190 1,217 56 1,350 1 854 1 928 0 422

12/31/02 3,968 483 116 63 1.02 155 16 139 93 1,335 304 1,759 134 1,180 1 1,269 0 490

41%

48%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 4,500 4,698 4,593 478 443 485 46 42 75 21 33 60 0.32 0.53 0.93 (2) 44 145 18 16 12 (20) 28 133 78 70 104 1,389 1,426 1,390 300 298 300 1,795 1,818 1,779 140 81 1 1,179 1,162 1,045 1 1 1 1,274 1,256 1,164 0 0 0 521 562 615 15%

13%

12/31/06 4,902 552 112 87 1.30 210 20 190 274 1,662 326 2,089 1 1,208 1 1,379 0 710

12/31/07 5,927 703 200 127 1.86 259 22 238 252 1,936 816 2,872 4 1,514 224 1,987 0 885

LTME 9/30/08 6,872 880 288 172 2.56 326 32 294 341 2,076 845 3,047 4 1,600 197 2,036 0 1,011

FQE 9/30/07 1,501 169 55 38 0.55 70 5 66 223 1,922 799 2,844 3 1,492 299 2,019 0 824

FQE 9/30/08 1,720 224 79 49 0.72 89 9 80 341 2,076 845 3,047 4 1,600 197 2,036 0 1,011

43%

81%

>100%

n/m

24%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW

•

EMCOR provides mechanical and electrical construction, energy infrastructure and facilities services to commercial, industrial, utility and institutional customers. The company’s systems create facility environments. Domestic electrical and mechanical construction accounted for 64% of revenue in 2007, of which 68% was related to new construction and 32% to renovation and retrofit. EMCOR has 30,000 employees and 170 locations in the U.S., Canada and U.K.

SELECTED OPERATING DATA FYE December 31 2005 2006 % of revenue by geographic segment: U.S. electrical services 27% 26% U.S. mechanical services 36% 37% U.S. facilities services 15% 17% Canada services 7% 6% U.K. services 15% 14% Revenue growth by geographic segment: U.S. electrical services -1% 5% U.S. mechanical services -6% 9% U.S. facilities services 8% 22% Canada services 22% -13% U.K. services -1% 0% ∆ revenue 0% 7% ∆ organic revenue EBIT margin by geographic segment: U.S. electrical services 6.5% 3.7% U.S. mechanical services 1.2% 4.5% U.S. facilities services 3.0% 4.0% Canada services -2.3% 0.1% U.K. services 1.1% 1.0% Corporate and other -1.0% -1.2% Total EBIT margin 1.6% 2.3% D&A as % of revenue 0.4% 0.3% Capex as % of revenue 0.3% 0.4%

2007

YTD 9/30/08

24% 40% 18% 6% 12%

25% 36% 22% 6% 10%

12% 29% 26% 28% 7% 21% 15%

27% 10% 59% 28% 4% 23% 12%

6.2% 5.8% 4.2% 1.8% -1.8% -1.0% 3.4% 0.3% 0.4%

5.9% 4.0% 7.4% 2.6% 2.0% -1.0% 3.9% 0.4% 0.5%

INVESTMENT HIGHLIGHTS •

•

• •

Thanksgiving 2008

Complexity of electrical and mechanical systems drives industry growth. U.S. non-residential construction spending, a proxy for EMCOR’s markets, rose 16% to $630 billion in 2007.1 Leader in core businesses: electrical, mechanical, and int’l construction; strong in growth businesses: top three in commercial and top ten in government facilities services, #1 non-OEM mechanical/ mobile services provider, #2 non-OEM fire protection provider, #1 in industrial heat exchangers. Benefits from increased energy services demand, including utility generation, distributed generation, refinery/ oil & gas, and energy efficiency. Guiding for revenue growth of 15-18% and EPS growth of 31-36% in 2008, with estimated revenue of $6.8-7.0 billion and EPS of $2.48-2.58.

•

• •

Facilities services mitigate cyclicality, as margins are less volatile and inversely related to construction margins. Demand for facilities services rose in Q3. $455 million Ohmstede deal should be accretive in 2008. Ohmstede provides maintenance, repair and manufacturing to Gulf Coast refineries and petrochemical firms (2008E revenue: $300 million). Service work 35% of revenue in 2008E vs. 25% in 2003. Facilities services represent higher-margin recurring revenue not entirely reflected in backlog. Stock price implies 33% trailing FCF yield, 5x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS • • •

• •

Q3-end backlog of $4.4 billion fell 1% y-y and down 5% from the record level at the end of Q2. Cyclical construction business: “customers may delay or cancel new projects…, especially with respect to more profitable private sector work…” Input prices. EMCOR uses copper and steel in construction and facilities services. Gas prices affect its fleet of 7,500 vehicles. Most contracts “do not allow [EMCOR] to adjust our prices… increases in material or fuel costs could reduce… profitability.” Fixed-price contracts account for a “significant” portion of revenue, exposing the company to inaccurate cost assessments and cost overruns. 73% of workforce unionized.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) FIX IESC JCI LII PWR EME

MV 280 105 9,124 1,271 2,786

EV 193 73 12,684 1,531 2,932

904

763

EV/Rev .1x .1x .3x .4x .8x

P/TB 1.6x 0.7x 4.4x 3.6x 3.3x

08 P/E 6x n/a 8x 9x 16x

09 P/E 7x n/a 7x 9x 11x

.1x

5.4x

MAJOR HOLDERS CEO MacInnis 3% │ Other insiders 5% │ Bank of New York 6% │ Freiss 5%

Source: EMCOR, United States Census Bureau.

THE BOTTOM LINE EMCOR has many things going for it, including strong positions in attractive markets and positive operating momentum, driven by organic and acquisition-related revenue growth, margin expansion, and near-record backlog. Faster-growing facilities services revenue mitigates some of the cyclicality of the construction-related businesses. However, we remain unconvinced that the company has done away with the cyclicality of the overall business. As a result, we worry that recent margin expansion may be reversible and that the company could see lower earnings in a prolonged downturn. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Emulex Corporation (NYSE: ELX)

Costa Mesa, CA, 714-662-5600 http://www.emulex.com

Technology: Semiconductors Trading Data

Consensus EPS Estimates

Price: $7.22 (as of 11/14/08) 52-week range: $6.89 - $17.90 Market value: $593 million Enterprise value: $299 million Shares out: 82.1 million Ownership Data Insider ownership: 2% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.21 0.19

Month Ago $0.23 0.21

# of Ests 12 12

FYE 6/30/09

0.83

0.86

EV / LTM revenue

0.6x

FYE 6/30/10 FYE 6/30/11

0.86 n/a

0.96 n/a

11 0

EV / LTM EBITDA EV / LTM EBIT

4.2x 4.8x

P / tangible book Greenblatt Criteria

1.5x

LT EPS growth 10.0% 10.1% Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 95% # of institutional owners: 476

Date

Actual

Estimate

10/23/08

$0.22

$0.18

P/E FYE 6/29/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

n/m 8.7x 8.4x n/a

LTM EBIT yield

21%

LTM pre-tax ROC

48%

6/30/02 255 132 (104) (96) (1.18) 89 10 80 511 598 430 1,207 0 39 345 384 0 823

6/29/03 308 196 99 66 0.79 107 19 88 376 498 424 1,190 0 75 209 288 0 902

EBIT/capital employed

-157%

>100%

Fiscal Years Ended 6/27/04 7/3/05 7/2/06 364 376 403 221 221 239 (499) 105 61 (532) 72 41 (6.47) 0.80 0.46 79 151 111 51 17 52 28 135 59 412 467 591 541 585 708 123 96 78 973 802 860 0 0 235 55 77 303 525 233 0 580 324 303 0 0 0 393 478 557 -469%

85%

7/1/07 470 275 44 29 0.34 130 13 117 271 399 171 660 0 71 0 78 0 582

6/29/08 488 301 66 (7) (0.09) 142 28 114 350 457 155 699 0 88 0 123 0 576

LTME 9/28/08 483 303 63 (10) (0.13) 89 30 59 294 400 148 640 0 54 0 91 0 549

FQE 9/30/07 117 68 13 10 0.12 45 6 39 275 393 166 641 0 50 0 74 0 566

FQE 9/28/08 112 70 9 8 0.09 (8) 8 (16) 294 400 148 640 0 54 0 91 0 549

37%

62%

48%

n/m

55%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

Emulex provides storage networking products, based on proprietary ASICs, in two primary categories: Host server products (HSPs) include host bus adapters (HBAs) based on fibre channel technology, and converged network adapters (CNAs) based on fibre channel over ethernet (FCoE) technology. HBAs enable servers to efficiently connect to storage area networks (SANs) by offloading data processing tasks from the server. CNAs efficiently move data between ethernet-based local area networks (LANs) and fibre channel-based SANs. Embedded storage products (ESPs) include storage switches, bridges, routers, and input/output controllers (IOCs) deployed inside arrays, tape libraries, and other storage. Emulex typically experiences modest seasonality, with lower sequential revenue growth in FQ1 and FQ3. 2006

2007

2008

1Q09

85% 15%

76% 23%

72% 28%

73% 27%

6% 21% 7%

5% 82% 17%

-1% 25% 4%

-9% 8% -5%

55% 13% 32%

47% 17% 36%

40% 26% 34%

36% 29% 35%

29% 23% 10% 21% 17%

25% 18% 13% 17% 27%

28% 18% 15% 14% 25%

29% 13% 16% <10% >32%

INVESTMENT HIGHLIGHTS •

• •

• • •

Number-two provider of fibre channel HBAs, ranking behind Qlogic in quasi-duopolistic market (Brocade’s mid-2007 market entry may adversely affect competitive dynamics). The market for host server products has grown along with the adoption of storage area networks as a means of accessing enterprise data. HBA market growth is also heavily influenced by server shipments, which have slowed. Strong proprietary technology. Emulex’s fibre channel development efforts began in 1992. The company has 500 engineers and owns significant IP. James McCluney (57) joined Emulex as COO and became CEO in 2006. He was previously CEO of Vixel, which Emulex acquired in 2003. Former Emulex CEO Folino remains executive chairman.

Strong balance sheet, with $294 million of cash and short-term investments and no debt. M&A: CEO McCluney wants to “take advantage of our opportunities to grow through diversification.” $140 million repurchase authorized in August. Stock price implies 10% trailing FCF yield and 9x forward P/E (trailing GAAP EPS loss reported).

INVESTMENT RISKS & CONCERNS • •

•

SELECTED OPERATING DATA FYE June 30 % of revenue by segment: Host server products Embedded storage products Revenue growth by segment: Host server products Embedded storage products Total revenue growth % of revenue by geography: U.S. Pacific Rim Europe and ROW Revenue by customer: IBM EMC HP Info X Others

Thanksgiving 2008

• •

Guiding for 2Q09 revenue decline of 11-15% and non-GAAP EPS decline of 32-41%, following revenue drop of 5% and EPS drop of 19% in 1Q09. Growing competition, including the mid-2007 HBA market entry by Brocade and the increasing prominence of iSCSI HBA vendors, such as Broadcom, Intel, and Mellanox. Emulex’s ESPs compete against LSI, Maxim, and PMC-Sierra. Large customer concentration, with investors heavily focused on OEM share gains and losses. Marketing head Michael Smith left Emulex in July. He was not immediately replaced. Technology evolution. Storage has evolved, driven by the decline of SCSI technology, the rise of fibre channel, and the market entry of Cisco, which has pushed iSCSI as a fibre channel alternative. Emulex benefited from the decline of SCSI but stands to lose if fibre channel declines. We are reminded of Adaptec, whose HBA fortunes fell along with SCSI.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) BRCD BRCM CSCO QLGC LSI ELX

MV 1,417 7,852 97,853 1,387 2,013

EV 912 5,605 77,961 1,006 1,554

593

299

EV/Rev .6x 1.2x 1.9x 1.5x .6x

P/TB 1.8x 3.0x 4.8x 2.5x 2.9x

08 P/E 6x 9x 12x 9x 7x

09 P/E 6x 11x 11x 9x 8x

.6x

1.5x

MAJOR HOLDERS CEO McCluney 1% │ Other insiders 7% │ Wellington 9% │ Primecap 8% │ Invesco 6% │ Vanguard 6%

THE BOTTOM LINE Emulex has produced strong cash flows due to the duopolistic nature of the fibre channel HBA market, in which it has competed almost exclusively against Qlogic. However, the mid-2007 market entry of fibre channel SAN vendor Brocade may alter the competitive landscape. In addition, fibre channel itself may be under threat from iSCSI (favored by Cisco) and other technologies. Meanwhile, growth in Emulex’s core HBA segment has ground to a halt due to slow growth in enterprise server shipments. These strategic growth and profitability challenges cause us to stay away. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 94 of 401

Thanksgiving 2008

Energen Corporation (NYSE: EGN)

Birmingham, 205-326-2700 http://www.energen.com

Utilities: Natural Gas Utilities, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $28.40 (as of 11/14/08) 52-week range: $24.59 - $79.57 Market value: $2.0 billion Enterprise value: $2.6 billion Shares out: 71.7 million Ownership Data Insider ownership: 0% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.97 1.72

Month Ago $0.99 1.93

# of Ests 6 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.6x 6.5x 6.6x 5.7x

FYE 12/31/08

4.34

4.28

EV / LTM revenue

1.7x

FYE 12/31/09 FYE 12/31/10

4.33 4.97

4.90 5.57

8 5

EV / LTM EBITDA EV / LTM EBIT

3.5x 4.5x

P / tangible book 1.2x Greenblatt Criteria

LT EPS growth 6.3% 10.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 73% # of institutional owners: 732

Date

Actual

Estimate

10/22/08

$1.01

$0.83

LTM EBIT yield

22%

LTM pre-tax ROC

>100%

12/31/01 144 45 11 4 0.06 21 38 (16) 7 201 0 1,240 40 215 544 766 0 474

12/31/02 669 287 134 69 1.04 214 166 47 5 234 0 1,643 136 393 513 1,060 0 583

45%

>100%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 842 937 1,128 400 443 544 218 245 316 111 128 173 1.54 1.74 2.35 243 291 335 179 178 231 64 113 104 2 5 9 287 350 479 0 0 0 1,778 2,182 2,618 21 145 168 328 499 688 553 613 683 1,079 1,378 1,726 0 0 0 699 804 893 n/m

n/m

12/31/06 1,394 719 477 274 3.73 483 302 181 10 490 0 2,837 158 561 583 1,635 0 1,202

12/31/07 1,435 783 522 309 4.28 484 374 110 9 449 0 3,080 144 606 562 1,701 0 1,379

LTME 9/30/08 1,545 1,226 577 336 4.66 553 438 115 12 421 0 3,258 23 406 562 1,620 0 1,637

FQE 9/30/07 276 160 99 58 0.80 100 97 3 3 325 0 2,864 98 439 563 1,500 0 1,364

FQE 9/30/08 330 206 131 73 1.01 138 136 2 12 421 0 3,258 23 406 562 1,620 0 1,637

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

Thanksgiving 2008

•

Energen develops domestic, onshore reserves of natural gas, oil and natural gas liquids (NGL), with 3P reserves of 3.6 Tcfe. It is also the top distributor of natural gas in Alabama. •

SELECTED OPERATING DATA YTD FYE December 31 2005 2006 2007 9/30/08 % of revenue by segment: Oil and gas operations 47% 52% 58% 59% Natural gas distribution 53% 48% 42% 41% Revenue growth by segment: Oil and gas operations 29% 38% 13% 16% Natural gas distribution 14% 11% -8% 2% Total revenue growth 20% 24% 3% 10% EBIT margin by segment: Oil and gas operations 46% 55% 55% 54% Natural gas distribution 12% 11% 12% 14% Total EBIT margin 28% 34% 36% 37% Capex to D&A (or DD&A) by segment: 1 Oil and gas operations 4.0x 2.7x 3.3x 3.0x 2 1.7x 1.7x 1.2x 1.2x Natural gas distribution Oil and gas operations — % of revenue by type: Natural gas 69% 60% 60% 58% Oil 22% 25% 30% 31% NGL 7% 7% 8% 8% Other 1% 8% 1% 2% 3 Oil and gas operations — growth of production volumes: Natural gas (MMcf) 7% 3% 2% 5% Oil (MBbl) -3% 10% 6% 4% NGL (MMgal) 3% 8% 1% -9% 4 Oil and gas operations — growth of proved reserves: Natural gas (MMcf) 6% 2% 2% n/a Oil (MBbl) 38% 0% 0% n/a NGL (MBbl) -8% -8% 7% n/a Oil and gas operations — revenue per unit of production: Natural gas (per Mcf) $7.81 $6.53 $6.45 $8.22 Oil (per barrel) $51.61 $59.88 $67.17 $73.69 NGL (per gallon) $0.74 $0.80 $0.98 $1.06 Natural gas distribution — % of revenue by customer type: Residential 64% 64% 64% 62% Commercial, industrial 28% 27% 27% 27% Transportation, other 8% 8% 9% 11% Natural gas distribution — growth of delivery volumes (MMcf): Residential -3% -9% -7% 0% Commercial, industrial 1% -10% -6% 0% Transportation -8% 2% 1% -6% 1

In 2007, oil and gas capex was $379 million, versus D&A of $114 million. In 2007, gas distribution capex was $59 million, versus D&A of $47 million. 3 2007 production included 64,300 MMcf of natural gas and 3,879 MBbl of oil. 4 2007 reserves included 1.1mn MMcf of natural gas and 74,625 MBbl of oil. 2

INVESTMENT HIGHLIGHTS •

•

Oil and gas operations performing well, driven by higher sales prices and volumes. Production in the San Juan Basin has benefited from new drilling and continued development of Fruitland Coal properties. Exploring Alabama shales with Chesapeake, with three test wells drilled and gas encountered in each well. The companies are working on “completion techniques” to determine if the gas from Alabama shale formations can be produced economically.

• • •

Cohesive management team. Each executive officer has been with the company for at least five years. Chairman and CEO James McManus II (49) has been with the company since 1986. Guiding for 2008 EPS of $4.35-$4.55, up 2-6% from 2007 EPS of $4.28. Management has guided for 2009 EPS of $3.70-$4.10 (down 6-19%). 2009 guidance assumes hedge position covering 62% of production, prices for unhedged natural gas, oil and NGL of $7 per Mcf, $70 per barrel and $0.91 per gallon, respectively, among other assumptions.1 Hedges cover 73% of Q4 and 62% of 2009 oil and gas production, mitigating the near-term impact of recent declines in oil and gas prices. Paying dividends at annual rate of $0.48 per share. Stock price implies 6% trailing FCF yield, 6x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS • •

Utility revenue and EBIT up despite reduced customer usage. The latter “remains a concern” and could cause segment results to deteriorate. 59% of YTD revenue from cyclical oil and gas operations. While the company has benefited from prices materially exceeding operating costs in recent years, there is no reason to believe the company can sustain superior returns on capital in this segment.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) DUK PXD SO

MV 19,789 2,621 27,273

EV 32,652 5,350 45,741

EV/Rev 2.5x 2.2x 2.7x

P/TB 1.2x 0.8x 2.0x

08 P/E 13x 5x 15x

09 P/E 12x 5x 14x

EGN

2,037

2,609

1.7x

1.2x

MAJOR HOLDERS CEO McManus II <1% │ Other insiders 1% │ Vanguard 5% │ JP Morgan 5% │ Barclays 5%

RATINGS VALUE Intrinsic value materially higher than market value? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends? EXPLOSIVENESS 5%+ probability of 5x upside in one year? 1 Guidance does not include potential property acquisitions, Alabama shales exploration or stock repurchases, nor does it include a potential impairment of capitalized unproved leasehold related to Alabama shales ($41 million).

THE BOTTOM LINE Energen is highly dependent on commodity price levels and, as such, not a magic formula company with sustainably high returns on capital. Nonetheless, the shares are quite attractive from a valuation perspective and may be considered by investors with a view on a potential rebound in oil and gas prices. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

First Advantage Corporation (Nasdaq: FADV)

St. Petersburg, FL, 727-214-3411 http://www.fadv.com

Services: Business Services Trading Data

Consensus EPS Estimates

Price: $12.02 (as of 11/14/08) 52-week range: $6.99 - $23.40 Market value: $715 million Enterprise value: $720 million Shares out: 59.5 million Ownership Data Insider ownership: 82% Insider buys (last six months): 2

Valuation

This quarter Next quarter

Latest $0.19 0.19

Month Ago $0.28 0.24

# of Ests 4 2

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

5.7x 12.7x 12.9x 11.9x

FYE 12/31/08

0.95

1.09

EV / LTM revenue

0.9x

FYE 12/31/09 FYE 12/31/10

0.93 1.01

1.13 n/a

4 1

EV / LTM EBITDA EV / LTM EBIT

4.9x 7.0x

P / tangible book 10.8x Greenblatt Criteria

LT EPS growth 13.3% 13.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 5 Institutional ownership: 19% # of institutional owners: 208

Date

Actual

Estimate

10/27/08

$0.24

$0.29

LTM EBIT yield

14%

LTM pre-tax ROC

68%

12/31/01 243 164 30 16 0.38 1 6 (5) 1 10 44 62 1 6 1 9 0 53

12/31/02 319 206 48 29 0.67 6 6 (1) 7 22 130 164 1 13 1 18 0 146

>100%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 420 517 629 268 324 398 58 72 97 38 42 58 0.79 0.85 1.08 2 59 71 4 11 22 (2) 48 50 6 8 28 34 53 153 230 355 727 285 431 986 7 20 38 30 55 132 14 86 182 45 143 403 0 0 0 239 288 583 >100%

>100%

12/31/06 798 508 119 66 1.13 93 32 61 32 204 762 1,090 21 137 180 415 0 675

12/31/07 843 561 118 138 2.10 135 40 94 77 265 796 1,232 18 189 14 348 0 884

LTME 9/30/08 791 527 103 128 2.02 78 38 41 46 210 840 1,181 11 106 40 275 0 906

FQE 9/30/07 209 141 34 19 0.32 40 9 31 34 215 795 1,152 19 130 152 396 0 756

FQE 9/30/08 188 121 22 13 0.21 36 8 28 46 210 840 1,181 11 106 40 275 0 906

>100%

68%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

First Advantage provides risk mitigation in six segments: Lender Services offers mortgage-related credit reporting. Data Services includes transportation credit reporting, supply chain theft mitigation, and criminal records reselling. Dealer Services serves auto dealers with consumer credit reports, credit automation software and lead generation. Employer Services offers background screening, tax incentive services, occupational health, and hiring solutions. Multifamily Services provides resident screening and software, including background and eviction searches. Investigative and Litigation Support Services includes surveillance, field interviews, and computer forensics.

SELECTED OPERATING DATA FYE December 31 2005 2006 1 % of service revenue by segment: Lender services 29% 24% Data services 13% 17% Dealer services 17% 16% Employer services 25% 26% Multifamily services 11% 9% Investigative services 6% 8% Service revenue growth by segment: Lender services 25% 5% Data services 22% 68% Dealer services 41% 23% Employer services 25% 36% Multifamily services 17% 9% Investigative services 34% 71% Total revenue growth 27% 28% EBIT margin by segment: Lender services 29% 31% Data services 37% 31% Dealer services 14% 13% Employer services 9% 10% Multifamily services 25% 22% Investigative services 6% 19% Corporate and other -4% -5% Total EBIT margin 17% 16% % of revenue by geography: Domestic 98% 97% International 2% 3% 1

•

INVESTMENT RISKS & CONCERNS

YTD 9/30/08

19% 15% 14% 30% 9% 13%

19% 16% 13% 30% 11% 12%

-14% -6% -6% 19% 5% 67% 6%

-18% -8% -11% -5% 2% 20% -6%

22% 28% 13% 12% 26% 35% -6% 15%

18% 20% 15% 8% 31% 37% -5% 13%

COMPARABLE PUBLIC COMPANY ANALYSIS

89% 11%

88% 12%

MAJOR HOLDERS

•

• • •

INVESTMENT HIGHLIGHTS

•

Divestitures “almost over.” In Q2, the company sold First Advantage Investigative Services and Credit Management Solutions. In 4Q07, it sold US SEARCH.com (previously in data services). Also in 4Q07, the company sold a portion of its shares in DealerTrack, realizing a gain of $97 million. Guiding for EPS decline of 44-48% in 2008, with estimated EPS of $1.10-1.18 versus $2.10 in 2007. Anand Nallathambi (46) became CEO in 1Q07 upon the resignation of John Long. Nallathambi has been president since 2005. His previous experience includes a position as group president at First American Corp., the company’s parent. Stock price implies 6% trailing FCF yield, 6x trailing P/E and 13x forward P/E.

2007

Service revenue excludes reimbursables.

•

Thanksgiving 2008

Top three in core segments, with 4,800 employees and 90,000 customers. In credit screening, the company has high market share in small global markets with low growth, focusing on scale and cash generation. In employment screening, the company seeks to grow its share of a large global market with manifold growth opportunities. Proprietary engine draws on many data sources, including external data and customers’ internal data, utilizing technology to standardize and present data.

Mortgage industry and labor market weakness have negatively affected the lender services, employer services and data services segments. The company is pursuing “aggressive cost reduction.” Controlled by First American, which owns 80% of the economics and 98% of the voting power via ownership of the Class B common stock. M&A strategy, with 13 acquisitions since 2006. While each deal has been fairly small, the large number of deals heightens integration risk. Efforts to protect consumer privacy due to rising identity theft could hurt the company by limiting access to data and the ability to distribute data.

($mn) ADP EFX FIC

MV 17,837 2,972 650

EV 1,561 4,211 1,034

FADV

715

720

EV/Rev .1x 2.1x 1.4x

P/TB 3.7x n/m n/m

08 P/E 15x 10x 8x

09 P/E 13x 9x 7x

.9x

10.8x

13x

Class A Common (12 million shares out): First American 82% │ CEO Nallathambi 1% │ Other insiders 1% │ Experian 6% │ Pequot 4% │ Maverick 2%; Class B Common (48 million shares out): First American 100%

THE BOTTOM LINE First Advantage operates a non capital-intensive, highly profitable business. Unfortunately, the company’s target markets are going through a severe downturn that is expected to cause a steep drop in earnings this year. While brightspots remain (e.g., investigative services), we are not convinced the shares offer sufficient value to compensate for end market weakness. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 98 of 401

Thanksgiving 2008

Forest Laboratories, Inc. (NYSE: FRX)

New York, NY, 212-421-7850 http://www.frx.com

Health Care: Biotechnology & Drugs, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $22.97 (as of 11/14/08) 52-week range: $20.00 - $42.76 Market value: $6.9 billion Enterprise value: $5.0 billion Shares out: 301.4 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.80 0.81

Month Ago $0.87 0.82

# of Ests 19 18

FYE 3/31/09

3.28

3.27

EV / LTM revenue

1.3x

FYE 3/31/10 FYE 3/31/11

3.57 3.99

3.57 4.17

21 10

EV / LTM EBITDA EV / LTM EBIT

n/a 4.1x

P / tangible book Greenblatt Criteria

2.1x

LTM EBIT yield

24%

LT EPS growth 9.1% 9.2% Latest Quarterly EPS Surprise

Insider sales (last six months): 5 Institutional ownership: 95% # of institutional owners: 997

Date

Actual

Estimate

10/21/08

$0.80

$0.71

P/E FYE 3/31/08 P/E FYE 3/31/09 P/E FYE 3/31/10 P/E FYE 3/31/11

7.5x 7.0x 6.4x 5.8x

LTM pre-tax ROC

>100%

3/31/02 1,602 1,231 470 338 0.91 427 68 359 612 1,195 280 1,952 0 325 0 327 0 1,625

3/31/03 2,246 1,741 821 622 1.66 728 124 605 1,442 2,255 294 2,918 0 564 0 566 0 2,352

Fiscal Years Ended 3/31/04 3/31/05 3/31/06 2,680 3,160 2,962 2,072 2,472 2,311 937 1,185 870 736 839 709 1.95 2.25 2.08 628 871 561 134 109 56 494 763 505 1,793 1,619 1,027 2,916 2,708 2,207 290 278 227 3,863 3,705 3,120 0 0 0 605 564 421 0 0 0 607 573 422 0 0 0 3,256 3,132 2,698

EBIT/capital employed

>100%

86%

3/31/07 3,442 2,696 709 454 1.41 888 30 858 1,353 2,423 172 3,653 0 628 0 629 0 3,025

3/31/08 3,836 3,036 1,210 968 3.06 1,192 450 742 1,777 2,908 543 4,525 0 611 0 810 0 3,715

LTME 9/30/08 3,948 3,122 1,218 962 3.10 1,141 36 1,104 1,890 3,059 506 4,698 0 611 0 833 0 3,865

FQE 9/30/07 919 729 278 225 0.71 252 8 243 1,575 2,703 151 4,048 0 578 0 755 0 3,294

FQE 9/30/08 993 788 315 244 0.80 232 13 219 1,890 3,059 506 4,698 0 611 0 833 0 3,865

73%

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Page 99 of 401

BUSINESS OVERVIEW Forest Labs provides branded and generic prescription and non-prescription drugs. The company’s central nervous system (CNS) franchise accounted for 90% of revenue in FY08. The company markets products through an in-house salesforce numbering 2,700 people (52% of workforce).

SELECTED OPERATING DATA FYE March 31 2006 2007 % of revenue by therapeutic class: 1 CNS 86% 88% Cardiovascular, other 14% 12% Revenue growth by therapeutic class: 1 CNS -8% 16% Cardiovascular, other -14% -1% Total revenue growth -8% 14% % of revenue by major line item: Lexapro 67% 66% Namenda 18% 21% Contract revenue 4% 6% All other 11% 8% 2 % of revenue by customer: McKesson 35% 37% Cardinal Health 26% 27% AmeriSource Bergen 20% 13% Other 19% 23% % of revenue by geography: U.S. 98% 98% U.K. and Ireland 2% 2% 1 2

Thanksgiving 2008

•

• •

2008

1H09

90% 10%

12% -6% 10%

9% -3% 8%

65% 24% 6% 5%

64% 26% 6% 5%

38% 30% 15% 17%

n/a n/a n/a n/a

•

98% 2%

n/a n/a

•

INVESTMENT RISKS & CONCERNS •

Central nervous system franchise; includes Lexapro, Celexa, and Namenda. The named major customers act as wholesale distributors.

INVESTMENT HIGHLIGHTS •

•

Chairman and CEO Howard Solomon (80) has been a director since 1964 and CEO since 1977. President and COO Lawrence Olanoff (56) has been with the company for more than a dozen years. Share repurchases. The company bought back 8.9 million shares for $356 million in FY08, and 10.1 million shares for $332 million so far in FY09. Stock price implies 16% trailing FCF yield, 7x trailing P/E and 6x forward P/E.

Key products: Lexapro (65% of revenue), a selective serotonin reuptake inhibitor for major depression and generalized anxiety disorder; Namenda (24% of revenue), an N-methyl-Daspartate antagonist for moderate to severe Alzheimer’s disease; and Bystolic (since January 2008), a novel beta-blocker for hypertension. Bystolic received FDA approval in December 2007 and is being marketed for the treatment of hypertension. Bystolic is a novel beta-1 selective beta-blocker. It has received five years of marketing exclusivity under Hatch-Waxman. Late-stage pipeline has two compounds under FDA review: milnacipran for the treatment of fibromyalgia and Lexapro for the additional indication in the treatment of adolescent depression. The company has also reported positive clinical results for three other late-stage pipeline products. Guiding for FY09 adjusted EPS of $3.30-3.40 (excluding charge related to termination of AZOR co-promotion), compared to FY08 adjusted EPS of $3.55. The company expects to spend $100 million in development milestones in FY09.

Dependent Lexapro and Namenda (66% and 24% of FY08 revenue, respectively). A Lexapro-related patent was upheld in 2007 by a Court of Appeals, and the company is pursuing an infringement suit against a generic maker seeking FDA approval of a generic alternative to Lexapro. Forest Labs is also suing multiple manufacturers who are seeking FDA approval to market generic versions of Namenda. Dependent on in-licensing and acquisition of new products. The company concedes that its pipeline “is currently dependent on the licensing and acquisition of new product opportunities.” FDA approval of milnacipran delayed. Contrary to management expectations, the FDA has not yet acted on the NDA for milnacipran. The company still expects favorable action “in the near future.”

COMPARABLE PUBLIC COMPANY ANALYSIS MV

GSK LLY MRK NVO NVS SNY PFE

94,416 36,451 57,781 36,226 110,839 82,566 109,775

FRX

6,923

($mn)

80.2x 3.2x 3.3x 6.9x 3.8x n/m 4.1x

08 P/E 10x 8x 8x 18x 13x 8x 7x

09 P/E 10x 7x 8x 18x 12x 7x 7x

2.1x

EV/Rev

P/TB

106,982 34,944 57,872 35,046 113,506 89,716 99,330

3.1x 1.7x 2.4x 4.7x 2.7x 2.5x 2.0x

5,033

1.3x

MAJOR HOLDERS CEO Solomon 2% │ Other insiders <1% │ Wellington 14% │ Capital Group International 11% │ Clearbridge 10% │ Barclays 10% │ Vanguard 10% │ Fairholme 6%

THE BOTTOM LINE Forest Labs has a strong central nervous system franchise, powered by patented drugs Lexapro and Namenda. While Lexapro is by far the larger product based on revenue, the success of Namenda has driven recent growth. Lexapro remains crucial, however, with generic challenges being fought by the company in courts. The shares offer an enticing risk-reward tradeoff. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Foster Wheeler Ltd. (Nasdaq: FWLT)

Clinton, NJ, 908-730-4000 http://www.fwc.com

Capital Goods: Construction Services Trading Data

Consensus EPS Estimates

Price: $19.94 (as of 11/14/08) 52-week range: $17.77 - $85.65 Market value: $2.7 billion Enterprise value: $1.6 billion Shares out: 133.8 million Ownership Data Insider ownership: 1% Insider buys (last six months): 4

Valuation

This quarter Next quarter

Latest $0.97 0.91

Month Ago $1.00 1.00

# of Ests 10 5

P/E FYE 12/28/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

7.3x 5.4x 5.1x 5.0x

FYE 12/31/08

3.72

3.71

EV / LTM revenue

0.2x

FYE 12/31/09 FYE 12/31/10

3.91 3.97

4.22 4.91

10 6

EV / LTM EBITDA EV / LTM EBIT

n/a 2.5x

P / tangible book 3.2x Greenblatt Criteria

LT EPS growth 19.8% 19.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 4 Institutional ownership: 88% # of institutional owners: 858

Date

Actual

Estimate

11/5/08

$0.89

$0.91

LTM EBIT yield

39%

LTM pre-tax ROC

n/m

12/28/01 3,324 160 (213) (336) (82.29) (89) 34 (123) 224 1,754 275 3,326 726 2,214 313 3,374 0 (48)

12/27/02 3,531 105 (360) (525) (91.49) 160 53 107 345 1,330 123 2,842 46 1,450 1,078 3,623 0 (781)

-48%

-167%

EBIT/capital employed

Fiscal Years Ended 12/26/03 12/31/04 12/30/05 3,724 2,661 2,200 284 261 346 (110) (232) (70) (157) (285) (110) (38.27) (28.92) (1.18) (62) (31) 51 13 10 11 (75) (41) 40 378 317 351 1,174 1,040 852 123 122 115 2,507 2,178 1,895 21 35 22 1,350 1,252 998 1,012 535 294 3,379 2,703 2,236 0 0 0 (872) (526) (341) n/m

n/m

12/29/06 3,495 508 344 262 1.86 264 30 233 611 1,390 114 2,566 22 1,248 182 2,502 0 64

12/28/07 5,107 744 530 394 2.72 425 51 374 1,049 2,044 115 3,249 19 1,524 186 2,675 0 574

LTME 9/26/08 6,681 863 621 505 3.47 591 80 511 1,309 2,427 127 3,638 20 1,605 204 2,682 0 956

FQE 9/28/07 1,300 198 165 129 0.89 110 21 89 860 1,851 114 3,036 25 1,433 175 2,594 0 442

FQE 9/26/08 1,718 229 149 128 0.88 163 20 143 1,309 2,427 127 3,638 20 1,605 204 2,682 0 956

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW

•

Foster Wheeler is an engineering and construction contractor and power equipment supplier that operates in two segments: The Engineering & Construction (E&C) Group builds processing facilities for the oil and gas, power and other industries. Services include front-end design; engineering, procurement, construction; and project management. The Power Group provides steam generating and auxiliary equipment for power stations and industrial facilities.

•

SELECTED OPERATING DATA

•

FYE December 31 2005 2006 % of revenue by segment: E&C 67% 63% Power 33% 37% Revenue growth by segment: E&C -12% 51% Power -26% 75% ∆ revenue -17% 59% ∆ new orders 71% 18% 1 na 56% ∆ revenue ex. flow-through 2 37% 17% ∆ backlog ex. flow-through 3 EBITDA margin by segment (GAAP basis): E&C 11% 15% Power 15% 7% Corporate and other -12% -1% Total EBITDA margin 0% 11% % of revenue by industry: Power generation 42% 38% Oil refining 20% 20% Oil and gas 15% 19% Chemical / petrochemical 10% 11% Other 13% 11% % of E&C revenue by geography: North America 4% 6% South America 2% 3% Europe 46% 28% Asia 11% 14% Middle East 19% 21% Other 18% 28% % of Power revenue by geography: North America 51% 58% South America 2% 4% Europe 26% 30% Asia 19% 7% Middle East 2% 0% Other 0% 0%

•

2007

YTD 9/30/08

72% 28%

75% 25%

66% 12% 46% 82% 27% 30%

50% 27% 43% 4 -19% 17% 6%

14% 10% -1% 12%

11% 15% -1% 11%

•

28% 28% 18% 20% 7%

24% 23% 27% 23% 4%

•

7% 2% 23% 22% 27% 19%

n/a n/a n/a n/a n/a n/a

49% 5% 34% 11% 0% 0%

n/a n/a n/a n/a n/a n/a

Revenue excluding flow-through costs (“Foster Wheeler scope”) was $3.6 billion in 2007 and $3.0 billion in the first nine months of 2008. 2 Backlog ex. flow-through costs was $3.2 billion (+6% y-y) at September 30. 3 EBITDA margins are materally higher on a “Foster Wheeler scope” basis. 4 New orders on a “Foster Wheeler scope” basis are up 1% YTD.

INVESTMENT HIGHLIGHTS •

•

Industry leader with 14,000 people: Technically advanced provider of large-scale engineering and construction services; leader in combustion and steam generation technology for the power industry.

Thanksgiving 2008

Strategy: grow organically and via “bolt on” M&A; leverage strong position in refining, delayed coking, LNG and circulating fluidized-bed boilers; pursue “clean coal” and renewable technologies. E&C outlook: Key markets “very robust”; expects strong 2H08 orders; Q3-end backlog up 7% y-y. Power outlook: Global demand may offset delays in N.A. prospects; Q3-end backlog up 5% y-y. Authorized $750 million buyback in September, with $338 million used to buy 10.5 million shares. Stock price implies 19% trailing FCF yield, 6x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

Power group profit may be pressured. According to the company, “EBITDA growth in 2009 will depend on how the N.A. market develops and on our continued success booking jobs outside N.A.” Dependent on demand from oil and gas, refining, chemical and power industries, all of which exhibit cyclicality in their spending on large-scale engineering and construction projects. Fixed-price deals account for ~20% of revenue, exposing the company to the risk of cost overruns. Long-term liabilities include $254 million pension liability and $334 million asbestos liability. Present value of asbestos liability is difficult to estimate. The company has recorded a GAAP liability based on forcasted claims through 2022. CEO Ray Milchovich to retire in 2009.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ABB JEC FLR MDR

MV 24,883 3,796 6,485 1,778

EV 20,057 3,299 4,418 952

EV/Rev .6x .3x .2x .1x

P/TB 2.9x 2.8x 2.4x 1.3x

08 P/E 6x 8x 10x 3x

09 P/E 6x 8x 9x 4x

FWLT

2,667

1,581

.2x

3.2x

MAJOR HOLDERS Insiders <1% │ T Rowe 9%

n/a1

The company is looking for a new CEO to replace Ray Milchovich.

THE BOTTOM LINE Foster Wheeler has executed well in recent years, benefiting from global growth and strength in energy-related industries. The company has a rock-solid balance sheet and has embarked on a $750 million buyback. The shares price in a sharp nearterm downturn in business, even as the company may grow revenue and income in 2009. Investors should monitor the socalled “scope” backlog in order to gauge the company’s resilience in a weaker operating environment. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Gannett Co., Inc. (NYSE: GCI)

McLean, VA, 703-854-6000 http://www.gannett.com

Services: Printing & Publishing, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $8.15 (as of 11/14/08) 52-week range: $7.86 - $40.19 Market value: $1.9 billion Enterprise value: $5.6 billion Shares out: 228.1 million Ownership Data Insider ownership: 1% Insider buys (last six months): 3

Valuation

This quarter Next quarter

Latest $0.94 0.50

Month Ago $0.99 0.55

# of Ests 8 5

P/E FYE 12/30/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

2.0x 2.4x 3.1x 3.2x

FYE 12/31/08

3.44

3.54

EV / LTM revenue

0.8x

FYE 12/31/09 FYE 12/31/10

2.60 2.58

3.01 3.32

11 4

EV / LTM EBITDA EV / LTM EBIT

-6.6x -5.0x

P / tangible book Greenblatt Criteria

LT EPS growth 3.0% 3.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 953

Date

Actual

Estimate

10/24/08

$0.76

$0.75

n/m

LTM EBIT yield

-20%

LTM pre-tax ROC

-42%

12/30/01 6,300 3,024 1,590 831 3.12 1,319 325 994 141 1,178 8,684 13,096 0 1,128 5,080 7,360 0 5,736

12/29/02 6,422 3,168 1,926 1,160 4.31 1,032 275 757 90 1,133 8,921 13,733 0 959 4,547 6,821 0 6,912

67%

77%

EBIT/capital employed

Fiscal Years Ended 12/28/03 12/26/04 12/25/05 6,616 7,284 7,435 3,206 3,507 3,440 1,946 2,113 1,977 1,211 1,317 1,245 4.38 4.84 4.82 1,481 1,586 1,432 281 280 263 1,200 1,306 1,169 67 136 163 1,223 1,392 1,462 9,711 10,117 10,131 14,706 15,421 15,743 0 0 0 962 1,006 1,096 3,835 4,608 5,438 6,283 7,257 8,173 0 0 0 8,423 8,164 7,571 71%

72%

12/31/06 7,848 3,477 1,905 1,161 4.81 1,480 201 1,279 94 1,532 10,897 16,224 0 1,117 5,210 7,842 0 8,382

12/30/07 7,440 3,275 1,651 1,056 4.17 1,345 171 1,174 77 1,343 10,770 15,888 0 962 4,098 6,871 0 9,017

LTME 9/28/08 6,929 2,941 (1,135) (1,696) (7.45) 1,259 182 1,078 123 1,346 9,032 13,419 0 1,207 3,908 6,813 0 6,606

FQE 9/30/07 1,799 773 389 234 1.01 213 34 179 91 1,481 10,882 16,058 0 959 4,418 7,081 0 8,977

FQE 9/28/08 1,637 652 259 158 0.69 238 46 192 123 1,346 9,032 13,419 0 1,207 3,908 6,813 0 6,606

62%

55%

-42%

n/m

66%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW

•

Gannett is the top U.S. newspaper publisher, with 85 daily papers (paid circulation of 6.9 million, including USA Today of 2.3 million) and 900 non-daily publications. Newsquest is the second-largest regional newspaper publisher in the U.K., with 17 paid daily and 300 non-daily publications. Gannett also operates 23 TV stations reaching 20 million U.S. households. The Captivate subsidiary delivers news and ads on elevator video screens. Gannett websites attract ~26 million unique visitors monthly, reaching 16% of the U.S. Internet audience. The company was founded in 1906.

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by type: Advertising 68% Circulation 17% 1 10% Broadcasting All other 5% Growth of revenue by type: Advertising 7% Circulation 4% 1 -10% Broadcasting All other 13% Total revenue growth 5% % of revenue by segment: Publishing 90% 1 10% Broadcasting EBIT margin by segment: 2 Publishing 26% 1 42% Broadcasting Corporate -1% Total EBIT margin 27% 2 4% D&A as % of revenue Capex as % of revenue 4% % of revenue by geography: U.S. 84% Foreign 16% 1

Includes Captivate.

2006

2007

YTD 9/30/08

67% 16% 11% 6%

66% 17% 11% 6%

65% 18% 11% 5%

4% 3% 16% 10% 6%

-6% -2% -8% 5% -5%

-12% -3% -3% -8% -9%

89% 11%

23% 44% -1% 24% 4% 3%

21% 40% -1% 22% 4% 2%

17% 39% -1% 19% 4% 2%

85% 15%

84% 16%

n/a n/a

•

Recent brightspots include higher political advertising in broadcasting segment, positive results from Captivate, and growth in online revenue. Part-owner with Hearst, NY Times and Tribune of quadrantOne, a national digital ad network that reaches 70 million unique visitors and covers 29 of top 30 designated market areas (DMAs). Dividends and buybacks have returned $6.2 billion to holders since 2000. Gannett pays dividends at an annual rate of $1.60 per share. The company repurchased 4.6 million shares for $215 million in 2007 and 2.1 million shares for $73 million YTD. Stock price implies 58% trailing FCF yield and 3x forward P/E (trailing GAAP EPS loss reported).

INVESTMENT RISKS & CONCERNS •

•

“Difficult and volatile” economy hurting results. Gannett pre-announced lower Q2 earnings in July and wrote off nearly $3 billion of intangibles and newspaper PP&E. Q3 revenue fell 9% despite Olympics and political advertising, as publishing has seen lower demand for real estate classifieds in the U.S. and U.K. The company is also facing “significantly” higher newsprint prices. Secular decline of newspaper industry. Gannett is dealing with the same adverse trends that its traditional competitors are also forced to address. While most newspaper companies have responded to the industry’s secular decline by acquiring digital assets, it is not at all clear that such acquisitions will result in competitive advantage and add value.

COMPARABLE PUBLIC COMPANY ANALYSIS

Excludes asset impairment charges.

INVESTMENT HIGHLIGHTS •

•

Thanksgiving 2008

Aggressive digital strategy, including PointRoll, a provider of online marketing. Gannett also owns stakes in CareerBuilder for job ads and Classified Ventures for auto and real estate ads. In late 2007, Gannett and Tribune created a 50/50 JV, Metromix, an online entertainment model for local properties that will be networked for national ad opportunities. Gannett also acquired HighSchoolSports.net, a digital content site serving high school audiences. Recently acquired Tribune and McClatchy’s minority interests in ShopLocal, the top marketing and database services company for most major U.S. retailers. Gannett intends to pursue synergies between ShopLocal and PointRoll in order to create an end-to-end solution for retailers.

($mn) MNI NWS.A NYT GCI

MV 135 19,419 1,055

EV 2,198 27,408 2,136

EV/Rev 1.1x .8x .7x

P/TB n/m n/m 17.6x

08 P/E 2x 7x 10x

09 P/E 3x 6x 12x

1,859

5,645

.8x

n/m

MAJOR HOLDERS CEO Dubow <1% │ Other insiders 1% │ Brandes 11% │ AXA 5%

THE BOTTOM LINE Gannett is a company in harvesting mode. While newspaper publishing and broadcasting are still throwing off strong cash flow, long-term trends are negatively impacting Gannett’s business. Given the emergence of highly decentralized, user-driven content creation on the Internet (e.g., blogs, YouTube), Gannett will find it difficult to become a force in digital content. These negatives and $4 billion of net debt notwithstanding, we believe the shares are simply too cheap to dismiss. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Garmin Ltd. (Nasdaq: GRMN)

Camana Bay, Cayman Islands, 345-640-9050 http://www.garmin.com

Technology: Scientific & Technical Instruments Trading Data

Consensus EPS Estimates

Price: $19.04 (as of 11/14/08) 52-week range: $18.00 - $112.68 Market value: $3.9 billion Enterprise value: $3.3 billion Shares out: 202.5 million Ownership Data Insider ownership: 46% Insider buys (last six months): 6

Valuation

This quarter Next quarter

Latest $1.03 0.58

Month Ago $1.25 0.67

# of Ests 20 10

P/E FYE 12/29/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

4.9x 5.1x 5.7x 5.8x

FYE 12/31/08

3.74

3.92

EV / LTM revenue

0.9x

FYE 12/31/09 FYE 12/31/10

3.36 3.29

3.90 4.06

20 2

EV / LTM EBITDA EV / LTM EBIT

n/a 3.5x

P / tangible book 2.0x Greenblatt Criteria

LT EPS growth 13.4% 14.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 31% # of institutional owners: 479

Date

Actual

Estimate

10/29/08

$0.87

$0.84

LTM EBIT yield

28%

LTM pre-tax ROC

88%

12/29/01 369 198 131 113 0.52 130 27 103 234 360 17 539 4 56 28 85 0 454

12/28/02 465 255 177 143 0.66 162 12 150 330 473 25 706 0 81 20 103 0 603

91%

>100%

EBIT/capital employed

Fiscal Years Ended 12/27/03 12/25/04 12/31/05 573 763 1,028 331 411 535 227 271 338 179 206 311 0.82 0.94 1.43 174 209 247 33 78 27 141 131 220 327 314 367 540 637 801 42 50 36 857 1,117 1,362 0 0 0 104 176 196 0 0 0 107 182 205 0 0 0 750 936 1,157 >100%

>100%

92%

12/30/06 1,774 882 555 514 2.35 362 93 269 410 1,169 68 1,897 0 338 0 339 0 1,558

12/29/07 3,180 1,463 907 855 3.89 682 157 525 745 2,333 196 3,292 0 802 0 941 0 2,351

LTME 9/27/08 3,663 1,632 939 882 4.08 639 143 496 540 2,037 214 3,015 0 697 0 876 0 2,140

FQE 9/29/07 729 342 214 194 0.88 134 18 116 762 1,858 164 2,646 0 568 1 660 0 1,985

FQE 9/27/08 870 386 214 171 0.82 233 34 199 540 2,037 214 3,015 0 697 0 876 0 2,140

>100%

99%

88%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$140 $120 $100 $80 $60 $40 $20 $0 Jan 00

Jan 00

Oct 01

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BUSINESS OVERVIEW

INVESTMENT RISKS & CONCERNS

Garmin provides navigation devices and applications enabled by GPS technology. Products serve auto, mobile, wireless, outdoor recreation, marine, aviation, and OEM applications. No customer accounts for 10% or more of revenue.

•

SELECTED OPERATING DATA

•

FYE December 31 Revenue by segment: Auto / mobile Outdoor / fitness Aviation Marine Revenue by geography: North America Europe Asia Units shipped (mn) Change (y-y) Revenue per unit ($) Change (y-y)

2005

2006

2007

YTD 9/30/08

39% 23% 22% 15%

61% 16% 13% 9%

74% 11% 9% 6%

70% 13% 10% 7%

64% 31% 5% 3.0 31% 339 3%

62% 33% 5% 5.4 78% 329 -3%

65% 30% 5% 12.3 128% 259 -21%

64% 31% 4% 10.6 55% 231 -20%

•

INVESTMENT HIGHLIGHTS •

•

• • •

•

• • •

Thanksgiving 2008

Leader in personal navigation devices (PNDs), with 55% market share in North America and 20% share in Europe (#2 behind TomTom). Industry shipments have slowed sharply after growing 100% in the U.S. and 40% in Europe earlier this year. Deals with auto makers and car rental firms have boosted Garmin’s market presence. The company has deals with Ford, Honda, and Volvo, as well as National Car Rental and Alamo Car Rental. Acquisitions of European distributors have doubled Garmin’s European share since early 2007. Planned nüvifone launch in 2009. The nüvifone is a mobile device that seeks to integrate the navigation and communication experience. Leading-edge proprietary technology, protected by more than 330 U.S. patents and 190 U.S. patent applications pending; and more than 40 foreign patents and 32 foreign patent applications pending. Units, revenue, and EBIT up 55%, 25% and 5%, respectively, YTD. Growth continues to be driven primarily by the auto/mobile and outdoor/fitness segments, while the marine segment has lagged. Guiding for 2008 revenue of $3.6 billion (+13%), down from prior guidance of $3.9 billion (+23%), with EPS of $3.78 (excluding forex translation). Repurchased $625 million of stock YTD. Stock price implies 13% trailing FCF yield, 5x trailing P/E and 6x forward P/E.

•

ASP declines have approximated 25% recently and are expected to do so through yearend 2008. Offsetting the declines are unit volume increases, component cost reductions, and greater efficiency. Inflation could make lower costs tough to sustain. Marine and aviation segments have slowed due to higher fuel prices and economic weakness. $8 billion Nokia acquisition of Navteq, which supplies digital map data for vehicle navigation and location-based services to Garmin under a deal that runs through 2019. Garmin renewed the Navteq deal in late 2007 and abandoned a proposal to buy Navteq competitor Tele Atlas. Nokia competes with Garmin, calling into question the long-term viability of Garmin’s Navteq partnership. €3 billion TomTom acquisition of Tele Atlas. Top Garmin competitor TomTom took control of Tele Atlas in June 2008. This deal puts both major providers of digital map data—Navteq and Tele Atlas—into the hands of Garmin competitors. Dependence on Global Positioning System (GPS). GPS is a satellite-based navigation and positioning system consisting of a constellation of orbiting satellites operated by the U.S. Department of Defense. The DoD does not currently charge for access to the satellite signals, but it is conceivable the government could decide to do so in the future.

COMPARABLE PUBLIC COMPANY ANALYSIS1 ($mn)

MOT NOK RIMM

9,247 47,854 22,620

TOM2.AS GRMN 1

1.0x 10.3x 5.7x

08 P/E 68x 6x n/a

09 P/E 29x 7x n/a

1.2x

n/m

.9x

2.0x

EV/Rev

P/TB

6,288 44,007 21,052

.2x .6x 2.5x

762

2343

3,856

3,317

TomTom and privately-held Magellan, Mio, Navigon are closest comps.

MAJOR HOLDERS CEO Min Kao 20% │ Other insiders 26% │ Cap Re 5%

THE BOTTOM LINE Garmin is the worldwide leader in personal navigation devices, ahead of Dutch provider TomTom, which has a leveraged balance sheet and is struggling. Garmin continues to grow revenue, and while unit growth has slowed, the market for personal navigation devices continues to benefit from consumer adoption. Profits have stagnated due to rapid ASP erosion; however, price declines appear likely to moderate, enabling the company to continue reasonably strong performance even in a weak economic environment. We believe the stock has been “orphaned” as momentum investors have fled. We value Garmin at $35-65 per share, based on a range of 10x estimated 2009 earnings to 10x estimated normalized earnings. © 2008 by BeyondProxy LLC. All rights reserved.

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…additional insight into GRMN:

GARMIN VERSUS TOMTOM – PND UNIT SHIPMENTS

WHAT ARE THE SHARES WORTH? •

We value Garmin at $35-65 per share, based on the valuation analysis summarized below. The wide range of fair value reflects (1) the difficulty of balancing the potential earnings impact of the current slowdown and the continued positive longterm growth outlook for personal navigation devices; and (2) the virtually impossible task of predicting the multiple of earnings Garmin will deserve in the future. We reflect this dual challenge in fairly conservative assumptions.

PND unit sales (mn): Garmin TomTom Relative market shares: Garmin TomTom

($ in millions, except per share data)

Low Value

High Value

$522 18 309 $849 (200) $649

$522 18 309 $849 (100) $749

•

• •

•

Value of core business: 2009 estimated EPS ex. interest income Fair value multiple of 2009E adjusted EPS Estimated EBIT power in 2-3 years Fair value multiple of EBIT power Total

$6,552

1,600 8x $12,800

Estimated fair value of GRMN per share

$7,201 $35

$13,549 $65

3.15 10x

Based on balance sheet values as of September 27, 2008. Represents MOI estimate. Source: Company filings, The Manual of Ideas estimates and analysis.

•

WHY THE SHARES MAY BE MISPRICED Turnover in “style” of shareholder base. While only a year ago Garmin was a favorite “momentum stock,” it now attracts investors who are both comfortable with a projected earnings decline and willing to own a business experiencing rapid technological change. In other words, the shares may not have found a natural “home” yet, but we believe they are now moving into the sweetspot of “magic formula” and low P/E investors.

2005

2006

2007

2.3 0.2

3.0 1.7

5.4 4.7

12.3 9.6

90% 10%

64% 36%

54% 46%

56% 44%

TOP COMPETITOR TOMTOM – SNAPSHOT

Value of excess marketable assets: Cash and equivalents Marketable securities Long-term marketable securities Net cash and investments 2 Cash needed to run business Total

2004

Source: Garmin, TomTom, The Manual of Ideas.

Garmin — Valuation Summary

•

Thanksgiving 2008

•

TomTom is #1 PND supplier in Europe (45% market share) and #2 globally. It derives more than three-quarters of revenue from Europe, with the rest primarily from North Amrica. TomTom was founded in 1991, went public in 2005 (Amsterdam: TOM2.AS), and has ~3,500 employees today. Explosive growth from 2002-07, with revenue up from €8 million to €1.7 billion and net income up from €1 million to €317 million over the period. Q3 pro forma revenue down 12% sequentially and down 10% y-y. Favorable sequential but unfavorable y-y ASP trends are evident from the fact that TomTom shipped 2.5 million PND units in Q3, down 18% sequentially and up 17% y-y. Guiding for 2008 PND market size of 18 million units in Europe and 18 million units in North America, down from TomTom previous market guidance for 20 million units in each market. TomTom expects to comprise 12-13 million of the estimated 36 million units sold globally, resuling in estimated revenue of €1.6-1.7 billion to TomTom, with 40% gross and 20% operating margins. Acquired digital mapping provider Tele Atlas for €3 billion in August, creating a strategic challenge for Garmin, which relies on mapping data provided by Navteq, which Nokia acquired for $8 billion. Weak balance sheet, with negative tangible book, $263 million of cash and $1.6 billion of debt.

TomTom Stock Performance Since IPO € 80 € 70 € 60 € 50 € 40 € 30 € 20 € 10 €0 May-05

May-06

May-07

May-08

Source: TomTom, The Manual of Ideas.

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SHIPMENT VOLUME AND ASP TRENDS •

•

Unit shipments grew 128% in 2007 on a 21% decline in ASPs. Unit growth slowed to 55% in the first nine months of 2008, while ASPs eroded 20%.

• •

Garmin—Unit Shipments and ASPs, 2000-08 YTD 14mn units 12mn units 10mn units 8mn units 6mn units 4mn units 2mn units 0mn units

$400 per unit

•

$300 per unit $200 per unit $100 per unit

•

$0 per unit 00 01 02 03 04 05 06 07 ytd Unit Shipments

Revenue per Unit

Note: YTD data is for the nine months ended September 30, 2008. Source: Company, The Manual of Ideas.

•

Garmin—Unit Growth and ASP Changes, 2001-08 YTD 140% 120% 100% 80% 60% 40% 20% 0%

30% 20% 10% 0% -10% -20% -30% 01

Unit Grow th (left axis)

ASP Change (right axis)

Note: YTD data is for the nine months ended September 30, 2008. Source: Company, The Manual of Ideas.

• •

MANAGEMENT’S VIEW OF BUSINESS Notes from 3Q08 earnings call on October 29: • Business environment: “the reason we had to drop our numbers from our earlier guidance was October; we definitely saw a slowdown;” in PND market, Europe has slowed “more dramatically” than U.S.; PND remains “hot category— it will still be one of the pushes for the holiday season when you look at shelf space and number of SKUs;” “very strong promotional emphasis for PNDs for the holidays” • Q3 review: 19% revenue growth on 43% shipment growth and 17% ASP decline; “solid” growth in automotive and outdoor fitness; gross margin eroded 260 bps y-y, but “exceeded our earlier expectations as ASP declines moderated and price reductions were largely offset by lower product cost;” gross margin eroded 150 bps sequentially but would have been “nearly flat” excluding currency; EPS down 2% assuming constant currency rates • Q3 review—automotive and mobile: 21% revenue growth, driven by “strong” unit growth and “moderating” price declines; Garmin has top three PNDs and seven of top ten PNDs in the U.S. © 2008 by BeyondProxy LLC. All rights reserved.

•

ytd

•

• • •

Thanksgiving 2008

Q3 review—outdoor fitness: 35% revenue growth, helped by market share gains Q3 review—aviation: +9%, “as shipments to OEM offset weakness in portable and retrofit markets” Q3 review—marine: 8% revenue decline, as higher fuel prices have weakened marine industry; gaining share in OEM and dealer-installed markets Q3 review—by geography: 29% North American revenue growth, 9% European revenue growth, 21% Asian revenue decline; Asia down due to “timing of several sales programs… we do continue to expect healthy double-digit growth in our APAC markets” 2008 guidance: revised down – “some markets are slowing,” “weaker international currencies add additional pressure on our revenues and margins;” expect revenue of $3.6 billion (+13%), 24% EBIT margin and EPS of $3.78 (flat y-y) including gain on TeleAtlas shares (based on 19% tax rate) 2009 outlook: market will be “different, with higher penetration rates as we go into the year, but still unit growth and less ASP decline;” ASP may erode less due to (1) already low prices and (2) already thin margins realized by competitors, leaving limited room for price cuts; U.S. PND unit growth: “not prepared to give 2009 guidance, but… do not see any reason why we shouldn’t see at least 20% unit growth;” PND margin may see “slight reduction… should still see [PND] margins of about 30%” ASP dynamics: -17% in Q3; ASP stable or up y-y in outdoor fitness, aviation and marine; PND ASP decline continues “in line with our earlier forecast” Inventory: to fall $150 million in Q4; at Q3-end, inventory was “more lean as retailers look to reduce their… exposure and delay cash expenditures” nüvifone: on track for 1H09 launch; signed deals “with some key carriers” (including carrier subsidies); breadth and depth of LBS capabilities are “superior to any other device on the market;” expects to be competitive versus Apple and RIM in features and pricing; gross margin should be 3035%; one million units shipped in first twelve months after release would be “acceptable” PND market size and growth: U.S. and Europe are 20 million units each, with 60% growth in North America and 20% in Europe; while growth is down, “the PND market is still growing at a healthy pace in comparison to other categories;” at Q3-end, North American penetration is in mid teens while Europe is above 20%; mix of new to replacement sales is 80%/20% (replacement sales expected to increase as market matures); average life of PND device is 3-5 years (likely to come down with price) Garmin PND market share: grew to 54% in North America and >20% in Europe in Q3 Share repurchases: bought back 14.7 million shares for $624 million YTD; authorized additional $300 million on October 29 Miscellaneous: employs 1,700+ engineers globally

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Thanksgiving 2008

Hansen Natural Corporation (Nasdaq: HANS)

Corona, CA, 951-739-6200 http://www.hansens.com

Consumer Non-Cyclical: Beverages (Non-Alcoholic), Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $25.36 (as of 11/14/08) 52-week range: $20.52 - $50.18 Market value: $2.3 billion Enterprise value: $2.1 billion Shares out: 92.4 million Ownership Data Insider ownership: 17% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.42 0.38

Month Ago $0.43 0.36

# of Ests 9 5

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

16.8x 14.3x 12.2x 10.3x

FYE 12/31/08

1.77

EV / LTM revenue

2.0x

FYE 12/31/09 FYE 12/31/10

2.08 2.47

2.05 2.40

10 5

EV / LTM EBITDA EV / LTM EBIT

7.8x 7.8x

P / tangible book 4.8x Greenblatt Criteria

LT EPS growth 14.9% 13.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 599

Date

Actual

Estimate

11/6/08

$0.54

$0.53

LTM EBIT yield

13%

LTM pre-tax ROC

>100%

12/31/01 81 29 6 3 0.04 5 1 5 0 19 17 39 0 6 6 13 0 25

12/31/02 92 33 5 3 0.04 3 1 2 1 21 17 41 0 6 4 12 0 28

38%

33%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 110 180 349 44 83 183 10 34 104 6 20 63 0.07 0.22 0.65 6 20 55 3 1 2 3 19 52 1 21 74 27 60 140 18 18 19 48 82 164 0 0 1 10 19 33 0 0 0 13 23 38 0 0 0 35 59 126 56%

>100%

12/31/06 606 317 159 98 0.99 76 5 72 137 275 21 308 0 63 0 83 0 225

12/31/07 905 468 231 149 1.51 136 7 129 76 270 24 545 1 83 0 122 0 422

LTME 9/30/08 1,026 526 267 177 1.80 182 7 174 271 477 26 640 1 88 0 126 0 514

FQE 9/30/07 247 128 73 46 0.46 38 2 36 256 461 24 508 1 98 0 138 0 370

FQE 9/30/08 285 149 82 52 0.54 63 3 60 271 477 26 640 1 88 0 126 0 514

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW

•

Hansen markets and distributes “alternative” non-alcoholic beverages. The company has two segments, Direct Store Delivery (DSD), whose principal products comprise energy drinks (~90% of revenue), and Warehouse, whose principal products comprise juice-based and soda beverages. DSD sells through exclusive distributors whereas Warehouse products directly to retailers. The company outsources manufacturing to third-party bottlers and contract packers. Seasonality is strongest in Q2 and Q3.

FYE December 31 Revenue by type of customer: Grocery, specialty, wholesale Club, drug, mass merchandise Full service distributors Health food distributors Other Revenue by customer: Dr Pepper Snapple Group Wal-Mart (incl. Sam’s Club)

2005

2006

2007

YTD 9/30/08

19% 11% 65% 3% 2%

12% 14% 69% 2% 3%

8% 14% 73% 2% 3%

9% 15% 72% 2% 2%

18% <10%

19% 12%

16% 12%

16% 11%

•

INVESTMENT HIGHLIGHTS • •

•

• •

$26 billion alternative beverage market up 11% in 2007, outpacing beverage industry growth. Continued strong performance of Monster brand despite weakness in ready-to-drink beverage category. Hansen continues to gain share, driven by Monster Energy and Java Monster drinks. Continuous innovation. Hansen frequently brings new and improved products to market. While some of those new introductions flop, others generate high returns on capital (e.g., Java Monster). Anheuser-Busch, PepsiCo distribution deals. Hansen has transitioned most of its full-service distributors to the the AB system, while PepsiCo has become the exclusive distributor for Canada. Entrepreneurial management. CEO Rodney Sacks (58) and CFO Hilton Schlosberg (55) engineered the 1992 purchase of Hansen and have grown it in impressive fashion since then. Repurchased 1.7 million shares for $50 million ($29 per share) in the first nine months of 2008. Solid balance sheet, with $271 million in cash and short-term investments, $110 million in auction-rate securities, and no debt as of September 30.

Stock price implies 7% trailing FCF yield, 14x trailing P/E and 12x forward P/E.

INVESTMENT RISKS & CONCERNS

Hansen dates back to the 1930s when Hubert Hansen started selling fresh juices in L.A. California still accounts for close to 30% of sales, which the U.S. accounts for roughly 95%.

SELECTED OPERATING DATA

Thanksgiving 2008

Consumer spending weakness in “convenience store cold drink channels, where the vast majority of energy drinks are sold.” Hansen has also noted a “decline in store traffic primarily in the convenience and gas sector especially in Southern California.” Margin impact of higher raw materials costs. The company has absorbed significant increases in the cost of PET plastic bottles, aluminum cans, glucose, high fructose corn syrup, milk, cream and juice concentrates over the past couple of years. This inflation has negatively affected gross margins. Highly competitive beverage industry, with several large and many small companies competing for shelf space and consumer mindshare: Red Bull, Sobe, Snapple Elements, Arizona, Fuse, Coca-Cola, PepsiCo, Cadbury Schweppes, Tree Top, Ocean Spray, Jones Soda, Clearly Canadian, Crystal Geyser, Kern’s, V8, Mott’s, and others. Tough Q4 comp. Hansen raised prices on January 1, 2008. 7-8% of 4Q07 sales were attributable to stocking up in advance of the increases. As a result, sales growth may be challenged in 4Q08.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn)

DPS JSDA KFT KO PEP

4,455 13 40,313 104,156 83,123

HANS

2,344

n/m 0.6x n/m 9.5x 9.7x

08 P/E 9x n/m 14x 14x 15x

09 P/E 9x n/m 14x 14x 14x

4.8x

14x

12x

EV/Rev

P/TB

7,838 -2 60,169 107,596 89,004

1.4x -.1x 1.4x 3.3x 2.1x

2,074

2.0x

MAJOR HOLDERS CEO Sacks, CFO Schlosberg 19% (combined) │ Other insiders 3% │ Brandon LP 9% │ Hilrod Holdings 6% │ Artisan 7% │ Franklin 6%

THE BOTTOM LINE Hansen is hardly unknown to investors given the stock’s meteoric rise in 2006-07 and subsequent sharp decline. The shares were a “valuation short” in the $50+ range and have fallen primarily due to a “normal” slowdown in the growth rate. As the shareholder base has turned over, Hansen has not yet found an institutional home. However, the shares ought to appeal to investors looking for growth at a reasonable price. While input costs are going up, Hansen should grow EBIT via volume and price increases. We like the large ownership position by top management.

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Thanksgiving 2008

Heidrick & Struggles (Nasdaq: HSII)

Chicago, IL, 312-496-1200 http://www.heidrick.com

Services: Business Services, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $21.24 (as of 11/14/08) 52-week range: $18.92 - $37.98 Market value: $347 million Enterprise value: $164 million Shares out: 16.4 million Ownership Data Insider ownership: 2% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.46 0.31

Month Ago $0.57 0.42

# of Ests 9 6

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

7.2x 9.0x 14.4x 11.4x

FYE 12/31/08

2.36

2.45

EV / LTM revenue

0.2x

FYE 12/31/09 FYE 12/31/10

1.47 1.87

2.22 2.90

9 3

EV / LTM EBITDA EV / LTM EBIT

n/a 2.4x

P / tangible book 1.8x Greenblatt Criteria

LT EPS growth 14.3% 14.3% Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 95% # of institutional owners: 339

Date

Actual

Estimate

10/28/08

$0.80

$0.69

LTM EBIT yield

42%

LTM pre-tax ROC

n/m

12/31/01 488 153 (73) (43) (2.52) (21) 24 (45) 109 240 64 411 3 147 2 182 0 230

12/31/02 377 108 (52) (40) (2.22) 6 5 1 110 203 61 368 1 119 0 168 0 200

-177%

-192%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 341 398 433 94 126 138 (22) 29 22 (81) 82 39 (4.43) 4.11 1.98 10 26 33 6 6 6 5 20 27 119 223 204 179 290 282 56 56 53 304 421 411 1 0 0 114 140 122 0 0 0 178 205 173 0 0 0 126 216 238 n/m

n/m

12/31/06 502 150 50 34 1.81 100 6 94 221 335 94 513 0 199 0 250 0 264

12/31/07 648 201 80 57 2.97 106 8 98 283 403 100 617 0 254 0 307 0 310

LTME 9/30/08 665 195 69 43 2.40 59 10 49 183 335 113 559 0 196 0 258 0 302

FQE 9/30/07 170 56 25 16 0.84 63 3 60 218 381 93 587 0 217 0 276 0 311

FQE 9/30/08 165 50 21 14 0.80 61 3 58 183 335 113 559 0 196 0 258 0 302

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW

•

Heidrick & Struggles is a global executive search firm. It has 400 consultants and provides search services on a retained basis, recruiting senior executives whose first-year base salary and bonus averaged $345K in 2007. Clients include Fortune 1000 and major non-U.S. companies, middle market and emerging growth firms, governmental, educational and non-profit organizations. H&S dates back to 1953. H&S charges executive search fees equal to one-third of a placement’s first-year cash compensation (includes salary and bonus). The company compensates its consultants in cash, with a 15%-20% three-year deferred bonus. Comp is based on revenue generation and firm-building behaviors.

SELECTED OPERATING DATA 2005 FYE December 31 % of net revenue by segment: Americas 58% Europe 33% Asia Pacific 10% 1 Net revenue growth by segment: Americas 11% Europe 4% Asia Pacific 25% 1 10% Total net revenue growth EBIT margin by segment: Americas 21% Europe 6% Asia Pacific 26% Corporate -6% 2 11% Total EBIT margin Revenue per consultant ($mn) 1.3 Average fee per search ($K) 97 1 2

•

YTD 9/30/08

55% 34% 10%

54% 33% 13%

51% 32% 16%

11% 22% 25% 16%

26% 27% 59% 30%

-3% 2% 33% 3%

•

20% 9% 27% -7% 11% 1.3 101

20% 15% 20% -6% 13% 1.5 115

16% 13% 19% -5% 10% 1.5 118

•

$10 billion executive search industry is fragmented and consists of several thousand firms. Top firms include Korn/Ferry, H&S, Spencer Stuart, Russell Reynolds, and Egon Zehnder. Favorable secular trends include globalization, shorter executive tenures, stricter corporate governance requirements, and demand for ancillary services such as Board and leadership assessment. Competitive advantage due to brand reputation and focus on top-level search. H&S has been in executive search for more than five decades and has built a strong reputation. The company’s focus on top-level services gives it access to key decision makers, increased potential for recurring engagements, higher fees per search, enhanced brand visibility, and a global footprint. The highend focus also allows H&S to hire and retain talent.

Kevin Kelly (42) became CEO in 2006 after serving in various roles at H&S since 1997, including as president of EMEA and Asia. Eileen Kamerick (49) joined the company as CFO in 2004. Strong balance sheet, with $183 million of cash and no debt as of September 30. Share repurchases. The company spent $37 million on buybacks in 2005, $52 million in 2006, $69 million in 2007, and $47 million YTD. Stock price implies 14% trailing FCF yield, 9x trailing P/E and 14x forward P/E.

INVESTMENT RISKS & CONCERNS

2007

INVESTMENT HIGHLIGHTS

•

2006

Net revenue excludes reimbursables. Excludes restructuring costs of $0.4 million in 2006 and $22.5 million in 2005.

•

Thanksgiving 2008

Executive search remains sensitive to economic conditions. Revenue growth has slowed to 3% YTD, with revenue down 3% in Q3. While Asian revenue continues strong growth, it accounted for only 16% of overall revenue YTD. Meanwhile, economic weakness in the U.S. and Europe translated into flat U.S. revenue in Q3 and a 17% constant-currency revenue decline in Europe. Financial services practice generated 33% of revenue in 2007. Other industries contributed to revenue as follows: 21% industrial, 18% consumer, 10% technology, 9% health care, and 11% other. Financial services revenue down YTD, with U.S. and European weakness offsetting strength in Asia. The company has also seen revenue in the U.S. consumer sector under pressure.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) HHGP KFY MPS RHI HSII

MV 111 553 578 2,762

EV 67 344 523 2,392

347

164

EV/Rev .1x .4x .2x .5x

P/TB 0.8x 1.6x 2.3x 3.3x

08 P/E 24x 10x 8x 11x

09 P/E 108x 10x 15x 25x

.2x

1.8x

14x

MAJOR HOLDERS CEO Kelly <1% │ Other insiders 3% │ Royce 11% │ W. Blair 10% │ Kornitzer 9% │ Barclays 8% │ NFJ 6%

THE BOTTOM LINE Heidrick & Struggles trades materially below “replacement value,” as it would be exceedingly difficult to replicate the firm’s strong reputation. The shares should deliver an above-average return over a five-year period. However, it is impossible to judge when the company will resume meaningful growth, and it is conceivable that revenue could decline materially in a global recession. As a result, the risk-reward is somewhat less favorable than that of our top ten magic formula selections.

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Thanksgiving 2008 Grand Cayman, Cayman Islands, 310-4109600 http://www.herbalife.com

Herbalife Ltd. (NYSE: HLF) Consumer Non-Cyclical: Personal & Household Products Trading Data

Consensus EPS Estimates

Price: $17.56 (as of 11/14/08) 52-week range: $16.60 - $51.09 Market value: $1.1 billion Enterprise value: $1.3 billion Shares out: 63.8 million Ownership Data Insider ownership: 2% Insider buys (last six months): 5

Valuation

This quarter Next quarter

Latest $0.71 0.80

Month Ago $0.92 1.02

# of Ests 9 2

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.7x 4.9x 5.4x 4.9x

FYE 12/31/08

3.56

3.72

EV / LTM revenue

0.5x

FYE 12/31/09 FYE 12/31/10

3.25 3.58

4.26 4.83

10 1

EV / LTM EBITDA EV / LTM EBIT

n/a 3.6x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 14.3% 14.3% Latest Quarterly EPS Surprise

Insider sales (last six months): 5 Institutional ownership: 95% # of institutional owners: 604

Date 11/3/08

Actual $0.89

Estimate $0.86

LTM EBIT yield LTM pre-tax ROC

28% >100%

12/31/01 1,020 779 69 43 1.36 96 11 85 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

12/31/02 1,094 858 67 23 0.46 66 7 59 66 205 527 856 19 198 322 664 0 191

n/a

>100%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,159 1,310 1,567 924 1,040 1,251 107 139 219 37 (14) 93 0.69 (0.27) 1.28 94 80 143 14 23 32 81 57 112 151 202 88 278 370 300 520 497 449 904 949 838 72 120 10 276 372 286 253 366 253 666 884 669 0 0 0 238 64 169 n/m

n/m

12/31/06 1,886 1,505 257 143 1.92 184 63 122 154 456 425 1,017 6 324 180 663 0 354

12/31/07 2,146 1,707 313 192 2.63 271 42 229 187 487 422 1,067 5 376 361 885 0 182

LTME 9/30/08 2,424 1,948 357 241 3.60 278 80 198 149 509 421 1,144 12 408 314 869 0 275

FQE 9/30/07 530 424 78 48 0.67 67 10 57 161 475 422 1,045 4 356 230 750 0 295

FQE 9/30/08 602 486 89 58 0.89 80 31 49 149 509 421 1,144 12 408 314 869 0 275

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$60 $50 $40 $30 $20 $10 $0 Jan 00

Jan 00

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BUSINESS OVERVIEW

•

Herbalife is a network marketing company that sells weightmanagement, nutritional supplements and personal care products intended to support a healthy lifestyle. Products are sold in 66 countries through 1.8 million distributors. Global retail sales were $3.5 billion in 2007, consisting of distributor allowances of $1.4 billion and net sales of $2.1 billion. Variable expenses were 73% of net sales (36% royalties, 21% product costs, 16% distributor-facing costs); “fixed” costs amounted to 18% of net sales (12% overhead, 5% tax, 1% interest), resulting in a 9% net income margin.

•

SELECTED OPERATING DATA

•

FYE December 31 2005 Growth in “sales leaders” 10% 1 Retention 40% % of revenue by geography: U.S. 18% Mexico 14% Others 68% Revenue growth by geography: U.S. 13% Mexico 114% Others 11% Total revenue growth 20% EBIT margin by geography: U.S. 42% Mexico 44% Others 45% Corporate -30% Total EBIT margin 14% % of revenue by product line: Weight management 63% Targeted nutrition 19% Energy and fitness 4% Outer nutrition 10% Literature and other 5% % of revenue by geographic region: North America 19% Mexico & Central America 14% South America 10% EMEA 35% Asia Pacific 22% 1

2006 29% 42%

2007 9% 43%

YTD 9/30/08 12% 41%

18% 20% 62%

20% 17% 63%

20% 16% 64%

19% 70% 10% 20%

24% -1% 16% 14%

19% 4% 21% 18%

42% 44% 45% -30% 14%

38% 41% 47% -30% 15%

42% 43% 49% -32% 15%

63% 19% 4% 8% 5%

63% 20% 4% 7% 6%

63% 21% 4% 6% 6%

19% 20% 12% 29% 20%

20% 18% 14% 26% 21%

21% 17% 15% 25% 23%

Measured annually after January re-qualification.

•

Healthy distributor organization. Enrollment of new sales leaders, and subsequent progression of those new recruits up the “organizational” ladder continues to grow at double-digit rates. Earnings potential for top performers is strong, with more than 1,000 distributors likely earning $1+ million.3 Management experienced in consumer branding. CEO Michael Johnson (53) joined Herbalife in 2003 after 17 years at Walt Disney, mostly recently as President of Walt Disney International. Repurchased $94 million of stock YTD and $366 million in 2007. The annual dividend is $0.80/share. Stock price implies 18% trailing FCF yield, 5x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

Multi-level marketing, built on a network of 1.8 million independent distributors, of which roughly 400K are “sales leaders” who have made it their business to sell Herbalife products. The company retains ~40% of sales leaders each year, with new recruitment crucial to network growth. If recruiting falters or retention declines, business would suffer. Competitors include direct selling firms NuSkin, Nature’s Sunshine, Alticor/Amway, Melaleuca, Avon, Oriflame and Mary Kay, as well as retail establishments Weight Watchers, Jenny Craig, General Nutrition, Wal-Mart, and retail pharmacies.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AVP MTEX NUS USNA

MV 9,605 89 682 541

EV 11,048 55 767 558

EV/Rev 1.0x .2x .6x 1.3x

P/TB 13.8x 1.3x 6.1x 14.4x

08 P/E 11x n/a 10x 16x

09 P/E 11x n/a 8x 14x

HLF

1,121

1,298

.5x

n/m

MAJOR HOLDERS CEO Johnson 3% │ Other insiders 2% │ Bank of New York 6% │ Times Square 5% │ GS Investment Strategies 5%

INVESTMENT HIGHLIGHTS •

•

Thanksgiving 2008

80% of revenue outside of North America due to worldwide distribution network. Key strategies: (1) Move from monthly supply model to “Daily Method of Operation” (DMO) in order to improve stickiness and drive volume. (2) Develop unique science-based products using safe ingredients. (3) Make distributors more productive through training and infrastructure support. (4) Drive growth from under-penetrated markets. (5) Build awareness of and affinity for Herbalife brand.

RATINGS VALUE Intrinsic value materially higher than market value? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends? EXPLOSIVENESS 5%+ probability of 5x upside in one year? 3 Manual of Ideas estimate, based on company disclosure that supervisors on “President’s Team” earn $500K in multi-level fees and that an additional 2x is earned systemwide on the 50% retail discount afforded supervisors.

THE BOTTOM LINE We are not fans of multi-level marketing companies, as they often add value neither to their customers nor their long-term shareholders. However, Herbalife stands out positively due to its focus on improving people’s health and, more importantly, its exceptionally strong profitability and growth profile. The company appears to have ample high-ROIC reinvestment opportunities left, and management execution has been solid. We view the shares as undervalued at only 5x 2009E EPS. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Herman Miller, Inc. (Nasdaq: MLHR)

Zeeland, MI, 616-654-3000 http://www.hermanmiller.com

Consumer Cyclical: Furniture & Fixtures, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $14.61 (as of 11/14/08) 52-week range: $13.78 - $33.89 Market value: $784 million Enterprise value: $1.0 billion Shares out: 53.6 million Ownership Data Insider ownership: 2% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.59 0.44

Month Ago $0.63 0.61

# of Ests 5 5

FYE 5/31/09

2.08

2.49

EV / LTM revenue

0.5x

FYE 5/31/10 FYE 5/31/11

2.01 2.11

2.49 2.84

5 2

EV / LTM EBITDA EV / LTM EBIT

n/a 4.0x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 2.0% 5.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 95% # of institutional owners: 518

Date

Actual

Estimate

9/17/08

$0.60

$0.55

P/E FYE 5/31/08 P/E FYE 5/31/09 P/E FYE 5/31/10 P/E FYE 5/31/11

5.7x 7.0x 7.3x 6.9x

LTM EBIT yield

25%

LTM pre-tax ROC

>100%

6/1/02 1,469 440 (80) (56) (0.74) 55 52 2 135 386 48 788 19 211 222 525 0 263

5/31/03 1,337 424 48 23 0.31 145 29 116 197 414 45 757 26 237 209 566 0 191

EBIT/capital employed

-21%

15%

Fiscal Years Ended 5/29/04 5/28/05 6/3/06 1,338 1,516 1,737 416 490 575 61 122 158 42 68 99 0.59 0.96 1.45 83 109 150 27 35 51 56 74 100 200 168 122 431 437 390 45 46 45 715 708 668 23 21 10 237 287 299 193 181 176 520 537 530 0 0 0 195 171 138 26%

58%

83%

6/2/07 1,919 646 198 129 1.98 138 41 96 92 385 49 666 10 285 173 511 0 155

5/31/08 2,012 699 247 152 2.56 214 41 173 171 493 58 783 9 311 376 760 0 23

LTME 8/30/08 2,000 694 250 152 2.63 186 40 146 164 489 58 775 6 275 376 725 0 51

FQE 9/1/07 492 168 54 34 0.54 32 9 23 81 383 48 664 40 298 174 537 0 126

FQE 8/30/08 479 162 57 33 0.60 4 8 (4) 164 489 58 775 6 275 376 725 0 51

100%

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

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BUSINESS OVERVIEW

•

Herman Miller operates in two segments: North American Furniture provides furniture for office and healthcare environments. The segment also includes owned contract furniture dealers. Non-North American Furniture provides furniture for work-related settings outside of North America. 70% of sales are made through the company’s dealer distribution network, with the remainder made directly to end users (governments account for 20-25% of sales).

• •

SELECTED OPERATING DATA

•

FYE May 31 2006 % of revenue by segment: Furniture – N.A. 83% Furniture – ROW 12% 1 4% Other Revenue growth by segment: Furniture – N.A. 15% Furniture – ROW 13% 1 18% Other 2 15% ∆ revenue 3 15% ∆ orders 4 4% ∆ backlog EBIT margin by segment: Furniture – N.A. 10% Furniture – ROW 7% 1 5% Other Total EBIT margin 9% % of revenue by product type: Office furniture systems 31% Seating 24% Freestanding & storage 16% 5 19% International 6 10% Other Revenue growth by product type: Office furniture systems 8% Seating 21% Freestanding & storage 16% 5 23% International 6 4% Other

2007

2008

1Q09

81% 15% 4%

81% 16% 3%

83% 15% 3%

8% 28% 6% 10% 11% 21%

5% 16% -32% 5% 2% -1%

-3% -4% 8% -3% 11% 19%

10% 10% 10% 10%

12% 15% 7% 12%

12% 9% 14% 12%

29% 25% 15% 21% 9%

29% 24% 15% 24% 8%

n/a n/a n/a n/a n/a

7% 14% 4% 22% 2%

3% 2% 3% 18% -5%

n/a n/a n/a n/a n/a

•

Orders weakened in September and October to $34 million per week vs. $41 million in FQ1. The company plans to cut costs by $60 million per year, with related charges of $10 million in FQ3. U.S. industry orders and shipments expected to decline 6.5% and 9.7%, respectively, in CY08, according to trade association BIFMA. In CY09, it expects both orders and shipments to drop 6.3%. Beginning to feel effects of commodity price inflation. The company implemented a price increase in August in order to defend margins. The extent of the effect of input cost pressures is likely to become evident over the next few quarters. Office furniture demand sensitive to general corporate profitability, white-collar employment, new office construction rates, and vacancy rates.

COMPARABLE PUBLIC COMPANY ANALYSIS

Consists of residential furniture business and Convia, and unallocated items. 2 The weakening of the dollar added $27 million to revenue in FY08, and the Brandrud acquisition added another $7 million; offsetting these benefits was an OEM deal expiration that contributed $20 million in FY07 and zero in FY08. 3 A price increase in early August resulted in pulled ahead orders of ~$35 million in 1Q09. Order growth would have been 3% without this effect. 4 Backlog of unfilled orders was $286 million as of May 31, 2008. 5 The company does not disclose international product line information. 6 Consists of miscellaneous and uncategorized product and service sales.

INVESTMENT HIGHLIGHTS

•

Design innovator with 200+ patents; partners with designers and pays them royalties. Past successes, such as the Stumpf-designed Aeron chair, may be repeatable, though timing of “hits” is unpredictable. Distribution: 250 independent, 50 certified dealers. Targeting 13% EBIT margin (12.3% in FY08). It has eliminated 150 positions and may cut more. Most executives tenured for at least a decade. Emblematic of the culture, CEO Brian Walker (46) calls staff “employee-owners.” Repurchased $250+ million in FY08 and ~$60 million YTD. Shares are down ~25% since FY03. Stock price implies 19% trailing FCF yield, 6x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS

•

Thanksgiving 2008

Third-largest player in U.S. office furniture industry with 12% share, behind Steelcase (17%) and HNI (16%), and ahead of Haworth (8%) and Knoll (7%). In 1986, HMI had 7% share, Steelcase 21%, HNI 7%, Haworth 4%, and Knoll 2%. Targets furniture segments with $13 billion in size and $7 billion in growth potential, driven by new channels, geographies, and products. The Convia offering adds another $8 billion opportunity.

($mn) HNI SCS

MV 532 827

EV 862 956

MLHR

784

1,002

EV/Rev .3x .3x

P/TB 5.7x 1.4x

08 P/E 9x 7x

09 P/E 10x 8x

.5x

n/m

MAJOR HOLDERS CEO Walker 1% │ Other insiders 3% │ Columbia Wanger 11% │ Ariel 10% │ Barclays 8% │ Morgan Stanley 7%

THE BOTTOM LINE Herman Miller is no ordinary furniture maker. In a commoditized industry, the company has proven it can innovate product design, generating above-average growth and superior ROIC. While the company faces cost pressures, the market may be giving it too little credit in terms of pricing power and commitment to shareholder value. The company has optimized the capital structure via debt-financed share repurchases. If we were to own a furniture maker, this would be it. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 116 of 401

Thanksgiving 2008

Hurco Companies, Inc. (Nasdaq: HURC)

Indianapolis, IN, 317-293-5309 http://www.hurco.com

Technology: Scientific & Technical Instruments Trading Data

Consensus EPS Estimates

Price: $17.17 (as of 11/14/08) 52-week range: $15.62 - $52.12 Market value: $110 million Enterprise value: $77 million Shares out: 6.4 million Ownership Data Insider ownership: 10% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 10/31/07 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

5.3x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

0.3x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

n/a 2.0x

n/a

P / tangible book 1.0x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 65% # of institutional owners: 213

Date

Actual

Estimate

n/a

LTM EBIT yield

49%

LTM pre-tax ROC

68%

10/31/01 92 23 (1) (2) (0.28) (4) 2 (5) 4 50 3 66 0 18 12 31 0 36

10/31/02 71 16 (7) (8) (1.48) 6 2 4 4 42 2 57 1 21 8 29 0 28

-2%

-23%

EBIT/capital employed

Fiscal Years Ended 10/31/03 10/31/04 10/31/05 76 100 126 21 30 43 2 9 17 1 6 16 0.08 1.04 2.60 2 7 12 1 2 3 1 5 9 5 8 18 42 57 74 2 3 4 58 73 94 1 0 0 20 30 31 9 4 4 29 35 35 0 0 0 29 39 59 8%

32%

10/31/06 149 53 23 16 2.42 14 3 11 30 103 6 126 0 44 4 50 0 75

10/31/07 188 71 31 21 3.24 14 5 10 40 139 6 164 0 63 0 66 0 98

LTME 7/31/08 227 85 38 25 3.84 2 6 (3) 33 154 6 185 0 63 0 66 0 119

FQE 7/31/07 49 19 8 5 0.80 4 1 3 39 131 6 154 0 61 0 62 0 92

FQE 7/31/08 57 21 9 6 0.90 6 2 4 33 154 6 185 0 63 0 66 0 119

62%

72%

68%

n/m

54%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

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Oct 03

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BUSINESS OVERVIEW

•

Hurco an industrial technology firm that provides computerized machine tools to companies in the metal working industry. It also provides computer control systems and software products, which are integrated into the company’s machine tools. Hurco was founded in 1968.

• •

SELECTED OPERATING DATA1 FYE October 31 2005 2006 % of revenue by type: Machine tools 86% 87% Service and other 14% 13% Revenue growth by type: Machine tools 28% 20% Service and other 14% 8% Revenue growth 26% 18% 2 19% 26% Order growth % of revenue by geography: Americas 34% 33% Europe 59% 59% Asia and other 7% 9% Revenue growth by geography: Americas 40% 13% Europe 23% 18% Asia and other 0% 49%

2007

YTD 7/31/08

88% 12%

89% 11%

29% 14% 27% 29%

30% 16% 28% 20%

27% 66% 7%

20% 74% 6%

3% 43% 7%

-7% 40% 52%

•

INVESTMENT HIGHLIGHTS

•

• • •

New manufacturing facility in China produces castings and components, but can be expanded to include sub-assembly operations. May consider “opportunistic” M&A, “consistent with our strategic focus on expanding our product line and entering new markets.” Two-thirds of revenue outside U.S. The overseas exposure has benefited revenue growth, but may hurt reported results when the dollar strengthens. Michael Doar (52) became chairman and CEO in 2001 after spending more than a decade as a senior executive at Ingersoll Milling Machine Company. James Fabris (56) became president and COO of Hurco at the same time as Doar became CEO. Stock price implies 4x trailing P/E (no EPS estimates available).

INVESTMENT RISKS & CONCERNS

1 Hurco typically converts backlog into revenue within 60 days. As a result, backlog is not a useful indicator of future performance. 2 FY07 orders benefited by $12 million, or 7.5%, due to currency changes.

•

Thanksgiving 2008

Leader in interactive computer control systems for manufacturing automation in metal parts industry. Hurco pioneered conversational software for use on machine tools and has concentrated on user-friendly systems that can be operated by skilled and unskilled tool operators. The company’s control systems enable operators on the production floor to quickly create a program for machining a part from a blueprint or computer-aided design file. Continued strong demand in European markets, “particularly in Germany and the United Kingdom.” The company is also benefiting from continued expansion into Eastern European markets. European revenue grew 30% in the July quarter (FQ3). Strong growth in Asia due to robust demand, FQ3 Asian revenue up 49% y-y. Weaker dollar benefited FQ3 sales growth by fourteen percentage points in Europea and Asia. Introduced 14 new machines in September, representing Hurco’s largest product introduction to date. A marketing focus has been the company software technology. Hurco’s 5-axis technology is critical to mature markets such as North America.

•

Will North America sales rebound (down 19% in FQ3)? “In spite of adverse economic conditions [in the U.S.], I believe we may see increased activity in the near future due to our new product introductions and the timing of our industry’s largest trade show.” North America accounted for 18% of FQ3 revenue. Raw materials price inflation has “significantly affected” the machine tool industry, according to Hurco. FQ3 gross margin fell to 36% from 38% a year earlier due to rising input costs. Highly cyclical machine tool industry. Demand trends can change abruptly across geographies.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ATU HDNG KMT

MV 933 66 1,288

EV 1,385 80 1,700

HURC

110

EV/Rev .8x .2x .6x

P/TB n/m 0.3x 1.9x

08 P/E 7x 13x 7x

09 P/E 7x 12x 7x

.3x

1.0x

n/a

MAJOR HOLDERS CEO Doar <1% │ Other insiders 5% │ Systematic 7% │ Royce 6%

THE BOTTOM LINE Hurco is a cheap company that has benefited greatly from the boom in industrial production. It derives two-thirds of revenue outside the U.S., with dollar depreciation a meaningful driver of double-digit growth. However, as the dollar stabilizes or strengthens and global growth slows, Hurco’s positive trend is likely to be slowed or reversed (Americas revenue is down 9% YTD). Hurco continues to operate in a cyclical industry, making it difficult to estimate “normalized” earnings.

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Thanksgiving 2008

iBasis, Inc. (Nasdaq: IBAS)

Burlington, MA, 781-505-7500 http://www.ibasis.net

Services: Communications Services Trading Data

Consensus EPS Estimates

Price: $2.15 (as of 11/14/08) 52-week range: $1.40 - $5.93 Market value: $153 million Enterprise value: $122 million Shares out: 71.2 million Ownership Data Insider ownership: 57% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.01 n/a

Month Ago $0.09 n/a

# of Ests 1 0

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.5x 43.0x 30.7x 30.7x

FYE 12/31/08

0.05

0.16

EV / LTM revenue

0.1x

FYE 12/31/09 FYE 12/31/10

0.07 0.07

0.37 0.38

1 1

EV / LTM EBITDA EV / LTM EBIT

3.0x 9.6x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 26% # of institutional owners: 127

Date

Actual

Estimate

10/21/08

$0.05

$0.08

LTM EBIT yield

10%

LTM pre-tax ROC

n/m

12/31/01 110 8 (133) (191) (9.91) (82) 35 (117) 101 226 0 329 26 71 171 242 0 87

12/31/02 165 22 (46) (122) (3.75) (45) 5 (49) 32 59 0 99 5 37 94 133 0 (34)

-81%

-48%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 655 715 790 96 78 119 67 46 61 43 28 41 1.07 0.69 1.01 (3) (7) 53 5 3 5 (8) (11) 48 17 39 44 44 75 94 0 0 0 68 88 106 2 2 2 41 45 64 66 66 2 110 112 67 0 0 0 (42) (24) 39 >100%

>100%

12/31/06 814 106 62 43 1.06 33 4 29 22 221 0 233 0 208 0 209 0 24

12/31/07 939 91 25 16 0.33 58 10 49 66 275 343 660 1 296 25 325 0 335

LTME 9/30/08 1,228 132 13 7 0.09 59 16 43 63 281 340 659 1 304 31 337 0 321

FQE 9/30/07 216 16 6 4 0.10 37 3 33 59 129 0 145 1 104 0 105 0 40

FQE 9/30/08 338 32 1 3 0.05 16 3 13 63 281 340 659 1 304 31 337 0 321

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Sep 00

Sep 01

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BUSINESS OVERVIEW

•

iBasis is a wholesale carrier of international long distance (24 billion minutes last year) and a provider of retail prepaid calling and enhanced services for mobile operators. Customers include KPN, Verizon, Vodafone, China Mobile, Skype, Telecom Italia, and Telefonica. In October 2007, iBasis “acquired” KPN Global Carrier Services to create the #3 carrier of international voice traffic, and KPN became a 51% owner of iBasis. In April 2008, iBasis acquired TDC’s international voice business. iBasis was founded in 1996.

2005

2006

2007

YTD 9/30/08

81% 19%

82% 18%

97% 3%

93% 7%

39% 90% 46%

33% 30% 33%

119% -73% 84%

n/a n/a 74%

12% 17% 13%

12% 15% 12%

10% 14% 10%

10% 13% 10%

•

Includes outsourcing revenue.

INVESTMENT HIGHLIGHTS •

•

• •

• • •

Cost leader. iBasis is the wholesale long distance market share leader in multiple countries and operates one of the largest VoIP networks. Scale allows iBasis to offer cost-attractive routes. Transformative KPN deal in October 2007. iBasis’ combination with KPN Global Carrier Services has increased minutes by 70%, revenue by 100%+, and EPS by ~200%. iBasis has gained a strong footprint in Europe and expects to achieve $20 million of annual cost synergies by Q2 2009. KPN has raised iBasis’ stature, affording it new opportunities, such as marketing services to mobile operators in Asia and Latin America. $10 million acquisition of TDC Wholesale (April 2008) adds $80 million in incremental revenue. TDC outsources non-Nordic voice traffic to iBasis. iBasis believes that other international wholesale carriers may also decide to outsource traffic to the company due to low margins and capital needs. Still mostly unknown on Wall Street. iBasis moved to the OTC following the Internet bubble and returned to the Nasdaq in mid-2006. Repurchase $15 million of stock YTD. CEO Ofer Gneezy (56) co-founded iBasis in 1996. Previously, he served as CEO of a predecessor to Acuity Imaging, an industrial automation company.

Stock price implies 28% trailing FCF yield, 24x trailing P/E and 31x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 % of revenue by segment: 1 Wholesale trading Retail Revenue growth by segment: Wholesale trading Retail Total revenue growth Gross margin by segment: Wholesale trading Retail Total gross margin

Thanksgiving 2008

•

Challenging conditions in wholesale (due to calling card market decline) and retail. The company has guided for capex of $15-16 million in 2008 and “modest” revenue growth in 2009. Pro forma revenue down 8% in Q3. iBasis grew revenue, adjusted for the KPN deal, in the low single digits in 1H08 but saw it fall 8% in Q3. Pro forma minutes were down 6% in Q3. KPN integration and control risks. iBasis plans to spend $12 million in 2008 and $5 million in 2009 to achieve $20 million of annualized synergies. The net impact will be FCF-negative in 2008 and FCFpositive in 2009, with the first full year of benefits in 2010. In addition to integration risks, investors need to weigh KPN’s majority ownership of iBasis. Obviously, KPN’s interests are not perfectly aligned with those of minority shareholders. Low-margin, “commodity” business. International wholesale voice is a behind-the-scenes business in which cost is a key driver. iBasis may enjoy some scale advantages, but it also suffers from a lack of true differentiation (low-teens gross margin). ROIC may not be sustained. iBasis operates in a niche in which returns are likely to erode over time.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn)

LVLT S T VZ

1,402 6,571 162,942 85,215

IBAS

153

n/m n/m n/m n/m

08 P/E n/m 29x 10x 12x

09 P/E n/m n/m 9x 11x

n/m

43x

31x

EV/Rev

P/TB

7,578 25,095 238,122 128,316

1.7x .7x 1.9x 1.3x

122

.1x

MAJOR HOLDERS CEO Gneezy 2% │ Other insiders 2% │ KPN 53%

Two starts due to KPN control and low insider ownership.

THE BOTTOM LINE iBasis is still under the radar of most investors, despite having positively transformed itself over the past year. The KPN deal has improved the company’s market position and business prospects. However, we doubt the sustainability of above-average returns on capital in the wholesale international voice business. As a result, we do not find the shares sufficiently compelling.

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Thanksgiving 2008

ICF International, Inc. (Nasdaq: ICFI)

Fairfax, VA, 703-934-3000 http://www.icfi.com

Services: Business Services Trading Data

Consensus EPS Estimates

Price: $18.00 (as of 11/14/08) 52-week range: $14.50 - $28.17 Market value: $266 million Enterprise value: $353 million

This quarter Next quarter

Latest $0.39 0.36

FYE 12/31/08

1.88

1.89

EV / LTM revenue

0.5x

FYE 12/31/09 FYE 12/31/10

1.38 1.57

1.40 1.69

6 4

EV / LTM EBITDA EV / LTM EBIT

4.9x 6.0x

LT EPS growth 15.0% 15.0% Latest Quarterly EPS Surprise

P / tangible book Greenblatt Criteria

n/m

Shares out: 14.8 million Ownership Data Insider ownership: 51% Insider buys (last six months): 3 Insider sales (last six months): 7 Institutional ownership: 39% # of institutional owners: 205

Valuation

Month Ago $0.40 0.38

Date

Actual

Estimate

11/5/08

$0.45

# of Ests 6 4

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.6x 9.6x 13.0x 11.5x

LTM EBIT yield

17%

LTM pre-tax ROC

>100%

12/31/03 146 55 6 2 0.22 12 2 10 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EBIT/capital employed

n/a

Fiscal Years Ended 12/31/04 12/31/05 140 177 56 71 7 6 3 2 0.30 0.21 3 2 1 1 2 1 1 1 33 57 56 85 94 151 4 7 27 39 17 54 46 98 0 0 48 53 51%

12/31/06 331 114 23 12 1.10 18 2 16 3 119 87 216 0 96 0 102 0 114

12/31/07 727 195 71 41 2.72 46 4 42 3 203 177 393 0 165 47 228 0 165

LTME 9/30/08 722 233 59 32 2.12 26 10 16 3 171 219 410 0 110 90 215 0 195

FQE 9/30/07 199 51 20 11 0.74 5 1 4 2 168 124 303 0 141 0 150 0 154

FQE 9/30/08 176 61 13 7 0.45 9 6 3 3 171 219 410 0 110 90 215 0 195

86%

>100%

n/m

27%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

INVESTMENT RISKS & CONCERNS

ICF International provides consulting and IT services, addressing the program life cycle, from analysis and design through implementation and improvement. ICFI was bought by current management and private equity in 1999. The company made two acquisitions in 2005 and went public in 2006. ICFI was founded in 1969 and has 3,000 employees.

•

SELECTED OPERATING DATA 2005 FYE December 31 % of revenue by market: Energy and climate change 20% Environment, infrastructure 35% Health and human services 17% Homeland security, defense 28% Revenue growth by market: Energy and climate change 21% Environment, infrastructure 1% Health and human services 35% Homeland security, defense 87% ∆ revenue 27% ∆ backlog (period end) 69% % of revenue by client: U.S. federal government 72% U.S. state and local gov’t 9% Domestic commercial 14% International 5% % of revenue by contract type: Time and materials 42% Fixed price 24% Cost based 34% % of revenue by contract role: Prime contractor 86% Subcontractor 14%

2006

2007

YTD 9/30/08

12% 17% 53% 18%

8% 9% 75% 8%

10% 24% 57% 9%

12% -9% 483% 20% 87% 328%

46% 16% 211% -2% 119% -15%

24% 197% -26% 11% -1% 3%

49% 40% 7% 4%

27% 65% 6% 2%

35% 48% 12% 5%

•

46% 34% 20%

55% 36% 9%

68% 21% 11%

•

89% 11%

94% 6%

n/a n/a

INVESTMENT HIGHLIGHTS •

• • •

• •

Thanksgiving 2008

•

High dependence on government. While ICFI aims to grow commercial revenue, government clients accounted for 92% of revenue in 2007. If the Road Home contract is excluded, government clients accounted for three-quarters of revenue. Louisiana contract accounted for 63% of revenue in 2007; declined to 34% in 3Q08. ICFI won the Road Home deal in 2006 and manages a program to help homeowners and landlords of small rental properties affected by Hurricane Katrina by providing compensation for property repair. The contract has a stated term of three years, but ICFI has earned revenue faster than projected. Only $3060 million of revenue appears likely in 2009. Louisiana deal “one-time” boost; total revenue expected to decline ~20% in 2009 even as nonRoad Home revenue may rise 15%. While Road Home is accounted for as a continuing operation, the unusually large deal size means that the revenue lost when the deal ends will not be fully replaced. Highly competitive market. Competitors include Abt Associates, BearingPoint, Booz Allen, CRA, Lockheed Martin, L-3, Navigant, Northrop Grumman, PA Consulting, SAIC, SRA, and Westat. Numerous acquisitions raise question about organic growth prospects. ICFI has bought a number of professional services organizations in recent years, including Synergy, Caliber, Z-Tech, SH&E, Jones & Stokes, and others.

COMPARABLE PUBLIC COMPANY ANALYSIS

Strategy: win more end-to-end assignments; layer higher-margin commercial engagements onto stable government contracts; maintain tight cost structure; and continue strategic acquisition program. Long-standing client relationships. ICFI has served government agencies, including the DoD, EPA, HHS, and DOT, for 10-30 years or longer. Won three-year, $900 million Louisiana Road Home contract in 2006, the largest reconstruction program in U.S. history. (See Risks for more info.) Strong energy practice, with 20+ years of experience in power, fuels, climate policy, and energy efficiency. Clients include utilities, E&P and independent power firms, and government agencies. 42% of consultants have post-graduate degrees. 320 employees hold a federal security clearance. Turnover is 11%. Senior staff tenure is ~12 years. Stock price implies 6% trailing FCF yield, 8x trailing P/E and 13x forward P/E.

($mn) ACN NCI SAI ICFI

MV 20,919 832 3,607

EV 17,304 1,101 4,035

266

353

EV/Rev .7x 1.3x .4x

P/TB 12.3x n/m 8.0x

08 P/E 10x 20x 17x

09 P/E 9x 16x 15x

.5x

n/m

10x

13x

MAJOR HOLDERS CEO Kesavan 2% │ Other insiders 51% (includes CM Equity Partners 49%)

THE BOTTOM LINE ICFI joined the magic formula list due to profits from the Louisiana Road Home contract, which accounted for 63% of revenue in 2007. While other revenue is growing, the impending completion of Road Home is likely to have a negative impact on profitability in 2009 and beyond. Road Home may appropriately be viewed as a non-recurring item, suggesting that the company should not have qualified for inclusion on the magic formula list. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Iconix Brand Group, Inc. (Nasdaq: ICON)

New York, NY, 212-730-0030 http://www.iconixbrand.com

Consumer Cyclical: Apparel/Accessories, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $8.72 (as of 11/14/08) 52-week range: $6.56 - $23.55 Market value: $508 million Enterprise value: $1.1 billion Shares out: 58.3 million Ownership Data Insider ownership: 7% Insider buys (last six months): 4

Valuation

This quarter Next quarter

Latest $0.28 0.31

Month Ago $0.32 0.33

# of Ests 7 3

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

8.4x 7.6x 7.1x n/a

FYE 12/31/08

1.15

1.17

EV / LTM revenue

5.2x

FYE 12/31/09 FYE 12/31/10

1.23 n/a

1.31 n/a

7 0

EV / LTM EBITDA EV / LTM EBIT

n/a 7.5x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 17.0% 18.7% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: n/a # of institutional owners: n/a

Date

Actual

Estimate

11/3/08

$0.30

$0.28

LTM EBIT yield

13%

LTM pre-tax ROC

>100%

1/31/02 101 31 (2) (2) (0.12) 0 3 (2) 1 23 20 51 14 27 1 27 0 24

1/31/03 157 41 (1) (4) (0.17) (10) 2 (12) 2 52 43 103 24 46 29 74 0 29

1/31/04 131 27 (8) (11) (0.45) 11 0 11 3 26 42 75 15 30 25 56 0 19

-10%

-4%

-41%

EBIT/capital employed

Fiscal Years Ended 12/31/04 12/31/05 69 30 13 0 3 15 0 16 0.01 0.46 5 16 0 1 5 15 1 12 10 22 42 172 60 217 3 14 16 27 20 85 36 116 0 0 24 101 >100%

n/m

12/31/06 81 0 54 33 0.72 29 1 29 74 100 561 696 22 36 141 231 0 466

12/31/07 160 0 122 64 1.04 84 0 84 48 96 1,167 1,336 53 76 650 808 0 528

LTME 9/30/08 210 0 147 72 1.18 88 5 84 83 149 1,167 1,385 63 83 610 786 0 599

FQE 9/30/07 43 0 29 17 0.28 22 0 22 265 334 847 1,237 26 44 616 730 0 507

FQE 9/30/08 55 0 36 18 0.30 26 0 25 83 149 1,167 1,385 63 83 610 786 0 599

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW Iconix owns a portfolio of 17 consumer brands, which it licenses directly to retailers, wholesalers and suppliers for apparel, accessories, footwear, beauty, and home products. Iconix supports the brands with marketing. Licensees pay minimum guaranteed royalties. Target, Kohl’s and Kmart were 14%, 8% and 6% of revenue, respectively, in 2007.

SELECTED OPERATING DATA FYE December 31 1 Revenue growth % of revenue by category: Direct-to-retail license Wholesale license 2 Other (commissions) % of revenue by geography: U.S. Other

2005 186%

2006 168%

2007 98%

YTD 9/30/08 44%

43% 50% 7%

43% 54% 3%

34% 65% 2%

25% 72% 3%

98% 2%

96% 4%

94% 6%

92% 8%

1 The 2005 number reflects growth in licensing and commission revenue only. GAAP revenue fell 56% in 2005, as Iconix transitioned to a licensing model. 2 Includes Bright Star, which earns commissions for arranging footwear production for mass market and discount retailers. Inconix holds no inventory.

• •

Brand Badgley Mischka Joe Boxer; Rampage Mudd; London Fog; Mossimo; Ocean Pacific/OP 3 Danskin and Rocawear; Official-Pillowtex brands; Starter 4 Waverly

•

In 2006, the company acquired ~$60 million in annual royalty streams. In 2007, the company acquired ~$115 million in annual royalty streams. Iconix acquired Starter for $60 million (2008E royalties of $18 million). 4 Acquired in October for $26 million. 2 3

•

• •

Net debt limits strategic flexibility and may depress earnings in weak economy. The company had $673 million of debt and $110 million of cash as of September 30, raising the risk of distress. Guidance lowered. In May, Iconix provided 2008 revenue guidance of $250-260 million. In June, it lowered guidance due to the absence of M&A and, apparently, due to a weak retail outlook. FCF, as calculated by company, may overstate “owner earnings.” Iconix expects 2008 FCF of $120+ million, with $5 million of capex and $50 million of non-cash items. Iconix does not include M&A in capex, but inclusion may be appropriate. Management’s FCF calculation may overstate the cash that can be paid out without hurting prospects.

COMPARABLE PUBLIC COMPANY ANALYSIS

INVESTMENT HIGHLIGHTS •

Non-U.S. (licensing) revenue growing quickly, but accounted for only 6% of revenue in 2007. Iconix recently formed a JV to target China. To meet “low end” of guidance for 2008 growth of 34-37% in revenue and 11-15% in EPS, i.e., revenue of $215-220 million (>70% guaranteed minimums), EPS of $1.15-1.20 and FCF of $120+ million in 2008 (see Risks below regarding FCF). Guiding for 2009 revenue of $225-235 million, EPS of $1.20-1.30 and FCF of $114-118 million. Stock price implies 16% trailing FCF yield, 7x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS

BRAND ACQUISITIONS SINCE 2004 Year 2004 2005 1 2006 2 2007 2008

Thanksgiving 2008

Brand ownership and licensing model with low capital intensity and no inventory risk. Iconix enjoys high ROC, although incremental capital is invested at lower returns due to acquisitions. Minimum royalties and low overhead help Iconix to maintain EBIT profitability in a difficult economy. Direct-to-retail model provides retailers with proprietary brands, resulting in premium shelf space. DTR deals include Walmart (OP, Starter, Danskin), Target (Mossimo, Fieldcrest), Sears/Kmart (Cannon, Joe Boxer), Kohls (Candie’s), and Bed Bath & Beyond (Royal Velvet). Acquisitions key to growth, with brand strength and future royalties among the key M&A criteria. Organic growth opportunities in 2009 include the company’s Wal-Mart brands and the Cannon launch at Sears and Kmart (the Cannon brand was acquired as part of the Official-Pillowtex purchase in 2007).

($mn) CHKE GPS JNY

MV 138 8,217 527

EV 122 6,725 1,110

EV/Rev 3.1x .4x .3x

P/TB 7.8x 1.9x 1.2x

08 P/E 9x 9x 7x

09 P/E 9x 8x 7x

ICON

508

1,098

5.2x

n/m

MAJOR HOLDERS CEO Cole 6% │ Other insiders 2% │ Fred Alger 9% │ Baron 6%

THE BOTTOM LINE Iconix makes for a difficult judgment call. The company owns a portfolio of attractive brands and operates a model with low capital intensity and high returns. However, we are concerned that it has overleveraged in pursuit of acquisition-driven growth. Deterioration in retail sales, coupled with tight credit, may put the company in distress, potentially leaving equity holders with little value. While more than 70% of Iconix’s 2008 revenue guidance is backed by minimum royalties, the company’s negotiating leverage and licensing opportunities are likely to diminish in a weak economy. In such a scenario, Iconix may have to put acquisitions on hold, and it may struggle to satisfy creditors. We view the shares as too speculative. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

infoGROUP Inc (Nasdaq: IUSA)

Omaha, NE, 402-593-4500 http://www.infogroup.com

Services: Printing & Publishing Trading Data

Consensus EPS Estimates

Price: $3.38 (as of 11/14/08) 52-week range: $2.94 - $9.97 Market value: $192 million Enterprise value: $494 million Shares out: 56.9 million Ownership Data Insider ownership: 41% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.16 n/a

Month Ago $0.17 n/a

# of Ests 1 0

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

4.6x 12.1x 4.6x n/a

FYE 12/31/08

0.28

0.53

EV / LTM revenue

0.7x

FYE 12/31/09 FYE 12/31/10

0.73 n/a

0.78 n/a

1 0

EV / LTM EBITDA EV / LTM EBIT

5.3x 12.0x

P / tangible book Greenblatt Criteria

n/m

LTM EBIT yield

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 53% # of institutional owners: 233

Date

Actual

Estimate

10/27/08

-$0.07

$0.16

LTM pre-tax ROC

>100%

12/31/01 289 208 40 5 0.10 55 8 46 5 78 285 419 20 81 206 323 0 96

12/31/02 303 218 55 20 0.40 53 5 48 7 70 273 393 26 83 164 275 0 118

65%

96%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 311 345 383 224 242 275 49 41 58 20 18 32 0.38 0.33 0.58 57 72 86 7 7 12 50 65 75 6 13 3 72 94 119 248 365 365 366 509 544 17 34 6 85 151 182 123 162 142 220 338 346 0 0 0 146 172 198 >100%

>100%

n/m

12/31/06 435 318 65 33 0.60 60 21 38 7 187 490 750 5 223 255 515 0 234

12/31/07 689 413 87 41 0.73 74 21 52 12 200 533 813 5 229 278 544 0 269

LTME 9/30/08 746 432 41 20 0.24 51 29 22 12 224 537 836 3 244 310 587 0 249

FQE 9/30/07 185 113 31 17 0.30 32 5 27 10 189 533 803 5 220 296 554 0 249

FQE 9/30/08 182 104 (9) (9) (0.15) 12 10 2 12 224 537 836 3 244 310 587 0 249

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

infoGROUP (formerly infoUSA) provides business and consumer databases for sales leads and mailing lists, database marketing services, data processing services and sales solutions. The company was founded in 1972 and operates in three segments: The Data Group consists of National Accounts, OneSource, Database License, and the Small and Medium Sized Business Group. The segment bears the compilation and verification costs of the company’s proprietary databases. The Services Group provides customer data management and brokerage services, e-mail marketing, and catalog marketing. The Marketing Research Group provides customer surveys, opinion polling, and other market research for business (Opinion Research division) and government (Macro Int’l division). The segment also includes Guideline, NWC, and Northwest, which are research companies acquired in 2007.

•

1 2

2005

2006

2007

YTD 9/30/08

76% 24% 0%

69% 28% 3%

48% 20% 32%

42% 22% 36%

n/a n/a n/a 11%

3% 32% n/m 13%

10% 13% n/m 58%

-4% 22% 30% 11%

21% 23% n/a -7% 15%

22% 24% 3% -7% 15%

27% 25% 5% -6% 13%

22% 18% 5% -12% 3%

Established in 2006 with acquisition of Opinion Research Corp. 2005 segment growth unavailable due to redefinition of segments.

INVESTMENT HIGHLIGHTS •

•

Founder Vinod Gupta ousted in August. Gupta had been chairman and CEO since founding the company in 1972. The resignation followed on the heels of shareholder litigation, an SEC investigation (outcome still pending) and a Board review. The latter “determined that various related party transactions, expense reimbursements, and corporate expenditures were excessive.” Gupta agreed to return $9 million. Board members Bill Fairfield and Bernard Reznicek assumed the CEO and chairman roles, respectively. IUSA shares rose 19% on the day of Gupta’s resignation. Stock price implies 11% trailing FCF yield, 14x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS •

SEGMENT BREAKDOWN FYE December 31 % of revenue by segment: Data Group Services Group 1 Marketing Research Group 2 Revenue growth by segment: Data Group Services Group 1 Marketing Research Group Total revenue growth EBIT margin by segment: Data Group Services Group Marketing Research Group Corporate Total EBIT margin

Thanksgiving 2008

•

Management turnover. Major governance deficiencies cascaded into major management changes this year, affecting the chairman, CEO and CFO roles. Ultimately, however, the changes may have alleviated a major investor concern. Direct marketing faces a number of headwinds that require infoGROUP to adapt. The industry has come under scrutiny by consumer groups and regulators. Internet-based services have made data more widely available and more easily accessible. Risks relating to M&A strategy. The company has made 35+ acquisitions since 1996 and intends to continue looking for strategic opportunities.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ACXM DNB HHS VCI IUSA

Data Group owns 12 proprietary marketing databases, including information on tens of millions of businesses and executives, and 200+ million consumers. Its Internet-based services, including Salesgenie.com and Credit.net, tap into these databases, which are compiled by 800 people. Services Group helps direct marketing firms enhance the value of their own data with services such as list management and list brokerage, data processing, and Yesmail email marketing services. Marketing Research Group leverages a global data collection network to perform surveys and other research services for clients.

MV 529 3,921 317 53

EV 1,028 4,555 591 1,158

192

494

EV/Rev .8x 2.7x .5x .5x

P/TB n/m n/m n/m n/m

08 P/E 10x 14x 5x 2x

09 P/E 9x 12x 6x 2x

.7x

n/m

12x

MAJOR HOLDERS Founder and former CEO Vinod Gupta 40% │ Other insiders 3% │ Cardinal 6% │ Burgundy 5% │ Columbia Wanger 4%

THE BOTTOM LINE infoGROUP is a company in transition. With founder and long-time CEO Vinod Gupta gone, the company is likely to refocus on shareholder value. However, the management change occurred rather abruptly in August, and it is unclear whether new CEO Bill Fairfield is up to the task. As a result, infoGROUP appears somewhat directionless. Nonetheless, the low equity valuation (5x 2009E EPS) and non capital-intensive model make it an interesting company to watch.

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Thanksgiving 2008

Jackson Hewitt Tax Service Inc (NYSE: JTX)

Parsippany, NJ, 973-630-1040 http://www.jacksonhewitt.com

Services: Personal Services Trading Data

Consensus EPS Estimates

Price: $11.76 (as of 11/14/08) 52-week range: $10.56 - $34.48 Market value: $339 million Enterprise value: $620 million Shares out: 28.9 million Ownership Data Insider ownership: 1% Insider buys (last six months): 3

Valuation

This quarter Next quarter

Latest -$0.73 0.73

Month Ago -$0.73 0.73

# of Ests 6 6

FYE 4/30/09

1.51

1.52

EV / LTM revenue

2.2x

FYE 4/30/10 FYE 4/30/11

1.71 2.05

1.73 2.07

5 2

EV / LTM EBITDA EV / LTM EBIT

7.9x 9.5x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 9.0% 9.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 250

Date

Actual

Estimate

9/4/08

-$0.69

P/E FYE 4/30/08 P/E FYE 4/30/09 P/E FYE 4/30/10 P/E FYE 4/30/11

10.8x 7.8x 6.9x 5.7x

LTM EBIT yield

10%

LTM pre-tax ROC

>100%

4/30/02 157 120 70 43 1.13 14 23 (9) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

4/30/03 172 118 67 41 1.10 64 5 59 2 32 482 662 0 21 0 50 0 612

Fiscal Years Ended 4/30/04 4/30/05 4/30/06 206 233 275 142 162 197 70 87 102 43 50 58 1.15 1.32 1.59 64 115 113 4 5 11 60 110 102 5 113 15 48 143 54 482 480 479 726 675 588 0 0 0 32 57 101 0 175 50 71 279 200 0 0 0 655 396 388

n/a

>100%

4/30/07 293 208 116 65 1.93 80 9 71 2 38 478 574 0 100 127 270 0 304

4/30/08 279 177 67 32 1.09 34 6 28 5 42 501 600 0 92 231 364 0 237

LTME 7/31/08 277 173 65 32 1.12 44 6 38 0 27 503 583 0 50 281 370 0 213

FQE 7/31/07 6 (9) (30) (20) (0.65) (46) 1 (47) 1 24 477 558 0 61 210 312 0 246

FQE 7/31/08 4 (14) (31) (21) (0.72) (36) 1 (37) 0 27 503 583 0 50 281 370 0 213

n/m

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$40 $35 $30 $25 $20 $15 $10 $5 $0 Jan 00

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BUSINESS OVERVIEW Jackson Hewitt is the second-largest paid tax return preparer in the U.S., behind H&R Block. The company has a branded network of 5,763 franchised and 1,000 company-owned offices. The network provides income tax return preparation, electronic filing services, and refund anticipation loans. Filers earning less than $30,000 accounted for 67% of unit volume in FY08 (compared to 50% nationwide). Jackson Hewitt was spun off from Cendant in an IPO in 2004.

SELECTED OPERATING DATA1 FYE April 30 % of revenue by segment: Franchise operations Company-owned offices Revenue growth by segment: Franchise operations Company-owned offices Total revenue growth EBIT margin by segment: Franchise operations Company-owned offices Corporate and other Total EBIT margin % of franchise revenue by type: Royalty Marketing 2 RALs Other Frachised offices (period end) Company offices (period end) Total tax returns prepared (mn) Avg revenue per tax return ($) 1 2

• •

2007

2008

74% 26%

73% 27%

69% 31%

20% 14% 18%

4% 12% 6%

-10% 8% -5%

62% 17% -12% 38%

61% 19% -10% 39%

53% 6% -15% 24%

37% 17% 37% 9% 5,379 643 3.66 $178

39% 17% 38% 6% 5,778 723 3.65 $192

40% 18% 37% 5% 5,763 1,000 3.39 $192

•

Q1 FY09 data not shown, as it is not meaningful due to seasonality. Includes revenue from refund anticipation loans and other financial products.

•

INVESTMENT HIGHLIGHTS •

•

• • •

Prepared 3.4 million tax returns in FY08, or 4% of returns prepared by a paid preparer. The paid preparer market is fragmented and stagnantes due to competition from software alternatives. Jackson Hewitt may grow by taking share from CPAs. Franchisees pay marketing fees of 6% of revenue and royalties of 15% of revenue (12% for territories sold before mid-year 2000). Franchisees also pay a $2 fee to Jackson Hewitt for each tax return filed electronically. 20% of franchisees earned revenue of more than $1 million in FY08. 35% of 5,100 total territories remain available for sale (~60,000 people per territory). 78% of new territories were sold to existing franchisees in FY08. Existing territories under-penetrated. In FY08, 31% of territories reached a target of 3+ offices per territory. The company had 2.1 offices per territory. 28% of offices have been in existence for three years or less. As offices mature to 7+ years, their number of tax returns prepared more than doubles.

Bought 3.5 million shares for $99 million in FY08 and 4.4 million shares for $142 million in FY07. Stock price implies 11% trailing FCF yield, 11x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS

• 2006

Thanksgiving 2008

Weak FY08 tax season, with returns prepared by Jackson Hewitt down 7%, driven by the lack of an early-season product, brand damage from DOJ lawsuitss, and greater compliance requirements. Brand damage from settled DOJ lawsuits against a franchisee for fraudulent tax return preparation. Terminated CEO Lister on heels of IRS and DOJ settlements in 2007, promoting Michael Yerington from COO to CEO and Mark Heimbouch from CFO to COO. Daniel O’Brien joined as CFO in January 2008, while Heimbouch resigned in October. Refund anticipation loans (RALs) are short-term loans with a high implied interest rate. In January 2008, the IRS issued an advance notice of proposed rulemaking (ANPRM) regarding the use of tax return information for the marketing of RALs. Franchise renewals coming up in 2009-10. 93% of franchisees opted to renew their ten-year deals in the last renewal cycle in 1999-2000. One-third of franchise deals will be up for renewal in the next two years (no renewals prior to April 15, 2009). Competition from H&R Block, Liberty Tax and alternatives, including Intuit’s TurboTax software and the Free File Alliance, an IRS consortium. Highly seasonal business presents hiring and space utilization challenges. There were 7,700 seasonal hires in company-owned offices in FY08, compared to a year-round base of 430 employees.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) HRB JTX

EV/Rev

P/TB

08 P/E

09 P/E

5,801

6,588

1.5x

n/m

11x

339

620

2.2x

n/m

MAJOR HOLDERS CEO Yerington <1% │ Other insiders 2% │ Invesco 15% │ Shamrock 9% │ Cap Re 8% │ Cardinal 6% │ Ziff 5%

THE BOTTOM LINE Jackson Hewitt plays in a stagnant market and has suffered from bad execution. However, if the company can return to its historical pattern of gaining share versus CPAs, it should be able to grow modestly for many years to come. Improved execution during the FY09 tax season, including a more aggressive early-season strategy, could restore profit growth. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

KBR, Inc. (NYSE: KBR)

Houston, TX, 713-753-3011 http://www.kbr.com

Capital Goods: Construction Services, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $13.11 (as of 11/14/08) 52-week range: $11.82 - $44.46 Market value: $2.1 billion Enterprise value: $1.0 billion Shares out: 161.5 million Ownership Data Insider ownership: 1% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.42 0.46

Month Ago $0.44 0.46

# of Ests 11 4

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

12.1x 7.7x 7.3x 6.6x

FYE 12/31/08

1.71

1.72

EV / LTM revenue

0.1x

FYE 12/31/09 FYE 12/31/10

1.80 1.99

1.98 2.23

12 7

EV / LTM EBITDA EV / LTM EBIT

n/a 2.1x

P / tangible book 1.4x Greenblatt Criteria

LT EPS growth 15.0% 15.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 3 Institutional ownership: 92% # of institutional owners: 610

Date

Actual

Estimate

10/31/08

$0.44

$0.43

LTM EBIT yield

47%

LTM pre-tax ROC

>100%

12/31/01 4,795 64 26 (8) (0.13) 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

12/31/02 5,125 (93) (182) (92) (0.94) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

n/a

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 8,863 11,906 9,291 14 (265) 433 (64) (357) 385 (133) (303) 240 (1.04) (2.31) 1.36 (899) (61) 527 63 74 76 (962) (135) 451 n/a 234 394 n/a 3,732 3,510 n/a 288 285 n/a 5,487 5,182 n/a 18 16 n/a 2,967 2,566 n/a 42 792 n/a 4,675 3,926 n/a 0 0 n/a 812 1,256 n/a

-35%

12/31/06 8,805 372 152 168 0.39 931 57 874 1,410 3,898 251 5,414 0 2,983 0 3,620 0 1,794

12/31/07 8,745 520 294 302 1.08 248 43 205 1,861 4,056 251 5,203 0 2,623 0 2,936 0 2,267

LTME 9/30/08 10,584 766 470 302 1.58 77 38 39 1,110 3,659 753 5,323 0 2,630 0 3,046 0 2,277

FQE 9/30/07 2,177 167 102 63 0.35 (222) 9 (231) 1,795 4,020 251 5,177 0 2,609 0 3,058 0 2,119

FQE 9/30/08 3,018 199 144 85 0.44 285 11 274 1,110 3,659 753 5,323 0 2,630 0 3,046 0 2,277

42%

n/m

>100%

n/m

38%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW KBR is an engineering, construction and services company supporting the energy, petrochemicals, government, and civil infrastructure sectors. It operates in four segments, with few projects typically accounting for a large portion of revenue. Government and Infrastructure (G&I) supports the military mission cycle. In civil infrastructure, it operates in waste and water treatment, transportation, and facilities maintenance, providing program management and other services. Upstream constructs energy and petrochemical projects, including technically complex projects in remote locations. Expertise includes LNG and GTL gas monetization facilities, refineries, oil and gas production facilities, and pipelines. Services provides construction and industrial services. Other includes Downstream, Technology, and Ventures. Halliburton (NYSE: HAL) sold stock in KBR for $17 per share in an IPO in November 2006, and divested its entire stake in April 2007. KBR sold its 51% interest in European naval dockyard DML for $345 million in June 2007.

2007 -1%

YTD 9/30/08 29%

70% 22% 4% 5%

63% 23% 9% 5%

5% 10% 17% 4% -2% 4%

5% 11% 7% 12% -2% 5%

11% 50% 39%

n/a n/a n/a

78% 12% 10%

79% 9% 12%

74% 18% 8%

78% 18% 4%

Government and infrastructure.

•

$550 million BE&K acquisition grows Services. The July deal re-establishes KBR as a domestic contractor and maintenance services provider. The integration is “going extremely well,” with “strong contributions” in new awards and financial results. Management has expressed optimism in KBR’s ability to execute and deliver positive results. CEO Bill Utt (51) joined KBR in 2006 after six years as CEO of SUEZ Energy N.A. CFO Kevin DeNicola joined KBR in June 2008 from Lyondell Chemical, where spent six years as CFO. Stock price implies 2% trailing FCF yield, 8x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS •

• •

50% of revenue from Iraq and Kuwait in 2007. The rate of spending in those regions has decreased already, partly due to a new competitively bid, multiple service provider LogCAP IV contract, which replaced the previous LogCAP III contract. U.S. government was 62% of revenue in 2007, exposing KBR to a drop in revenue if U.S. agencies materially alter their contract award criteria, or if KBR is suspended or debarred from contracting with U.S. agencies due to potential consequences of ongoing investigations into the company’s conduct. Dependent on capex by oil and gas companies in Upstream, Services, and Other business units. Formal SEC investigation and DOJ criminal investigation into “improper payments” that may have been made to government officials in Nigeria.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) FLR JEC SAI URS

MV 6,485 3,796 3,607 2,292

EV 4,418 3,299 4,035 3,234

EV/Rev .2x .3x .4x .4x

P/TB 2.4x 2.8x 8.0x n/m

08 P/E 10x 8x 17x 10x

09 P/E 9x 8x 15x 9x

KBR

2,118

1,008

.1x

1.4x

MAJOR HOLDERS CEO Utt <1% │ Other insiders <1% │ Cap Re 12% │ Tontine 11% │ Fidelity 9%

RATINGS

INVESTMENT HIGHLIGHTS •

•

SELECTED OPERATING DATA FYE December 31 2005 2006 Revenue growth -17% -5% % of revenue by segment: 1 G&I 79% 74% Upstream 12% 19% Services 3% 4% Other 6% 3% EBIT margin by segment: 1 G&I 4% 5% Upstream 9% 2% Services 14% 14% Other 22% -12% Unallocated -3% -3% Total EBIT margin 3% 2% % of revenue by geography: U.S. 14% 15% Iraq and Kuwait 59% 52% Other 28% 33% % of G&I revenue by sub-segment: U.S. Gov’t – Middle East 81% 81% U.S. Gov’t – Americas 14% 13% International operations 5% 6% % of upstream revenue by sub-segment: Gas monetization 34% 60% Offshore 47% 23% Other 19% 18%

•

Thanksgiving 2008

“Go to” contractor for U.S. government, other large buyers of engineering and construction services. KBR has proven expertise in executing large-scale projects in far-flung places. Q3-end backlog of $15 billion, up 27% y-y, provides several quarters of visibility.

VALUE Intrinsic value materially higher than market value? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends? EXPLOSIVENESS 5%+ probability of 5x upside in one year?

THE BOTTOM LINE KBR has benefited hugely from the U.S. presence in Iraq, with 50% of 2007 revenue derived from Iraq and Kuwait. As a result, it is impossible to predict a reasonable EPS range over the next few years. A sharp drop in revenue from Iraq could have a disproportionate impact on earnings. The current valuation does not adequately compensate for this risk. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Kenexa Corporation (Nasdaq: KNXA)

Wayne, PA, 610-971-9171 http://www.kenexa.com

Services: Business Services Trading Data

Consensus EPS Estimates

Price: $5.59 (as of 11/14/08) 52-week range: $5.40 - $24.01 Market value: $126 million Enterprise value: $100 million Shares out: 22.6 million Ownership Data Insider ownership: 7% Insider buys (last six months): 0 Insider sales (last six months): 0 Institutional ownership: 89% # of institutional owners: 265

Valuation

This quarter Next quarter

Latest $0.24 0.27

Month Ago $0.38 0.36

# of Ests 22 18

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.0x 4.3x 4.5x 4.7x

FYE 12/31/08

1.31

1.43

EV / LTM revenue

0.5x

FYE 12/31/09 FYE 12/31/10

1.24 1.18

1.63 1.72

22 4

EV / LTM EBITDA EV / LTM EBIT

2.4x 3.3x

LT EPS growth 19.1% 18.9% Latest Quarterly EPS Surprise

P / tangible book 1.8x Greenblatt Criteria

Date

Actual

Estimate

11/3/08

$0.36

$0.35

LTM EBIT yield

30%

LTM pre-tax ROC

>100%

12/31/02 32 24 (1) (1) (0.21) 2 2 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

12/31/03 34 25 1 (11) 0.00 3 1 3 3 12 9 25 2 10 51 61 9 (44)

n/a

22%

EBIT/capital employed

Fiscal Years Ended 12/31/04 12/31/05 46 66 34 47 4 10 (5) (35) (0.85) (3.06) 10 17 1 4 9 13 10 44 20 59 9 9 33 74 0 0 14 23 59 0 73 23 10 0 (50) 51 >100%

12/31/06 112 80 19 16 0.78 19 5 14 43 87 166 268 20 75 45 120 0 147

12/31/07 182 131 31 24 0.93 39 13 26 96 139 184 348 0 57 0 60 0 288

LTME 9/30/08 206 147 30 22 0.94 41 22 19 26 80 206 344 0 58 0 66 0 277

FQE 9/30/07 47 33 8 7 0.27 11 3 8 114 166 166 364 0 56 0 58 0 306

FQE 9/30/08 54 38 8 5 0.24 9 5 4 26 80 206 344 0 58 0 66 0 277

n/m

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW Kenexa provides web-enabled human capital management services, including applicant tracking, onboarding, recruitment process outsourcing, employment branding, skills and behavioral assessments, structured interviews, performance management, multi-rater feedback surveys, employee engagement surveys, and HR analytics. Kenexa started as a provider of recruiting services in 1987. It offered its first automated talent management system in 1993. The company has acquired 28 businesses since 1994.

• • •

2005

2006

2007

YTD 9/30/08

78% 22%

81% 19%

82% 18%

79% 21%

40% 47% 42% 89%

77% 48% 71% 148%

64% 54% 62% 12%

14% 35% 18% 11%

90% 10%

85% 15%

75% 25%

Reflects changes in period-end deferred revenue.

•

INVESTMENT HIGHLIGHTS • •

•

• •

Positioned in Gartner’s leaders quadrant in a recent research report on e-recruitment software. Focuses on talent acquisition and employee performance management, unlike vendors that provide broad suites of human capital management software. The company has developed verticalspecific software for financial services, hospitality, retail, manufacturing, pharma, and other industries. Targeting large- and medium-sized organizations with complex needs in talent acquisition and employee performance management. Kenexa uses a direct sales force comprised of inside sales, telesales and field sales personnel (150 total sales reps). Subscriptions provide recurring revenue stream, with clients typically entering into multi-year deals. Renewal rates for on-demand talent acquisition and performance management solution contracts have been running at more than 90%. Subscriptions accounted for 82% of revenue in 2007. Offers core software on demand, reducing the cost and risk associated with deploying traditional enterprise applications. Low-cost development center in India, founded in 2003 and now employing close to 200 software developers. The latter cost the company 70% less per developer than do U.S.-based employees.

Rudy Karsan (50) co-founded Kenexa’s predecessor in 1987. He has served as CEO of the company since 1991 and as chairman since 1997. Repurchased $30 million of stock YTD and $25 million in 2007. Stock price implies 15% trailing FCF yield, 6x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 % of revenue by type: Subscription Other Revenue growth by type: Subscription Other ∆ revenue 1 ∆ deferred revenue % of revenue by geography: U.S. International

Thanksgiving 2008

Lowered 2008 guidance in November to revenue growth of 12-13% (down from 24-26%) and nonGAAP EPS growth of 11-14% (vs 31-34%). Kenexa expects revenue of $204-206 million (high-70s percentage from subscriptions), non-GAAP EBIT of $37 million and non-GAAP EPS of $1.29-1.32. M&A integration. The company has completed 27 acquisitions since 1994. More recently, Kenexa acquired BrassRing for $118 million, Gantz Wiley for $7 million, Knowledge Workers for $3 million, Psychometrics for $8 million and Webhire for $34 million in 2006; HRC Human Resources Consulting for $4 million and StraightSource for $12 million in 2007; and Quorum for $20 million in 2008. Competitors include point solution providers Authoria, iCIMS, Integrated Performance Systems, InScope, PeopleClick, Kronos, Pilat HR, Previsor, Vurv, SHL Group, SuccessFactors, and Taleo; ERP software vendors Oracle (PeopleSoft), SAP, Siebel, and Lawson; and, to a lesser extent, employment process outsourcing service providers Accolo, Gallup, Hyrian, and Recruitment Enhancement.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) LWSN ORCL SAP

MV 642 87,110 41,890

EV 529 85,326 39,852

KNXA

126

100

EV/Rev .6x 3.7x 2.8x

P/TB n/m n/m 119x

08 P/E 11x 11x 14x

09 P/E 9x 10x 13x

.5x

1.8x

MAJOR HOLDERS CEO Karsan 5% │ Other insiders 2% │ Columbia Wanger 12% │ Artisan 7% │ Gund Gordon 7%

THE BOTTOM LINE Kenexa operates a non capital-intensive business providing on-demand recruiting and performance management software to large and mid-sized firms. The company has strong recurring revenue characteristics and has managed to create value through a string of acquisitions. However, we note Kenexa’s high reliance on acquired growth and the fact that acquisitions make it difficult to assess the underlying performance of the business. We are on the sidelines despite a low valuation. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

KHD Humboldt Wedag (NYSE: KHD)

Hong Kong SAR, China, 60-4-683-8286 http://www.khdhumboldt.com

Capital Goods: Construction & Agricultural Machinery Trading Data

Consensus EPS Estimates

Price: $9.10 (as of 11/14/08) 52-week range: $7.26 - $35.79 Market value: $278 million Enterprise value: -$118 million Shares out: 30.5 million Ownership Data Insider ownership: 22% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.38 0.47

Month Ago $0.53 0.47

# of Ests 2 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.4x 4.3x 5.1x 7.7x

FYE 12/31/08

2.12

2.15

EV / LTM revenue

-0.2x

FYE 12/31/09 FYE 12/31/10

1.77 1.18

2.50 n/a

2 1

EV / LTM EBITDA EV / LTM EBIT

n/a -1.4x

P / tangible book 0.8x Greenblatt Criteria

LT EPS growth 32.8% 32.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 44% # of institutional owners: 153

Date

Actual

Estimate

11/12/08

$0.80

$0.55

LTM EBIT yield

-73%

LTM pre-tax ROC

n/m

12/31/01 214 66 44 43 1.60 65 0 65 159 336 28 395 0 42 98 149 0 246

12/31/02 284 99 47 51 1.85 21 0 21 178 422 16 447 0 87 69 161 0 285

33%

32%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 410 187 384 76 31 52 50 15 31 49 37 25 1.79 0.47 1.01 37 60 67 0 2 3 37 58 65 165 263 113 235 471 462 16 20 0 405 604 610 9 27 5 154 253 249 27 14 6 186 334 325 0 0 0 218 269 285 69%

n/m

52%

12/31/06 459 72 43 30 1.04 43 3 40 243 513 0 748 6 316 16 430 0 319

12/31/07 580 86 53 34 1.42 130 4 127 370 634 0 789 0 396 14 482 0 307

LTME 9/30/08 638 116 86 70 2.31 114 3 111 408 709 0 848 0 412 13 496 0 352

FQE 9/30/07 150 21 15 12 0.64 35 (0) 35 285 558 0 717 0 348 12 424 0 293

FQE 9/30/08 194 37 32 31 1.01 (23) 1 (24) 408 709 0 848 0 412 13 496 0 352

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW KHD operates in two segments: Industrial Plant Engineering and Equipment Supply provides technologies, equipment, and engineering for cement, coal, and minerals processing. The segment also builds plants that produce clinker, cement, clean coal, and minerals. Resource Property consists of a mining sublease on which the Wabush iron ore mine is situated that commenced in 1956 and expires in 2055. The company spun off Mass Financial, representing KHD’s former financial services and merchant banking business, in January 2006. KHD completed several other strategic actions subsequent to the Mass Financial spin-off.

SELECTED OPERATING DATA YTD FYE December 31 2005 2006 2007 9/30/08 ∆ revenue 120% 28% 44% 14% ∆ order intake n/a 55% 19% 28% ∆ order backlog (period end) n/a 70% 38% 39% % of revenue by segment: 1 Industrial plant engineering 100% 100% 100% 100% 2 0% 0% 0% 0% Iron ore mine royalty % of pre-tax income by segment: 1 Industrial plant engineering 84% 95% 93% 85% 2 14% 12% 25% 27% Iron ore mine royalty Corporate and other 2% -7% -18% -13% % of industrial plant engineering revenue by customer group: Cement 90% 84% 89% 86% Coal and minerals 10% 16% 11% 14% % of industrial plant engineering revenue by geography: Americas 7% 19% 20% n/a Asia 21% 26% 34% n/a Europe and Russia 23% 18% 21% n/a Middle East 42% 34% 21% n/a Africa and other 6% 4% 4% n/a

• • •

•

Includes industrial plant engineering and equipment supply. KHD has a royalty interest in the Wabush iron ore mine. “Income from interest in resource property” is earned from an unincorporated JV operating in Canada. KHD does not report any revenue related to this JV.

INVESTMENT HIGHLIGHTS •

•

Third-largest player with 20% global market share, based on new contracted cement kiln capacity, behind Danish firm FL Smidth (29%) and Chinese firm Sinoma (28%), and ahead of German firm Polysius (part of ThyssenKrupp). Unlike cement manufacturers, KHD is a service provider operating under an asset-light business model. Low exposure to U.S., which represented 6% of KHD backlog going into 2008. The Middle East, where cement consumption is growing 10-15%, was 33% of backlog. Asia, where consumption is growing 10%+, accounted for 29% of backlog. Russia and Eastern Europe, where consumption is growing 10-15%, represented 29% of backlog.

Backlog amounts to 2.3 years of LTM revenue, providing several quarters of visibility. Holds 471 patents, including innovations in kiln design, pyro processing, calciners, coolers, grinding technologies, and separators and roller presses. Chairman Michael Smith (59) has a history of shareholder value creation. Smith’s M&A, corporate finance and global taxation background have benefited investors, as he has created value through various entities over the years, including MFC Bancorp, Mass Financial, Sasamat Capital, Cathay Merchant Group, and Blue Earth Refineries. KHD owns non-core assets, including an ore mine royalty interest (LTM income of $27 million); preferred shares of Mass Financial of $86 million; and (3) net cash and equivalents of $395 million. Stock price implies 40% trailing FCF yield, 4x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS • •

•

1 2

Thanksgiving 2008

•

Q3 orders down 65% y-y due to “delays in project awards by customers revisiting their financing alternatives in light of credit market dynamics.” Downturn expected to persist. According to KHD, “Many of our customers are facing liquidity problems. Some have approached us to discuss renegotiating contracts… we should expect some projects to be delayed, others cancelled and a decrease in the number of project opportunities.” Outlook scrapped: “…we are not in a position at this time to confirm our guidance on earnings and order intake for 2008 which we gave [on April 2]” Tax rate likely to increase over time. Smart tax planning and NOLs have historically kept KHD’s tax rate in a range of 5-10%. Management expects the rate to increase to about 20% going forward.

MAJOR HOLDERS Chairman Smith <1% (may own more through various vehicles) │ CEO Busche <1% │ Peter Kellogg 21% (longtime association with Smith) │ Fidelity 6% │ Apis 5%

THE BOTTOM LINE KHD is a rare cyclical magic formula stock we find compelling. The business has existed for more than a century, and KHD is a proven innovator. Growth exploded in recent years, as cement plant engineering services and equipment experienced strong global demand. Chairman Michael Smith has a proven track record of efficient capital allocation. The market is myopically focused on the outlook for cement engineering while completely ignoring KHD’s excess assets. We value KHD at $25-37 per share, based on a sum-of-the-parts valuation analysis that considers the company’s $481 million in net cash, investments and Mass Financial preferred shares; the Wabush iron ore interest; and the core cement engineering business. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

…additional insight into KHD:

OVERVIEW OF SELECTED OPERATING DATA

WHAT ARE THE SHARES WORTH?

KHD – Engineering Revenue and Backlog, 2005-YTD’08

• •

We value KHD at $25-37 per share, based on the sum-of-the-parts valuation summarized below. In addition to strong upside potential, we note significant downside protection, with estimated excess cash and investments of $331-381 million. Our calculation of excess assets conservatively excludes $100-150 million, which we estimate is needed to run the core cement engineering business.

The company has grown cement plant engineering revenue rapidly in recent years, with backlog reaching $1.1 billion as of September 30. While the large backlog bodes well for near-term revenue, KHD saw a sharp decline in Q3 order intake, and management expects that some customers will seek to delay or cancel projects.

$1.2bn $1.0bn $0.8bn

$600mn $400mn

$0.6bn $0.4bn $0.2bn $0.0bn

$200mn

KHD — Sum-of-the-Parts Valuation Summary ($ in millions, except per share data)

Low Value

High Value

$373 27 9 31 86 (13) (32) $481 (150) $331

$373 27 9 31 86 (13) (32) $481 (100) $381

$0mn 05

Value of excess net assets: Cash and equivalents Short-term cash deposits Securities Restricted cash Preferred shares of Mass Financial Long-term debt Pension liability Net cash and investments 2 Cash needed to run business Total Value of iron ore interest: LTM earnings to KHD Fair value multiple of LTM earnings Annualized Q3 earnings to KHD Fair value multiple of ann. Q3 earnings Total

$27 5x $133

$35 5x $175

$296

145 (11) (16) 5x $593

Estimated fair value of KHD per share

$759 $25

$1,148 $37

85 (12) (13) 5x

YTD 07

YTD 08

Notes: Engineering revenue equals total revenue, as iron ore income is accounted for below the revenue line. Backlog represents period-end backlog. YTD represents period from January 1 through September 30. Source: Company, The Manual of Ideas.

KHD – Engineering Income and Margin, 2005-YTD’08 Engineering pre-tax margin has expanded since 2005, causing income growth to outstrip revenue growth over the same time period. Margins may get squeezed going forward, as the company attempts to keep customers from postponing or cancelling projects.

$75mn

15%

$60mn 10%

$45mn

$15mn $0mn

Based on balance sheet values as of September 30, 2008. MOI estimate of cash needed to run engineering business; reflects deferred revenue liability, which could become cash-draining amid order slowdown. 3 A portion of net interest income is subtracted from segment income to reflect the separate consideration of excess assets in our valuation analysis. Source: Company filings, The Manual of Ideas estimates and analysis. 2

WHY THE SHARES MAY BE MISPRICED Investors not looking beyond current slowdown in cement engineering business. KHD’s earnings report on November 12 spooked investors due to a 65% y-y drop in Q3 order intake and concerns about potential order cancellations. While the Q3 result represents a sharp reversal from earlier strength in orders, investors are myopically focusing on the current woes of cement engineering business, ignoring (1) the long-term earning power of the engineering business, (2) very large excess assets, and (3) the valuable Wabush iron ore interest.

$30mn

Value of cement engineering business: LTM pre-tax segment income LTM corporate/other expenses 3 LTM net interest income Fair value multiple of LTM pre-tax income Annualized Q3 pre-tax segment income Annualized Q3 corporate/other expenses 3 Annualized Q3 net interest income Fair value multiple of ann. Q3 income Total

•

Engineering Revenue (left axis) Backlog (right axis)

0% 05

Engineering Income (left axis) Engineering Margin (right axis)

YTD 07

YTD 08

Notes: Income and margin represent pre-tax segment income and margin; corporate and other expenses are excluded from segment income. YTD represents period from January 1 through September 30. Source: Company, The Manual of Ideas.

KHD – Iron Ore Royalty Income, 2005-YTD’08 The company’s income from an interest in the Wabush iron ore mine has grown as iron ore prices have risen, with YTD income reaching $22 million and Q3 income reaching $9 million.

$30mn $20mn $10mn $0mn 05

YTD 07

YTD 08

Notes: YTD represents period from January 1 through September 30. Source: Company, The Manual of Ideas.

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MANAGEMENT’S VIEW OF BUSINESS Notes from 3Q08 earnings call on November 12: • Operating environment: “rapidly changing;” expects credit shortage to negatively impact global construction and infrastructure markets; past trend of robust demand growth to “moderate;” customers facing “unprecedented” challenges; some customers have approached KHD to renegotiate contracts; customer capex spending likely to decline; KHD “should expect some projects to be delayed, some projects to be cancelled, and a general decrease in the number of project opportunities” • Management response to weak environment: changing focus from “business growth” to “sustaining equity” during uncertainty; expects to develop plan to cut costs by yearend (will present plan to shareholders); a key objective is to preserve cash by operating in cash flow-neutral way (“excluding working capital movements”) • Q3 review: order intake down 65% due to project award delays (55% of orders from Middle East, 23% from Russia and Eastern Europe) – intake weakened progressively throughout Q3; backlog of $1.1 billion at Q3-end (39% from Russia and Eastern Europe, 27% from Asia, 26% from Middle East) – initial assessment is that backlog solidity is “reasonable” (but also “dynamic” and “changing”) • Outlook: “not in position to confirm” prior guidance for earnings and order intake; “don’t have a feel” for how quickly business may pick up again • Balance sheet: majority of cash is held in Austrian banks with strong credit ratings (government has announced intention to support banks if necessary); largest portion of cash is denominated in euros; $100 million set aside in dollars for business growth • M&A strategy: “hesitant” to spend cash • Iron ore: income up due to price increases; mine output has been relatively consistent in recent years • Investment in Mass Financial preferred shares: negotiating with Mass to distribute to KHD shareholders a portion or all of KHD’s interest in Mass by way of newly created common shares in Mass; mechanism will likely be conversion of a portion of KHD shares held into shares of Mass

ROYALTY INTEREST IN WABUSH IRON ORE MINE

(0% of 2007 revenue, 25% of pre-tax income) •

KHD’s income from Wabush mine correlates closely with iron ore prices. As prices have risen, KHD’s income from its interest in Wabush has increased, from $4 million in 2005 to $6 million in 2006 and $17 million in 2007. For an excellent primer on iron ore supply, demand and pricing drivers, see the April 2008 letter by the chairman and president of Leucadia National (NYSE: LUK): http://tinyurl.com/moi14 (pages 2-4).

Thanksgiving 2008

• •

•

KHD participates in royalty interest in Wabush iron ore mine sublease, which expires in 2055. Description of Wabush mine, adopted from Cleveland Cliffs (CLF) 10-K dated February 29: “The mine and concentrator are located in Wabush, Labrador, Canada, and the pellet plant is located in Pointe Noire, Quebec. The Wabush mine has been in operation since 1965. Over the past five years, the mine has produced 3.8-5.2 million tons of iron ore pellets annually. CLF own 27% of Wabush, ArcelorMittal subsidiary Dofasco owns 29% and U.S. Steel Canada owns 45%.” In March, Dofasco sued U.S. Steel Canada and CLF to compel them to complete the sale of their interests to Dofasco. Holder of royalty interest receives royalties from an unincorporated JV that operates the mine. The JV pays a royalty that was set in 1987 at a base rate of C$1.685 per ton, with escalations as defined by agreement. In 2005, KHD sued the JV participants for alledged underpayment of royalties. Demand for iron ore is driven by raw material requirements of integrated steel producers. Demand for blast furnace steel is cyclical and influenced by macroeconomic factors.

Wabush Iron Ore Mine Iron ore shipments (mn tons) Pre-tax income to KHD ($mn)

2005 4.9 4.3

2006 4.1 6.4

2007 4.8 16.6

Major Iron Ore Producers

Vale do Rio Rio Tinto BHP Billiton Kumba LKAB 2 Others

URL vale.com riotinto.com bhpbilliton.com kumba.co.za lkab.com --

1Q08 Production (mn tons) 83 37 28 8 6 36

Market 1 Share 42% 19% 14% 4% 3% 18%

Source: EconStats, The Manual of Ideas. 1 Represents approximate share of ocean trade in iron ore. 2 Represents estimates.

Iron Ore Prices, 1976-20081 ($ per ton)

$140 $120 $100 $80 $60 $40 $20 $0 1976

1984

1992

2000

2008

Source: EconStats, CVRD, Wall Street Journal, steel producers. 1 Represents Brazil-to-Europe prices. Contracts are generally made in the spring/early summer between iron ore and steel producers. Prices shown are prices arranged at the beginning of May of each year. They represent price of fines, i.e., the most heavily-traded category of iron ore.

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Thanksgiving 2008

King Pharmaceuticals, Inc. (NYSE: KG)

Bristol, TN, 423-989-8000 http://www.kingpharm.com

Health Care: Biotechnology & Drugs, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $9.64 (as of 11/14/08) 52-week range: $6.98 - $12.60 Market value: $2.4 billion Enterprise value: $1.5 billion Shares out: 246.5 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.21 0.21

Month Ago $0.22 0.24

# of Ests 8 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

12.9x 8.1x 11.6x 12.9x

FYE 12/31/08

1.19

1.15

EV / LTM revenue

0.8x

FYE 12/31/09 FYE 12/31/10

0.83 0.75

0.85 0.82

7 5

EV / LTM EBITDA EV / LTM EBIT

2.8x 4.2x

P / tangible book 1.2x Greenblatt Criteria

LT EPS growth -13.0% n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 95% # of institutional owners: 791

Date

Actual

Estimate

11/6/08

$0.33

$0.26

LTM EBIT yield

24%

LTM pre-tax ROC

99%

12/31/01 872 686 343 218 0.93 280 40 239 925 1,238 1,038 2,507 1 151 346 598 0 1,908

12/31/02 1,088 797 275 182 0.69 345 74 271 816 1,262 1,232 2,751 1 370 345 820 0 1,931

>100%

88%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,493 1,304 1,773 1,107 952 1,450 152 (41) 180 92 (160) 118 0.40 (0.21) 0.48 430 299 520 51 55 53 379 244 466 146 359 525 970 1,127 1,248 1,674 1,407 1,088 3,202 2,924 2,965 0 0 345 728 689 972 345 345 0 1,197 1,075 992 0 0 0 2,005 1,849 1,973 47%

-12%

47%

12/31/06 1,989 1,569 403 289 1.19 466 72 394 1,004 1,674 973 3,330 0 618 400 1,041 0 2,289

12/31/07 2,137 1,570 228 183 0.75 673 149 524 1,366 1,820 910 3,427 0 453 400 916 0 2,511

LTME 9/30/08 1,751 1,324 352 258 1.05 n/a n/a n/a 1,304 1,700 785 3,512 0 318 400 779 0 2,733

FQE 9/30/07 545 347 (78) (41) (0.17) 174 72 103 1,079 1,655 962 3,378 0 453 400 920 0 2,459

FQE 9/30/08 388 287 123 85 0.34 n/a n/a n/a 1,304 1,700 785 3,512 0 318 400 779 0 2,733

>100%

74%

99%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW King is a vertically integrated branded pharma company. It develops novel prescription pharma products and technologies that complement its focus in specialty-driven markets, particularly neuroscience, hospital and acute care. The company’s leading brands include Avinza CII, a oncedaily morphine treatment for chronic pain; Skelaxin, for relief from discomfort associated with acute musculoskeletal conditions; Thrombin-JMI, which aids in controlling bleeding during surgery; Altace, an ACE inhibitor; Sonata CIV, one of three approved non-benzodiazepine treatments for insomnia; and Levoxyl, for the treatment of thyroid disorders. The Meridian Auto-Injector segment consists of EpiPen—a prefilled, pen-like device that allows a patient or caregiver to automatically inject a precise drug dosage—and nerve gas antidotes King provides to the U.S. Military.

•

• •

•

• YTD 9/30/08 81% 14% 5% 0%

•

44% 20% 0% 21% 15%

•

34% 10% 20% 5% 16% 15%

•

Revenue down 24% and adjusted EBIT down 32% YTD, primarily due to earlier-thanexpected generic competition for Altace. Following the Circuit Court’s decision in September 2007 invalidating King’s Altace patent, generic competition entered the market in December 2007. In response, King eliminated 20% of its workforce. New branded competition. King’s bovine thrombin product, Thrombin-JMI, faces new competition in 2008 from Omrix and Zymogenetics. Sales concentration. 75% of gross sales were attributable to McKesson (35%), Cardinal/ Bindley (27%), and AmerisourceBergen (13%) in 2007.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) BAX ELN HSP PFE WYE

INVESTMENT HIGHLIGHTS •

CEO and CFO with company since ‘04 and ‘05, respectively. Prior to joining King, CEO Brian Markison (48) spent 22 years at Bristol-Myers Squibb (most recently as president of the oncology business). CFO Joseph Squicciarino (51) was previously North America CFO at Revlon. Cash of $1.3 billion, student loans of $344 million (at fair value), and debt of $400 million. Launched $1.4 billion Alpharma (ALO) tender in September ($37 per share, >50% premium) and signed confidentiality agreement in October. Alpharma’s Board has called the offer inadequate. Stock price implies 9x trailing P/E and 12x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 2005 2006 2007 Revenue by segment: Branded pharma 87% 87% 87% Meridian Auto-Injector 7% 8% 9% Royalty revenue 4% 4% 4% Contract and other 1% 1% 1% Branded pharma revenue by therapeutic area: Neuroscience 28% 29% 34% Hospital 16% 16% 16% Acute care 5% 4% 4% Cardiovascular 49% 48% 44% Other 3% 3% 3% Branded pharma revenue by drug: Skelaxin 22% 24% 24% Avinza 0% 0% 6% Thrombin-JMI 14% 14% 14% Levoxyl 9% 6% 5% Altace 36% 38% 35% Other branded pharma 18% 17% 16%

Thanksgiving 2008

Recent positives include Q3 prescription growth of 8% for Avinza (10% of YTD branded pharma revenue, up from 5% a year ago). Thrombin-JMI has also performed well YTD, growing to 20% of branded pharma revenue, up from 14%. Merdian Auto-Injector revenue has increased 17% YTD. May submit three New Drug Applications by the end of this year. King partner Pain Therapeutics submitted an NDA for Remoxy (long-acting oral oxycodone) to the FDA in June. An FDA advisory committee reviewed the NDA on November 13. King and partner Acura Pharma plan to submit an NDA for Acurox (oxycodone HCl/niacin) this year (positive top-line data from the pivotal Phase III clinical trial reported in June). King also expects to file an NDA for Corvue soon.

MV 37,210 3,186 4,791 109,775 45,457

EV 38,439 4,452 6,665 99,330 42,795

EV/Rev 3.1x 4.7x 1.8x 2.0x 1.8x

P/TB 7.5x n/m 19.7x 4.1x 3.0x

08 P/E 18x n/m 12x 7x 10x

09 P/E 16x n/m 11x 7x 9x

2,376

1,472

.8x

1.2x

12x

MAJOR HOLDERS CEO Markison <1% │ Other insiders 1% │ Lord Abbett 9% │ Barclays 7% │ Vanguard 5%

The company has put in place numerous takeover provisions.

THE BOTTOM LINE King is a company in transition, as its best-selling drug Altace has encountered generic competition, causing revenue and profits to decline in 2008, and likely in 2009. The shares are not cheap enough to make us overlook weak performance. As the above comp table shows, investors can own Pfizer at a lower multiple of earnings, a far preferable choice, in our view. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Korn/Ferry International (NYSE: KFY)

Los Angeles, CA, 310-552-1834 http://www.kornferry.com

Services: Business Services, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $11.61 (as of 11/14/08) 52-week range: $9.87 - $20.75 Market value: $553 million Enterprise value: $344 million Shares out: 47.6 million Ownership Data Insider ownership: 2% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.30 0.26

Month Ago $0.30 0.27

# of Ests 9 8

FYE 4/30/09

1.15

1.21

EV / LTM revenue

0.4x

FYE 4/30/10 FYE 4/30/11

1.11 1.82

1.23 1.82

6 2

EV / LTM EBITDA EV / LTM EBIT

3.4x 3.8x

P / tangible book Greenblatt Criteria

1.6x

LTM EBIT yield

26%

LT EPS growth 14.3% 14.3% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 395

Date

Actual

Estimate

9/9/08

$0.36

$0.30

P/E FYE 4/30/08 P/E FYE 4/30/09 P/E FYE 4/30/10 P/E FYE 4/30/11

8.0x 10.1x 10.5x 6.4x

LTM pre-tax ROC

>100%

4/30/02 407 107 (106) (98) (2.62) (60) 9 (68) 66 172 86 378 52 146 2 198 0 179

4/30/03 339 92 (13) (24) (0.63) 22 4 19 83 162 95 369 5 89 51 203 0 167

EBIT/capital employed

-205%

-36%

Fiscal Years Ended 4/30/04 4/30/05 4/30/06 351 476 552 106 158 179 16 66 76 5 39 59 0.13 0.90 1.32 30 88 75 2 8 11 28 80 63 108 207 278 186 305 395 99 107 110 398 534 636 0 0 0 97 158 176 55 56 56 217 281 312 0 0 0 181 253 324 >100%

n/m

4/30/07 689 197 82 56 1.24 102 14 88 324 465 142 762 0 230 0 329 0 433

4/30/08 836 237 92 66 1.46 110 17 93 369 526 158 880 0 273 0 384 0 496

LTME 7/31/08 857 238 91 65 1.45 94 17 77 209 387 158 803 0 173 0 290 0 513

FQE 7/31/07 196 59 25 17 0.36 (73) 3 (77) 245 410 147 713 0 153 0 260 0 454

FQE 7/31/08 218 61 24 16 0.36 (89) 3 (92) 209 387 158 803 0 173 0 290 0 513

n/m

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

Korn/Ferry is a global executive search firm. Clients include many of the world’s largest companies, governments and nonprofits. Three-quarters of recruitment assignments are on behalf of clients who have used Korn/Ferry in the past three years. In FY08, assignments by industry were as follows: 27% industrial, 20% financial services, 17% consumer, 16% technology, and 20% other. 61% of FY08 assignments were to fill a Board level, CEO, CFO or other senior executive position. In 1998, the company expanded into middle management with the launch of Futurestep, an outsourced recruiting subsidiary. Korn/Ferry was founded in 1969.

• • •

SELECTED OPERATING DATA FYE April 30 2006 2007 2008 Consultants (period end) 507 601 684 % of revenue by type: Executive recruitment fees 82% 82% 81% Futurestep fees 13% 12% 13% Reimbursements 5% 5% 5% Revenue growth by type: Executive recruitment fees 14% 25% 20% Futurestep fees 30% 23% 29% Total fee revenue 16% 25% 21% % of executive recruitment fees by geography: North America 57% 58% 55% EMEA 26% 26% 27% Asia Pacific 13% 13% 14% South America 4% 3% 4% EBIT margin by type: Executive recruitment 22% 20% 18% Futurestep 5% 9% 8% Corporate -5% -6% -5% Total EBIT 14% 12% 11%

1Q09 n/a

• •

•

Beneficiary of globalization. Korn/Ferry generates an increasing portion of business internationally, with fees outside of North America amounting to 45% of total executive recruitment fees in FY08. The company is not a newcomer to global markets, having established offices in Europe, Asia and Latin America in 1972, 1973 and 1974, respectively. $377 million of cash, investments and similar assets and no debt as of July 31. Repurchased $64 million of stock in FY08 and another $2 million in 1Q09. Stock price implies 14% trailing FCF yield, 8x trailing P/E and 10x forward P/E.

INVESTMENT RISKS & CONCERNS •

80% 14% 5%

•

9% 22% 11%

•

54% 30% 12% 4% 18% 9% -5% 11%

Highly sensitive to employment trends. The company’s revenue and profitability would suffer materially in a global downturn. Modest barriers to entry. While the company’s strong reputation gives it an edge executive recruitment at the highest levels is a relationshipdriven rather than a brand-driven business. “People business,” ie, limited scalability. While Futurestep makes the company’s model more scalable, Korn/Ferry still largely depends on the “production” of its consultants. Qualified people are not easy to hire and retain, and they may demand an increasing share of profits in good times.

COMPARABLE PUBLIC COMPANY ANALYSIS1 ($mn) HHGP HSII MPS RHI

INVESTMENT HIGHLIGHTS •

Thanksgiving 2008

Top-notch reputation. Korn/Ferry leads the executive search industry and focuses on positions with comp of $150K+. Strong reputational capital allows it to operate as a retained rather than a contingency firm. Retained firms typically earn a one-time fee equal to one-third of annual cash comp without regard to whether a positon has been filled. Futurestep’s focus on mid-level recruitment adds a scalable, technology-driven business model to Korn/Ferry. Futurestep fees grew 29% in FY08. Building “talent management solutions” firm. While search fees still dominate, Korn/Ferry also helps clients “develop, retain and reward their talent,” thereby providing value beyond recruitment. Experienced management. Chairman Paul Reilly (54) was previously CEO of KPMG Int’l, while CEO Gary Burnison (47) held high-level positions at Guidance, Jefferies, and KPMG Peat Marwick.

KFY 1

MV 111 347 578 2,762

EV 67 164 523 2,392

553

344

EV/Rev .1x .2x .2x .5x

P/TB 0.8x 1.8x 2.3x 3.3x

08 P/E 24x 9x 8x 11x

09 P/E 108x 14x 15x 25x

.4x

1.6x

10x

Non-public comps include Egon Zehnder, Russell Reynolds, Spencer Stuart.

MAJOR HOLDERS Chairman Reilly 1% │ CEO Burnison <1% │ Other insiders 2% │ Royce 11% │ T Rowe 10% │ Fiduciary 6% │ Kornitzer 5%

THE BOTTOM LINE Korn/Ferry operates a non capital-intensive business and enjoys strong reputation that should allow it to win high-margin search assignments from the most desirable clients for a long time to come. The company also has a long runway of international growth ahead of it. While near-term earnings may suffer, the Korn/Ferry franchise should accrete value at a satisfactory rate over time. We find the shares interesting but not compelling, as earnings may yet surprise on the downside.

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Thanksgiving 2008

Lam Research Corporation (Nasdaq: LRCX)

Fremont, CA, 510-572-0200 http://www.lamrc.com

Technology: Semiconductors, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $17.99 (as of 11/14/08) 52-week range: $16.68 - $48.00 Market value: $2.2 billion Enterprise value: $1.5 billion Shares out: 124.9 million Ownership Data Insider ownership: 1% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest -$0.04 -0.08

Month Ago $0.25 0.30

# of Ests 17 15

FYE 6/30/09

0.13

1.20

EV / LTM revenue

0.7x

FYE 6/30/10 FYE 6/30/11

1.23 2.01

2.18 2.99

14 3

EV / LTM EBITDA EV / LTM EBIT

n/a 4.5x

P / tangible book Greenblatt Criteria

1.6x

LT EPS growth 12.3% 15.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 95% # of institutional owners: 771

Date

Actual

Estimate

10/22/08

$0.26

$0.25

P/E FYE 6/29/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

5.2x 138.4x 14.6x 9.0x

LTM EBIT yield

22%

LTM pre-tax ROC

96%

6/30/02 943 266 (120) (90) (0.71) 22 11 11 874 1,355 0 1,632 315 598 360 957 0 675

6/29/03 755 304 (5) (8) (0.06) 69 12 57 507 873 0 1,198 5 217 332 549 0 649

-45%

-2%

Fiscal Years Ended 6/27/04 6/26/05 6/25/06 936 1,503 1,642 431 764 827 111 388 405 83 297 335 0.59 2.09 2.33 157 426 367 24 23 42 133 403 325 430 809 1,050 896 1,245 1,706 0 0 15 1,199 1,449 2,327 3 0 0 377 379 568 10 0 350 386 382 919 0 0 0 813 1,067 1,409 66%

>100%

6/24/07 2,567 1,305 795 686 4.85 824 60 764 671 1,416 131 2,102 0 673 250 925 0 1,176

6/29/08 2,475 1,173 509 439 3.47 590 77 514 1,059 1,918 403 2,807 30 638 276 1,028 0 1,779

LTME 9/28/08 2,231 1,013 328 300 2.37 411 78 333 1,059 1,808 375 2,685 30 534 269 924 0 1,761

FQE 9/23/07 685 344 198 149 1.18 222 14 208 911 1,579 130 2,289 0 574 250 898 0 1,391

FQE 9/28/08 440 183 17 9 0.07 43 15 28 1,059 1,808 375 2,685 30 534 269 924 0 1,761

>100%

96%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW Lam Research supplies wafer fabrication equipment to the semiconductor industry. The company’s etch systems shape the microscopic conductive and dielectric layers into circuits that define a chip’s final use and function. Lam also offers single-wafer clean technologies which allow customers to implement customized yield-enhancing solutions. Founded in 1980, Lam acquired SEZ in March 2008. SEZ supplies single-wafer wet clean technology.

• •

2007 56% 23%

2008 -4% -36%

1Q09 -36% n/a

16% 9% 22% 21% 14% 18%

17% 10% 20% 22% 18% 12%

15% 10% 14% 27% 17% 17%

14% <10% 14%

19% 13% <10%

n/a n/a n/a

•

Backlog of $410 million as of June 30, 2008, one-sixth of trailing revenue.

INVESTMENT HIGHLIGHTS •

•

Market share leader in plasma etch. Lam has held #1 share for six years and now has a larger piece of the market than the next two competitors combined. Lam also offers an expanded product portfolio beyond etch integrated processing solutions. SEZ acquisition targets single-wafer clean market. SEZ’s proprietary Spin-Processor technology forms part of Lam’s equipment portfolio for wafer cleaning. As half of the wafer cleaning steps in a fab immediately follow an etch process, management views SEZ as highly complementary. Stephen Newberry (54) became CEO in 2005 after serving as COO for seven years. Prior to joining Lam, Newberry spent 17 years at Applied Materials, serving most recently as Group VP of Global Operations. Executive chairman James Bagley (69) previously served as Lam’s CEO. Prior to joining Lam, Bagley was CEO of OnTrack Systems, which Lam acquired in 1997. Bagley had also spent 15 years at Applied Materials, serving in roles including COO and vice chairman. CFO Martin Anstice (41) joined Lam in 2001, following 13-year tenure as a finance executive at Raychem. Strong balance sheet, with $1.1 billion of cash and short-term investments and $300 million of debt.

$250 million share repurchase authorized. Stock price implies 15% trailing FCF yield, 8x trailing P/E and 138x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE June 30 2006 ∆ revenue 9% 1 ∆ backlog (period end) 48% % of revenue by geography: U.S. 14% Europe 13% Taiwan 17% Korea 22% Japan 22% Other Asia 12% % of revenue by customer: Samsung Electronics 15% Toshiba 12% Hynix Semiconductor <10%

Thanksgiving 2008

•

Weak wafer fab equipment spending, with 1Q09 revenue down 36% . A prolonged supply/demand imbalance in memory continues, with spending down 35-40% y-y. The company sees limited nearterm capacity expansion in memory or foundry segments. According to Lam, while lower capital intensity benefits the industry in the long term, “significant December quarter uptick in shipments for Lam appears less likely.”1 The company is responding by restructuring the Clean Product Group, with targeted annual savings of up to $40 million, and by pursuing other cost savings. Competition. An investor presentation by CFO Martin Anstice in September listed “continued Etch market share defense” as a near-term focus, suggesting that management may be concerned about threats to Lam’s share. Primary competitors in the etch market are Tokyo Electron and Applied Materials. The primary competitor in the singlewafer wet clean market is Dainippon Screen Mfg. Revenue primarily from high-priced systems ranging in price up to $6 million per unit. This may increase cyclicality and volatility of results.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AMAT KLAC VECO

MV 13,725 3,067 148

EV 11,827 2,505 176

EV/Rev 1.5x 1.1x .4x

P/TB 2.3x 1.7x 1.3x

08 P/E 13x 36x 9x

09 P/E 9x 14x 16x

LRCX

2,248

1,488

.7x

1.6x

138x

15x

MAJOR HOLDERS CEO Newberry <1% │ Other insiders 1% │ Fidelity 14% │ Wellington 11% │ AllianceBernstein 7% │ Cap Re 6%

RATINGS VALUE Intrinsic value materially higher than market value? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends? EXPLOSIVENESS 5%+ probability of 5x upside in one year? 1 The outlook presented in this paragraph was adopted from an investor presentation by CFO Martin Anstice on September 16, 2008.

THE BOTTOM LINE Lam is dealing with a sharp downturn in wafer fab equipment spending. The company is highly dependent on the memory market, which continues to suffer from oversupply. As a result, management has been forced to take restructuring charges as part of an effort to cut costs. While the shares may be worth a look due to their low valuation and a $250 million buyback authorization, it is extremely difficult to predict how deteriorating industry conditions will impact near-term results.

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Thanksgiving 2008

LCA-Vision Inc. (Nasdaq: LCAV)

Cincinnati, OH, 513-792-9292 http://www.lasikplus.com

Health Care: Healthcare Facilities, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $3.91 (as of 11/14/08) 52-week range: $2.16 - $21.34 Market value: $73 million Enterprise value: $32 million Shares out: 18.5 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest -$0.23 0.19

Month Ago -$0.03 0.20

# of Ests 6 2

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

2.4x n/m n/m 10.6x

FYE 12/31/08

-0.17

0.29

EV / LTM revenue

0.1x

FYE 12/31/09 FYE 12/31/10

-0.17 0.37

0.27 0.95

7 3

EV / LTM EBITDA EV / LTM EBIT

1.3x 4.5x

P / tangible book 0.8x Greenblatt Criteria

LT EPS growth 13.7% 13.7% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 219

Date

Actual

Estimate

10/28/08

-$0.25

-$0.07

LTM EBIT yield

22%

LTM pre-tax ROC

16%

12/31/01 68 21 (8) (23) (1.34) (2) 7 (9) 17 19 0 43 0 5 0 5 0 38

12/31/02 62 21 (4) (4) (0.24) 6 2 4 18 21 0 40 0 8 0 8 0 32

-39%

-24%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 81 120 177 34 56 88 7 18 35 7 32 23 0.44 1.53 1.07 13 30 40 5 7 11 7 23 29 65 87 111 70 105 142 0 0 0 90 130 181 0 1 2 9 13 29 0 0 1 11 18 55 0 0 0 79 112 127 54%

97%

>100%

12/31/06 239 118 41 28 1.34 52 10 42 95 136 0 190 3 41 2 81 0 109

12/31/07 293 146 46 33 1.64 55 29 26 60 95 0 180 4 47 2 86 0 94

LTME 9/30/08 241 107 7 6 0.30 26 30 (3) 63 89 0 172 7 38 15 82 0 91

FQE 9/30/07 75 39 14 10 0.51 8 6 3 76 115 0 185 4 42 3 85 0 100

FQE 9/30/08 37 12 (6) (5) (0.25) 4 1 3 63 89 0 172 7 38 15 82 0 91

>100%

16%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

LCA-Vision provides laser vision correction under the LasikPlus brand in 77 fixed-site vision correction centers, primarily in the U.S. The centers employ laser technologies to correct nearsightedness, farsightedness and astigmatism, with independent, board-certified ophthalmologists performing procedures. Most patients receive the LASIK procedure, which was first performed in 1997. The company has performed one million procedures since 1991.

• •

2005 142 1,246 177 32 48% -1% 47% nm na na

2006 185 1,290 239 50 30% 4% 35% 57% na na

2007 192 1,523 293 42 4% 18% 22% -16% 72 45

YTD 9/30/08 96 1,787 171 27 -37% 22% -23% -36% 77 “most”

•

At period end.

•

INVESTMENT HIGHLIGHTS •

• •

• • •

170 million Americans require eyeglasses or contact lenses to correct vision problems. More than six million laser vision correction procedures have been performed in the U.S. since FDA approval in 1995 (1.4 million procedures in 2007). Laser vision correction is typically a private pay procedure performed on an outpatient basis. #1 or #2 provider along with TLC Vision. The two market leaders compete in a fragmented market, with more than 50% still served by local providers. Offers two procedures: PRK (old) and LASIK (new). PRK/surface ablation involves removing cells covering the cornea. LASIK, which accounts for most of LCA’s procedures, involves creating a corneal flap that remains hinged to the eye. Recovery from LASIK is more rapid than from PRK; the latter can take several days or longer. Each procedure takes about 30 minutes to complete. Rolled out new LASIK technology, IntraLase, to vast majority of vision centers. 74% of procedures performed in 3Q08 utilized IntraLase. Steven Straus (51) became CEO in 2006. He had previously served in various roles with MSO Medical, Titan Health and TLC Vision. Main competitor TLC Vision on the ropes due to excessive financial leverage.

Unlevered balance sheet, with $67 million of cash and short-term investments and $23 million of debt. Repurchased 1.6 million shares for $45 million in 2007, but has put buybacks on hold in 2008. Stock price implies -5% trailing FCF yield and 13x trailing P/E (forward loss projected).

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 Laser procedures (‘000) Revenue per procedure ($) Revenue ($mn) 1 Deferred revenue ($mn) ∆ procedures ∆ revenue per procedure ∆ revenue 1 ∆ deferred revenue Vision correction centers Centers with IntraLase

Thanksgiving 2008

•

Procedure volume down 52% in Q3, due to fewer pre-op appointments booked by prospective patients and weak show rates, though the latter improved modestly from Q2. Average price per procedure declined ~$100 from Q2 to Q3 due to aggressive discounting. Many patients view laser vision correction as a discretionary procedure, making volume dependent on the state of the economy. Suffered operating losses in past six months due to lower procedure volume. The company laid off 25% of staff in Q3, following major layoff earlier in the year; changed the workforce mix toward parttime staff; cut advertising expenses nearly in half; and put new center openings on hold. Recent management turnover, including abrupt departures of CFO in June and CMO in July. Each position continues to lack a permanent replacement. FDA Ophthalmic Devices Panel in April 2008 and negative media coverage of laser vision correction have hurt procedure growth.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AMSG NOVA TLCV

MV 685 84 13

EV 854 180 106

EV/Rev 1.4x 1.3x .4x

P/TB n/m n/m n/m

08 P/E 14x 10x n/a

09 P/E 13x 9x n/a

LCAV

.1x

0.8x

n/m

MAJOR HOLDERS CEO Straus <1% │ Other insiders 2% │ Lord Abbett 13% │ Royce 11% │ Tremblant 8% │ HWP 7% │ Barclays 6% │ Michael Roth 6% │ Morgan Stanley 5%

THE BOTTOM LINE LCA Vision faces challenges it may or may not overcome. In the short term, weak consumer spending has crushed procedure volume and swung the company to operating losses. Recent CFO and CMO departures have raised questions regarding strategy and execution. Longer term, it is unclear how widely laser vision correction will be adopted. There is some evidence that consumers have become concerned about the safety and efficacy of the procedures, prodded by media reports of long, painful recoveries and little vision improvement in some cases. If the company succeeds in returning to profitable growth, shareholders should be amply rewarded. It is questionable, however, whether the company will be able to do so. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Lear Corporation (NYSE: LEA)

Southfield, MI, 248-447-1500 http://www.lear.com

Consumer Cyclical: Auto & Truck Parts, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $1.40 (as of 11/14/08) 52-week range: $1.18 - $34.57 Market value: $108 million Enterprise value: $1.9 billion Shares out: 77.1 million Ownership Data Insider ownership: 0% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest -$0.61 -0.03

Month Ago $0.17 0.45

# of Ests 9 4

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

0.5x 1.3x n/m 1.0x

FYE 12/31/08

1.08

2.35

EV / LTM revenue

0.1x

FYE 12/31/09 FYE 12/31/10

-0.39 1.47

1.86 2.57

11 6

EV / LTM EBITDA EV / LTM EBIT

6.1x 6.1x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 9.0% 9.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 3 Institutional ownership: 95% # of institutional owners: 531

Date

Actual

Estimate

10/30/08

-$0.75

-$0.04

LTM EBIT yield

16%

LTM pre-tax ROC

30%

12/31/01 13,625 1,035 97 26 0.40 830 267 563 88 2,367 3,140 7,579 193 3,183 2,294 6,020 0 1,559

12/31/02 14,425 1,260 481 13 4.47 545 273 273 92 2,508 2,860 7,483 41 3,045 2,133 5,821 0 1,662

10%

45%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 15,747 16,960 17,089 1,346 1,402 736 534 564 (1,129) 381 422 (1,382) 5.31 5.65 (20.57) 586 676 561 376 429 568 211 247 (8) 169 585 197 3,375 4,372 3,846 2,940 3,090 1,983 8,571 9,944 8,288 21 668 33 3,582 4,648 4,107 2,057 1,867 2,243 6,314 7,214 7,177 0 0 0 2,258 2,730 1,111 41%

34%

12/31/06 17,839 928 (653) (708) (10.35) 285 348 (62) 503 3,890 2,039 7,851 65 3,887 2,435 7,249 0 602

12/31/07 15,995 1,149 323 242 3.09 467 202 265 601 3,718 2,093 7,800 110 3,604 2,345 6,710 0 1,091

LTME 9/27/08 14,829 919 313 25 0.31 393 222 171 523 3,643 2,052 7,655 43 3,469 2,297 6,524 0 1,132

FQE 9/29/07 3,575 267 60 41 0.52 62 46 16 602 4,006 2,039 7,945 116 3,837 2,352 7,012 0 933

FQE 9/27/08 3,134 129 (77) (98) (1.27) 41 38 3 523 3,643 2,052 7,655 43 3,469 2,297 6,524 0 1,132

-59%

31%

30%

n/m

-75%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

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INVESTMENT RISKS & CONCERNS

BUSINESS OVERVIEW Lear supplies automotive parts in two segments: Seating includes seat systems and components. Electrical and electronic includes electrical distribution systems and electronic products, primarily wire harnesses; junction boxes terminals and connectors, electronic control modules, and invehicle audio and entertainment systems. Lear has 91,000 employees at 215 facilities in 35 countries. In 2006/07, Lear divested its interior segment. Lear also contributed its European and North American interior businesses to joint ventures with WL Ross and Franklin Mutual in exchange for minority equity stakes.

• •

•

SELECTED OPERATING DATA FYE December 31 2005 2006 % of revenue by segment: Seating 65% 65% Electrical and electronic 17% 17% 1 18% 18% Interior Revenue growth by selected segment: Seating -2% 5% Electrical and electronic 10% 1% Total revenue growth 1% 4% EBIT margin by segment: Seating 3% 5% Electrical and electronic 6% 3% 1 -6% -6% Interior 2 1% 2% Total EBIT margin % of revenue by geography: U.S. 37% 37% Canada 8% 8% Germany 12% 11% Mexico 9% 10% Other countries 34% 34%

2007

YTD 9/30/08

76% 19% 4%

79% 21% 0%

5% 3% -10%

-5% 0% -10%

6% 1% 1% 4%

4% 3% n/a -1%

28% 7% 15% 10% 40%

n/a n/a n/a n/a n/a

Divested European and North American interior businesses in October 2006 and March 2007, respectively, in transactions involving WL Ross and Franklin. 2 Includes unallocated corporate expenses.

INVESTMENT HIGHLIGHTS •

• •

Thanksgiving 2008

#2 globally in seating systems, generating sales of more than $12 billion (~80% of revenue) in a $50 billion market. Lear is #2 in North America and #3 in Europe, and is a leader in China and India. Electrical distribution systems revenue of more than $2 billion. The company is #3 in North America and #4 in Europe in wire harnesses. Electronic products revenue of $900 million. Lear is a leader in junction box technology and a niche player in electronic modules, wireless products, premium audio/video and tire pressure monitoring. New operating structure aligns Lear with global strategies of major customers and allows it to access lowest-cost manufacturing and sourcing options. Stock price implies 5x trailing P/E.

•

Q3-end net debt of $1.8 billion, making Lear dependent on the continued confidence of lenders. Conditions “extremely challenging,” with 2008 industry production at the lowest level in more than a decade. In North America, production was down 17% in Q3, with Lear’s top fifteen platforms down 33%. European industry production was down 3%, with Lear’s top five customers down 8%. Buying patterns are shifting away from SUVs. Financial distress is rising within the supply chain. 49% of revenue from GM and Ford, with “classic” Ford and GM accounting for 42% of revenue, and Saab, Volvo, Jaguar and Land Rover generating 7% of revenue. In addition to the usual risks of customer concentration, Lear also faces risks relating to GM and Ford’s financial distress. Weak electrical and electronic business (~20% of revenue). Non-GAAP segment margin declined from 7.4% in 2005 to 3.6% in 2007, driven by “fierce” global competition. Lear is restructuring this segment, with the goal of achieving a low-cost global footprint, capitalizing on new technologies, and developing system integration capabilities. Prices of key raw materials, including hot-rolled steel, copper, crude oil, and foam chemicals, are still high. (Lear lowered exposure to resins and supplier issues with the divestiture of the interior business.)

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) DAN JCI MGA VC LEA

MV 105 9,124 2,925 61

EV 1,256 12,684 1,213 1,493

EV/Rev .1x .3x .0x .1x

P/TB 0.1x 4.4x 0.4x n/m

08 P/E n/m 8x n/a n/m

09 P/E 2x 7x n/a n/m

108

1,925

.1x

n/m

MAJOR HOLDERS CEO Rossiter <1% │ Other insiders 1% │ Icahn 16% (apparently sold out recently) │ Barclays 10% │ Pzena 9% │ Vanguard 8%

THE BOTTOM LINE While Lear has one of the strongest auto parts franchises in the world, it has struggled mightily with large exposure to financially troubled North American auto makers. Nonetheless, Lear has the strategy and execution in place that could enable it to survive the auto industry downturn and emerge with the equity intact. As a result, the shares represent an interesting opportunity for risk-seeking investors who can get comfortable with Lear’s financial position and liquidity. The CEO recently purchased shares in the open market, a step he might not have taken if a bankruptcy filing were imminent. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Lincare Holdings Inc. (Nasdaq: LNCR)

Clearwater, FL, 727-530-7700 http://www.lincare.com

Health Care: Healthcare Facilities, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $25.03 (as of 11/14/08) 52-week range: $22.79 - $37.83 Market value: $1.9 billion Enterprise value: $2.5 billion Shares out: 74.4 million Ownership Data Insider ownership: 0% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.76 0.53

Month Ago $0.79 0.51

# of Ests 14 7

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

9.7x 8.0x 11.1x 9.1x

FYE 12/31/08

3.14

3.12

EV / LTM revenue

1.5x

FYE 12/31/09 FYE 12/31/10

2.26 2.76

2.27 2.71

14 6

EV / LTM EBITDA EV / LTM EBIT

4.7x 6.1x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 16.5% 17.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 6 Institutional ownership: 95% # of institutional owners: 607

Date

Actual

Estimate

10/20/08

$0.76

$0.72

LTM EBIT yield

16%

LTM pre-tax ROC

100%

12/31/01 812 689 240 135 1.23 234 74 160 0 161 696 1,071 98 162 126 332 0 739

12/31/02 961 816 320 190 1.73 288 83 205 2 154 806 1,199 54 111 156 342 0 856

78%

100%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,147 1,269 1,267 976 1,084 1,013 389 456 352 232 273 214 2.19 2.60 2.06 371 419 370 128 90 111 243 330 259 10 226 47 187 378 213 946 1,039 1,150 1,432 1,721 1,681 66 68 14 147 132 94 321 275 275 584 555 543 0 0 0 848 1,166 1,138 >100%

>100%

12/31/06 1,410 1,094 347 213 2.16 329 106 223 25 242 1,204 1,775 71 190 275 665 0 1,111

12/31/07 1,596 1,206 383 226 2.58 406 143 263 150 366 1,208 1,928 288 439 550 1,195 0 734

LTME 9/30/08 1,662 1,259 401 237 3.07 423 162 261 33 269 1,214 1,935 73 246 550 1,038 0 897

FQE 9/30/07 408 307 99 59 0.66 135 30 105 36 255 1,203 1,799 408 566 0 763 0 1,036

FQE 9/30/08 406 311 93 56 0.76 128 53 75 33 269 1,214 1,935 73 246 550 1,038 0 897

85%

93%

100%

n/m

90%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

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BUSINESS OVERVIEW Lincare is a leading provider of oxygen and other respiratory therapy services to home patients in the U.S. Customers suffer from chronic obstructive pulmonary disease (COPD), such as emphysema, chronic bronchitis or asthma. Lincare serves 700,000 customers through 1,000 operating centers.

•

2006 11% 7% 11%

2007 4% 4% 13%

YTD 9/30/08 4% n/a 5%

92% 8%

67% 26% 7%

64% 29% 7%

n/a n/a n/a

70% 30%

67% 33%

n/a n/a

•

INVESTMENT HIGHLIGHTS •

•

$6 billion home respiratory market growing 6%. The market size estimate includes home oxygen equipment and respiratory therapy services. Growth drivers include an increasing number of COPD patients and a trend toward home treatment due to lower cost than acute care. 16 million Americans have been disgnosed with COPD. Lincare’s share of fragmented home respiratory services market has grown from 11% in 1997 to 25% in 2007. The market includes 2,000 regional and local providers. Local competitors’ share declined from 61% to 45%, and national competitors’ share rose from 28% to 30% during the same period. The industry is consolidating, with local players disadvantaged by regulatory changes. Growth strategy includes organic and acquired growth, supported by proprietary, integrated IT systems and scale-advantaged, efficient operations. The company made 67 acquisitions from 2003-07 for $459 million, or 1.4x acquired revenue. Lincare’s customers have grown from 400K in 2002 to 700K in 2007, while operating centers have grown from 642 in 2002 to 1,019 in 2007. Experienced management. Lincare executive team members have an average of 18 years of experience. 95% of Lincare’s 140 area managers have managed local Lincare sales efforts. 95% of the company’s 34 billing managers have been promoted within.

Repurchased 18 million shares for $673 million in 2007 and has bought back $35 million YTD. Stock price implies 14% trailing FCF yield, 8x trailing P/E and 11x forward P/E.

INVESTMENT RISKS & CONCERNS •

SELECTED OPERATING DATA FYE December 31 2005 ∆ operating centers 10% ∆ customers 18% ∆ revenue 0% % of revenue by product category: Oxygen and other therapy 91% Home medical equipment 9% Revenue by payor: Medicare and Medicaid 67% Private insurance 26% Direct payment 7% % of revenue by type: Rental 71% Sale 29%

•

Thanksgiving 2008

•

Medicare price reductions have negatively affected growth. Lincare has reported 5% GAAP revenue growth and 10% “internal” growth YTD, with the difference due to Medicare pricing. Reimbursement pressure. Lincare depends heavily on Medicare reimbursement, with Medicare Part B providing coverage for durable medical equipment (DME). Two-thirds of Lincare’s customers have primary coverage under Medicare Part B. Recent legislation, including the SCHIP Extension Act of 2007, the Deficit Reduction Act (DRA) of 2005 and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, contain provisions that directly impact reimbursement for the primary respiratory and other DME products provided by Lincare. SCHIP reduced Medicare reimbursement amounts for covered Part B drugs as of April 1, 2008. DRA provisions will impact reimbursement for oxygen equipment beginning in 2009. Regulatory pressure on Medicare-covered oxygen equipment rentals. DRA changes reimbursement from monthly payment for as long as the equipment is in use by a beneficiary to a capped rental contract whereby payment for oxygen equipment may not extend for more than 36 months.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AMED GTIV NHC

MV 1,365 686 545

EV 1,719 885 614

EV/Rev 1.7x .7x 1.0x

P/TB n/m n/m 1.7x

08 P/E 16x 16x n/a

09 P/E 13x 15x n/a

LNCR

1,862

2,452

1.5x

n/m

11x

MAJOR HOLDERS CEO Byrnes 4% │ Other insiders 3% │ Fidelity 15% │ Barclays 7% │ JP Morgan 6%

THE BOTTOM LINE Lincare has gained significant market share in the home respiratory market over the past decade. The company has executed fairly well, leveraging both organic and acquisition-driven growth to boost the number of operating centers from 642 in 2002 to 1,019 in 2007. In late 2007, Lincare took on debt to boost an already large share repurchase program, with a total of $673 million repurchased in 2007. We are cautious on the shares despite these apparent positives, as the company faces a myriad of reimbursement issues that could negatively affect long-term profitability. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Lorillard Inc. (NYSE: LO)

Greensboro, NC, 877-703-0386 http://www.lorillard.com

Consumer Non-Cyclical: Tobacco, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $60.78 (as of 11/14/08) 52-week range: $53.30 - $79.00 Market value: $10.2 billion Enterprise value: $9.0 billion

This quarter Next quarter

Latest $1.39 1.11

FYE 12/31/08

5.05

5.07

EV / LTM revenue

2.2x

FYE 12/31/09 FYE 12/31/10

5.63 6.04

5.62 6.07

7 5

EV / LTM EBITDA EV / LTM EBIT

n/a 7.0x

LT EPS growth 8.0% 8.0% Latest Quarterly EPS Surprise

P / tangible book 14.1x Greenblatt Criteria

Shares out: 168.1 million Ownership Data Insider ownership: 61% Insider buys (last six months): 0 Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 935

Valuation

Month Ago $1.40 1.11

Date

Actual

Estimate

10/27/08

$1.38

$1.35

# of Ests 6 3

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

11.8x 12.0x 10.8x 10.1x

LTM EBIT yield

14%

LTM pre-tax ROC

n/m

12/31/03 3,256 1,363 903 582 3.35 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EBIT/capital employed

Fiscal Years Ended 12/31/04 12/31/05 3,348 3,568 1,382 1,454 1,001 1,084 642 706 3.69 4.06 0 820 0 31 0 789 n/a 0 n/a 0 n/a 0 n/a 0 n/a 0 n/a 0 n/a 0 n/a 0 n/a 0 n/a 0

n/a

12/31/06 3,755 1,595 1,241 826 4.75 778 30 748 1,527 2,115 0 2,759 0 1,151 0 1,464 0 1,295

12/31/07 3,969 1,662 1,274 898 5.16 882 51 831 1,210 2,103 0 2,600 0 1,188 0 1,587 0 1,013

LTME 9/30/08 4,072 1,702 1,280 841 4.85 894 44 850 1,208 1,943 0 2,346 0 1,233 0 1,621 0 725

FQE 9/30/07 1,044 430 348 244 1.40 414 15 399 0 0 0 0 0 0 0 0 0 0

FQE 9/30/08 1,125 472 382 237 1.37 468 17 451 1,208 1,943 0 2,346 0 1,233 0 1,621 0 725

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Jan 00

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INVESTMENT RISKS & CONCERNS

BUSINESS OVERVIEW

•

Lorillard is the third-largest cigarette maker and the oldest continuously operating tobacco firm in the U.S. Lorillard’s flagship brand, Newport, is a menthol-flavored premium cigarette brand and the top selling menthol and second largest selling cigarette in the U.S. Lorillard manufactures all of its products at its Greensboro, NC facility. Lorillard was founded in 1760 and separated from Loews in June 2008.

•

SELECTED OPERATING METRICS FYE December 31 Unit volume (bn) Market share… …of total U.S. market …of premium segment …of menthol segment

2005 35.2

2006 36.1

2007 35.8

YTD 9/30/08 +1.4%

9.2% 12.3% 31.5%

9.6% 12.7% 32.2%

10.0% 13.0% 32.9%

11.0% n/a 34.6%

• •

INVESTMENT HIGHLIGHTS •

•

• • •

•

• • •

Thanksgiving 2008

Strong U.S. market position. Newport (94% of Lorillard’s volume and sales) is the #1 menthol and #2 overall brand cigarette in the $50 billion U.S. market (behind Philip Morris and RAI). The “Newport pleasure” theme has existed for 35 years. Gaining share in mature, competitive industry. Newport has grown to 33% of menthol cigarettes in the U.S., while menthol’s share of cigarettes shipped has grown from 26% to 28% over five years. In addition, the premium segment has grown from 68% to 73% of cigarettes, while Lorillard has captured a larger portion of the premium segment. Modest growth despite declining industry trend. Lorillard projects annual revenue growth of 3-4% in 2009-12, despite 3-4% industry unit declines. Industry-leading profitability. Lorillard generates more than $36 of operating income per 1,000 units shipped, better than any of its U.S. competitors. Still under-represented in Western U.S. Newport has 17% share of the menthol segment in 23 Western states, trailing Marlboro Menthol (23%), Kool/ Salem (21%) and Discount Menthol (24%). High-margin business; strong FCF generation, with LTM FCF of $850 million. The company expects to maintain operating margins in the 3233% range over the next few years. Repurchased 5.9 million shares for $400 million ($68 per share) from July through October. Seasoned management team. Lorillard executives have been with the company for a long time and appear focused on long-term shareholder value. Stock price implies 8% trailing FCF yield, 13x trailing P/E and 11x forward P/E.

•

Significant and uncertain legal liabilities. Lorillard is a defendant in thousands of lawsuits. Provisions have been recorded in cases with estimable liability only, with large contingent exposures. Lorillard already pays $1+ billion per year in settlement costs that reduce gross profit. Stated long-term goals may prove unrealistic. Management aims for long-term revenue growth of 3-4%, EPS growth of 5-7%, and a dividend yield of ~5%, resulting in a targeted annual equity return of 10-12%. This assumes continuing market share gains and accretive stock repurchases. No international exposure. Lorillard sold the international rights to its brands in 1977. Possibility of regulatory action on menthol. Some public health agencies have expressed concerns that mentholated cigarettes may pose greater health risks than other cigarettes, as smokers tend to inhale more deeply. A menthol ban appears unlikely, however. Move to greater taxation may curtail demand. Federal and state excise taxes have trended higher over the years. In April 2008, New York State almost doubled the excise tax per pack to $2.75. Lack of reinvestment opportunities. The U.S. tobacco industry faces a declining long-term trend, and Lorillard is unlikely to find ways to reinvest capital at high rates. The company is returning most free cash flow via share repurchases and dividends.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) BTI ITYBY PM RAI

MV 49,894 23,500 77,705 12,530

EV 60,945 30,971 86,049 14,620

EV/Rev 3.6x 1.7x 1.4x 1.6x

P/TB n/m n/m n/m n/m

08 P/E 12x 10x 12x 9x

09 P/E 11x 9x 11x 9x

10,215

9,007

2.2x

14.1x

12x

11x

MAJOR HOLDERS Insiders <1% │ BofA 5% │ Ameriprise 4% │ NWQ 4%

THE BOTTOM LINE Lorillard lacks a key attribute of a compelling magic formula selection — an ability to reinvest at least some FCF at the high ROIC that landed it on the list in the first place. As a domestic-only tobacco maker, Lorillard operates in a slowly but steadily declining market. This puts it in cash harvest mode despite the modest growth exhibited by Newport in recent years.

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Thanksgiving 2008

Manitowoc Company, Inc. (NYSE: MTW)

Manitowoc, WI, 920-684-4410 http://www.manitowoc.com

Capital Goods: Construction & Agricultural Machinery, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $6.92 (as of 11/14/08) 52-week range: $6.84 - $51.49 Market value: $902 million Enterprise value: $974 million Shares out: 130.3 million Ownership Data Insider ownership: 4% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.66 0.64

Month Ago $0.85 0.75

# of Ests 11 6

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

2.6x 2.1x 2.2x 2.1x

FYE 12/31/08

3.24

3.44

EV / LTM revenue

0.2x

FYE 12/31/09 FYE 12/31/10

3.11 3.24

3.68 3.87

12 7

EV / LTM EBITDA EV / LTM EBIT

1.6x 1.7x

P / tangible book 1.0x Greenblatt Criteria

LT EPS growth 12.5% 13.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 3 Institutional ownership: 79% # of institutional owners: 890

Date

Actual

Estimate

10/28/08

$0.80

$0.81

LTM EBIT yield

60%

LTM pre-tax ROC

70%

12/31/01 984 271 111 46 0.45 107 29 78 26 331 508 1,081 42 296 447 817 0 264

12/31/02 1,356 321 115 (21) 0.40 95 33 62 30 647 508 1,577 43 460 624 1,282 0 295

49%

31%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,468 1,845 2,254 317 376 422 66 104 124 4 39 66 0.08 0.35 0.48 151 57 107 32 43 55 119 14 52 47 179 232 646 846 953 531 606 570 1,603 1,928 1,962 25 72 19 545 653 690 567 512 474 1,304 1,409 1,419 0 0 0 298 519 543 14%

24%

12/31/06 2,933 647 288 166 1.33 294 68 227 176 1,143 622 2,220 4 935 264 1,445 0 775

12/31/07 4,005 912 489 337 2.62 238 120 119 366 1,576 719 2,869 13 1,075 218 1,519 0 1,350

LTME 9/30/08 4,405 1,025 589 412 2.09 359 163 195 382 1,973 693 3,376 251 1,383 202 1,815 0 1,561

FQE 9/30/07 925 212 106 76 0.56 56 22 34 106 1,374 716 2,591 10 1,036 263 1,532 0 1,059

FQE 9/30/08 1,107 244 (58) (26) (0.29) (5) 30 (35) 382 1,973 693 3,376 251 1,383 202 1,815 0 1,561

69%

91%

70%

n/m

29%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

Manitowoc, founded in 1902, operates in two segments: The crane group (88% of revenue) provides lifting equipment for the global construction industry. The foodservice group (12% of revenue) makes ice/beverage dispensers, ice-cube and commercial refrigeration machines.

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SELECTED OPERATING DATA FYE December 31 2005 % of revenue by segment: Crane 72% Foodservice 18% 1 10% Marine Revenue growth by segment: Crane 30% Foodservice 6% Total revenue growth 22% EBIT margin by segment: Crane 7% Foodservice 14% Corporate and other -1% Total EBIT margin 6% % of revenue by geography: Americas 56% EMEA 37% Asia and Oceania 8%

2006

2007

YTD 9/30/08

76% 14% 10%

81% 11% 8%

89% 11% 0%

37% 4% 30%

45% 6% 37%

28% 3% 25%

13% 14% -2% 10%

14% 14% -1% 13%

15% 15% -1% 14%

57% 35% 8%

53% 37% 10%

n/a n/a n/a

•

• •

•

INVESTMENT HIGHLIGHTS

•

• • • 1

World-leading industrial brands. Crane: Manitowoc: high-capacity, lattice-boom crawler cranes; Potain: top-slewing and self-erecting tower cranes; Grove: mobile telescopic cranes; National Crame: boom trucks. Foodservice: Manitowoc: #1 ice-cube machines in U.S., #1 ice-machines in China; Servend: #1 ice/beverage dispenser in U.S.; Kolpak: #1 walk-in refrigerator/freezer in U.S. 56% of Crane revenue from Europe and Asia. Global construction market is expected to grow from $6 trillion in 2008 to $13 trillion in 2016, with international outpacing U.S. growth by 2-to-1.1 U.S. construction exposure lower than appears. While residential and commercial construction accounts for one-third of Crane revenue, the U.S. accounts for only one-fifth of that one-third. Crane backlog up 26% y-y to $3.3 billion as of September 30, down slightly from June 30. Crane revenue up 28% YTD, driven by global infrastructure and energy development. EBIT margin has been in the mid teens. Stock price implies 22% trailing FCF yield, 3x trailing P/E and 2x forward P/E.

Source: Company, Global Insights.

80% of Foodservice revenue from renovation and replacement, with 20% from new locations. $2.7 billion cash acquisition of Enodis, completed in October, positions Manitowoc in hot foodservice and food retail equipment. Post-Enodis, Foodservice accounts for ~37% of revenue, up from 12%. The deal is expected to be accretive to EPS in 2009, with $80 million of annual synergies by 2011. Expects EPS to grow 18-21% to $3.15-3.25 in 2008, down from previous guidance of $3.30-$3.40.

INVESTMENT RISKS & CONCERNS

1 The marine group (8% of revenue in 2007) is being sold for $120 million (yearend close expected; will result in estimated $0.60 per share after-tax gain). The marine group is treated as a discontinued operation in 2008.

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Thanksgiving 2008

Enodis more than triples Foodservice Group, raising integration risks. The deal also leverages the balance sheet at a time when end markets may be slowing. The company won Enodis in an auction vs. Illinois Tool Works and may have overpaid. 91% of Crane revenue from new cranes, with 9% from parts and service, making the company vulnerable to a slowdown in capital spending. Soft residential and commercial construction, as well as “challenges” in customer and project financing affecting Crane group. Management also noted “slower demand” for lower capacity tower cranes in Western Europe, even as demand for mobile telescopic and other cranes remains “brisk.” Rising materials costs. Manitowoc faces rising steel, copper and other materials prices, and higher transportation and energy costs. Margins have so far not been materially affected by these cost increases.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) CAT DE HIT TEX

MV 22,296 14,429 15,445 1,150

EV 54,322 34,173 36,368 2,231

MTW

902

974

EV/Rev 1.1x 1.3x .3x .2x

P/TB 3.2x 2.4x 0.9x 0.9x

08 P/E 6x 7x n/a 2x

09 P/E 7x 6x n/a 3x

.2x

1.0x

MAJOR HOLDERS CEO Tellock <1% │ Other insiders 3% │ Fidelity 6% │ Vanguard 5%

Pro forma for Enodis acquisition.

THE BOTTOM LINE Manitowoc would be more enticing without Enodis. The large Foodservice deal not only suggests that high-ROIC reinvestment opportunities are scarce, but it adds a number of new risks to the investment thesis. Additionally, while nearterm earnings momentum remains positive, the Crane Group looks vulnerable to a slowdown in global demand. Such a change would be particularly damaging were it to occur in tandem with increases in key materials costs. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 152 of 401

Thanksgiving 2008

McGraw-Hill Companies, Inc. (NYSE: MHP)

New York, NY, 212-512-2000 http://www.mcgraw-hill.com

Services: Printing & Publishing, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $23.36 (as of 11/14/08) 52-week range: $17.15 - $49.13 Market value: $7.3 billion Enterprise value: $8.4 billion Shares out: 314.5 million Ownership Data Insider ownership: 2% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.39 0.23

Month Ago $0.47 0.25

# of Ests 7 3

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

7.9x 8.9x 8.8x 7.8x

FYE 12/31/08

2.63

2.69

EV / LTM revenue

1.3x

FYE 12/31/09 FYE 12/31/10

2.65 3.00

2.96 3.22

7 3

EV / LTM EBITDA EV / LTM EBIT

5.4x 6.0x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 80% # of institutional owners: 1123

Date

Actual

Estimate

10/28/08

$1.28

$1.22

LTM EBIT yield

17%

LTM pre-tax ROC

>100%

12/31/01 4,475 2,465 661 377 0.96 1,100 440 659 54 1,813 1,818 5,161 223 1,876 834 3,307 0 1,854

12/31/02 4,708 2,693 921 577 1.47 1,142 375 768 58 1,674 1,806 5,032 119 1,775 459 2,866 0 2,166

>100%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 4,890 5,251 6,004 2,872 3,204 3,687 990 1,175 1,364 688 756 844 1.79 1.96 2.21 1,382 1,064 1,560 361 387 395 1,021 676 1,165 696 681 749 2,256 2,426 2,591 1,674 1,954 2,352 5,365 5,841 6,396 26 5 3 1,994 1,947 2,225 0 1 0 2,808 2,857 3,283 0 0 0 2,557 2,985 3,113 >100%

>100%

12/31/06 6,255 3,868 1,418 882 2.40 1,509 426 1,083 354 2,258 2,325 6,043 2 2,468 0 3,363 0 2,680

12/31/07 6,772 4,245 1,663 1,014 2.94 1,717 545 1,172 396 2,333 2,336 6,357 0 2,657 1,197 4,751 0 1,607

LTME 9/30/08 6,509 3,999 1,391 824 2.57 1,354 461 893 485 2,585 2,325 6,533 307 2,818 1,198 4,900 0 1,633

FQE 9/30/07 2,188 1,421 739 452 1.34 688 143 546 453 2,692 2,351 6,525 1,331 3,915 0 4,795 0 1,730

FQE 9/30/08 2,049 1,301 646 390 1.23 677 92 585 485 2,585 2,325 6,533 307 2,818 1,198 4,900 0 1,633

>100%

n/m

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

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Page 153 of 401

BUSINESS OVERVIEW McGraw-Hill, founded in 1888, provides info services in the financial, education and business data markets. Brands include Standard & Poor’s, McGraw-Hill Education, BusinessWeek, and J.D. Power and Associates.

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SELECTED OPERATING DATA FYE December 31 2005 Revenue growth by segment: McGraw-Hill Education 12% Financial Services 17% Information & Media 16% Total revenue growth 14% % of revenue by segment: McGraw-Hill Education 45% Financial Services 40% Information & Media 16% EBIT margin by segment: McGraw-Hill Education 15% Financial Services 42% Information & Media 7% 1 23% Total EBIT margin % of revenue by geography: U.S. 78% Europe 13% Asia 6% Rest of world 4% 1

•

2006

2007

YTD 9/30/08

-6% 14% 6% 4%

7% 11% 4% 8%

-1% -12% 5% -5%

40% 44% 16%

40% 45% 15%

43% 41% 16%

13% 44% 5% 23%

15% 45% 6% 25%

16% 41% 8% 23%

76% 14% 6% 4%

74% 15% 6% 5%

n/a n/a n/a n/a

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INVESTMENT HIGHLIGHTS

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Education segment benefits from “robust” state new adoption market in 2008, with McGrawHill’s elementary to high school business expected to capture one-third of this year’s state spend of $900-$950 million (up 10-16% y-y). Guiding for non-GAAP EPS of $2.63-$2.65 in 2008 (down 11-12%), driven by weakness in Financial Services, slowing growth in Education, and slightly better growth in Information & Media. Stock price implies 12% trailing FCF yield, 9x trailing P/E and 9x forward P/E.

INVESTMENT RISKS & CONCERNS

Includes adjustments for unallocated and other expenses.

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Thanksgiving 2008

Leading brands: Standard & Poor’s, McGrawHill, Newsweek, JD Power and Associates. The branded franchises have wide-moat characteristics. S&P credit ratings are—next to ratings provided by Moody’s and Fitch—a key input into investors’ credit analysis processes, enabling the company to extract high-margin revenue from issuers seeking to access the capital markets. JD Power and Associates enjoys a strong reputation with consumers. McGraw-Hill Education and Newsweek are highly respected franchises in their respective markets. Financial Services bright spots mitigate sharp decline in credit ratings business. Investment Services (roughly 30% of Financial Services revenue) posted top-line growth of 3% YTD and 14% in Q3, driven by “solid gains” in index services and Capital IQ (subscriber base is growing ~20% and now approaches 2,500 clients). AUM in ETFs that track S&P indices rose 7% y-y to $224 billion as of September 30 (S&P receives AUM-based payments). The company also receives a royalty each time an exchange-traded derivative based on an S&P index is traded. Such trading volume grew 27% y-y to 3.7 million contracts in Q3.

Revenue and EBIT down due to weakness in Financial Services: segment revenue is down 15% YTD, accompanied by EBIT margin contraction of 606 bps. S&P Credit Market Services transaction revenue has dropped 54% YTD. S&P ratings business: Temporary setback or permanent impairment of franchise value? S&P’s ratings business has struggled due to the downturn in credit markets. S&P’s structured credit ratings are perceived to have failed investors, and the rating methodology and business model have come under scrutiny. A key criticism is that S&P generates revenue from issuers rather than investors who rely on the ratings. While there is no imminent move to force S&P to fundamentally change its business model, such a change could have a significant negative impact on franchise value.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) MCO PSO

MV 4,635 7,105

EV 5,588 9,804

EV/Rev 3.0x 1.5x

P/TB n/m n/m

08 P/E 11x 9x

09 P/E 11x 9x

MHP

7,347

8,366

1.3x

n/m

MAJOR HOLDERS CEO McGraw III 2% │ Other insiders 1% │ T Rowe 10%

1 The company’s moat may have narrowed a bit recently as a result of the company’s failure to accurately rate structured credit risks.

THE BOTTOM LINE McGraw-Hill is one of the widest-moat companies on the magic formula list. Unfortunately, its issuer-dependent credit ratings business and recent failure to properly evaluate structured credit risks have left it exposed to serious criticism and perhaps adverse regulatory action. Such action would negatively impact S&P’s earnings power, potentially impairing the long-term franchise value of the credit ratings business. However, the shares may be cheap enough to offset the negatives of significantly lower demand for structured credit ratings and potential regulatory action. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 154 of 401

Thanksgiving 2008

Medicis Pharmaceutical (NYSE: MRX)

Scottsdale, AZ, 602-808-8800 http://www.medicis.com

Health Care: Biotechnology & Drugs, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $11.24 (as of 11/14/08) 52-week range: $9.85 - $27.80 Market value: $638 million Enterprise value: $500 million Shares out: 56.7 million Ownership Data Insider ownership: 1% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.22 0.28

Month Ago $0.22 0.28

# of Ests 15 14

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

10.4x 8.7x 7.6x 6.2x

FYE 12/31/08

1.29

EV / LTM revenue

1.0x

FYE 12/31/09 FYE 12/31/10

1.48 1.80

1.49 1.80

15 7

EV / LTM EBITDA EV / LTM EBIT

5.2x 7.4x

P / tangible book 2.3x Greenblatt Criteria

LT EPS growth 19.0% 19.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 2 Institutional ownership: 95% # of institutional owners: 539

Date

Actual

Estimate

8/5/08

$0.40

$0.35

LTM EBIT yield

14%

LTM pre-tax ROC

n/m

6/30/02 213 177 70 50 0.80 74 20 54 578 659 185 876 0 47 400 447 0 429

6/30/03 248 209 78 51 0.91 85 83 2 499 646 274 933 0 69 400 472 0 461

EBIT/capital employed

>100%

Fiscal Years Ended 6/30/04 6/30/05 12/31/05 304 366 165 257 308 140 47 89 17 31 58 52 0.52 0.82 0.74 128 130 148 89 6 1 39 124 147 634 604 743 734 699 833 331 324 303 1,078 1,043 1,146 0 0 0 67 99 141 453 453 453 523 557 603 0 0 0 555 486 544 78%

>100%

12/31/06 393 347 (93) (48) (0.88) (41) 7 (48) 554 686 232 1,123 169 363 284 647 0 476

12/31/07 457 401 91 70 1.08 159 40 119 795 874 236 1,213 284 451 169 630 0 583

LTME 9/30/08 516 474 68 42 0.61 72 13 59 307 447 324 971 0 179 169 364 0 607

FQE 9/30/07 111 92 20 17 0.26 49 3 45 766 846 244 1,162 0 111 453 575 0 588

FQE 9/30/08 115 105 (14) (15) (0.26) (8) 3 (10) 307 447 324 971 0 179 169 364 0 607

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

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INVESTMENT RISKS & CONCERNS

BUSINESS OVERVIEW Medicis operates in two specialty pharma segments: The dermatological segment targets acne and non-acne treatment. Acne products include Dynacin, Plexion, Solodyn, Triaz, and Ziana. Non-acne products include Loprox, Omnicef, Perlane, Restylane, and Vanos. Seasonality: Acne revenue bumps up in Q3 due to back-to-school sales. The non-dermatological segment includes products for the treatment of urea cycle disorder, and contract revenue. Product lines include Ammonul and Buphenyl. The segment also includes contract revenue associated with licensing agreements and authorized generics.

•

SELECTED OPERATING DATA

•

FYE December 31 2005 % of revenue by product type: Acne dermatological 32% Non-acne dermatological 49% 1 19% Non-dermatological Revenue growth by product type: Acne dermatological products n/a Non-acne dermatological n/a 1 n/a Non-dermatological Total revenue growth n/a 1

2006

2007

YTD 9/30/08

41% 51% 9%

53% 38% 9%

61% 30% 10%

40% 16% -49% 11%

52% -13% 22% 16%

46% -14% 37% 20%

•

Includes contract revenue.

INVESTMENT HIGHLIGHTS •

•

Thanksgiving 2008

•

$6 billion market for dermatological pharma in the U.S. Nearly 12 million cosmetic procedures were performed in the U.S. in 2007, including nearly 10 million non-surgical procedures. Growth strategy: promote brands, develop new products and extensions, enter into collaborations, and acquire products. Medicis recently entered the international aesthetic market with LipoSonix. It will introduce Reloxin in 1Q09, pending approval. Medicis has obtained or licensed U.S. patents covering Triaz and Restylane (expire in 2015), a patent covering Solodyn Tablets (2018), two patents covering Ziana Gel (2015, 2020), and three patents covering Vanos Cream (2021). Strong growth of acne revenue, from $98 million in 2005 to $246 million in 2007, driven by Solodyn (approved in 2Q06) and Ziana (approved in 4Q06). Acne revenue amounted to $230 million in the first nine months of 2008, up 46%, driven by Solodyn. Guiding for revenue growth of 11-12% in 2008, with revenue of $506-511 million and non-GAAP EPS of $1.36-$1.39. The company had $307 million of cash and $170 million of debt at the end of Q3. Stock price implies 9% trailing FCF yield, 18x trailing P/E and 8x forward P/E.

Solodyn patent suit, generic competition from Impax. In January 2008, Impax filed an Abbreviated New Drug Application (ANDA) seeking FDA approval for a generic version of Solodyn. Impax also filed suit seeking a declaration that Medicis’s Solodyn patent is invalid. Competitors for prescription dermatological products include Allergan, Galderma, J&J, SanofiAventis, Stiefel Labs and Warner Chilcott. The primary facial aesthetics competitor is Allergan. The FDA approved Allergan’s Juvéderm in mid2006 (marketed since early 2007). High dependence on wholesalers. McKesson accounted for 52% and Cardinal accounted for 17% of revenue in 2007. McKesson is the sole distributor of Restylane and Perlane. FDA approval risks. Medicis has developed and licensed potential pharmaceutical compounds and agents, which must go through the FDA approval process. In January 2008, the FDA stated that, upon a preliminary review of Medicis’s BLA for the botulinum toxin type A, Reloxin, in aesthetics, the FDA had determined not to accept the BLA for filing because it was not sufficiently complete. 11.7 million stock options outstanding at average exercise price of $28 (as of yearend 2007). While almost all of the options are underwater, they equal 21% of basic shares outstanding.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ACL AGN ELN SNY MRX

MV 25,386 10,837 3,186 82,566

EV 23,666 11,423 4,452 89,716

638

500

EV/Rev 3.8x 2.6x 4.7x 2.5x

P/TB 6.9x 23.2x n/m n/m

08 P/E 14x 14x n/m 8x

09 P/E 13x 13x n/m 7x

1.0x

2.3x

MAJOR HOLDERS CEO Shacknai 5% │ Other insiders 3% │ BlackRock 11% │ Cap Re 9% │ Vissium 8% │ Fidelity 8% │ Morgan Stanley 8% │ T Rowe 6% │ Merrill Lynch 6% │ Susquehanna 5%

THE BOTTOM LINE Medicis is a cheap company with strongly positive current operating momentum and a strong balance sheet. The company competes in the market for the treatment of dermatological and aesthetic conditions, a segment benefiting from favorable long-term demand trends. The key risk investors should evaluate carefully in this otherwise attractive situation is the nearterm prospect of generic competition to SOLODYN, Medicis’s top-selling dermatological product. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 156 of 401

Thanksgiving 2008

MEMC Electronic Materials (NYSE: WFR)

St. Peters, MO, 636-474-5000 http://www.memc.com

Technology: Semiconductors, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $15.34 (as of 11/14/08) 52-week range: $13.79 - $96.08 Market value: $3.4 billion Enterprise value: $2.4 billion Shares out: 224.5 million Ownership Data Insider ownership: 1% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.95 0.94

Month Ago $1.11 1.14

# of Ests 22 20

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

4.3x 4.3x 3.7x 3.3x

FYE 12/31/08

3.57

3.76

EV / LTM revenue

1.1x

FYE 12/31/09 FYE 12/31/10

4.13 4.63

4.78 5.08

22 8

EV / LTM EBITDA EV / LTM EBIT

n/a 2.5x

P / tangible book 1.7x Greenblatt Criteria

LT EPS growth 18.1% 28.1% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 89% # of institutional owners: 1337

Date

Actual

Estimate

10/23/08

$0.86

$0.88

LTM EBIT yield

40%

LTM pre-tax ROC

>100%

12/31/01 618 (51) (219) (523) (7.51) (33) 50 (83) 107 264 4 549 76 222 149 574 0 (25)

12/31/02 687 174 65 (22) (0.17) 76 22 54 166 364 4 632 124 286 161 656 0 (25)

-104%

30%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 781 1,028 1,107 233 370 367 143 199 257 117 226 249 0.53 1.02 1.10 99 258 321 67 146 163 31 112 158 131 92 154 365 409 436 0 0 0 727 1,028 1,148 72 43 18 244 254 225 59 116 35 533 585 437 0 0 0 194 443 711 52%

45%

12/31/06 1,541 689 558 369 1.61 528 148 379 586 900 0 1,766 5 258 29 599 0 1,167

12/31/07 1,922 1,001 850 826 3.56 917 276 641 1,316 1,590 0 2,887 5 444 26 852 0 2,035

LTME 9/30/08 2,115 1,105 943 694 3.00 756 346 410 1,120 1,429 0 2,985 6 523 25 905 0 2,080

FQE 9/30/07 473 239 200 152 0.65 267 71 195 1,213 1,473 0 2,513 5 416 28 835 0 1,678

FQE 9/30/08 546 270 228 183 0.80 115 73 42 1,120 1,429 0 2,985 6 523 25 905 0 2,080

90%

>100%

n/m

46%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$120 $100 $80 $60 $40 $20 $0 Oct 99

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BUSINESS OVERVIEW

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MEMC provides silicon wafers for semiconductor and solar applications. It has global R&D and manufacturing facilities. Customers include semi device and solar cell makers. MEMC sells wafers from 100-300mm and intermediate products such as polysilicon and silane gas. The company has 200+ U.S. and 450+ foreign patents. Samsung and Yingli Green Energy each accounted for 10%+ of revenue in 2007. Texas Pacific Group acquired the company from E.ON in 2001 and sold its stake in several transactions through 2007.

2005 -3%

2006 10%

2007 -41%

YTD 9/30/08 -41%

90% 10%

81% 19%

78% 22%

n/a n/a

31% 3% 17% 20% 29%

34% 14% 12% 18% 22%

24% 21% 16% 17% 22%

n/a n/a n/a n/a n/a

INVESTMENT HIGHLIGHTS •

•

• •

•

18% CAGR in silicon wafer shipments from 1990-2007, driven by growth in semiconductor units and solar megawatts. The wafer market is expected to grow from $10 billion (80/20 semi/solar split) in 2005 to $32 billion (45/55) in 2010. Semi devices and solar cells are made from wafers. Capital-intensive yet high-ROIC business. MEMC operates several production facilities with 8,000MT of targeted annual polysilicon capacity. Net PP&E was $976 million as of September 30. Capex was $276 million in 2007 and $242 YTD. $15-18 billion of contracts in place. In July, MEMC amended a ten-year solar wafer deal with Conergy, reducing volume from $7-8 billion to $4 billion. MEMC also announced a $3-3.5 billion tenyear “take-or-pay” solar wafer deal with Tainergy. Customers make deposits in advance of deliveries. Wafer volume drives revenue growth, with volume increases driven by new wafers and higher shipments of existing wafers. Prices declined 41% in 2007 due to a mix shift, with new 156mm wafers depressing the average price, while existing wafers and intermediate products realized higher prices. Strong balance sheet, with $1.3 billion of net cash and investments as of September 30. Repurchased four million shares for $270 million since May 2007 on total authorization of $1 billion.

Stock price implies 12% trailing FCF yield, 5x trailing P/E and 4x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 Change in wafer ASPs % of revenue by product type: Wafers Excess polysilicon raw material % of revenue by geography: U.S. China Korea Taiwan Other

Thanksgiving 2008

•

Expects Q4 revenue to drop 2-11% to $475-525 million, down from prior guidance for growth of 1-12%. The company expects gross margin of 48% and opex of $27 million (lower than previous estimate of $41 million due to forfeiture of options). Weak semiconductor application demand due to customers reducing inventory. Solar demand has been “healthy,” although management stated on November 17 that macro weakness is increasingly having a “negative effect” on solar as well. Nabeel Gareeb resigned as CEO on October 30 after six years with MEMC. Director Marshall Turner has stepped in until a new CEO is hired. Unanticipated events can affect production. In Q2, a premature failure of a heat-exchanger at the Merano, Italy facility reduced polysilicon output by 5%, causing Q2 results to miss guidance. The number of adverse events has increased as MEMC has expanded and ramped up production capacity. Dependent on demand in semiconductor device and solar industries. Weak end-market demand puts pressure on MEMC to cut prices and capacity. Competitors include Shin-Etsu Handotai, SUMCO, Siltronic, BP Solar, Evergreen Solar, Kyocera, REC Group, Sanyo, Sharp, and SolarWorld.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) BRCM FSLR MRVL SPWRA STP

MV 7,852 9,470 3,550 2,193 1,660

EV 5,605 8,913 2,983 2,322 2,548

EV/Rev 1.2x 8.8x .9x 1.8x 1.5x

P/TB 3.0x 7.0x 2.7x 2.9x 2.0x

08 P/E 9x 30x 7x 11x 7x

09 P/E 11x 16x 8x 8x 5x

WFR

3,443

2,354

1.1x

1.7x

MAJOR HOLDERS Insiders <1% │ AXA 6% │ Cap Re 4% │ Barclays 4%

THE BOTTOM LINE MEMC is a technology company tapping into long-term semiconductor industry growth and global adoption of solar cells. Shares have declined as the outlook for semi cap equipment makers has deteriorated and management has slashed guidance (the CEO resigned in late October). We believe momentum-oriented investors have overreacted to the slowdown in growth. While semi cap equipment is highly cyclical, solar represents a major secular growth opportunity, one the market is currently ignoring. We value MEMC at $30-36 per share, based on a range of 6x trailing EBIT to 10x estimated 2009 EPS. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 158 of 401

Thanksgiving 2008

…additional insight into WFR:

REVENUE AND MARGIN ANALYSIS

WHAT ARE THE SHARES WORTH?

WFR – Revenue, Gross Profit and EBIT, 1996-07

•

We value MEMC at $30-36 per share, based on the valuation analysis summarized below. The company has $1.3-1.4 billion in excess investments, providing meaningful downside protection and an opportunity to increase intrinsic value per share through stock repurchases. While earnings from the company’s business are difficult to predict, MEMC should remain profitable even in a weaker macro environment. Shares appear grossly undervalued, even at multiples that do not reflect the company’s long-term growth prospects.

MEMC results have exhibited significant historical volatility, reflecting the cyclical nature of the semiconductor capital equipment industry. However, as MEMC’s sales into the solar market have grown, MEMC has added a strong secular growth component to its operating profile.

$2,000mn $1,500mn $1,000mn $500mn $0mn -$500mn 96 97 98 99 00 01 02 03 04 05 06 07

MEMC Electronic Materials — Valuation Summary ($ in millions, except per share data)

Low Value

High Value

$932 187 318 30 $1,468 (200) $1,268

$932 187 318 30 $1,468 (100) $1,368

Revenue

Gross Profit

EBIT

Source: Company, The Manual of Ideas.

40%

943 6x

30% 20%

$5,659

3.00 10x $6,840

$6,927 $30

$8,208 $36

-10%

Based on balance sheet values as of September 30, 2008. Represents MOI estimate. Source: Company filings, The Manual of Ideas estimates and analysis.

YTD

Source: Company, The Manual of Ideas.

WFR – Gross and EBIT Margin, 1996-YTD’08 MEMC’s profit margins have risen in recent years to levels that are unlikely to be sustained through the downcycle in the semiconductor capital equipment industry. However, the company may be in a position to maintain respectable margins due to continued strength in solar applications.

60% 40% 20% 0% -20% -40%

EBIT Margin

YTD

-60% 99

Investors may overestimate cyclicality. While MEMC remains a cyclical business, investors may not be giving the company enough credit for its strong market position in solar applications. The solar market appears likely to continue strong secular growth, mitigating the negative impact of the traditional semiconductor downcycle. Departure of momentum investors over the past year, as the notion that MEMC can continue strong growth unaffected by traditional semiconductor cyclicality has been exposed as a myth. The shares have until recently remained too expensive for value investors. The latter may also be uncomfortable owning a company with a moat that depends to a large degree on continued technology leadership. Unexpected hit from hurricane Ike. The company lost fifteen days of production at its Pasadena factory, forcing a downward revision to Q3 estimates. While this is obviously a short-term issue, it seems that it affected some investors’ willingness to own the shares during Q3.

•

-20% 97

WHY THE SHARES MAY BE MISPRICED

•

-30%

•

10%

Estimated fair value of WFR per share

MEMC’s highly volatile growth profile reflects the cyclicality of the semiconductor capital equipment industry. However, even as many cap equipment makers are posting revenue declines in 2008, MEMC has managed to continue growing. While the company is still exposed to cyclicality, it should also continue to benefit from secular growth in the solar industry.

Value of core business: LTM EBIT Fair value multiple of LTM EBIT 2009 estimated EPS ex. interest income Fair value multiple of 2009E adjusted EPS Total

WFR – Y-Y Revenue Growth, 1997-YTD’08

Value of excess marketable assets: Cash and equivalents Short-term investments Long-term investments Long-term debt Net cash and investments 2 Cash needed to run business Total

Gross Margin

Source: Company, The Manual of Ideas.

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MANAGEMENT’S VIEW OF BUSINESS

•

Notes from 3Q08 earnings call with CEO Gareeb and CFO Hannah on October 23: • Operating environment: solar application demand continues to be “healthy;” semiconductor application demand is “weak, mostly due to customer inventory reduction efforts in light of uncertain macro economic conditions” (result: “significant sequential reduction in semiconductor wafer demand”); “while it takes quite a bit more polysilicon to make up the equivalent revenue by producing wafers for solar applications, our increased polysilicon production capability demonstrated in [Q3] and our market positioning should allow us to show continued sequential growth in [Q4] while improving our margin profile” • 1H08: polysilicon production was negatively impacted due to technical issues related to Pasadena expansion in Q1 and equipment failures in Q2 • Q3: Revenue of $546 million came in above posthurricane guidance of $530 million ± $10 million, due to “rapid ramp following the hurricane;” quarter included four weeks of impacted production; Pasadena factory did incur “any significant physical or structural damage;” delivered “significant” quantity of short-term wafers (spot production) • Q4 outlook: operations have returned to prehurricane levels; expect revenue of $540-600 million (sequential growth of up to 10%), gross margin “over 50% in spite of reduced utilization of our manufacturing facilities and price reductions,” and opex of $41 million; semiconductor wafer demand expected to decline 20-30% sequentially, with pricing down mid to high single digits; revenue growth expectation noteworthy because the company needs to sell twice as much poly for solar application as it does for semiconductor application in order to generate equivalent revenue (revenue guidance would have been $590-650 million assuming constant mix between semiconductor and solar); revenue guidance includes 2-3 weeks of production “buffer” • 2008: Revenue related to solar application expected to exceed $1 billion for the first time; capex expected to be 15% of less of revenue • Production capacity: key driver of revenue; first step is adding capacity in manufacturing facilities, second step is utilizing such capacity (typically ramped up over 3-6 month period); currently installed capacity should allow company to achieve quarterly revenue of $800-900 million based on traditional semiconductor/solar mix, or revenue of $720-810 million based on expected Q4 mix; these run rates might be achievable by 2Q09 (important: company is not giving 2009 guidance at this time)

•

• • •

•

Thanksgiving 2008

Pricing: spot poly prices “stayed pretty healthy” in Q3; no clear indications on Q4 pricing yet (spot poly sales occur in last month of the quarter); majority of contracts will come up for price renegotiation in December (pricing likely to depend on customer consumption expectations for February and March Potential customer issue (Gintech) [raised in Q&A]: $3-4 billion deal with Gintech, which may have difficulty funding capacity expansion, but has so far paid MEMC “on time;” this is a potential revenue risk rather than receivables risk, as Gintech has deposited cash with MEMC; if customers such as Gintech are unable to pay the company, MEMC would keep deposits (triple digit millions in the case of largest customers—included in liability section of balance sheet, plus off-balance-sheet letters of credit), look to sell poly in spot market and enter into new long-term deals (current prices are “way higher” than prices specified in certain long-term arrangements) Competitive position: industry-leading asset turnover; “continued growth in spite of the sharp inventory corrections in the semiconductor application market in [1H08] highlights the benefits of MEMC’s unique positioning as a vertically integrated wafer supplier to multiple markets, especially as we achieved a significant milestone of having revenue generated by solar applications exceeding $1 billion in 2008, in spite of our spot polysilicon sales declining as a percentage of sales;” [analyst question:] competitors such as GCL have difficulty raising capital—is potential effect of this factored into guidance? [answer:] no Share repurchases: bought back 2.5 million shares in Q3; more than $500 million remains on $1 billion total repurchase authorization Potential acquisitions: some competitors getting weaker; “keeping our eyes wide open;” “want to stay in our core competency of making wafers” Wafer gross margin profile (from highest to lowest gross margin): (1) short-term spot poly, (2) short-term 156 millimeter wafer, (3) longer term 156 millimeter wafers and 300 millimeter wafers, (4) 200 millimeter and smaller diameter wafers Miscellaneous: pension obligation was fully funded as of September 30

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Thanksgiving 2008

Meredith Corporation (NYSE: MDP)

Des Moines, IA, 515-284-3000 http://www.meredith.com

Services: Printing & Publishing, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $16.11 (as of 11/14/08) 52-week range: $15.09 - $58.46 Market value: $727 million Enterprise value: $1.2 billion Shares out: 45.1 million Ownership Data Insider ownership: 11% Insider buys (last six months): 3

Valuation

This quarter Next quarter

Latest $0.49 0.79

Month Ago $0.67 0.73

# of Ests 5 4

FYE 6/30/09

2.45

2.66

EV / LTM revenue

0.7x

FYE 6/30/10 FYE 6/30/11

2.53 3.05

2.67 3.17

6 2

EV / LTM EBITDA EV / LTM EBIT

4.4x 5.3x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 2 Institutional ownership: 87% # of institutional owners: 581

Date

Actual

Estimate

10/29/08

$0.41

P/E FYE 6/30/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

5.7x 6.6x 6.4x 5.3x

LTM EBIT yield

19%

LTM pre-tax ROC

99%

6/30/02 988 554 118 91 1.79 137 23 113 28 272 939 1,460 19 307 385 953 0 508

6/30/03 1,080 615 162 (4) 1.59 161 27 134 22 268 913 1,432 23 297 375 934 0 498

70%

95%

Fiscal Years Ended 6/30/04 6/30/05 6/30/06 1,162 1,217 1,562 659 694 905 192 228 267 104 129 145 2.00 2.50 2.87 163 171 194 25 24 29 139 147 165 59 30 31 314 305 432 897 935 1,333 1,466 1,491 2,041 95 144 65 371 439 464 225 125 515 856 840 1,343 0 0 0 610 652 698

6/30/07 1,616 953 288 162 3.44 211 43 168 39 453 1,330 2,090 112 487 375 1,257 0 833

6/30/08 1,587 902 242 135 2.82 256 30 226 38 403 1,382 2,060 86 443 410 1,272 0 788

LTME 9/30/08 1,553 871 218 120 2.53 239 35 204 29 404 1,381 2,059 140 522 325 1,276 0 783

FQE 9/30/07 404 228 61 33 0.69 62 4 58 26 467 1,322 2,086 135 530 325 1,274 0 813

FQE 9/30/08 370 197 37 19 0.41 45 10 35 29 404 1,381 2,059 140 522 325 1,276 0 783

>100%

99%

n/m

>100%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

INVESTMENT RISKS & CONCERNS

Meredith is the leading media and marketing company serving American women. Meredith has a broad media footprint: National brands, including Better Homes and Gardens, Parents, Ladies’ Home Journal, Family Circle, American Baby, Fitness and More, generate of $1 billion and reach 75 million unduplicated women each month. Local brands, including 12 TV stations that reach 10% of U.S. households, generate revenue of $350 million. Online and diversified businesses, including 40+ websites, broadband video, integrated marketing and brand licensing, generate $250 million in high-margin revenue. Advertising revenue comprises 60% of total company revenue.

•

SELECTED OPERATING DATA

•

FYE June 30 2006 % of revenue by segment: 1 Publishing 80% 2 20% Broadcasting Publishing segment data: 3 Revenue growth 37% 4 22% EBIT growth 4 17% EBIT margin Broadcasting segment data: 5 Revenue growth 2% 6 3% EBIT growth 6 28% EBIT margin Unallocated overhead -2%

2007

2008

1Q09

78% 22%

80% 20%

81% 19%

2% 3% 17%

0% -2% 17%

-9% -40% 11%

10% 20% 31% -2%

-8% -26% 25% -2%

-7% -21% 16% -2%

•

($mn) DM MSO PRM RUK

Advertising comprised 51% of publishing revenue in FY08. Advertising comprised 97% of broadcasting revenue in FY08. 3 Includes growth from acquisitions related to Meredith Integrated Marketing. 4 Excludes $25 million FY08 charge related to book publishing business. 5 FY08 revenue growth was 0% if political ad revenue is excluded. 6 Political ad revenue declined from $33 million in FY07 to $5 million in FY08.

MDP

INVESTMENT HIGHLIGHTS

•

• •

•

Short- and long-term headwinds. Meredith is being impacted by weakness in ad spending (60% of revenue; declining 18% y-y) and higher paper costs (+20% y-y). Longer term, the company faces challenging print magazine subscription trends. M&A strategy may not deliver value. Meredith’s acquisitions have aimed to generate growth outside magazines and TV. However, the company’s acquisitions of interactive marketing agencies may ultimately not deliver as much value as expected. Interactive agencies typically thrive due to the efforts of key employees. Leading-edge creativity may be difficult to maintain in a large company. Limited reinvestment opportunities. Meredith has spent $1.2 billion on M&A, $600 million on share repurchases and $200 million on dividends over the past decade. The spending exceeds FCF of $1.1 billion, implying some leveraging of the balance sheet. The M&A activity, buybacks and dividends suggest that the company has limited high-ROIC reinvestment opportunities in the core business. This lowers Meredith’s appeal as an MF selection.

COMPARABLE PUBLIC COMPANY ANALYSIS

•

Thanksgiving 2008

Profitable media assets, with stable of brands targeting American women. While most assets are in slow-growing magazine publishing and local TV, the company continues to generate strong EBIT. Growing online and video portfolio. Meredith’s 40+ websites attract 20 million unique visitors and deliver 170 million page views per month, driving ad revenue and boosting magazine subscriptions. High-margin brand licensing opportunities. The company has signed recent licensing deals with Wal-Mart, Realogy and Universal Furniture. Fast-growing custom marketing business. Meredith Integrated Marketing (MIM) has been transformed via five acquisitions from a custom publisher to a full-service interactive marketing firm. This non-ad revenue stream has grown at a five-year CAGR of 25% to $150 million in FY08. Stock price implies 28% trailing FCF yield, 6x trailing P/E and 7x forward P/E.

MV 107 215 61 8,626

EV 277 165 287 8,626

EV/Rev 1.6x .5x 1.0x 2.8x

P/TB n/m 4.1x n/m 11.0x

08 P/E 6x 65x 2x 11x

09 P/E 4x 13x 2x 10x

727

1,163

.7x

n/m

MAJOR HOLDERS Meredith has 37.0 million common shares and 9.2 million Class B shares outstanding. Holders of the common shares and the Class B shares are entitled to one and ten votes per share, respectively. The common shares trade publicly, while the Class B shares are controlled by the Meredith family. Economic ownership: Insiders 15% │ Select Equity Group 7% │ Eminence Capital 5% │ T. Rowe 5%

The dual-class share structure serves to entrench insiders.

THE BOTTOM LINE Meredith is a relatively cheap company with few attractive reinvestment opportunities in the core magazine publishing and local television businesses. Potential growth will likely be driven by M&A, with FCF redeployment at rates of return dictated by future acquisition multiples. This seems to imply unspectacular long-term returns for equity holders.

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Thanksgiving 2008

Mesabi Trust (NYSE: MSB)

New York, NY, 615-835-2749

Financial: Misc. Financial Services Trading Data

Consensus EPS Estimates

Price: $8.89 (as of 11/14/08) 52-week range: $8.50 - $31.70 Market value: $117 million Enterprise value: $103 million Shares out: 13.1 million Ownership Data Insider ownership: 1% Insider buys (last six months): 3

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 1/31/08 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

6.4x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

3.1x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

n/a 3.2x

n/a

P / tangible book Greenblatt Criteria

n/m

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 38% # of institutional owners: 63

Date

Actual

Estimate

n/a

LTM EBIT yield

32%

LTM pre-tax ROC

n/m

1/31/02 4 0 4 4 0.28 4 0 4 1 0 0 2 0 0 0 2 0 0

1/31/03 5 0 5 5 0.36 5 0 5 3 0 0 4 0 0 0 4 0 0

n/m

Fiscal Years Ended 1/31/04 1/31/05 1/31/06 7 14 22 0 0 0 7 13 21 7 13 21 0.52 0.99 1.58 7 10 20 0 0 0 7 10 20 0 4 6 0 0 0 0 0 0 5 8 11 0 0 0 0 0 0 0 0 0 5 8 11 0 0 0 0 0 0 n/m

n/m

1/31/07 18 0 17 17 1.31 21 0 21 4 0 0 5 0 0 0 5 0 0

1/31/08 19 0 18 18 1.39 18 0 18 7 0 0 9 0 0 0 9 0 0

LTME 7/31/08 33 0 33 33 2.48 28 0 28 14 0 0 20 0 0 0 20 0 0

FQE 7/31/07 4 0 4 4 0.32 4 0 4 4 0 0 7 0 0 0 7 0 0

FQE 7/31/08 17 0 17 17 1.26 13 0 13 14 0 0 20 0 0 0 20 0 0

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$35 $30 $25 $20 $15 $10 $5 $0 Oct 99

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BUSINESS OVERVIEW Mesabi, formed in 1961, derives leasehold royalty income from outsourced iron ore mining. The trust has interests in leases and the Mesabi Land Trust. Trustee activities are limited to collecting income, paying expenses, distributing income to unitholders, and protecting the assets held. The trust has no employees but engages consultants to monitor the amount and sale price of iron ore products shipped from Silver Bay, Minnesota, based on information provided by CCI/Northshore (NYSE: CLF), the lessee/ operator of the Mesabi lands. Royalties payable to the trust by CCI are based on the amount and price of iron ore shipped. The trust is organized as a pass-through vehicle for income tax purposes. The trust is likely to terminate in several decades based on a formula specified in the trust agreement.

•

• •

2006

2007

2008

1H09

59% 60% 99%

-17% -17% 5%

5% 6% -16%

232% 244% 215%

98% 2% 4% 96% 97%

97% 2% 4% 96% 122%

97% 3% 3% 97% 97%

n/a n/a 2% 98% 73%

• •

•

INVESTMENT HIGHLIGHTS •

• • •

•

Royalty income and distributions to unitholders driven by (1) shipment volume of iron ore pellets, (2) pricing of iron ore sales, and (3) the percentage of iron ore pellet shipments from Mesabi Trust lands rather than from other Northshore lands. Shipment volume of iron ore pellets varies based on customer delivery schedules, iron ore industry conditions, and weather on the Great Lakes. Prices under contracts between CCI and its customers are subject to adjustment based on multiple price and inflation index factors. Majority of income derived from base overriding royalties, which roughly range from 2.5% of gross proceeds for the first one million tons of iron ore shipped annually, to 6% of gross proceeds for shipments in excess of 4 million tons. Other income sources are royalty bonuses, fee royalties, and minimum advance royalties. Bonuses are earned when iron ore is sold at prices above a threshold price. Fee royalties are relatively minor and relate to the so-called Peters Lease. Minimum advance royalties specify a minimum royalty amount that is payable regardless of volume.

Mesabi has no officers or directors and is overseen by four trustees, including an SVP of corporate trust services at U.S. Bank, a retired mining geologist, a partner in the law firm of Oppenheimer Wolff, and a private investor. Distributes income to shareholders on quarterly basis, driven by iron ore royalties received. Stock price implies 24% trailing FCF yield and 4x trailing P/E (no EPS estimates available).

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE January 31 Selected growth rates: Revenue Net income per unit Distributions per unit % of revenue by type: Royalties – amended leases Royalties – Peters Lease Trust expenses as % of revenue Net income as % of revenue Distributions as % of net income

Thanksgiving 2008

Results highly correlated with volatile iron ore prices, which have recently reached historic highs.1 Does not operate iron ore mines and has little control over CCI’s activities. Northshore has power to decide capex and production levels. The trust relies on data provided by CCI in order to determine royalties in any given period. CCI decides portion of operations on Mesabi lands versus government or other lands. If CCI opted to produce more on lands other than Mesabi lands, royalties would likely decrease. In CY07, 88% of CCI’s Northshore production was on Mesabi lands, down from 91% in CY06. CCI derives 80%+ of North American iron ore revenue from five customers. In some cases, CCI is the sole supplier of iron ore pellets to its customers. As sales volume depends on customer requirements, it can fluctuate wildly.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) BHP CLF RIO RTP MSB

MV 90,825 2,301 60,543 54,488

EV 97,229 2,336 74,198 96,684

117

103

EV/Rev 1.6x .7x 1.9x 2.2x

P/TB 2.4x 1.5x 1.6x 6.6x

08 P/E 5x 3x 4x 5x

09 P/E 5x 2x 5x 7x

3.1x

n/m

n/a

MAJOR HOLDERS Insiders <1% │ RenTech 8% │ Tontine 7%

n/a

For iron ore price trends, see analysis of KHD in this issue of the MOI.

THE BOTTOM LINE Mesabi Trust is a limited-purpose pass-through vehicle with an economic interest in iron ore mining operations. The trust has no employees and is a passive recipient of royalty income driven by iron ore prices and volumes shipped by Cleveland-Cliffs (NYSE: CLF), the lessee/operator of the Mesabi lands. The trust distributes virtually all income, providing unitholders with an attractive current yield. However, given Mesabi’s unmitigated exposure to iron ore prices and third party-run operations, an investment should only be considered by investors with a favorable outlook regarding iron ore prices. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Microsoft (Nasdaq: MSFT)

Redmond, WA, 425-882-8080 http://www.microsoft.com

Technology: Software & Programming, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $20.06 (as of 11/14/08) 52-week range: $18.74 - $36.72 Market value: $178.4 billion Enterprise value: $159.7 billion Shares out: 8,895.6 million Ownership Data Insider ownership: 13% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.51 0.50

Month Ago $0.55 0.53

# of Ests 30 26

FYE 6/30/09

2.02

2.11

EV / LTM revenue

2.6x

FYE 6/30/10 FYE 6/30/11

2.29 2.60

2.38 2.73

30 4

EV / LTM EBITDA EV / LTM EBIT

n/a 7.2x

P / tangible book Greenblatt Criteria

9.2x

LTM EBIT yield

14%

LT EPS growth 11.2% 11.2% Latest Quarterly EPS Surprise

Insider sales (last six months): 28 Institutional ownership: 61% # of institutional owners: 3545

Date

Actual

Estimate

10/23/08

$0.48

$0.47

P/E FYE 6/30/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

10.7x 9.9x 8.8x 7.7x

LTM pre-tax ROC

n/m

6/30/02 28,365 22,666 3,952 5,355 0.48 14,509 770 13,739 38,652 48,576 1,669 67,646 0 12,744 0 15,466 0 52,180

6/30/03 32,187 26,128 8,395 7,531 0.69 15,797 891 14,906 49,048 58,973 3,512 81,732 0 13,974 0 16,820 0 64,912

n/m

Fiscal Years Ended 6/30/04 6/30/05 6/30/06 36,835 39,788 44,282 30,239 33,757 36,632 8,952 14,409 16,064 8,168 12,254 12,599 0.75 1.12 1.20 14,626 16,605 14,404 1,109 812 1,578 13,517 15,793 12,826 60,592 37,751 34,161 70,566 48,737 49,010 3,684 3,808 4,405 94,368 70,815 69,597 0 0 0 14,969 16,877 22,442 0 0 0 19,543 22,700 29,493 0 0 0 74,825 48,115 40,104 n/m

n/m

6/30/07 51,122 40,429 18,499 14,065 1.42 17,796 2,264 15,532 23,411 40,168 5,638 63,171 0 23,754 0 32,074 0 31,097

6/30/08 60,420 48,822 22,180 17,681 1.87 21,612 3,182 18,430 23,662 43,242 14,081 72,793 0 29,886 0 36,507 0 36,286

LTME 9/30/08 61,719 49,948 22,204 17,765 1.90 19,104 3,450 15,654 20,722 37,202 14,190 65,117 1,975 24,383 0 31,523 0 33,594

FQE 9/30/07 13,762 11,087 5,834 4,289 0.45 5,878 510 5,368 21,574 35,853 11,869 65,645 0 22,744 0 33,510 0 32,135

FQE 9/30/08 15,061 12,213 5,927 4,373 0.48 3,370 778 2,592 20,722 37,202 14,190 65,117 1,975 24,383 0 31,523 0 33,594

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Page 165 of 401

BUSINESS OVERVIEW Microsoft, founded in 1975, is the world’s largest software firm. It operates in five segments: Client (Windows OS), Server and Tools (Windows & SQL Server), Online Services (MSN), Microsoft Business (Office, Project, Visio, Exchange, Live Meeting), and Entertainment and Devices (Xbox, Zune, Windows Mobile, Windows Embedded).

•

SELECTED OPERATING DATA FYE June 30 2006 % of revenue by segment: Client 30% Server & Tools 21% Online Services Business 6% Microsoft Business Division 33% Entertainment and Devices 9% Revenue growth by segment: Client 10% Server & Tools 16% Online Services Business -2% Microsoft Business Division 9% Entertainment and Devices 38% ∆ revenue 11% 1 19% ∆ deferred revenue EBIT margin by segment: Client 79% Server & Tools 33% Online Services Business 5% Microsoft Business Division 67% Entertainment and Devices -27% Total EBIT margin 37% % of revenue by geography: U.S. 63% Other countries 37% Revenue growth by geography: U.S. 10% Other countries 14%

2007

2008

1Q09

29% 22% 5% 33% 11%

29% 22% 5% 32% 12%

28% 23% 5% 33% 12%

15% 15% 6% 13% 26% 15% 16%

13% 18% 32% 15% 34% 18% 21%

2% 17% 15% 20% -6% 9% 16%

77% 33% -25% 66% -32% 36%

77% 35% -38% 65% 5% 37%

73% 32% -68% 66% 7% -7%

61% 39%

59% 41%

n/a n/a

12% 21%

15% 24%

n/a n/a

1 Represents y-y change in period-end deferred (unearned) revenue. Deferred revenue was $13.5 billion at 1Q09-end, equal to one-fifth of annual revenue.

INVESTMENT HIGHLIGHTS •

• •

•

Parlayed ownership of PC operating systems into leadership in enterprise software, Internet services, and gaming. The company now generates almost as much EBIT from business software as it does from Windows OS. While MSN online services and Xbox are not yet contributing to profitability, they have the potential to become major profit drivers. Sales, EBIT, EPS up 18%, 21%, 32% in FY08. Performance drivers included Windows Vista, Office 2007, server software, and Xbox 360. Authorized $40 billion repurchase in September; has returned $115 billion to shareholders through buybacks and dividends in the last five years.

•

Thanksgiving 2008

FY09 (June) guidance for double-digit growth: Revenue of $65-66 billion (up 7-10% y-y), EBIT of $24-26 billion (up 8-13%), and EPS of $2-2.10 (up 7-12%). Revenue growth by segment is expected to be 2-6% in Client, 15-17% in Server & Tools, 1013% in Online Services, 12-13% in the Business Division, and -3%-flat in Entertainment. Cheaper than EBIT-to-EV yield suggests. As MSN and Xbox are still roughly breaking even, their value is not reflected in the EBIT-to-EV yield metric. As a result, investors should value MSN and Xbox based on metrics other than trailing earnings. Stock price implies 9% trailing FCF yield, 11x trailing P/E and 10x forward P/E.

INVESTMENT RISKS & CONCERNS •

• •

Competitive threats from Google, open source software, SaaS, etc. Microsoft is aggressively trying to win business away from Google and appears to be the front runner on a competitive deal to supply search and advertising on Verizon mobile phones. Lower-than-expected demand for Vista, Office or Xbox 360 could significantly slow top-line growth. Pursuit of Yahoo may reflect limited high-ROC reinvestment opportunities and concerns regarding Google. Microsoft does not plan to rebid for Yahoo.

COMPARABLE PUBLIC COMPANY ANALYSIS MV

GOOG ORCL YHOO

97,580 87,110 14,994

MSFT

178,445

($mn)

4.5x n/m 2.1x

08 P/E 16x 11x 26x

09 P/E 14x 10x 23x

9.2x

10x

EV/Rev

P/TB

83,168 85,326 11,780

4.0x 3.7x 1.6x

159,698

2.6x

MAJOR HOLDERS Bill Gates 9% │ Steve Ballmer 4% │ Other insiders <1% │ Barclays 4% │ State Street 3% │ Cap Re 3%

THE BOTTOM LINE Microsoft is quite possibly the world’s best business, as reflected by the company’s global ubiquity, virtually unassailable market position in operating systems, strong management, and ability to generate enormous profits while employing no capital in the business. While Microsoft is cheap based on 10x estimated FY09 headline EPS, the undervaluation becomes even more apparent if one considers the fact that the company’s balance sheet remains highly deleveraged and that valuable businesses, such as MSN and Xbox, are not yet contributing to headline EPS. We value Microsoft at $41-54 per share, based on the sum-of-the-parts valuation analysis summarized on the next page. Our estimate ascribes no value to the company’s recently announced $40 billion stock repurchase plan, which should be highly accretive to EPS.

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…additional insight into MSFT:

POTENTIAL EPS ACCRETION FROM SHARE REPURCHASES •

WHAT ARE THE SHARES WORTH? •

•

Thanksgiving 2008

We value Microsoft at $41-54 per share, based on the sum-of-the-parts valuation analysis summarized below. Upside to our value estimate could come from share repurchases and better-than-expected performance of the Xbox and MSN.com businesses. Deserves premium valuation due to defensible moat and stability of earnings and free cash flow.

Microsoft — Sum-of-the-Parts Valuation Summary1 Low Value

High Value

$9,004 11,718 4,381 1,975 $27,078 (2,000) $25,078

$9,004 11,718 4,381 1,975 $27,078 (1,000) $26,078

Value of Client: LTM EBIT 4 Fair value multiple of LTM EBIT Total

12,856 9x $115,704

12,856 12x $154,272

Value of Business Division: LTM EBIT 5 Fair value multiple of LTM EBIT Total

12,904 8x $103,232

12,904 10x $129,040

Value of Server and Tools: LTM EBIT 6 Fair value multiple of LTM EBIT Total

22,642 8x $181,136

22,642 10x $226,420

($ in millions, except per share data)

•

Value of excess marketable assets: Cash and equivalents Short-term investments Long-term investments Short-term debt Net cash and investments 3 Cash needed to run business Total

Value of Entertainment and Devices: LTM revenue 7 Fair value multiple of LTM EBIT Total

8,025 1x $8,025

8,025 3x $24,075

Value of Online Services Business: LTM revenue 8 Fair value multiple of LTM EBIT Total

3,313 2x $6,626

3,313 5x $16,565

Value Offset of Corporate Overhead: LTM operating loss Fair value multiple of LTM loss Total

(6,847) 8x ($54,776)

(6,847) 10x ($68,470)

Estimated fair value of MSFT per share

$385,025 $41

$507,980 $54

Does not include incremental value of $40 billion buyback plan. 2 Based on balance sheet values as of September 30, 2008. 3 Represents MOI estimate. 4 Multiples reflect near-monopoly status and 14% FY08 EBIT growth. 5 Multiples reflect very strong margin profile and 15% FY08 EBIT growth. 6 Multiples reflect strong margin profile and 26% FY08 EBIT growth. 7 Multiples reflect strong Xbox market position and 34% FY08 revenue growth. 8 Multiples reflect large online opportunity and 32% FY08 revenue growth. Source: Company filings, The Manual of Ideas estimates and analysis.

We estimate EPS accretion of $0.11-$0.13 over the next twelve months (NTM), assuming $40 billion spent on incremental share repurchases and an average price paid of $26-30 per share. Microsoft treasurer George Zinn: “…strong credit quality coupled with investors’ current appetite for high quality paper provides a unique opportunity for the company to establish its firstever commercial paper program and enhance its capital structure.” (September 22, 2008) The following analysis shows EPS accretion sensitivity to various assumptions of repurchase amount and purchase price per share.

NTM Shares Repurchased ($ and shares in millions, except per share data) Price paid per share $20.00 $22.00 $24.00 $26.00 $28.00 $30.00 $32.00 $34.00

NTM Weighted-Average Shares Outstanding1,2 ($ in millions, except per share data) Price paid per share $20.00 $22.00 $24.00 $26.00 $28.00 $30.00 $32.00 $34.00 1 2

•

Viewed as unexciting by many technology investors, despite 18% revenue growth in FY08. Headline earnings ignore value of Xbox and MSN businesses, making a sum-of-the-parts valuation analysis necessary to judge fair value.

NTM Repurchase Amount $20,000 $40,000 $60,000 8,880 8,380 7,880 8,925 8,471 8,016 8,963 8,547 8,130 8,995 8,611 8,226 9,023 8,666 8,309 9,047 8,713 8,380 9,068 8,755 8,443 9,086 8,792 8,498

Based on 9.4 billion diluted shares outstanding currently. Assumes weighted average repurchase date six months from today.

NTM EPS Accretion From Incremental Buybacks3,4 ($ in millions, except per share data) Price paid per share $20.00 $22.00 $24.00 $26.00 $28.00 $30.00 $32.00 $34.00

WHY THE SHARES MAY BE MISPRICED •

NTM Repurchase Amount $20,000 $40,000 $60,000 1,000 2,000 3,000 909 1,818 2,727 833 1,667 2,500 769 1,538 2,308 714 1,429 2,143 667 1,333 2,000 625 1,250 1,875 588 1,176 1,765

3 4

NTM Repurchase Amount $20,000 $40,000 $60,000 $0.09 $0.20 $0.31 $0.08 $0.17 $0.27 $0.07 $0.15 $0.24 $0.06 $0.13 $0.21 $0.06 $0.12 $0.19 $0.05 $0.11 $0.17 $0.05 $0.10 $0.15 $0.04 $0.09 $0.14

Assumes 2.0% interest rate and 40% effective tax rate. Assumes NTM net income of $20.0 billion (prior to lost interest income).

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MANAGEMENT’S VIEW OF BUSINESS

•

Notes from 1Q09 call with CFO Liddell on October 23: • Macroeconomic environment… “clearly weakened throughout the quarter;” deterioration in spending “has continued into October” • Management focus: (1) maintain total-ownershipcost leadership of software; (2) improve operating efficiency, including opex reduction of $400-500 million (lower headcount, lower marketing, lower capex); invest in “strategic opportunities,” including expansion in emerging markets • Market share: “continue to forecast outgrowing the market regardless of the economic conditions” • FY09 guidance—revenue: $64.9-66.4 billion, up 7-10%; “still foresee an increase in demand for our products and the potential to drive revenue and [EPS] growth from high single to low double-digits for this financial year;” at top end, guidance assumes “mild recession” and “relatively modest growth rate for all IT-based products;” at bottom end, assumes “deeper recession” and “end-season lower growth for IT;” revenue growth guidance by segment: Client up 2-6% (assumes PC unit growth of 8-12%, with 6-12% in 2H09), Server & Tools up 15-17% (driven by Server platform), Business Division up 12-13% (driven by Office, SharePoint, Dynamics and Unified Communications), Online up 10-13% (assumes online ad growth of 15%), Entertainment Devices down 3% or flat (due to Xbox 360 pricing cuts, offset by unit volume growth); unearned revenue at end of FY09 expected to be up 2-5% y-y • FY09 guidance—EBIT: $24.4-25.5 billion • FY09 guidance—EPS: $2-2.10; assumes effective tax rate of 26.5% (150 bps lower than previous expectations) • 1Q09 review: revenue, EBIT and EPS met or exceeded high end of guidance despite a “very challenging environment;” unearned revenue at quarter end was up 16% y-y • 1Q09 review—Client: revenue up 2%, 400 bps below guidance; drivers: PC unit growth was 1012%, but growth of traditional PCs was several percentage points below expectations, offset by growth in low-end netbook segment (traditional PC growth in mature markets was flat to low single digit, while emerging markets showed double-digit growth across all segments); OEM revenue was down 1% even as licenses grew 8%; commercial and retail licensing grew 20% • 1Q09 review—Server & Tools: revenue up 17%;

•

• •

Thanksgiving 2008

1Q09 review—Business Division: revenue up 20%, 400 bps above guidance; business revenue grew 16%, driven by “strong sales of enterprise agreements and Client access license suites” 1Q09 review—Entertainment & Devices: revenue down 6%, exceeded high end of guidance; difficult comp due to year-ago launch of Halo 3 was mitigated by stronger Xbox 360 console sales (units of 2.2 million grew 20% y-y and outperformed PS3 sales by 100,000+ units); Xbox Live membership of 14+ million has roughly doubled in each of past two years; segment EBIT margin expanded by 100+ bps Impact of netbooks on Windows licenses: “too early to determine the extent to which the new netbooks segment is cannibalizing the traditional consumer PC market sales or simply capturing a new market opportunity, so we believe that there are likely aspects of both;” revenue realization from netbooks is “lower than we traditionally get from the consumer segment… it does impact our overall revenue per license” Change in ability to forecast Client segment results due to greater segmentation of PC market: “you have quite different dynamics in the business market, the consumer, non-netbooks market, the consumer netbooks market and the emerging country version of all of those as well; quite different growth rates, quite different realizations and quite different dynamics driving that; so it becomes, if you like more complicated from a forecasting point of view but a more interesting marketplace” Share repurchases and dividends: Authorized new $40 billion program; repurchased 223 million shares for $6 billion in 1Q09; accretion from buybacks will be partially offset by lower investment income (not only as a result of cash spent on repurchases but also as a result of a lower yield on the investment portfolio) Currency impact on revenue: 1/3 of revenue is in dollars in North America; 1/3 is in dollars but sold internationally (mainly OEM sales); 1/3 is sold in local currency internationally; FY09 revenue should not be impacted materially by currency swings as company is “pretty much fully hedged” M&A strategy: “continue to be a net acquirer of businesses,” with focus on small and medium-sized companies (did not discuss Yahoo) Miscellaneous: issued commercial paper at interest cost of less than 1%

annuity licensing grew faster than non-annuity, boosting quarter-end unearned revenue 28%; consulting and support services revenue up 19% 1Q09 review—Online: revenue up 15%; ad revenue grew 15% (search ads outperformed display ads)

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REVENUE, PRODUCTIVITY AND PROFIT MARGINS

MSFT – EBIT Margin, FY 2000-Q1 2009

MSFT – Revenue and EBIT, FY 2000-2008 Microsoft has posted steady revenue growth even as operating income has experienced some volatility, particularly in the years following the bursting of the Internet bubble.

$75bn

After fluctuating significantly during and after the Internet bubble, Microsoft’s operating margins have stabilized in the 35-40% range in recent years. Competitive and economic pressures are exerting downward pressure on margins, while margin expansion in the Xbox and MSN businesses could lead to overall margin expansion.

50%

Revenue EBIT

$50bn

Thanksgiving 2008

40%

$25bn

30%

1Q09

FY08

FY07

FY06

FY05

FY04

FY03

FY02

FY00

Source: Company, The Manual of Ideas.

FY01

20%

FY08

FY07

FY06

FY05

FY04

FY03

FY02

FY01

FY00

$0bn

Source: Company, The Manual of Ideas.

MSFT – Y-Y Revenue Growth, FY 2001-2009E The company has posted steady though unspectacular growth this decade, helped by emerging businesses such as Xbox and MSN. Management is guiding for 7-10% revenue growth in FY09.

20%

MSFT – Revenue by Geography, FY 2002-2008 International revenue has grown steadily, both in absolute terms and as a percentage of overall revenue. International revenue grew from $8 billion in FY02 to $24 billion in FY08, a 20% CAGR.

10%

29%

31%

32% 36%

37%

39%

41%

FY08

80%

FY07

100%

15%

60%

FY09E

U.S.

Other Countries FY06

FY05

FY04

Source: Company, The Manual of Ideas.

FY03

0% FY02

1Q09

FY08

FY07

FY06

FY05

FY04

FY03

20%

FY02

40%

0% FY01

Source: Company, The Manual of Ideas.

MSFT – Y-Y EPS Growth, FY 2001-2009E EPS growth has been volatile this decade, driven by major new product releases and investments in emerging businesses. While EPS declined 6% y-y in 1Q09, management is guiding for full-year fiscal 2009 EPS growth of 7-12%. The company has quite a bit of latitude in influencing FY09 EPS due to the large size and accretive nature of the share repurchase plan announced in September.

FY09E

1Q09

FY08

FY07

FY06

FY05

FY04

FY03

FY02

FY01

60% 45% 30% 15% 0% -15% -30%

Source: Company, The Manual of Ideas.

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Page 169 of 401

SEGMENT #1: CLIENT

•

(29% of FY08 revenue, 77% EBIT margin) •

• •

•

Comprises Windows OS, including Vista, XP, Media Center, and Tablet PC Edition. The segment leads the ongoing development of Windows and manages relationships with PC makers. Key revenue driver is worldwide PC shipments, with OEMs accounting for 80% of revenue. Competitors include Unix and Apple’s operating system. Linux is available for free under a general public license, with variants sold by HP, IBM and Sun. Apple has gained share, particularly in the U.S. consumer segment where it has benefited from the enormous success of the iPod and iPhone. Released Windows Vista in FY07, with advances in security, digital media, and user interfaces.

•

(32% of FY08 revenue, 65% EBIT margin) •

(22% of FY08 revenue, 35% EBIT margin) •

•

Includes Windows Server operating system, Microsoft SQL Server, Microsoft Enterprise Services, Visual Studio, System Center products, Forefront security products, and Biz Talk Server. Revenue from multi-year licensing deals (45% of revenue), fully packaged product and transactional volume licensing programs (25%), OEM licenses (10%), and services (20%). Competitors in server operating systems include (1) vertically integrated computer makers such as HP, IBM, Sun, which sell versions of Unix along with hardware; (2) companies such as Novell and Red Hat, which provide versions of Linux; and (3) server virtualization providers such as VMware. Competitors in enterprise-wide computing include (1) companies that provide J2EE-compliant solutions, including IBM and Sun; (2) server application providers such as CA, IBM and Oracle; (3) open source software, including Linux, Apache, MySQL, and PHP; and (4) Java middleware, including JBoss, Geronimo and Spring Framework. Other competitors include (1) System Center competitors HP, BMC, CA, and IBM; (2) Forefront competitors McAfee, Symantec and Trend Micro; (3) Adobe, BEA, Borland, IBM, Oracle, Sun, and the Eclipse open source project, which compete against Microsoft products for software developers. Released new versions of Windows Server and Visual Studio in FY08; plans to release new version of SQL Server in FY09. Windows Server includes virtualization technologies that compete with VMware’s software offerings.

SEGMENT #3: ONLINE SERVICES BUSINESS •

Consists of MSN online portals, Live Search, an online advertising platform for web publishers and advertisers, Hotmail email, instant messaging, and AvenueA Razorfish media agency services.

•

Includes Microsoft Office, Project, Visio, SharePoint Server, Exchange Server, Live Meeting, Tellme, and other business software. 90%+ of revenue from Office system offerings, with growth driven by new Office features and new offerings in areas such as content management, collaboration, and unified communications. 80% of revenue from businesses, 20% from consumers. Businesses buy Office through volume licensing, with revenue driven by the number of workers using Office (not highly correlated with PC shipments). Consumers buy products through OEMs in connection with new PC shipments. Competitors to Office system products include Apple, Corel (WordPerfect), Google (Apps), IBM (Smartsuite, Notes, Workplace), Novell, Oracle, Red Hat, and Sun. OpenOffice.org provides a free cross-platform application. Web-based offerings such as AjaxWrite, gOffice, iNetOffice, SimDesk, ThinkFree, and wikiCalc also compete with Office. However, the alternatives generally lack rich functionality and are marketed with low-priced PCs. Competitors to business management products (Microsoft Dynamics) include Intuit and Sage in the SMB market, and Oracle and SAP in the enterprise market. These competitors have much greater market share and stronger product offerings than do competitors in the Office market segments.

SEGMENT #5: ENTERTAINMENT AND DEVICES

(12% of FY08 revenue, 5% EBIT margin) • •

•

(5% of FY08 revenue, -38% EBIT margin)

Revenue primarily from online ads and secondarily from subscriptions and transactions related to paid services, as well as ancillary services. Competitors include AOL, Google and Yahoo, whose Internet search and media properties connect users and advertisers. Google leads in online ad revenue related to search and syndication. Launched new releases of Windows Live and adCenter in FY08. It also acquired aQuantive, a next-generation advertiser and publisher solution.

SEGMENT #4: BUSINESS

•

SEGMENT #2: SERVER AND TOOLS

Thanksgiving 2008

Includes Xbox 360 console and games, Zune, Mediaroom, mice and keyboards, Windows Mobile software, and Windows Embedded device OS. Competitors to Xbox video game consoles include Sony’s PlayStation and Nintendo’s Wii. Zune competes with Apple’s iPod. Windows Mobile software Apple, Nokia, Openwave, Palm, Qualcomm, RIM, and Symbian. Released Xbox 360 in 2005, while Nintendo and Sony released new versions of their consoles in 2006. The console life cycle averages 5-7 years.

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Thanksgiving 2008

Monster Worldwide, Inc. (NYSE: MWW)

New York, NY, 212-351-7000 http://www.monster.com

Services: Business Services, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $11.62 (as of 11/14/08) 52-week range: $9.99 - $37.39 Market value: $1.4 billion Enterprise value: $1.0 billion Shares out: 123.2 million Ownership Data Insider ownership: 5% Insider buys (last six months): 4

Valuation

This quarter Next quarter

Latest $0.31 0.22

Month Ago $0.35 0.26

# of Ests 18 11

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

10.1x 8.5x 10.9x 8.8x

FYE 12/31/08

1.37

1.33

EV / LTM revenue

0.7x

FYE 12/31/09 FYE 12/31/10

1.07 1.32

1.37 1.54

19 4

EV / LTM EBITDA EV / LTM EBIT

5.1x 5.4x

P / tangible book 4.3x Greenblatt Criteria

LT EPS growth 19.8% 19.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 748

Date

Actual

Estimate

10/30/08

$0.40

$0.33

LTM EBIT yield

19%

LTM pre-tax ROC

n/m

12/31/01 875 538 144 69 0.83 191 57 134 341 1,006 940 2,206 67 930 9 977 0 1,229

12/31/02 667 376 (8) (535) (0.15) (15) 39 (53) 166 809 387 1,631 86 799 3 817 0 813

n/m

-31%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 552 594 818 276 343 487 (19) 70 141 (109) 59 98 (0.20) 0.36 0.72 17 93 209 19 13 36 (2) 80 173 142 198 320 567 704 773 443 665 577 1,122 1,555 1,679 38 29 31 640 740 706 2 34 16 654 775 745 0 0 0 468 780 933 n/m

n/m

12/31/06 1,080 684 226 37 1.16 268 56 213 597 1,124 628 1,970 23 826 0 860 0 1,110

12/31/07 1,324 827 219 146 1.15 269 64 205 578 1,185 651 2,078 0 829 0 961 0 1,117

LTME 9/30/08 1,401 860 193 141 1.07 305 88 217 639 1,109 744 2,203 247 987 0 1,126 0 1,077

FQE 9/30/07 330 203 51 33 0.26 73 11 62 629 1,133 651 2,022 2 734 0 859 0 1,163

FQE 9/30/08 332 196 63 43 0.36 92 21 71 639 1,109 744 2,203 247 987 0 1,126 0 1,077

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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Oct 04

Oct 05

Oct 06

Oct 07

Oct 08

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BUSINESS OVERVIEW

•

Monster is the leading global job search website. It connects employers with job seekers, and has a local presence in key markets in North America, Europe and Asia.

•

SELECTED OPERATING DATA FYE December 31 % of revenue by segment: Careers – North America Careers – International Internet advertising, fees Revenue growth by segment: Careers – North America Careers – International Internet advertising, fees Total revenue growth EBIT margin by segment: Careers – North America Careers – International Internet advertising, fees Corporate Total EBIT margin % of revenue by geography: U.S. International Revenue growth by geography: U.S. International

2005

2006

2007

YTD 9/30/08

64% 23% 13%

59% 27% 14%

52% 36% 12%

48% 43% 9%

29% 69% 41% 38%

26% 64% 39% 36%

7% 59% 2% 21%

-6% 31% 0% 8%

33% -4% 31% -7% 17%

35% 6% 30% -5% 21%

32% 11% 8% -6% 16%

28% 16% 8% -9% 12%

76% 24%

71% 29%

62% 38%

55% 45%

30% 70%

27% 66%

6% 58%

-6% 31%

• •

Monster is the leader in online job search, having defined the industry for much of the past decade. The Monster brand enjoys strong global awareness. Revenue up 8% and deferred revenue down 5%, driven by strong international growth (helped by foreign currency gains), offset by U.S. weakness. International accounted for 48% of Q3 careers revenue, up from 26% in CY05. The company has become less dependent on U.S. revenue, enabling it to grow despite domestic economic weakness, and to benefit from foreign currency appreciation. Monster owns 44.5% of ChinaHR, China’s secondlargest online career marketplace. Monster holds the #1 or #2 position in several other overseas markets, including the U.K., South Korea, and India. $73 million Trovix acquisition in July added intelligent search technology, aiming to provide targeted matches to employers and job seekers. Chairman and CEO Salvatore Iannuzzi (54) joined Monster in 2007. Previously, he spent three months at Motorola and three years at Symbol Technologies, where he rose to CEO. CFO Timothy Yates (60) also joined Monster in 2007. Iannuzzi and Yates have prior experience working together.

Strong balance sheet, with $392 million of net cash and short-term investments and $94 million of illiquid auction rate securities as of September 30. Strong ability to throw off cash as it grows, due to negative working capital position. Monster had deferred revenue of $412 million at the end of Q3. Repurchased $128 million of stock YTD, following $252 million buyback in 2007. Stock price implies 15% trailing FCF yield, 11x trailing P/E and 11x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

INVESTMENT HIGHLIGHTS •

Thanksgiving 2008

North America careers revenue down 6% YTD and 11% in Q3. While the company grew North America careers revenue 7% in 2007, economic weakness has had a more pronounced impact YTD. Internet advertising and fees have been flat. Global slowdown could have material negative impact on results. Despite declining U.S. revenue, Monster has posted respectable performance YTD due to double-digit overseas growth. If the global economy enters recession, Monster would suffer. Highly competitive, evolving market. Monster competes against a wide range of online and offline providers of job search services. Online competitors include Yahoo, Craigslist, Careerbuilder, among others. Future competition could come from best-inclass technology firms such as Google.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) KFRC MPS RHI YHOO

MV 262 578 2,762 14,994

EV 278 523 2,392 11,780

EV/Rev .3x .2x .5x 1.6x

P/TB 3.4x 2.3x 3.3x 2.1x

08 P/E 10x 8x 11x 26x

09 P/E 14x 15x 25x 23x

MWW

1,432

1,040

.7x

4.3x

11x

MAJOR HOLDERS Common (118 million shares out): CEO Iannuzzi <1% │ Other insiders 1% │ T Rowe 15% │ Morgan Stanley 7% │ Cap Re 6% │ Fidelity 6% │ Andrew McKelvey 4%; Class B Common (5 million shares out): Andrew McKelvey 100%

THE BOTTOM LINE Monster offers an opportunity to buy a global leader in a growth industry at a value price. While Monster’s business has slowed due to U.S. weakness, the company’s brand name and global franchise remain strong. Monster is likely to continue to take share from newspapers and other offline job search providers. With a strong balance sheet, the company has the ability to take advantage of the current downturn to make tuck-in acquisitions and repurchase shares. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Mosaic Company (NYSE: MOS)

Plymouth, MN, 800-918-8270 http://www.mosaicco.com

Basic Materials: Chemical Manufacturing Trading Data

Consensus EPS Estimates

Price: $32.47 (as of 11/14/08) 52-week range: $23.96 - $163.25 Market value: $14.4 billion Enterprise value: $13.7 billion Shares out: 444.3 million Ownership Data Insider ownership: 65% Insider buys (last six months): 4 Insider sales (last six months): 2 Institutional ownership: 28% # of institutional owners: 1056

Valuation

This quarter Next quarter

Latest $2.13 2.60

Month Ago $2.26 2.78

# of Ests 11 6

P/E FYE 5/31/08 P/E FYE 5/31/09 P/E FYE 5/31/10 P/E FYE 5/31/11

7.0x 3.1x 2.9x 3.3x

FYE 5/31/09

10.40

11.26

EV / LTM revenue

1.1x

FYE 5/31/10 FYE 5/31/11

11.37 9.91

13.30 12.34

8 3

EV / LTM EBITDA EV / LTM EBIT

n/a 3.5x

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

P / tangible book Greenblatt Criteria

2.5x

Date

Actual

Estimate

10/1/08

$2.65

$2.94

LTM EBIT yield

28%

LTM pre-tax ROC

71%

5/31/03 1,663 159 72 54 0.21 40 119 (80) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

5/31/04 2,374 178 77 72 0.29 122 162 (41) 10 669 0 1,871 10 458 351 1,028 0 842

n/a

Fiscal Years Ended 5/31/05 5/31/06 4,397 5,306 526 637 319 102 159 (133) 0.47 (0.35) 332 294 255 404 77 (110) 245 173 1,728 1,583 2,160 2,347 8,412 8,723 205 222 1,153 1,129 2,464 2,388 5,198 5,192 0 0 3,214 3,531 11%

5/31/07 5,774 926 651 420 0.95 708 292 416 421 1,956 2,284 9,164 542 1,630 1,818 4,980 0 4,184

5/31/08 9,813 3,161 2,804 2,083 4.67 2,547 372 2,175 1,961 4,810 1,875 11,820 176 2,186 1,375 5,089 0 6,731

LTME 8/31/08 12,132 4,287 3,904 2,962 6.64 2,670 477 2,193 2,190 6,177 1,808 13,010 179 2,640 1,311 5,342 0 7,668

FQE 8/31/07 2,003 522 449 306 0.69 438 82 356 639 2,170 2,207 9,313 604 1,604 1,586 4,765 0 4,548

FQE 8/31/08 4,323 1,649 1,549 1,185 2.65 562 187 375 2,190 6,177 1,808 13,010 179 2,640 1,311 5,342 0 7,668

13%

54%

71%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Jan 00

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BUSINESS OVERVIEW

INVESTMENT HIGHLIGHTS •

Mosaic provides fertilizers and operates in three segmets. The phosphates segment produces phosphate fertilizer and phosphate-based animal feed ingredients. The potash segment produces potash sold principally as fertilizer but also for use in non-agricultural applications. The offshore segment provides phosphate-, potash- and nitrogen-based crop nutrients and animal feed ingredients. Mosaic was formed in 2004 through the merger of IMC and the fertilizer business of Cargill (owns 64% of Mosaic).

•

SELECTED OPERATING DATA

•

FYE May 31 2006 2007 2008 1 % of revenue by segment: Phosphates 56% 53% 56% Potash 21% 24% 22% Offshore 23% 22% 22% Revenue growth by segment: Phosphates 45% 3% 78% Potash 35% 28% 52% Offshore 2% 9% 64% Total revenue growth 21% 9% 70% Gross margin by segment: Phosphates 8% 13% 36% Potash 30% 28% 38% Offshore 4% 6% 12% Total gross margin 12% 16% 32% 2 EBIT margin by segment: Phosphates 5% 10% 34% Potash 27% 25% 35% Offshore -2% 0% 8% Total EBIT margin 7% 11% 29% Capex as % of revenue 8% 5% 4% D&A as % of revenue 6% 6% 4% % of revenue by geography: U.S. 30% 33% 33% Brazil 14% 15% 17% India 13% 10% 14% Other 43% 42% 35% % of revenue by product: Phosphate fertilizer 52% 48% 51% Potash fertilizer 18% 22% 21% Blends 13% 15% 17% Other 16% 15% 12% Change in sales volume: Phosphates 15% -12% 2% Potash 19% 22% 8% Change in average selling price: 3 DAP 10% 8% 94% 4 na 3% 24% MOP 5 na 0% 57% K-Mag Change in average price paid for key raw materials: Ammonia 13% -3% 22% Sulfur 9% -14% 197% 1

1Q09

•

56% 21% 23%

World’s largest producer of phosphate fertilizer and largest U.S. producer of phosphate animal feed ingredients, with 15% of global production and 59% of U.S. production of phosphate fertilizer in FY08. World’s third-largest producer of potash, accounting for 14% of global production and 38% of North American production, with mines in Saskatchewan, Canada, New Mexico and Michigan. Large producer and distributor of blended fertilizers in Brazil, with operations and strategic investments in this key agricultural market. CEO Jim Prolopanko (55) joined Mosaic as COO in 2006. He had been at Cargill since 1978. Stock price implies 15% trailing FCF yield, 5x trailing P/E and 3x forward P/E.

INVESTMENT RISKS & CONCERNS

119% 137% 111% 116%

•

39% 52% 17% 38% 37% 49% 15% 36% 4% 2%

Impact of capacity increases on selling prices question of “when” rather than “if.” With prices for phosphate and potash fertilizers exploding in CY07-08, producers have announced capacity expansion plans. Phosphate rock producers, who sell to non-integrated fertilizer firms, may also boost capacity. Finally, Chinese exports of phosphate fertilizers have risen, though recent government action has sought to keep more fertilizer in China. While it may take a couple of years for capacity to catch up with demand, it appears likely that selling prices will decline materially at some point.

COMPARABLE PUBLIC COMPANY ANALYSIS

27% 18% 24% 32% n/a n/a n/a n/a -7% -9%

($mn) AGU CF MON POT TRA

MV 5,157 3,126 40,603 21,064 1,665

EV 7,534 1,978 40,806 23,575 1,535

EV/Rev .8x .5x 3.6x 2.6x .6x

P/TB 2.9x 1.8x 8.6x 4.1x 1.8x

08 P/E n/a 4x 16x n/a 3x

09 P/E n/a 4x 14x n/a 4x

MOS

14,425

13,725

1.1x

2.5x

MAJOR HOLDERS Insiders <1% │ Cargill 64% │ Fidelity 4%

149% 198% 138%

RATINGS

75% 674%

Excludes eliminations. In FY08, these items amounted to -$369 million. Excludes phosphates restructuring losses in FY06-08 ($18 million in FY08). Represents diammonium phosphate fertilizer (FOB plant/mine). 4 Represents muriate of potash (FOB plant/mine). 5 Represents double sulfate of potash magnesia (FOB plant/mine). 2

Thanksgiving 2008

THE BOTTOM LINE Mosaic’s profit exploded in FY08 and is likely to increase again in FY09. Consensus estimates put the stock at only 3x FY09 EPS. While this valuation alone may justify investment, recent growth has been driven entirely by selling price increases (volumes have declined). It is impossible to estimate cycle-average earnings with any conviction, and we would not be surprised to see the stock trade below book value at the trough of the next downcycle. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Net 1 Ueps Technologies (Nasdaq: UEPS)

Johannesburg, South Africa, 27-11-343-2000 http://www.net1ueps.co.za

Technology: Computer Services Trading Data

Consensus EPS Estimates

Price: $10.97 (as of 11/14/08) 52-week range: $9.88 - $33.28 Market value: $641 million Enterprise value: $509 million Shares out: 58.4 million Ownership Data Insider ownership: 16% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.45 0.46

Month Ago $0.52 0.52

# of Ests 3 3

FYE 6/30/09

1.90

2.01

EV / LTM revenue

1.9x

FYE 6/30/10 FYE 6/30/11

2.14 2.29

2.31 2.84

4 2

EV / LTM EBITDA EV / LTM EBIT

4.1x 4.6x

P / tangible book Greenblatt Criteria

4.2x

LTM EBIT yield

22%

LT EPS growth 18.0% 18.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 2 Institutional ownership: 67% # of institutional owners: 321

Date

Actual

Estimate

11/6/08

$0.42

$0.49

P/E FYE 6/30/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

7.3x 5.8x 5.1x 4.8x

LTM pre-tax ROC

>100%

6/30/02 52 38 13 9 0.27 12 2 10 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

6/30/03 75 49 19 13 0.37 18 7 11 54 79 12 98 0 20 0 28 0 71

Fiscal Years Ended 6/30/04 6/30/05 6/30/06 131 176 196 92 126 146 36 71 90 13 45 59 0.38 0.80 1.03 42 38 76 3 3 2 39 35 74 80 108 190 117 151 241 26 23 20 153 182 270 0 0 0 48 34 43 0 0 0 57 45 61 0 0 0 96 137 209

6/30/07 224 170 97 64 1.11 66 4 62 172 248 118 376 0 55 4 95 0 281

6/30/08 254 187 110 87 1.50 119 4 115 273 346 99 454 0 77 4 114 0 340

LTME 9/30/08 262 190 112 95 1.65 46 6 39 246 370 207 588 110 185 5 231 0 358

FQE 9/30/07 60 45 26 18 0.31 40 1 40 216 289 118 417 0 69 4 112 0 305

FQE 9/30/08 68 49 27 26 0.45 (33) 3 (36) 246 370 207 588 110 185 5 231 0 358

n/a

>100%

n/m

>100%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$70 $60 $50 $40 $30 $20 $10 $0 Jan 00

Jan 00

Sep 01

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Sep 03

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BUSINESS OVERVIEW Net 1 provides a proprietary universal electronic payment system (UEPS) to the underbanked in developing economies. It operates in four segments, primarily in South Africa: The transaction-based activities segment earns fee income from a state welfare distribution service in South Africa, and transaction processing for retailers, utilities and banks. The smart card accounts segment derives revenue from a fixed monthly fee for the provision of smart card accounts. The financial services segment provides short-term loans on a principal basis and life insurance on an agency basis. It generates interest income and initiation and services fees. The hardware, software and technology segment derives revenue from sales of hardware, SIM cards, cryptography, SIM card licenses, and hardware rentals to merchants.

SELECTED OPERATING DATA FYE June 30 2006 % of revenue by segment: Transaction processing 60% Smart card accounts 18% Financial services 8% Technology sales 14% Revenue growth by segment: Transaction processing 13% Smart card accounts 4% Financial services -20% Technology sales 52% Total revenue growth 11% EBIT margin by segment: Transaction processing 52% Smart card accounts 45% Financial services 43% Technology sales 63% Corporate -6% Total EBIT margin 46% 1 30% Total net income margin 1

2007

2008

1Q09

62% 15% 5% 17%

60% 14% 3% 22%

59% 13% 3% 25%

19% -5% -30% 47% 14%

10% 4% -27% 44% 13%

6% -6% -18% 60% 13%

57% 45% 30% 16% -3% 43% 28%

55% 45% 23% 21% -2% 43% 34%

54% 45% 18% 24% -4% 40% 39%

Includes foreign exchange gains and losses and other transitory items.

INVESTMENT HIGHLIGHTS •

•

UEPS could enable four billion people with limited bank access to transact electronically. Four million out of 18 million unbanked South Africans receive welfare on Net 1 smart cards. UEPS uses smart cards that operate in real-time but offline, unlike prevalent systems that require immediate network access. UEPS users can transact in remote areas when a portable smart card reader is available. UEPS can also be used for banking, health care, money transfers, voting, and ID. CEO Serge Belamant (54) and CFO Herman Kotze (38) have been with the company or predecessors since 1989 and 2000, respectively.

•

• • •

Thanksgiving 2008

Selected by Central Bank of Ghana as country’s common electronic payment platform. Net 1 also provides a customized banking and payment system to a government-affiliated consortium in Iraq. Expanding into Namibia and Botswana through JVs that operate smart card-based systems; and into Colombia and Vietnam to operate virtual topup solutions for mobile prepaid airtime vending. BGS acquisition accelerates entry into Russia. Net 1 acquired 80% of BGS for €72 million and 40K shares in August. BGS’ largest customer and 20%-owner is Sberbank, the largest bank in Russia. Authorized $50 million buyback two weeks ago. Guiding for 15% adjusted EPS growth in FY09. Stock price implies 6% trailing FCF yield, 6x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS •

Two-thirds of revenue affected by South African tender. The South African Social Security Agency recently conducted a tender for the distribution of welfare grants. Net 1 filed proposals in May 2007. In November 2008, SASSA terminated the tender process without any awards. As a result, Net 1 retained contracts with five provincial governments through March 31, 2009 – and probably beyond. However, the long-term outcome remains unclear.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) DFS GPN MA TSS V

MV 4,545 2,948 18,569 2,393 45,825

EV -4,076 2,871 15,833 2,348 42,105

UEPS

641

509

EV/Rev -1.6x 2.1x 3.3x 1.2x 6.7x

P/TB 0.8x 37.5x 16.1x 4.9x 38.8x

08 P/E 6x 15x 16x 9x 20x

09 P/E 8x 14x 14x 9x 17x

1.9x

4.2x

MAJOR HOLDERS CEO Belamant 4% │ Other insiders 1% │ Brait S.A. 16% │ General Atlantic 11%

THE BOTTOM LINE Net 1 has developed an electronic payment solution for the underbanked in developing countries. The company’s system addresses the needs of four billion people, an enormous addressable market. While Net 1 faces the long-term risk of losing government-related revenue in South Africa (two-thirds of revenue), a competitive bidding process was terminated in early November, with Net 1 retaining all contracts on existing terms. Revenue and earnings continue to grow despite global macro weakness. We value the company at $20-30 per share, based on a range of 10x trailing EBIT to 15x forward EPS.

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Thanksgiving 2008

…additional insight into UEPS:

REVENUE AND MARGIN ANALYSIS

WHAT ARE THE SHARES WORTH?

UEPS – Revenue, Gross Profit and EBIT, FY 2000-08

•

We value Net 1 at $20-30 per share, based on the valuation analysis summarized below. We believe a mid teens multiple of after-tax income is justified in the case of Net 1 due to the recurring revenue nature of the company’s business, high returns on capital and continued growth in revenue and profits.

$250mn $200mn

Low Value

High Value

$100mn

$246 ($110) $136 ($100) $36

$246 ($110) $136 ($50) $86

$0mn

Value of excess marketable assets: Cash and equivalents Short-term loan facility Net cash and equivalents Cash needed to run business2 Total

$300mn

$150mn

Net 1 UEPS — Valuation Summary ($ in millions, except per share data)

Net 1 has performed well over the past six years, as its proprietary payment system has enjoyed greater acceptance in South Africa and, more recently, in Ghana and Iraq. Net 1 derived two-thirds of revenue from contracts with South African provincial governments in 2007.

Value of core business: LTM EBIT Fair value multiple of LTM EBIT Estimated NTM EPS ex. interest income Fair value multiple of NTM adjusted EPS Total

$1,118

$1.90 15x $1,682

Estimated fair value of UEPS per share

$1,154 $20

$1,767 $30

$50mn 00

Revenue

Gross Profit

08 EBIT

Source: Company, The Manual of Ideas.

UEPS – Y-Y Revenue Growth, FY 2001-1Q09

$112 10x

Based on balance sheet values as of September 30, 2008. Represents MOI estimate. Source: Company filings, The Manual of Ideas estimates and analysis. 2

Net 1 has reported revenue growth in the low to mid teens since FY06, as its relationships with South African provincial governments have matured while transaction volumes have continued to increase. The company’s recent expansion beyond South Africa, including the acquisition of BGS in Russia in August 2008, may accelerate growth.

80% 60% 40% 20%

WHY THE SHARES MAY BE MISPRICED

-20% 1Q09

-40%

Source: Company, The Manual of Ideas.

UEPS – Gross and EBIT Margin, FY 2000-1Q09 Net 1 has enjoyed strong gross and operating margins throughout this decade. EBIT margin has surpassed 40% in recent years, a level that will be difficult to maintain over a long period of time. However, any margin erosion appears likely to occur slowly and to be more than offset by increases in revenue.

80% 60% 40% 20%

EBIT Margin

1Q09

0% 01

•

Stigma against financial services-related companies targeting low-income consumers. At first glance, Net 1 appears to be exposed to a highly undesirable consumer demographic in South Africa and other countries. However, Net 1’s main clients are South African governmental entities, and the company is not exposed to the credit risk of consumers using Net 1-processed payment cards. Net 1 is not a lender but a pure-play payment processor with an attractive recurring revenue model. We believe the market may be missing this important feature of the company’s model. Undue fear of potential loss of South African contracts. We believe much of the uncertainty related to the company’s contracts for the distribution of welfare grants was lifted on November 6 when the company announced that the government has decided to terminate the related competitive tender process. The market may not yet have appropriately digested this positive news.

•

Gross Margin

Source: Company, The Manual of Ideas.

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UPDATE ON SOUTH AFRICAN CONTRACTS FOR DISTRIBUTION OF WELFARE GRANTS (two-thirds of revenue) •

• •

•

Contracted with five provincial governments covering total of four million beneficiaries. In 1998, Net 1 acquired four of the contracts, which were originally awarded from 1992-97. Net 1 was awarded an additional contract in 2002. It implemented smart cards from 2000-04 and rolled out merchant acquiring capability in 2004-05. 45% share of distribution of welfare grants in South Africa. Main competitors are the South African Post Office and the formal banking sector. South African tender concluded without new awards in November 2008. The South African Social Security Agency (SASSA) recently conducted a competitive tender that could have displaced Net 1 from one or more of its five contracts. However, Net 1 announced on November 3 that SASSA had decided to make no awards, to terminate the procurement process, and to defer a decision about commencing a fresh tender process. All five contracts expire in March 2009. Net 1 stated the following in a press release on November 6: “We believe that SASSA’s statement to defer a decision about commencing a fresh tender process will necessitate a further extension of our current contracts. The terms and conditions of our current service level agreements will probably remain unchanged during any extension period.”

• •

•

• •

•

MANAGEMENT’S VIEW OF BUSINESS Notes from 1Q09 earnings release dated November 6: • Operating environment: Net 1 performing well despite “disruptions in the financial markets and concerns about a weakening global economy;” “do not share the prevailing negative global sentiment towards emerging markets as our technology is focused on these territories and remains in demand, especially when the weaknesses of traditional banking systems have become patently clear” • 1Q09 review: “very pleased” with results • FY09 guidance: maintain 15% fundamental EPS growth outlook on constant currency basis; GAAP EPS growth to “exceed 25% on a constant currency basis as a result of the change in tax rates and the foreign exchange gains on a short-term investment” • Strategy: “…focused on the globalization of our technology by following a disciplined approach to new markets, through careful evaluation of new opportunities. Where we believe it makes sense, we will use partnerships or make acquisitions to accelerate our entry into new markets. • South Africa tender cancellation: “SASSA may decide to extend our current contracts on a short term renewal basis. We have the capacity to operate this business without compromising our high service levels regardless of the period, or frequency, of any extension periods granted.” © 2008 by BeyondProxy LLC. All rights reserved.

•

Thanksgiving 2008

South Africa welfare payment business: “anticipate beneficiary growth of approximately 6% per annum” (growth is “fairly lumpy”) BGS: “core business consists of developing and integrating smart card-based offline and online financial transaction systems;” “customers in Russia, Ukraine, Uzbekistan, India and Oman;” “emphasis on significantly expanding the application of our technology in the Russian Federation and the CIS Republics” Wage payment system in partnership with Grindrod Bank: “target markets for the wage payment system are the un-banked and underbanked wage earners in South Africa, estimated at five million people;” in 1Q09, signed deal with largest security and guarding services provider in South Africa, with 20,000 employees (expects to complete enrollment of all employees 3Q09-end) Ghana: continued delivery of POS devices and smart cards under Bank of Ghana deal in 1Q09 Iraq: first transaction in August; project is pilot with 100K beneficiaries (40K issued payment cards so far); to earn “ongoing transaction and license fees, as well as payments for the provision of outsourcing services and the sale of hardware” VTU technology and business model: VTU (virtual top up) technology “enables prepaid cell users to purchase additional airtime simply, securely and conveniently through the distribution of airtime value from a vendor’s cellular handset to that of the customer;” “derive revenue from the sale of VTU licenses to mobile operators and we have recently established VTU businesses in Colombia and Vietnam, where we are minority shareholders” Sales process: sales cycles are “unpredictable and often stretch over a period of years. It is therefore particularly difficult to provide clear short term visibility on our international prospects and the specific product, application or business model that will ultimately be implemented in a specific country…;” sales and marketing teams focus on specific regions of Africa, the Middle East and Central and Eastern Europe; “plan to introduce dedicated teams for South America and Asia…” New patents: “application… will allow any mobile phone user to effect payments that are generally referred to as “card not present” payments completely securely, through the utilization of a once off, disposable, virtual credit or debit card” Proposed abolishment of secondary taxation on companies in South Africa: secondary taxation may be phased out in 2010; “expect the proposed replacement of STC with a dividend tax to reduce our current fully distributed rate of 34.55% to 28%. Under US GAAP, we apply the fully distributed tax rate of 34.55% to our deferred taxation assets and liabilities; not yet determined if Net 1 would qualify for treaty relief available to foreign shareholders

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Thanksgiving 2008

New Frontier Media, Inc. (Nasdaq: NOOF)

Boulder, CO, 303-444-0900 http://www.noof.com

Services: Broadcasting & Cable TV Trading Data

Consensus EPS Estimates

Price: $1.80 (as of 11/14/08) 52-week range: $1.60 - $6.14 Market value: $41 million Enterprise value: $26 million

This quarter Next quarter

Latest $0.09 0.06

Month Ago $0.09 0.07

FYE 3/31/09

0.26

FYE 3/31/10 FYE 3/31/11

0.33 n/a

0.34 n/a

Shares out: 22.7 million Ownership Data Insider ownership: 2% Insider buys (last six months): 8

Valuation # of Ests 3 3

LT EPS growth 10.0% 10.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 4 Institutional ownership: 65% # of institutional owners: 72

Date

Actual

Estimate

11/5/08

$0.06

P/E FYE 3/31/08 P/E FYE 3/31/09 P/E FYE 3/31/10 P/E FYE 3/31/11

5.0x 6.9x 5.5x n/a

EV / LTM revenue

0.5x

3 0

EV / LTM EBITDA EV / LTM EBIT

2.2x 2.2x

P / tangible book Greenblatt Criteria

1.3x

LTM EBIT yield

46%

LTM pre-tax ROC

>100%

3/31/02 52 27 1 (1) (0.03) 6 3 3 6 15 18 48 5 13 1 14 0 34

3/31/03 37 19 (5) (12) (0.56) 0 1 (1) 4 11 16 35 1 8 1 9 4 22

12%

-88%

Fiscal Years Ended 3/31/04 3/31/05 3/31/06 43 46 47 26 31 33 12 16 16 11 11 11 0.50 0.48 0.48 14 15 12 1 1 1 13 14 11 17 28 21 24 37 38 16 14 30 45 60 87 1 0 0 7 6 9 0 0 1 8 7 16 0 0 0 37 54 71

3/31/07 63 44 19 12 0.51 19 2 17 26 43 31 88 0 13 0 17 0 72

3/31/08 56 38 13 9 0.36 8 3 6 19 36 32 84 0 16 0 18 0 66

LTME 9/30/08 57 38 12 8 0.32 13 4 9 15 28 33 79 0 13 0 15 0 65

FQE 9/30/07 12 9 3 2 0.09 (0) 1 (1) 16 32 31 79 0 9 0 12 0 67

FQE 9/30/08 13 9 2 1 0.06 2 1 1 15 28 33 79 0 13 0 15 0 65

>100%

89%

>100%

n/m

>100%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$14 $12 $10 $8 $6 $4 $2 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW

•

New Frontier Media (NOOF) produces and distributes adult programming in three segments: Transactional TV delivers nine adult-themed pay-per-view (PPV) networks via cable and satellite in the U.S., reaching 175 million network homes. NOOF also provides video-ondemand (VOD) content on cable and satellite, reaching 33 million homes. It is the exclusive distributor of Penthouse television in the U.S. It owns thousands of hours of digital content and has license deals with 130 movie studios. The segment earns a contractual percentage of the retail price. Film Production makes adult movies distributed on premium channels such as Cinemax and Showtime, and erotic event programming distributed on cable and satellite. NOOF’s Lightning Entertainment Group represents independent mainstream film producers. The Film Production segment was formed in 2006 when NOOF acquired MRG. The segment licenses owned content under arrangements that provide either for a one-time fee or a revenue split. Direct-to-Consumer provides content through NOOF’s websites, which charge users a monthly membership fee.

• •

•

2007

2008

1H09

42% 28% 4% 75% 22% 4%

37% 34% 2% 73% 23% 3%

38% 41% 2% 81% 16% 3%

15% 10% -26% 10% >100% -8% 35%

-22% 6% -54% -13% -4% -22% -12%

-2% 16% -56% 4% 2% 0% 4%

59% 16% -30% -16% 31%

52% 17% 0% -19% 23%

52% 0% -133% -21% 16%

14% 21% 12% 13%

18% 14% 14% 13%

22% 14% 14% 15%

The company ceased offering C-Band services in FQ3 2008. FY08 Film Production consists of owned content revenue of $8.1 million (62%), repped content revenue of $2.0 million (15%), and other revenue. 1

INVESTMENT HIGHLIGHTS •

Outperforming Playboy, which has suffered from poor execution under CEO Christie Hefner.

Broad cable and satellite TV distribution. NOOF has agreements with nine of the ten largest U.S. cable MSOs, DISH Network, and DirecTV, enabling it to reach 175 million households. Testing Direct-to-Consumer IPTV set-top box in U.K. Beta customers are online and test marketing has begun. Results are expected by the end of FY09. Entrepreneurial management. Chairman and CEO Michael Weiner (65) co-founded NOOF in 1995 and has turned it into one of the most profitable producers of adult movie programming. Repurchased 2.6 million shares (11%) from Steel Partners on November 13 at $1.55 per share in EPS-accretive transaction. NOOF had bought back $4 million in 1H09 and $6 million in FY07-08. Stock price implies 22% trailing FCF yield, 6x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS •

SELECTED OPERATING DATA FYE March 31 2006 % of revenue by segment: PPV -- Cable / DBS 49% VOD 35% 1 8% C-Band and Other Transactional TV (total) 92% 2 3% Film Production Direct-to-Consumer 5% Revenue growth by segment: PPV -- Cable / DBS -4% VOD 4% C-Band and Other -3% Transactional TV (total) -1% Film Production n/a Direct-to-Consumer -7% Total revenue growth 1% EBIT margin by segment: Transactional TV 53% Film Production -17% Direct-to-Consumer 16% Corporate -15% Total EBIT margin 34% % of revenue by customer: Comcast 12% DISH 35% Time Warner 14% DirecTV 0%

Thanksgiving 2008

•

DirecTV (15% of revenue) – termination or renegotiation? The deal was to auto-renew for one year to mid-October 2009 on existing terms for three channels, if they achieved predetermined revenue targets by October 2008. The targets were not met, giving DirecTV an opening to renegotiate or remove one or more NOOF channels. Concentrated third-party distribution. The company generated 59% of FY08 revenue from Comcast, DISH, DirecTV, and Time Warner. These operators have the right to terminate deals with NOOF on relatively short notice without penalty.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) PLA PRVT

MV 55 83

EV 142 88

EV/Rev .5x 3.3x

P/TB n/m 1.8x

08 P/E n/m n/a

09 P/E 12x n/a

NOOF

.5x

1.3x

MAJOR HOLDERS CEO Weiner 2% │ Other insiders 5% │ Fidelity 16% │ Royce 11% │ RenTech 8%

THE BOTTOM LINE NOOF is unreasonably cheap in light of solid profitability, high returns on capital, share repurchases, and capable management. The company recently purchased more than 11% of stock from Steel Partners at a below-market price, likely generating EPS accretion and increasing intrinsic value per share. The risk-reward tradeoff appears compelling.

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Thanksgiving 2008

NutriSystem Inc. (Nasdaq: NTRI)

Horsham, PA, 215-706-5300 http://www.nutrisystem.com

Services: Personal Services, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $13.22 (as of 11/14/08) 52-week range: $10.01 - $31.61 Market value: $391 million Enterprise value: $333 million Shares out: 29.6 million Ownership Data Insider ownership: 7% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.22 0.48

Month Ago $0.36 0.49

# of Ests 7 2

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

4.4x 7.3x 7.3x 6.4x

FYE 12/31/08

1.81

1.96

EV / LTM revenue

0.5x

FYE 12/31/09 FYE 12/31/10

1.82 2.07

2.21 2.60

8 1

EV / LTM EBITDA EV / LTM EBIT

3.2x 3.4x

P / tangible book 3.2x Greenblatt Criteria

LT EPS growth 16.7% 17.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 17 Institutional ownership: n/a # of institutional owners: n/a

Date

Actual

Estimate

10/22/08

$0.45

$0.48

LTM EBIT yield

29%

LTM pre-tax ROC

>100%

12/31/01 24 11 0 1 0.02 0 0 0 1 5 0 6 0 3 0 3 0 4

12/31/02 28 10 2 2 0.08 3 0 3 3 7 0 8 0 3 0 3 0 5

14%

>100%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 23 38 210 8 16 102 (3) 2 35 1 1 21 0.03 0.03 0.61 (2) 3 16 1 1 5 (2) 2 11 3 4 46 10 11 94 0 2 2 14 18 107 0 0 0 4 5 28 0 0 0 4 6 28 0 0 0 9 12 79 -86%

50%

>100%

12/31/06 566 295 133 85 2.31 67 6 61 80 186 0 198 0 52 0 53 0 145

12/31/07 777 413 163 104 2.98 108 19 89 43 159 0 199 0 56 0 57 0 142

LTME 9/30/08 710 359 97 60 1.91 69 15 54 58 130 6 174 0 44 0 46 0 128

FQE 9/30/07 188 100 35 22 0.64 38 5 34 118 183 0 203 0 49 0 50 0 153

FQE 9/30/08 163 83 22 14 0.45 25 3 22 58 130 6 174 0 44 0 46 0 128

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Jan 00

Sep 00

Sep 01

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BUSINESS OVERVIEW

INVESTMENT RISKS & CONCERNS

NutriSystem provides weight management products. It offers an auto-delivery weight loss program based on portioncontrolled, lower Glycemic Index prepared meals (~$300 per 28-day supply). The meals are shelf stable at room temperature. There is no membership fee. Q1 and Q4 are the seasonally strongest and weakest quarters, respectively.

• •

SELECTED OPERATING DATA FYE December 31 % of revenue by channel: Direct QVC and other Revenue growth by channel: Direct QVC and other ∆ revenue ∆ new customers 1 ∆ revenue / customer Direct channel metrics: New customers ('000) Marketing ($mn) Marketing / new customer ($) 1 Revenue / customer ($) 1

2005

2006

2007

YTD 9/30/08

90% 10%

93% 7%

94% 6%

93% 7%

515% 194% 454% 571% 18%

178% 88% 169% 130% 4%

38% 25% 37% 20% 3%

-10% -9% -10% n/a n/a

347 47 136 605

798 116 146 632

954 175 184 648

n/a 148 n/a n/a

•

• •

Based on nine-month trailing revenue (as tracked by the company).

•

INVESTMENT HIGHLIGHTS •

•

Thanksgiving 2008

$60 billion U.S. diet market, with 58% of people overweight or obese and 99 million dieting in 2007. NutriSystem’s database still only includes five million current and past customers. 20% of revenue comes from customer reactivation and 30% from male dieters (seniors are also a growth segment). Global sales are a longer-term opportunity. High-ROIC, direct-to-consumer model. The company has no locations and generates 94% of revenue from the direct channel. Having outsourced meal production and fulfillment, NutriSystem has become a capital-lite branding and marketing firm. NutriSystem brand has benefited from hundreds of millions spent on marketing and advertising over the years. The company has perfected a model of efficient marketing across multiple channels, with each marketing dollar generating $4-$5 in sales. Low working capital has kept FCF roughly in line with net income despite explosive growth in recent years. NutriSystem has generated FCF of $88 million YTD, supporting stock repurchases ($60 million YTD) and an annualized dividend of $0.70. Stock price implies 14% trailing FCF yield, 7x trailing P/E and 7x forward P/E.

•

Guiding for revenue drop of 10-11% in 2008, due to “weaker than anticipated demand.” The company expects adjusted EBITDA of $105-110 million. Value proposition debatable. While NutriSystem is not expensive at $10 per day, consumers may be able to purchase higher-quality food for the same price from a source that incurs lower customeracquisition and shipping costs (local grocery store). Risky 1Q09 frozen food launch, as higher shipping costs may amplify value proposition concerns. The launch also gives some credence to claims that NutriSystem’s shelf-stable meals lack taste. New customers cancel after about ten paid weeks (only two shipping cycles). Product returns are not negligible. There is also the industry issue that successful customers no longer need the company, while failures have little motivation to stick with it. NutriSystem may be more discretionary than typical diet spending, due to shipping costs. Gross margin impacted by rising input costs. While management claims some pricing power, elasticity of demand might be high in a recession. Near-term initiatives pressure margins. The company is implementing a supply chain optimization effort that requires up-front expense. The frozen food rollout is also likely to elevate cost. CEO/CFO turnover in past year raises execution risks, particularly in current macro environment.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) WTW DIET

MV 2,048 68

EV 3,632 73

NTRI

391

333

EV/Rev 2.4x 2.5x

P/TB n/m n/m

08 P/E 10x n/m

09 P/E 9x n/m

.5x

3.2x

MAJOR HOLDERS Insiders 9% │ Legg Mason 10% │ Fidelity 8% │ Mazama 6% │ Citigroup 7% │ Bridger 5%

THE BOTTOM LINE NutriSystem may be too cheap to ignore. However, concerns regarding the value proposition to the customer, coupled with near-term input-cost and demand-side pressures, give us pause. We can envision a scenario in which NutriSystem’s carefully finessed, marketing-driven model breaks down. If the company is forced to raise prices to offset input cost increases and to support the upcoming frozen food launch at the same time as the buying power of the customer base diminishes, NutriSystem may find profit margins squeezed into oblivion. While the company will likely retain some profitable distribution channels, total profit dollars may be insufficient to justify a meaningfully higher valuation.

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Thanksgiving 2008

NVIDIA Corporation (Nasdaq: NVDA)

Santa Clara, CA, 408-486-2000 http://www.nvidia.com

Technology: Semiconductors, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $7.17 (as of 11/14/08) 52-week range: $5.97 - $36.40 Market value: $4.0 billion Enterprise value: $2.7 billion Shares out: 556.6 million Ownership Data Insider ownership: 5% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.14 0.11

Month Ago $0.18 0.18

# of Ests 21 19

FYE 1/31/09

0.84

0.81

EV / LTM revenue

0.6x

FYE 1/31/10 FYE 1/31/11

0.66 0.87

0.93 n/a

21 5

EV / LTM EBITDA EV / LTM EBIT

7.3x 7.3x

P / tangible book Greenblatt Criteria

2.0x

LT EPS growth 14.3% 15.4% Latest Quarterly EPS Surprise

Insider sales (last six months): 12 Institutional ownership: 72% # of institutional owners: 1141

Date

Actual

Estimate

11/6/08

$0.20

$0.12

P/E FYE 1/27/08 P/E FYE 1/31/09 P/E FYE 1/31/10 P/E FYE 1/31/11

5.5x 8.5x 10.9x 8.2x

LTM EBIT yield

14%

LTM pre-tax ROC

64%

1/27/02 1,370 519 242 177 0.34 161 97 64 791 1,234 81 1,503 4 434 306 739 0 764

1/26/03 1,909 582 144 91 0.18 265 63 202 1,028 1,352 77 1,617 6 379 305 684 0 933

EBIT/capital employed

>100%

Fiscal Years Ended 1/25/04 1/30/05 1/29/06 1,823 2,010 2,376 525 648 910 37 95 337 49 89 301 0.09 0.17 0.55 50 132 446 128 67 80 (78) 65 367 604 670 950 1,053 1,307 1,550 149 136 161 1,399 1,664 1,955 4 1 0 334 421 439 1 0 0 348 443 459 0 0 0 1,051 1,221 1,496 19%

27%

92%

1/28/07 3,069 1,301 454 449 0.76 573 131 442 1,118 2,032 347 2,675 0 639 0 668 0 2,007

1/27/08 4,098 1,869 836 798 1.31 1,270 188 1,083 1,810 2,889 461 3,748 0 967 0 1,130 0 2,618

LTME 10/26/08 4,146 1,582 367 375 0.61 n/a n/a n/a 1,305 2,480 522 3,649 0 1,005 0 1,162 0 2,487

FQE 10/28/07 1,116 516 248 236 0.38 401 70 330 1,853 2,756 371 3,475 0 856 0 997 0 2,478

FQE 10/26/08 898 368 57 62 0.11 n/a n/a n/a 1,305 2,480 522 3,649 0 1,005 0 1,162 0 2,487

>100%

64%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

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BUSINESS OVERVIEW

•

NVIDIA, founded in 1993, is a leader in graphics chips and operates in four segments: The Graphic Processing Unit (GPU) Business serves the entertainment and consumer market with GeForce products for desktops and notebooks; also includes memory products. The Professional Solutions Business (PSB) serves the design and visualization market with Quadro products, and the highperformance computing market with Tesla products. The Media and Communications Processor (MCP) Business includes nForce core logic and motherboard GPU products. The Consumer Products Business (CPB) is comprised of GoForce and APX products that support handheld devices, including PMPs, PDAs, and cellular phones. CPB also includes license, royalty, other revenue related to video game consoles and other digital consumer electronics devices.

• •

2007

2008

YTD 7/31/08

56% 15% 22% 8%

61% 14% 17% 6%

59% 19% 18% 4%

21% 21% 88% 1% 29%

47% 29% 7% 8% 34%

13% 43% 17% -40% 15%

22% 47% 12% 18% -9% 15%

29% 52% 8% 11% -7% 20%

11% 51% -29% -13% -8% 2%

36% 21% 18% 14% 10%

32% 31% 16% 11% 11%

32% 31% 17% 9% 10%

•

Significant deterioration in Q3, with revenue down 20% y-y. On a YTD basis, notebook GPU, MCP and PSB have performed reasonably well, offset by weakness in the desktop GPU business. Constant threat of new technologies. NVIDIA is the largest supplier of AMD 64 chipsets with 60% share in 4Q07. A decline in demand for those chipsets as a result of competition could have a large impact on results. In addition, Intel is working on a multi-core architecture code-named Larrabee. Competition from “platform solutions.” AMD has announced a platform solution, and Intel has achieved success with the Centrino platform. If Intel and AMD integrate a CPU and GPU on the same chip (e.g., AMD’s Fusion processor project), NVIDIA may be unable to compete. NVIDIA claims, however, that platform solutions are unlikely to meet users’ performance needs.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) AMD BRCM INTC MRVL QCOM STM TXN

MV 1,479 7,852 74,086 3,550 54,531 6,626 20,885

EV 5,372 5,605 64,238 2,983 48,120 7,582 18,892

EV/Rev .8x 1.2x 1.6x .9x 4.3x .7x 1.4x

P/TB 8.7x 3.0x 2.2x 2.7x 4.1x 1.0x 2.3x

08 P/E n/m 9x 12x 7x 16x 12x 10x

09 P/E n/m 11x 13x 8x 13x 11x 12x

NVDA

3,991

2,686

.6x

2.0x

11x

MAJOR HOLDERS

INVESTMENT HIGHLIGHTS •

Entrepreneurial management. Jen-Hsun Huang (44) co-founded NVIDIA in 1993 and has served as CEO since inception. He holds a Stanford M.S.E.E. Repurchased $124 million of stock in 1H09; $1.5 billion remains authorized. Stock price implies 0% trailing FCF yield, 12x trailing P/E and 11x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA 2006 FYE January 31 % of revenue by segment: GPU 59% PSB 16% MCP 15% CPB 10% Revenue growth by segment: GPU 5% PSB 114% MCP 666% CPB -12% Total revenue growth 18% EBIT margin by segment: GPU 15% PSB 47% MCP 9% CPB 19% All Other -5% Total EBIT margin 14% % of revenue by geography: Taiwan 48% China 17% Other Asia Pacific 11% U.S. and Americas 16% Europe 9%

Thanksgiving 2008

NVIDIA, Intel each claim top spot in graphics chips, based on diverging definitions of the market. According to Intel, Intel and NVIDIA had 42% and 33% of the PC graphics market in 4Q07, up from 31% and 23% in 4Q05 (losers were AMD and Via). Meanwhile, NVIDIA points to total GPU shipments of 366 million, of which NVIDIA GPUs account for 59% and Intel IGPs account for 41%. NVIDIA also claims to be preferred by gamers, with 62% market share, versus 31% for AMD and 3% for Intel.

CEO Huang 5% │ Other insiders 2% │ AXA 9% │ Barclays 6% │ Primecap 5% │ Jennison 4%

THE BOTTOM LINE NVIDIA shares represent an enticing opportunity, as the company is the clear leader in graphics chips, a large and growing market. While challenges from Intel and AMD should be evaluated carefully, NVIDIA GPUs appear likely to retain their performance advantage. The company is pursuing a highly accretive share buyback, amplifying the upside potential.

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Thanksgiving 2008

Pacer International, Inc. (Nasdaq: PACR)

Concord, CA, 877-917-2237 http://www.pacer-international.com

Transportation: Misc. Transportation Trading Data

Consensus EPS Estimates

Price: $10.27 (as of 11/14/08) 52-week range: $9.06 - $25.21 Market value: $359 million Enterprise value: $395 million Shares out: 34.9 million Ownership Data Insider ownership: 1% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.37 0.31

Month Ago $0.55 0.38

# of Ests 14 7

P/E FYE 12/28/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.8x 6.1x 6.4x 5.7x

FYE 12/31/08

1.67

1.77

EV / LTM revenue

0.2x

FYE 12/31/09 FYE 12/31/10

1.60 1.79

1.92 2.01

14 7

EV / LTM EBITDA EV / LTM EBIT

3.4x 3.6x

P / tangible book 6.9x Greenblatt Criteria

LT EPS growth 10.2% 12.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 9 Institutional ownership: 95% # of institutional owners: 462

Date

Actual

Estimate

10/28/08

$0.49

$0.41

LTM EBIT yield

28%

LTM pre-tax ROC

>100%

12/28/01 1,671 231 51 7 0.28 22 15 7 0 225 282 633 2 205 396 630 0 3

12/27/02 1,608 245 73 25 0.74 29 9 20 0 221 288 618 6 184 250 438 0 181

63%

81%

EBIT/capital employed

Fiscal Years Ended 12/26/03 12/31/04 12/30/05 1,669 1,808 1,860 268 284 316 67 87 93 31 47 51 0.82 1.24 1.34 60 44 82 3 5 5 57 40 77 1 0 9 220 246 243 288 288 288 595 606 590 0 19 0 161 185 188 214 154 90 378 341 284 0 0 0 216 265 307 64%

72%

88%

12/29/06 1,888 318 118 68 1.80 67 4 63 0 228 288 565 3 164 59 228 0 337

12/28/07 1,969 301 93 54 1.51 108 14 94 7 231 288 574 13 197 64 271 0 303

LTME 9/19/08 2,124 323 110 69 1.99 84 26 58 10 259 288 614 2 215 44 274 0 340

FQE 9/21/07 489 74 23 13 0.38 31 1 30 0 225 288 560 10 192 74 272 0 288

FQE 9/19/08 556 82 29 20 0.59 22 6 17 10 259 288 614 2 215 44 274 0 340

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

Pacer is an asset-light transportation firm. Two segments: Intermodal (80% of revenue) facilitates the movement of freight by trailer or container using two or more modes of transportation. It consists of the Stacktrain, Cartage and Rail Brokerage operations, and provides services to transportation intermediaries, beneficial cargo owners and international shipping companies who utilize intermodal transportation. Logistics (20% of revenue) provides truck brokerage, truck transport, supply chain services, freight forwarding, ocean shipping and warehousing, and distribution services. Big Lots, C.H. Robinson, GE, Sony, Union Pacific, Toyota and Conagra accounted for 19% of revenue in 2007.

2006

2007

YTD 9/30/08

79% 21%

80% 20%

78% 22%

6% -13% 1%

5% 1% 4%

10% 15% 11%

89% 11%

88% 12%

90% 10%

1% 7%

3% 12%

12% 5%

9% 0% -1% 6%

7% 1% -1% 5%

8% 0% -1% 5%

• •

•

• •

Foreign revenue is generated by the logistics segment, with the exception of Mexico, where the majority of revenue is generated by the Stacktrain operation.

INVESTMENT HIGHLIGHTS •

• • •

Good business in capital-intensive industry. Pacer’s non-asset-based strategy limits capex and reduces working capital through deals with carriers and equipment providers. The strategy gives Pacer access to freight terminals and facilities and control over transportation-related equipment. Competitive advantages: ability to pass volume ratet savings to customers; cross-selling; flexibility to tailor services in changing freight market. Recently reorganized intermodal segment to reflect our strategy of placing additional emphasis on retail customers and door-to-door services. Long-term deal with APL improves Pacer’s bargaining power with railroads, as APL freight moves from the West Coast to the Midwest, while domestic freight typically moves the other way.

Stock price implies 16% trailing FCF yield, 5x trailing P/E and 6x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA 2005 FYE December 31 % of revenue by segment: Intermodal 75% Logistics 25% Revenue growth by segment: Intermodal 5% Logistics -2% Total revenue growth 3% % of revenue by geography: Domestic 89% 1 11% Foreign Revenue growth by geography: Domestic 2% Foreign 11% EBIT margin by segment: Intermodal 8% Logistics 1% Corporate and other -1% Total EBIT margin 5%

Thanksgiving 2008

Management sees “tough economic period” in Q4 and “well into 2009.” Logistics segment posted slight loss YTD due to excess capacity, declining prices and higher fuel costs. The truck services sub-segment incurred higher claims and bad debts due to bankruptcies. Cyclical shipping volumes in transportation and logistics industries. Pacer’s asset-light model does not insulate it from factors affecting pricing and expenses. Pacer claims it retains volumes in downcycles and benefits from increased use of Stacktrain at the expense of long-haul trucking. Dependent on rail, truck, ocean transportation services and equipment provided by third parties. Pacer has experienced shortages in the past, mostly in the October/November peak season. Pacer has contracts with Union Pacific (thru 2011), CSX (thru 2014), and KCSM in Mexico (thru 2012). Competitors include Union Pacific, CSX, J.B. Hunt and Hub Group, C.H. Robinson, Exel, Alliance Shippers, Burlington Northern, and the supply chain solutions divisions of Ryder and Menlo Worldwide. $400+ million in lease commitments, the majority of which relate to railcars, containers and chassis. An undisclosed portion can be terminated each year. Management owns only 1% of the company.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) EXPD HUBG JBHT UNP

MV 6,506 1,002 3,114 29,160

EV 5,809 938 3,803 36,765

PACR

359

395

EV/Rev 1.0x .5x 1.0x 2.1x

P/TB 4.9x 15.9x 6.4x 1.9x

08 P/E 22x 16x 15x 13x

09 P/E 20x 15x 14x 11x

.2x

6.9x

MAJOR HOLDERS CEO Uremovich <1% │ Other insiders 1% │ Royce 9% │ Barclays 8% │ Invesco 6% │ Cardinal 6%

THE BOTTOM LINE Pacer is a cheap, asset-light business in an otherwise capital-intensive industry. While some asset-light logistics companies, such as Expeditors International (EXPD), have performed extremely well over the long term, we believe the model has matured and is fundamentally less attractive than it has been in the past. As a result, investors should investigate the sustainability of the company’s superior returns on capital. That said, the shares are enticing at 6x estimated 2009 EPS. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Perini Corporation (NYSE: PCR)

Framingham, MA, 508-628-2000 http://www.perini.com

Capital Goods: Construction Services Trading Data

Consensus EPS Estimates

Price: $14.42 (as of 11/14/08) 52-week range: $11.75 - $58.33 Market value: $726 million Enterprise value: $387 million Shares out: 50.3 million Ownership Data Insider ownership: 1% Insider buys (last six months): 7

Valuation

This quarter Next quarter

Latest $0.76 0.76

Month Ago $0.87 0.95

# of Ests 4 2

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

4.1x 3.9x 4.9x 4.9x

FYE 12/31/08

3.67

3.63

EV / LTM revenue

0.1x

FYE 12/31/09 FYE 12/31/10

2.95 2.92

3.94 4.33

4 3

EV / LTM EBITDA EV / LTM EBIT

n/a 2.3x

P / tangible book 2.1x Greenblatt Criteria

LT EPS growth 11.0% 12.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 476

Date

Actual

Estimate

11/6/08

$1.01

$0.91

LTM EBIT yield

43%

LTM pre-tax ROC

>100%

12/31/01 1,553 58 30 24 1.04 (24) 5 (29) 57 486 1 501 10 393 8 422 0 79

12/31/02 1,085 59 26 21 0.91 (4) 5 (8) 47 382 1 402 0 266 12 316 0 87

50%

36%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,374 1,842 1,734 70 92 70 30 49 8 50 35 5 2.10 1.39 0.20 43 60 30 5 5 12 37 55 18 68 136 140 526 608 806 15 13 33 565 654 915 1 1 16 400 430 653 9 9 40 445 480 732 0 0 0 121 174 183 38%

72%

12/31/06 3,043 169 71 41 1.54 117 22 95 226 1,078 32 1,196 15 884 34 952 0 244

12/31/07 4,628 249 141 97 3.54 282 24 258 468 1,526 30 1,654 7 1,233 13 1,286 0 368

LTME 9/30/08 5,304 285 168 111 3.78 131 55 75 409 2,002 994 3,384 21 1,747 49 2,038 0 1,346

FQE 9/30/07 1,243 64 34 24 0.87 32 5 27 370 1,447 26 1,575 8 1,184 15 1,241 0 334

FQE 9/30/08 1,413 86 52 34 1.01 (42) 38 (80) 409 2,002 994 3,384 21 1,747 49 2,038 0 1,346

84%

n/m

>100%

n/m

10%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Jan 00

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BUSINESS OVERVIEW Perini, dating back to 1894, is a construction firm offering diversified general contracting, construction management and design-build services. It operates in three segments: The building segment focuses on large, complex projects in the hospitality and gaming, entertainment, educational, transportation, corrections, healthcare, and tech markets. The civil segment focuses on public works construction in the northeastern and mid-Atlantic U.S., including the repair, replacement and reconstruction of the public infrastructure. The management services segment provides construction, design-build and maintenance to the military and government agencies as well as surety companies and large corporations.

•

• • •

Revenue related to MGM Mirage projects in Las Vegas, primarily the CityCenter project, accounted for 32% of Perini revenue in 2007.

INVESTMENT HIGHLIGHTS •

Perini has completed a number of milestone projects in its 100+ year history, including the Prudential Center in 1963, section two of the TransAlaska Pipeline in 1976, and Mohegan Sun in 2002.

#1 builder in hotel, motel and convention center market, and 7th-largest contractor in U.S. general building market, based on 2007 revenue, according to industry publication Engineering News-Record. $8 billion backlog provides near-term visibility. Three-quarters of the backlog are cost-plus projects. Authorized $100 million buyback in November. Stock price implies 10% trailing FCF yield, 4x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS •

SELECTED OPERATING DATA YTD FYE December 31 2005 2006 2007 9/30/08 % of revenue by segment: Building 68% 83% 92% 93% Civil 16% 9% 5% 5% Management services 16% 8% 3% 3% Revenue growth by segment: Building -9% 113% 69% 22% Civil 100% 2% -16% 5% Management services -32% -11% -41% -5% ∆ revenue -6% 76% 52% 20% ∆ new business awarded >500% -58% 4% 76% ∆ backlog (period end) >500% 7% -10% 7% EBIT margin by segment: Building 2.5% 2.4% 3.0% 3.0% Civil -9.8% 0.6% -5.5% 7.0% Management services 6.9% 13.9% 34.1% 22.1% Corporate -0.8% -0.8% -0.5% -0.4% Total EBIT margin 0.5% 2.3% 3.0% 3.3% % of revenue by geography: U.S. 89% 95% 97% n/a Foreign 11% 5% 3% n/a % of EBIT by geography: U.S. 14% 69% 70% n/a Foreign 86% 31% 30% n/a 1 % of revenue by client source: Private owners 69% 82% 86% n/a State, local governments 19% 13% 11% n/a Federal governmental 12% 5% 3% n/a % of building segment revenue by end market (excludes “other”): Hospitality and gaming 65% 55% 67% n/a Education facilities 9% 6% 7% n/a Healthcare facilities 10% 20% 14% n/a Office/industrial buildings 4% 9% 9% n/a

Thanksgiving 2008

•

• •

Major CEO conflicts of interest. Chairman and CEO Ronald Tutor (67) is also CEO and primary owner of construction firm Tutor-Saliba. The firms participate in JVs and have a management deal under which Perini pays Tutor-Saliba $1 million per year. In January, the Tutor-Saliba acquired a firm that has $64 million in subcontracts with Perini. Merger with Tutor-Saliba may benefit CEO at expense of Perini. The companies closed the deal in September after successfully fighting a suit by shareholders. The deal gives T-S 45% of the combined firm (it appears T-S accounted for less than 20% of combined backlog at yearend 2007). 3% of revenue generated 35% of EBIT in 2007— contribution may not be sustainable, as it represents very high-margin projects outside the U.S., including in Afghanistan and Iraq. Las Vegas exposure. Hospitality and gaming were 67% of building segment revenue in 2007. Building services competitors: Balfour Beatty, Gilbane, Huntcor, James B. Pirtle, Marnell-Carrao, McCarthy Suffolk, Skanska, Taylor, and Turner.

COMPARABLE PUBLIC COMPANY ANALYSIS All of the competitors listed above are privately held firms, except Balfour Beatty, which is listed on the London Stock Exchange. More info is available at www.balfourbeatty.com

MAJOR HOLDERS CEO Tutor 43%

THE BOTTOM LINE Perini is cheap based on guidance for EPS of $2.80-3.00 in 2009 (down from earlier guidance of $4.00-$4.20). Backlog could drop sharply as the company completes projects awarded in 2005 (new business awarded annually since 2006 has been running at less than one-half of backlog). The company’s aggressive prior guidance may have been partly motivated by the need to make a strong argument for the merger with Tutor-Saliba. The deal, which gives Tutor-Saliba and Perini CEO Ronald Tutor de facto control of the combined firm, does not pass the “smell test.” © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Pre-Paid Legal Services, Inc. (NYSE: PPD)

Ada, OK, 580-436-1234 http://www.prepaidlegal.com

Services: Personal Services, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $35.92 (as of 11/14/08) 52-week range: $30.01 - $57.50 Market value: $417 million Enterprise value: $449 million Shares out: 11.6 million Ownership Data Insider ownership: 35% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 12/31/07 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

9.3x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

1.0x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

4.5x 4.5x

n/a

P / tangible book 16.3x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 12 Institutional ownership: 82% # of institutional owners: 299

Date

Actual

Estimate

n/a

LTM EBIT yield

22%

LTM pre-tax ROC

>100%

12/31/01 304 75 41 27 1.28 38 8 30 20 44 0 86 0 39 0 44 0 42

12/31/02 351 95 55 36 1.82 52 15 37 25 50 0 97 2 47 9 62 0 35

n/m

>100%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 361 386 423 106 116 114 61 62 55 40 41 36 2.27 2.48 2.29 52 47 50 27 11 15 25 36 35 32 27 41 57 58 74 0 0 0 131 146 165 19 18 16 68 77 77 26 29 25 101 115 114 0 0 0 30 31 51 >100%

>100%

12/31/06 444 142 80 52 3.51 54 9 45 54 88 0 189 19 71 75 158 0 31

12/31/07 457 149 85 51 3.88 67 6 61 38 76 0 168 18 79 56 150 0 18

LTME 9/30/08 466 163 100 57 4.69 64 7 57 36 76 0 164 25 81 43 138 0 26

FQE 9/30/07 115 35 18 12 0.88 13 1 11 42 80 0 176 18 73 61 147 0 29

FQE 9/30/08 117 40 24 14 1.23 17 1 15 36 76 0 164 25 81 43 138 0 26

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

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BUSINESS OVERVIEW PPD’s plans (“memberships”) provide legal services in a manner similar to medical plans. Benefits include preventive services, motor vehicle legal defense, trial defense and IRS audit services for an average monthly membership fee of $21. In 2007, provider law firms received 2.2 million calls from members needing legal services. 25% of memberships are employee group memberships, provided by companies as part of their fringe benefits. PPD dates back to 1969 when founder and current CEO Harland Stonecipher was involved in a collision that resulted in large uncovered legal fees.

• •

2005

2006

2007

YTD 9/30/08

92% 8%

93% 7%

94% 6%

10% 12% 10% 6% 5% 12% 72% 125%

6% -7% 5% 0% 2% -13% 71% -29%

4% -7% 3% 2% 2% 0% 73% -14%

3% -3% 3% 0% 1% -9% n/a -20%

•

1 Persistency measures the number of memberships in force at the end of a year as a percentage of the total of (i) memberships in force at the beginning of such year, plus (ii) new memberships sold during such year.

INVESTMENT HIGHLIGHTS •

•

• •

•

Legal “insurance” still developing. While legal service plans are a $4 billion industry in Europe, the plans are not widely accepted in the U.S. PPD’s 1.6 million members represent 1.5% of the addressable market of 110 million “middle” market households. Identity Theft Shield (IDT) taps into growing consumer anxiety. The company began offering IDT in 3Q03 for $9.95 per month if added to a legal membership, or separately for $12.95 per month. Benefits include a credit report and score, related instructional guides, and credit report monitoring. Active stand-alone IDT memberships grew 28% in 2007 to 83K. IDT services are provided by Kroll. Low working capital, as membership fees are received in advance (“deferred revenue and fees”). Improved terms with business partners. Over the past eighteen months, PPD has negotiated better terms with Kroll, lower bank service fees, and reduced interest rates on Wells Fargo financing. $34 million company-owned office complex in Ada, Oklahoma was constructed in 2004.

Repurchased $400 million of shares since 1999, reducing shares out from 25 million to 12 million. Stock price implies 14% trailing FCF yield and 8x trailing P/E (no EPS estimates available).

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 % of revenue by type: Membership fees Associate services and other Revenue growth by type: Membership fees Associate services and other ∆ revenue ∆ memberships (period end) ∆ annual membership fee ∆ new members recruited 1 Persistency ∆ sales associates recruited

Thanksgiving 2008

•

Relatively high membership base turnover. PPD has 1.5% share of addressable households, while another 6% have previously purchased but no longer own memberships (roughly 10 million households are former members). It is difficult to assess whether the turnover has been due to a weak value proposition. PPD markets to former members and typically reinstates 75K-85K of them each year. Value proposition? PPD allows members to access a network of provider law firms under contract with PPD. Providers are paid a monthly fixed fee on a capitated basis to render services to local members. As the payments do not vary based on the type of benefits utilized, the deals help PPD manage claims risk. However, the arrangement also disincentivized providers from prioritizing member claims. PPD’s multi-level marketing scheme encourages individuals to sell memberships and recruit their own sales teams. 75% of members have been recruited by the multi-level salesforce (25% are employee group memberships). The utilization of multi-level marketing may limit scalability, as many potential members may not want to buy through such a channel. PPD may also encounter difficulty recruiting salespeople. The number of “vested” sales associates declined from 468K in 2005 to 442K in 2007, with new associate recruitments down from 242K in 2005 to 149K in 2007. Competitors include Hyatt Legal Plans (MetLife), ARAG North America, National Legal Plan, and Legal Services Plan of America (GE Financial).

MAJOR HOLDERS Chairman Stonecipher 7% │ Thomas Smith 27% │ Other insiders 1% │ RenTech 8% │ GSAM 7% │ Barclays 6%

THE BOTTOM LINE PPD is a company with a theoretically appealing value proposition. Unfortunately, the company has not yet found the right formula to grow membership beyond the current 1.5% of addressable households. PPD’s multi-level marketing strategy may present a hurdle to widespread adoption of the pre-paid legal service. We recognize that it would be exceedingly difficult to revamp the sales strategy due to the risk for significant transitional channel conflict. As a result, PPD may be stuck in a strategy that could keep it a marginal provider of legal services for a long time.

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Thanksgiving 2008

Precision Castparts Corp. (NYSE: PCP)

Portland, OR, 503-417-4800 http://www.precast.com

Capital Goods: Construction - Supplies and Fixtures, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $55.04 (as of 11/14/08) 52-week range: $47.23 - $154.50 Market value: $7.7 billion Enterprise value: $7.6 billion Shares out: 139.4 million Ownership Data Insider ownership: 1% Insider buys (last six months): 5

Valuation

This quarter Next quarter

Latest $1.75 2.04

Month Ago $1.97 2.24

# of Ests 16 15

FYE 3/31/09

7.65

8.07

EV / LTM revenue

1.1x

FYE 3/31/10 FYE 3/31/11

8.72 9.52

9.30 10.10

15 8

EV / LTM EBITDA EV / LTM EBIT

n/a 4.7x

P / tangible book Greenblatt Criteria

3.8x

LT EPS growth 17.1% 17.1% Latest Quarterly EPS Surprise

Insider sales (last six months): 5 Institutional ownership: 88% # of institutional owners: 1265

Date

Actual

Estimate

10/21/08

$1.89

$1.91

P/E FYE 3/30/08 P/E FYE 3/31/09 P/E FYE 3/31/10 P/E FYE 3/31/11

8.0x 7.2x 6.3x 5.8x

LTM EBIT yield

21%

LTM pre-tax ROC

78%

3/31/02 2,448 550 179 42 0.78 310 124 187 38 879 994 2,565 205 727 697 1,613 0 952

3/30/03 1,809 417 229 124 1.42 251 61 190 29 786 990 2,467 160 625 531 1,406 0 1,062

20%

26%

Fiscal Years Ended 3/28/04 4/3/05 4/2/06 1,913 2,900 3,480 428 654 795 199 365 511 118 (2) 351 1.10 1.83 2.56 143 357 231 56 61 95 87 296 136 80 154 60 1,189 1,213 1,234 1,408 1,581 1,660 3,756 3,625 3,750 253 44 69 914 780 768 823 799 594 2,041 1,845 1,609 0 0 0 1,715 1,780 2,141 20%

34%

47%

4/1/07 5,319 1,299 914 633 4.42 866 221 645 150 2,037 2,099 5,259 554 1,658 319 2,423 0 2,836

3/30/08 6,852 1,870 1,463 987 6.88 914 226 687 221 2,372 2,338 6,050 20 1,205 335 2,005 0 4,045

LTME 9/28/08 7,138 1,991 1,614 1,071 7.46 n/a n/a n/a 414 2,728 2,336 6,421 20 1,282 305 2,070 0 4,351

FQE 9/30/07 1,719 465 354 235 1.67 194 54 140 201 2,259 2,164 5,603 171 1,337 723 2,494 0 3,109

FQE 9/28/08 1,820 501 403 269 1.89 n/a n/a n/a 414 2,728 2,336 6,421 20 1,282 305 2,070 0 4,351

63%

76%

78%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW Precision Castparts operates in three segments: Investment Cast Products manufactures investment castings for aircraft engines, IGT engines, airframes, armaments, medical prostheses, and other industrial applications. Forged Products consists of the forging operations of Wyman-Gordon and the nickel-based alloys and superalloy production of SMC, acquired in Q1 FY07. Fastener Products produces fasteners, fastener systems and components for critical applications in the aerospace, automotive and industrial machinery markets.

2007

2008

1H09

33% 44% 23%

32% 46% 22%

33% 44% 23%

11% 163% 20% 53% 54%

24% 35% 25% 29% 26%

16% 1% 14% 8%

•

22% 17% 21% -2% 18% 2.1% 4.1%

24% 22% 25% -1% 22% 1.9% 3.3%

25% 21% 28% -1% 23% 2.0% 2.9%

53% 21% 26%

55% 24% 21%

n/a n/a n/a

80% 14% 6%

80% 13% 7%

n/a n/a n/a

12%

n/a

• • • •

Four-fifths of revenue from cyclical aerospace and power generation markets. Commercial aerospace depends on new aircraft demand. Military aerospace depends on government funding. Power generation demand depends on economic strength. Hurt by Boeing strike, with orders pushed out. Dependent on Boeing 787 and Airbus A380 programs as major component supplier. The 787 is expected to move into production later in 2009. Management turnover, including departure of forged products president Ayers in July and the retirement of CFO Larsson at the end of CY08. Competitors include Alcoa and Ladish in cast products. Forged product comps inlude Ladish, Fortech and Thyssen in aerospace turbines; Alcoa and Schultz in structural products; Vallourec/ Mannesmann and Sumitomo in energy; and Allegheny, Carpenter and Haynes in nickel alloys. Fastener comps include Alcoa, LISI, McKecknie.

COMPARABLE PUBLIC COMPANY ANALYSIS

INVESTMENT HIGHLIGHTS

•

Other key customers include United Technologies and Rolls Royce.

•

Contractual pass-through of raw material price increases helps offset rising costs. The company has escalation clauses for nickel and other metals in “certain long-term contracts,” and employs price-ineffect metal pricing to lock-in alloy production cost. Acquisitions have contributed to growth, and the company continues to pursue deals. Chairman and CEO Mark Donegan (51) has been with the company for more than 15 years. Stock price implies 0% trailing FCF yield, 7x trailing P/E and 6x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE March 31 2006 % of revenue by segment: Investment cast products 45% Forged products 26% Fastener products 29% Revenue growth by segment: Investment cast products na Forged products na Fastener products na ∆ revenue 22% ∆ backlog (period end) 32% EBIT margin by segment: Investment cast products 20% Forged products 13% Fastener products 17% Corporate -1% Total EBIT margin 16% D&A as % of revenue 2.7% Capex as % of revenue 2.7% % of revenue by market area: Aerospace 59% Power generation 18% Industrial and automotive 23% % of revenue by geography: U.S. 85% U.K. 10% Other 4% % of revenue by 10%+ customer: 1 GE 17%

•

Thanksgiving 2008

Cast products performing well, driven by “robust” aerospace demand, OEM and aftermarket shipments and industrial gas turbine (IGT) growth. Product lines are well-positioned on aerospace production programs; IGT volume is near all-time highs. There is “continued [margin] upside going forward.” Forged products stagnating, reflecting steady aerospace component demand, strong seamless pipe sales and lower selling prices of external alloy sales. Sales of nickel alloy mill forms are improving. Fastener products growing in mid teens, driven by strong sales of critical aerospace fasteners, partially offset by lower automotive fastener sales.

($mn) AA ATI CRS LDSH

MV 8,675 2,041 704 241

EV 18,028 2,285 632 351

EV/Rev .6x .4x .2x .8x

P/TB 0.9x 0.9x 1.0x 1.2x

08 P/E 7x 4x 5x 7x

09 P/E 11x 5x 4x 6x

PCP

7,674

7,585

1.1x

3.8x

MAJOR HOLDERS CEO Donegan <1% │ Other insiders 1% │ Cap Re 6%

THE BOTTOM LINE Precision Castparts has been hurt by the Boeing strike but should benefit when the 787 moves into production later in 2009. Backlog continues to be strong, but performance may deteriorate as aerospace and power generation feel the effects of the weak economy. As a result, it is extremely difficult to judge how earnings may evolve over the next couple of years. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Premier Exhibitions (Nasdaq: PRXI)

Atlanta, GA, 404-842-2600 http://www.prxi.com

Services: Recreational Activities Trading Data

Consensus EPS Estimates

Price: $0.78 (as of 11/14/08) 52-week range: $0.74 - $12.08 Market value: $23 million Enterprise value: $14 million Shares out: 29.2 million Ownership Data Insider ownership: 13% Insider buys (last six months): 4

Valuation

This quarter Next quarter

Latest $0.03 0.01

Month Ago $0.03 0.01

# of Ests 4 4

FYE 2/28/09

0.04

EV / LTM revenue

0.2x

FYE 2/28/10 FYE 2/28/11

0.18 n/a

3 0

EV / LTM EBITDA EV / LTM EBIT

1.6x 3.0x

P / tangible book Greenblatt Criteria

0.7x

LT EPS growth 17.5% 17.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 34% # of institutional owners: 82

Date

Actual

Estimate

10/7/08

$0.03

$0.01

P/E FYE 2/29/08 P/E FYE 2/28/09 P/E FYE 2/28/10 P/E FYE 2/28/11

2.1x 19.5x 4.3x n/a

LTM EBIT yield

34%

LTM pre-tax ROC

29%

2/28/02 3 3 (7) (7) (0.40) (0) 0 (0) 0 4 0 9 0 2 0 2 0 7

2/28/03 3 3 (1) (1) (0.04) 3 1 2 2 3 0 8 0 2 0 2 0 7

EBIT/capital employed

-277%

-79%

Fiscal Years Ended 2/29/04 2/28/05 2/28/06 3 7 13 3 4 10 (1) (2) 3 (1) (2) 5 (0.06) (0.12) 0.19 (1) (0) 2 0 1 2 (1) (1) 0 1 1 5 1 4 10 0 1 4 7 10 22 0 0 1 1 3 3 0 0 0 1 3 3 0 0 0 6 7 20 -440%

-444%

83%

2/28/07 30 22 12 7 0.24 12 2 9 17 25 3 35 0 2 0 2 0 33

2/29/08 62 41 18 12 0.37 17 5 12 18 28 10 51 0 4 0 4 0 47

LTME 8/31/08 64 35 5 4 0.10 7 11 (4) 9 24 12 53 0 6 0 6 0 46

FQE 8/31/07 16 12 8 6 0.17 5 2 3 26 37 5 50 0 5 0 5 0 46

FQE 8/31/08 15 7 1 1 0.03 (1) 5 (6) 9 24 12 53 0 6 0 6 0 46

>100%

29%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Jan 00

Jan 00

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BUSINESS OVERVIEW Premier develops touring, museum-quality exhibitions presented in museums, exhibition centers, and other venues. The exhibitions, including Bodies…The Exhibition and Titanic: The Artifact Exhibition, have attracted 20 million visitors. Since 1994, Premier subsidiary RMS Titanic has been Salvor-in-Possession of the wreck of the Titanic, as ordered by a federal district court. RMS has conducted multiple expeditions, recovering 5,500 artifacts. Revenue sources include exhibition ticket sales, merchandise sales, licensing activities, and sponsorship agreements.

• • •

2007

2008

1H09

72% 28%

81% 19%

67% 1 <33%

96% 4%

85% 15%

96% 4%

79% 21%

n/a n/a

• •

•

Titanic accounted for the vast majority of non-Bodies revenue in 1H09.

INVESTMENT HIGHLIGHTS •

•

Bodies attended by more than five million visitors since FY05, including in New York, Las Vegas, San Diego, Prague, and Sao Paulo. In FY08, Premier presented 15 separate human anatomy exhibitions at 28 venues. The exhibitions include displays of dissected human bodies kept from decaying through a process known as plastination. The 2005 acquisition of Exhibitions International gave Premier multi-year licenses and exhibition rights to multiple human anatomy exhibitions. Exclusive right to recover objects from the Titanic due to Salvor-in-Possession status. Public interest in the Titanic story remains strong 96 years after she set sail, and Premier’s Titanic exhibitions have attracted audiences in 60+ venues worldwide. In 1993, Premier acquired Titanic Ventures, which started exploring the Titanic wreck site in 1987. New exhibitions include Dialog in the Dark (“world without sight”) and Sports Immortals (memorabilia). The exhibitions will be conducted under long-term licensing deals and are expected to open in late FY09. Sports Immortals will present sports memorabilia consisting of one million artifacts from great athletes. Dialog in the Dark will “provide insight and experience to the paradox of learning to ‘see’ without the use of sight.”

16% holder Mark Sellers demands firing of CEO Arnie Geller due largely to poor performance. Repurchased $7 million of stock in FY08. Stock price implies negative trailing FCF yield, 8x trailing P/E and 4x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE February 28 2006 % of revenue by theme: Bodies 37% Titanic 63% % of revenue by type: Exhibition 94% Merchandise and other 6% % of revenue by geography: U.S. 80% International 20%

Thanksgiving 2008

•

Performing “well below” expectations, with sharp declines in per-venue gross margin, sharp rise in opex and weak international results from Bodies. Resignations of CEO Eskowitz and legal counsel Wainger in August. Arnie Geller (66), who served as CEO prior to Eskowitz, was reappointed CEO. The changes followed a demand for two Board seats by 16% shareholder Mark Sellers. (Premier appointed a new CFO, Bud Ingalls, in February.) May not retain Titanic Salvor-in-Possession rights indefinitely. While the U.S. Court of Appeals for the Fourth Circuit in 2006 recognized Premier’s exclusive right to recover objects from the Titanic site, the same court left Premier with non-exclusive rights to photograph and film the wreck site. In order for Premier to maintain Salvorin-Possession status, it “must maintain a presence over the wreck site as interpreted by the courts.” In addition, an international treaty that does not recognize Premier’s Salvor-in-Possession rights was signed by the U.K. in 2003 and the U.S. in 2004. The treaty has yet to take effect, however, as the U.S. has not enacted implementing legislation. Bodies comprised 81% of revenue in FY08. The exhibitions have several competitors. In addition, in May, Premier settled an NYAG inquiry into the sourcing of specimens, allowing the company to operate the exhibition without interruption.

MAJOR HOLDERS CEO Geller 10% │ Other insiders 3% │ Mark Sellers 16% │ GSAM 8% │ W. & J. Gasparrini 8% │ Morgan Stanley 7%

THE BOTTOM LINE Premier’s revenue has exploded in recent years due to the success of the Bodies exhibitions. The company has misstepped recently, allowing the cost structure to get out of hand. However, with involvement by 16% holder Mark Sellers, Premier should be able to improve execution. While the company may not remain salvor-in-possession of the Titanic wreck site in the long term, it owns 2,000 recovered artifacts, appraised at $46 million but on the books for only $3 million. We value Premier at $1.50-7.50 per share, reflecting earnings uncertainty. At the low end, we ascribe zero value to the company’s ongoing business, zero value to the company’s net cash position of $9 million, and $46 million of value to the Titanic assets. © 2008 by BeyondProxy LLC. All rights reserved.

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…additional insight into PRXI:

REVENUE AND MARGIN ANALYSIS

“Our existing exhibitions continue to attract strong attendance and our new exhibitions have the potential to achieve blockbuster results in the coming years. We are keenly focused on improving our core businesses, streamlining our overhead cost structure and increasing shareholder value.” —Arnie Geller, Chairman and CEO

•

Premier – Revenue, Gross Profit and EBIT, 1Q04-2Q09 Premier scaled up dramatically from “startup mode” in FY04, as the Titanic and Bodies exhibitions came to market. The company lost its cost discipline in 2H08, with gross and operating profits declining dramatically even as revenue remained fairly stable. In a November 2008 letter to the board, major shareholder Mark Sellers decried the bloated cost structure and large payouts to executives.

$20mn $15mn

WHAT ARE THE SHARES WORTH? • •

Thanksgiving 2008

We estimate value at $1.50-7.50 per share. On the low end, we ascribe zero value to the company’s ongoing business, zero value to the company’s net cash position of $9 million, and $46 million of value to the Titanic assets (equal to appraised value of 2,000 artifacts owned by Premier; includes neither >$100 million appraised value of additional artifacts nor the value of potential future recoveries). On the high end, we estimate fair value at 15x normalized earning power of $0.50 per share. While our estimate of earning power is highly subjective, we believe it is reasonably conservative considering the significant unrealized potential of the company’s new exhibitions, including Dialog, Sports Immortals and Star Trek. We note that the company achieved EPS of $0.17 in 2Q08 (quarter ended August 31, 2007) before earnings declined sharply due to poor execution. 2Q08 results were achieved based solely on the Bodies and Titanic exhibitions. With other exhibitions in the pipeline, it is conceivable the company could surpass $0.17 per quarter in the next 1-3 years (assuming strong management execution). As a result, our estimate of normalized EPS may ultimately prove conservative. Premier shares are difficult to value given the significant disparity between current earnings and likely earning power. With earnings highly sensitive not only to opex discipline but also to the ramp-up and execution of new exhibitions, it is impossible to project income with any certainty. However, with activist shareholder involvement and asset protection in the form of Titanic artifacts, the downside appears to be reasonably protected. As a result, we find the shares less speculative than might be assumed given the difficulty of projecting EPS.

$10mn $5mn $0mn -$5mn

1Q04

1Q05

1Q06

Net Revenue

1Q07

1Q08

Gross Profit

1Q09 EBIT

Source: Company, The Manual of Ideas.

Premier – Y-Y Revenue Growth, 1Q05-2Q09 Premier showed explosive revenue growth without the need for significant capital investment from FY05-08. Revenue has stagnated recently, as some exhibitions have concluded while new ones have yet to ramp up. However, with Dialog, Sports Immortals and Star Trek in the pipeline — and the possibility of improved international execution of Bodies — Premier has a clear path to restoring growth.

250% 200% 150% 100% 50% 0% -50% 1Q05

1Q06

1Q07

1Q08

1Q09

Source: Company, The Manual of Ideas.

Premier – Gross and EBIT margin, 1Q04-2Q09 Gross margins have declined in recent quarters, as the company has shifted to operating more self-run venues (six in FQ2 versus three in the year-ago period). Even so, gross margin has declined below the company’s target for well north of 50%. EBIT margins have deteriorated even more dramatically in recent quarters, reflecting a bloated cost structure, including extremely generous executive pay.

100% 50% 0% -50% 1Q04

1Q05

1Q06

EBIT Margin

1Q07

1Q08

1Q09

Gross Margin

Source: Company, The Manual of Ideas.

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Page 195 of 401

EXHIBITIONS OVERVIEW

WHY THE SHARES MAY BE MISPRICED •

•

Value of Titanic assets not reflected on balance sheet. The company’s ownership of 2,000 Titanic artifacts is reflected in a $3 million balance sheet asset even as the collection has been appraised at $46 million. In addition, the company has not reflected any value for additional artifacts that are the subject of litigation (appraised at >$100 million), nor for the potential value of future recoveries from the Titanic shipwreck site. As we approach the 100-year anniversary of the sinking of the Titanic in 2012, these assets may become even more highly prized. Loss of investor confidence, due to history of disappointing investor expectations and lavishing excessive pay on senior executives. Investors appear to have “written off” Premier, as the company has repeatedly ratcheted down expectations and failed to execute in line with its potential. Market’s misjudgment of Mark Sellers’ intentions and staying power. Sellers owns 16% of Premier and has come into the spotlight due to a Wall Street Journal article highlighting his hedge fund’s recent rocky performance (despite solid performance since inception). Some market participants may have mistakenly assumed that Sellers may be forced to exit his 16% position in Premier. However, Sellers appears not to be at risk of near-term redemptions and appears likely to see this investment through to an acceptable conclusion. We view Sellers as a capable, committed holder who is likely to serve as a positive catalyst.

Thanksgiving 2008

Exhibition Titanic (6 current exhibitions)

Timeline Named salvor-inpossession in 1994

Comments 2,000 artifacts carried at $3 million but appraised at $46 million; seeking salvage award on 3,500 additional artifacts, appraised at >$100 million; additional value in potential future recoveries

Bodies (11 current exhibitions)

Signed deal for first exhibition in 2004

Accounted for 81% of revenue in FY08

Star Trek (1 current exhibition)

Opened in June in San Diego; looking for second venue

Exclusive rights to present exhibition worldwide; no capital investment required with 50/50 split of profits

Dialog in the Dark (1 current exhibition)

Announced in February; opened August 30 in Atlanta; second location under review

Sold out events in >20 countries in Europe, Asia, South America

Sports Immortals

Signed long-term licensing deal in March 2008; goal is to open at least one new exhibition by the end of FY09

>1 million artifacts from worlds of baseball, football, basketball, hockey, tennis, golf, Olympics

Source: Company, The Manual of Ideas.

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MANAGEMENT’S VIEW OF BUSINESS Notes from FQ2 earnings call on October 8: • State of company: “these are very troubled times, but if any company should know about navigating in treacherous waters, it should be this company, and I can assure you that we’ve got a firm hand on the rudder and we’re proceeding very carefully” • FQ2 review: 6% revenue decline on 15% attendance drop for Bodies and Titanic (despite increase in Bodies exhibitions from 11 to 19; “venue days of operation” were up 48%); average daily attendance per venue was down 40% to 704 attendees; several international exhibitions lost money; “while we are disappointed with our financial results for Q2 and the YTD results, we are pleased by the progress we are achieving and have achieved over the past several months toward both expansion and diversification of the company’s revenue and the right sizing of the company’s organizational structure” • Outlook: does not provide specific guidance; FY09 “will be year of transition, but hopefully continued growth;” “suspect that we will see… the Bodies exhibitions begin to do well, and as our new product proves its capabilities, we’ll see our revenues and our profits move where they should be” • Pricing: “may” lower ticket prices • Key initiatives: (1) stringent cost controls – will see unspecified benefit of headcount reductions in FQ3 and beyond; (2) Star Trek exhibition: licensing relationship, opened on June 21, “off to a promising start;” (3) Dialog in the Dark: opened at end of August, “attendance has been slow to ramp up,” remains “very optimistic about the opportunity” • Bodies: 62% of revenue in FQ2, down from 68% last year; “Bodies is certainly our biggest disappointment… over this past immediate period” – “reason for the disappointment for the most part is the international activity,” where it works with local partners; “Bodies exhibitions… are as important and as successful in their appeal to the general public throughout the world now as they were when we first introduced them, and two excellent examples of that are two exhibitions that just recently closed, one in Kansas City where our Bodies exhibition achieved attendance of approximately 250,000 people, and at the same time, Cincinnati was doing an excellent job at Union Station where we sold over 300,000 tickets;” opportunity to develop “large” market for corporate training programs • Titanic: continue to do “well;” opening exhibition in Milwaukee – Titanic has never been to Milwaukee but company expects several hundred thousand in ticket sales due to popularity of venue; 100-year anniversary coming up in 2012, with opportunities in exhibitions, expeditions and merchandising from 2011 through 2013

•

• •

•

Thanksgiving 2008

Legal issue with regard to ownership of Titanic: “we have the unfettered right to… ownership [of 1,800 objects]”; Norfolk federal district court “is now dealing with us on a salvage award for the other two-thirds of 5,500 objects that have not been awarded yet;” “the court will either have to award us money or the artifacts” (“no matter what happens or how that award is ultimately determined, it will not effect the 1,800 objects that we all ready own”) Star Trek: “sales team has been communicating with museums who have reacted very positively to wanting a Star Trek exhibition” – “over a dozen have expressed high interest” in U.S. Dialog in the Dark: “receiving the best reactions;” “will be around for many years in [five] permanent locations” in major U.S. markets; to benefit strongly from “word of mouth;” attendance could reach “7.5” on a scale on which Bodies reaches “10” – potential less than Bodies due to less efficient space utilization (Bodies can handle up to 20,000 people per day in a space that would handle only 2,000 people per day for Dialog, as latter requires people to move through sequentially in groups of ten) Sports Immortals: still being developed; “holding back from moving into the Luxor [in Las Vegas]… until we prove that we have [a] hit;” could eventually generate as much traffic as Bodies Geller on CEO role: “I didn’t come back to the company just to spend a couple of months and try to patch this company together; I’ve come back with the major commitment of being here and staying here;” “bringing this company back today to where it was is not a daunting task; it’s not a difficult task; all of our product is excellent product” Self-run venues: FY08 shift to operating more selfrun venues (six in FQ2 versus three a year ago) impacts cost of sales and gross margin – self-run venues require more revenue than do partnered venues to break even; targeting margins of 50%+ Balance sheet: cash down to $9.2 million due to EBIT decline, MGR purchase and initiation of capital projects, including Luxor, Dialog and Sports Capex: $3.5 million in FQ2 (versus $700K a year ago) – $1.8 million at Luxor, $900K at Dialog in the Dark, and $400K at Sports and Mortals; expects higher capex in 2H09 – $10 million at Luxor, $2-4 million at Dialog, $2-4 million at Sports and Mortals, and $1-2 million of maintenance capex Liquidity: $10 million line of credit with Bank of America was fully available at FQ2-end, with option to increase to $25 million (BofA must consent); may draw on line toward the end of FQ4 to meet growth capex requirements outlined above Business model comment: “investment costs for new exhibitions are all based upon trial and success before rollout; so when we open up a second, third or fourth exhibition, that’s because we know that we’ve already proven its ability for success”

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The Only Investment That’s Guaranteed to Succeed —or Your Money Back*

Thanksgiving 2008

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Thanksgiving 2008

PRIMEDIA Inc. (NYSE: PRM)

Norcross, GA, 678-421-3000 http://www.primedia.com

Services: Printing & Publishing Trading Data

Consensus EPS Estimates

Price: $1.37 (as of 11/14/08) 52-week range: $0.80 - $10.10 Market value: $61 million Enterprise value: $287 million Shares out: 44.2 million Ownership Data Insider ownership: 1% Insider buys (last six months): 12

Valuation

This quarter Next quarter

Latest $0.24 n/a

Month Ago $0.24 n/a

# of Ests 1 0

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

n/m 2.1x 1.7x n/a

FYE 12/31/08

0.64

EV / LTM revenue

1.0x

FYE 12/31/09 FYE 12/31/10

0.80 n/a

1 0

EV / LTM EBITDA EV / LTM EBIT

4.4x 5.7x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 2 Institutional ownership: 95% # of institutional owners: 156

Date

Actual

Estimate

11/6/08

$0.20

$0.18

LTM EBIT yield

18%

LTM pre-tax ROC

n/m

12/31/01 1,378 1,048 (651) (1,174) (31.80) (101) 61 (162) 34 407 2,030 2,731 8 628 1,946 2,649 685 (603)

12/31/02 1,341 1,050 (39) (647) (6.84) 50 39 11 19 305 1,324 1,836 8 553 1,728 2,395 630 (1,189)

n/m

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 974 804 307 760 641 274 104 114 32 (3) 22 565 (2.34) (1.81) (2.31) 63 45 (12) 40 35 30 24 10 (43) 9 13 7 288 284 302 1,179 1,146 995 1,636 1,559 1,390 22 25 8 465 437 324 2,037 2,111 1,457 2,649 2,704 1,961 165 0 0 (1,178) (1,145) (572) n/m

n/m

12/31/06 308 278 34 38 (1.48) 38 27 11 6 323 862 1,254 6 295 1,317 1,778 0 (523)

12/31/07 315 286 31 491 (1.26) (46) 20 (66) 15 73 156 257 5 73 248 401 0 (144)

LTME 9/30/08 301 277 50 15 0.53 (12) 12 (24) 23 64 154 270 3 67 246 394 0 (124)

FQE 9/30/07 80 73 2 394 (0.82) (11) 4 (15) 47 94 158 282 5 88 248 411 0 (129)

FQE 9/30/08 76 70 13 12 0.20 14 2 12 23 64 154 270 3 67 246 394 0 (124)

62%

75%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$250

$200

$150

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$50

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BUSINESS OVERVIEW PRIMEDIA publishes and distributes ad-supported print and online consumer guides for the apartment leasing and new home sale segments of residential real estate. The guides are provided for free to end users. In 2007, it distributed 38 million guides to 60,000 locations through DistribuTech, which also distributes 2,000 third-party publications. PRIMEDIA owns websites associated with its print guides, as well as Rentals.com, the leading paid listings website for residential real estate rentals. The company monetizes visits to the sites through ad formats such as cost per lead, cost per impression, cost per click, cost per action, and flat fees.

• • •

2005

2006

2007

YTD 9/30/08

71% 11% 18%

67% 15% 18%

66% 16% 18%

68% 14% 18%

n/a n/a n/a 7%

-5% 36% 0% 0%

0% 10% 3% 2%

2% -18% -4% -2%

•

Revenue reclassified to exclude Enthusiast Media and Auto Guides. Consists of Apartment Guide, ApartmentGuide.com and Rentals.com. Consists of New Home Guide and NewHomeGuide.com businesses. 4 Consists of PRIMEDIA's distribution arm, DistribuTech. 2 3

GEOGRAPHIC SCOPE OF PRIMEDIA PRINT PRODUCTS Apartments New homes 5 DistribuTech

North1 east 23 6 6,646

EBIT of $31 million YTD, up from $18 million in year-ago period, driven by move of HQ from NYC to Atlanta, opex reductions, improved distribution, and exit from two Auto Guide markets. New CEO Charles Stubbs (35) joined PRIMEDIA in April 2008 from Yellowpages.com, which he had built into a cohesive brand and Top 30 Internet site. Reduced corporate overhead to $12 million run rate, down from $29 million in 2007. The company has moved headquarters from New York to Atlanta. Stock price implies negative trailing FCF yield, 3x trailing P/E and 2x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 1 % of revenue by type: 2 Advertising – apartments 3 Advertising – new homes 4 Distribution 1 Revenue growth by type: 2 Advertising – apartments 3 Advertising – new homes 4 Distribution Total revenue growth

•

Thanksgiving 2008

South2 east 21 17 3,956

Mid3 west 14 6 4,007

West

Totals

19 5 5,285

77 34 19,894

Major markets include Washington, D.C., Philadelphia, Baltimore, Chicago. Major markets include Atlanta, Tampa, Orlando, Miami, Charlotte. Major markets include Dallas-Fort Worth, Houston, Austin, Kansas City. 4 Major markets include Phoenix, Las Vegas, L.A., San Francisco, Denver. 4 Represents number of DistribuTech’s exclusive retail distribution locations. 2

New Homes (16% of revenue) and DistribuTech (18% of revenue) continue to face pressure from the depression in real estate. New Homes revenue is down 18% YTD, while DistribuTech revenue has declined 4%. The company is “aggressively pursuing operating efficiencies.” Weak, albeit improved balance sheet. PRIMEDIA had net debt of $226 million at September 30, down from net debt of $1.2 billion at June 30, 2007. Debt has been reduced by proceeds from the divestiture of Enthusiast Media. PRIMEDIA continues to pay a quarterly dividend of ~$3 million ($0.07 per share).

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) LEDR MOVE TREE PRM

MV 58 155 21

EV -4 211 -5

EV/Rev n/m .8x n/m

P/TB 0.8x 2.7x 0.3x

08 P/E n/m n/m n/m

09 P/E n/m 8x n/m

287

1.0x

n/m

INVESTMENT HIGHLIGHTS •

•

Completed major divestitures, reduced debt and refocused on Consumer Guides for real estate. The company sold Enthusiast Media to Source Interlink for $1.2 billion in 2007. In July 2008, it discontinued Auto Guides. It now focuses on print and online guides for U.S. residential real estate. Apartment Guide business (68% of revenue) continues to grow revenue and customer count. Management sees new growth possibilities in this segment, particularly online. According to CEO Stubbs, “there is a meaningful opportunity … [to] expand our portfolio of product offerings…”

MAJOR HOLDERS Insiders 3% │ KKR 40% │ Glenview 8% │ Marathon 8% │ Amber 7%

THE BOTTOM LINE PRIMEDIA has restructured and strengthened the balance sheet in the midst of a depression in residential real estate, the company’s sole remaining market. New CEO Charles Stubb appears focused on the right priorities — continuing to improve operating efficiency while positioning the company for strong online growth when the real estate market turns. PRIMEDIA finally appears able to handle its financial leverage, even in the current downturn. As a result, value accretion to equity holders could be swift when investors perceive the real estate market to have stabilized. Current macro weakness provides a compelling opportunity for investors to buy a restructured business at a great price. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Questcor Pharmaceuticals, Inc. (Nasdaq: QCOR)

Union City, CA, 510-400-0700 http://www.questcor.com

Health Care: Biotechnology & Drugs Trading Data

Consensus EPS Estimates

Price: $8.15 (as of 11/14/08) 52-week range: $3.65 - $8.99 Market value: $529 million Enterprise value: $489 million Shares out: 65.0 million Ownership Data Insider ownership: 7% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.11 0.12

Month Ago $0.10 0.12

# of Ests 2 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

16.0x 18.1x 15.7x 13.4x

FYE 12/31/08

0.45

0.42

EV / LTM revenue

5.1x

FYE 12/31/09 FYE 12/31/10

0.52 0.61

0.51 0.60

2 1

EV / LTM EBITDA EV / LTM EBIT

8.1x 8.2x

P / tangible book 12.5x Greenblatt Criteria

LT EPS growth 18.0% n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 15 Institutional ownership: 53% # of institutional owners: 179

Date

Actual

Estimate

10/30/08

$0.13

$0.11

LTM EBIT yield

12%

LTM pre-tax ROC

>100%

12/31/01 6 4 (9) (9) (0.28) (5) 0 (5) 11 12 2 15 5 9 0 10 5 (0)

12/31/02 15 12 (2) (3) (0.07) (2) 0 (2) 8 11 1 13 0 3 3 7 5 1

n/m

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 14 18 14 11 15 11 (3) (0) (2) (6) (2) 5 (0.14) (0.03) 0.10 (3) 2 1 15 0 2 (18) 2 (1) 3 9 27 7 14 30 14 13 0 23 28 31 0 4 0 3 9 14 3 2 0 7 12 15 13 13 5 2 4 11 -314%

-20%

12/31/06 13 10 (11) (10) (0.18) (10) 4 (14) 18 24 4 30 0 7 0 8 5 16

12/31/07 50 45 22 37 0.51 10 0 10 30 72 4 78 0 15 0 17 5 57

LTME 9/30/08 95 88 60 52 0.72 72 0 72 41 64 4 70 0 22 0 23 0 47

FQE 9/30/07 15 13 9 8 0.12 (4) 0 (4) 11 28 4 34 0 6 0 8 5 21

FQE 9/30/08 24 22 15 9 0.13 24 0 24 41 64 4 70 0 22 0 23 0 47

n/m

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$9 $8 $7 $6 $5 $4 $3 $2 $1 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW

•

Questcor is a specialty pharma company that markets Acthar, an injectable drug approved for the treatment of certain disorders with an inflammatory component, including exacerbations associated with MS. Acthar’s primary but not indicated-for use is treating patients with infantile spasms (IS), a rare form of refractory childhood epilepsy. Questcor expects to resubmit an Acthar supplemental New Drug Application (sNDA) for IS to the FDA during 2008. The company is also developing QSC-001, a unique orally disintegrating tablet formulation for the treatment of pain. Seasonality of Acthar for IS: Q1: 15% below annual average; Q3: 12% above average; Q2 & Q4: slightly above average.

• •

2006

2007

YTD 9/30/08

100% 0% 52%

100% 0% 289%

100% 0% 201%

0% 36% 28% 27% 9%

80% 7% 6% 3% 4%

n/a n/a n/a n/a n/a

•

Questcor divested related product lines in October 2005.

INVESTMENT HIGHLIGHTS •

•

• •

New Acthar strategy has been huge success. The strategy, launched in August 2007, has boosted insurance coverage of Acthar for IS to 95%. Acthar sales have grown to $68 million YTD, up 210% from $22 million in the first nine months of 2007. Acthar is well-regarded for IS. While no drug is approved in the U.S. for treatment of IS, Acthar has 40% market share and is considered by many child neurologists as the standard-of-care in IS. Expects to resubmit Acthar IS to the FDA by yearend. Having already received orphan designation for IS, FDA approval may give Acthar for IS 7-year exclusivity. Approval would also allow Questcor to advertise Acthar for IS. Acthar may develop other therapeutic uses, including among a subset of MS patients who do not respond to or tolerate IV corticosteroids. QSC-001 addresses large market with 120 million prescriptions annually. This orally disintegrating tablet for patients who have difficulty swallowing will begin pivotal trials in 2Q09.

Don Bailey (62) became CEO in late 2007. He negotiated a change-of-control provision in June. Questcor is still formulating a long-term strategy. YTD FCF of $54 million, with $46 million spent to repurchase common and preferred stock. Stock price implies 14% trailing FCF yield, 11x trailing P/E and 16x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by therapeutic area: Neurology 59% 1 41% Gastroenterology, other Neurology revenue growth 3% Revenue by customer: CuraScript 0% Wholesaler A 35% Wholesaler B 29% Wholesaler C 23% Others 13%

Thanksgiving 2008

Off-label: Acthar not indicated for primary use. The FDA has approved Acthar, but not for IS, the disease for which the drug is primarily prescribed. Questcor is prohibited from promoting the use of Acthar in IS. It is unclear when/whether FDA approval of Acthar for IS might be forthcoming. Lack of patent protection. Acthar, which Questcor acquired from Aventis in 2001, dates back to 1952 and has no patent protection. Questcor claims that Acthar would be “very difficult” to reproduce. Looming competitive threats. Vigabatrin is already approved in Canada and under FDA review for treatment of IS. Other potentially competitive drugs include Synacthen and Ganaxolone. Net revenue about 30% below gross revenue, due to Medicaid rebates and government-related chargebacks. It is unclear how this may evolve.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn)

ENZN NVS SNY TRMS VPHM

172 110,839 82,566 49 921

QCOR

529

n/m 3.8x n/m 1.3x 2.0x

08 P/E n/m 13x 8x 6x 12x

09 P/E n/m 12x 7x 6x 22x

12.5x

18x

16x

EV/Rev

P/TB

311 113,506 89,716 12 502

1.6x 2.7x 2.5x .4x 2.2x

489

5.1x

MAJOR HOLDERS CEO Bailey 1% │ Other insiders 10% │ P. Cavazza 11% │ Tang 9% │ Black Horse 7% │ Visium 5% │ Broadwood 5%

THE BOTTOM LINE In a little more than a year, Questcor has transformed from a money-losing company teetering on the verge of bankruptcy to a highly profitable leader in the treatment of infantile spasms (IS). The company revamped its pricing and go-to-market strategy and appointed a new CEO in mid-2007. Questcor now focuses on the commercialization of Acthar for IS. As Acthar is currently approved for uses other than treatment of IS, the company is not allowed to promote the product in its core market. Questcor expects to resubmit an application for Acthar IS this year. The shares offer an enticing risk-reward tradeoff.

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Thanksgiving 2008

RadioShack Corporation (NYSE: RSH)

Fort Worth, TX, 817-415-3011 http://www.radioshackcorporation.co…

Services: Retail (Technology), Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $9.65 (as of 11/14/08) 52-week range: $9.27 - $20.34 Market value: $1.2 billion Enterprise value: $1.1 billion Shares out: 125.1 million Ownership Data Insider ownership: 0% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.74 0.27

Month Ago $0.76 0.29

# of Ests 18 10

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

5.5x 5.5x 6.3x 7.1x

FYE 12/31/08

1.75

1.76

EV / LTM revenue

0.3x

FYE 12/31/09 FYE 12/31/10

1.52 1.35

1.66 1.59

18 5

EV / LTM EBITDA EV / LTM EBIT

2.4x 3.0x

P / tangible book 1.5x Greenblatt Criteria

LT EPS growth 10.0% 10.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 730

Date

Actual

Estimate

10/23/08

$0.39

$0.36

LTM EBIT yield

34%

LTM pre-tax ROC

56%

12/31/01 4,776 2,297 329 162 0.85 776 139 637 401 1,714 11 2,245 106 826 565 1,467 65 714

12/31/02 4,577 2,238 459 259 1.45 522 107 415 447 1,707 3 2,228 36 828 591 1,500 0 728

33%

48%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 4,649 4,841 5,082 2,316 2,435 2,267 496 560 350 299 337 267 1.77 2.08 1.81 652 353 363 190 229 171 462 123 192 635 438 224 1,667 1,775 1,627 3 47 40 2,244 2,517 2,205 77 56 41 858 957 986 541 507 495 1,475 1,595 1,616 0 0 0 769 922 589 60%

61%

12/31/06 4,778 2,129 157 73 0.54 315 91 224 472 1,600 8 2,070 195 984 346 1,416 0 654

12/31/07 4,252 2,026 382 237 1.74 379 45 334 510 1,567 5 1,990 61 748 348 1,220 0 770

LTME 9/30/08 4,330 2,008 386 231 1.77 289 56 233 824 1,814 0 2,246 36 636 726 1,461 0 785

FQE 9/30/07 960 468 77 46 0.34 111 13 98 417 1,439 0 1,874 39 695 344 1,172 0 702

FQE 9/30/08 1,022 477 85 50 0.39 54 20 35 824 1,814 0 2,246 36 636 726 1,461 0 785

19%

54%

56%

n/m

35%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

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BUSINESS OVERVIEW

•

RadioShack is a consumer electronics retailer operating from neighborhood and mall locations. It has 6,000 companyoperated stores and dealer outlets in the U.S. and 700 nonRadioShack branded wireless phone kiosks. Stores are located in major malls and strip centers, as well as individual storefronts. Each location carries both private label and thirdparty branded electronics products, including mobile phones, flat panel TVs, wireline phones, DVD players, computers, digital cameras, etc. Company-operated kiosks are primarily inside Sam’s Club locations, and stand-alone Sprint Nextel kiosks in malls. Seasonality is strongest during the Q4 holiday shopping season, accompanied by a pre-seasonal inventory buildup. The company was founded in 1967.

2006 -5.6%

2007 -8.2%

YTD 9/30/08 +3.4%

85% 7% 7%

86% 7% 7%

-9% 30% 6% -6%

-11% -13% -11% -11%

4% -5% -2% 3%

4,467 1,596 772

4,447 1,484 739

4,435 1,407 685

17% -7% 0% -11% 3%

21% 5% 17% -10% 9%

19% 2% 15% -10% 7%

35% 23% 16% 13% 14%

33% 24% 15% 13% 14%

33% 3 28% 3 14% 3 11% 3 13%

Average store size: 2,527 sq. ft. Average store size: 99 sq. ft. 3 Represents MOI estimate. 2

•

• •

•

Sales trends slowed in September, following strength in July and August. Management expects the “challenging” retail environment to continue. Results have benefited from digital-to-analog TV converter sales. The transition of broadcast signals to digital only is scheduled to take place in 1Q09. Competition from other electronics retailers and discounters, including Walmart and Best Buy, which have gained share against RadioShack. The company’s wireless phone kiosks compete against providers such as AT&T and Sprint Nextel. Commoditization due to Internet-based price discovery. While some consumers may value the service of RadioShack, many turn to the Internet to save money on big-ticket items. Some may come to a store to get educated but ultimately buy online.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) BBY CONN GME HGG RSC

MV 9,096 188 3,811 159 69

EV 11,242 141 3,817 276 58

EV/Rev .3x .2x .5x .2x .2x

P/TB 4.5x 0.6x 6.2x 1.8x 0.3x

08 P/E 8x 5x 9x 6x n/a

09 P/E 9x 5x 8x 6x n/a

RSH

1,207

1,145

.3x

1.5x

MAJOR HOLDERS

INVESTMENT HIGHLIGHTS •

Fresh management, with ties to Kmart. Prior to joining RadioShack as chairman and CEO in 2006, Julian Day (55) served as COO of Kmart, CFO and COO of Sears, and a director of Sears Holdings. Bryan Bevin (45), EVP of Store Operations, joined in January 2008 from Blockbuster. James Gooch (40), who joined as CFO in 2006, has prior experience as controller of Kmart. Peter Whitsett (42), joined as Chief Merchandising Officer in late 2007, having served in a similar role at Kmart. Stock price implies 19% trailing FCF yield, 5x trailing P/E and 6x forward P/E.

INVESTMENT RISKS & CONCERNS •

SELECTED OPERATING DATA FYE December 31 2005 Comparable sales growth +0.9% % of revenue by segment: Company-operated stores 88% Kiosks 5% Other 7% Revenue growth by segment: Company-operated stores 0% Kiosks 370% Other 8% Total revenue growth 5% Number of locations at period end: 1 Company-operated stores 4,972 Dealer/franchise outlets 1,711 2 777 Kiosks EBIT margin by segment: Company-operated stores 20% Kiosks -5% Other 10% Unallocated -11% Total EBIT margin 7% % of revenue by product category: Wireless 34% Accessories 20% Personal electronics 15% Modern home 13% Other 17%

•

Thanksgiving 2008

Comparable sales grew 7% in Q2 and 8% in Q3, driven by digital-to-analog TV converters, GPS devices, video gaming, prepaid wireless phones and AT&T post-paid business, partially offset by weak Sprint post-paid business. Comps would have been up 4% in Q3 excluding Sprint and converter sales. Repurchased 8.7 million shares for $24 per share in 2007 and virtually no shares YTD.

CEO Day 1% │ Other insiders 1% │ Invesco 11% │ Barclays 11% │ BlackRock 9% │ GSAM 7% │ Janus 7%

THE BOTTOM LINE RadioShack’s performance has improved following comparable sales declines in 2006 and 2007. The balance sheet has strengthened due to continued strong FCF, allowing the company to continue a fairly aggressive share buyback program. The stock is cheap on current and prospective earnings, making it an interesting selection. We note, however, that consumer electronics retailing remains a business in which high returns on capital may not be sustainable in the long term. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

R.G. Barry Corp. (Nasdaq: DFZ)

Pickerington, OH, 614-864-6400 http://www.rgbarry.com

Consumer Cyclical: Footwear Trading Data

Consensus EPS Estimates

Price: $5.28 (as of 11/14/08) 52-week range: $5.15 - $8.84 Market value: $56 million Enterprise value: $49 million Shares out: 10.6 million Ownership Data Insider ownership: 9% Insider buys (last six months): 2

Valuation

This quarter Next quarter

Latest $0.49 0.06

Month Ago $0.37 0.05

# of Ests 1 1

FYE 6/30/09

0.66

EV / LTM revenue

0.5x

FYE 6/30/10 FYE 6/30/11

0.90 n/a

1 0

EV / LTM EBITDA EV / LTM EBIT

n/a 4.9x

P / tangible book Greenblatt Criteria

1.2x

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 7 Institutional ownership: 33% # of institutional owners: 38

Date

Actual

Estimate

11/3/08

$0.10

$0.24

P/E FYE 6/28/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

5.7x 8.0x 5.9x n/a

LTM EBIT yield

21%

LTM pre-tax ROC

24%

12/28/02 119 41 (12) (12) (0.85) (6) 2 (8) 7 61 2 88 4 20 6 40 0 47

1/3/04 123 43 (8) (22) (1.97) (3) 2 (5) 2 44 0 61 6 19 2 36 0 25

-24%

-18%

Fiscal Years Ended 1/1/05 12/31/05 7/1/06 104 98 29 37 43 12 (19) 8 (4) (20) 8 (4) (2.05) 0.76 (0.42) (3) 6 (2) 0 1 0 (3) 6 (2) 1 4 1 33 36 35 0 0 0 39 42 40 7 3 3 18 15 19 1 1 0 34 31 31 0 0 0 5 11 9 -61%

36%

6/30/07 105 42 12 25 2.46 16 1 16 18 50 0 64 2 16 0 27 0 36

6/28/08 110 45 14 10 0.92 9 2 7 26 56 0 68 2 10 0 22 0 46

LTME 9/27/08 103 41 10 7 0.67 10 2 8 10 62 0 75 2 16 0 28 0 47

FQE 9/29/07 32 14 6 4 0.35 (17) 0 (17) 1 50 0 64 2 13 0 25 0 40

FQE 9/27/08 26 10 2 1 0.10 (16) 1 (17) 10 62 0 75 2 16 0 28 0 47

60%

62%

24%

n/m

-20%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$14 $12 $10 $8 $6 $4 $2 $0 Oct 99

Oct 00

Oct 01

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Oct 03

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BUSINESS OVERVIEW R.G. Barry provides accessory footwear (mostly wholesale), including slippers, sandals, fashion items, and slipper socks. The company sold its European operations in July 2007 and now focuses on North America. Manufacturing is outsourced to China and Vietnam. Roughly 70% of sales are recorded in the second half of each calendar year.

•

2006 n/a n/a

2007 8% 51%

2008 4% 10%

1Q09 -20% n/a

35% 11%

33% 11%

37% 11%

n/a n/a

•

94% 4% 2%

85% 3% 12%

89% 1% 10%

n/a n/a n/a

•

Based on backlog as of September 1st of each year.

INVESTMENT HIGHLIGHTS • •

•

CEO Greg Tunney (47) joined R.G. Barry in 2006 from Phoenix Footwear, where he served as COO for seven years. Tunney also spent six years as national sales manager of Brown Shoe. Stock price implies 14% trailing FCF yield, 8x trailing P/E and 8x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE June 28 Revenue growth 1 Backlog growth Revenue by customer: Wal-Mart J.C. Penney Revenue by type: Owned brands Licensed brands Private label programs

•

Thanksgiving 2008

Transitioned business model in FY04, from manufacturer of footwear to distributor of goods purchased from third-party manufacturers. Flagship slipper brand, Dearfoams, dominates multiple retail channels. The slippers retail for $530 per pair and are often purchased as gifts during the holiday shopping season. Terrasoles and Superga brands received “good reception” at consumer level in FY08. R.G. Barry expects Terrasoles eco-friendly hybrid footwear and licensed Superga canvas/active fashion footwear to show “healthy” growth in FY09. Terrasoles upper materials include recycled micro fleece and mesh, as well as organic materials such as bamboo. They retail for $49-59 and are sold mainly in specialty chain stores, independent shoe stores, and department stores. Superga products retail for $80180 and are sold in mid-range and premier department stores and better footwear stores. FY09 Nautica and My College Footwear brand launches may balance out seasonal and demographic aspects of business. The company foresees “modest” first-year performance from licensed Nautica slippers and accessories and NCAA-licensed My College Footwear. Nautica products (launched in the September quarter) retail for $36-48 and are sold through upper-tier department and specialty stores. Looking for “category-appropriate” acquisitions that will add revenue, be accretive to earnings, and continue to mitigate the seaonality of the business.

•

Management expects “approximately flat” sales in FY09, despite 20% FQ1 revenue decline (should be recovered in FQ2, based on shipments to retailers since the end of FQ1, open orders and retail sellthrough). Gross margin erosion is likely in FY09. Retailers are delaying or reducing orders; retail space is being downsized, partly due to bankruptcies among mid-tier department stores. Cost of materials, labor and energy is pressuring margins, as company has little pricing power. Management believes the pressure to be temporary and gross margin to return to 40% in FY10. Globalization and retail consolidation have hurt accessory footwear makers. These factors have increased competition in the marketplace and put significant pressure on industry margins. For example, the merger of Sears and Kmart negatively affected the long-term prospects of Footstar. $12 million pension obligation exceeds $7 million of net cash and investments as of September 30.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) BWS DECK PXG TBL WWW DFZ

MV 316 793 3 593 926

EV 402 725 13 528 933

EV/Rev .2x 1.3x .2x .4x .8x

P/TB 0.9x 2.7x 0.2x 1.2x 2.2x

08 P/E 9x 9x n/m 13x 10x

09 P/E 8x 7x n/m 14x 9x

.5x

1.2x

MAJOR HOLDERS CEO Tunney <1% │ Other insiders 12% │ Ergates 11% │ Nicusa 6% │ Zeff 5%

THE BOTTOM LINE R.G. Barry operates in an extremely difficult business. The long-term structure of the wholesale accessory footwear industry has changed for the worse due to globalization and retailer consolidation. The industry also suffers from short-term challenges, both on the revenue and cost side. As a result, while the company has executed well over the years and remains profitable even in the current difficult environment, we are skeptical that it can grow shareholder value at an acceptable rate.

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Thanksgiving 2008

Robert Half International Inc. (NYSE: RHI)

Menlo Park, CA, 650-234-6000 http://www.rhi.com

Services: Business Services, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $17.81 (as of 11/14/08) 52-week range: $14.31 - $29.99 Market value: $2.8 billion Enterprise value: $2.4 billion Shares out: 155.1 million Ownership Data Insider ownership: 3% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.27 0.17

Month Ago $0.41 0.38

# of Ests 17 13

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

9.8x 10.9x 24.7x 21.7x

FYE 12/31/08

1.64

1.77

EV / LTM revenue

0.5x

FYE 12/31/09 FYE 12/31/10

0.72 0.82

1.49 1.61

17 9

EV / LTM EBITDA EV / LTM EBIT

5.0x 5.0x

P / tangible book 3.3x Greenblatt Criteria

LT EPS growth 14.7% 14.7% Latest Quarterly EPS Surprise

Insider sales (last six months): 7 Institutional ownership: 91% # of institutional owners: 743

Date

Actual

Estimate

10/22/08

$0.43

LTM EBIT yield

20%

LTM pre-tax ROC

>100%

12/31/01 2,453 1,017 196 121 0.67 276 85 191 347 686 161 994 0 177 3 189 0 806

12/31/02 1,905 715 4 2 0.01 161 47 114 317 646 162 938 0 187 2 193 0 745

63%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,975 2,676 3,338 727 1,056 1,373 12 235 392 6 141 238 0.04 0.79 1.36 113 162 328 37 33 62 76 129 266 377 437 458 699 916 1,017 163 168 166 986 1,199 1,319 0 0 0 186 279 337 2 2 3 197 287 348 0 0 0 789 912 971 4%

86%

>100%

12/31/06 4,014 1,694 466 283 1.65 376 80 296 448 1,112 179 1,459 0 403 4 416 0 1,043

12/31/07 4,646 1,978 490 296 1.81 411 84 327 310 1,060 195 1,450 0 448 4 466 0 984

LTME 9/30/08 4,831 2,035 476 290 1.86 434 76 358 374 1,132 192 1,524 0 468 4 485 0 1,039

FQE 9/30/07 1,179 501 122 74 0.46 76 17 59 329 1,100 196 1,488 0 489 4 504 0 983

FQE 9/30/08 1,160 484 110 66 0.43 96 17 79 374 1,132 192 1,524 0 468 4 485 0 1,039

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

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BUSINESS OVERVIEW

•

Robert Half is a staffing firm and owns Protiviti, a consulting and internal audit firm. Staffing divisions provide temporary (Accountemps), full-time and project personnel in finance and accounting, temporary admin support (OfficeTeam), and professionals in IT, legal, advertising, marketing and web design (Creative Group). The company has 400 locations and 15,300 employees, including 3,300 in Protiviti. RHI placed 257,000 temporary employees with clients in 2007. RHI was founded in 1948. Prior to 1986, the company franchised offices providing finance personnel. Current management subsequently acquired the franchised locations. In 2002, RHI hired 700 professionals from the internal audit and risk consulting practice of Arthur Andersen. These professionals formed the base of the Protiviti subsidiary.

•

2006

2007

YTD 9/30/08

78% 8% 14%

79% 10% 12%

19% 53% 13% 20%

16% 32% 2% 16%

5% 8% 5% 5%

10% 22% 11% 11% 2% 2%

10% 19% 4% 10% 2% 2%

10% 16% 1% 10% 2% 2%

INVESTMENT HIGHLIGHTS •

•

Staffing remains stable, helped by continued growth in international operations. International, which accounts for 30% of staffing revenue, grew 15% in Q3. Staffing revenue remains at near-record levels, with permanent placement fairly stable and technology staffing still growing modestly. Sarbanes-Oxley has boosted demand for skilled professionals in accounting and finance. Since these industry segments are a large part of RHI’s business, the company benefits from the trend toward better corporate governance and internal control over financial reporting. Impressive long-term shareholder value creation. $1 invested in RHI stock on June 30, 1986, was worth $51 at yearend 2007, a 20% CAGR.

Astute management. We believe current leadership deserves significant credit for smart strategic decisions such as the acquisition of franchisees post 1986 and the hiring of 700 former Andersen staff. Stock price implies 13% trailing FCF yield, 10x trailing P/E and 25x forward P/E.

INVESTMENT RISKS & CONCERNS •

• •

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by segment: Temporary staffing 79% Permanent staffing 7% Risk consulting 14% Revenue growth by segment: Temporary staffing 21% Permanent staffing 61% Risk consulting 36% Total revenue growth 25% EBIT margin by segment: Temporary staffing 9% Permanent staffing 21% Risk consulting 18% Total EBIT margin 11% D&A as % of revenue 2% Capex as % of revenue 2%

Thanksgiving 2008

• •

Sensitive to economic conditions. Clients’ staffing needs are cyclical, with non-farm payrolls and the unemployment rate key indicators of demand. In Q3, clients “became increasingly cautious with their hiring actions as the quarter progressed.” Revenue down 2%, EPS down 6% in Q3 after years of consistent growth. Low barriers to entry. Competition for both clients and candidates is stiff in the staffing services business, and reputation of the service provider is only one factor driving engagement wins. Reliance on short-term contracts. Long-term deals are not a significant part of RHI’s staffing business, making operating results less predictable. Limited reinvestment opportunities? RHI has spent more than $1 billion on buybacks and more than $150 million on dividends in three years.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) KELYA MAN SFN

MV 432 2,166 140

EV 433 2,506 211

EV/Rev .1x .1x .1x

P/TB 0.7x 1.9x 0.5x

08 P/E 15x 6x 9x

09 P/E 24x 9x 12x

RHI

2,762

2,392

.5x

3.3x

11x

25x

MAJOR HOLDERS CEO Messmer, Jr. 3% │ Other insiders 7% │ Barclays 13% │ Fidelity 10% │ Cap Re 6%

THE BOTTOM LINE Robert Half’s current management, led by chairman and CEO Harold Messmer, Jr., has delivered impressive performance over the past twenty years. The company continues to perform reasonably well in the face of economic headwinds, though a prolonged global downturn would undoubtedly impact profitability. With foreign revenue outpacing domestic growth and now accounting for more than 20% of total revenue, we believe RHI may offset U.S. weakness with better performance abroad. The shares are fairly attractive but not yet compelling.

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Thanksgiving 2008

Rockwell Automation (NYSE: ROK)

Milwaukee, WI, 414-382-2000 http://www.rockwellautomation.com

Technology: Electronic Instruments & Controls, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $26.08 (as of 11/14/08) 52-week range: $21.51 - $72.53 Market value: $3.8 billion Enterprise value: $4.2 billion Shares out: 145.6 million Ownership Data Insider ownership: 0% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.85 0.81

Month Ago $1.06 0.99

# of Ests 8 6

FYE 9/30/09

3.53

4.03

EV / LTM revenue

0.7x

FYE 9/30/10 FYE 9/30/11

3.58 4.20

4.52 5.22

8 3

EV / LTM EBITDA EV / LTM EBIT

n/a 4.8x

P / tangible book Greenblatt Criteria

7.3x

LT EPS growth 14.0% 13.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 66% # of institutional owners: 828

Date

Actual

Estimate

11/10/08

$1.08

$0.98

P/E FYE 9/30/08 P/E FYE 9/30/09 P/E FYE 9/30/10 P/E FYE 9/30/11

6.7x 7.4x 7.3x 6.2x

LTM EBIT yield

21%

LTM pre-tax ROC

65%

9/30/02 3,776 1,186 229 122 1.18 437 100 337 289 1,757 1,124 4,006 162 966 767 2,397 0 1,609

9/30/03 3,992 1,311 298 286 1.48 435 108 327 226 1,692 1,138 3,940 9 776 764 2,353 0 1,587

14%

18%

Fiscal Years Ended 9/30/04 9/30/05 9/30/06 4,411 4,112 4,556 1,563 1,664 1,900 438 630 736 415 540 607 1.85 2.39 2.94 623 665 424 98 103 122 525 562 302 474 464 408 2,026 2,187 2,188 1,135 1,119 820 4,213 4,525 4,735 0 1 219 864 941 1,293 758 748 748 2,352 2,876 2,817 0 0 0 1,861 1,649 1,918 28%

41%

54%

9/30/07 5,004 2,097 789 1,488 3.53 452 131 321 624 2,382 1,102 4,546 521 1,745 406 2,803 0 1,743

9/30/08 5,698 2,343 809 578 3.90 591 151 440 582 2,118 1,166 4,594 100 537 904 2,905 0 1,689

LTME 9/30/08 5,698 2,343 877 578 3.89 591 151 440 582 2,118 1,166 4,594 100 537 904 2,905 0 1,689

FQE 9/30/07 1,371 574 231 165 1.07 189 49 140 624 2,382 1,102 4,546 521 1,745 406 2,803 0 1,743

FQE 9/30/08 1,484 590 177 126 0.87 245 48 196 582 2,118 1,166 4,594 100 537 904 2,905 0 1,689

71%

60%

65%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

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BUSINESS OVERVIEW Rockwell Automation provides industrial automation power, control and information solutions to manufacturers. Its industrial automation brands include Allen-Bradley controls and services and Rockwell Software factory management software. The company operates in two segments: Architecture & Software contains the control and information architecture capable of connecting customers’ entire manufacturing enterprise. Control Products & Solutions provides intelligent motor control and industrial control products and services. Rockwell employs 20,000 people. As of September 30, 2007, Rockwell operated 53 plants, mainly in North America. It had 267 sales and administrative offices and 26 warehouses and other facilities. Floor space was 10.2 million square feet (24% owned, 76% leased). Rockwell has divested a number of businesses over the years: sold aerospace and defense businesses to Boeing in 1996; sold FirstPoint in 2004; sold ElectroCraft in 2006; sold 50% stake in Rockwell Scientific Company in 2006; sold Power Systems to Baldor for $1.8 billion in January 2007. In order to gauge the health of Rockwell’s U.S. served markets, investors may track Industrial Equipment Spending (BEA), Capacity Utilization (Fed), and Manufacturing Purchasing Managers’ Index (Institute for Supply Mgmt).

•

• • •

2006 11% 10% 127%

2007 10% 6% 139%

2008 14% 5% 111%

45% 55%

44% 56%

42% 58%

57% 7% 18% 11% 6%

54% 7% 21% 12% 7%

50% 7% 23% 13% 7%

26% 14% -2% 17%

26% 14% -2% 18%

24% 13% -2% 16%

•

Softness in U.S. and Europe; customers operate largely in cyclical industries. According to management, “macro-economic conditions in Europe and the U.S. are weakening.” The company has “begun to see a change in buying behavior by some of our customers in consumer related industries, including project delays and curtailed capital spending.” Legal contingencies. The company’s activities expose it to a variety of legal claims. Ongoing legal proceedings are detailed in Rockwell’s 10-K.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ABB EMR SI

MV 24,883 25,917 47,003

EV 20,057 28,658 52,151

EV/Rev .6x 1.2x .6x

P/TB 2.9x 10.2x 3.1x

08 P/E 6x 11x 9x

09 P/E 6x 11x 7x

ROK

3,797

4,219

.7x

7.3x

MAJOR HOLDERS CEO Nosbusch 1% │ Other insiders 1% │ Neuberger 9% │ Cap Re 5% │ Vanguard 4% │ Barclays 4% │ MFS 3%

RATINGS

INVESTMENT HIGHLIGHTS •

Delivered 9% local currency revenue growth, 11% non-GAAP EPS growth and 24% ROIC in FY08, with non-U.S. revenue reaching 50% of total revenue. Rockwell achieved greater penetration in process industries and strong growth in solutions businesses, continuing to diversify the revenue base. Seasoned management team. Keith Nosbusch (56) has been with the company for a decade and has served as CEO since 2004. Repurchased $359 million of stock and paid $170 million in dividends in FY08, following $1.5 billion repurchase and $185 dividend payments in FY07. Stock price implies 12% trailing FCF yield, 7x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE September 30 Revenue growth Organic revenue growth Capex as % of D&A % of revenue by segment: Architecture & Software Control Products & Solutions % of revenue by geography: U.S. Canada EMEA Asia Pacific Latin America EBIT margin by segment: Architecture & Software Control Products & Solutions Corporate and D&A Total EBIT margin

Thanksgiving 2008

Demand for Rockwell’s products and services has benefited from customer investments in manufacturing capacity, needs for greater productivity, and global industrial production. Transforming itself from “U.S.-based hardware company to global technology-driven enterprise.” The FY07 sale of Power Systems fits into this shift.

THE BOTTOM LINE Rockwell is a leader in industrial automation and has benefited from global growth. With roughly one-half of revenue now coming from outside the U.S., the company appears appropriately diversified given the slowing U.S. economy. However, we note that Rockwell could see a lag effect of weaker consumer spending as customers begin to delay capital spending. As a result, we do not view the shares as sufficiently cheap to warrant purchase.

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Thanksgiving 2008

Seagate Technology (Nasdaq: STX)

Grand Cayman, Cayman Islands, 831-438-6550 http://www.seagate.com

Technology: Computer Storage Devices Trading Data

Consensus EPS Estimates

Price: $4.87 (as of 11/14/08) 52-week range: $4.35 - $28.30 Market value: $2.4 billion Enterprise value: $3.3 billion Shares out: 488.3 million Ownership Data Insider ownership: 2% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.22 0.21

Month Ago $0.38 0.37

# of Ests 17 16

FYE 6/30/09

0.89

1.36

EV / LTM revenue

0.3x

FYE 6/30/10 FYE 6/30/11

1.42 1.97

1.94 2.25

16 2

EV / LTM EBITDA EV / LTM EBIT

2.9x 3.1x

P / tangible book Greenblatt Criteria

1.1x

LT EPS growth 12.0% 13.7% Latest Quarterly EPS Surprise

Insider sales (last six months): 3 Institutional ownership: 91% # of institutional owners: 853

Date

Actual

Estimate

10/22/08

$0.26

$0.22

P/E FYE 6/27/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

2.1x 5.5x 3.4x 2.5x

LTM EBIT yield

33%

LTM pre-tax ROC

40%

6/28/02 6,087 1,593 374 153 0.36 905 540 365 843 1,962 6 3,095 2 1,603 749 2,454 0 641

6/27/03 6,486 1,727 691 641 1.36 882 516 366 1,194 2,282 0 3,517 4 1,363 745 2,201 0 1,316

69%

>100%

Fiscal Years Ended 7/2/04 7/1/05 6/30/06 6,224 7,553 9,206 1,459 1,673 2,137 444 722 874 529 707 840 1.06 1.41 1.60 635 1,428 1,457 605 691 1,008 30 737 449 1,183 1,836 1,733 2,461 3,502 4,333 0 3 2,782 3,942 5,244 9,544 4 4 330 1,248 1,780 3,337 739 736 640 2,087 2,703 4,332 0 0 0 1,855 2,541 5,212 41%

52%

56%

6/29/07 11,360 2,185 614 913 1.56 943 906 37 1,144 3,801 2,488 9,472 330 2,649 1,733 4,735 0 4,737

6/27/08 12,708 3,205 1,376 1,262 2.36 2,538 930 1,608 1,141 4,272 2,463 10,120 360 3,287 1,670 5,534 0 4,586

LTME 10/3/08 12,456 2,921 1,060 967 1.81 2,088 1,060 1,028 1,153 4,366 2,443 10,168 660 3,587 1,370 5,523 0 4,645

FQE 9/28/07 3,285 809 396 355 0.64 754 150 604 1,498 4,349 2,496 10,065 330 2,863 1,734 5,185 0 4,880

FQE 10/3/08 3,033 525 80 60 0.12 304 280 24 1,153 4,366 2,443 10,168 660 3,587 1,370 5,523 0 4,645

28%

52%

40%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

Seagate provides hard disc drives for applications including enterprise, desktop, mobile computing, and electronics. Seagate also provides online backup to through EVault (acquired in FY07). Seasonality is weakest in FQ4 (June). •

SELECTED OPERATING DATA FYE June 30 2006 Unit shipments (mn) 119 Change (y-y) 21% Avg sales price per unit $78 Change (y-y) 1% 1 7% Programs / gross sales Unit shipments by segment (mn): 2,3 Enterprise 14 2,4 12 Mobile 2,5 74 Desktop 2,6 18 Consumer Unit shipment growth by segment: 2,3 Enterprise 6% 2,4 118% Mobile 2,5 19% Desktop 2,6 8% Consumer % of revenue by channel: 7 OEM 72% Distributors 25% Retail 3% % of revenue by country: U.S. 31% Netherlands 23% Singapore 38% Other 8%

2007 159 34% $71 -9% 9%

2008 183 15% $68 -4% 9%

1Q09 48 2% $62 -10% 12%

17 19 98 25

20 27 111 25

5 10 28 5

17% 56% 33% 40%

22% 38% 13% -3%

13% 24% -3% -16%

64% 30% 6%

67% 26% 7%

66% 27% 7%

29% 23% 38% 10%

31% 29% 39% 2%

n/a 8 n/a 8 n/a 8 n/a

•

• •

•

Sales programs are recorded as contra revenue. 2 Denotes unit shipments. FY08 unit growth driven by server virtualization; STX gained share; unit growth and improved product mix were partially offset by price erosion. 4 FY08 growth driven by notebook sales; STX lost share (industry grew 45%); Unit gains, favorable mix were offset by “particularly pronounced” price erosion. 5 FY08 growth driven by proliferation of digital content; STX maintained share; unit growth and favorable product mix were offset by price erosion. 6 FY08 decline due to 36% drop in gaming units, partially offset by 33% gain in DVR shipments. Some new gaming platforms do not utilize a disc drive. 7 HP and Dell accounted for 16% and 11% of FY08 revenue, respectively. 8 1Q09 revenue by geography: North America: 27%, Europe: 29%, Asia 44%. 3

INVESTMENT HIGHLIGHTS •

• •

Experienced management. CEO William Watkins (55), COO David Wickersham (52), CFO Charles Pope (53), Chief Sales & Marketing Officer Brian Dexheimer (45), and CTO Robert Whitmore (46) have each been at Seagate for more than a decade. Repurchased 65 million shares for $1.5 billion in FY08, and 62 million shares for $1.5 billion in FY07. No shares were bought back in 1Q09. Stock price implies 43% trailing FCF yield, 3x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS

•

Thanksgiving 2008

Growing demand for data storage, driven by applications such as digital photos, video and music. Growing demand for disc drives, driven by a proliferation of enterprise data, mobile computing, and consumer electronics. Desktop demand has moderated due to a shift toward mobile computing. Scale leader status gives Seagate a manufacturing and R&D advantage in the disc drive business. It has ~5,000 patents issued and ~2,000 pending. Disc drive industry consolidation, driven by high capex requirements and scale advantages: Maxtor/ Quantum, 2001; IBM/ Hitachi their disc drive businesses, 2002; Seagate/ Maxtor, 2006; TDK/ Alps, 2007; Western Digital/ Komag, 2007.

•

Guiding for revenue decline of 11-17% and nonGAAP EPS decline of 70-75% in Q4 CY08, due to “challenging macro-economic environment.” Unit prices fell 9% and 4% in FY07 and FY08 (price per unit of storage capacity fell even more); manufacturers routinely discount to gain share. Inventory obsolescence is also a major risk. Derives two-thirds of revenue from OEMs, including HP, Dell, Sony, EMC, and IBM. Deals typically have 12-36 month terms and do not have minimum purchase requirements. Competition from disc drive makers Western Digital and GS Magicstor, and captive producers such as Fujitsu, Samsung, Hitachi, and Toshiba. Flash memory products also compete with Seagate. Raw materials price inflation. Seagate’s new perpendicular recording technology utilizes ruthenium, a precious metal the price of which has increased significantly in the past couple of years.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) EMC QTM TDK WDC STX

MV 20,367 36 4,304 2,980

EV 17,950 413 3,727 2,272

EV/Rev 1.2x .4x .4x .3x

P/TB 3.9x n/m 0.7x 1.1x

08 P/E 13x 2x 17x 4x

09 P/E 12x 1x 13x 4x

2,378

3,255

.3x

1.1x

MAJOR HOLDERS CEO Watkins 1% │ Other insiders 3% │ Franklin 12% │ Capital International 7%

THE BOTTOM LINE Seagate is the market share and technology leader and arguably the best-managed company in the disc drive industry. The shares are highly attractive at 3x FY09E earnings. While Seagate operates in a fairly capital-intensive business that has seen irrational price competition, the company is far from a commodity manufacturer and should not trade at 1.1x tangible book. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Sierra Wireless, Inc. (Nasdaq: SWIR)

Richmond, BC, Canada, 604-231-1100 http://www.sierrawireless.com

Technology: Communications Equipment Trading Data

Consensus EPS Estimates

Price: $7.88 (as of 11/14/08) 52-week range: $7.00 - $21.18 Market value: $244 million Enterprise value: $42 million Shares out: 30.9 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 12/31/07 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

6.8x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

0.1x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

0.8x 0.9x

n/a

P / tangible book 0.9x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 76% # of institutional owners: 139

Date

Actual

Estimate

n/a

LTM EBIT yield

117%

LTM pre-tax ROC

>100%

12/31/01 62 15 (27) (24) (1.50) (21) 14 (35) 44 82 10 111 1 19 1 21 0 90

12/31/02 77 8 (38) (42) (2.56) (5) 4 (8) 35 56 7 71 4 19 0 22 0 49

-79%

-163%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 102 211 107 41 84 38 2 28 (40) 2 25 (37) 0.12 0.96 (1.44) 14 28 (17) 6 9 10 8 18 (28) 85 132 90 110 171 117 34 33 30 176 216 174 2 1 1 30 40 34 0 0 0 32 42 36 0 0 0 144 174 138 19%

>100%

12/31/06 221 69 6 10 0.38 (8) 11 (19) 87 170 28 212 1 58 1 59 0 153

12/31/07 440 123 39 33 1.16 49 12 37 177 297 50 385 0 86 1 90 0 295

LTME 9/30/08 570 158 49 40 1.25 72 22 50 202 332 49 429 0 104 0 107 0 322

FQE 9/30/07 112 33 12 9 0.33 14 3 12 98 200 52 273 1 68 0 74 0 200

FQE 9/30/08 137 38 10 7 0.23 23 7 16 202 332 49 429 0 104 0 107 0 322

25%

86%

>100%

n/m

-484%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Oct 00

Oct 01

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BUSINESS OVERVIEW

•

Sierra Wireless provides modems and software to connect to mobile broadband networks. The company targets enterprise, consumer, OEM, vertical industry, and machine-to-machine (M2M) markets. It provides professional services in wireless design, integration and carrier certification. Revenue breaks down into PC adapter products (AirCard and USB solutions), embedded module solutions, and mobile and M2M. The margin profile reflects gross margin of ~28% and EBIT margin of ~9%. Sierra is dual-listed on Nasdaq and the TSE.

• •

•

2007

YTD 9/30/08

71% 21% 6% 2%

71% 23% 5% 1%

•

99% 74% 298% 99%

41% 56% 43% 43%

•

69% 12% 19%

69% 9% 22%

60% 12% 8% 20%

60% 14% 8% 18%

• •

•

“Short term view is cautious.” Management has pointed to erosion in sales of embedded modules to PC OEMs, and economic uncertainty as factors impacting the business. Q3 results fell short of expectations due to a missed product launch with a large wireless operator. Concentration of distribution channels. AT&T and Sprint accounted for a combined 44% of revenue in 2007. Other wireless carriers represented 16% of revenue, and OEMs comprised 20%. Acquisitive. Sierra bought AirLink for $12 million and 1.3 million shares in 2007, and announced but terminated a purchase of CradlePoint in April 2008 (consideration would have been $22 million and 463K shares). Sierra sold 3.8 million shares for $22 per share in October 2007, generating $80+ million for “future acquisitions” and other uses.

COMPARABLE PUBLIC COMPANY ANALYSIS

INVESTMENT HIGHLIGHTS •

Growing across geographies. YTD revenue is up 39% in the Americas, 7% in Europe, 85% in Asia. Authorized plan to repurchase 5% of stock. The company may purchase 1.6 million shares over the next year in accordance with Canadian laws. Stock price implies 21% trailing FCF yield and 6x trailing P/E (no EPS estimates available).

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE December 31 2005 2006 % of revenue by product: AirCards 70% 71% Embedded modules 13% 24% Mobile and M2M 13% 3% Other 4% 2% Revenue growth by product: AirCards -40% 109% Embedded modules -80% 281% Mobile and M2M 32% -52% Total revenue growth -49% 107% % of revenue by geography: Americas 69% 64% EMEA 12% 17% Asia Pacific 19% 19% % of revenue by distribution channel: Wireless carriers 47% 49% PC OEM 6% 13% Other OEM 8% 12% Resellers 38% 25%

Thanksgiving 2008

Positive operating trend. Revenue and EBIT are up 43% and 41%, respectively, YTD. The AirLink acquisition (closed in May 2007) and an expansion of distribution and OEM channels have driven growth in PC cards and embedded modules. Leader in wireless for mobile and M2M. The company’s core competencies are in airlink innovation, software, integration and certification. Focused on fast-growing market segments. Sierra’s target markets—PC adapters and embedded solutions for mobile computing, and machine-tomachine communications—are projected to grow at a CAGR of more than 30% over the next several years to more than $20 billion.1 New products and upgrades. PC adapters: AirCard (2H08), Compass USB modems (3Q08); embedded modules: new modules slated for 2H08.

($mn) ADCT ADTN NVTL PWAV

MV 708 837 138 79

EV 705 739 12 371

EV/Rev .5x 1.5x .0x .4x

P/TB 1.4x 2.3x 0.7x n/m

08 P/E 6x 11x 24x 6x

09 P/E 8x 11x 12x 15x

SWIR

244

.1x

0.9x

n/a

MAJOR HOLDERS CEO Cohenour <1% │ Other insiders <1% │ Acuity Investment 13% │ Philippe Laffont 10% │ Manulife 6%

Source: Sierra Wireless, ABI Research.

THE BOTTOM LINE Sierra Wireless deserves a closer look despite questions regarding the long-term sustainability of its wireless technology advantage and some concern regarding high-ROIC reinvestment opportunities. On the positive side, the company operates in high-growth market segments that can support revenue increases for many years to come. The company has so far successfully translated revenue growth into FCF growth, and we are cautiously optimistic it can do so in coming years. At a trailing FCF yield of 21% and a large net cash position, the shares strike us as too cheap to ignore.

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Page 214 of 401

Thanksgiving 2008

Sigma Designs (Nasdaq: SIGM)

Milpitas, CA, 408-262-9003 http://www.sigmadesigns.com

Technology: Computer Peripherals Trading Data

Consensus EPS Estimates

Price: $8.79 (as of 11/14/08) 52-week range: $7.87 - $73.00 Market value: $232 million Enterprise value: $111 million Shares out: 26.3 million Ownership Data Insider ownership: 4% Insider buys (last six months): 2

Valuation

This quarter Next quarter

Latest $0.43 0.44

Month Ago $0.43 0.45

# of Ests 9 9

FYE 1/31/09

1.79

1.80

EV / LTM revenue

0.4x

FYE 1/31/10 FYE 1/31/11

1.84 n/a

1.93 n/a

8 0

EV / LTM EBITDA EV / LTM EBIT

n/a 1.8x

P / tangible book Greenblatt Criteria

0.9x

LTM EBIT yield

56%

LT EPS growth 17.4% 17.4% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 59% # of institutional owners: 263

Date

Actual

Estimate

8/28/08

$0.47

$0.40

P/E FYE 2/2/08 P/E FYE 1/31/09 P/E FYE 1/31/10 P/E FYE 1/31/11

3.6x 4.9x 4.8x n/a

LTM pre-tax ROC

>100%

1/31/02 13 6 (10) (10) (0.64) (4) 0 (4) 6 25 0 26 12 15 0 15 0 12

1/31/03 18 10 (6) (6) (0.37) (5) 1 (5) 1 20 0 21 12 15 0 16 0 6

-55%

-34%

Fiscal Years Ended 1/31/04 1/31/05 1/28/06 31 31 33 19 22 21 2 (0) (5) 2 (0) (2) 0.07 (0.01) (0.07) 1 2 1 0 1 1 1 1 1 19 19 26 27 30 37 0 0 0 30 35 40 0 0 0 4 6 9 0 0 0 4 6 10 0 0 0 26 29 31 13%

-6%

2/3/07 91 44 6 6 0.24 9 3 6 33 62 11 76 0 23 0 23 0 53

2/2/08 221 113 57 70 2.46 40 8 33 219 296 9 380 0 33 0 34 0 346

LTME 8/2/08 258 130 63 73 2.41 42 14 28 121 217 20 318 0 26 0 28 0 290

FQE 8/4/07 43 22 9 9 0.32 7 0 6 43 82 10 96 0 22 0 22 0 74

FQE 8/2/08 58 30 13 10 0.35 (6) 3 (9) 121 217 20 318 0 26 0 28 0 290

93%

>100%

n/m

-89%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Jan 00

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BUSINESS OVERVIEW Sigma Designs is a fabless provider of highly integrated SoC solutions used to deliver multimedia entertainment in the home. The SoCs are a component of consumer applications such as IPTV and HD-DVD. The SoCs are used in leading IPTV set-top box makers, including Cisco/SFA, Motorola, Netgem, and UTStarcom. Set-top boxes utilizing the company’s SoCs are deployed by AT&T, BT, Deutsche Telekom, Freebox, and other global carriers. The company’s products are also used by consumer electronics providers, such as D-Link, Netgear, Panasonic, Pioneer, Sharp, Sony, and Toshiba in applications such as HD-DVD players.

SELECTED OPERATING DATA FYE January 31 2006 % of revenue by type: SoCs 85% Other 15% % of revenue by target market: IPTV 58% HD-DVD and similar 34% HDTV 2% Other 6% Revenue growth by target market: IPTV 6% HD-DVD and similar 8% HDTV 120% Other -19% Total revenue growth 6% % of revenue by geography: Asia 82% Europe 6% North America, other 12% % of revenue by customer: MTC Singapore <10% Cisco Systems <10% Uniquest 26% Macnica <10% Freebox <10%

2007

2008

1H09

95% 5%

98% 2%

99% 1%

67% 27% 2% 4%

74% 22% 2% 2%

80% 14% 0% 6%

221% 120% 108% 58% 174%

167% 99% 119% 28% 143%

64% -12% -80% 371% 46%

53% 36% 11%

69% 26% 5%

53% 41% 6%

<10% <10% 17% <10% 20%

23% <10% 19% 12% <10%

22% 23% <10% <10% <10%

•

• • •

Founder and CEO Thinh Tran (54) has been with Sigma since 1982. CFO Thomas Gay (59) joined the company in 2007 after spending ten years as CFO of Catalyst Semiconductor. Head of sales Silvio Perich (60) has served in this role since 1985. Liquid balance sheet, with $121 million of cash and short-term securities, $59 million of long-term marketable securities, and no debt as of August 2. Repurchased 4.2 million shares for $86 million ($20.50 per share) under current authorization. Stock price implies 12% trailing FCF yield, 4x trailing P/E and 5x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

FQ3 revenue to fall 20% sequentially, with FQ4 revenue to be flat to down 10% from FQ3. States management: “The slowing of the world-wide economy has significantly impacted our customer’s business strategy, particularly in the IPTV market.” Emerging threats from Broadcom and ST Micro in core IPTV market. While Sigma has a large installed base in IPTV SoCs, Broadcom and ST are now targeting IPTV. They are expected to ship little volume in 2008 but pose a threat for 2009. High customer concentration. MTC Singapore, Uniquest, and Macnica accounted for 23%, 19% and 12%, respectively, of revenue in FY08. Sigma has experienced turnover among top customers.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ADI BRCM IFX STM TXN

INVESTMENT HIGHLIGHTS •

•

Thanksgiving 2008

Leader in digital media processor SoCs for settop boxes in fast-growing IPTV market (Microsoft Mediaroom and Linux platforms), and one of the leaders in SoCs for HD-DVD players. Six-month revenue of $115 million (up 46% y-y), non-GAAP EPS of $0.93 (up 16% y-y), and GAAP EPS of $0.57 (up 9% y-y), driven primarily by strong growth in the IPTV market. The company excludes stock comp, in-process R&D and other items from the calculation of non-GAAP EPS. Growth initiatives: (1) working on Blu-ray designs and “gaining ground” with Asian manufacturers; (2) completing new chipsets; and (3) pursuing revenue streams in HDTV, Ultra-wideband connectivity and cable-based IPTV set-top boxes, and growing the company’s presence in VXP video processors.

SIGM

MV 5,603 7,852 2,077 6,626 20,885

EV 4,321 5,605 2,596 7,582 18,892

232

111

EV/Rev 1.7x 1.2x .4x .7x 1.4x

P/TB 2.7x 3.0x 0.8x 1.0x 2.3x

08 P/E 11x 9x 55x 12x 10x

09 P/E 12x 11x n/m 11x 12x

.4x

0.9x

MAJOR HOLDERS CEO Tran 4% │ Other insiders 2% │ Royce 9% │ Coatue 8% │ Steelhead 6% │ Vanguard 4% │ Barclays 4%

THE BOTTOM LINE Sigma has delivered strong results in the past two years by riding the growth of IPTV and HD-DVD. However, margins have come under pressure, and management has significantly lowered the near-term outlook. Impending IPTV competition from Broadcom and ST Microelectronics is another big unknown. Sigma derives three-quarters of revenue from the IPTV market, making its ability to fend off competitors crucial to any long investment thesis. © 2008 by BeyondProxy LLC. All rights reserved.

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Page 216 of 401

Thanksgiving 2008

Spark Networks (AMEX: LOV)

Beverly Hills, CA, 323-658-3000 http://www.spark.net

Services: Personal Services Trading Data

Consensus EPS Estimates

Price: $3.05 (as of 11/14/08) 52-week range: $2.70 - $6.00 Market value: $65 million Enterprise value: $61 million Shares out: 21.4 million Ownership Data Insider ownership: 0% Insider buys (last six months): 3

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 12/31/07 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

9.8x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

1.0x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

5.8x 6.3x

n/a

P / tangible book Greenblatt Criteria

n/m

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 27% # of institutional owners: 31

Date

Actual

Estimate

n/a

LTM EBIT yield

16%

LTM pre-tax ROC

n/m

12/31/01 10 0 (7) (8) (0.47) (2) 2 (4) 8 9 3 17 0 2 0 2 0 15

12/31/02 16 0 (1) (1) (0.03) 2 2 0 8 9 3 18 0 4 0 4 0 14

-440%

-113%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 37 65 66 0 0 0 (11) (12) (1) (11) (12) (1) (0.57) (0.51) (0.06) 3 (2) 4 3 6 1 (0) (7) 3 6 8 17 8 10 21 3 9 22 17 27 49 0 1 10 12 16 21 0 1 1 12 17 23 0 0 0 5 11 25 n/m

n/m

12/31/06 69 0 7 7 0.21 13 1 13 21 26 24 52 1 12 0 14 0 38

12/31/07 65 0 4 9 0.31 15 1 14 9 16 24 44 0 11 0 13 0 31

LTME 9/30/08 60 0 10 12 0.45 16 1 15 7 10 24 42 3 16 0 18 0 24

FQE 9/30/07 16 0 2 2 0.06 4 0 4 8 13 23 38 0 10 0 12 0 25

FQE 9/30/08 14 0 3 2 0.08 5 1 4 7 10 24 42 3 16 0 18 0 24

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

MARKET SEGMENTATION—PERSONALS WEBSITES1

Spark provides online personals services. The company’s websites, including JDate.com and AmericanSingles.com, enable adults to meet online. Members pay a monthly fee to communicate with each other (company’s primary source of revenue). Subscription programs auto-renew monthly until canceled. More than 90% of revenue comes from the U.S.

SELECTED OPERATING DATA FYE December 31 2005 2006 1 Growth of average paying subscribers: Jewish networks na 11% General market networks na -17% Other affinity networks na 200% Total subscriber growth -5% 10% % of revenue by segment: Jewish networks 45% 47% General market networks 48% 37% Other affinity networks 4% 14% Offline and other businesses 2% 2% Revenue growth by segment: Jewish networks na 9% General market networks na -20% Other affinity networks na 252% Offline and other businesses na -4% Total revenue growth 1% 5% Contribution margin by segment: Jewish networks 87% 86% General market networks 44% 46% Other affinity networks 51% 49% Offline and other businesses 12% 7% Unallocated -64% -55% EBIT margin -1% 10% 1

2007

YTD 9/30/08

0% -39% 26% -9%

-2% -46% 3% -13%

52% 24% 20% 4%

58% 15% 23% 4%

4% -38% 37% 75% -5%

3% -49% 4% -2% -10%

90% 46% 41% 41% -62% 6%

93% 54% 43% 48% -56% 18%

Spark sites Competitors2 Growth rate Operational mode

• • •

•

30 million people visit a personals site per month, out of a target market of 100 million U.S. singles. Spark runs religious sites such as JDate, ethnic sites such as BlackSingles, international sites such as JDate.co.il, and the generic site AmericanSingles. JDate is leading personals site for Jewish singles and most valuable Spark asset. JDate has 400K members out of 1.8 million single Jews in the U.S. Paid subscribers comprise only 4% of the target audience. JDate has strong brand recognition, with 80% of traffic “organic” (direct to site). JDate also has desirable demographics and strong user metrics. Management aims to grow value by growing Other Affinity Networks, maximizing “yield” from Jewish Networks, optimizing marketing spend, adding ad revenue streams, and reducing overhead. Adam Berger (44) has been chairman and CEO since 2007. Previously, he spent seven years as CEO of WeddingChannel.com, growing the site and ultimately selling it to The Knot for ~$80 million.

Growth verticals BlackSingles BlackDatingNetwork High potential

Significant spending to keep subscribers Low

Spending into growth while generating acceptable profit Medium

Dominant vertical JDate eHarmony Slow and steady Dominance = high margins High

40-45%

90-92%

Selected sites only.

Strong FCF, with recurring subscription revenue and negative working capital. An NOL of ~$40 million shields the company from income taxes. Repurchased 10 million shares, i.e., close to onethird of shares outstanding, since July 2007. Stock price implies 23% trailing FCF yield and 7x trailing P/E (no EPS estimates available).

INVESTMENT RISKS & CONCERNS • •

•

INVESTMENT HIGHLIGHTS

U.S. general market AmericanSingles Match, eHarmony Flat

Win back customers Contribution 45-50% margin 1 Source: Company, The Manual of Ideas.

The company has close to 200,000 paying subscribers.

•

Thanksgiving 2008

AmericanSingles.com a lost cause? General Market Networks revenue fell from $32 million in 2005 to $16 million in 2007 and $6 million YTD. Could generic sites such as Match.com threaten JDate over time? While JDate has strong brand recognition among Jewish singles, Match has more tech resources, a larger ad budget, and more users. Similarly, social networking sites such as MySpace and Facebook could become future competitors. Potential threat from free personals sites, such as OkCupid, DateHookup, ChristianDatingForFree.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) IACI YHOO LOV

MV 2,235 14,994

EV 867 11,780

EV/Rev .3x 1.6x

P/TB 1.2x 2.1x

08 P/E 53x 26x

09 P/E 16x 23x

1.0x

n/m

n/a

MAJOR HOLDERS CEO Berger 2% │ Other insiders 2% │ Great Hill 36% │ Cap Re 10% │ Alon Carmel 10% │ Moab 7%

THE BOTTOM LINE Spark’s JDate.com dating site for Jewish singles is a unique and valuable property; however, we are skeptical that the company can find similar success in other religious or ethnic verticals. The online dating market has become very crowded and competitive, with JDate’s success largely due to its first-mover advantage (site dates back to 1997). Unless one believes that the company can successfully grow beyond JDate, the stock remains unexciting even at the current low valuation. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

SPSS (Nasdaq: SPSS)

Chicago, IL, 312-651-3000 http://www.spss.com

Technology: Software & Programming, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $24.30 (as of 11/14/08) 52-week range: $21.98 - $43.36 Market value: $441 million Enterprise value: $284 million Shares out: 18.1 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.45 0.48

Month Ago $0.56 0.50

# of Ests 7 7

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

14.7x 12.8x 12.4x 12.7x

FYE 12/31/08

1.90

1.92

EV / LTM revenue

0.9x

FYE 12/31/09 FYE 12/31/10

1.96 1.92

2.11 2.13

7 2

EV / LTM EBITDA EV / LTM EBIT

n/a 5.4x

P / tangible book 3.4x Greenblatt Criteria

LT EPS growth 11.9% 11.9% Latest Quarterly EPS Surprise

Insider sales (last six months): 7 Institutional ownership: n/a # of institutional owners: n/a

Date

Actual

Estimate

11/4/08

$0.55

$0.44

LTM EBIT yield

18%

LTM pre-tax ROC

n/m

12/31/01 174 153 (34) (26) (1.90) 14 33 (20) 31 119 92 252 1 93 0 119 0 133

12/31/02 209 185 (17) (17) (0.99) (1) 24 (25) 15 89 67 214 3 99 6 112 0 102

-116%

-75%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 208 224 236 192 210 220 0 7 28 9 6 16 0.53 0.31 0.85 22 12 52 12 15 17 10 (2) 35 36 37 84 113 116 144 73 74 73 229 235 272 3 3 3 96 102 106 6 3 1 109 107 108 0 0 0 120 129 164 1%

>100%

12/31/06 262 243 34 15 0.73 48 17 31 140 207 77 333 0 114 0 116 0 217

12/31/07 291 273 50 34 1.65 85 19 66 307 376 80 501 0 139 150 292 0 209

LTME 9/30/08 309 288 52 38 1.97 79 20 58 307 361 83 488 0 122 150 275 0 213

FQE 9/30/07 72 68 13 8 0.41 17 5 12 297 358 80 488 0 119 150 270 0 218

FQE 9/30/08 75 69 13 11 0.55 17 7 10 307 361 83 488 0 122 150 275 0 213

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW SPSS provides analytics software, with “predictive analytics” technology improving processes by providing “forward visibility” for business decisions. SPSS was founded in 1968.

•

SELECTED OPERATING DATA FYE December 31 2005 2006 % of revenue by type: License 46% 48% Maintenance 43% 42% Services 11% 10% Revenue growth by type: License 12% 16% Maintenance 5% 7% Services -14% 4% Total revenue growth 5% 11% Selected items as % of revenue: EBIT 12% 13% D&A 7% 6% Capex -3% -2% Capitalized software -4% -5% % of revenue by geography: U.S. 44% 42% Europe 42% 43% Pacific Rim 15% 15%

2007

YTD 9/30/08

49% 41% 10%

47% 43% 10%

15% 8% 5% 11%

5% 13% 6% 8%

17% 6% -2% -5%

16% 7% -2% -5%

41% 44% 15%

40% 44% 16%

•

• • • •

Investors may under-appreciate underlying growth, as revenue has grown more slowly than license revenue. Consistent double-digit license growth reflects strong adoption of SCSS software. Stock price implies 13% trailing FCF yield, 12x trailing P/E and 12x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

“Very challenging economic times” and dollar appreciation have hurt YTD results. License sales in Europe and Japan have not met expectations. Sales in northern Europe have been affected by a lack of sales capacity, an issue the company is addressing. Primary worldwide competitor in each target market is the well-respected and larger SAS Institute (>$2 billion revenue). SPSS also competes against NCR, Fair Isaac and Oracle. Recently updated poison pill. The company has a shareholder rights plan in place that discourages the acquisition of more than 15% of SPSS shares without the company’s approval.

COMPARABLE PUBLIC COMPANY ANALYSIS

INVESTMENT HIGHLIGHTS •

•

Thanksgiving 2008

$3 billion market growing in low teens. SPSS targets advanced analytics ($1.5 billion, growing at 10%) and CRM analytic applications ($1.5 billion, growing at 13%). SPSS has less than 10% share. Predictive Analytics software improves processes by providing visibility for key decision makers and automating decisions to meet business goals. SCSS claims that Predictive Analytics ads significantly more value than business intelligence software. Customer list includes 95% of Fortune 1000, all major countries, all U.S. State governments, every branch of the U.S. Military, all top U.S. universities and 75% of top European universities. Steady margin improvement from 2004-07. SPSS achieved EBIT margins of 3% in 2004, 12% in 2005, 13% in 2006, and 17% in 2007. Repurchased $28 million of stock YTD and $72 million in 2007. Low-cost $150 million convert due 2012, with a conversion price of $47 per share and a fixed interest rate of 2.5%. Guiding for revenue growth of 4-6% and EPS growth of 15-20% in 2008, with expected revenue of $302-308 million, non-GAAP EPS of $1.90-1.98.

($mn)

FIC MSFT MSTR ORCL SAP

650 178,445 422 87,110 41,890

SPSS

441

n/m 9.2x 3.7x n/m 119.0x

08 P/E 8x 10x 10x 11x 14x

09 P/E 7x 9x 10x 10x 13x

3.4x

13x

12x

EV/Rev

P/TB

1,034 159,698 295 85,326 39,852

1.4x 2.6x .8x 3.7x 2.8x

284

.9x

MAJOR HOLDERS CEO Noonan 3% │ Other insiders 2% │ T Rowe 11% │ Barclays 7% │ AXA 6% │ State Street 6% │ Brown 6% │ Ellington 6% │ Daruma 5%

THE BOTTOM LINE SPSS is a compelling magic formula selection. The impressive client roster, including 95% of the Fortune 1000, highlights SPSS’s advantage in predictive analytics software. This niche market appears to have better long-term characteristics than most other software segments, which tend to undergo rapid change and attract vicious competition. SPSS’s primary competitor, the SAS Institute, has been a solid performer for many years, and we believe SPSS could achieve similar success.

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Thanksgiving 2008

Syneron Medical (Nasdaq: ELOS)

Yokneam Illit, Israel, 972-4-909-6200 http://www.syneron.com

Health Care: Medical Equipment & Supplies Trading Data

Consensus EPS Estimates

Price: $7.74 (as of 11/14/08) 52-week range: $7.71 - $18.04 Market value: $215 million Enterprise value: $95 million Shares out: 27.7 million Ownership Data Insider ownership: 10% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.14 0.11

Month Ago $0.37 0.26

# of Ests 5 3

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.9x 8.7x 10.8x 6.1x

FYE 12/31/08

0.89

1.35

EV / LTM revenue

0.7x

FYE 12/31/09 FYE 12/31/10

0.72 1.27

1.37 1.36

5 1

EV / LTM EBITDA EV / LTM EBIT

n/a 3.9x

P / tangible book 0.9x Greenblatt Criteria

LT EPS growth 14.0% 14.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 65% # of institutional owners: 126

Date

Actual

Estimate

11/11/08

$0.08

$0.13

LTM EBIT yield

26%

LTM pre-tax ROC

70%

12/31/01 1 0 (1) (1) (0.24) (1) 0 (1) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

12/31/02 12 10 2 2 0.10 2 0 2 4 8 0 9 0 3 0 4 0 5

n/a

>100%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 35 58 87 31 51 76 8 26 39 9 27 41 0.42 1.14 1.48 14 23 31 0 1 1 14 22 30 18 94 133 25 107 166 0 0 0 27 110 170 0 0 0 10 12 21 0 0 0 14 15 25 0 0 0 13 94 145 n/m

n/m

>100%

12/31/06 117 99 35 40 1.44 37 1 36 103 153 1 225 0 26 0 31 0 194

12/31/07 141 114 25 31 1.12 48 2 46 168 222 5 269 0 33 0 39 0 231

LTME 9/30/08 139 108 24 26 0.94 43 2 41 120 179 5 290 0 30 0 36 0 254

FQE 9/30/07 33 26 6 8 0.28 7 1 7 135 196 0 266 0 27 0 33 0 233

FQE 9/30/08 29 22 2 2 0.08 0 0 (0) 120 179 5 290 0 30 0 36 0 254

>100%

98%

70%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW Syneron provides aesthetic medical products based on proprietary Electro-Optical Synergy (Elos) technology, which uses electrical and optical energy. The products are sold to physicians and target non-invasive procedures, including hair removal, wrinkle reduction, treatment of superficial vascular and pigmented lesions, and treatment of leg veins. Syneron has an installed base of 10,000 products.

•

• •

SELECTED OPERATING DATA FYE December 31 2 % of revenue by geography: North America Other Revenue growth by geography: North America Europe Total revenue growth % of revenue by type: Product 1 Service

2005

2006

2007

YTD 9/30/08

62% 38%

57% 43%

52% 48%

67% 30% 51%

22% 53% 34%

21% 20% 21%

-7% 4% -2%

93% 7%

94% 6%

91% 9%

n/a n/a

Service revenue should increase over time as the installed base grows. In 2007, 57% of revenue came from North America, 23% from Europe, 16% from Asia Pacific, and 4% from Israel and other countries.

• •

•

INVESTMENT HIGHLIGHTS •

•

20% global share in aesthetic medical products, a market with favorable long-term trends. Syneron focuses on the growth segments of aesthetic medicine of body shaping and skin rejuvenation. Innovative Elos technology. Approaches that rely solely on optical energy limit the safety and efficacy of many procedures due to limited skin penetration and unwanted epidermal absorption. Elos makes it easier to target the tissue to be treated, and boosts safety through tracking of skin temperature. Positive acceptance of minimally invasive LipoLite laser-assisted lipolysis product, which was launched in February. Syneron delivered the first units in Q2, with volume shipments in Q3. Adding recurring revenue stream to equipment sales business model. The LipoLite Energy Access Program (LEAP) charges physicians a subscription fee for laser-assisted lipolysis treatment, foregoing up-front revenue for a more attractive stream over time. The company has also introduced a disposable element to Matrix RF (FDA approval pending). Doron Gerstel (48) and Fabian Tenenbaum (34) became CEO and CFO, respectively, in 2007. Gerstel was previously president of Syneron N.A. and Operations VP at Lumenis (formerly ESC Medical, founded by Syneron chairman Eckhouse). $219 million of net cash and liquid investments.

Signed development and supply deal with P&G in early 2007, with goal of commercializing homeuse devices and topical compositions for better skin appearance. P&G will buy the devices exclusively from Syneron and sell them on a co-branded basis. Repurchased 590,000 shares for $9.1 million under $50 program authorized in November 2007. Stock price implies 19% trailing FCF yield, 8x trailing P/E and 11x forward P/E.

INVESTMENT RISKS & CONCERNS

1 2

Thanksgiving 2008

•

Slowdown: “Doctors are postponing decisions to make new capital equipment purchases and credit terms have tightened significantly.” Gross margin in high 70s, roughly 20 points above industry average, may not be sustained. Competitors include public companies Candela, Cutera, Cynosure, Thermage, and Palomar Medical, and private companies Lumenis Sciton, Reliant Technologies, UltraShape, and Alma Lasers. Subject to FDA regulation. Before a new Syneron device can be marketed in the U.S., it generally must receive 510(k) clearance, which usually lasts 3-12 months. Syneron must also comply with the FDA’s Quality System Regulation, which covers various aspects of bringing products to market. CEO Gerstel, CFO Tenenbaum own <1% of Syneron, while chairman Eckhouse owns 9%.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) CLZR CUTR CYNO PMTI THRM

MV 9 111 107 186 50

EV -18 13 35 58 4

EV/Rev n/m .1x .2x .6x .1x

P/TB 0.1x 1.0x 0.8x 1.3x 0.9x

08 P/E n/m n/m 5x 102x n/m

09 P/E n/m 44x 5x 28x 14x

ELOS

215

-4

n/m

0.9x

11x

MAJOR HOLDERS Chairman Eckhouse 9% │ CEO, CFO and other insiders <1% │ Baupost 11% │ Brandywine 6% │ RenTech 5%

THE BOTTOM LINE Syneron offers innovative products in the growing global market for aesthetic medical procedures. Investors appear to be ignoring the company’s earning power and emerging growth prospects, including new recurring revenue opportunities related to the LipoLite Energy Access Program and a potentially meaningful partnership with P&G. We value Syneron at $14-18 per share, based on a sum-of-the-parts analysis that considers the company’s $219 million in net cash and investments and values the aesthetic products business based on a range of 8x trailing EBIT to 8x estimated normalized EBIT. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

…additional insight into ELOS:

REVENUE AND MARGIN ANALYSIS

WHAT ARE THE SHARES WORTH?

ELOS – Revenue, Gross Profit and EBIT, 2001-07

• •

•

We value Syneron at $14-18 per share, based on the sum-of-the-parts analysis presented below. Upside may come from share repurchases and higher earning power than estimated. Earnings upside could come from the LipoLite Energy Access Program and the partnership with P&G. Downside appears protected due to $8 per share in net cash and liquid investments. While markets can be irrational, a profitable, high-ROIC business should not trade at a negative enterprise value.

Low Value

High Value

$21 99 98 $219 (20) $199

$21 99 98 $219 (10) $209

$150mn $100mn $50mn $0mn

Syneron — Sum-of-the-Parts Valuation Overview ($ in millions, except per share data)

Syneron posted explosive growth until recently, with revenue increasing from virtually zero in 2001 to more than $140 million in 2007, driven by rapid adoption of proprietary Elos aesthetic medical products. The company showed strong operating leverage in the first half of the decade, but EBIT has eroded since 2006.

Value of excess liquid assets: Cash and equivalents Short-term marketable securities Long-term marketable securities Net cash and investments 2 Cash needed to run business Total

Value of aesthetic products business: LTM EBIT Fair value multiple of LTM pre-tax income Estimate of normalized EBIT Fair value multiple of normalized EBIT Total

$194

35 8x $280

Estimated fair value of ELOS per share

$393 $14

$489 $18

Revenue

Gross Profit

07 EBIT

Source: Company, The Manual of Ideas.

ELOS – Y-Y Revenue Growth, 2002-YTD’08 The company grew revenue more than twenty-fold in 2002 and doubled it again in 2003. While growth has steadiy decelerated over the past six years, it remained quite strong until recently. YTD revenue has declined 2%, with Q3 revenue down 14% due to doctors increasingly postponing capital equipment purchases.

24 8x

90% 70% 50% 30%

Based on balance sheet values as of September 30, 2008. Represents MOI estimate. Source: Company filings, The Manual of Ideas estimates and analysis. 2

10%

YTD

ELOS – Gross and EBIT Margin, 2001-YTD’08 The value of Syneron’s proprietary technology is evident in the high gross margins the company has posted since ramping up sales in 2001. While gross margin declined to 77% YTD and 75% in Q3, it remains at a level that allows the company to maintain bottom-line profitability despite a sharp slowdown in sales.

100% 80% 60% 40% 20%

EBIT Margin

YTD

0% 03

•

Source: Company, The Manual of Ideas.

•

Near-term business momentum has been negative, giving investors little to get excited about. While most investors may agree that Syneron is undervalued at a market value roughly equal to net cash and investments, few investors consider a strong balance sheet sufficient reason to invest. Syneron shares may remain undervalued until the company gives investors reason to like the business again. Catalyst could include adoption of the LipoLite Energy Access Program or positive news related to the partnership with P&G. Low-conviction selling? Some value funds may have followed highly respected Baupost Group into Syneron without developing a level of conviction that would help them stick with the company through a period of weak fundamentals. Adopted “poison pill” on November 11, a move that both signals the Board’s concern about a potential hostile takeover bid and antagonizes shareholders who may want the company to operate under threat of a takeover, thereby putting more pressure on the incumbent Board to perform.

•

-10%

WHY THE SHARES MAY BE MISPRICED

Gross Margin

Source: Company, The Manual of Ideas.

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Page 223 of 401

MANAGEMENT’S VIEW OF BUSINESS Notes from Q3 earnings call dated November 11: • Operating environment: “facing major macroeconomic and industry challenges;” lower consumer confidence has negatively affected doctors’ decisions to purchase capital equipment; credit tightening has made financing for equipment “more difficult;” industry consolidation is “more relevant” than in the past (will “definitely” happen in 2009) – some competitors have “real challenges, and it has to do with the amount of cash they have;” most weakness in U.S. and Western Europe • Q3 review: revenue down 14%; diversified globally, with 53% of revenue from North America and 47% from various international markets; 75% gross margin; “overall stable ASP;” 7% GAAP and 10% non-GAAP EBIT margin, respectively • Outlook: “cautious… until we see a clear sign of recovery;” sees “slight decrease in ASP;” expects Western European weakness to be partially offset by other international markets • Cost reduction: taking steps to reduce cost structure, “recognizing potentially protracted nature of slowdown”: downsizing office in Canada (to result in 11% reduction in North American headcount, mostly in back office and support functions); “rationalizing” overhead in Europe – expects $5 million of savings in 2009; will evaluate additional cost reduction opportunities • Business model-related comments: cost side: utilizes flexible OEM production model that reduces capital outlay and overhead; sales side: “exploring ways to introduce a new business model” to enable doctors to access Syneron devices at “relatively low initial cost while still generating good levels of profitability for Syneron” • LEAP: Syneron had previously introduced LipoLite Energy Access Program (LEAP) subscription program; doctors obtain LipoLite for $30K instead of >$100K – when initial energy allocation is depleted, doctors buy additional energy packets from Syneron; other new products also have recurring revenue components; “overall feedback we’re getting, mainly from existing customers… [has been] very positive;” “very pleased” with effort • R&D: plans to use financial resources to continue investing in R&D (“essential for bringing products to market more quickly”); goal is to advance product pipeline in body shaping and facial applications

•

• •

Thanksgiving 2008

Inlight acquisition (announced November 4): small U.S.-based laser technology company; innovative design will provide “cutting-edge clinical results at significantly lower cost than existing fractional laser technology;” Syneron made “relatively small [undisclosed] investment” – provides Syneron complementary technology that will allow company to launch new product platform with “minimal” lead time, i.e., in 1Q09, and generate incremental source of revenue Procter & Gamble partnership: “going accotrding to plan;” “feel very strongly about the relationship and how it is moving forward” Other activities: pursuing joint ventures, including in China and South America

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Thanksgiving 2008

Take-Two Interactive Software (Nasdaq: TTWO)

New York, NY, 646-536-2842 http://www.take2games.com

Technology: Software & Programming, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $10.76 (as of 11/14/08) 52-week range: $10.03 - $27.95 Market value: $835 million Enterprise value: $496 million Shares out: 77.6 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.06 0.25

Month Ago $0.06 0.26

# of Ests 13 6

P/E FYE 10/31/07 P/E FYE 10/31/08 P/E FYE 10/31/09 P/E FYE 10/31/10

n/m 5.1x 7.9x 5.9x

FYE 10/31/08

2.12

EV / LTM revenue

0.3x

FYE 10/31/09 FYE 10/31/10

1.37 1.83

1.40 1.83

13 7

EV / LTM EBITDA EV / LTM EBIT

3.1x 3.8x

P / tangible book 2.5x Greenblatt Criteria

LT EPS growth 12.7% 13.2% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 406

Date

Actual

Estimate

9/4/08

$0.93

$0.54

LTM EBIT yield

27%

LTM pre-tax ROC

>100%

10/31/01 451 145 25 (7) (0.03) 27 13 14 12 227 100 360 54 135 0 139 0 220

10/31/02 795 295 123 72 1.21 145 24 121 108 328 127 491 0 132 0 136 0 356

17%

98%

EBIT/capital employed

Fiscal Years Ended 10/31/03 10/31/04 10/31/05 1,034 1,128 1,201 396 378 415 163 97 38 98 62 35 1.51 0.91 0.50 81 21 40 46 64 91 35 (44) (51) 184 155 107 513 715 613 163 187 261 707 945 935 0 0 0 165 307 247 0 0 0 174 310 249 0 0 0 534 636 686 >100%

41%

10/31/06 1,038 212 (187) (185) (2.60) 43 25 18 133 545 262 869 0 264 0 318 0 550

10/31/07 982 247 (126) (138) (1.93) (64) 27 (91) 78 499 271 831 0 312 18 360 0 471

LTME 7/31/08 1,507 540 132 105 1.35 277 14 263 339 715 326 1,093 0 392 0 427 0 666

FQE 7/31/07 206 38 (57) (59) (0.81) (59) 4 (62) 62 436 260 758 0 241 11 306 0 453

FQE 7/31/08 434 174 59 52 0.67 282 4 278 339 715 326 1,093 0 392 0 427 0 666

-74%

-72%

>100%

n/m

13%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$35 $30 $25 $20 $15 $10 $5 $0 Oct 99

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BUSINESS OVERVIEW

•

Take-Two provides interactive gaming software. The company develops software for leading consoles, including Sony’s PlayStation, Microsoft’s Xbox, Nintendo’s Wii, and for the PC. Flagship titles include Grand Theft Auto and Sid Meier’s Civilization. The company distributes proprietary and third-party products to retailers in North America. WalMart, GameStop and Best Buy accounted for 15%, 13% and 12% of revenue, respectively, in FY07 (top five were 51%).

•

Turnover, restructurings. The incumbent Board was defeated in March 2007, resulting in removal of the CEO and subsequent resignation of the CFO. In 2Q07, Take-Two hired ZelnickMedia to provide management services. The company has incurred various charges, with more expected in FQ4. Electronic Arts (ERTS) dropped hostile tender in September, with TTWO shares falling 24% to $17. The companies had signed a confidentiality deal, but Take-Two had called EA’s $26 per share offer inadequate. Take-Two remains “actively engaged in discussions with other parties in the context of our formal process to consider strategic alternatives.” Cyclical, hit-driven business. The video game software industry, while growing in the long term, has exhibited strong cyclicality due to major hardware transitions. Demand for prior-generation software declined in 2007 due to the adoption of next-generation platforms such as Xbox 360. In addition, Take-Two is highly dependent on “hit” titles, such as Grand Theft Auto IV or Civilization. Litigation. The Grand Theft Auto franchise has come under fire from consumer groups and government officials as too violent. At this time, litigation does not appear to pose a material threat.

COMPARABLE PUBLIC COMPANY ANALYSIS

INVESTMENT HIGHLIGHTS •

Strong balance sheet, with $339 million cash and no debt as of July 31. Stock price implies 31% trailing FCF yield, 8x trailing P/E and 8x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA YTD FYE October 31 2005 2006 2007 7/31/08 % of revenue by segment: Publishing 71% 73% 71% 81% Distribution 29% 27% 29% 19% Gross margin by segment: Publishing 45% 25% 32% 44% Distribution 9% 9% 9% 9% Total GM 35% 20% 25% 37% Revenue growth by segment: Publishing 11% -12% -8% 109% Distribution -3% -19% 2% 5% Revenue growth 7% -14% -5% 76% % of publishing segment revenue by product platform: Xbox 360 0% 23% 30% 42% PlayStation 3 0% 0% 10% 33% Wii 0% 0% 5% 8% PlayStation / PS 2 59% 30% 26% 8% PSP 6% 18% 10% 4% PC 11% 17% 14% 3% Xbox and other 23% 12% 6% 2% % of distribution segment revenue by type: Hardware 25% 40% 43% 42% Software 75% 60% 57% 58% % of revenue by geography: North America 68% 69% 75% 59% International 32% 31% 25% 41%

Thanksgiving 2008

$9 billion video game software market growing at 10-15%, with significant volatility in the annual growth rate caused by new console introductions. For example, the company Xbox-related revenue declined from $163 million in FY05 to $13 million in FY07, while Xbox 360-related revenue grew from zero in FY05 to $206 million in FY07. More than half of all Americans claim to play games. FY08 revenue growth driven by Grand Theft Auto IV. The game, released in April, set an industry sales record, with six million units sold through in the first week at a retail value of $500+ million (>10 million units have sold through YTD). Raised FY08 guidance, lowered FQ4 guidance, after strong FQ3. Management expects FQ4 revenue of $285-335 million and non-GAAP EPS of $0.01-$0.05, implying FY08 revenue of $1.50-$1.55 billion and non-GAAP EPS of $2.08-2.12.

($mn)

ATVI ERTS KNM SNE

13,989 6,559 2,942 21,193

TTWO

835

5.4x 2.5x 2.2x 0.7x

08 P/E 18x 17x 10x 12x

09 P/E 15x 11x 11x 9x

2.5x

EV/Rev

P/TB

11,053 4,094 2,759 20,396

6.9x .9x .9x .2x

496

.3x

MAJOR HOLDERS CEO Feder <1% │ Other insiders 1% │ Oppenheimer 23% │ Fidelity 14% │ UniCredito 11% │ Legg Mason 10%

THE BOTTOM LINE Take-Two owns several video game franchises, most notably Grand Theft Auto. While the business is hit-driven and depends on new hardware launches by Microsoft, Sony and Nintendo, Take-Two’s core franchises are strong enough to achieve repeat blockbuster sales. The shares sold off precipitously following EA’s tender withdrawal and are now cheap at 8x FY09E EPS. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Tempur-Pedic International (NYSE: TPX)

Lexington, KY, 800-878-8889 http://www.tempurpedic.com

Consumer Cyclical: Furniture & Fixtures Trading Data

Consensus EPS Estimates

Price: $6.72 (as of 11/14/08) 52-week range: $6.04 - $33.08 Market value: $503 million Enterprise value: $934 million Shares out: 74.8 million Ownership Data Insider ownership: 9% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.16 0.17

Month Ago $0.32 0.25

# of Ests 12 6

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

3.9x 7.2x 7.6x 6.5x

FYE 12/31/08

0.93

1.10

EV / LTM revenue

0.9x

FYE 12/31/09 FYE 12/31/10

0.89 1.03

1.19 1.48

12 5

EV / LTM EBITDA EV / LTM EBIT

n/a 5.3x

P / tangible book Greenblatt Criteria

n/m

LT EPS growth 12.6% 10.5% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: n/a # of institutional owners: n/a

Date

Actual

Estimate

10/16/08

$0.32

LTM EBIT yield

19%

LTM pre-tax ROC

59%

12/31/01 222 114 30 12 1.52 20 35 (16) 8 73 19 177 11 51 95 148 12 17

12/31/02 298 150 40 17 2.14 35 11 24 13 101 250 449 14 70 182 297 148 3

29%

35%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 479 685 837 255 361 424 83 146 186 38 75 99 0.39 0.73 0.97 47 77 102 33 39 87 14 38 15 14 28 18 145 214 228 289 277 274 620 640 702 11 9 31 91 99 121 366 281 314 498 426 476 0 0 0 123 214 226 58%

73%

12/31/06 945 461 199 112 1.28 166 38 128 16 238 269 726 20 132 342 512 0 213

12/31/07 1,107 535 244 142 1.74 126 17 109 33 327 267 806 0 127 602 758 0 48

LTME 9/30/08 1,028 461 176 98 1.29 165 17 149 88 320 267 782 0 146 519 698 0 84

FQE 9/30/07 294 142 68 39 0.49 56 4 52 24 294 268 774 0 155 556 746 0 28

FQE 9/30/08 253 106 43 24 0.32 73 2 71 88 320 267 782 0 146 519 698 0 84

62%

70%

59%

n/m

68%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$40 $35 $30 $25 $20 $15 $10 $5 $0 Jan 00

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BUSINESS OVERVIEW

•

Tempur-Pedic provides premium branded mattresses and pillows in two segments: Domestic consists of two U.S. factories and a distribution subsidiary. International consists of a factory in Denmark and distribution subs.

•

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by geography: Domestic 64% International 36% Revenue growth by geography: Domestic 25% International 18% Total revenue growth 22% EBIT margin by geography: Domestic 18% International 32% Total EBIT margin 23% 1,2 Revenue growth by channel: Retail 31% Direct 4% Healthcare -2% Third party -1% 3 Revenue growth by product: Mattresses 31% Pillows -9% Other 27% 4 n/a U.S. door count 5 International door count n/a

2006

2007

YTD 9/30/08

66% 34%

63% 37%

16% 8% 13%

17% 18% 17%

-15% 2% -10%

19% 29% 22%

9% 23% 15%

19% -17% -2% 12%

21% -7% 12% 3%

-8% -38% 3% 2%

•

15% 0% 16% 6,050 4,450

18% 12% 18% 6,350 4,990

-11% -9% -3% 6,800 5,100

•

INVESTMENT HIGHLIGHTS •

• •

$13 billion global mattress market, with 22 million mattress unit sold in the U.S., and a similar number of mattresses sold outside the U.S., in 2007.1 In addition, domestic pillow sales were $1.1 billion, with roughly equivalent international sales. Leader in growing specialty mattress category, which comprises non-innerspring mattresses, including foam mattresses, airbeds, and waterbeds. Comfort and health advantages over standard bedding products. The company uses temperaturesensitive material that has a high density and conforms to the body to reduce neck and back pain. The company holds 70 U.S. and foreign patents.

Thomas Bryant (60) became CEO in 2006 after five years with Tempur-Pedic. He was previously CEO of Stairmaster. Other senior executives joined the company in the past two to five years. Commencing “most extensive new product launch” in company history, with new and upgraded products slated for launch globally. Stock price implies 30% trailing FCF yield, 5x trailing P/E and 8x forward P/E.

INVESTMENT RISKS & CONCERNS •

Products are sold through four distribution channels in each geographic segment: retail (furniture, specialty, and department stores), direct (direct response and Internet), healthcare (chiropractors, medical retailers, hospitals), and third-party distributors in countries with no owned subsidiaries. 2 In 2007, the company derived 83% of revenue from the retail channel, 7% from direct, 5% from healthcare, and 5% from third-party distribution. 3 In 2007, the company derived 69% of revenue from mattresses, 13% from pillows, and 18% from other products (foundations, adjustable beds, etc.). 4 The company plans to increase door count to 7,000-8,000 "over time"; the total available market is estimated at 10,000 stores. 5 The company has identified 7,000 international stores as appropriate targets.

Thanksgiving 2008

Guiding for revenue and EPS decline of 14-16% and 43-48%, respectively, in 2008, with estimated revenue of $930-950 million and EPS of $0.90-1.00, reflecting “the most challenging… environment in memory.” Management reduced guidance when it reported Q3 results in October. Retail partners have reported store traffic “down sharply” in 2008, average selling prices have trended lower, and trends have weakened in several European markets. Net debt of $431 million at Q3-end. The company has eliminated dividends and is reducing expenses and working capital. The goal is to “operate without risk of breaching our credit facility covenants even if the market continues to deteriorate.” Inflationary cost environment. The company has experienced margin compression due in part to the rising cost of chemicals and proprietary additives.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ETH ZZ SCSS

MV 438 212 23

EV 561 961 77

EV/Rev .6x .6x .1x

P/TB 1.6x n/m 1.5x

08 P/E 12x 5x n/m

09 P/E 9x 5x n/m

TPX

503

934

.9x

n/m

MAJOR HOLDERS CEO Bryant 1% │ Other insiders 2% │ Invesco 25% │ Amvescap 15% │ TA Associates 7% │ State Street 6% │ Friedman Fleischer 6% │ Munder 5%

Source: Tempur-Pedic, International Sleep Products Association (ISPA).

THE BOTTOM LINE Tempur-Pedic is a wide-moat business with strong brand equity, pricing power, industry-leading cost structure, high returns on capital, and favorable long-term growth prospects. We believe investors underestimate the variability of the company’s cost structure and the company’s ability to service its debt in a difficult market environment. The discretionary nature of Tempur-Pedic’s high-ticket products makes the stock an easily conceptualized short. The high short interest could, however, result in explosive stock price upside once the market refocuses on the company’s significant normalized earnings power. We value Tempur-Pedic at $11-18 per share, based on 7x trailing EBIT and 12x estimated normalized EPS. © 2008 by BeyondProxy LLC. All rights reserved.

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…additional insight into TPX:

Thanksgiving 2008

•

WHAT ARE THE SHARES WORTH? • •

We value Tempur-Pedic at $11-18 per share, based on the valuation analysis summarized below. Our estimate is supported by an analysis of free cash flow. FCF per share should exceed EPS by up to $0.25 due to D&A significantly exceeding capex. FCF may be ~$1.15 per share in 2009, implying an FCF yield of 6-11% based on our valuation range.

Tempur-Pedic — Valuation Summary ($ in millions, except per share data)

Low Value

High Value

$88 (519) ($431)

Debt covenant worries. Investors may be overly concerned about the potential for Tempur-Pedic to bust debt-related covenants. The company took on debt to recapitalize the balance sheet, spending more than $500 million on share repurchases from 2005-07. Tempur-Pedic reduced debt by $38 million in Q3 and is repatriating cash from overseas. The company must maintain a ratio of funded debt to trailing EBITDA of not more than 3x. The ratio stood at 2.45x at the end of Q3. Trailing EBITDA and funded debt are likely to decline going forward. With debt expected to be cut materially in the near term, the company appears highly likely to stay within the boundary of 3x debt to EBITDA.

Negative value of net debt: Cash and equivalents Long-term debt Total

Value of core business: LTM EBIT Fair value multiple of LTM EBIT Estimated normalized EPS power Fair value multiple of EPS power Total Estimated fair value of TPX per share

REVENUE AND MARGIN ANALYSIS TPX – Revenue, Gross Profit and EBIT, 2000-07 Tempur-Pedic posted strong growth through 2007, benefiting from a virtuous cycle of a differentiated product, high-return marketing expenditures, increasing brand recognition, market share gains, highmargin revenue, low working capital and capex requirements, and increasing cash flow available for sales and marketing.

$176 7x $1,234

$2.00 12x $1,800

$802 $11

$1,369 $18

$1,200mn $1,000mn $800mn

Based on balance sheet values as of September 27, 2008. 2 Represents MOI estimate. Source: Company filings, The Manual of Ideas estimates and analysis.

$600mn $400mn $200mn

WHY THE SHARES MAY BE MISPRICED •

•

$0mn

Fundamental underappreciation of company’s superior operating model. Tempur-Pedic is the lowest-cost producer in the mattress industry, with efficient production, low inventory requirements, and low overall capital intensity. This, coupled with strong brand recognition and preference by higherend consumers, should enable the company to sustain superior returns on capital. Large short interest; sellers may underestimate company’s ability to remain profitable. TempuPedic fits the typical target profile of many short sellers: the company sells big-ticket consumer items dependent on discretionary spending. With pricing squeezed both on the input and output sides, management lowering guidance, and net debt of $431 million, momentum appears to be favoring the short sellers’ thesis. 19 million of 75 million outstanding shares were sold short as of October 28 (stock was until recently on NYSE list of Reg SHO threshold securities). The short sellers’ aggressive stance against Tempur-Pedic has not only depressed the shares, but also opened the door to a massive short squeeze if/when their thesis is proven wrong.

Revenue

Gross Profit

07 EBIT

Source: Company, The Manual of Ideas.

TPX – Y-Y Revenue Growth, 2000-YTD’08 The company posted annual growth rates of 30-60% in the first half of the decade, with growth slowing from 2005-07 due to greater scale and market penetration. The YTD sales decline of 10% has primarily been caused by weak consumer spending. We do not believe the YTD result signals a departure from the company’s long-term growth trend and expect Tempur-Pedic to resume growth when the macroeconomic outlook improves.

70% 60% 50% 40% 30% 20% 10% 0% -10% 00

YTD

Source: Company, The Manual of Ideas.

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•

TPX – Gross and EBIT margin, 2000-YTD’08 Tempur-Pedic has maintained operating margin well above 10% throughout this decade. While EBIT margin is down this year from 2007, it remains above 10% despite the YTD decline in sales. We believe this attests to the company’s variable cost structure and superior operating model. The company appears poised to maintain profitability even if sales continue to decline in a weak economic environment. We estimate long-term EBIT margin at roughly 20%.

•

60% 50% 40% 30%

•

20% 10% 0% 00

EBIT Margin

YTD

Gross Margin

Source: Company, The Manual of Ideas.

•

MANAGEMENT’S VIEW OF BUSINESS CEO Sarvary and CFO Williams provided the following commentary on the 3Q08 earnings call on October 16: • Q3 performance: “sales and earnings in line with our expectations” • Q4 outlook: “Given the extraordinary events of recent weeks, the company now believes fourth quarter sales and earnings will fall below prior expectations;” projecting Q4 sales decline of 30%; “Christmas has always been a little bit seasonally slower for the mattress business… we’re not expecting any dramatic change, certainly not for the upside, this quarter” • Operating environment: “most challenging economic environment in memory… no reason to assume this will improve in the short term” • Inventory: “We have wrung out the inventory out of the system at this stage.” • Production volume: “we were running productions significantly less than sales to bleed out the inventory;” “overall production volume is not dramatically different” in Q4 than in Q3 • Debt reduction: repatriating $140 million from overseas; suspending dividend; “generated substantial benefit from working capital” and “reduced debt by $38 million” in Q3; $640 million credit facility in place, with “quite attractive” terms; intends to “de-leverage our domestic business while modestly leveraging our international business, thereby allowing for more rapid overall debt reduction;” “developing a lot of breathing room on… covenants”

•

• •

Thanksgiving 2008

Tempur-Pedic brand: “spent over $600 million building the brand during the last six years;” “trend toward the Tempur material is a very long-running trend;” “the fundamental, long-term demand is as strong as it ever was” Long-term initiatives: (1) “Historically we were a direct response company. Today we predominantly sell through retail. …program currently underway to streamline our distribution network.” (2) “broaden and strengthen our [mattress] product line… meet the needs of premium consumers that we don’t currently address.” (3) improve gross margin. Input price inflation: raw material costs were “up substantially” y-y… “coping with cost increases in the vicinity of the mid-20%;” chemical cost increases “hit us a little harder than we [thought]… expecting that chemicals will continue to be high;” “significant cost pressure in the last quarter around diesel pricing… seeing some relief there so our freight cost is coming down” in Q4 versus Q3 Would you go below $1,500 for a queen set? “while I will never say never, at the moment we see no need for that;” “we are a premium product” Market share: based on Q2 ISPA data, the company gained share (Q3 data not yet available)European business: “…we saw some weakness in certain countries and we saw it spreading as the year progressed. In the third quarter we saw it spread even further. So basically now the entire European continent is suffering to some degree in terms of the economic weakness.” Asian business: “continues to perform very well” Marketing budget: “our anticipation is to maintain this 9% to 10% range, in a normal period, but we may move it from period to period, especially in environments like this”

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Thanksgiving 2008

TheStreet.com (Nasdaq: TSCM)

New York, NY, 212-321-5000 http://www.thestreet.com

Technology: Computer Services Trading Data

Consensus EPS Estimates

Price: $3.17 (as of 11/14/08) 52-week range: $3.08 - $16.74 Market value: $97 million Enterprise value: $19 million Shares out: 30.5 million Ownership Data Insider ownership: 31% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.00 -0.02

Month Ago $0.08 0.07

# of Ests 7 4

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

3.2x 28.8x 52.8x 16.7x

FYE 12/31/08

0.11

0.27

EV / LTM revenue

0.3x

FYE 12/31/09 FYE 12/31/10

0.06 0.19

0.32 0.45

7 4

EV / LTM EBITDA EV / LTM EBIT

1.5x 2.8x

P / tangible book 1.0x Greenblatt Criteria

LT EPS growth 18.0% 20.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 78% # of institutional owners: 186

Date

Actual

Estimate

10/29/08

-$0.04

$0.06

LTM EBIT yield

36%

LTM pre-tax ROC

>100%

12/31/01 15 (1) (32) (29) (1.14) (24) 2 (25) 30 34 3 47 0 10 0 10 0 37

12/31/02 21 9 (10) (9) (0.38) (4) 1 (4) 26 30 3 39 0 10 0 10 0 29

n/m

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 25 31 34 14 19 21 (1) 3 5 (4) (2) 0 (0.04) 0.14 0.22 (1) 3 1 1 1 1 (1) 2 1 26 30 33 30 34 38 3 3 3 37 40 43 0 0 0 11 14 16 0 0 0 11 15 16 0 0 0 26 25 27 n/m

n/m

12/31/06 51 32 11 13 0.47 16 2 14 46 54 7 65 0 20 0 20 0 44

12/31/07 65 40 13 29 0.99 13 5 8 79 99 59 176 0 24 0 24 0 153

LTME 9/30/08 75 43 7 6 0.19 13 6 7 78 99 57 180 0 23 0 23 0 156

FQE 9/30/07 16 10 3 20 0.67 2 1 1 38 56 31 103 0 19 0 19 0 84

FQE 9/30/08 17 8 (1) (1) (0.04) 2 2 (0) 78 99 57 180 0 23 0 23 0 156

n/m

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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Oct 06

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BUSINESS OVERVIEW

•

TheStreet.com is a web-centric financial media company offering free and subscription content. The company has expanded its network of media properties through organic growth and acquisitions. Properties include TheStreet.com, RealMoney.com, Stockpickr.com, BankingMyWay.com, MainStreet.com, Rate-Watch.com, and Promotions.com. TheStreet.com, launched in 1996 by Jim Cramer, pioneered investment-related subscription content on the Internet.

• • •

SELECTED OPERATING DATA FYE December 31 Unique monthly visitors (mn) % of revenue by type: Paid services — subscription Paid services — syndication Advertising — financial Advertising — non-financial 1 Interactive marketing Revenue growth by type: Paid services — subscription Paid services — syndication Advertising — financial Advertising — non-financial ∆ revenue 2 ∆ pro forma revenue ∆ unique visitors per month ∆ deferred rev. (period end) % of ad revenue from top 5

2005 3.0

2006 4.4

2007 5.8

YTD 9/30/08 7.2

68% 3% 23% 6% --

66% 4% 22% 8% --

52% 7% 19% 15% 8%

42% 15% 19% 13% 11%

3% -9% n/a n/a 10% n/a n/a 36% 33%

45% 67% 48% 119% 51% 37% 47% 28% 34%

2% 123% 9% 132% 29% 9% 32% 28% 28%

-10% 243% 15% 20% 22% -2% 29% 19% 26%

Attributable to Promotions.com (acquired in August 2007). Assumes that all companies acquired in recent years have been part of TheStreet.com throughout the period shown.

INVESTMENT HIGHLIGHTS •

•

Refocused on consumer market in 2005, with goal of becoming destination for “all things money.” Ad revenue from non-financial firms has grown rapidly since then. The company anticipates the revenue mix to continue shifting toward marketing services, including ad revenue and interactive marketing revenue. The latter is generated by Promotions.com, which creates promotional ad campaigns. Redesigned TheStreet.com website in early 2008 and launched MainStreet.com in February. The latter is a free site that features general news articles with a tie to various personal finance topics. M&A has boosted growth, with GAAP revenue growth of 29% vs. organic growth of 9% in 2007. Since 2006, the company has acquired Weiss (fund and other ratings) for $3 million, Stockpickr.com (stock portfolios) for $3 million, Promotions.com for $21 million, and BankingMyWay.com and RateWatch.com for $25 million.

Thanksgiving 2008

YouTube content licensing creates ad-supported channel, which generates no material revenue but will be monetized through Google’s ad programs. CEO Thomas Clarke (51) joined in 1999. He previously led a Knight-Ridder sub. Co-founder Jim Cramer (58) became chairman in October. Strong balance sheet, with $80 million of net cash. The company has not repurchased shares recently. Stock price implies 7% trailing FCF yield, 17x trailing P/E and 53x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

Dependent on consumer interest in stock market, which in turn depends heavily on the performance of major market indices. A protracted bear market may lessen consumer interest in financial content, adversely affecting subscription and ad revenue. Financial sector accounts for one-half of ad revenue, or roughly one-fifth of total revenue. Financial firms’ advertising budgets are likely to decline materially due to industry weakness. Jim Cramer is significant driver of subscription revenue. The company and Cramer extended his contract in July. Under the amended deal, Cramer may terminate his contract in January 2010.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) EDGR JRJC MORN RATE YHOO

MV 25 176 1,414 558 14,994

EV 25 90 1,104 517 11,780

TSCM

EV/Rev 1.3x 2.1x 2.2x 3.4x 1.6x

P/TB n/m 2.5x 5.5x 8.7x 2.1x

08 P/E n/m 10x 16x 19x 26x

09 P/E n/m 6x 15x 16x 23x

.3x

1.0x

29x

53x

MAJOR HOLDERS CEO Clarke 3% │ Chairman Cramer 12% │ Other insiders 5% │ Technology Crossover 14% │ Columbia Wanger 10% │ Independence Investments 7% │ Guardian Life 6% │ UBS 5% │ North Pointe 5%

THE BOTTOM LINE TheStreet.com has succeeded in becoming a widely read online alternative or complement to publications such as Investor’s Business Daily and Barron’s. The company has benefited both from Jim Cramer’s popularity and from a model that has thrown off enough FCF to enable it to make several acquisitions. TheStreet.com retains a strong balance sheet, with more than two-thirds of market value in cash. It is unclear how the company will deploy the cash, though it appears likely it may seek additional acquisitions. We view the shares as undervalued, but investors should gain comfort around prospective uses of the cash and the risk of Jim Cramer ending his contract in early 2010. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Thomas & Betts Corporation (NYSE: TNB)

Memphis, TN, 901-252-8000 http://www.tnb.com

Technology: Electronic Instruments & Controls, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $20.90 (as of 11/14/08) 52-week range: $19.05 - $55.33 Market value: $1.2 billion Enterprise value: $1.6 billion Shares out: 55.9 million Ownership Data Insider ownership: 0% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $1.05 0.87

Month Ago $1.11 0.93

# of Ests 7 2

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

6.7x 5.6x 5.7x 5.7x

FYE 12/31/08

3.72

3.70

EV / LTM revenue

0.7x

FYE 12/31/09 FYE 12/31/10

3.64 3.65

4.06 n/a

9 2

EV / LTM EBITDA EV / LTM EBIT

4.6x 4.6x

P / tangible book 8.8x Greenblatt Criteria

LT EPS growth 12.0% 12.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 4 Institutional ownership: 95% # of institutional owners: 503

Date

Actual

Estimate

10/23/08

$1.11

$1.09

LTM EBIT yield

22%

LTM pre-tax ROC

55%

12/30/01 1,498 318 (145) (146) (2.39) 101 39 62 242 770 475 1,762 54 356 618 1,078 0 683

12/29/02 1,346 332 31 (53) (0.14) 80 24 57 244 705 437 1,620 65 297 560 996 0 624

-27%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,322 1,516 1,695 352 431 500 82 144 204 43 93 113 0.73 1.57 1.86 97 64 193 29 25 37 68 39 157 389 338 509 812 779 950 455 463 463 1,783 1,756 1,920 133 3 151 365 238 404 552 543 387 1,051 854 868 0 0 0 731 902 1,053 16%

30%

12/31/06 1,869 569 246 175 2.85 221 44 177 371 868 507 1,830 1 249 387 762 0 1,068

12/31/07 2,137 661 289 183 3.13 261 41 221 150 906 1,178 2,568 116 469 695 1,339 0 1,229

LTME 9/30/08 2,505 786 351 297 5.14 184 44 139 203 979 1,238 2,595 152 548 513 1,224 0 1,371

FQE 9/30/07 553 171 82 51 0.88 74 9 65 105 733 793 1,997 116 446 273 837 0 1,160

FQE 9/30/08 666 208 101 62 1.11 2 11 (9) 203 979 1,238 2,595 152 548 513 1,224 0 1,371

51%

47%

55%

n/m

44%

Ten-Year Stock Price Performance and Trading Volume Dynamics

$70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW Thomas & Betts designs and manufactures industrial products. The company operates in three segments: Electrical provides electrical connectors and components for electrical, utility and communications applications. The segment experiences modest seasonality, with sales strongest during the construction season in Q2 and Q3. Steel Structures provides highly engineered tubular steel transmission and distribution poles. HVAC provides heating and ventilation products for commercial and industrial buildings.

• •

•

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by segment: Electrical 81% Steel structures 11% HVAC 8% Revenue growth by segment: Electrical 10% Steel structures 33% HVAC 8% Total revenue growth 12% EBIT margin by segment: Electrical 15% Steel structures 18% HVAC 14% Corporate -3% Total EBIT margin 12% D&A as % of revenue 3% Capex as % of revenue 2% % of revenue by geography: U.S. 67% Canada 19% Europe 12% Other 3%

2006

2007

YTD 9/30/08

81% 12% 7%

83% 11% 7%

86% 9% 5%

10% 19% 3% 10%

17% 3% 6% 14%

29% -2% 2% 24%

•

16% 16% 15% -3% 13% 3% 2%

17% 17% 17% -3% 14% 3% 2%

20% 18% 17% -5% 14% 3% 2%

•

66% 19% 11% 4%

60% 20% 14% 6%

n/a n/a n/a n/a

•

Guiding for GAAP EPS of $5.35-5.45 in 2008, including $1.50 gain on the $300 million Leviton sale in June, and $0.13 legal settlement gain. Dominic Pileggi (56) became CEO in 2004 and chairman in 2006. He has been with the company for most of the past thirty years. CFO Kenneth Fluke joined the company in 2000 from Goodyear. Repurchased $333 million of stock in 2006-07, but has not bought back any shares in 2008, despite a declining stock price and a remaining authorization on 2.8 million shares. Stock price implies 12% trailing FCF yield, 4x trailing P/E and 6x forward P/E.

INVESTMENT RISKS & CONCERNS •

• •

Headline growth overstates underlying results. While the company achieved 24% revenue growth YTD, revenue before acquisitions and currency gains grew in the low single digits. Cyclical business, electrical product demand driven by the construction market, industrial production levels and spending by utilities for replacements, expansion and efficiency improvements. May not be able to pass through price increases of energy and raw materials (steel, aluminum, copper, zinc, resins and rubber compounds). Recent acquisitions may prove to have been illtimed, and integration may present challenges. Net debt of $453 million could prove burdensome if the business environment deteriorates sharply.

COMPARABLE PUBLIC COMPANY ANALYSIS MV

ABB BDK CBE GE SI

24,883 2,373 5,498 168,144 47,003

TNB

1,168

($mn)

INVESTMENT HIGHLIGHTS •

Thanksgiving 2008

Market-leading products in electrical segment, including fittings, fastenings, connectors, switch and outlet boxes, and metal framing. Target markets include industrial MRO, commercial, utility and residential construction; project construction; industrial OEMs; and communication companies. Expanded electrical capabilities with five acquisitions totaling $830 million in 2007-08, including Lamson & Sessions ($450 million), Joslyn and Power Solutions ($282 million), Homac ($75 million), and Drilling Technical ($23 million). Industrial demand and commodity- and energyrelated price increases are offsetting lower sales volumes in markets affected by the slowdown in residential construction, such as retail, utility distribution and light commercial construction. The electrical segment “performed very well” in Q3, “offsetting higher commodity and energy costs.”

2.9x 9.3x 18.8x 12.3x 3.1x

08 P/E 6x 8x 7x 8x 9x

09 P/E 6x 9x 8x 9x 7x

8.8x

EV/Rev

P/TB

20,057 3,658 6,443 700,506 52,151

.6x .6x 1.0x 3.8x .6x

1,630

.7x

MAJOR HOLDERS CEO Pileggi <1% │ Other insiders 1% │ Wachovia 7% │ GAMCO 7% │ Vanguard 6%

THE BOTTOM LINE Thomas & Betts enjoys a strong position in electrical connectors and components for industrial markets, but we do not believe the company is diversified enough to withstand a severe downturn in cyclical end-markets. The company posted EBIT losses of more than $100 million in each of 2000 and 2001, and we are concerned profits could decline once again. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Total System Services, Inc. (NYSE: TSS)

Columbus, GA, 706-649-2310 http://www.tsys.com

Technology: Computer Services, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $12.16 (as of 11/14/08) 52-week range: $11.08 - $29.93 Market value: $2.4 billion Enterprise value: $2.3 billion Shares out: 196.8 million Ownership Data Insider ownership: 5% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.34 0.33

Month Ago $0.34 0.33

# of Ests 17 12

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

10.1x 9.3x 8.6x 7.9x

FYE 12/31/08

1.31

EV / LTM revenue

1.2x

FYE 12/31/09 FYE 12/31/10

1.41 1.53

19 5

EV / LTM EBITDA EV / LTM EBIT

6.2x 6.5x

P / tangible book 4.9x Greenblatt Criteria

LT EPS growth 12.3% 12.7% Latest Quarterly EPS Surprise

Insider sales (last six months): 5 Institutional ownership: 55% # of institutional owners: 639

Date

Actual

Estimate

10/9/08

$0.33

$0.34

LTM EBIT yield

15%

LTM pre-tax ROC

86%

12/31/01 892 391 138 104 0.53 91 88 3 59 203 265 657 0 104 0 149 0 507

12/31/02 955 424 158 126 0.64 198 81 116 109 263 328 780 0 114 0 177 0 602

84%

97%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 1,054 1,187 1,603 502 595 828 191 202 287 141 151 195 0.71 0.76 0.99 266 368 241 190 116 76 76 252 164 123 232 238 273 448 512 417 476 558 1,001 1,282 1,411 15 2 2 147 272 277 30 5 4 269 417 398 0 0 0 733 865 1,013 93%

88%

>100%

12/31/06 1,787 912 357 249 1.26 386 52 334 389 745 539 1,634 3 296 4 417 0 1,217

12/31/07 1,806 838 354 237 1.20 335 106 229 211 587 513 1,479 12 274 257 635 0 845

LTME 9/30/08 1,904 860 361 230 1.16 367 119 248 309 695 497 1,587 74 306 189 605 0 981

FQE 9/30/07 458 212 91 69 0.35 128 23 105 593 963 508 1,827 6 252 74 437 0 1,390

FQE 9/30/08 500 228 96 64 0.33 105 26 79 309 695 497 1,587 74 306 189 605 0 981

>100%

97%

86%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW

•

TSYS provides payment processing services to card issuers and merchant acquirers. It operates in three segments: Domestic-based Support Services includes payment processing and other services provided from within the U.S. Clients include banks and other card-issuing organizations. International-based Support Services includes payment processing and other services from outside the U.S. Clients include banks and other card-issuing organizations. Merchant Acquiring Services includes the operations of Vital, which began as a 50/50 JV with Visa in 1996. TSYS bought out Visa for $96 million in 2005. Clients include financial institutions and other merchant acquirers. Seasonality is strongest during the holiday season in Q4. TSYS began in 1959 as part of Columbus Bank & Trust.

SELECTED OPERATING DATA FYE December 31 2005 2006 2007 % of revenue before reimbursables by type: Payment processing 67% 69% 67% Merchant acquiring 18% 18% 18% Other services 14% 13% 15% Revenue growth before reimbursables by type: Payment processing 15% 14% -3% Merchant acquiring 807% 10% -2% Other services 6% 1% 18% ∆ revenue 35% 11% 0% 1,2 32% 4% -3% ∆ AOF (average) 1,2 22% -5% -10% ∆ AOF (period end) 3 Top 3 clients as % of revenue 36% 39% 32% % of revenue by geography (domicile of customer): North America 91% 89% 85% Europe 8% 9% 12% Japan and other 1% 2% 3% % of revenue before reimbursables by segment: Card issuer services – N.A. 73% 72% 67% Card issuer services – Global 10% 11% 17% Merchant acquiring 17% 17% 16% 4 EBIT margin by segment: Card issuer services – N.A. 27% 29% 27% Card issuer services – Global 3% 7% 17% Merchant acquiring 23% 31% 29% Total EBIT margin 22% 25% 26%

YTD 9/30/08

• •

•

3% 1% 18% 5% -10% 0% n/a 83% 14% 3%

•

INVESTMENT HIGHLIGHTS #2 provider of processing services to card issuers. While First Data remains the largest provider, TSYS’ card issuer processing technology has allowed it to gain market share. At yearend 2007, TSYS had U.S. processing market share of 42% in consumer credit cards, 87% in Visa and MasterCard commercial cards and 10% in retail cards.

Risk of in-sourcing by large card issuers, heightened by consolidation in banking industry. Large banks have at times opted to build processing operations in-house. TSYS’ strong technology has allowed it to make a strong outsourcing argument, but the case may become tougher as the largest card issuers gain additional scale and can better amortize the large cost of internal technology development. Payment card saturation. While credit, debit and stored-value cards continue to gain share versus cash and checks, U.S. consumers already hold multiple cards per person, on average. As a result, growth may have to come from international clients.

COMPARABLE PUBLIC COMPANY ANALYSIS1

64% 21% 15% 28% 19% 26% 26%

#2 provider of payment processing to merchants, behind First Data but ahead of Global Payments. TSYS has 20% market share of card-accepting merchant locations in the U.S. The company relies heavily on bank relationships in merchant acquiring. No longer controlled by Synovus. While TSYS has been public for many years, Synovus finally gave up control in a spinoff at yearend 2007. Guiding for 5-7% net income growth in 2008, despite an expectation of a “slow” holiday season. Strong, steady management, led by chairman and CEO Phil Tomlinson, who has been with TSYS since 1982. CFO Jim Lipham and COO Troy Woods have been with TSYS for 20+ years each. Stock price implies 10% trailing FCF yield, 10x trailing P/E and 9x forward P/E.

INVESTMENT RISKS & CONCERNS

66% 17% 17%

1 Accounts on file. Represents payment card accounts owned by card-issuing clients, for which transaction processing services are provided by TSYS. 2 AOF refer to card issuer processing services only (not merchant processing). 3 Includes Bank of America and Capital One, which accounted for 12% and 13%, respectively, of TSYS revenue in 2007. 4 Based on revenue before reimbursables; excludes spinoff-related expenses.

•

Thanksgiving 2008

($mn) ADS GPN HPY

MV 2,913 2,948 561

EV 4,544 2,871 667

EV/Rev 2.1x 2.1x .4x

P/TB n/m 37.5x 130.5x

08 P/E 10x 15x 13x

09 P/E 9x 14x 11x

TSS

2,393

2,348

1.2x

4.9x

The company’s closest comp, First Data, was acquired by KKR in 2007.

MAJOR HOLDERS CEO Tomlinson 1% │ Other insiders 5% │ Synovus 13%

THE BOTTOM LINE TSYS is an obscure but steady business that extracts a small toll from purchases made with certain credit and debit cards. The company touches various aspects of the payment card value chain, primarily serving card issuers and merchant acquirers. The company should grow modestly for a long time, with little in the way of capital requirements. The shares deserve a look. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Travelzoo (Nasdaq: TZOO)

New York, NY, 212-484-4900 http://www.travelzoo.com

Technology: Computer Services Trading Data

Consensus EPS Estimates

Price: $4.48 (as of 11/14/08) 52-week range: $4.11 - $17.20 Market value: $64 million Enterprise value: $48 million Shares out: 14.3 million Ownership Data Insider ownership: 45% Insider buys (last six months): 129

Valuation

This quarter Next quarter

Latest -$0.12 -0.03

Month Ago -$0.09 0.03

# of Ests 2 2

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

7.9x n/m n/m n/a

FYE 12/31/08

-0.40

-0.33

EV / LTM revenue

0.6x

FYE 12/31/09 FYE 12/31/10

-0.06 n/a

0.27 n/a

2 0

EV / LTM EBITDA EV / LTM EBIT

n/a 9.4x

P / tangible book 2.9x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 29% # of institutional owners: 81

Date

Actual

Estimate

10/27/08

-$0.13

-$0.09

LTM EBIT yield

11%

LTM pre-tax ROC

>100%

12/31/01 6 6 1 0 0.02 1 0 1 1 2 0 2 0 1 0 1 0 1

12/31/02 10 9 1 1 0.04 1 0 1 1 3 0 3 0 1 0 1 0 2

n/m

>100%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 18 34 51 18 33 50 4 11 15 2 6 8 0.10 0.33 0.45 2 5 8 0 10 0 2 (6) 8 4 37 44 6 43 55 0 0 0 7 43 56 0 0 0 3 3 7 0 0 0 3 3 7 0 0 0 4 40 49 >100%

>100%

12/31/06 70 69 30 17 1.01 17 0 17 34 43 0 44 0 7 0 7 0 37

12/31/07 79 77 21 9 0.57 10 1 9 23 36 0 37 0 10 0 11 0 26

LTME 9/30/08 81 78 5 (4) (0.28) (3) 3 (6) 16 30 0 35 0 12 0 13 0 22

FQE 9/30/07 20 20 5 2 0.14 1 0 1 24 36 0 37 0 9 0 11 0 26

FQE 9/30/08 19 18 (0) (2) (0.13) (3) 2 (5) 16 30 0 35 0 12 0 13 0 22

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$120 $100 $80 $60 $40 $20 $0 Jan 00

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BUSINESS OVERVIEW Travelzoo’s free Internet media properties reach 12 million consumers in the U.S., Europe and Asia. The properties include the Travelzoo website, the Top 20 list of weekly deals, email alerts, and a travel search engine. Travelzoo publishes offers from 900 advertisers, with Travelzoo deal experts reviewing offers to find the best travel deals.

SELECTED OPERATING DATA FYE December 31 2005 2006 2007 Unpaid subscribers by geography (mn) (period end): North America 9.4 10.2 11.0 11.1 Europe 0.3 0.7 1.4 2.1 Asia Pacific --0.2 1.1 Unpaid subscriber growth by geography (mn) (period end): North America 15% 9% 8% 2% Europe n/m 120% 111% 69% Asia Pacific n/m n/m n/m >999% ∆ total subscribers 19% 12% 16% 17% ∆ total revenue 51% 37% 14% 3% Average subscriber acquisition cost ($): North America 2.66 2.10 3.16 4.03 Europe 1.86 2.17 4.04 4.44 Asia Pacific n/a n/a 2.88 2.98 % of revenue by geography: North America 99% 95% 93% 88% Europe 1% 5% 7% 12% Asia Pacific 0% 0% 0% 1% EBIT margin by geography: North America 32% 47% 40% 32% Europe -148% -49% -89% -91% Asia Pacific n/a n/a n/m n/m Total EBIT margin 29% 43% 26% 4% % of revenue by customer: Travelport 12% 16% 15% 15% Expedia <10% 14% 11% 11% Sabre 15% <10% <10% <10%

•

Founded and managed by Bartel brothers. Chairman Ralph Bartel (42) founded Travelzoo in 1998 and served as CEO until September 2008 when Holger Bartel (41) assumed the role. Previously, Holger oversaw Travelzoo’s operations in North America and worked at McKinsey. Repurchased 1 million shares for $20 million in 2007, and 1 million shares for $29 million in 2006. Material insider buying above current price.

INVESTMENT RISKS & CONCERNS • • • •

Global expansion may not work. Travelzoo is losing money overseas as it attempts to scale. The company’s model may not succeed abroad. North America EBIT margin has declined from 47% in 2006 to 40% in 2007 and 32% YTD. Dependent on ad revenue. Travelzoo may suffer if travel declines due to economic weakness, high oil prices, terrorist threats or other factors. High ROIC has attracted new entrants, while Google AdWords has lowered barriers to entry. Sherman’s Travel is the #2 travel deals email distribution company, with four million subscribers.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) EXPE GOOG MSFT OWW PCLN YHOO TZOO

INVESTMENT HIGHLIGHTS

•

• •

YTD 9/30/08

•

Thanksgiving 2008

$1.3 billion in newspaper advertising by travel companies is moving to Internet. Travelzoo is well-positioned to benefit from this transition. The company’s revenue increased from $18 million in 2003 to $79 million in 2007, a 34% CAGR. Profitable, non-capital-intensive U.S. business. Travelzoo generated EBIT of $17 million in North America YTD, while employing minimal capital. Large global opportunity. Travelzoo is attempting to replicate worldwide the success it has had in the U.S. Travelzoo entered the U.K. in 2005; Canada, Germany and Spain in 2006; Australia, China, France, Hong Kong, Japan, and Taiwan in 2007.

2,238 97,580 178,445 250 2,184 14,994 64

n/m 4.5x 9.2x n/m 13.5x 2.1x

08 P/E 6x 16x 10x n/m 9x 26x

09 P/E 6x 14x 9x n/m 9x 23x

2.9x

n/m

EV/Rev

P/TB

2,723 83,168 159,698 767 2,199 11,780

.9x 4.0x 2.6x .9x 1.2x 1.6x

.6x

MAJOR HOLDERS Ralph Bartel 60% │ Holger Bartel 1% │ Other insiders <1% │ JP Morgan 10% │ Coatue 4%

THE BOTTOM LINE Travelzoo is a good business run by capable insiders who have loaded up on shares this year. The market values Travelzoo’s international startup operations materially below zero even though the company has a proven model and management knows Europe well (founder Ralph Bartel was educated in Germany and Switzerland). The downside appears limited as the Bartel brothers are heavily incentivized to create shareholder value. If international operations do not achieve desired profitability, management may shut them down and sell the U.S. business to a competitor such as Priceline.com. We value Travelzoo at $25-26 per share, based on a probability-weighted scenario analysis that includes estimated ranges of annualized EBIT for North America and the rest of the world.

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…additional insight into TZOO:

Estimated Enterprise Value (based on various scenarios of normalized EBIT)

WHAT ARE THE SHARES WORTH? •

•

($ in millions)

We value Travelzoo at $25-26 per share, based on a probability-weighted scenario analysis that includes estimated ranges of annualized EBIT for North America and the rest of the world. Normalized EBIT for North America and rest of the world (ROW) are key valuation drivers. As Travelzoo generates strong EBIT in North America while investing heavily in global expansion, we value the company on a sum-of-the-parts basis. Travezoo is a non-capital-intensive business with few excess assets, and the value of the enterprise depends on profit generation. While Travelzoo’s 12 million-strong subscriber base and brand name may have strategic value to an acquirer, we have not used M&A transaction multiples in our analysis, as such a valuation might be too speculative. In North America, our most likely scenario (50% probability) has Travelzoo roughly maintaining normalized EBIT at approximately $25 million per year. We assign a fair value multiple of 10x in such a scenario. If EBIT declines, we anticipate multiple contraction due to likely business model concerns. If EBIT increases, we anticipate multiple expansion due to likely renewed optimism regarding growth. Our analysis conservatively assumes that EBIT deterioration is more likely than EBIT growth. In the rest of the world, our most likely scenario (40% probability) has Travelzoo earning normalized EBIT of $10 million, less than half the current North American EBIT run rate. This may be a fairly conservative assumption, as we see little reason why Travelzoo’s international business, particularly in Europe, could not emulate the success achieved in the U.S. We have assigned a 5% probability to the scenario that Travelzoo continues to suffer an annualized operating loss of roughly $20 million internationally. The company is highly likely to take decisive action to eliminate the operating loss even if international growth does not materialize, as the Bartel brothers own ~60% of Travelzoo shares.

WHY THE SHARES MAY BE MISPRICED • •

Steady-state EBIT materially understated. Startup losses in Europe and Asia mask continued strong U.S. profitability. High taxes lower net income yield. As U.S. income is fully taxed and foreign losses generate no current tax benefit, effective tax rate is temporarily elevated, lowering the after-tax earnings yield.

Thanksgiving 2008

ROW EBIT -$20 -$10 $0 $10 $20

EV/EBIT Multiple 5x 5x n/m 12x 15x

$10 5x -$50 $0 $50 $170 $350

North America EBIT $20 $25 $30 8x 10x 12x $60 $150 $260 $110 $200 $310 $160 $250 $360 $280 $370 $480 $460 $550 $660

$40 15x $500 $550 $600 $720 $900

Probability-Weighted Enterprise Value (sum of probability-weighted contributions of scenarios) ($ in millions) North America EBIT ROW $10 $20 $25 $30 $40 EBIT Probability 6% 25% 50% 15% 4% -$20 5% $0 $1 $4 $2 $1 -$10 10% $0 $3 $10 $5 $2 $0 25% $1 $10 $31 $14 $6 $10 40% $4 $28 $74 $29 $12 $20 20% $4 $23 $55 $20 $7 Probability-weighted enterprise value: $344 million

Estimated Equity Value per Share ($ and shares in millions, except per share data) Probability-weighted enterprise value Net cash

$344 $21

Estimated equity value Shares outstanding

$365 14.3

Estimated equity value per share

$25.52

COMMENTS ON BUSINESS MODEL •

Travelzoo employs virtually no capital in running the business. The company has no inventory cost, as its services are entirely webbased. No elaborate infrastructure is required to create the services, resulting in minimal PP&E investment. The only major input is the time and effort of Travelzoo employees, yet the company does not depend on specific employees to maintain current operations (we do believe that the services of the Bartel brothers are crucial to growing value over time). Enterprise value is embedded primarily in the Travelzoo consumer brand, an online distribution channel (including email), and a 12 million-strong subscriber base. With this infrastructure in place, Travelzoo can maintain current operations at low cost, creating a quasirecurring business model.

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•

Per-employee performance metrics are quite impressive, as the following table shows. Peremployee results have declined primarily due to the startup of international operations. The company could boost per-employee performance substantially if it opted to maintain rather than grow operations. However, we believe investment in new countryspecific Travelzoo websites will earn favorable riskadjusted returns for shareholders.

($’000) Revenue per employee N.A. EBIT per employee EBIT per employee

•

2005 853 269 250

2006 915 412 391

2007 660 242 173

YTD 9/30/08 338 96 14

Advertiser-supported model, while highly profitable, creates perceived and real conflicts of interest. Travelzoo makes money not from the consumers who rely on its media properties, but from travel companies who pay for inclusion in the company’s Top 20 list and other properties. While Travelzoo claims that Top 20 deals are selected exclusively based on merit, there is a perceived and real risk that editorial decisions may be influenced by advertising revenue prospects. Most consumers appear to be unaware that Travelzoo relies heavily on payments for deals included in the Top 20. However, it is conceivable that existing competitors or new entrants could expose this fact over time, perhaps lessening the consumer appeal of Travelzoo’s media properties. Top 20 list may be less scalable than it appears. The Travelzoo model appears almost infinitely scalable: once the Top 20 list is created, there is no marginal cost of emailing the list to incremental subscribers (leaving aside the cost of subscriber acquisition). However, the model contains a limit to scalability: Consumers must be able to book the deals presented on the Top 20 list; if too many consumers subscribe, too few may be able to benefit from the deals presented. This may force the company to forgo deals with low capacity in favor of large-scale but potentially less-favorable deals. For example, as the Top 20 list has grown to more than 10 million subscribers in the U.S., the company has been forced to limit small deals on the list. As the deals get bigger in terms of capacity, however, they may become less appealing. This dynamic puts a natural limit on the size of the Top 20 subscriber base in each country. An interesting way in which the company appears to be trying to address this is by customizing the Top 20 list for different types of subscribers (e.g., by residence location or travel preference). This customization happens largely behind the scenes, with users not explicitly asked to state their preferences. Of course, the (potential) existence of customized Top 20 lists means that an aggregate of more than 20 deals are selected each week, which may in turn dilute the quality of deals.

•

Thanksgiving 2008

A corollary of the previous point is that Travelzoo is in a strong position to grow newcountry Top 20 lists from a low base. As the company launches new Top 20 lists, it has the luxury of including deals without much regard for capacity. As a result, the quality of the deals in startup countries may be higher than the quality of deals presented in the U.S. This quality advantage may make it easier for Travelzoo to grow by word of mouth in new countries, potentially helping to keep subscriber acquisition costs low. As a result, investors may overestimate the difficulty Travelzoo will encounter in scaling up new markets.

MANAGEMENT’S VIEW OF BUSINESS Notes from 3Q08 earnings call on October 27: • Operating environment: economy “definitely a challenging one” for advertisers; search volume and traffic to travel websites have been decreasing since September (even on seasonally adjusted basis); however, Travelzoo hotel business is doing “really, really well… seeing increased business there” • Response to weak environment: Plans to cut costs in North America and “reduce the speed of our investments in Asia Pacific and Europe;” strategy of developing global brand remains “unchanged” • Q3 review: “unsatisfactory results” in North America, “impacted more negatively than expected by a weak economy;” European revenue up 62% (September best month ever: hotels and cruises strong; number of search queries down); Asia revenue of ~$200K; net loss widened due to European and Asian losses – not tax deductible, resulting in high effective tax rate; used $3.4 million of cash in operations; 207 employees at Q3-end (104 in North America, 52 in Europe, 51 in Asia), up from 191 sequentially and up from 128 y-y • Q4 outlook: does not provide guidance; acknowledged travel weakness but argued that Travelzoo provides even more value to advertisers when it is difficult to move investory • International growth strategy: dates back to 2005; management still believes exansion will increase shareholder value in the long term; international presence improves competitive position due to ability to (1) sell ad inclusions across different geographies and (2) perform local due diligence on quality and availability of travel deals (currently has producers and sales staff in 11 countries) • Competitive landscape: no news; has faced new competitors in North America during past few years; none of them have Travelzoo’s reach • Travelzoo’s strengths: “push media,” such as Top 20 weekly email, create demand that is incremental to “pull” demand, i.e., potential travelers proactively searching for travel deals online; SuperSearch product leverages more than 2.8 million ratings from Travelzoo users

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Thanksgiving 2008

USA Mobility, Inc. (Nasdaq: USMO)

Alexandria, VA, 866-662-3049 http://www.usamobility.com

Services: Communications Services Trading Data

Consensus EPS Estimates

Price: $9.55 (as of 11/14/08) 52-week range: $6.43 - $15.55 Market value: $260 million Enterprise value: $156 million Shares out: 27.2 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.32 n/a

Month Ago $0.25 n/a

# of Ests 1 0

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

n/m 6.7x 8.6x 12.7x

FYE 12/31/08

1.42

1.32

EV / LTM revenue

0.4x

FYE 12/31/09 FYE 12/31/10

1.11 0.75

0.92 0.55

1 1

EV / LTM EBITDA EV / LTM EBIT

-2.0x -1.3x

P / tangible book 1.5x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 1 Institutional ownership: 87% # of institutional owners: 275

Date

Actual

Estimate

10/29/08

$0.35

$0.32

LTM EBIT yield

-79%

LTM pre-tax ROC

-252%

12/31/01 1,164 815 (1,425) (1,576) (8.80) 47 110 (62) 75 245 1 652 67 197 0 2,309 0 (1,657)

12/31/02 819 562 1,657 1,656 8.92 207 84 122 42 115 16 438 55 157 162 320 0 118

-320%

>100%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 598 490 619 403 325 398 38 34 26 13 12 13 0.65 0.58 0.47 181 114 139 25 19 14 156 95 126 41 47 39 111 128 105 0 222 190 496 782 634 20 48 0 116 162 87 40 48 0 169 226 101 0 0 0 326 556 533 16%

19%

12/31/06 498 317 67 40 1.46 147 21 126 68 124 186 588 0 83 0 112 0 476

12/31/07 425 266 76 (5) (0.19) 114 18 96 66 110 205 484 0 67 0 111 0 374

LTME 9/30/08 375 239 (124) (212) (7.72) 108 19 89 104 142 10 290 0 62 0 112 0 178

FQE 9/30/07 105 66 20 16 0.56 28 5 24 64 113 208 552 0 67 0 115 0 438

FQE 9/30/08 88 58 15 2 0.09 31 6 25 104 142 10 290 0 62 0 112 0 178

78%

>100%

-252%

n/m

18%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

USA Mobility was formed in 2004 by the merger of Arch (formerly Nasdaq: AWIN) and Metrocall (formerly Nasdaq: MTOH), the two leading independent domestic paging firms. USA Mobility focuses on the business-to-business market and supplies wireless connectivity to Fortune 1000 firms. The company operates nationwide networks for one-way paging and two-way messaging services.

•

FYE December 31 2005 2006 2007 % of revenue by type: Paging services (one-way) 75% 74% 73% Paging services (two-way) 19% 19% 19% Non-paging services 2% 2% 3% Products 4% 4% 5% Revenue growth by type: Paging services (one-way) 22% -20% -16% Paging services (two-way) 32% -20% -17% Non-paging services 318% -3% 8% Products 33% -17% 3% ∆ revenue 26% -20% -15% ∆ blended ARPU -3% -3% -1% 1 -22% -16% -15% ∆ one-way units 1 -15% -17% -14% ∆ two-way units % of paging units in service (period end) ('000): One-way 91% 91% 91% Two-way 9% 9% 9% 1

YTD 9/30/08 73% 18% 3% 6% -15% -18% -13% -6% -15% 0% -17% -13% 91% 9%

Represents y-y change in paging units at period end.

•

INVESTMENT HIGHLIGHTS •

•

• • • •

Expense reductions ahead of revenue erosion. The company’s top line is eroding in the mid teens due to a secular decline in the paging market. However, operating expenses have been reduced by 200-300 bps faster, resulting in margin expansion. Healthcare represents 40% of customer base and has experienced lower net unit loss rates than other vertical segments. As the contribution of healthcare grows, subscriber losses may slow somewhat from current annualized rates in the mid teens. Stated objective to maximize cash flow and return (most of) it to holders. The company generated $64 million of trailing EBIT and $89 million of FCF. Guiding for revenue of $355-$360 million and cash opex of $245-$250 million, with maintenance capex of $18-$20 million in 2008. $104 million of cash and no debt as of September 30. The company pays a dividend. Repurchased $35 million of stock at below-market price in private transaction in November.

Large NOL. USA Mobility has tax assets, both on and off the balance sheet, available to offset future income taxes. As a result, the shares are even cheaper than the EBIT-to-EV yield may suggest. Stock price implies 34% trailing FCF yield and 9x forward P/E (trailing GAAP EPS loss reported).

INVESTMENT RISKS & CONCERNS •

SELECTED OPERATING DATA

Thanksgiving 2008

•

Revenue erosion due to decline of paging. The low cost of devices such as email-ready mobile phones and PDAs continues to impact paging. The company has experienced revenue erosion in the mid teens, and declines are likely to continue. While ARPU has remained relatively steady, units in service have declined to three million. Tenuous sustainability of EBITDA margin, which has risen to 33% YTD (up 200+ bps y-y), driven by large opex reductions. At some point, the subscriber base may be insufficient to cover the fixed cost of a nationwide paging network. Implications of FCC’s Back-Up Power Order. This Order, if and when effective, would “entail significant capital and operating costs” that would negatively affect FCF. USA Mobility is appealing the Order and believes it is likely to prevail. Potential for adverse change to Universal Service Fund contribution requirement. The FCC is considering imposing a $1+ fee per assigned phone number instead of the current revenue-based methodology. Such a change would significantly increase the company’s contribution costs. Lack of reinvestment opportunities. The company is returning cash via dividends (structured as return of capital) and a $50 million buyback program initiated in August. Distributions have amounted to $1.50 per share in 2005, $3.65 per share in 2006, $3.60 per share in 2007, and $1.15 per share YTD.

MAJOR HOLDERS Insiders <1% │ David Abrams 15% │ Pamet 13% │ Contrarian 9% │ Barclays 6%

THE BOTTOM LINE USA Mobility should be valued on a “runoff” basis. Paging, which accounts for 90% of the company’s revenue, is a dying market. Management appears to be aware of this fact and is running the company for maximum cash flow. The company’s network rationalization program and other cost cutting measures have kept margins strong despite top-line erosion in the mid teens. A program of dividends and share buybacks is returning excess cash to shareholders. Nonetheless, investors should keep a watchful eye on management to ensure that cash is not sunk into revenue-diversifying projects that may ultimately create little value. We note that insiders own less than 1% of the shares. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

VAALCO Energy, Inc. (NYSE: EGY)

Houston, TX, 713-623-0801 http://www.vaalco.com

Energy: Oil & Gas Operations Trading Data

Consensus EPS Estimates

Price: $4.39 (as of 11/14/08) 52-week range: $3.50 - $8.99 Market value: $256 million Enterprise value: $157 million Shares out: 58.2 million Ownership Data Insider ownership: 4% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.21 0.17

Month Ago $0.28 0.13

# of Ests 2 1

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

13.7x 5.2x 8.1x n/a

FYE 12/31/08

0.84

EV / LTM revenue

0.8x

FYE 12/31/09 FYE 12/31/10

0.54 n/a

0.78 n/a

2 0

EV / LTM EBITDA EV / LTM EBIT

1.1x 1.3x

P / tangible book 1.5x Greenblatt Criteria

LT EPS growth 8.0% 8.0% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 61% # of institutional owners: 289

Date

Actual

Estimate

11/10/08

$0.38

$0.32

LTM EBIT yield

79%

LTM pre-tax ROC

>100%

12/31/01 2 1 (2) (3) (0.15) 3 7 (4) 10 11 0 19 0 6 0 9 0 10

12/31/02 10 7 3 1 0.01 1 16 (15) 8 25 0 49 3 14 15 33 0 15

-69%

19%

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 36 57 85 27 47 74 17 40 64 9 23 29 0.13 0.43 0.50 23 23 36 2 15 13 20 8 22 23 28 44 28 40 58 0 0 0 46 68 98 4 2 0 14 14 9 3 2 2 22 21 20 0 0 0 24 48 78 86%

>100%

12/31/06 98 86 74 40 0.67 62 33 29 61 84 0 168 0 27 5 46 0 122

12/31/07 125 110 69 19 0.32 43 15 29 77 110 0 187 0 24 5 44 0 142

LTME 9/30/08 190 171 124 39 0.66 87 21 66 104 137 0 222 0 28 5 51 0 172

FQE 9/30/07 35 31 24 9 0.15 1 2 (1) 70 101 0 177 0 16 5 35 0 141

FQE 9/30/08 56 50 42 22 0.38 10 11 (1) 104 137 0 222 0 28 5 51 0 172

>100%

98%

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Jun 99

Jun 00

Jun 01

Jun 02

Jun 03

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BUSINESS OVERVIEW

•

Vaalco Energy is an independent oil and gas exploration and production company. Vaalco seeks to increase reserves and production, primarily in West Africa (Gabon and Angola) and, more recently, in the North Sea.

SELECTED OPERATING DATA FYE December 31 Revenue by segment ($mn): Gabon Angola North Sea Total revenue Growth EBIT by segment ($mn) Gabon Angola North Sea Corporate Total EBIT Total EBIT growth EBIT margin by segment: Gabon Total EBIT margin Acreage leased (net) ('000) Production (net) (BOPD) Sales price, BOE ($/unit) Production cost, BOE ($/unit) Proved developed reserves: Oil (MBbls) Gas (MMcf) Std meas., proved res. ($mn)

2005

2006

2007

YTD 9/30/08

85 0 0 85 50%

98 0 0 98 16%

125 0 0 125 27%

153 0 0 153 74%

67 0 0 -4 64 58%

81 -1 0 -6 74 17%

90 -5 -8 -9 69 -7%

121 -1 -6 -7 107 108%

79% 75% 501 4,488 52 6

82% 76% 1,015 4,258 63 8

72% 55% 1,069 4,819 71 9

79% 70% n/a n/a 107 10

6,620 21 161

4,691 17 134

4,506 61 192

n/a n/a n/a

•

• • •

All six producing wells located offshore Gabon (four in the Etame field, two in Avouma/Tchibala). Seven development and exploration wells expose Vaalco to 50+ million net barrels, eight times more than Vaalco’s 6.2 million barrels of proved reserves. These seven wells include a development well in Ebouri field (oil production expected in December at initial rate of 4,000-6,000 bpd); three exploratory wells in Etame block (reserve potential of 15+ million net barrels); two exploratory wells onshore Gabon in the Mutamba concession (drilling in first well expected in December 2008; reserve potential of 30+ million net barrels); and one exploratory well in Angola (drilling expected in 1H09; reserve potential of 60+ million net barrels). 25% stake in gas prospect in British North Sea. Vaalco is participating with Century Exploration on the well, which has reserve potential of 60 Bcf. Strong balance sheet, with net cash of $93 million. Repurchased $9 million of stock YTD and $2 million in 2007.

Chairman and CEO Robert Gerry III (70) has served in those roles for more than ten years. In October, Russell Scheirman (52) trasitioned into the role of COO, having served as CFO for more than fifteen years. He was replaced by long-time Shell finance executive Greg Hullinger (55). Stock price implies 26% trailing FCF yield, 7x trailing P/E and 8x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

INVESTMENT HIGHLIGHTS •

Thanksgiving 2008

Operations almost entirely offshore Gabon. The Gabon fields constituted almost 100% of production in 2007, with nearly 100% of net proved reserves attributable to those fields. Vaalco’s results would suffer materially if mechanical problems, storms or other events affected its Gabon properties. The company has operated in Gabon since 1995 and believes it has good relations with the government. Spending heavily to replace reserves. Vaalco had capex of $15 million and dry hole costs of $8 million in 2007. The company has had capex of $16 and dry hole costs of $6 million YTD. Exploration risks. In March, shareholder Nanes Delorme asked the company in a letter put itself up for sale and to “[c]ease attempting to diversify away from the Company’s core geographical area in West Africa. The Company has been unwisely spending cash on acquiring and drilling minor North Sea interests that have been total exploration failures.”1

COMPARABLE PUBLIC COMPANY ANALYSIS MV

HES HNR PXD XOM

18,107 219 2,621 374,784

EGY

256

($mn)

1.6x 0.8x 0.8x 3.0x

08 P/E 6x 18x 5x 8x

09 P/E 9x 9x 5x 10x

1.5x

EV/Rev

P/TB

20,659 101 5,350 346,614

.5x 9.0x 2.2x .7x

157

.8x

MAJOR HOLDERS CEO Gerry III 5% │ CFO Scheirman <1% │ Other insiders 1% │ Barclays 5% │ RenTech 5% │ Columbia Wanger 3%

See exhibit to Schedule 13D filed with the SEC on March 12, 2008.

THE BOTTOM LINE Vaalco has benefited from an increase in oil prices over the past few years, driving returns on capital materially above sustainable levels. The company’s efforts to diversify away from Gabon are fraught with risks. The current share price accurately compensates investors for Vaalco’s exploration risks and the inherent cyclicality of the oil business.

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Thanksgiving 2008

Value Line, Inc. (Nasdaq: VALU)

New York, 212-907-1500 http://www.valueline.com

Financial: Investment Services Trading Data

Consensus EPS Estimates

Price: $32.88 (as of 11/14/08) 52-week range: $30.02 - $47.20 Market value: $328 million Enterprise value: $204 million Shares out: 10.0 million Ownership Data Insider ownership: 87% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 4/30/08 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

12.8x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

2.5x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

n/a 6.2x

n/a

P / tangible book Greenblatt Criteria

3.8x

LTM EBIT yield

16%

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 8% # of institutional owners: 102

Date

Actual

Estimate

n/a

LTM pre-tax ROC

n/m

4/30/02 87 79 29 20 2.04 20 2 18 121 127 4 269 0 32 0 73 0 196

4/30/03 82 73 24 20 2.00 17 2 15 13 20 4 247 0 13 0 51 0 195

n/m

Fiscal Years Ended 4/30/04 4/30/05 4/30/06 85 85 85 76 76 78 25 27 35 20 21 23 2.04 2.14 2.35 8 37 19 2 2 1 6 35 18 244 82 104 257 89 111 4 4 3 267 99 119 0 0 0 220 44 47 0 0 0 232 55 57 0 0 0 35 44 62 n/m

n/m

4/30/07 84 77 36 25 2.47 25 1 24 113 122 2 129 0 47 0 53 0 76

4/30/08 83 76 35 26 2.56 20 1 20 126 132 1 138 0 44 0 50 0 88

LTME 7/31/08 82 76 33 25 2.47 21 1 20 124 131 1 137 0 43 0 49 0 88

FQE 7/31/07 21 19 9 6 0.60 6 n/a n/a 118 126 2 133 0 47 0 54 0 79

FQE 7/31/08 20 19 8 5 0.51 6 0 6 124 131 1 137 0 43 0 49 0 88

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$80 $70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW

•

Value Line dates back to 1931 and operates in two segments: Investment Periodicals, Publishing & Licensing produces investment-related periodicals (retail and institutional) and includes licensing fees for Value Line’s proprietary ranking system and trademarks. Investment Management advises the Value Line Funds and separate accounts. The company owns a registered broker-dealer, Value Line Securities, which distributes the Value Line Funds, a family of no-load funds that charge rule 12b-1 marketing fees.

•

Liquid balance sheet, with $15 million in cash and $109 million in short-term investments on July 31. $30 million of the liquid assets may be considered “float” from up-front subscription payments. Stock price implies 6% trailing FCF yield and 13x trailing P/E (no EPS estimates available).

INVESTMENT RISKS & CONCERNS •

SELECTED OPERATING DATA FYE April 30 2006 2007 2008 1Q09 % of revenue by segment: Print 43% 41% 37% 35% 1 13% 14% 15% 16% Electronic Total publishing 56% 55% 52% 51% Licensing 6% 8% 9% 8% Investment mgmt 38% 37% 40% 41% Revenue growth by segment: Print -6% -7% -10% -10% 1 0% 5% 5% 7% Electronic Total publishing -5% -4% -6% -6% Licensing 97% 37% 3% 2% Investment mgmt 2% -4% 5% 0% ∆ revenue 1% -2% -1% -3% 2 -6% -9% -6% -10% ∆ deferred revenue EBIT margin by segment: Publishing & licensing 38% 38% 37% 39% Investment mgmt 47% 51% 49% 33% Total EBIT margin 41% 43% 42% 37% AUM, Value Line Funds $3.8bn $3.8bn $3.8bn $3.7bn AUM, licensing clients $6.3bn $6.4bn $6.3bn $5.5bn % of AUM, Value Line Funds by asset class (period end): Equity funds 87% 87% 87% 87% Fixed income 8% 8% 7% 7% Money market 4% 5% 6% 6%

Thanksgiving 2008

• •

•

Publishing revenue in steady decline. Subscription revenue fell 4% in FY07 and 6% in FY08, with print revenue down 7% in FY07 and 10% in FY08 (electronic revenue grew 5% in each year). Circulation continues to decline, driven by competition from free and lower-cost Internet-based research and no-cost brokerage firm research. AUM may decline. AUM in Value Line Funds and products managed by licensing customers may decline amid weak stock market performance. Investment profits may decline. Value Line earns income from securities transactions involving $17 million in trading securities and $92 million in securities available for sale as of July 31. Such income may decline in a weak market environment. Low float and control by chairman and CEO Jean Buttner (73). Buttner owns all of the voting stock of Arnold Bernhard & Co., which owns 8.6 million, or 87% of Value Line’s shares outstanding. The company and Arnold Bernhard have also engaged in certain related-party transactions.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn)

7,347 1,414 14,881 97 328

n/m 5.5x n/m 1.0x

08 P/E 9x 16x 10x 29x

09 P/E 9x 15x 9x 53x

3.8x

n/a

EV/Rev

P/TB

8,366 1,104 22,186 19

1.3x 2.2x 2.0x .3x

204

2.5x

Value Line derives 47% of electronic revenue from institutional accounts and 53% from retail subscribers. Institutional electronic revenue increased 23%, while retail revenue declined 7% in FY08. 2 Represents y-y change in period-end deferred revenue (includes short-term and long-term deferred revenue liability).

INVESTMENT HIGHLIGHTS • •

•

MHP MORN TRIN TSCM VALU

Value Line Investment Survey is premier service, published weekly and covering 1,700 stocks. Serves as investment adviser to 14 mutual funds with AUM of $3.7 billion as of July 31. The largest distribution channel for the Value Line Funds are fund supermarket platforms run by Charles Schwab, TD Ameritrade, and National City Bank. Earns high-margin fees from licensing trademarks and proprietary information for use in products such unit investment trusts, annuity trusts, managed accounts, and ETFs. AUM of parties participating in licensing programs was $5.5 billion as of July 31.

MAJOR HOLDERS CEO Buttner 87% (via Arnold Bernhard & Co.) │ Other insiders <1% │

THE BOTTOM LINE Value Line trades at a high single digit earnings yield, part of which is dividended out at an annual rate of $1.60 per share. Retained cash has accumulated on the balance sheet, creating an inefficient capital structure. As the company is 87%-owned by an affiliate of the CEO, shareholders have little leverage to compel the company to repurchase stock. Given an absence of meaningful growth opportunities, we find Value Line a less-than-compelling investment. We question the wisdom of Value Line remaining a public company and believe minority shareholders might be better off in a CEO-led buyout. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

ValueClick, Inc. (Nasdaq: VCLK)

Westlake Village, CA, 818-575-4500 http://www.valueclick.com

Services: Advertising, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $5.71 (as of 11/14/08) 52-week range: $5.47 - $24.74 Market value: $495 million Enterprise value: $406 million Shares out: 86.7 million Ownership Data Insider ownership: 1% Insider buys (last six months): 4

Valuation

This quarter Next quarter

Latest $0.15 0.14

Month Ago $0.19 0.18

# of Ests 20 11

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

8.2x 10.2x 9.4x 9.1x

FYE 12/31/08

0.56

0.68

EV / LTM revenue

0.6x

FYE 12/31/09 FYE 12/31/10

0.61 0.63

0.77 0.78

21 8

EV / LTM EBITDA EV / LTM EBIT

3.8x 5.4x

P / tangible book 5.2x Greenblatt Criteria

LT EPS growth 10.6% 15.4% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 526

Date

Actual

Estimate

10/29/08

$0.02

$0.14

LTM EBIT yield

19%

LTM pre-tax ROC

>100%

12/31/01 45 25 (13) (7) (0.19) (5) 2 (7) 163 175 8 191 1 13 1 25 0 166

12/31/02 63 41 (9) (11) (0.04) 2 3 (2) 233 250 3 264 1 16 1 32 0 232

-211%

-99%

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 93 169 304 61 118 215 7 36 64 10 31 41 0.13 0.37 0.45 16 47 61 4 6 9 12 41 52 220 243 241 246 282 327 65 78 376 323 385 721 0 0 0 32 41 67 0 0 0 49 56 102 0 0 0 274 329 619 88%

>100%

12/31/06 546 378 102 63 0.62 114 10 104 282 403 370 793 0 87 0 150 0 644

12/31/07 646 441 110 71 0.70 143 9 133 254 399 553 1,011 0 219 0 301 0 710

LTME 9/30/08 676 457 75 55 0.56 143 11 132 89 219 527 800 0 105 0 178 0 622

FQE 9/30/07 157 106 26 17 0.17 18 1 17 251 376 458 855 0 92 0 169 0 687

FQE 9/30/08 153 99 (11) 2 0.02 32 2 30 89 219 527 800 0 105 0 178 0 622

>100%

n/m

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$40 $35 $30 $25 $20 $15 $10 $5 $0 Jan 00

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW ValueClick is an online marketing services firm that sells targeted online ad campaigns to advertisers, generating leads, online sales and brand recognition. The company was founded in 1998 and operates in four segments: The Media segment’s ValueClick Media brand provides online display advertising and lead generation. Affiliate Marketing’s Commission Junction brand allows advertisers to pay their own salesforce of online publishers. Comparison Shopping operates PriceRunner in Europe and Smarter.com and CouponMountain.com in the U.S. Technology’s Mediaplex provides ad serving and tracking for advertisers seeking to understand their online ad spending.

•

Growth strategy based on acquisition-driven and organic growth. While the company has indicated an interest in exploring M&A opportunities, it is also focused on new and upgraded products. $119 million in cash and securities and no debt. Repurchased 12 million shares for $150 million YTD, 2.3 million shares for $44 million in 2007, and 33 million shares for $179 million before 2007. Despite the buybacks, average diluted shares grew from 91 million in 2005 to 101 million in 2007. Stock price implies 27% trailing FCF yield, 10x trailing P/E and 9x forward P/E.

INVESTMENT RISKS & CONCERNS

2006

2007

YTD 9/30/08

70% 21% 5% 5%

60% 21% 14% 5%

48% 18% 28% 6%

•

132% 17% 52% -5% 79%

1% 22% 251% 27% 18%

-20% 9% 123% 21% 7%

•

25% 52% 12% 30% -11% 19%

22% 50% 19% 39% -12% 17%

22% 48% 24% 41% -19% 9%

87% 13%

85% 15%

83% 17%

20% 9%

18% 9%

11% 2%

Seeing weaker revenue trends than anticipated, with consumers taking less action on online shopping sites, and advertisers holding sites to stricter performance objectives. The company has responded with spending and headcount reductions. Guiding for revenue decline of 1%-2% to $633638 million in 2008. Management anticipates 2008 “adjusted” EBITDA of $161-164 million (25-26% margin) and GAAP EPS of $0.55-0.56, lower than previous guidance for EPS of $0.69-$0.71. M&A rollup strategy. ValueClick has completed numerous acquisitions in recent years, including MeziMedia, Shopping.net, Fastclick, Webclients, EBabylon, Pricerunner, Commission Junction, etc.

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) DRIV GOOG MWW VCLK

INVESTMENT HIGHLIGHTS •

• •

•

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by segment: Media 54% Affiliate marketing 31% Comparison shopping 6% Technology 9% Revenue growth by segment: Media 157% Affiliate marketing 30% Comparison shopping 204% Technology 6% Total revenue growth 80% EBIT margin by segment: Media 23% Affiliate marketing 47% Comparison shopping 12% Technology 34% Corporate and other -10% Total EBIT margin 21% % of revenue by geography: U.S. 84% International 16% EBIT margin by geography: U.S. 23% International 10%

•

Thanksgiving 2008

Leadership positions in core businesses that benefit from long-term growth in online ads and ecommerce. ValueClick is the leading independent online display ad network, with 142 unique visitors per month. The company is also the leading player globally in online affiliate marketing. Multiple touch points allow ValueClick to engage consumers more deeply than more narrowlyfocused alternatives. Each ValueClick technology feeds into a common data platform and leverages anonymous consumer data for enhanced targeting.

MV 865 97,580 1,432

EV 565 83,168 1,040

495

406

EV/Rev 1.4x 4.0x .7x

P/TB 3.1x 4.5x 4.3x

08 P/E 13x 16x 8x

09 P/E 12x 14x 11x

.6x

5.2x

10x

MAJOR HOLDERS CEO Vadnais <1% │ Other insiders 1% │ Fidelity 15% │ Barclays 9%

THE BOTTOM LINE ValueClick is the kind of investment Warren Buffett might put in the “too difficult” pile. Not only does the company compete in the fast-changing, technology-driven online advertising market, but it has also been cobbled together from various acquisitions, making it difficult to judge organic growth and internal cohesiveness. We are concerned that the online ad space remains a “wild west” of new media, with intrusive tactics still used by some players to capture consumers. We note that ValueClick settled with the FTC in February regarding allegations of deceptive marketing. We have no basis on which to judge the predictability or sustainability of ValueClick’s FCF, putting us on the sidelines. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Varian Semiconductor (Nasdaq: VSEA)

Gloucester, MA, 978-282-2000 http://www.vsea.com

Technology: Semiconductors, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $17.47 (as of 11/14/08) 52-week range: $16.59 - $43.47 Market value: $1.3 billion Enterprise value: $1.1 billion Shares out: 72.6 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest -$0.03 -0.02

Month Ago $0.11 0.18

# of Ests 11 11

FYE 9/30/09

0.07

0.93

EV / LTM revenue

1.3x

FYE 9/30/10 FYE 9/30/11

0.81 1.15

1.88 1.74

5 1

EV / LTM EBITDA EV / LTM EBIT

n/a 7.0x

P / tangible book Greenblatt Criteria

2.5x

LT EPS growth 14.6% 14.6% Latest Quarterly EPS Surprise

Insider sales (last six months): 0 Institutional ownership: 95% # of institutional owners: 688

Date

Actual

Estimate

10/30/08

$0.05

$0.01

P/E FYE 10/3/08 P/E FYE 9/30/09 P/E FYE 9/30/10 P/E FYE 9/30/11

13.2x 249.6x 21.6x 15.2x

LTM EBIT yield

14%

LTM pre-tax ROC

50%

9/27/02 335 139 3 9 0.12 153 15 139 308 527 12 590 6 145 0 153 0 436

10/3/03 363 151 13 11 0.14 11 17 (6) 351 521 12 584 6 92 5 110 0 474

10%

Fiscal Years Ended 10/1/04 9/30/05 9/29/06 530 601 731 240 269 310 87 85 103 61 72 95 0.73 0.85 1.10 37 31 73 13 12 12 24 19 61 393 474 414 682 789 723 12 12 12 750 863 938 4 0 1 154 148 159 4 4 3 173 174 183 0 0 0 576 689 755 53%

41%

47%

9/28/07 1,055 489 257 142 1.73 141 12 129 198 612 12 799 1 173 3 233 0 566

10/3/08 834 396 152 98 1.32 108 11 97 209 549 0 700 1 115 2 185 0 515

LTME 10/3/08 834 396 152 99 1.30 n/a n/a n/a 209 549 0 700 1 115 2 185 0 515

FQE 9/28/07 299 142 80 43 0.55 25 3 22 198 612 12 799 1 173 3 233 0 566

FQE 10/3/08 142 64 4 2 0.03 n/a n/a n/a 209 549 0 700 1 115 2 185 0 515

97%

50%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$70 $60 $50 $40 $30 $20 $10 $0 Oct 99

Oct 00

Oct 01

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BUSINESS OVERVIEW Varian is a semiconductor capital equipment maker and the leading producer of ion implantation equipment.

•

SELECTED OPERATING DATA FYE September 30 % of revenue by geography: North America Asia Pacific Europe Revenue growth by geography: North America Asia Pacific Europe ∆ revenue ∆ unit shipments of tools ∆ deferred revenue (period end) % of revenue by type: Product Service Royalty % of shipments by market: Memory Logic Foundry % of shipments by wafer size: 300 mm 200 mm Top 10 customers (% of revenue)

2006

2007

2008

22% 67% 11%

22% 71% 7%

22% 70% 8%

20% 20% 39% 22% 33% 6%

45% 53% -10% 44% 51% 10%

-21% -22% -12% -21% n/a -41%

88% 11% 1%

91% 8% 1%

90% 10% 0%

51% 19% 30%

70% 14% 16%

n/a n/a n/a

75% 25% 63%

91% 9% 72%

n/a n/a n/a

• • • •

($ in millions) Medium current High current High energy Ultra high dose Overall 1

•

• •

Varian Market Share CY06 CY07 53% 57% 46% 78% 17% 13% na 100% 43% 65%

INVESTMENT HIGHLIGHTS

•

Sharp drop-off in business, driven by drop in capital spending, particularly by manufacturers of DRAM devices. Revenue fell 37% and 52% y-y in the June and September quarter, respectively. The company expects to post a small loss in 1Q09. Cyclical business, dependent on semi makers’ capacity investments, which exhibit large volatility (particularly in the case of memory manufacturers). Axcelis may become strong competitor if bought. Sumitomo Heavy Industries made a hostile bid for Axcelis in February, but shelved its proposal after Axcelis rejected a sweetened $616 million offer.

COMPARABLE PUBLIC COMPANY ANALYSIS

Source: Garter Dataquest, VLSI Research, Company.

•

PLAD plasma tool expands addressable market through creation of ultra high-dose segment, with sales potentially surpassing $100 million in FY09. Little risk of commoditization, due to advances in implanter technology and changes in wafer and chip size. Implantation has become a higher-value step in semi production, giving Varian more pricing power. Gary Dickerson (50) joined Varian as CEO in 2004, having served for ten years in roles at KLATencor, including as Group VP, EVP, and COO. $209 million of net cash and short-term securities. Repurchased $179 million of stock in FY08, $427 million in FY07 and $109 million in FY06. Stock price implies 0% trailing FCF yield, 13x trailing P/E (forward EPS estimate is $0.07).

INVESTMENT RISKS & CONCERNS

VARIAN’S SHARE OF GLOBAL IMPLANTER MARKET1 Market Size CY06 CY07 $414 $454 720 672 230 147 na 64 $1,364 $1,337

•

Thanksgiving 2008

#1 in $1 billion implantation equipment market, with share up from 43% in CY06 to 65% in CY07. Varian has grown share—and is likely to continue to do so—in the largest segments while maintaining 100% of the fast-growing, ultra high-dose market. Gained high-current share due to industry shift from batch ion to single wafer implanters. Varian began developing the technology in 1994, giving it large lead over Applied Materials and Axcelis. AMAT was effectively forced to exit the highcurrent segment in 2007, with Varian benefiting. Large barriers to entry due to role of patents and technical expertise. Implanters weigh 20+ tonnes and sell for roughly $4 million each. The industry has seen no credible new entrants in decades.

($mn) ACLS AMAT KLAC LRCX

MV 64 13,725 3,067 2,248

EV 97 11,827 2,505 1,488

EV/Rev .3x 1.5x 1.1x .7x

P/TB 0.2x 2.3x 1.7x 1.6x

08 P/E n/m 13x 36x 138x

09 P/E n/m 9x 14x 15x

VSEA

1,269

1,063

1.3x

2.5x

250x

22x

MAJOR HOLDERS CEO Dickerson <1% │ Other insiders 2% │ Fidelity 15% │ Wellington 9% │ Oppenheimer Funds 9% │ Turner 5%

THE BOTTOM LINE Varian is the undisputed leader in a small but important segment of the semiconductor cap equipment industry. Several years ago, the company positioned itself to take advantage of an industry shift to single wafer implanters. It gained market share as a result and moved closer to a quasi-monopolic position (only remaining credible competitor is struggling Axcelis). The implanter segment has high barriers to entry and should exhibit mid to high single-digit growth in the long term. While the industry is undergoing a cyclical downturn, we believe Varian shares offer compelling value. © 2008 by BeyondProxy LLC. All rights reserved.

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Thanksgiving 2008

Verigy Ltd. (Nasdaq: VRGY)

Singapore, Singapore, 65--675-2033 http://www.verigy.com/portal/page/p…

Technology: Semiconductors Trading Data

Consensus EPS Estimates

Price: $10.96 (as of 11/14/08) 52-week range: $10.50 - $27.96 Market value: $646 million Enterprise value: $261 million

This quarter Next quarter

Latest $0.15 0.00

FYE 10/31/08

1.22

1.21

EV / LTM revenue

0.3x

FYE 10/31/09 FYE 10/31/10

0.49 0.80

1.25 2.12

10 2

EV / LTM EBITDA EV / LTM EBIT

n/a 2.8x

LT EPS growth 20.0% 20.0% Latest Quarterly EPS Surprise

P / tangible book 1.2x Greenblatt Criteria

Shares out: 58.9 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0 Insider sales (last six months): 19 Institutional ownership: 81% # of institutional owners: 345

Valuation

Month Ago $0.15 0.18

Date

Actual

Estimate

8/21/08

$0.29

$0.28

# of Ests 10 10

P/E FYE 10/31/07 P/E FYE 10/31/08 P/E FYE 10/31/09 P/E FYE 10/31/10

6.8x 9.0x 22.4x 13.7x

LTM EBIT yield

36%

LTM pre-tax ROC

>100%

10/31/03 540 231 (25) (28) (0.56) (29) 7 (36) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

EBIT/capital employed

Fiscal Years Ended 10/31/04 10/31/05 607 456 253 140 5 (105) (8) (119) (0.16) (2.38) 48 (74) 5 11 43 (85) 0 0 197 199 18 17 265 260 0 0 128 158 0 0 146 173 0 0 119 87

n/a

10/31/06 778 350 16 0 0.00 164 36 128 300 551 18 674 0 253 0 287 0 387

10/31/07 761 340 99 97 1.62 121 12 109 375 604 18 771 0 226 0 273 0 498

LTME 7/31/08 750 350 93 96 1.58 128 11 117 385 607 18 831 0 212 0 270 0 561

FQE 7/31/07 204 93 31 30 0.50 36 2 34 391 592 18 714 0 204 0 235 0 479

FQE 7/31/08 179 83 15 18 0.30 26 4 22 385 607 18 831 0 212 0 270 0 561

32%

>100%

n/m

-149%

Ten-Year Stock Price Performance and Trading Volume Dynamics

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BUSINESS OVERVIEW

•

Verigy provides advanced test systems for the semiconductor industry. The company offers a single platform for each of the two categories of devices being tested: the 93K platform is designed to test System-on-a-Chip (SoC), System-in-aPackage (SiP) and high-speed memory devices, while the Versatest V5000 platform is designed to test memory devices, including flash memory and multi-chip packages containing a mix of memory devices. Verigy has so far sold 1,650 93K systems and 2,500 Versatest systems. Customers include integrated device manufacturers (IDMs), test subcontractors, and fabless design companies. Verigy maintains a direct salesforce. It uses Flextronics and other contract manufacturers to produce the company’s systems. Verigy separated from Agilent (A) and went public in 2006. It has 1,600 employees.

• •

2007

YTD 7/31/08

44% 37% 19%

68% 11% 22%

-25% 38% 11% -2%

74% -76% 8% -2%

28% 56% 7% 9%

15% 67% 9% 9%

-15% -2% -10%

n/a n/a n/a

•

• •

Also includes System-in-a-Package (SIP) and high-speed memory products. Backlog was $224 million on October 31, 2007, or ~30% of annual revenue. 3 Product backlog: systems under POs, to be delivered within six months. 4 Services backlog outstanding orders for product support and services. 2

INVESTMENT HIGHLIGHTS

•

Memory market has turned down, producing “very challenging” environment, partially offset by “strong demand” for consumer mixed signal and Port Scale RF products. Sharp revenue and profit drop expected in FQ4. Verigy has provided guidance for the quarter ended October 31st of $155-165 million in revenue (down 21-26% y-y) and $7-10 million in net income (down 69-78% y-y) (EPS of $0.12-$0.17). FQ4 net income includes ~$4.5 million of stock comp expense. Cyclicality, inventory risk, and pricing pressure in industry with solid long-term growth. The semiconductor industy continues to benefit from increased use of ICs in computing, electronics, and other markets. Nonetheless, the industry has at times been plagued by excess capacity resulting in steep price declines and inventory writedowns. Three customers comprised 44% of revenue in FQ3. Two customers were 32% of FY07 revenue. Competitors include Advantest, Credence, LTX, Nextest, Teradyne, and Yokogawa. Verigy also competes with internal development by customers.

COMPARABLE PUBLIC COMPANY ANALYSIS

•

Chairman and CEO Keith Barnes (56) joined Verigy in 2006. He had previously been CEO of Electroglas and Integrated Measurement Systems. Repurchased 637K shares for $15 million in FQ3 under six million-share program authorized in April. Stock price implies 18% trailing FCF yield, 7x trailing P/E and 22x forward P/E.

INVESTMENT RISKS & CONCERNS

SELECTED OPERATING DATA FYE October 31 2005 2006 % of revenue by type: 1 Products: SoC etc. 59% 57% Products: Memory 19% 26% Services 22% 17% Revenue growth by type: 1 Products: SoC etc. -28% 66% Products: Memory -33% 132% Services -5% 31% Total growth -25% 71% % of revenue by geography: U.S. 26% 31% Singapore 39% 48% Japan 21% 10% Rest of the world 14% 10% 2 Growth in period-end backlog: 3 Product backlog n/a 52% 4 n/a 29% Services backlog Total backlog n/a 42%

Thanksgiving 2008

Test equipment companies have ridden longterm growth curve of semiconductor industry. By detecting and sometimes repairing defects, test equipment enables semi firms to improve yield. HP roots; scalable and flexible test solutions. Verigy’s technology can be traced back to HP and Agilent, from which Verigy separated in 2006. The test platforms are scalable across frequency ranges, pin counts and numbers of devices. This flexibility allows for a single test system to test a wide range of applications, providing Verigy with efficiencies such as lower R&D costs and inventory risk.

($mn) ATE TER

MV 2,377 686

EV 830 378

EV/Rev .7x .3x

P/TB 0.9x 0.8x

08 P/E n/a 16x

09 P/E n/a n/m

VRGY

646

261

.3x

1.2x

22x

MAJOR HOLDERS CEO Barnes <1% │ Other insiders <1% │ Iridian 7% │ TCW 5% │ Clearbridge 5% │ Citadel 4%

THE BOTTOM LINE Verigy trades at a low valuation but growth has ground to a halt due to memory market weakness. Assuming that top-line growth resumes when end market conditions improve, and assuming that such improvement is a matter of months rather than years, Verigy shares have substantial upside. The company has a rock-solid balance sheet and has authorized a program to buy back up to 10% of shares outstanding (accretive to EPS). Verigy is interesting, but there are better opportunities.

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Page 252 of 401

Thanksgiving 2008

Versant Corporation (Nasdaq: VSNT)

Fremont, CA, 510-789-1500 http://www.versant.com

Technology: Software & Programming Trading Data

Consensus EPS Estimates

Price: $14.46 (as of 11/14/08) 52-week range: $14.10 - $33.48 Market value: $54 million Enterprise value: $27 million Shares out: 3.7 million Ownership Data Insider ownership: 9% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest n/a n/a

Month Ago n/a n/a

# of Ests n/a n/a

P/E FYE 10/31/07 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01

7.3x n/a n/a n/a

FYE 1/0/00

n/a

EV / LTM revenue

1.1x

FYE 12/30/00 FYE 12/30/01

n/a n/a

EV / LTM EBITDA EV / LTM EBIT

2.8x 2.8x

n/a

P / tangible book 2.2x Greenblatt Criteria

LT EPS growth n/a n/a Latest Quarterly EPS Surprise

Insider sales (last six months): 3 Institutional ownership: 42% # of institutional owners: 57

Date

Actual

Estimate

n/a

LTM EBIT yield

36%

LTM pre-tax ROC

n/m

10/31/01 24 12 (7) (7) (5.94) 0 0 0 4 12 0 15 1 8 0 9 5 2

10/31/02 20 14 (4) (3) (2.76) 1 0 1 4 10 0 12 0 7 0 8 5 (1)

-219%

-232%

Fiscal Years Ended 10/31/03 10/31/04 10/31/05 22 18 16 14 14 12 (3) (8) (16) (2) (12) (15) (1.75) (3.33) (4.23) (1) (7) 0 0 0 0 (2) (7) 0 3 3 4 8 10 7 1 22 8 11 33 16 1 0 0 7 8 6 0 0 0 8 10 7 8 0 0 (5) 23 9 n/m

n/m

10/31/06 17 14 4 4 1.01 3 0 3 8 12 8 20 0 6 0 7 0 14

10/31/07 21 19 8 8 1.98 10 1 9 19 22 8 31 0 7 0 7 0 23

LTME 7/31/08 25 23 10 9 2.43 11 0 11 27 32 7 40 0 7 0 8 0 33

FQE 7/31/07 5 5 2 2 0.50 0 0 0 15 19 8 28 0 7 0 7 0 20

FQE 7/31/08 6 6 3 3 0.70 2 0 2 27 32 7 40 0 7 0 8 0 33

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Page 253 of 401

BUSINESS OVERVIEW Versant, founded in 1988, provides object-oriented data management software that companies use to solve complex data management and integration problems. The software is used in strategic distributed applications, including network modeling and management, fault diagnosis, fraud prevention, service activation and assurance, and customer billing and scheduling. Management is based in the U.S. and Germany, while R&D activities are conducted in Germany and India. The company targets the telecom, technology, defense, financial, transportation, and health care industries. It sells two types of perpetual licenses: Development licenses, sold on a per seat basis, authorize a customer to develop an application that uses Versant software. Deployment licenses permit a customer to deploy an application it has developed under a development license. End-users typically buy deployment licenses based on the number of CPUs. VARs and distributors purchase development licenses on a per seat basis. In exchange for royalties, VARs are authorized to sublicense deployment copies of Versant software.

SELECTED OPERATING DATA FYE October 31 2005 2006 % of revenue by type: License 56% 51% Maintenance 40% 40% Prof. services 4% 9% Revenue growth by type: License -9% -4% Maintenance -7% 7% Prof. services -50% 153% Total growth -11% 6% 1 Gross margin by type: License 97% 96% Maintenance 77% 79% Prof. services -42% 34% Total GM 83% 83% % of revenue by geography: North America 34% 37% Europe 64% 61% Asia 2% 3% 2 14% 1% ∆ in shares out

2007

YTD 7/31/08

60% 39% 1%

64% 35% 1%

50% 22% -84% 26%

32% 12% 7% 24%

99% 82% 54% 92%

98% 84% 65% 93%

46% 50% 4% 3%

32% 54% 14% 2%

•

Large recurring revenue stream, high switching costs. We estimate that two-thirds of revenue is of a recurring nature. Versant is deeply embedded into customer applications, making it difficult to switch. Highly capable Jochen Witte (47) became CEO in 2005. Previously, he headed Versant’s European operations and co-founded a firm that merged with Versant in 2004. Since taking the helm, Witte has cut costs and focused on the database business. Financial results have improved dramatically. Strong balance sheet; large NOLs. Versant had $27 million of net cash as of July 31. It had federal, state, and German NOLs of $80 million, $16 million, and $41 million as of October 31, 2007. Stock price implies 19% trailing FCF yield and 6x trailing P/E (no EPS estimates available).

INVESTMENT RISKS & CONCERNS •

• •

Impact of weak economy, dollar appreciation. According to CEO Witte, “achieving our future goals will become more challenging.” Competition from relational database companies including Oracle, CA, Sybase, IBM, and Microsoft. Versant also competes against object database firms such as Progress Software and Objectivity. Small but growing object-oriented database market. The $70 million market size limits the explosiveness of Versant’s growth potential. Low insider ownership—particularly noteworthy given Versant’s small market capitalization.

COMPARABLE PUBLIC COMPANY ANALYSIS

Gross profit excludes intangibles amortization, which amounted to $237K in each of the nine months ended July 31, 2007 and July 31, 2008. 2 Represents y-y change in average diluted shares outstanding.

($mn) CA BMC ORCL PRGS SY

MV 8,821 4,691 87,110 829 2,025

EV 8,660 4,077 85,326 599 1,924

VSNT

EV/Rev 2.0x 2.2x 3.7x 1.2x 1.7x

P/TB n/m n/m n/m 3.0x 116.4x

08 P/E 11x 11x 11x 11x 12x

09 P/E 10x 10x 10x 10x 12x

1.1x

2.2x

n/a

MAJOR HOLDERS CEO Jochen Witte 2% │ Other insiders 2% │ RenTech 9%

INVESTMENT HIGHLIGHTS

•

Thanksgiving 2008

Object-oriented database management software has advantages over relational databases in meeting the data requirements of companies who use very large, changing bodies of complex data. Versant Object Database (VOD) cuts customers’ hardware costs and speeds development. VOD sales account for almost all license revenue. Versant also sells FastObjects software, added in 2004 via a merger with CEO Witte’s former company.

THE BOTTOM LINE Versant barely missed our Top 10 magic formula selections. It is a well-managed, growing company with strong niche products in the database software market. We do not expect the company’s growth to fall off a cliff in the foreseeable future. As a result, we view the shares as meaningfully undervalued at only 6x trailing EPS (even less on cash-adjusted basis). © 2008 by BeyondProxy LLC. All rights reserved.

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Page 254 of 401

Thanksgiving 2008

Viacom, Inc. (NYSE: VIA.B)

New York, NY, 212-258-6000 http://www.viacom.com

Services: Broadcasting & Cable TV, Member of S&P 500 Trading Data

Consensus EPS Estimates

Price: $16.78 (as of 11/14/08) 52-week range: $14.51 - $45.40 Market value: $10.3 billion Enterprise value: $18.7 billion Shares out: 613.5 million Ownership Data Insider ownership: 12% Insider buys (last six months): 0 Insider sales (last six months): 1 Institutional ownership: 76% # of institutional owners: 1230

Valuation

This quarter Next quarter

Latest $0.87 0.41

Month Ago $0.91 0.47

# of Ests 24 7

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

7.0x 6.7x 6.6x 5.8x

FYE 12/31/08

2.49

2.53

EV / LTM revenue

1.3x

FYE 12/31/09 FYE 12/31/10

2.53 2.90

2.71 3.13

26 17

EV / LTM EBITDA EV / LTM EBIT

5.5x 6.2x

LT EPS growth 12.4% 13.8% Latest Quarterly EPS Surprise

P / tangible book Greenblatt Criteria

n/m

Date

Actual

Estimate

11/3/08

$0.55

LTM EBIT yield

16%

LTM pre-tax ROC

>100%

12/31/02 6,051 3,094 1,738 (319) 1.26 1,601 122 1,479 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

12/31/03 7,304 3,632 2,002 339 1.53 1,911 114 1,797 58 3,213 10,242 22,304 39 3,766 163 6,489 0 15,816

n/a

>100%

EBIT/capital employed

Fiscal Years Ended 12/31/04 12/31/05 8,132 9,520 4,224 4,850 2,283 2,359 294 1,257 1.85 1.73 1,984 1,636 141 193 1,844 1,443 149 361 2,626 3,513 10,517 10,732 18,441 19,116 53 56 2,786 3,269 292 5,702 4,976 11,328 0 0 13,465 7,788 >100%

>100%

12/31/06 11,361 5,398 2,767 1,592 2.19 2,270 209 2,061 706 4,211 11,954 21,797 64 4,617 7,584 14,631 0 7,166

12/31/07 13,423 5,992 2,936 1,838 2.41 1,776 237 1,539 920 4,833 12,059 22,904 187 5,273 8,060 15,793 0 7,111

LTME 9/30/08 14,630 6,206 3,026 1,638 2.52 1,293 324 969 525 4,169 12,149 22,815 133 4,183 8,819 15,665 0 7,150

FQE 9/30/07 3,271 1,600 815 641 0.67 298 67 231 373 3,590 11,899 21,370 125 4,204 7,605 14,318 0 7,051

FQE 9/30/08 3,408 1,463 689 401 0.62 617 53 564 525 4,169 12,149 22,815 133 4,183 8,819 15,665 0 7,150

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Page 255 of 401

BUSINESS OVERVIEW

•

Viacom is a leading global entertainment content company. It operates through two reporting segments: Media Networks, which includes MTV Networks and BET Networks; and Filmed Entertainment. Viacom engages audiences on TV, motion picture and digital platforms through well-known brands, including MTV, VH1, CMT, Nickelodeon, Comedy Central, Spike TV, BET, Paramount Pictures, and DreamWorks Pictures. Viacom’s reach includes 160 channels and 340 online properties in 160 countries. MTV Networks reaches 520 million households worldwide, while BET reaches 88 million U.S. households. Paramount dates back to 1912, has a library of 3,500 motion pictures, and ranked #1 in domestic box office revenue in 2007. Viacom became a standalone company via a separation from the former Viacom (now known as CBS Corp.) at yearend 2005.

SELECTED OPERATING DATA FYE December 31 2005 % of revenue by segment: Media Networks 70% Filmed Entertainment 30% EBIT margin by segment: Media Networks 39% Filmed Entertainment 2% % of revenue by component: Advertising 42% Feature film 30% Affiliate fees 19% Ancillary 8% % of revenue by geography: U.S. 78% Europe 13% Other 9%

2006

2007

YTD 9/30/08

63% 37%

60% 40%

40% 3%

38% 2%

35% 0%

38% 36% 18% 9%

34% 39% 17% 10%

32% 39% 19% 11%

76% 15% 9%

73% 17% 10%

n/a n/a n/a

•

D&A exceeds capex. Viacom recorded D&A of $1 billion from 2005-07, with capex of $639 million. Stock price implies 9% trailing FCF yield, 7x trailing P/E and 7x forward P/E.

INVESTMENT RISKS & CONCERNS •

•

• •

Challenging ad revenue environment. While Viacom has diverse revenue streams including affiliate, ancillary and motion picture revenue, advertising accounts for one-third of revenue. This stream has weakened due to economic conditions. TV may face newspaper-like risks in long term. Video content is becoming increasingly popular online due to the proliferation of broadband and sites such as YouTube that allow anyone to share content. Consumers increasingly spend time online, threatening TV’s still-strong market share position. Hit-dependent motion picture business. While Paramount is a leading franchise, results fluctuate based on the timing of “hit” movie releases. Filmed Entertainment contributes little EBIT despite meaningful revenue. While this implies margin upside, it also raises the question whether continued investment in the segment is justified or whether alternatives should be explored.

COMPARABLE PUBLIC COMPANY ANALYSIS

INVESTMENT HIGHLIGHTS •

•

Thanksgiving 2008

Business continues to perform. Viacom’s new franchise, the top-selling Rock Band music video game, has had 18 million songs downloaded since launch. Rock Band 2 should aid EPS growth in 2009. Paramount generated $1 billion in box office receipts in record time in 2008, driven by Indiana Jones, Kung Fu Panda, and Iron Man. Low double-digit EPS growth from 2008-10. Management expects to deliver low double-digit annual growth in diluted EPS from continuing operations (2007 base year EPS was $2.36). Seasoned management. Founder Sumner Redstone (84) remains executive chairman, with CEO Philippe Dauman (54) at the helm since 2006. Dauman has been with Viacom for two decades. Debt-financed buybacks optimize cap structure. Viacom has $8.4 billion of net debt and has repurchased $1.1 billion of stock so far this year.

($mn) DIS DISCA NWS.A TWX

MV 38,427 3,915 19,419 32,825

EV 50,065 7,777 27,408 66,762

EV/Rev 1.3x 2.9x .8x 1.4x

P/TB 16.4x n/m n/m n/m

08 P/E 10x 14x 7x 8x

09 P/E 9x 13x 6x 8x

VIA.B

10,295

18,722

1.3x

n/m

MAJOR HOLDERS Viacom has 57 million Class A common shares (one vote per share) and 556 million Class B shares (non-voting) outstanding. Both classes of stock trade publicly, with the Class A shares controlled by Sumner Redstone. Economic ownership: Sumner Redstone 12%│ Insiders other than Redstone <1% │ Franklin 7% │ Morgan Stanley 6% │ Wellington 6% │ NWQ 5% │ Barclays 5%

THE BOTTOM LINE There is a lot to like: Tremendous global reach, brands with definitive staying power, shareholder-friendly management, strong long-term prospects for EPS growth, efficient capital structure, and 9% trailing FCF yield. Viacom does face softer ad spending and Internet-based competition, but those factors only explain the current stock price—they do not justify it.

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Page 256 of 401

Thanksgiving 2008

ViroPharma (Nasdaq: VPHM)

Exton, PA, 610-458-7300 http://www.viropharma.com

Health Care: Biotechnology & Drugs, Member of S&P SmallCap 600 Trading Data

Consensus EPS Estimates

Price: $11.70 (as of 11/14/08) 52-week range: $7.78 - $15.16 Market value: $921 million Enterprise value: $502 million Shares out: 78.7 million Ownership Data Insider ownership: 1% Insider buys (last six months): 1

Valuation

This quarter Next quarter

Latest $0.15 0.08

Month Ago $0.16 0.03

# of Ests 12 5

P/E FYE 12/31/07 P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10

9.7x 11.9x 21.7x 117.0x

FYE 12/31/08

0.98

0.90

EV / LTM revenue

2.2x

FYE 12/31/09 FYE 12/31/10

0.54 0.10

0.43 -0.01

12 12

EV / LTM EBITDA EV / LTM EBIT

4.7x 5.0x

P / tangible book 2.0x Greenblatt Criteria

LT EPS growth 24.5% 30.4% Latest Quarterly EPS Surprise

Insider sales (last six months): 3 Institutional ownership: 80% # of institutional owners: 435

Date

Actual

Estimate

10/29/08

$0.33

$0.23

LTM EBIT yield

20%

LTM pre-tax ROC

>100%

12/31/01 3 0 (79) (83) (4.34) (39) 5 (44) 240 252 0 266 0 31 180 227 0 39

12/31/02 6 0 (49) (16) (1.11) (62) 4 (66) 158 162 0 174 0 9 135 146 0 28

n/m

EBIT/capital employed

Fiscal Years Ended 12/31/03 12/31/04 12/31/05 2 22 132 0 21 114 (34) (12) 88 (37) (20) 114 (1.43) (0.73) 2.02 (34) (20) 72 1 1 0 (35) (21) 71 121 35 233 124 56 275 0 116 122 134 178 436 0 0 79 11 13 108 128 190 0 141 205 109 0 0 0 (8) (26) 327 -3091%

-289%

>100%

12/31/06 167 148 99 67 0.95 95 2 93 255 284 123 430 0 18 0 18 0 412

12/31/07 204 195 116 95 1.21 123 9 114 584 623 123 776 0 28 250 280 0 497

LTME 9/30/08 230 221 101 89 1.10 122 2 120 668 699 124 855 0 27 250 280 0 574

FQE 9/30/07 51 49 28 21 0.26 40 0 40 552 595 124 744 0 22 250 273 0 471

FQE 9/30/08 66 63 33 27 0.33 41 2 39 668 699 124 855 0 27 250 280 0 574

>100%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

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Page 257 of 401

BUSINESS OVERVIEW

•

ViroPharma develops products that address serious diseases treated by physician specialists. The company commercializes Vancocin, approved for oral administration for treatment of antibiotic-associated pseudomembranous colitis. ViroPharma focuses drug development activities in infectious diseases including cytomegalovirus (CMV) and non-toxigenic C. difficile (NTCD).

DRUG PIPELINE OVERVIEW Preclinical

Ph. 1

Ph. 2

Ph. 3

ViroPharma 1 Vancocin 2 I Camvia 3 Camvia I 4 NTCD 5 Antiviral Lev Pharmaceuticals — acquisition pending 6 Cinryze

Marketed

•

1 Approved for oral administration for treatment of antibiotic-associated pseudomembranous colitis caused by Clostridium difficile and enterocolitis caused by Staphylococcus aureus, including methicillin-resistant strains. 2 Cambia (maribavir) targets CMV disease in Stem Cell Transplant (SCT). 3 Cambia (maribavir) targets CMV disease in Solid Organ Transplant (SOT). 4 Non-toxigenic C. difficile (NTCD) to prevent recurrence of CD infection. 5 Discovery of antiviral compounds targeting hepatitis C virus (partner: Wyeth). 6 Replacement therapy for patients with HAE (hereditary angioedema).

• •

•

INVESTMENT HIGHLIGHTS •

•

Approved Vancocin drives current business. ViroPharma generates substantially all sales from Vancocin for treatment of enterocolitis caused by S. aureus and antibiotic associated pseudomembranous colitis caused by C. difficile. ViroPharma acquired U.S. rights to Vancocin from Eli Lilly for $116 million plus royalties in 2004. Vancocin grew to $182 million in the past nine months, up 17% y-y. Large acquisition of Lev Pharma (OTC: LEVP), completed in October, adds Cinryze C1 esterase inhibitor (human), a late-stage product targeting life-threatening hereditary angioedema (HAE) disease with limited treatment options (~10,000 U.S. patient population; multi-hundred million dollar market opportunity in acute and prophylaxis). Lev met its primary endpoints in Phase III clinical trials for both the acute and prophylactic treatment of HAE and expects to begin marketing Cinryze in December. The FDA has granted seven years of marketing exclusivity to Cinryze for HAE routine prophylaxis pursuant to the Orphan Drug Act. In the acquisition, ViroPharma is paying $443 million up front (82% cash, 18% stock), with contingent consideration of another $175 million.

Strong FCF from Vancocin sales, with related gross margin in excess of 95%. Stock price implies 13% trailing FCF yield, 11x trailing P/E and 22x forward P/E.

INVESTMENT RISKS & CONCERNS

•

Thanksgiving 2008

•

One-drug company. ViroPharma depends on Vancocin for all of its current revenue. The last core patent protecting Vancocin expired in 1996. Lev acquisition changes risk profile. ViroPharma spent a large portion of its enterprise value on the purchase of money-losing Lev. EBIT decline due to increases in R&D and G&A. R&D spending is up 94% to $45 million while G&A expenses have risen 77% to $43 million YTD. The company attributes the increases to costs associated with phase three of Camvia (maribavir), compensation costs related to European and Vancocin salesforce headcount, and marketing efforts. The opex jump reduced EBIT to $82 million in the first nine months of 2008, down 15% y-y. Management changes, including appointment of Charles Rowland as CFO in October. He was previously CFO of Endo Pharma. A new head of medical affairs also joined ViroPharma in October. Likely to drop off magic formula list due to Lev acquisition, as the deal redeploys a large amount of cash into an EBIT-negative business (ViroPharma had net cash of $418 million as of September 30).

COMPARABLE PUBLIC COMPANY ANALYSIS ($mn) ABII BRL CBST TEVA WPI

MV 2,424 7,074 1,404 35,015 2,470

EV 1,780 8,418 1,358 36,420 2,946

VPHM

921

502

EV/Rev 5.2x 3.0x 3.5x 3.4x 1.2x

P/TB 3.6x 16.7x 11.1x 7.8x 3.9x

08 P/E n/a 22x 19x 15x 12x

09 P/E n/a 17x 14x 14x 11x

2.2x

2.0x

12x

22x

MAJOR HOLDERS CEO Milano <1% │ Other insiders 3% │ Baker Brothers 10% │ Barclays 6%

THE BOTTOM LINE ViroPharma fails to meet magic formula criteria when results are adjusted for the pending acquisition of Lev. An investment in ViroPharma therefore becomes a judgment call on the prospective performance of Lev’s Cinryze, ViroPharma’s Vancocin, and ViroPharma’s drug pipeline. We are not comfortable with such a judgment call in the face of reduced pro forma profitability and, therefore, pass on the shares. © 2008 by BeyondProxy LLC. All rights reserved.

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Western Digital Corp. (NYSE: WDC)

Lake Forest, CA, 949-672-7000 http://www.westerndigital.com

Technology: Computer Storage Devices, Member of S&P MidCap 400 Trading Data

Consensus EPS Estimates

Price: $13.45 (as of 11/14/08) 52-week range: $12.00 - $40.00 Market value: $3.0 billion Enterprise value: $2.3 billion Shares out: 221.6 million Ownership Data Insider ownership: 1% Insider buys (last six months): 0

Valuation

This quarter Next quarter

Latest $0.85 0.65

Month Ago $0.97 0.81

# of Ests 14 13

FYE 6/30/09

3.02

3.34

EV / LTM revenue

0.3x

FYE 6/30/10 FYE 6/30/11

3.17 3.12

3.61 3.53

16 2

EV / LTM EBITDA EV / LTM EBIT

n/a 2.1x

P / tangible book Greenblatt Criteria

1.1x

LT EPS growth 14.0% 14.8% Latest Quarterly EPS Surprise

Insider sales (last six months): 13 Institutional ownership: 93% # of institutional owners: 942

Date

Actual

Estimate

10/23/08

$0.93

$0.81

P/E FYE 6/27/08 P/E FYE 6/30/09 P/E FYE 6/30/10 P/E FYE 6/30/11

3.5x 4.5x 4.2x 4.3x

LTM EBIT yield

49%

LTM pre-tax ROC

63%

6/28/02 2,151 282 51 65 0.28 101 48 53 224 529 0 637 86 493 0 534 0 103

6/27/03 2,719 443 187 182 0.89 258 62 196 393 744 0 866 0 506 0 539 0 327

EBIT/capital employed

>100%

n/m

Fiscal Years Ended 7/2/04 7/1/05 6/30/06 3,047 3,639 4,341 461 590 829 154 195 366 150 196 395 0.69 0.90 1.76 190 421 368 132 194 268 58 227 100 378 598 699 857 1,181 1,505 26 11 0 1,159 1,589 2,086 15 20 25 587 820 872 53 33 19 672 888 929 0 0 0 488 700 1,157 >100%

>100%

6/29/07 5,468 900 415 564 2.50 618 324 294 907 2,029 4 2,901 12 1,130 10 1,185 0 1,716

6/27/08 8,074 1,739 1,006 867 3.84 1,399 615 784 1,107 2,731 197 4,875 27 1,564 482 2,179 0 2,696

LTME 9/26/08 8,417 1,840 1,105 1,009 4.46 1,481 614 867 1,215 2,948 194 5,092 45 1,596 462 2,205 0 2,887

FQE 9/28/07 1,766 323 135 69 0.31 219 163 56 851 2,447 187 4,374 1,011 2,463 7 2,587 0 1,787

FQE 9/26/08 2,109 424 234 211 0.93 301 162 139 1,215 2,948 194 5,092 45 1,596 462 2,205 0 2,887

66%

80%

63%

n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Oct 99

Oct 00

Oct 01

Oct 02

Oct 03

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BUSINESS OVERVIEW

•

Western Digital produces hard disc drives, which it markets to systems manufacturers, resellers, and retailers. The products are used in PCs, notebooks, and enterprise applications such as servers, workstations, network-attached storage, and video surveillance equipment. The top ten customers accounted for 47% of revenue in FY08 (no customer was 10%+ of revenue). Western was founded in 1970; it acquired competitor Komag for $1 billion in 2007.

• • •

SELECTED OPERATING DATA FYE June 30 2006 2007 2008 1 Unit shipments (mn) 73 97 133 Change (y-y) 20% 32% 38% Net revenue ($mn) 4,341 5,468 8,074 Change (y-y) 19% 26% 48% 2 59 57 59 ASP per unit ($) Change (y-y) 0% -3% 4% % of revenue by product – hard drives for… …non-desktop sources 29% 43% 56% …desktop computers 71% 57% 44% % of revenue by channel: 3 OEM 54% 48% 51% Distributors 39% 36% 31% Retailers (ie, branded) 7% 16% 18% % of revenue by geography: U.S. 32% 33% 24% Asia 36% 34% 41% EMEA 28% 29% 29% Other 4% 5% 5%

1Q09 39 34% 2,109 19% 53 -10%

•

61% 39%

•

56% 26% 18%

•

n/a 4 n/a 4 n/a 4 n/a

INVESTMENT HIGHLIGHTS

•

Declining average selling prices. ASP declines are a “fact of life” in the disc drive industry, and prices per unit of storage capacity are likely to continue to decline. ASP declines are driven by factors such as production cost decreases, excess capacity, excess inventories, and attempts to gain market share. Meaningful degree of commoditization: “Hard drives manufactured by different competitors are highly substitutable due to the industry mandate of technical form, fit and function standards.”1 Intense competition from ExcelStor, Fujitsu, Hitachi, Samsung, Seagate, and Toshiba.

COMPARABLE PUBLIC COMPANY ANALYSIS

FY08 growth driven by demand for hard drives and Western’s diversification into non-desktop markets, including mobile, electronics, enterprise, and branded. Western shipped 37 million 2.5 inch drives to the mobile and branded markets in FY08, up from 12 million units in FY07. The company shipped 15 million units to the DVR market in FY08, up from 10 million units in FY07. 2 ASPs are based on sales of hard drives only. 3 Dell accounted for 12%, 10% and <10% of revenue in FY06, FY07 and FY08. 4 1Q09 revenue by geography: Americas 23%, EMEA 29%, Asia 48%.

•

Long-tenured management. CEO John Coyne (58) has served in various roles at Western for 25 years. CFO Timothy Leyden (56) returned to Western in 2007 and has been with the company for 20 years. Strong balance sheet, with $1.2 billion of cash and $500 million of debt as of September 30. Repurchased 18 million shares for $284 million since 2005, including $36 million in 1Q09. Stock price implies 29% trailing FCF yield, 3x trailing P/E and 4x forward P/E.

INVESTMENT RISKS & CONCERNS

•

Thanksgiving 2008

Growing demand for data storage, driven by applications such as digital photos, video and music. Growing demand for disc drives, driven by a proliferation of enterprise data, mobile computing, and consumer electronics. Desktop demand has moderated due to a shift toward mobile computing. $1 billion Komag acquisition strengthens Western’s competitive position against Seagate, which remains the hard disc drive industry leader. Komag improves Western’s market share, production efficiencies, and technology position. Disc drive industry consolidation, driven by high capex requirements and scale advantages: Maxtor/ Quantum, 2001; IBM/ Hitachi their disc drive businesses, 2002; Seagate/ Maxtor, 2006; TDK/ Alps, 2007; Western Digital/ Komag, 2007.

($mn) EMC QTM STX TDK

MV 20,367 36 2,378 4,304

EV 17,950 413 3,255 3,727

EV/Rev 1.2x .4x .3x .4x

P/TB 3.9x n/m 1.1x 0.7x

08 P/E 13x 2x 5x 17x

09 P/E 12x 1x 3x 13x

WDC

2,980

2,272

.3x

1.1x

MAJOR HOLDERS CEO Coyne <1% │ Other insiders <1% │ AXA 12% │ Fidelity 6% │ LSV 5%

Source: Western Digital 10-K for the fiscal year ended June 27, 2008.

THE BOTTOM LINE Western Digital joins close competitor Seagate as a magic formula selection. Both companies are attractively valued, trading at mid single digit multiples of run-rate earnings. Western has a stronger balance sheet and, therefore, an ability to buy back stock more aggressively. However, we view Seagate as the technology leader and more consistent performer. As a result, we prefer Seagate over Western, though both companies deserve thorough investigation. In Western’s case, prospective investors should gain comfort that the Komag acquisition added value and has been integrated successfully.

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MOI Top Ten Lists Top Ideas, Sorted by Category

Top 10 Companies With Hidden Assets

Top 10 Heavily Shorted Stocks

Companies with assets that are unknown to or underappreciated by investors Avistar, Cresud, KHD Humboldt Wedag, IDT, Playboy, Premier Exhibitions, Sonae, Steinway Musical, Maui Land & Pineapple, Natuzzi

Companies with large reported short interests Chipotle, Fairfax Financial, Jefferies, Pzena Investment, Tempur-Pedic, CompuCredit, Greenlight Capital Re, Netflix, Sears Holdings, Sierra Wireless

Top 10 Super Investor Ideas

Top 10 Bargains In Financial Sector

Companies owned by top investment managers American Express, AmeriCredit, Austrian Post, Cresud, Fairfax Financial, Forest City Enterprises, Microsoft, Pfizer, SFK Pulp Fund, Steak n Shake

Financial services companies, broadly defined American Express, AmeriCredit, Cowen, Jefferies, Legg Mason, Fairfax, Greenlight Capital Re, Nicholas Financial, Tree.com, Wells Fargo

Top 10 Stocks You’ve Never Heard Of

Top 10 Foreign Companies Listed In U.S. or Canada

Companies that are unknown to most institutional investors Charles & Colvard, Belzberg Technology, Caldwell Partners, Cimatron, Gravity, IDT, ITEX, McRae Industries, Optimal Group, Strathmore Minerals

Companies generating more than 50% of revenue outside the U.S. Belzberg Technologies, Brazil Fast Foods, Cresud, Cryptologic, Gravity, Indosat, Nippon Telephone, Retail Holdings, SFK Pulp Fund, Sony

Top 10 End-Of-The-Year Tax Selling Bargains

Top 10 Branded Businesses

Companies that may be under selling pressure for tax-planning reasons Ambassadors International, Boyd Gaming, Gravity, IDT, Jamba, Pinnacle Airlines, Playboy, Premier Exhibitions, Select Comfort, Travelzoo

Companies that own widely recognized brands American Eagle, American Express, Boeing, Microsoft, New York Times, Playboy, Princeton Review, Sony, Sotheby’s, Steinway Musical

Top 10 Leveraged Speculations

Top 10 Renaissance Technologies Ideas

Indebted companies with favorable risk-reward tradeoffs but also distinct possibility of permanent loss of capital AmeriCredit, Boyd Gaming, Forest City Enterprises, Lear, Magna Entertainment, Office Depot, Select Comfort, Sears Holdings, Servidyne, Sprint Nextel

Companies owned in size by the world’s top quantitative investment fund; number of shares held must have increased sequentially in order to qualify DISH Network, EarthLink, Forest Labs, Netflix, RadioShack, Stamps.com, Syneron Medical, Walter Industries, WellCare Health Plans, Wet Seal

Top 10 Explosive Stocks De-leveraged companies with a 5% probability of 5x price gain in a year Avistar, Gravity, IDT, Jamba, Mace Security, Premier Exhibitions, Select Comfort, Travelzoo, Tree.com, UTStarcom

“Risk comes from not knowing what you’re doing.”

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Top 10 Ideas For Activist Value Investors Companies typically meeting criteria favored by activists, including lack of insider control, discount to intrinsic value, and recent underperformance Adaptec, InfoSpace, Ingram Micro, Premier Exhibitions, Sierra Wireless, Target, Tech Data, USA Mobility, Versant, Yahoo

Top 10 Ideas For Nano Cap Investors Companies with market value of less than $100 million BSQUARE, Cimatron, IDT, ITEX, New Frontier Media, Playboy, Premier Exhibitions, Servidyne, Travelzoo, Tree.com

Top 10 Ideas For Deep Value Investors

Top 10 Ideas For Micro Cap Investors

Companies meeting criteria favored by deep value investors, such as low price-to-book, price-to-earnings and enterprise value-to-revenue multiples AmeriCredit, Cresud, EchoStar, KHD, IDT, Natuzzi, Office Depot, Sears Holdings, Syneron, UTStarcom

Companies with market value of $100 million to $500 million Boyd Gaming, Cresud, Diamond Management, Greenlight Re, Harvest Natural Resources, KHD, Lear, Natuzzi, Syneron, UTStarcom

Top 10 Ideas For Cash Flow Investors

Top 10 Ideas For Small Cap Investors

Companies trading at low multiples of trailing and/or forward free cash flow, or as Berkowitz might say, “cash gushers” Contango Oil & Gas, DISH Network, EchoStar, ITEX, Microsoft

Companies with market value of $500 million to $2 billion American Eagle, AmeriCredit, Contango Oil & Gas, Deckers Outdoor, EchoStar, Net 1 UEPS, Seagate, Sotheby’s, Tempur-Pedic, Walter Industries

Top 10 Ideas For GARP Investors Companies meeting criteria favored by Growth-At-a-Reasonable-Price (GARP) investors, including good long-term growth prospects and high earnings yield American Eagle, Cadence Design, Garmin, MEMC Electronic Materials, Microsoft, Monster, Net 1 UEPS, NVIDIA, Seagate, Varian

Top 10 Ideas For Mid Cap Investors Companies with market value of $2 billion to $15 billion DISH Network, Forest Labs, Leap Wireless, Linear Technology, McGraw-Hill, MetroPCS, Sears Holdings, Sprint Nextel, TDK, Toll Brothers

Top 10 Ideas For Special Situation Investors

Top 10 Ideas For Large Cap Investors

Companies undergoing corporate change, with expected price performance driven by corporate events such as acquisitions, recaps or divestitures Ascent Media, Axcelis, Brink’s, Digimarc, Discovery, John Bean Technologies, KHD, Porsche stub (ex. Volkswagen), Tree.com, Yahoo

Companies with market value of more than $15 billion American Express, Berkshire-Hathaway, Dell, Microsoft, Nippon Telephone, Pfizer, Sony, Target, Wal-Mart, Wells Fargo

“Show me a guy who’s afraid to look bad, and I’ll show you a guy you can beat every time.”

“Never attribute to malice that which can be adequately explained by stupidity.”

—Lou Brock

—Unknown

Summary investment theses for selected Top 10 companies are included on the following pages.

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Servidyne (Nasdaq: SERV) Price: $2.10 ($2.10-$6.19) Market value: $8 million Enterprise value: $20 million Shares out: 3.7 million Institutional ownership: 15% Insider ownership: 25% Insider buys/sales: 5/0

Energy Demand Management & Real Estate (www.servidyne.com) P/E FYE 4/30/08: P/E FYE 4/30/09: P/E FYE 4/30/00: P/E FYE 4/30/01: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

n/m n/a n/a n/a 1.2x n/m 0.7x

Business: Servidyne operates in two segments: Building Performance Efficiency and Real Estate. BPE provides energy efficiency solutions and sustainability programs to companies that own and operate buildings. Real Estate has engaged in real estate activities since 1960, including the acquisition, development, leasing, and sale of shopping centers, office buildings and land in the Southeast and Midwest. The company uses third-party property managers and leasing agents. Thesis: The company owns income-producing real estate worth $5+ per share net of debt, giving investors the BPE segment for free. BPE, an attractive energy demand management business, could be worth another $8-12 per share, based on 2-3x trailing revenue. BPE revenue grew 11% to $14 million in FY08. Comparable companies in the energy demand management and demand reduction space trade as high as five times revenue. Servidyne may have been overlooked by investors due to its small size, illiquidity, family control, and the fact that the company has posted losses on a GAAP basis.

Ambassadors International (Nasdaq: AMIE) Price: $1.25 ($0.23-$15.99) Market value: $14 million Enterprise value: $129 million Shares out: 11.1 million Institutional ownership: 42% Insider ownership: 16% Insider buys/sales: 0/0

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

4/30/06 16 7 (3) 1 (0.11) 1 (3) (13) 13 5 9 21 52 -10%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

4/30/07 17 7 (4) 1 (0.31) 0 (1) (14) 10 5 9 22 57 -15%

4/30/08 20 8 (3) 1 (0.31) 1 (2) (12) 18 4 9 23 52 -10%

7/31/08 16 6 (3) (1) (0.62) 1 (5) (12) 14 3 10 22 50 -10%

$15 $10 $5 $0 99 00

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River & Ocean Cruising, Marina Construction (www.ambassadors.com) n/m n/a n/a n/a 0.4x n/m 0.2x

Business: Ambassadors International operates four businesses: 1) Windstar Cruises, an international luxury cruise line with ~600 passenger berths; 2) Majestic America, a North American river cruising company with ~1,500 berths; 3) a global marina construction business; and 4) a small travel and event services (T&E) business. Thesis: Ambassadors has put money-losing Majestic on the block. A sale would likely eliminate the companyâ&#x20AC;&#x2122;s debt and leave it with up to $40 million of net cash. Pro forma for a sale of Majestic, investors are being paid to own the other three businesses. Ambassadors paid $100 million for Windstar in April 2007. Windstar earned EBIT of $10 million in 2007 and $5 million YTD. The marina construction business generated EBIT of $8 million in 2007 and $3 million YTD. T&E earned EBIT of $1.5 million in 2007 and $3 million YTD. We value Windstar at $40 million (4x 2007 EBIT), the marina business at $30 million (4x 2007 EBIT), and T&E at $10 million (7x 2007 EBIT). Adding a pro forma net cash position of $40 million yields total equity value of $120 million, or $11 per share. The key risk is that the company is unsuccessful in selling Majestic, resulting in severe financial distress.

Thanksgiving 2008

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 27 0 0 3 0.30 0 4 95 119 26 10 109 135 n/m

12/31/06 144 91 1 6 0.49 3 (4) (30) 121 68 13 116 256 2%

12/31/07 287 152 (21) (27) (2.48) 23 (18) (143) 132 125 20 88 377 -12%

9/30/08 299 176 (11) (41) (2.73) 13 (25) (115) 105 102 21 84 309 -5%

$60 $40 $20 $0

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Nicholas Financial (Nasdaq: NICK) Price: $2.60 ($2.01-$8.10) Market value: $27 million Enterprise value: $132 million Shares out: 10.3 million Institutional ownership: 33% Insider ownership: 16% Insider buys/sales: 1/0

P/E FYE 3/31/08: P/E FYE 3/31/09: P/E FYE 3/31/10: P/E FYE 3/31/11: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Subprime Auto Loans (www.nicholasfinancial.com) 2.8x n/a n/a n/a 2.5x 8.0x 0.3x

Business: Nicholas Financial is a subprime consumer finance company engaged in acquiring and servicing contracts for the purchase of new and used automobiles and light trucks. The company operates through 47 retail locations in twelve states, including Florida, Ohio, Georgia, and North Carolina. It also maintains close relationships with 1,500 dealers of new and used vehicles. Thesis: Nicholas Financial has remained profitable throughout the continuing depression in subprime lending—a testament to the company’s prudence and superior underwriting. Prior to the subprime crisis, the company exhibited steady revenue and profit growth, earning 15-20% ROEs. Nicholas reported EPS of $0.94 in the fiscal year ended March 31, 2008, an extremely difficult year for subprime auto finance. We expect Nicholas to resume 10-20% EPS growth off the FY08 base when the business environment improves. The company has a relatively underleveraged balance sheet and solid management, with insiders and the Mahan family owning roughly one-fourth of the stock. Given the company’s favorable long-term growth outlook, we value the equity at 8x FY08 EPS, resulting in fair value of $7.50 per share.

3/31/08 50 50 16 10 0.94 0 17 (102) 0 0 0 79 190 16%

9/30/08 52 52 17 7 0.64 0 19 (105) 0 0 0 83 197 16%

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Fruit Smoothie Retailing (www.jambajuice.com) P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

n/m n/m n/m n/a 0.1x n/m 0.3x

Business: Founded in 1990, Jamba is the leading retailer of freshly blended fruit smoothies. It has 520 company-operated stores and 229 franchised stores in the U.S. Jamba introduced ready-to-drink beverages to grocery stores in partnership with Nestle in May 2008. It announced a management shakeup in August 2008, with both the CEO and CFO leaving. Former Safeway SVP James White agreed to become CEO on November 17. Thesis: Jamba shares are down ~95% since the company went public via a reverse merger with a SPAC. Jamba posted a comparable sales decline of 10% in Q3; it has lost money this year. Nonetheless, at an enterprise value of roughly $27,000 per store, Jamba shares offer an interesting risk-reward tradeoff. The Jamba brand has strong name recognition and is associated with a healthy lifestyle. The company’s store base offers ample opportunity for rationalization, and we believe the company could be solidly profitable at a modestly lower store count. While Jamba has posted a large GAAP loss YTD, the vast majority of the loss has been due to special charges. With a new CEO in place, Jamba may be able to improve execution.

3/31/07 47 47 19 12 1.13 1 16 (94) 0 0 0 70 173 21%

$20

Jamba (Nasdaq: JMBA) Price: $0.54 ($0.42-$5.67) Market value: $28 million Enterprise value: $20 million Shares out: 52.6 million Institutional ownership: 34% Insider ownership: 11% Insider buys/sales: 1/23

3/31/06 43 43 17 11 1.01 1 15 (82) 0 0 0 58 150 23%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 0 0 (0) 3 0.25 0 1 1 1 14 0 115 129 n/m

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

1/9/07 23 17 (8) (59) (2.41) 5 (6) 87 105 117 272 286 468 n/m

1/1/08 317 233 (228) (113) (2.17) 52 (40) 23 57 72 88 184 276 -600%

7/15/08 338 250 (327) (223) (4.26) 49 (40) 9 27 57 4 90 165 -576%

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Select Comfort (Nasdaq: SCSS) Price: $0.51 ($0.44-$11.25) Market value: $23 million Enterprise value: $77 million Shares out: 45.1 million Institutional ownership: 71% Insider ownership: 3% Insider buys/sales: 1/0

P/E FYE 12/29/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Mattresses (www.selectcomfort.com) 0.9x n/m n/m 2.0x 0.1x n/m 1.5x

Business: Founded in 1987, Select Comfort provides the Sleep Number bed, a line of adjustable-firmness mattresses featuring airchamber technology, as well as foundations and accessories. Products are sold in 470 company-owned stores in the U.S. Thesis: Select Comfort shares are down more than 95% in the past two years due to same-store sales contraction and operating losses. The company has felt the twin effects of lower consumer spending and higher raw materials costs. The shares may have “fallen through the cracks,” as they appeal neither to growth investors, nor to high FCFyield or low-P/E investors, nor to traditional value investors who like to have downside protection afforded by a strong balance sheet. Nonetheless, Select Comfort offers exceptional value on a “normalized” earnings basis. The company generated combined EBIT of ~$275 million from 2003-07, or $55 million per year. It also generated strong cash from operations in that period, despite rapid growth. Unfortunately for the company, but perhaps fortunately for prospective investors, Select Comfort spent $132 million on repurchases in 2007, weakening the balance sheet just before demand imploded. They key question is whether the company can service $54 million of net debt.

Mace Security International (Nasdaq: MACE) Price: $0.93 ($0.65-$2.08) Market value: $15 million Enterprise value: $7 million Shares out: 16.5 million Institutional ownership: 8% Insider ownership: 0% Insider buys/sales: 0/0

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/00: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

12/31/05 690 406 69 44 0.76 26 62 68 116 106 0 121 240 >100%

12/30/06 806 491 73 47 0.85 31 28 47 103 98 0 116 229 >100%

12/29/07 799 486 44 28 0.57 44 1 (31) 79 149 0 24 191 >100%

9/27/08 668 397 (16) (11) (0.24) 41 (41) (54) 60 145 0 15 180 -42%

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Personal and Enterprise Security Products (www.mace.com) n/m n/a n/a n/a 0.1x n/m 0.4x

Business: Mace operates in three segments: security, digital media marketing and car washes. The security segment provides surveillance products and Mace defense sprays. Digital media marketing was acquired in 2007 under the former CEO. New management may sell or discontinue the segment over time, as it has little synergy with the security business. The car wash segment is in the process of being liquidated, and most of the associated real estate has been sold. Thesis: Mace had $8 million of net cash, and car washes held for sale with a book value of $5 million, at the end of Q3. Past car wash sales have mosty occurred at prices above book value. The pro forma net cash position of $13 million gives investors the security and digital media businesses for only $2 million. We value the security business at $20 million, or ~1x revenue, while we assign zero value to the digital media business, resulting in total estimated equity value of $33 million, or $2 per share. Mace shares have languished for quite some time as a result of value destruction by former CEO Lou Paolino. However, with Paolino’s firing in May 2008, Mace appears poised to unlock value.

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 46 12 (3) (5) (0.37) 1 1 (15) 25 10 6 62 96 -5%

12/31/06 43 10 (8) (7) (0.53) 1 (4) (7) 45 18 5 57 88 -13%

12/31/07 47 11 (10) (7) (0.59) 1 (10) 3 33 15 14 54 75 -21%

9/30/08 51 15 (11) 1 (0.59) 1 (10) 8 34 12 12 52 66 -29%

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Avistar Communications (Nasdaq: AVSR) Price: $0.90 ($0.22-$1.70) Market value: $31 million Enterprise value: $41 million Shares out: 34.6 million Institutional ownership: 14% Insider ownership: 63% Insider buys/sales: 12/0

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/00: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Thanksgiving 2008

Patent Licensing & Videoconferencing (www.avistar.com) n/m n/a n/a n/a 5.4x n/m n/m

Business: Avistar is a company with intellectual property in the field of unified communications, a growth segment of the technology industry. The company sells desktop videoconferencing solutions and licenses a portfolio of 80 patents for inventions in video and network technology. Licensees are videoconferencing, rich media, and public networking companies, including Sony, Polycom, Tandberg, and Radvision. Thesis: Avistar’s valuable patent portfolio may have gone unnoticed due to the company’s negative net worth and operating losses. While Avistar has generated income from patent licensing, it has lost money in videoconferencing. The company has appointed a new CEO who appears focused on cutting costs and pursuing an aggressive patent licensing strategy. Avistar’s patent portfolio has apparently been appraised at several hundred million dollars by a patent valuation firm. While investors should not rely on this appraisal, it does suggest that a closer analysis of the patent portfolio may be warranted. We note that Leucadia has purchased a stake in Avistar, providing some validation of intrinsic value (we do note that Leucadia obtained a lien on the patent portfolio, protection that is unavailable to public investors).

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

12/31/07 12 7 (3) (3) (0.09) 1 (6) (0) 8 16 0 (10) 11 n/m

9/30/08 8 3 (10) (10) (0.29) 0 (13) (10) 10 19 0 (15) 11 n/m

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Musical Instruments (www.steinwaymusical.com) 9.8x 8.1x 7.0x n/a 0.7x 10.5x 1.2x

Business: Steinway is the largest domestic manufacturer of musical instruments. Its brands include Steinway & Sons in the high-end piano segment; Boston and Essex in the mid-priced piano segment; and Bach, Selmer, C.G. Conn, Leblanc, and others in band instruments. Thesis: Steinway has real estate assets worth $200-300 million. The th company owns a prime office building on W 57 Street in Manhattan— on the books for ~$25 million, estimated by management to be worth $100 million. The company also owns a factory on 11 acres of waterfront property in Queens—on the books for $3 million, estimated by management to be worth $200 million. Manufacturing pianos in New York City is clearly inefficient, and the company already utilizes some Asian production. While management has shown no urgency in selling either piece of real estate, one or both assets may be monetized over time. The operating business has generated fairly steady adjusted EBITDA of ~$50 million per year. If we value this stream at 6x, we arrive at a combined fair enterprise value of $500-600 million. Subtracting ~$150 million of net debt leaves an equity value of $350450 million, or $41-53 per share.

12/31/06 13 8 (9) (8) (0.24) 0 (8) 5 12 14 0 (10) 15 n/m

$15

Steinway Musical Instruments (NYSE: LVB) Price: $17.46 ($16.60-$30.58) Market value: $149 million Enterprise value: $298 million Shares out: 8.5 million Institutional ownership: 72% Insider ownership: 15% Insider buys/sales: 0/0

12/31/05 7 3 (6) (5) (0.15) 0 (10) 11 15 9 0 (4) 20 n/m

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 387 112 34 14 1.67 5 26 (170) 296 72 47 149 456 11%

12/31/06 385 107 9 (1) (0.08) 6 24 (148) 283 66 50 158 447 3%

12/31/07 406 124 35 15 1.78 5 29 (139) 286 67 51 164 458 12%

9/30/08 415 126 28 13 1.45 5 38 (149) 287 66 46 166 447 9%

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Pinnacle Airlines (Nasdaq: PNCL) Price: $3.45 ($1.88-$17.02) Market value: $62 million Enterprise value: $698 million Shares out: 18.1 million Institutional ownership: 81% Insider ownership: 2% Insider buys/sales: 4/11

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Regional Airline (www.pncl.com) 2.3x 2.8x 1.8x n/a 0.8x 16.3x 3.1x

Business: Pinnacle operates 134 regional jet aircraft as Northwest Airlink and Delta Connection. The Colgan Air subsidiary, acquired for $20 million in 2007, operates 60 turboprop regional aircraft as Continental Connection, United 3 Express, and US Airways Express. Thesis: Pinnacle’s normalized EPS may be $1-2. The stock has declined due to (1) airlines rationalizing their regional fleets as a result of high oil prices; (2) losses by Colgan due to Colgan’s assumption of fuel price and other risks; and (3) contentious pay negotiations with pilots. The market appears to be ignoring the following facts: (1) Pinnacle’s contracts guarantee a fixed EBIT margin regardless of fuel prices or load factors (Delta tried to cancel its long-term deal with Pinnacle but relented after minor concessions); (2) Colgan is transitioning to a fixed-margin model; and (3) the current environment improves Pinnacle’s negotiating leverage with pilots. The balance sheet includes a $193 million deferred revenue liability related to Northwest’s former bankruptcy. The liability flows into income at a 100% gross margin over the life of the Northwest contract. As a result, the liability may be viewed as equity (tax-effected at a low rate).

12/31/07 787 367 52 35 1.50 24 251 (66) 295 244 45 58 709 39%

9/30/08 848 409 43 6 0.26 37 (25) (636) 177 259 33 53 1,086 12%

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Barter Exchange for Small Businesses (www.itex.com) P/E FYE 7/31/08: P/E FYE 7/31/09: P/E FYE 7/31/10: P/E FYE 7/31/11: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

8.8x 3.1x n/a n/a 0.5x 4.9x 1.0x

Business: ITEX is the largest barter exchange in North America, with 24,000 members and $250 million in transaction volume. ITEX helps small businesses conserve cash and generate incremental sales. Thesis: ITEX may be worth $24 million, or $1.35 per share, based on 12x estimated forward FCF of $2 million. ITEX is a high-ROIC business with strong management and attractive organic growth and acquisition opportunities. Barriers to entry are high for a company its size, owing to a nationwide franchise network and a proprietary payment processing platform. ITEX’s value proposition should resonate with small businesses in a recessionary environment. Recent initiatives have improved the value proposition, making membership attractive to most small businesses. With 24,000 members out of more than 25 million small businesses, the company has a long runway of growth. In December 2007, activist investor Sardar Biglari’s Western Sizzlin (Nasdaq: WEST) made an unsolicited offer of $1.02 in stock. ITEX remained independent, as most holders did not tender their shares.

12/31/06 825 286 128 78 3.54 4 17 (48) 197 74 32 97 301 >100%

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ITEX (OTC: ITEX) Price: $0.44 ($0.37-$1.05) Market value: $8 million Enterprise value: $7 million Shares out: 17.7 million Institutional ownership: n/a Insider ownership: 11% Insider buys/sales: 0/0

12/31/05 842 284 27 26 1.17 13 14 (62) 126 80 33 19 229 82%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

7/31/06 15 4 1 3 0.18 0 2 (0) 3 2 3 8 11 >100%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

7/31/07 14 5 2 5 0.25 0 2 2 4 2 3 12 14 >100%

7/31/08 16 6 2 1 0.05 3 (0) 1 4 3 5 13 16 >100%

7/31/08 16 6 2 1 0.05 2 0 1 4 3 5 13 16 >100%

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Cowen Group (Nasdaq: COWN) Price: $5.50 ($4.60-$11.31) Market value: $78 million Enterprise value: -$23 million Shares out: 14.2 million Institutional ownership: 59% Insider ownership: 3% Insider buys/sales: 10/0

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

Investment Banking (www.cowen.com) n/m n/m 137.5x n/a n/m n/m 0.5x

Business: Founded in 1918, Cowen is a 500-person investment bank with franchises in health care, technology, media, telecom, consumer, defense, and alternative energy. Cowen is a top three healthcare investment bank in the U.S. The company was acquired by Societe Generale for $500+ million in 1998 and spun off in an IPO in 2006. Thesis: Cowen has adjusted net cash of $135 million, or $9.50 per share, with investors being “paid” to own the investment bank. The company has a clean balance sheet with no leverage and no exposure to mortgage-related securities. While Cowen has lost money this year, the modest operating loss has had only a minor impact on the cash position. Cowen generates revenue of $250-300 million in a “normal” environment, and we believe the company should achieve a net margin of at least 5% in the next upcycle, resulting in net income of at least $12-15 million. If we value the company at 5x normalized earnings, we arrive at a total equity value of $195-210 million, or $14-15 per share. Long-time Cowen CEO Kim Fennebresque retired in March 2008 and resigned from the Board in June 2008. Given Cowen’s strong balance sheet, we would not be surprised to see former or current members of management propose a going-private transaction.

12/31/05 294 245 12 12 0.94 1 44 (142) 0 0 50 374 785 9%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

9/30/08 235 191 (73) (72) (6.34) 2 23 102 0 0 3 149 228 n/m

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Restaurants (www.steaknshake.com) P/E FYE 9/24/08: P/E FYE 9/30/08: P/E FYE 9/30/09: P/E FYE 9/30/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

n/m n/m n/m n/m 0.5x n/m 0.4x

Business: Steak n Shake is a full-service restauranteur known for “steakburgers.” The restaurants feature full-service dining areas, counter service, and drive-thru windows. The company has 436 company-owned and 69 franchised units operating in 21 states. Thesis: Activist investor Sardar Biglari became CEO in August after prevailing in a proxy fight. Old management had been plagued by conflicts of interest and poor execution. Biglari’s success in taking control of Steak n Shake opens the door to operating improvements and policies focused on shareholder value. Steak n Shake has tangible book value of $277 million, the vast majority of which relates to real estate associated with restaurants. New management appears intent on cutting overhead and refranchising. The strategy promises to free up capital and turn the company into an asset-light franchisor of a brand that has gained acceptance over seven decades, primarily in the Midwest and Southeast. Potential proceeds from real estate sales could be used to repurchase stock or pay (special) dividends.

12/31/07 262 217 (20) (11) (0.88) 2 (30) 113 0 0 50 209 349 n/m

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Steak n Shake (NYSE: SNS) Price: $3.91 ($3.72-$13.12) Market value: $112 million Enterprise value: $275 million Shares out: 28.6 million Institutional ownership: 75% Insider ownership: 4% Insider buys/sales: 29/7

12/31/06 345 292 17 38 2.92 12 377 (68) 0 0 50 218 684 15%

9/27/06 639 176 42 28 1.00 81 (11) (175) 31 83 17 287 543 10%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

9/26/07 654 167 15 12 0.42 69 (25) (188) 48 95 17 304 565 3%

9/24/08 610 121 (35) (23) (0.81) 31 (7) (163) 61 76 16 284 520 -8%

9/24/08 610 121 (21) (23) (0.81) 32 (7) (163) 61 76 16 284 520 -5%

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Tree.com (Nasdaq: TREE) Price: $2.19 ($1.96-$11.10) Market value: $21 million Enterprise value: -$5 million Shares out: 9.4 million Institutional ownership: 11% Insider ownership: 1% Insider buys/sales: 10/0

Thanksgiving 2008

Online Real Estate Services and Lending Marketplace (www.lendingtree.com) P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

n/m n/m n/m n/a n/m n/m 0.3x

Business: Tree.com operates two businesses: The lending business consists of LendingTree.com, GetSmart.com, and call centers, which match consumers with lenders and loan brokers. The segment also originates and funds home loans. The real estate business consists of a residential real estate brokerage that operates a website and offices in 14 markets under the brand RealEstate.com, REALTORS. Thesis: Tree may be worth $200 million, or $21 per share, based on an EV multiple of one times run-rate revenue. The company has $98 million of net cash ($41 million if warehouse lines are netted against cash rather than loans held for sale) – we value the cash at zero, as we assume it may be needed in the current downturn. Tree’s primary assets, LendingTree.com and RealEstate.com, operate non capitalintensive businesses with attractive long-term prospects and name recognition. Tree was spun off from IAC/InterActiveCorp in August as part of a series of transactions involving several entities. Tree, due to its small size and participation in real estate and consumer lending, may have seen selling pressure from IAC/InterActiveCorp holders, while finding few incremental buyers. Among the buyers, however, have been Tree CEO Doug Lebda and CFO Matthew Packey.

12/31/05 421 355 19 6 0.63 18 (100) 0 0 0 0 0 0 n/m

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

P/E FYE 12/31/07: P/E FYE 1/0/00: P/E FYE 12/30/00: P/E FYE 12/30/01: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

9/30/08 231 167 (717) (727) (78.49) 5 21 26 187 113 75 142 280 -2157%

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Horse Racing Venues (www.magnaent.com) n/m n/a n/a n/a 0.7x n/m 0.1x

Business: Magna Entertainment is a large land owner and North America’s largest operator of horse racetracks. The company also operates off-track betting facilities and casinos in conjunction with some racetracks. It owns AmTote, a provider of totalisator services to the pari-mutuel industry, and XpressBet, an online wagering system. Magna has a 50% interest in HorseRacing TV, a 24-hour TV network, and TrackNet, a distributor of racing content. Thesis: Magna is an asset-rich, cash-poor company in distress. Due to a high debt load, the value of the equity is highly sensitive to changes in estimated EV. The company has tangible book of $163 million and net debt of ~$600 million. It is working to reduce debt by selling off real estate. We believe Magna deserves a closer look, as it is controlled by chairman and CEO Frank Stronach by virtue of his control of MI Developments (MIM). Stronach is also founder of Magna International (MGA), the large Canadian auto parts maker. Stronach appears committed to seeing Magna stay out of bankruptcy, creating a meaningful probability that shareholders will not be wiped out.

12/31/07 346 273 (540) (550) (59.01) 9 224 (54) 173 189 249 215 444 -258%

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Magna Entertainment (Nasdaq: MECA) Price: $1.69 ($1.01-$35.20) Market value: $10 million Enterprise value: $416 million Shares out: 5.9 million Institutional ownership: n/a Insider ownership: 66% Insider buys/sales: 0/0

12/31/06 477 403 14 9 0.93 13 62 (270) 505 426 725 774 1,261 8%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 527 38 (94) (105) (17.35) 123 (189) (484) 197 324 110 460 1,415 -11%

12/31/06 574 57 (87) (87) (14.82) 80 (141) (507) 151 245 112 401 1,247 -11%

12/31/07 626 88 (111) (114) (19.75) 74 (139) (417) 226 389 110 363 1,243 -15%

9/30/08 596 85 (59) (159) (21.93) 47 (114) (406) 225 420 110 273 1,164 -9%

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Harvest Natural Resources (NYSE: HNR) Price: $6.66 ($5.81-$13.43) Market value: $219 million Enterprise value: $101 million Shares out: 32.9 million Institutional ownership: 80% Insider ownership: 2% Insider buys/sales: 8/0

Oil & Gas Operations (www.harvestnr.com)

P/E FYE 12/31/07: P/E FYE 12/31/08: P/E FYE 12/31/09: P/E FYE 12/31/10: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

4.4x 17.5x 9.1x n/a 9.0x n/m 0.8x

Business: Harvest operates oil and natural gas properties in Venezuela and owns exploration properties worldwide. Thesis: Harvest remains an orphaned stock due to investors’ fear of owning assets in Chavez-ruled Venezuela. While the political risk is real, much of it has played out. Venezuela has nationalized the oil and gas industry, forcing foreign companies to enter into JVs majorityowned by state oil company PDVSA. As such, Harvest is essentially a service provider to the Venezuelan government. Instead of being paid by the hour or per project, however, Harvest makes money via minority ownership in the fields it operates. It trades at an EV of less than $3 per barrel of proved reserves and less than $1 per barrel of 3P reserves (assumes zero value for global exploration projects). Despite the political risk, Venezuelan oil and gas assets changed hands in the past year at 4-5x Harvest’s valuation. In addition, FCF growth should accelerate as Harvest boosts production. The company has repurchased $29 million of stock YTD. We value the business, exploration assets and net cash at $800 million or $24 per share.

12/31/05 237 197 105 39 1.01 16 99 158 240 62 0 298 401 55%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

9/30/08 11 0 (27) 60 1.57 18 21 118 134 16 0 286 363 -233%

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Software & Programming (www.gravity.co.kr) P/E FYE 12/31/07: P/E FYE 1/0/00: P/E FYE 12/30/00: P/E FYE 12/30/01: EV / LTM revenue: EV / LTM EBIT: P / tangible book:

n/m n/a n/a n/a n/m n/m 0.4x

Business: Gravity is a leading Asian developer of Internet-based games commonly referred to as MMORPGs (massively multiplayer online role-playing games). Gravity’s flagship game Ragnarok Online (RO) is one of the most popular Asian MMORPGs of all time. Thesis: Gravity may be worth $160 million, or $5.70 per ADR, based on 6x post-RO2 estimated net income of $20 million, plus $40 million of excess cash. Gravity completed an IPO at $13.50 per share in 2005 on the back of nearly $25 million in profits resulting primarily from the success of RO. Revenue has dropped and profits have evaporated over the past three years as the company has repeatedly delayed the much-anticipated release of Ragnarok Online 2 (RO2). Two U.S. hedge funds have been engaged in a battle over Gravity’s corporate governance practices (Gravity is majority-owned by a Japanese public company with ties to Softbank). While Gravity’s market value reflects investor despondency regarding poor execution and poor treatment of shareholders, the market value ignores the fact that RO2 is in open beta testing and appears likely to come to market within a few months. In addition, the company turned profitable in Q3 due to efficiency improvement measures implemented by new management.

12/31/07 11 0 (20) 57 1.51 1 (21) 112 154 43 0 314 414 -278%

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Gravity (Nasdaq: GRVY) Price: $0.67 ($0.36-$3.80) Market value: $19 million Enterprise value: -$25 million Shares out: 27.9 million Institutional ownership: 20% Insider ownership: 50% Insider buys/sales: 0/0

12/31/06 60 50 1 (63) (1.68) 2 (26) 43 200 82 0 281 468 1%

Year ended Revenue: GP: EBIT: Net income: Diluted EPS: Capex: FCF: Net cash: ST assets: ST liabilities: Intangibles: Book value: Total assets: ROIC:

12/31/05 43 30 (2) (2) (0.09) 12 3 75 88 16 11 97 116 -16%

12/31/06 33 19 (14) (18) (0.67) 2 (3) 65 71 13 10 79 98 -481%

12/31/07 32 17 (18) (19) (0.67) 8 (16) 50 58 8 11 60 78 -683%

6/30/08 33 15 (15) (17) (0.54) (2) (26) 44 54 7 11 60 76 -267%

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Portfolios With Signal Value Revealing the Top Ideas of Top Investors

“Signal value” as opposed to “noise.” We present the

MOI Signal Rank answers the question, “What are this

holdings of some of the world’s top investors. We look for

investor’s top ten ideas right now?” Rather than simply

investors who have amassed impressive track records over

presenting each investor’s largest holdings as of the recently

long periods of time. We choose these investors carefully

filed quarter end, the MOI’s proprietary methodology ranks

to avoid the noise inherent in most 13F-HR filings.

the companies in each investor’s portfolio based on the investor’s current level of conviction in each holding, as

Top investors included in this section:

judged by the MOI.

•

William Ackman, Pershing Square

•

Bruce Berkowitz, Fairholme

a number of variables, including the size of a position in an

•

Warren Buffett, Berkshire Hathaway

investor’s portfolio, the size of a position relative to the

•

Ian Cumming & Joe Steinberg, Leucadia

market value of the corresponding company, the most recent

•

David Einhorn, Greenlight

•

Glenn Greenberg, Chieftain

•

Mason Hawkins, Southeastern

•

Chris Hohn, Children’s Investment Fund

•

Carl Icahn, Icahn

•

Seth Klarman, Baupost

•

Eddie Lampert, ESL

holding that is simply too small to rank highly based on size

•

Warren Lichtenstein, Steel Partners

alone. On the other hand, such a holding might represent

•

Dan Loeb, Third Point

19.9% of the shares outstanding of the subject company,

•

Steve Mandel, Lone Pine

suggesting a high level of conviction. Our estimate of the

•

Mohnish Pabrai, Pabrai Funds

conviction level would rise further if the subject company

•

Rich Pzena, Pzena Investment

has a 20% poison-pill threshold, thereby suggesting that the

•

Prem Watsa, Fairfax

•

Marty Whitman, Third Avenue

Our proprietary methodology takes into account

quarterly change in the number of shares owned, and the change in the stock price of a position since the most recent quarterly filing date. For example, an investor might have the most conviction in a position that is only the tenth-largest position in such investor’s portfolio. This might be the case if an investor invests in a small company, resulting in a

investor has bought as much of the subject company as is practically feasible.

Missing your favorite Super Investor? Let us know at editor@manualofideas.com.

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Thanksgiving 2008

Portfolio with Signal Value: William Ackman (Pershing Square) MOI Signal Rank 1 2 3 4 5 6 7 8 9

Company Wendy’s / Arby’s Borders EMC Dr Pepper Snapple Barnes & Noble Target Mastercard Visa Greenlight Capital Re

Ticker WEN BGP EMC DPS BKS TGT MA V GLRE

Market Value ($mn) 1,701 140 20,367 4,455 866 24,926 18,569 46,025 403

Latest Date 3.62 2.31 9.98 17.56 15.75 33.03 143.68 54.24 11.10

Price ($) Filing ∆ Since Date Filing 5.26 -31% 6.56 -65% 11.96 -17% 26.48 -34% 26.08 -40% 49.05 -33% 177.33 -19% 61.39 -12% 22.99 -52%

Shares Owned Latest ∆ Since Filing 6/30/08 55,619,748 >+100% 10,597,880 no change 58,615,731 +47% 22,128,910 +4% 6,540,451 no change 19,608,749 no change 569,924 new position 2,703,618 new position 250,000 no change

Holdings as % of Co. Fund 12% 8% 18% 2% 3% 18% 9% 15% 12% 4% 3% 25% 1% 3% 1% 4% 1% 0%

Portfolio with Signal Value: Bruce Berkowitz (Fairholme) MOI Signal Rank 1 2 3 4 5 6 7 8 9 10

Company WellCare Leucadia AmeriCredit Sears Holdings St Joe UnitedHealth Boeing Pfizer Winthrop Realty Canadian Natural

Ticker WCG LUK ACF SHLD JOE UNH BA PFE FUR CNQ

Market Value ($mn) 390 4,630 647 4,838 2,321 24,180 30,076 109,775 185 21,056

Price ($) Filing ∆ Since Date Filing 36.00 -74% 45.44 -56% 10.13 -45% 93.50 -59% 39.09 -36% 25.39 -21% 57.35 -28% 18.44 -12% 3.90 -40% 68.46 -43%

Latest Date 9.36 19.88 5.56 38.27 25.17 20.02 41.04 16.28 2.35 38.93

Shares Owned Latest ∆ Since Filing 6/30/08 8,325,300 +1% 15,497,343 +35% 22,528,906 +50% 14,596,690 +18% 11,012,900 +16% 20,695,583 +22% 8,236,177 new position 92,993,625 +26% 6,640,962 +53% 6,961,324 +46%

Holdings as % of Co. Fund 20% 3% 7% 7% 19% 2% 12% 14% 12% 5% 2% 6% 1% 5% 1% 18% 9% 0% 1% 5%

Portfolio with Signal Value: Warren Buffett (Berkshire-Hathaway) MOI Signal Rank 1 2 3 4 5 6 7 8 9 10

Company ConocoPhillips USG American Express Moody’s Comdisco Washington Post Burlington Northern Wesco Financial Coca-Cola Procter & Gamble

Ticker COP USG AXP MCO CDCO WPO BNI WSC KO PG

Market Value ($mn) 70,650 904 23,186 4,635 31 3,681 27,259 2,157 104,156 188,428

Latest Date 47.39 9.12 19.99 19.33 7.60 393.00 79.63 303.00 45.02 63.11

Price ($) Filing ∆ Since Date Filing 73.25 -35% 25.60 -64% 35.43 -44% 34.00 -43% 9.51 -20% 556.76 -29% 92.43 -14% 357.00 -15% 52.88 -15% 69.69 -9%

Shares Owned Latest ∆ Since Filing 6/30/08 83,955,800 +41% 17,072,192 no change 151,610,700 no change 48,000,000 no change 1,538,377 no change 1,727,765 no change 64,610,418 +1% 5,703,087 no change 200,000,000 no change 105,847,000 no change

Holdings as % of Co. Fund 6% 9% 17% 1% 13% 8% 20% 2% 38% 0% 21% 1% 19% 9% 83% 3% 9% 15% 4% 11%

Portfolio with Signal Value: Ian Cumming & Joe Steinberg (Leucadia) MOI Signal Rank 1 2 3 4 5 6 7

Company AmeriCredit International Assets Cresud Jefferies Capital Southwest Kewaunee Scientific Georesources

Ticker ACF IAAC CRESY JEF CSWC KEQU GEOI

Market Value ($mn) 647 85 254 2,109 331 23 129

Latest Date 5.56 9.88 5.90 12.90 88.52 9.06 7.94

Price ($) Filing ∆ Since Date Filing 10.13 -45% 24.11 -59% 10.50 -44% 22.40 -42% 142.05 -38% 11.10 -18% 11.46 -31%

www.manualofideas.com

Shares Owned Latest ∆ Since Filing 6/30/08 32,715,440 +8% 1,384,985 no change 3,364,174 no change 48,585,385 no change 19,776 no change 44,137 new position 194,605 +48%

Holdings as % of Co. Fund 28% 22% 16% 2% 7% 2% 30% 73% 1% 0% 2% 0% 1% 0%

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Portfolio with Signal Value: David Einhorn (Greenlight) MOI Signal Rank 1 2 3 4 5 6 7 8 9 10

Company Helix Energy URS Dr Pepper Snapple MI Developments Einstein Noah Restaurant BioFuel Energy Health Management Associates EchoStar Ticketmaster Teradata

Ticker HLX URS DPS MIM BAGL BIOF HMA SATS TKTM TDC

Market Value ($mn) 776 2,292 4,455 476 67 14 439 1,381 336 2,114

Latest Date 8.45 27.45 17.56 10.25 4.22 0.44 1.80 15.42 5.87 12.01

Price ($) Filing ∆ Since Date Filing 24.28 -65% 36.67 -25% 26.48 -34% 18.49 -45% 10.08 -58% 0.54 -19% 4.16 -57% 24.10 -36% 10.73 -45% 19.50 -38%

Shares Owned Latest ∆ Since Filing 6/30/08 9,093,892 +30% 4,325,641 +69% 9,484,120 +30% 5,387,535 +8% 10,733,469 no change 7,542,104 no change 22,161,942 +1% 2,307,292 +19% 665,518 n/m 3,935,510 +4%

Holdings as % of Co. Fund 10% 15% 5% 11% 4% 17% 12% 7% 67% 8% 49% 0% 9% 6% 5% 4% 1% 0% 2% 5%

Portfolio with Signal Value: Glenn Greenberg (Chieftain) MOI Signal Rank 1 2 3 4 5 6 7

Company Eaton Ingersoll-Rand Laboratory Corp America Movil Crosstex Energy Comcast Dell

Ticker ETN IR LH AMX XTXI/XTEX CMCSK/CMCSA DELL

Market Value ($mn) 6,786 4,817 6,979 51,406 203/307 44,413 21,327

Latest Date 41.15 15.11 64.62 30.76 n/a 15.15 10.89

Price ($) Filing ∆ Since Date Filing 56.18 -27% 31.17 -52% 69.50 -7% 46.36 -34% n/a -80% 19.72 -23% 16.48 -34%

Shares Owned Latest ∆ Since Filing 6/30/08 6,005,010 new position 10,694,315 +18% 7,584,821 +1% 5,875,425 +46% 6,903,887 -3% 51,512,691 -6% 22,397,150 -2%

Holdings as % of Co. Fund 4% 10% 3% 10% 7% 15% 1% 8% n/a 7% 6% 30% 1% 11%

Portfolio with Signal Value: Mason Hawkins (Southeastern) Signal Rank 1 2 3 4 5 6 7 8 9 10

Company Liberty Media Interactive Sun Microsystems Dillard’s Saks Liberty Media Entertainment Chesapeake Energy Fair Isaac Dell tw telecom Fairfax Financial

Ticker LINTA JAVA DDS SKS LMDIA CHK FIC DELL TWTC FFH

Market Value ($mn) 1,790 3,043 246 576 6,619 12,758 650 21,327 997 4,962

Latest Date 3.01 4.12 3.35 4.06 12.80 21.23 13.42 10.89 6.76 271.12

Price ($) Filing ∆ Since Date Filing 12.91 -77% 7.60 -46% 11.80 -72% 9.25 -56% 24.97 -49% 35.86 -41% 23.05 -42% 16.48 -34% 10.39 -35% 328.50 -17%

Shares Owned Latest ∆ Since Filing 6/30/08 108,163,583 +4% 155,566,828 +62% 9,202,748 no change 9,515,955 new position 97,496,922 +2% 41,102,355 +14% 7,178,400 +11% 147,277,194 +7% 11,868,000 new position 3,264,134 +20%

Holdings as % of Co. Fund 19% 5% 21% 4% 13% 0% 7% 0% 20% 9% 7% 5% 15% 1% 8% 9% 8% 0% 18% 4%

Portfolio with Signal Value: Chris Hohn (Children’s Investment Fund) MOI Signal Rank 1 2 3 4 5 6 7 8 9

Company Visa CME Group ArcelorMittal Mastercard CSX Union Pacific TransAlta Sterlite Industries India Google

Ticker V CME MT MA CSX UNP TAC SLT GOOG

Market Value ($mn) 46,025 14,002 30,874 18,569 15,313 29,003 3,766 3,145 97,616

Latest Date 54.24 209.03 21.31 143.68 38.82 57.27 19.06 4.44 310.02

Price ($) Filing ∆ Since Date Filing 61.39 -12% 371.51 -44% 49.38 -57% 177.33 -19% 54.57 -29% 71.16 -20% 27.48 -31% 9.01 -51% 400.52 -23%

www.manualofideas.com

Shares Owned Latest ∆ Since Filing 6/30/08 6,541,000 new position 2,016,967 +68% 235,000 new position 5,947,290 +37% 17,796,998 no change 24,028,735 no change 14,521,700 >+100% 15,625,779 +10% 35,000 no change

Holdings as % of Co. Fund 1% 7% 4% 14% 0% 0% 6% 19% 4% 18% 5% 31% 7% 7% 2% 3% 0% 0%

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Portfolio with Signal Value: Carl Icahn MOI Signal Rank 1 2 3 4 5 6 7

Company Guaranty Financial Federal Mogul Biogen Idec American Railcar Icahn Enterprises Yahoo! Lions Gate Entertainment

Ticker GFG FDML BIIB ARII IEP YHOO LGF

Market Value ($mn) 66 533 12,697 189 1,885 15,015 763

Latest Date 1.48 5.36 43.52 8.85 26.74 10.82 6.59

Price ($) Filing ∆ Since Date Filing 4.22 -65% 12.55 -57% 50.29 -13% 16.04 -45% 43.05 -38% 17.30 -37% 7.35 -10%

Shares Owned Latest ∆ Since Filing 6/30/08 3,823,308 new position 75,241,924 no change 3,502,261 +41% 6,526,980 no change 64,288,061 no change 13,757,264 no change 2,152,479 new position

Holdings as % of Co. Fund 4% 0% 75% 19% 1% 3% 31% 2% 91% 55% 1% 5% 2% 0%

Portfolio with Signal Value: Seth Klarman (Baupost) MOI Signal Rank 1 2 3 4 5 6 7 8 9

Company RHI Entertainment BreitBurn Energy Liberty Media News Corp Linn Energy Domtar Centerplate Theravance Syneron Medical

Ticker RHIE BBEP LMDIA NWS/A LINE UFS CVP THRX ELOS

Market Value ($mn) 67 373 6,619 19,523 1,747 929 40 381 212

Latest Date 4.95 7.09 12.80 7.43 15.17 1.80 1.91 6.16 7.74

Price ($) Filing ∆ Since Date Filing 14.90 -67% 14.86 -52% 24.97 -49% 11.99 -38% 15.30 -1% 4.60 -61% 3.04 -37% 12.46 -51% 14.25 -46%

Shares Owned Latest ∆ Since Filing 6/30/08 3,480,299 new position 6,188,660 >+100% 4,808,726 +50% 16,855,000 +37% 10,028,989 >+100% 22,364,700 no change 2,209,051 +13% 6,269,891 no change 3,086,619 no change

Holdings as % of Co. Fund 26% 3% 12% 6% 1% 7% 1% 12% 9% 9% 5% 6% 11% 0% 12% 5% 11% 3%

Shares Owned Latest ∆ Since Filing 6/30/08 66,024,366 +1% 78,521,550 +9% 9,875,523 +3% 23,370,297 +2% 34,586,789 new position 19,715,300 no change 7,269,321 +85% 550,000 new position 19,083,800 no change 3,293,989 no change

Holdings as % of Co. Fund 52% 53% 44% 8% 2% 4% 39% 25% 1% 0% 1% 4% 3% 0% 0% 0% 0% 3% 4% 0%

Portfolio with Signal Value: Eddie Lampert (ESL) MOI Signal Rank 1 2 3 4 5 6 7 8 9 10

Company Sears Holdings AutoNation Capital One Autozone Fannie Mae Home Depot CIT Group Hartford Financial Citigroup Acxiom

Ticker SHLD AN COF AZO FNM HD CIT HIG C ACXM

Market Value ($mn) 4,838 1,123 12,216 6,131 2,891 34,886 1,182 3,802 51,880 529

Latest Date 38.27 6.35 31.19 105.76 0.54 20.54 4.14 12.65 9.52 6.78

Price ($) Filing ∆ Since Date Filing 93.50 -59% 11.24 -44% 51.00 -39% 123.34 -14% 1.53 -65% 25.89 -21% 6.96 -41% 40.99 -69% 20.51 -54% 12.54 -46%

Portfolio with Signal Value: Warren Lichtenstein (Steel Partners) MOI Signal Rank 1 2 3 4 5 6 7 8 9 10

Company GenCorp Transocean SL Industries Adaptec Selectica Nathan’s Famous SP Acquisition Chemtura Ronson Key Energy

Ticker GY RIG SLI ADPT SLTC NATH DSP CEM RONC KEG

Market Value ($mn) 151 22,626 51 355 30 78 492 366 2 596

Latest Date 2.62 70.89 8.75 2.91 1.03 13.50 9.10 1.51 0.40 4.89

Price ($) Filing ∆ Since Date Filing 6.74 -61% 109.84 -35% 13.25 -34% 3.21 -9% 1.01 2% 15.89 -15% 9.29 -2% 4.56 -67% 1.07 -63% 11.60 -58%

Shares Owned Latest ∆ Since Filing 6/30/08 8,034,059 no change 350,000 new position 1,608,550 no change 22,744,046 +11% 4,207,681 +32% 1,018,200 no change 10,322,400 no change 3,808,167 +6% 483,035 no change 1,531,176 no change

www.manualofideas.com

Holdings as % of Co. Fund 14% 4% 0% 3% 27% 2% 19% 6% 15% 0% 17% 1% 19% 8% 2% 1% 10% 0% 1% 1%

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Portfolio with Signal Value: Dan Loeb (Third Point) MOI Signal Rank 1 2 3 4 5 6 7 8 9

Company Dr Pepper Snapple Lorillard Phoenix Cos EXCO Resources Energy XXI Bermuda Depomed TIBCO Software Nabi Biopharmaceuticals Core-Mark

Ticker DPS LO PNX XCO EXXI DEPO TIBX NABI CORE

Market Value ($mn) 4,455 10,215 383 1,487 189 84 780 167 196

Latest Date 17.56 60.78 3.35 7.05 1.30 1.64 4.34 3.22 18.21

Price ($) Filing ∆ Since Date Filing 26.48 -34% 71.15 -15% 9.24 -64% 16.32 -57% 3.04 -57% 3.65 -55% 7.32 -41% 4.66 -31% 24.99 -27%

Shares Owned Latest ∆ Since Filing 6/30/08 3,350,000 new position 1,100,000 new position 9,000,000 +58% 6,700,000 +49% 22,000,000 +12% 7,050,000 no change 7,500,000 >+100% 6,890,000 no change 1,064,200 no change

Holdings as % of Co. Fund 1% 5% 1% 5% 8% 5% 3% 6% 15% 4% 15% 1% 4% 3% 13% 2% 10% 2%

Portfolio with Signal Value: Steve Mandel (Lone Pine) MOI Signal Rank 1 2 3 4 5 6 7 8 9 10

Company Visa SandRidge Energy Qualcomm Crown Castle XTO Energy America Movil Dolby Laboratories priceline.com Precision Castparts Weatherford

Ticker V SD QCOM CCI XTO AMX DLB PCLN PCP WFT

Market Value ($mn) 46,025 1,672 54,531 4,059 19,346 51,406 3,039 2,184 7,674 8,718

Latest Date 54.24 10.07 32.94 14.06 33.54 30.76 27.00 53.80 55.04 12.80

Price ($) Filing ∆ Since Date Filing 61.39 -12% 19.60 -49% 42.97 -23% 28.97 -51% 46.52 -28% 46.36 -34% 35.19 -23% 68.43 -21% 78.78 -30% 25.14 -49%

Shares Owned Latest ∆ Since Filing 6/30/08 4,651,970 >+100% 13,773,667 +12% 18,014,416 +57% 7,399,788 new positon 11,941,076 +40% 18,014,280 +26% 4,425,984 new position 3,604,068 >+100% 2,509,284 new position 7,754,431 +61%

Holdings as % of Co. Fund 1% 5% 8% 5% 1% 15% 3% 4% 2% 11% 2% 16% 9% 3% 9% 5% 2% 4% 1% 4%

Portfolio with Signal Value: Mohnish Pabrai MOI Signal Rank 1 2 3 4 5 6 7

Company WellCare Ternium Harvest Natural Sears Holdings Berkshire Hathaway CryptoLogic CompuCredit

Ticker WCG TX HNR SHLD BRK.A/BRK.B CRYP CCRT

Market Value ($mn) 390 1,331 219 4,838 155,729 38 119

Latest Date 9.36 6.64 6.66 38.27 n/a 3.00 2.47

Price ($) Filing ∆ Since Date Filing 36.00 -74% 17.64 -62% 10.12 -34% 93.50 -59% n/a -23% 5.50 -45% 3.92 -37%

Shares Owned Latest ∆ Since Filing 6/30/08 818,330 +52% 1,778,944 no change 5,712,701 no change 514,111 -1% n/a n/a 1,114,207 no change 2,066,097 no change

Holdings as % of Co. Fund 2% 9% 1% 10% 17% 18% 0% 15% 0% 7% 4% 2% 4% 3%

Portfolio with Signal Value: Rich Pzena MOI Signal Rank 1 2 3 4 5 6 7 8 9 10

Company Bank of America Microsoft Liz Claiborne JPMorgan Chase Harman KB Financial MetLife Pediatrix Medical Motorola Timberland

Ticker BAC MSFT LIZ JPM HAR KB MET PDX MOT TBL

Market Value ($mn) 82,389 178,445 349 128,654 871 7,900 22,332 1,366 9,247 593

Latest Date 16.42 20.06 3.69 34.47 14.88 22.17 28.14 29.94 4.08 10.31

Price ($) Filing ∆ Since Date Filing 35.00 -53% 26.69 -25% 16.43 -78% 46.70 -26% 34.07 -56% 45.69 -51% 56.00 -50% 53.92 -44% 7.14 -43% 17.37 -41%

Shares Owned Latest ∆ Since Filing 6/30/08 16,729,344 +2% 17,560,379 +24% 19,225 new position 9,927,669 >+100% 227,475 >+100% 174,675 new position 18,057 +98% 46,220 >+100% 31,972,279 >+100% 510,400 >+100%

www.manualofideas.com

Holdings as % of Co. Fund 0% 4% 0% 4% 0% 0% 0% 4% 0% 0% 0% 0% 0% 0% 0% 0% 1% 2% 1% 0%

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Portfolio with Signal Value: Prem Watsa (Fairfax) MOI Signal Rank 1 2 3 4 5 6 7 8 9

Company Level 3 Dell International Coal Overstock.com Cresud Pfizer Johnson & Johnson SandRidge Energy Odyssey Re

Ticker LVLT DELL ICO OSTK CRESY PFE JNJ SD ORH

Market Value ($mn) 1,402 21,327 396 206 254 109,775 166,613 1,672 2,460

Latest Date 0.87 10.89 2.58 9.04 5.06 16.28 60.05 10.07 40.94

Price ($) Filing ∆ Since Date Filing 2.70 -68% 16.48 -34% 6.24 -59% 19.81 -54% 10.50 -52% 18.44 -12% 69.28 -13% 19.60 -49% 43.80 -7%

Shares Owned Latest ∆ Since Filing 6/30/08 168,776,170 +45% 16,423,900 +45% 21,055,000 no change 3,388,774 no change 1,573,032 >+100% 17,833,600 no change 5,935,300 no change 280,000 new position 42,399,400 no change

Holdings as % of Co. Fund 11% 12% 1% 7% 14% 3% 15% 2% 3% 0% 0% 9% 0% 11% 0% 0% 67% 49%

Portfolio with Signal Value: Marty Whitman (Third Avenue) MOI Signal Rank 1 2 3 4 5 6 7 8 9 10

Company Bel Fuse Superior Industries Tejon Ranch Skyline Cavco Industries Sycamore Networks Haverty Furniture Bristow Group Triad Guaranty Cimarex Energy

Ticker BELFB SUP TRC SKY CVCO SCMR HVT BRS TGIC XEC

Market Value ($mn) 177 288 425 152 176 749 171 599 7 2,311

Latest Date 15.31 10.81 25.00 18.09 27.12 2.64 8.00 20.58 0.45 27.75

Price ($) Filing ∆ Since Date Filing 28.47 -46% 19.16 -44% 37.15 -33% 26.43 -32% 36.15 -25% 3.23 -18% 11.44 -30% 33.84 -39% 1.57 -71% 48.91 -43%

www.manualofideas.com

Shares Owned Latest ∆ Since Filing 6/30/08 1,131,140 +3% 4,330,332 +1% 4,865,973 +3% 1,517,212 +4% 814,943 +15% 40,661,294 +8% 4,615,918 no change 2,833,391 +85% 1,300,000 no change 5,752,252 +8%

Holdings as % of Co. Fund 12% 0% 16% 1% 29% 2% 18% 0% 13% 0% 14% 2% 27% 1% 10% 1% 9% 0% 7% 3%

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MOI Stock Screens Searching for Equities with Asymmetrical Risk-Reward Profiles CONTRARIAN “Shunned by the market, but not by insiders”

Companies close to 52-week lows, with consistent insider buying

“Biggest losers”

Companies whose stock prices have declined most over 1+ years

“Biggest losers (deleveraged)”

Companies with no net debt and large stock price decline over 1+ years

“Biggest losers (deleveraged, likely profitable)”

Companies with no net debt, positive next FY EPS, and large price drop

“Lots of revenue, but little enterprise value”

Companies that trade at low multiples of net revenue

“Neglected gross profiteers”

Companies that trade at low multiples of gross profit

DEEP VALUE “Companies with strong, liquid balance sheets”

Companies with at least 50% of market value in net cash

ACTIVIST TARGETS “Underperformers”

Companies underperforming their peers on a variety of metrics

“Sale, liquidation or recap opportunities”

Companies that may unlock value through a corporate event

MAGIC FORMULA: “Good businesses at good prices”… …based on LTM EBIT

Companies with high ROC, trading at high EBIT-to-EV yield

…based on this FY EPS estimates

Companies with high ROC, trading at high forward EPS yield

…based on next FY EPS estimates

Companies with high ROC, trading at high forward EPS yield

…based on 2012 EPS estimates

Companies with high ROC, trading at high forward EPS yield

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Thanksgiving 2008

Contrarian #1: Shunned by the Market, But Not by Insiders Screening criteria: ► Persistent insider buying in past six months ► No insider selling ► Price within 10% of 52-week low ► Market value more than $100 million │ Sorted by: Number of insider purchases

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Move Inc. Alternative Asset Management Hearst-Argyle Television, In Trian Acquisition I Corp. Equity One, Inc. Isle of Capri Casinos Enterprise Acquisition Corp. MedCath Corporation Presidential Life Corp MVC Capital, Inc. Kite Realty Group Trust Solutia Inc. China Security & Surveillanc Hercules Technology Growth C Allied Capital Corporation Meadowbrook Insurance Group, Adolor Corporation Fairpoint Communications, In Harris & Harris Group, Inc. Hersha Hospitality Trust Gaylord Entertainment Compan State Bancorp, Inc./NY Synta Pharmaceuticals Corp. CapitalSource, Inc. Central Securities Corp. CTS Corporation DCP Midstream Partners, LP Discovery Laboratories, Inc. Maguire Properties, Inc. NGP Capital Resources Shutterfly, Inc. Source Capital, Inc. BreitBurn Energy Partners L. Dillard's, Inc. Incyte Corporation Legacy Reserves LP Mine Safety Appliances Regal Entertainment Group Ulta Salon, Cosmetics & Frag CDI Corp. Del Monte Foods Company Dow Chemical Company, The Garmin Ltd. GLG Partners, Inc. SeaBright Insurance Holdings Stoneleigh Partners Acquisit Tenet Healthcare Corporation Accelrys, Inc. Advanta Corp. CNA Financial Corporation

Ticker MOVE AMV HTV TUX EQY ISLE EST MDTH PLFE MVC KRG SOA CSR HTGC ALD MIG ADLR FRP TINY HT GET STBC SNTA CSE CET CTS DPM DSCO MPG NGPC SFLY SOR BBEP DDS INCY LGCY MSA RGC ULTA CDI DLM DOW GRMN GLG SBX SOC THC ACCL ADVNB CNA

Price ($) 1.01 9.07 11.33 8.87 12.03 3.25 8.93 7.71 7.37 10.38 3.50 6.88 7.70 6.37 2.97 4.48 2.20 2.66 4.14 2.72 8.14 10.90 4.75 4.64 15.95 5.20 9.27 1.01 2.64 9.75 6.83 29.42 7.09 3.35 3.59 8.93 23.51 9.53 7.60 10.54 5.73 21.15 19.04 2.70 9.39 7.61 1.95 3.78 3.01 12.77

∆ to 52-Wk High 244% 7% 116% 6% 122% 490% 7% 250% 177% 72% 380% 216% 203% 104% 775% 123% 177% 514% 143% 308% 448% 56% 117% 321% 85% 169% 397% 212% 1064% 84% 354% 120% 328% 590% 257% 188% 142% 121% 304% 175% 80% 115% 492% 420% 76% 2% 253% 118% 354% 191%

MV ($mn) 155 469 1,065 1,020 922 100 279 151 218 252 102 649 353 209 531 258 102 237 107 131 333 158 161 1,308 338 175 262 102 126 211 171 255 373 246 349 278 841 1,463 437 199 1,132 19,538 3,856 662 201 260 931 103 137 3,435

EV ($mn) 211 468 1,900 1,020 1,949 1,470 280 207 294 277 820 2,015 445 454 2,460 300 -45 2,549 106 842 1,569 156 107 11,417 338 222 85 4,984 326 131 261 1,080 1,534 493 499 961 3,374 552 123 3,064 30,173 3,317 845 195 34 5,150 54 272 5,333

EV/ LTM Rev. .8x nm 2.6x 100.0x 8.1x 1.3x nm .3x 1.0x 8.6x 5.8x .8x 1.2x 6.5x 4.7x .8x nm 2.5x 42.6x 3.2x 1.8x 1.6x 39.8x 8.0x 34.9x .3x nm 18.4x 8.8x 8.6x .6x 29.9x 2.9x .2x 38.8x 2.2x .9x 1.3x .5x .1x .8x .5x .9x 1.0x .7x nm .6x .7x .5x .6x

Est P/E This Next FY FY nm 8x na na 15x 34x na na 13x 19x nm nm na na 8x 6x na na 4x 6x 9x 7x 9x 6x 5x 4x 5x 5x 2x 3x 5x 5x nm nm nm 7x 1x na na na nm 39x 17x 11x nm nm 4x 4x na na 7x 11x 7x 5x nm nm nm nm 10x 7x nm 683x na na 3x 4x nm nm nm nm 6x 5x 12x 11x 11x 10x 14x 11x 8x 11x 10x 9x 7x 8x 5x 6x 7x 8x 5x 5x na na nm 98x nm 54x nm nm 4x 4x

P/ Book 2.0x .9x .5x .8x .9x .5x .9x .4x .4x .6x .3x .4x 1.2x .5x .2x .5x 1.0x 1.1x .6x .3x .4x 1.4x nm .4x .5x .5x 1.1x 6.3x 1.1x .7x 1.0x .5x .3x .1x nm 1.0x 1.7x nm 1.9x .7x .8x 1.0x 1.8x nm .6x .9x 6.7x 1.3x .2x .4x

Insiders % # Own. Buys 14% 98 20% 84 77% 65 20% 46 57% 37 49% 35 20% 28 9% 27 27% 26 9% 24 22% 21 1% 19 37% 17 3% 17 3% 14 8% 14 4% 13 1% 13 5% 12 10% 11 1% 9 8% 9 50% 9 31% 8 12% 8 2% 8 14% 8 10% 8 26% 8 3% 8 9% 8 0% 8 33% 7 9% 7 16% 7 62% 7 15% 7 57% 7 65% 7 10% 6 1% 6 1% 6 46% 6 61% 6 3% 6 9% 6 0% 6 2% 5 15% 5 1% 5

[MOI ● MOI - 1,2,4,5,6 ● MOIA]

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Contrarian #2: Biggest Losers Screening criteria: ► At least one analyst estimate of this year’s EPS and next year’s EPS ► Market value more than $100 million │ 1 Sorted by: Largest price decline since yearend 2006

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 1

Company / Ticker General Growth Prope / GGP Fannie Mae / FNM Freddie Mac / FRE Ambac Financial Grou / ABK iStar Financial Inc. / SFI American Internation / AIG PMI Group, Inc., The / PMI McClatchy Company, T / MNI Genworth Financial, / GNW MGIC Investment Corp / MTG Lear Corporation / LEA Avis Budget Group In / CAR Radian Group Inc. / RDN Office Depot, Inc. / ODP KKR Financial Holdin / KFN E TRADE Financial Co / ETFC Bank of Ireland (ADR / IRE Standard Pacific Cor / SPF CompuCredit Corporat / CCRT National City Corpor / NCC Coldwater Creek Inc. / CWTR Rite Aid Corporation / RAD Thomson SA (ADR) / TMS Maguire Properties, / MPG National Financial P / NFP Las Vegas Sands Corp / LVS RAIT Financial Trust / RAS Charming Shoppes, In / CHRS Newcastle Investment / NCT Sirius XM Radio Inc. / SIRI CIT Group Inc. / CIT Smurfit-Stone Contai / SSCC Brunswick Corporatio / BC MBIA Inc. / MBI Unisys Corporation / UIS Developers Diversifi / DDR ProLogis / PLD Protalix BioTherapeu / PLX YRC Worldwide Inc. / YRCW Louisiana-Pacific Co / LPX Corus Bankshares, In / CORS Liz Claiborne, Inc. / LIZ XL Capital Ltd. / XL Health Management As / HMA Hovnanian Enterprise / HOV Allied Capital Corpo / ALD Boyd Gaming Corporat / BYD Sovereign Bancorp, I / SOV Dillard's, Inc. / DDS Chico's FAS, Inc. / CHS

Recent Price ($) 0.44 0.54 0.67 1.35 1.22 2.08 1.72 1.63 1.47 2.73 1.40 1.03 2.64 2.03 1.60 1.35 5.70 1.66 2.47 2.33 1.57 0.35 1.27 2.64 2.92 6.11 2.45 0.97 2.30 0.26 4.14 0.79 2.44 5.90 0.64 5.22 5.08 1.40 3.17 1.81 1.95 3.69 6.14 1.80 2.98 2.97 4.21 2.39 3.35 1.99

MV ($mn) 118 581 434 388 159 5,595 140 135 637 341 108 105 214 558 241 726 1,431 167 119 4,744 143 296 343 126 116 2,172 159 110 121 924 1,182 202 214 1,612 232 628 1,350 106 188 187 105 350 2,031 439 229 531 370 1,587 246 351

EV ($mn) 24,746 820,977 750,672 2,191 12,440 211,675 (41) 2,198 3,598 327 1,925 9,136 1,486 1,104 12,039 11,971 9,876 1,097 722 21,695 68 6,684 2,035 4,984 370 11,246 6,651 180 6,062 3,937 60,495 3,866 598 10,033 800 7,063 12,456 53 1,269 551 (2,420) 1,273 (389) 3,558 2,294 2,460 2,870 3,775 1,534 74

Cumulative Price Performance Since… 12/31/07 12/29/06 12/30/05 12/31/01 -99% -99% -99% -97% -99% -99% -99% -99% -98% -99% -99% -99% -95% -98% -98% -98% -95% -97% -97% -95% -96% -97% -97% -97% -87% -96% -96% -95% -87% -96% -97% -97% -94% -96% -96% na -88% -96% -96% -96% -95% -95% -95% -96% -92% -95% -96% -96% -77% -95% -95% -94% -85% -95% -94% -89% -89% -94% -93% na -62% -94% -94% -87% -91% -94% -91% -84% -50% -94% -95% -86% -75% -94% -94% -79% -86% -94% -93% -92% -77% -94% -92% -44% -87% -94% -90% -93% -91% -93% -94% -96% -91% -93% -91% na -94% -93% -94% na -94% -93% -85% na -72% -93% -91% -85% -82% -93% -93% -82% -82% -93% -91% na -91% -93% -96% na -83% -93% -92% na -93% -93% -94% -95% -86% -92% -94% -89% -68% -92% -90% -89% -86% -92% -89% -95% -86% -92% -89% -73% -92% -92% -89% -76% -59% -92% -97% -39% -81% -92% -93% -87% -87% -92% -93% -79% -82% -92% -93% -83% -82% -92% -90% -85% -88% -91% -91% -93% -70% -91% -92% -90% -58% -91% -94% -72% -86% -91% -90% -89% -88% -91% -91% -35% -79% -91% -88% -80% -82% -90% -87% -79% -78% -90% -95% -70%

Price/ Tang. Book .1x nm nm nm .1x .1x .1x nm .1x .1x nm nm .1x .3x .1x 3.5x .2x .2x .2x .5x .5x nm nm 1.4x nm 1.0x .1x .3x nm nm .3x nm .2x .6x nm .3x .2x 1.9x .4x .1x .2x .8x .3x nm .4x .2x .8x .5x .1x .4x

Next FY P/E 1x nm nm 5x nm 1x nm 3x 1x nm nm 21x nm 9x 1x nm 4x nm nm nm nm nm nm nm 1x 16x 2x nm 2x nm 16x nm nm 13x 4x 5x 7x nm nm nm nm 5x 2x 4x nm 3x 7x 4x nm 20x

[Industry Browser ● Price Performance ● macros_screens.xls, MOI_screen_01]

All price performance numbers exclude dividends.

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Contrarian #3: Biggest Losers (Deleveraged) Screening criteria: ► Positive net cash ► At least one analyst estimate of this year’s EPS and next year’s EPS ► Market value more than 1 $100 million │ Sorted by: Largest price decline since yearend 2006

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 1

Company / Ticker PMI Group, Inc., The / PMI MGIC Investment Corp / MTG Coldwater Creek Inc. / CWTR Protalix BioTherapeu / PLX XL Capital Ltd. / XL Chico's FAS, Inc. / CHS Heelys, Inc. / HLYS THQ Inc. / THQI Isilon Systems, Inc. / ISLN Frontier Financial C / FTBK SMART Modular Tech / SMOD WellCare Health Plan / WCG InterNAP Network Ser / INAP Affymetrix, Inc. / AFFX RTI International Me / RTI Orbotech Ltd. / ORBK Force Protection, In / FRPT Winnebago Industries / WGO New York & Company, / NWY SanDisk Corporation / SNDK Kenexa Corporation / KNXA Rackable Systems, In / RACK Hanmi Financial Corp / HAFC Cornerstone Therapeu / CRTXD Martha Stewart Livin / MSO Acme Packet, Inc. / APKT Move Inc. / MOVE JDS Uniphase Corpora / JDSU Flamel Technologies / FLML Symyx Technologies, / SMMX Thomas Weisel Partne / TWPG Sun Microsystems, In / JAVA Christopher & Banks / CBK UTStarcom, Inc. / UTSI AnnTaylor Stores Cor / ANN Xyratex Ltd. / XRTX Motorola, Inc. / MOT Theravance, Inc. / THRX Palomar Medical Tech / PMTI Actions Semiconducto / ACTS Cogo Group, Inc. / COGO Williams-Sonoma, Inc / WSM Charlotte Russe Hold / CHIC NutriSystem Inc. / NTRI Evercore Partners In / EVR Intevac, Inc. / IVAC Kimball Internationa / KBALB Focus Media Holding / FMCN Global Industries, L / GLBL Sonus Networks, Inc. / SONS

Recent Price ($) 1.72 2.73 1.57 1.40 6.14 1.99 3.80 3.98 3.40 3.70 1.75 9.36 2.71 3.20 11.01 3.90 2.81 5.37 2.15 7.15 5.59 5.28 3.92 3.60 3.91 3.69 1.01 3.06 5.60 4.04 4.00 4.12 3.55 1.67 6.37 4.24 4.08 6.16 10.22 1.68 3.70 6.46 6.36 13.22 7.72 5.45 5.11 6.99 2.76 1.40

MV ($mn) 140 341 143 106 2,031 351 105 267 217 174 108 390 136 225 253 131 192 156 129 1,616 126 158 180 156 215 204 155 658 135 137 123 3,043 126 211 363 123 9,247 381 186 142 131 682 133 391 247 119 189 905 309 381

EV ($mn) (41) 327 68 53 (389) 74 12 104 170 11 73 (928) 90 89 206 (24) 113 135 65 1,267 100 (18) 176 149 165 77 211 367 104 69 35 1,671 42 (120) 256 96 6,288 335 58 (116) 8 669 87 333 87 79 168 524 293 64

Cumulative Price Performance Since… 12/31/07 12/29/06 12/30/05 12/31/01 -87% -96% -96% -95% -88% -96% -96% -96% -77% -94% -92% -44% -59% -92% -97% -39% -88% -91% -91% -93% -78% -90% -95% -70% -45% -88% na na -86% -88% -83% -82% -33% -88% na na -80% -87% -83% -68% -83% -87% na na -78% -86% -77% na -67% -86% -37% -77% -86% -86% -93% -92% -84% -86% -71% 11% -78% -85% -84% -87% -40% -84% 260% na -74% -84% -84% -71% -66% -84% -90% na -78% -83% -89% -1% -71% -83% -74% na -47% -83% -81% na -55% -83% -78% -41% -72% -82% -95% na -58% -82% -78% -76% -71% -82% na na -59% -82% -80% -72% -77% -82% -84% -96% -44% -81% -70% 106% -47% -81% -85% na -71% -81% na na -77% -81% -75% -92% -69% -81% -81% -84% -39% -81% -79% -94% -75% -81% -82% -59% -73% -80% -76% na -75% -80% -82% -73% -68% -80% -73% na -33% -80% -71% 759% -59% -80% -79% na -77% -80% -40% 68% -75% -79% -85% -70% -61% -79% -69% -66% -51% -79% -63% 844% -64% -79% na na -63% -79% -59% 128% -63% -79% -52% -66% -88% -79% -59% na -87% -79% -76% -69% -76% -79% -62% na

Price/ Tang. Book .1x .1x .5x 1.9x .3x .4x .9x .7x 3.0x .5x .5x .8x 1.2x .6x .5x .3x .7x .9x .5x .4x 1.8x .6x .7x nm 4.1x 1.4x 2.7x 1.2x 2.4x 1.9x .6x 1.9x .6x .4x .7x .5x 1.0x nm 1.3x .5x .8x .6x .8x 3.2x 1.7x .7x .5x 1.3x .4x .8x

Next FY P/E nm nm nm nm 2x 20x 20x 8x nm 62x 6x 7x 13x nm 5x 4x 13x 12x 11x nm 5x nm 7x nm 13x 14x 8x 4x 28x nm nm 24x 10x nm 10x 4x 29x nm 28x 6x 5x 21x 10x 7x 7x nm >99x 4x 5x nm

[Industry Browser - D ● Price Performance ● macros_screens.xls, MOI_screen_01]

All price performance numbers exclude dividends.

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Contrarian #4: Biggest Losers (Deleveraged & Profitable) Screening criteria: ► Positive net cash ► Positive consensus EPS estimate for next FY ► At least one analyst estimate of this year’s 1 EPS and next year’s EPS ► Market value more than $100 million │ Sorted by: Largest price decline since yearend 2006

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 1

Company / Ticker XL Capital Ltd. / XL Chico's FAS, Inc. / CHS Heelys, Inc. / HLYS THQ Inc. / THQI Frontier Financial C / FTBK SMART Modular Tech / SMOD WellCare Health Plan / WCG InterNAP Network Ser / INAP RTI International Me / RTI Orbotech Ltd. / ORBK Force Protection, In / FRPT Winnebago Industries / WGO New York & Company, / NWY Kenexa Corporation / KNXA Hanmi Financial Corp / HAFC Martha Stewart Livin / MSO Acme Packet, Inc. / APKT Move Inc. / MOVE JDS Uniphase Corpora / JDSU Flamel Technologies / FLML Sun Microsystems, In / JAVA Christopher & Banks / CBK AnnTaylor Stores Cor / ANN Xyratex Ltd. / XRTX Motorola, Inc. / MOT Palomar Medical Tech / PMTI Actions Semiconducto / ACTS Cogo Group, Inc. / COGO Williams-Sonoma, Inc / WSM Charlotte Russe Hold / CHIC NutriSystem Inc. / NTRI Evercore Partners In / EVR Kimball Internationa / KBALB Focus Media Holding / FMCN Global Industries, L / GLBL Daktronics, Inc. / DAKT GFI Group Inc. / GFIG Cadence Design Syste / CDNS .LECG Corporation / XPRT Penson Worldwide, In / PNSN Citi Trends, Inc. / CTRN Perficient, Inc. / PRFT Zumiez Inc. / ZUMZ DivX, Inc. / DIVX Akamai Technologies, / AKAM Lattice Semiconducto / LSCC Ciena Corporation / CIEN ValueClick, Inc. / VCLK EMCORE Corporation / EMKR Imation Corp. / IMN

Recent Price ($) 6.14 1.99 3.80 3.98 3.70 1.75 9.36 2.71 11.01 3.90 2.81 5.37 2.15 5.59 3.92 3.91 3.69 1.01 3.06 5.60 4.12 3.55 6.37 4.24 4.08 10.22 1.68 3.70 6.46 6.36 13.22 7.72 5.11 6.99 2.76 7.85 3.35 3.93 4.07 6.30 9.22 3.82 7.09 5.54 12.76 1.56 6.68 5.71 1.34 11.38

MV ($mn) 2,031 351 105 267 174 108 390 136 253 131 192 156 129 126 180 215 204 155 658 135 3,043 126 363 123 9,247 186 142 131 682 133 391 247 189 905 309 317 396 1,023 104 158 132 124 208 179 2,158 180 603 495 104 429

EV ($mn) (389) 74 12 104 11 73 (928) 90 206 (24) 113 135 65 100 176 165 77 211 367 104 1,671 42 256 96 6,288 58 (116) 8 669 87 333 87 168 524 293 314 263 864 92 (2,077) 127 108 144 66 2,060 87 374 406 86 316

Cumulative Price Performance Since… 12/31/07 12/29/06 12/30/05 12/31/01 -88% -91% -91% -93% -78% -90% -95% -70% -45% -88% na na -86% -88% -83% -82% -80% -87% -83% -68% -83% -87% na na -78% -86% -77% na -67% -86% -37% -77% -84% -86% -71% 11% -78% -85% -84% -87% -40% -84% 260% na -74% -84% -84% -71% -66% -84% -90% na -71% -83% -74% na -55% -83% -78% -41% -58% -82% -78% -76% -71% -82% na na -59% -82% -80% -72% -77% -82% -84% -96% -44% -81% -70% 106% -77% -81% -75% -92% -69% -81% -81% -84% -75% -81% -82% -59% -73% -80% -76% na -75% -80% -82% -73% -33% -80% -71% 759% -59% -80% -79% na -77% -80% -40% 68% -75% -79% -85% -70% -61% -79% -69% -66% -51% -79% -63% 844% -64% -79% na na -63% -79% -52% -66% -88% -79% -59% na -87% -79% -76% -69% -65% -79% -47% 86% -86% -78% -72% na -77% -78% -77% -82% -73% -78% -77% na -56% -77% na na -40% -77% -78% na -76% -77% -57% 232% -71% -76% -67% na -60% -76% na na -63% -76% -36% 115% -52% -76% -64% -92% -80% -76% -68% -93% -74% -76% -68% 100% -91% -76% -82% -90% -46% -75% -75% -47%

Price/ Tang. Book .3x .4x .9x .7x .5x .5x .8x 1.2x .5x .3x .7x .9x .5x 1.8x .7x 4.1x 1.4x 2.7x 1.2x 2.4x 1.9x .6x .7x .5x 1.0x 1.3x .5x .8x .6x .8x 3.2x 1.7x .5x 1.3x .4x 1.8x 1.7x 2.0x .7x .6x .9x 2.1x 1.4x 1.2x 2.0x .7x 1.3x 5.2x .6x .7x

Next FY P/E 2x 20x 20x 8x 62x 6x 7x 13x 5x 4x 13x 12x 11x 5x 7x 13x 14x 8x 4x 28x 24x 10x 10x 4x 29x 28x 6x 5x 21x 10x 7x 7x >99x 4x 5x 11x 5x 66x 8x 5x 9x 5x 13x 9x 7x 13x 10x 9x 8x 16x

[Industry Browser – D,P ● Price Performance ● macros_screens.xls, MOI_screen_01]

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Contrarian #5: Lots of Revenue, But Market Says Enterprise Has Little Value Screening criteria: ► Enterprise value to trailing revenue less than 0.5x ► Market value does not exceed revenue ► Market value more than $500 million │ Sorted by: Enterprise value to revenue

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Ashland Inc. Tech Data Corporation Ingram Micro Inc. World Fuel Services Corporat Daiei, Inc. (ADR), The Magna International Inc. (US Humana Inc. Celestica Inc. (USA) AmerisourceBergen Corp. Perini Corporation Office Depot, Inc. Molina Healthcare, Inc. Health Net, Inc. Winn-Dixie Stores, Inc. Tesoro Corporation KBR, Inc. McKesson Corporation Sunoco, Inc. Valero Energy Corporation Manpower Inc. EMCOR Group, Inc. Sun Microsystems, Inc. Flextronics International Lt Chicago Bridge & Iron Compan Universal American Corporati Sears Holdings Corporation Benchmark Electronics, Inc. McDermott International AMERIGROUP Corporation Jabil Circuit, Inc. AK Steel Holding Corporation Eastman Kodak Company AutoNation, Inc. Holly Corporation Arrow Electronics, Inc. Tyson Foods, Inc. Western Refining, Inc. Sunoco Logistics Partners L. Centene Corporation Tellabs, Inc. Avnet, Inc. AXA (ADR) Cardinal Health, Inc. Williams-Sonoma, Inc. Barnes & Noble, Inc. Frontier Oil Corporation Bunge Limited Cypress Semiconductor Corpor Kyocera Corporation (ADR) General Motors Corporation

Ticker ASH TECD IM INT DAIEY MGA HUM CLS ABC PCR ODP MOH HNT WINN TSO KBR MCK SUN VLO MAN EME JAVA FLEX CBI UAM SHLD BHE MDR AGP JBL AKS EK AN HOC ARW TSN WNR SXL CNC TLAB AVT AXA CAH WSM BKS FTO BG CY KYO GM

Price ($) 17.28 19.46 11.73 31.65 8.01 25.98 30.63 4.15 29.98 14.42 2.03 22.26 9.46 14.03 10.25 13.11 35.26 37.97 19.51 27.78 13.80 4.12 3.06 7.93 9.33 38.27 10.97 7.80 22.50 6.33 8.72 7.89 6.35 17.47 14.56 4.90 8.36 43.25 17.26 3.68 15.02 17.43 36.09 6.46 15.75 12.34 38.70 3.56 52.45 3.01

∆ to 52-Wk Low High -3% 239% -6% 100% -5% 79% -56% 10% -38% 150% 0% 247% -18% 188% -13% 138% -7% 62% -19% 305% -26% 847% -17% 102% -4% 460% -28% 38% -26% 457% -10% 239% -6% 94% -44% 94% -25% 265% -10% 155% -7% 161% -15% 423% -2% 305% -7% 701% -31% 184% 0% 219% -20% 82% -8% 761% -29% 82% -5% 197% -14% 738% -8% 210% -37% 209% -20% 225% -7% 178% -8% 298% -46% 270% -36% 28% -24% 65% -16% 101% -7% 151% -15% 143% -4% 72% -3% 376% -7% 151% -32% 274% -29% 249% -18% 74% -5% 92% -9% 915%

MV ($mn) 1,087 983 1,934 926 795 2,925 5,168 951 4,751 726 558 599 981 762 1,419 2,118 9,643 4,437 10,068 2,166 904 3,043 2,477 756 632 4,838 714 1,778 1,192 1,333 977 2,118 1,123 868 1,737 1,740 572 1,239 741 1,465 2,263 35,919 12,978 682 866 1,282 4,707 516 9,954 1,838

EV ($mn) 267 936 1,584 884 1,058 1,213 1,568 455 5,062 387 1,104 253 1,286 629 2,777 1,008 10,315 5,844 13,776 2,506 763 1,671 4,219 714 612 6,918 385 952 655 1,930 1,201 1,579 2,476 1,019 2,752 4,386 1,883 1,791 555 298 3,095 25,885 16,070 669 959 1,151 8,795 381 4,356 30,713

EV/ LTM Rev. .03x .04x .04x .04x .05x .05x .06x .06x .07x .07x .07x .09x .09x .09x .09x .10x .10x .10x .11x .11x .11x .12x .12x .12x .13x .14x .14x .15x .15x .15x .15x .15x .16x .16x .16x .16x .16x .17x .17x .17x .17x .17x .17x .17x .18x .18x .18x .18x .19x .19x

P/E Next FY 8x 7x 9x 10x na na 5x na 9x 5x 9x 9x 5x 44x 7x 7x 8x 11x 5x 9x 5x 24x 3x 3x 6x 31x 10x 4x 9x 4x 3x 30x 6x 6x 7x 6x 9x 9x 9x 19x 6x 6x 8x 21x 10x 5x 5x 16x 23x nm

P/ Tang. Book .4x .5x .7x 2.3x .4x .4x 2.4x .7x 1.8x 2.1x .3x 2.0x 1.2x 1.4x .5x 1.4x 5.1x 1.5x .7x 1.9x 5.4x 1.9x 1.4x nm 1.2x .9x .7x 1.3x 2.1x .9x .7x .9x 1.4x 2.0x 1.0x .7x 1.2x 2.1x 2.5x .9x 1.1x 1.1x 7.9x .6x 1.6x 1.1x .7x .5x .7x nm

Insiders # # Buys Sells 5 4 4 6 1 1 1 1 7 2 18 2 6 1 8 1 3 20 1 2 3 10 6 6 3 1 2 2 2 11 2 3 2 4 7 15 23 4 3 2 1 1 5 2 11 2 3 3 4 6 -

[MOI05 ● MOI - 1,2,4,5,6 ● MOIE]

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Contrarian #6: Neglected Gross Profiteers Screening criteria: ► Enterprise value not more than trailing gross profit ► Market value not more than 2x gross profit ► Market value more than $200 million │ Sorted by: Enterprise value to gross profit

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Chico's FAS, Inc. Zoran Corporation Daiei, Inc. (ADR), The Kindred Healthcare, Inc. Ashland Inc. AnnTaylor Stores Corp. Office Depot, Inc. Sierra Wireless, Inc. (USA) Sun Microsystems, Inc. Silicon Image, Inc. Humana Inc. Affymetrix, Inc. Winn-Dixie Stores, Inc. Sonus Networks, Inc. Airvana, Inc. Ameriprise Financial, Inc. Evercore Partners Inc. RealNetworks, Inc. Magna International Inc. (US THQ Inc. Kelly Services, Inc. Blyth, Inc. Brown Shoe Company, Inc. AllianceBernstein Holding LP First American Corporation Williams-Sonoma, Inc. OmniVision Technologies, Inc Nortel Networks Corporation Allianz SE (ADR) Great Atlantic & Pacific Tea ArcelorMittal (ADR) Sears Holdings Corporation TrueBlue, Inc. Molina Healthcare, Inc. Abercrombie & Fitch Co. Scholastic Corporation Cypress Semiconductor Corpor Applied Micro Circuits Corpo JDS Uniphase Corporation Atlas Air Worldwide Holdings IAC/InterActiveCorp HSN, Inc. RadioShack Corporation Barnes & Noble, Inc. NetGear, Inc. Stage Stores, Inc. Jo-Ann Stores, Inc. Brunswick Corporation Manpower Inc. Kyocera Corporation (ADR)

Ticker CHS ZRAN DAIEY KND ASH ANN ODP SWIR JAVA SIMG HUM AFFX WINN SONS AIRV AMP EVR RNWK MGA THQI KELYA BTH BWS AB FAF WSM OVTI NT AZ GAP MT SHLD TBI MOH ANF SCHL CY AMCC JDSU AAWW IACI HSNI RSH BKS NTGR SSI JAS BC MAN KYO

Price ($) 1.99 6.42 8.01 11.71 17.28 6.37 2.03 7.88 4.12 3.37 30.63 3.20 14.03 1.40 4.77 18.00 7.72 3.88 25.98 3.98 12.42 5.86 7.47 17.70 19.79 6.46 6.56 0.56 7.00 4.54 21.31 38.27 6.52 22.26 17.79 15.28 3.56 4.25 3.06 15.90 15.92 4.67 9.65 15.75 9.90 5.31 14.47 2.44 27.78 52.45

∆ to 52-Wk Low High 0% 487% -59% 286% -38% 150% -1% 184% -3% 239% -6% 415% -26% 847% -11% 169% -15% 423% -3% 128% -18% 188% -5% 677% -28% 38% -7% 391% -30% 49% -9% 242% -4% 240% -12% 96% 0% 247% -8% 652% -7% 87% -5% 318% -7% 149% -11% 371% -16% 234% -3% 376% -3% 212% -7% 3261% -13% 210% -16% 597% -11% 392% 0% 219% -7% 168% -17% 102% 0% 375% -4% 146% -18% 74% -7% 156% -4% 401% -3% 318% -17% 58% -34% 254% -4% 111% -7% 151% -17% 274% -11% 239% -38% 87% -8% 778% -10% 155% -5% 92%

MV ($mn) 351 329 795 456 1,087 363 558 244 3,043 250 5,168 225 762 381 305 3,899 247 524 2,925 267 432 208 316 1,550 1,838 682 336 279 31,665 262 30,294 4,838 283 599 1,548 577 516 277 658 346 2,235 263 1,207 866 349 205 371 214 2,166 9,954

EV ($mn) 74 24 1,058 572 267 256 1,104 42 1,671 49 1,568 89 629 64 68 1,936 87 128 1,213 104 433 264 402 1,550 2,048 669 96 2,114 22,612 1,288 62,809 6,918 225 253 1,350 1,036 381 81 367 553 867 595 1,145 959 147 258 521 598 2,506 4,356

EV/ LTM Rev. .04x .05x .05x .14x .03x .11x .07x .07x .12x .16x .06x .20x .09x .20x .31x .24x .31x .21x .05x .10x .08x .23x .17x .38x .31x .17x .12x .19x .19x .15x .48x .14x .16x .09x .36x .28x .18x .28x .24x .32x .29x .20x .26x .18x .19x .17x .27x .11x .11x .19x

EV/ LTM GP .1x .1x .1x .2x .2x .2x .3x .3x .3x .3x .3x .3x .3x .3x .3x .3x .3x .3x .4x .4x .4x .4x .4x .4x .4x .5x .5x .5x .5x .5x .5x .5x .5x .5x .5x .5x .5x .6x .6x .6x .6x .6x .6x .6x .6x .6x .6x .6x .6x .6x

EV/ LTM EBIT 5x nm 10x 6x 1x 2x 11x 1x nm 6x 1x 2x 26x nm 1x 3x 4x nm 2x nm 11x 11x 5x 1x 26x 2x 2x nm 2x nm 3x 7x 3x 2x 2x 4x nm nm nm 6x nm nm 3x 4x 2x 3x 10x nm 4x 2x

P/E Next FY 20x nm na 8x 8x 10x 9x na 24x 13x 5x nm 44x nm 14x 5x 7x nm na 8x 24x 5x 8x 7x 13x 21x 7x na 5x nm 3x 31x 9x 9x 6x 7x 16x 7x 4x 4x 16x 5x 6x 10x 9x 7x 12x nm 9x 23x

P/ Tang. Book .4x .7x .4x .6x .4x .7x .3x .9x 1.9x 1.2x 2.4x .6x 1.4x .8x 2.3x .6x 1.7x 1.3x .4x .7x .7x .9x .9x 1.0x nm .6x .7x nm 1.0x nm .7x .9x 1.5x 2.0x .9x 1.4x .5x 1.0x 1.2x .6x 1.2x nm 1.5x 1.6x 1.0x .5x .9x .2x 1.9x .7x

[MOI06 ● MOI - 1,2,4,5,6 ● MOIF]

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Deep Value #1: Companies with Strong, Liquid Balance Sheets Screening criteria: ► Net cash at least 50% of market value ► At least as much insider buying as selling in past six months ► Price to tangible book less than 1.5x ► Market value more than $100 million │ Sorted by: Number of insider purchases; price to tangible book

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Adaptec, Inc. Fifth Street Finance Corp. Virtusa Corporation Adolor Corporation Electro Scientific Industrie Harvest Natural Resources, I OraSure Technologies, Inc. Stoneleigh Partners Acquisit ModusLink Global Solutions, Thomas Weisel Partners Group Ameriprise Financial, Inc. Discover Financial Services Tailwind Financial Inc. Zoran Corporation Exar Corporation Chico's FAS, Inc. Greenlight Capital Re, Ltd. Sigma Designs, Inc. Microtune, Inc. BlackRock Real Asset Trust Affymetrix, Inc. Maxygen, Inc. Cypress Bioscience, Inc. PMI Group, Inc., The Natuzzi, S.p.A (ADR) Orbotech Ltd. Opnext, Inc. Qiao Xing Mobile Communicati Magna International Inc. (US Gilat Satellite Networks Ltd AEGON N.V. (ADR) Coldwater Creek Inc. Actions Semiconductor Co., L Agria Corporation (ADR) Gushan Environmental Energy Rackable Systems, Inc. ORBCOMM Inc. Lattice Semiconductor Novatel Wireless, Inc. Zapata Corporation Kyocera Corporation (ADR) Celestica Inc. (USA) Sycamore Networks, Inc. KongZhong Corporation (ADR) Sonus Networks, Inc. KHD Humboldt Wedag Internati China Nepstar Chain Drugstor WellCare Health Plans, Inc. United Capital Corp. Radware Ltd.

Ticker ADPT FSC VRTU ADLR ESIO HNR OSUR SOC MLNK TWPG AMP DFS TNF ZRAN EXAR CHS GLRE SIGM TUNE BCF AFFX MAXY CYPB PMI NTZ ORBK OPXT QXM MGA GILT AEG CWTR ACTS GRO GU RACK ORBC LSCC NVTL ZAP KYO CLS SCMR KONG SONS KHD NPD WCG AFP RDWR

Price ($) 2.91 6.61 5.24 2.20 6.59 6.66 2.93 7.61 3.42 4.00 18.00 9.47 7.76 6.42 6.12 1.99 11.10 8.79 2.08 6.66 3.20 4.18 5.18 1.72 2.68 3.90 1.81 2.85 25.98 2.53 4.80 1.57 1.68 2.09 2.46 5.28 2.44 1.56 4.55 5.88 52.45 4.15 2.64 3.14 1.40 9.10 3.33 9.36 18.65 6.00

∆ to 52-Wk Low High -20% 46% -24% 102% -24% 261% 0% 177% -5% 226% -13% 102% -20% 229% -4% 2% -5% 352% -6% 267% -9% 242% -21% 110% -4% 3% -59% 286% -19% 61% 0% 487% -10% 115% -10% 730% -10% 231% -21% 192% -5% 677% -29% 114% -5% 151% -30% 924% -15% 116% -26% 390% -16% 430% -45% 249% 0% 247% -8% 345% -24% 288% -4% 452% -8% 198% -26% 498% -11% 630% -1% 174% -10% 223% -3% 156% -12% 289% -16% 25% -5% 92% -13% 138% -24% 53% -26% 138% -7% 391% -20% 293% -10% 530% -35% 527% -6% 46% -5% 158%

MV ($mn) 355 150 123 102 178 219 137 260 158 123 3,899 4,545 121 329 263 351 403 232 110 378 225 155 196 140 147 131 117 151 2,925 101 7,856 143 142 132 205 158 103 180 138 113 9,954 951 749 112 381 278 360 390 158 116

EV ($mn) -15 63 52 -45 26 101 61 34 -4 35 1,936 -4,076 19 24 17 74 186 111 28 -849 89 -57 46 -41 70 -24 -53 -89 1,213 -2 -3,690 68 -116 -69 28 -18 16 87 12 -41 4,356 455 -72 -19 64 -118 43 -928 51 28

EV/ LTM Rev. nm 2.9x .3x nm .1x 9.0x .8x nm nm .1x .2x nm 8.1x .0x .1x .0x 5.1x .4x .3x nm .2x nm 2.1x nm .1x nm nm nm .0x nm nm .1x nm nm .1x nm .5x .4x .0x nm .2x .1x nm nm .2x nm .1x nm .7x .3x

P/E Next FY 73x 4x 10x nm 20x 9x nm na na nm 5x 8x na nm 28x 20x na 5x 13x na nm nm 14x nm na 4x 7x na na 5x 7x nm 6x 6x 2x nm nm 13x 12x na 23x na nm 31x nm 5x 11x 7x na nm

P/ Tang. Book .9x .5x .8x 1.0x .5x .8x 1.0x 1.1x .5x .6x .6x .8x 1.2x .7x .9x .4x .8x .9x 1.0x .3x .6x .8x 1.4x .1x .3x .3x .4x .4x .4x .4x .4x .5x .5x .5x .6x .6x .7x .7x .7x .7x .7x .7x .8x .8x .8x .8x .8x .8x .8x .9x

Insiders # # Buys Sells 37 2 17 14 13 9 6 8 8 1 6 5 5 4 4 1 4 3 3 1 2 2 2 2 1 1 1 1 1 -

[MOI02 ● MOI - 1,2,4,5,6 ● MOIB]

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Activist Targets #1: Underperformers Screening criteria: ► Bottom-50% rank in EBIT margin, ROE and asset turnover; LTM rank lower than rank two years ago ► Stock price lower than two and five years ago ► Insider ownership less than 20% ► Market value more than $100 million │ Sorted by: Market value

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44

Company Schering-Plough Cor Merrill Lynch & Co. SLM Corporation Mylan Inc. Toll Brothers, Inc. Constellation Brand Micron Technology LSI Corporation Advanced Micro Tellabs, Inc. CIT Group Inc. International Rectifier Rambus Inc. E TRADE Financial Teradyne, Inc. AmeriCredit Fannie Mae ACI Worldwide Inc Lundin Mining Corpo Salix Pharmaceutica Redwood Trust, Inc. Sonus Networks, Inc RF Micro Devices Headwaters Cohu, Inc. LaBranche & Co. Exar Corporation Pinnacle Entertainm Brooks Automation, DineEquity, Inc. ImmunoGen, Inc. Vital Images, Inc. Louisiana-Pacific Belo Corp. Herley Industries Standard Pacific Symmetricom, Inc. Array BioPharma OraSure Technologies Orbotech Ltd. RADVISION GenVec Gilat Satellite SouthWest Water

Ticker SGP MER SLM MYL TOL STZ MU LSI AMD TLAB CIT IRF RMBS ETFC TER ACF FNM ACIW LMC SLXP RWT SONS RFMD HW COHU LAB EXAR PNK BRKS DIN IMGN VTAL LPX BLC HRLY SPF SYMM ARRY OSUR ORBK RVSN GNVC GILT SWWC

Price ($) 15.76 13.20 7.43 9.13 17.42 11.49 2.75 3.12 2.43 3.68 4.14 11.43 7.76 1.35 4.05 5.56 0.54 14.75 1.23 9.31 12.31 1.40 1.32 6.79 11.84 4.53 6.12 4.07 3.66 12.14 3.91 12.94 1.81 1.70 12.80 1.66 3.73 3.33 2.93 3.90 6.07 1.15 2.53 4.10

MV ($mn) 25,630 21,117 3,472 2,782 2,768 2,571 2,100 2,013 1,479 1,465 1,182 833 813 726 686 647 581 515 480 448 412 381 347 285 275 273 263 244 233 212 199 197 187 174 173 167 166 159 137 131 123 102 101 101

EV ($mn) 33,368 468,780 157,628 7,824 3,529 7,384 3,464 1,554 5,372 298 60,495 427 594 11,971 378 13,518 820,977 496 576 402 6,994 64 748 796 104 254 17 1,036 89 2,420 154 39 551 1,306 167 1,097 118 123 61 -24 40 80 -2 291

Price Change vs. 2 Yrs 5 Yrs Ago Ago -33% -9% -86% -77% -85% -80% -54% -64% -46% -12% -60% -30% -80% -80% -65% -65% -88% -84% -64% -56% -93% -88% -70% -77% -59% -75% -94% -89% -73% -84% -78% -65% -99% -99% -55% -34% -90% -13% -24% -38% -79% -76% -79% -81% -81% -87% -72% -65% -41% -38% -54% -61% -53% -64% -88% -56% -75% -85% -77% -68% -23% -23% -63% -28% -92% -90% -88% -92% -21% -38% -94% -93% -58% -49% -74% -41% -65% -63% -85% -84% -70% -47% -52% -65% -71% -48% -70% -62%

Percentile Rank vs. Industry Peers EBIT Marg. ROE Asset Turn. 2 Yrs 2 Yrs 2 Yrs LTM Ago LTM Ago LTM Ago 33 65 22 68 42 52 11 66 11 75 0 16 25 76 17 83 0 16 27 78 16 69 31 43 31 69 28 76 37 60 32 65 22 51 31 47 23 27 22 27 31 39 14 52 12 50 47 52 23 31 7 28 42 47 17 62 19 43 37 43 31 73 16 64 7 16 32 56 31 40 37 43 14 19 14 27 27 34 5 78 13 67 0 16 44 67 38 65 47 56 35 76 30 69 7 30 16 57 4 55 0 16 46 68 34 77 47 56 15 84 24 58 22 34 21 66 23 57 31 52 5 68 1 60 7 16 39 53 35 82 37 43 32 60 31 58 37 65 28 53 23 35 42 52 44 50 40 43 42 60 21 82 28 68 7 16 8 26 17 34 27 30 21 59 32 61 31 47 18 45 20 70 42 52 22 74 22 65 31 43 10 12 12 18 31 39 28 57 34 40 27 43 25 46 24 41 37 47 29 71 19 47 31 39 15 34 29 33 42 47 13 47 7 44 47 60 36 43 31 35 42 43 3 7 4 12 22 34 29 53 34 38 37 43 45 65 41 61 47 56 29 56 30 53 37 43 8 9 8 12 37 43 44 45 42 44 42 47 42 58 29 41 31 43 [MOI03 ● MOI – 3 ● MOIC]

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Activist Targets #2: Sale, Liquidation or Recap Opportunities Screening criteria: ► Tangible book at least 50% of market value ► Current assets minus total liabilities at least 50% of market value ► Positive net cash ► Insider ownership less than 20% ► Market value more than $100 million │ Sorted by: Market value

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Ingram Micro Inc. Foot Locker, Inc. HLTH Corporation Tellabs, Inc. Novellus Systems, Inc. Tech Data Corporation Benchmark Electronics, Inc. MKS Instruments, Inc. FormFactor, Inc. Cymer, Inc. Verigy Ltd. Emulex Corporation Plantronics, Inc. Coherent, Inc. Cabot Microelectronics Corpo Analogic Corporation JAKKS Pacific, Inc. OM Group, Inc. Harmonic Inc. Imation Corp. Fred's, Inc. TriQuint Semiconductor Ameron International Corpora Sonus Networks, Inc. Finish Line, Inc., The Park Electrochemical Corp. Adaptec, Inc. Chico's FAS, Inc. NetGear, Inc. Ixia OmniVision Technologies, Inc Zoran Corporation Ultratech, Inc. Geron Corporation Superior Industries Internat L.B. Foster Company Methode Electronics Inc. Applied Micro Circuits Corpo Cohu, Inc. THQ Inc. Exar Corporation Silicon Storage Technology, eHealth, Inc. RTI International Metals, In InfoSpace, Inc. Silicon Image, Inc. Sierra Wireless, Inc. (USA) Rigel Pharmaceuticals, Inc. Brooks Automation, Inc.(USA) Sigma Designs, Inc.

Ticker IM FL HLTH TLAB NVLS TECD BHE MKSI FORM CYMI VRGY ELX PLT COHR CCMP ALOG JAKK OMG HLIT IMN FRED TQNT AMN SONS FINL PKE ADPT CHS NTGR XXIA OVTI ZRAN UTEK GERN SUP FSTR MEI AMCC COHU THQI EXAR SSTI EHTH RTI INSP SIMG SWIR RIGL BRKS SIGM

Price ($) 11.73 11.22 8.21 3.68 12.18 19.46 10.97 13.99 13.63 21.86 10.96 7.22 11.96 23.47 23.34 39.16 18.98 16.10 4.83 11.38 9.89 2.69 41.72 1.40 6.70 17.58 2.91 1.99 9.90 5.31 6.56 6.42 12.95 3.70 10.81 27.46 7.23 4.25 11.84 3.98 6.12 2.74 10.27 11.01 7.32 3.37 7.88 6.55 3.66 8.79

MV ($mn) 1,934 1,739 1,524 1,465 1,190 983 714 688 669 647 646 593 584 557 543 527 522 491 459 429 395 392 383 381 368 360 355 351 349 338 336 329 304 293 288 282 278 277 275 267 263 262 258 253 253 250 244 240 233 232

EV ($mn) 1,584 1,433 509 298 865 936 385 449 133 528 261 299 384 339 320 340 428 372 166 316 391 312 296 64 303 144 -15 74 147 163 96 24 153 120 288 199 167 81 104 104 17 151 114 206 61 49 42 82 89 111

P/ Tang. Book .7x .9x 1.6x .9x 1.0x .5x .7x 1.3x .9x 1.3x 1.2x 1.5x 1.2x .9x 1.3x 1.4x 1.5x .6x 1.3x .7x 1.0x .8x .8x .8x .9x 1.3x .9x .4x 1.0x 1.3x .7x .7x 1.6x 1.6x .5x 1.3x 1.0x 1.0x 1.0x .7x .9x .9x 1.7x .5x 1.1x 1.2x .9x 1.8x .6x .9x

Net Net Current Assets as % of MV 122% 62% 56% 86% 55% 167% 108% 63% 87% 50% 52% 52% 58% 54% 53% 53% 53% 101% 66% 99% 58% 51% 55% 81% 50% 60% 103% 51% 92% 53% 86% 103% 57% 58% 61% 62% 61% 80% 84% 84% 91% 61% 54% 120% 70% 67% 92% 52% 93% 82%

Net Cash as % of MV 18% 18% 67% 80% 27% 5% 46% 35% 80% 18% 60% 50% 34% 39% 41% 35% 18% 24% 64% 26% 1% 20% 23% 83% 18% 60% 104% 79% 58% 52% 71% 93% 50% 59% 0% 29% 40% 71% 62% 61% 93% 42% 56% 19% 76% 80% 83% 66% 62% 52%

EV/ LTM Rev. .0x .3x 1.2x .2x .7x .0x .1x .6x .5x 1.1x .3x .6x .4x .6x .9x .8x .5x .2x .5x .1x .2x .6x .4x .2x .2x .6x nm .0x .2x .9x .1x .0x 1.2x 17.3x .3x .4x .3x .3x .5x .1x .1x .4x 1.1x .3x .4x .2x .1x 10.2x .2x .4x

P/E Next FY 9x 12x na 19x 406x 7x 10x 35x nm 21x 22x 8x 8x 15x 13x 12x 6x 4x 8x 16x 13x 6x 7x nm 9x 11x 73x 20x 9x 16x 7x nm 21x nm nm 11x 11x 7x 85x 8x 28x nm 17x 5x 35x 13x na nm nm 5x [MOI04 ● MOI – 1,2,4,5,6 ● MOID]

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Greenblatt’s “Magic Formula” #1: Good Businesses at Good Prices (Based on LTM Numbers) Screening criteria: ► Market value more than $100 million ► ADRs and banks excluded │ Sorted by: Equal-weighted average of two rankings: (1) LTM return on capital employed (“good business”), and (2) LTM EBIT-to-EV yield (“good price”)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company KBR, Inc. Primoris Services Corp Automatic Data Processing Heidrick & Struggles Interna Airvana, Inc. McDermott International EarthLink, Inc. CTC Media, Inc. Perini Corporation VAALCO Energy, Inc. HLTH Corporation Ituran Location and Control Herbalife Ltd. L.B. Foster Company Terra Industries Inc. CNA Surety Corporation Hackett Group, Inc., The Energen Corporation Administaff, Inc. CF Industries Holdings, Inc. Waddell & Reed Financial, In MEMC Electronic Materials, I EMCOR Group, Inc. Terra Nitrogen Company, L.P. China Sky One Medical, Inc. Net 1 Ueps Technologies In Cherokee Inc. Solutia Inc. Pacer International, Inc. Bare Escentuals, Inc. Wright Express Corporation Affiliated Managers Group, I Korn/Ferry International Take-Two Interactive Softwar China-Biotics Inc. OpenTV Corp. Sigma Designs, Inc. Gran Tierra Energy Inc. National Financial Partners World Acceptance Corp. Humana Inc. Legg Mason, Inc. Guess?, Inc. Manitowoc Company, Inc. Comfort Systems USA, Inc. Darling International Inc. Cal-Maine Foods, Inc. Pre-Paid Legal Services, Inc Coach, Inc. AmSurg Corp.

Ticker KBR PRIM ADP HSII AIRV MDR ELNK CTCM PCR EGY HLTH ITRN HLF FSTR TRA SUR HCKT EGN ASF CF WDR WFR EME TNH CSKI UEPS CHKE SOA PACR BARE WXS AMG KFY TTWO CHBT OPTV SIGM GTE NFP WRLD HUM LM GES MTW FIX DAR CALM PPD COH AMSG

Price ($) 13.11 5.66 35.12 21.24 4.77 7.80 6.36 4.45 14.42 4.39 8.21 7.00 17.56 27.46 16.30 13.91 2.57 28.40 16.18 54.97 11.21 15.34 13.80 99.48 10.09 10.97 15.52 6.88 10.27 4.45 13.03 29.93 11.61 10.76 7.99 1.07 8.79 2.17 2.92 17.07 30.63 15.65 13.97 6.92 7.10 4.57 21.55 35.92 16.20 21.79

to 52-Wk High 239% 53% 35% 79% 49% 761% 60% 613% 305% 105% 71% 97% 191% 118% 254% 65% 159% 180% 110% 215% 266% 526% 161% 72% 69% 203% 138% 216% 145% 572% 214% 343% 79% 160% 78% 97% 730% 305% 1556% 169% 188% 411% 247% 644% 123% 283% 126% 60% 136% 37%

MV ($mn) 2,118 172 17,837 347 305 1,778 689 677 726 256 1,524 164 1,121 282 1,665 614 102 2,037 410 3,126 951 3,443 904 1,859 165 641 138 649 359 407 505 1,229 553 835 137 149 232 251 116 277 5,168 2,201 1,315 902 280 374 513 417 5,296 685

EV ($mn) 1,008 123 1,561 164 68 952 501 747 387 157 509 117 1,298 199 1,535 636 76 2,609 221 1,978 889 2,354 763 1,786 114 509 122 2,015 395 629 669 2,246 344 496 94 53 111 194 370 525 1,568 2,776 1,079 974 193 371 551 449 4,889 854

EBIT/ EV 47% 38% 173% 42% 161% 65% 42% 35% 43% 79% 97% 64% 28% 84% 48% 23% 25% 22% 31% 52% 24% 40% 38% 21% 28% 22% 20% 74% 28% 29% 33% 22% 26% 27% 20% 27% 56% 32% 27% 19% 74% 33% 33% 60% 37% 37% 39% 22% 23% 24%

LTM EBIT/ Capital Empl. 5875% 10311% 448% 1559% 264% 241% 305% 290% 223% 164% 131% 145% 342% 123% 138% 1268% 406% 3563% 162% 97% 258% 110% 111% 604% 139% 327% 1272% 81% 136% 126% 108% 291% 145% 131% 613% 129% 78% 99% 118% 782% 69% 88% 88% 70% 83% 83% 78% 188% 160% 130%

Insiders Tax Rate 38% 3% 36% 43% 14% 22% 10% 29% 38% 63% 3% 30% 30% 36% 34% 30% 2% 37% 36% 36% 37% 27% 39% nm 20% 29% 40% 17% 36% 39% 33% 22% 36% 18% 22% 1% nm 35% 52% 39% 34% nm 38% 26% 38% 38% 35% 43% 34% 39%

# Buys 1 2 7 1 5 1 1 1 5 1 1 4 19 1 1 5 1 2 3 2 1 1 4 5 -

# Sells 3 21 1 40 11 32 1 5 1 11 24 17 6 10 2 3 9 3 4 1 4 14 3 17 17 16 12 1 18

[MOI07 ● Expanded Greenblatt View ● MOIG]

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Greenblatt’s “Magic Formula” #2: Good Businesses at Good Prices (Based on This FY Ests) Screening criteria: ► Market value more than $100 million ► ADRs and banks excluded │ Sorted by: Equal-weighted average of two rankings: (1) This FY estimated return on tangible equity (“good business”), and (2) This FY estimated earnings yield (“good price”)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Innophos Holdings, Inc. Steel Dynamics, Inc. Chart Industries, Inc. Federal-Mogul Corporation Amkor Technology, Inc. ON Semiconductor Corp. Vanguard Natural Resources, Reliance Steel & Aluminum ArvinMeritor, Inc. Quiksilver, Inc. Coventry Health Care, Inc. Advance America, Cash Advanc Technitrol, Inc. EarthLink, Inc. BE Aerospace, Inc. Crane Co. Mosaic Company, The DryShips Inc. WABCO Holdings Inc. Terra Industries Inc. ION Geophysical Corporation Liberty Media Corp (Entertai UDR, Inc. United States Steel Corporat Owens-Illinois, Inc. Manitowoc Company, Inc. EnPro Industries, Inc. Barnes Group Inc. GrafTech International Ltd. Embarq Corporation General Cable Corporation CIGNA Corporation Teekay Tankers Ltd. Ameristar Casinos, Inc. Thomas & Betts Corporation Textron Inc. Flextronics International Lt EMCOR Group, Inc. Clayton Williams Energy, Inc Perini Corporation Terex Corporation Superior Energy Services, In Cliffs Natural Resources Inc National-Oilwell Varco, Inc. Belden Inc. China Security & Surveillanc CF Industries Holdings, Inc. Pioneer Southwest Energy Par Williams Partners L.P. 3Com Corporation

Ticker IPHS STLD GTLS FDML AMKR ONNN VNR RS ARM ZQK CVH AEA TNL ELNK BEAV CR MOS DRYS WBC TRA IO LMDIA UDR X OI MTW NPO B GTI EQ BGC CI TNK ASCA TNB TXT FLEX EME CWEI PCR TEX SPN CLF NOV BDC CSR CF PSE WPZ COMS

Price ($) 16.71 8.12 9.81 5.36 3.02 3.50 8.01 19.00 3.80 1.62 12.59 1.88 4.64 6.36 8.29 14.15 32.47 9.11 16.00 16.30 3.91 12.80 13.56 29.75 20.16 6.92 17.56 11.86 4.79 30.16 11.44 12.95 8.65 6.16 20.90 14.73 3.06 13.80 46.15 14.42 12.12 16.75 20.27 25.81 15.83 7.70 54.97 12.35 15.66 1.82

to 52-Wk High 148% 404% 468% 450% 321% 210% 131% 313% 377% 637% 407% 469% 557% 60% 552% 227% 403% 1178% 243% 254% 367% 124% 110% 559% 201% 644% 149% 191% 484% 73% 630% 340% 202% 428% 165% 405% 305% 161% 163% 305% 529% 245% 502% 259% 233% 203% 215% 84% 167% 160%

MV ($mn) 351 1,475 279 539 553 1,438 101 1,393 280 207 1,876 115 190 689 825 847 14,425 574 1,119 1,665 389 6,617 1,847 3,459 3,367 902 356 645 570 4,287 607 3,519 216 353 1,168 3,551 2,477 904 559 726 1,150 1,299 2,301 10,771 736 353 3,126 371 827 739

EV ($mn) 611 4,329 373 2,665 1,739 2,241 199 3,626 1,140 1,162 2,247 307 505 501 1,834 968 13,725 3,144 1,021 1,535 740 7,831 5,352 5,891 6,380 974 467 1,093 702 10,044 1,782 4,846 522 1,900 1,630 13,130 4,219 763 952 387 2,231 1,882 2,336 10,518 1,111 445 1,978 346 1,745 499

This FY EPS / Tangible Price Book per Share 200% 55% 176% 40% 37345% 27% 481% 27% 125% 37% 710% 24% 186% 27% 105% 37% 93% 41% 81% 53% 635% 22% 92% 34% 248% 23% 105% 29% 122% 25% 412% 21% 79% 32% 57% 143% 115% 25% 65% 37% 243% 20% 52% 88% 56% 39% 52% 62% 273% 18% 49% 47% 72% 25% 344% 18% 47% 41% 1768% 17% 48% 38% 55% 28% 49% 34% 253% 17% 156% 18% 58% 24% 45% 33% 103% 19% 54% 25% 52% 25% 41% 48% 54% 24% 44% 30% 80% 19% 86% 19% 54% 22% 47% 25% 50% 24% 69% 19% 65% 20%

Insiders # Buys 1 7 3 5 6 3 10 5 13 9 4 1 2 1 3 2 1 1 9 7 59 3 4 7 17 5 3 -

# Sells 23 15 7 1 7 1 1 1 50 32 1 2 2 11 11 2 3 2 3 7 5 5 6 20 4 2 6 10 3 6 2 3 2 17 -

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Greenblatt’s “Magic Formula” #3: Good Businesses at Good Prices (Based on Next FY Ests) Screening criteria: ► Market value more than $100 million ► ADRs and banks excluded │ Sorted by: Equal-weighted average of two rankings: (1) Next FY estimated return on tangible equity (“good business”), and (2) Next FY estimated earnings yield (“good price”)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Finisar Corporation Technitrol, Inc. James River Coal Company Chemtura Corporation Innophos Holdings, Inc. Continental Airlines, Inc. Walter Industries, Inc. ON Semiconductor Corp. Chart Industries, Inc. Vanguard Natural Resources, Alpha Natural Resources, Inc Fortress Investment Group LL Steel Dynamics, Inc. ION Geophysical Corporation Coventry Health Care, Inc. General Steel Holdings, Inc. Advance America, Cash Advanc Mosaic Company, The Cliffs Natural Resources Inc ArvinMeritor, Inc. Quiksilver, Inc. Federal-Mogul Corporation Crane Co. BE Aerospace, Inc. Owens-Illinois, Inc. MV Oil Trust CONSOL Energy Inc. China Security & Surveillanc CIGNA Corporation Convergys Corporation Reliance Steel & Aluminum A-Power Energy Generation Sy Solutia Inc. GrafTech International Ltd. EnPro Industries, Inc. China Architectural Engineer Exide Technologies Manitowoc Company, Inc. EarthLink, Inc. Superior Energy Services, In Embarq Corporation Flextronics International Lt National-Oilwell Varco, Inc. CF Industries Holdings, Inc. Transocean Inc. Thomas & Betts Corporation Massey Energy Company CBRL Group, Inc. EMCOR Group, Inc. China Sky One Medical, Inc.

Ticker FNSR TNL JRCC CEM IPHS CAL WLT ONNN GTLS VNR ANR FIG STLD IO CVH GSI AEA MOS CLF ARM ZQK FDML CR BEAV OI MVO CNX CSR CI CVG RS APWR SOA GTI NPO CAEI XIDE MTW ELNK SPN EQ FLEX NOV CF RIG TNB MEE CBRL EME CSKI

Price ($) 0.48 4.64 8.37 1.51 16.71 11.40 23.93 3.50 9.81 8.01 26.47 2.88 8.12 3.91 12.59 3.97 1.88 32.47 20.27 3.80 1.62 5.36 14.15 8.29 20.16 10.98 25.52 7.70 12.95 5.43 19.00 5.25 6.88 4.79 17.56 2.68 3.38 6.92 6.36 16.75 30.16 3.06 25.81 54.97 70.89 20.90 16.20 14.39 13.80 10.09

to 52-Wk High 323% 557% 651% 483% 148% 174% 368% 210% 468% 131% 351% 577% 404% 367% 407% 320% 469% 403% 502% 377% 637% 450% 227% 552% 201% 169% 367% 203% 340% 230% 313% 507% 216% 484% 149% 418% 482% 644% 60% 245% 73% 305% 259% 215% 130% 165% 491% 170% 161% 69%

MV ($mn) 227 190 229 366 351 1,261 1,300 1,438 279 101 1,866 1,171 1,475 389 1,876 143 115 14,425 2,301 280 207 539 847 825 3,367 126 4,624 353 3,519 663 1,393 172 649 570 356 141 255 902 689 1,299 4,287 2,477 10,771 3,126 22,626 1,168 1,379 322 904 165

EV ($mn) 349 505 364 1,355 611 4,273 2,877 2,241 373 199 1,827 1,662 4,329 740 2,247 465 307 13,725 2,336 1,140 1,162 2,665 968 1,834 6,380 126 5,388 445 4,846 1,190 3,626 81 2,015 702 467 169 777 974 501 1,882 10,044 4,219 10,518 1,978 36,188 1,630 1,986 1,098 763 114

Next FY EPS / Tangible Price Book per Share 560% 33% 364% 34% 159% 64% 4850% 26% 158% 43% 158% 38% 132% 51% 744% 25% 33228% 24% 192% 28% 116% 44% 195% 28% 148% 33% 297% 24% 662% 23% 95% 34% 92% 34% 86% 35% 75% 51% 81% 36% 71% 47% 368% 21% 405% 20% 112% 23% 295% 20% 80% 28% 82% 25% 70% 28% 63% 32% 225% 19% 74% 26% 55% 36% 1888% 17% 50% 44% 69% 24% 56% 28% 46% 53% 47% 45% 80% 22% 56% 25% 1723% 16% 46% 34% 84% 20% 51% 27% 65% 22% 153% 17% 44% 34% 73% 21% 100% 18% 51% 24%

Insiders # Buys 5 3 1 2 5 7 2 10 4 3 9 13 3 1 17 1 26 6 19 2 3 4 5 1 4 3 -

# Sells 9 23 1 7 15 1 2 11 1 50 2 1 1 2 1 2 11 20 2 7 5 7 3 32 2 6 3 17 3 4 13 1 10 -

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Greenblatt’s “Magic Formula” #4: Good Businesses at Good Prices (Based on 2112 EPS Ests) Screening criteria: ► Market value more than $100 million ► ADRs and banks excluded │ Sorted by: Equal-weighted average of two rankings: (1) Next FY estimated return on tangible equity (“good business”), and (2) Next FY estimated earnings yield (“good price”)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Company Walter Industries, Inc. Alpha Natural Resources, Inc Finisar Corporation CONSOL Energy Inc. Chemtura Corporation Chart Industries, Inc. Massey Energy Company ON Semiconductor Corp. Continental Airlines, Inc. James River Coal Company Fortress Investment Group LL A-Power Energy Generation Sy Innophos Holdings, Inc. China Security & Surveillanc Coventry Health Care, Inc. BE Aerospace, Inc. Technitrol, Inc. Advance America, Cash Advanc Steel Dynamics, Inc. Sohu.com Inc. Owens-Illinois, Inc. Quiksilver, Inc. Holly Corporation Arch Coal, Inc. China Architectural Engineer ArvinMeritor, Inc. MercadoLibre, Inc. Vanguard Natural Resources, General Steel Holdings, Inc. Peabody Energy Corporation Crane Co. Atwood Oceanics, Inc. Convergys Corporation Net 1 Ueps Technologies In Flextronics International Lt Superior Energy Services, In PDL BioPharma Inc. Smith & Wesson Holding Corpo Tyco International Ltd. Bally Technologies Inc. CIGNA Corporation SunPower Corporation Foster Wheeler Ltd. China-Biotics Inc. ENGlobal Corporation PAREXEL International Corpor GrafTech International Ltd. Cliffs Natural Resources Inc EMCOR Group, Inc. Transocean Inc.

Ticker WLT ANR FNSR CNX CEM GTLS MEE ONNN CAL JRCC FIG APWR IPHS CSR CVH BEAV TNL AEA STLD SOHU OI ZQK HOC ACI CAEI ARM MELI VNR GSI BTU CR ATW CVG UEPS FLEX SPN PDLI SWHC TYC BYI CI SPWRA FWLT CHBT ENG PRXL GTI CLF EME RIG

Price ($) 23.93 26.47 0.48 25.52 1.51 9.81 16.20 3.50 11.40 8.37 2.88 5.25 16.71 7.70 12.59 8.29 4.64 1.88 8.12 43.32 20.16 1.62 17.47 15.86 2.68 3.80 10.27 8.01 3.97 27.07 14.15 22.53 5.43 10.97 3.06 16.75 9.51 2.54 20.50 17.18 12.95 25.56 19.94 7.99 4.11 8.03 4.79 20.27 13.80 70.89

to 52Wk High 368% 351% 323% 367% 483% 468% 491% 210% 174% 651% 577% 507% 148% 203% 407% 552% 557% 469% 404% 111% 201% 637% 225% 388% 418% 377% 690% 131% 320% 228% 227% 182% 230% 203% 305% 245% 97% 346% 134% 208% 340% 465% 330% 78% 347% 350% 484% 502% 161% 130%

MV ($mn) 1,300 1,866 227 4,624 366 279 1,379 1,438 1,261 229 1,171 172 351 353 1,876 825 190 115 1,475 1,669 3,367 207 868 2,266 141 280 455 101 143 7,218 847 1,443 663 641 2,477 1,299 1,137 120 9,734 942 3,519 2,193 2,667 137 112 444 570 2,301 904 22,626

EV ($mn) 2,877 1,827 349 5,388 1,355 373 1,986 2,241 4,273 364 1,662 81 611 445 2,247 1,834 505 307 4,329 1,390 6,380 1,162 1,019 3,567 169 1,140 443 199 465 10,266 968 1,411 1,190 509 4,219 1,882 1,115 227 12,479 1,173 4,846 2,322 1,581 94 145 675 702 2,336 763 36,188

5-Year EPS Est / Tangible Price Book per Share 849% 328% 432% 165% 948% 56% 310% 97% 7092% 39% 52809% 38% 192% 148% 1082% 37% 228% 55% 159% 64% 275% 39% 146% 95% 183% 50% 149% 60% 923% 32% 199% 41% 364% 34% 139% 52% 172% 39% 209% 36% 457% 31% 106% 70% 112% 57% 97% 70% 109% 55% 114% 50% 694% 28% 216% 32% 121% 43% 110% 45% 540% 27% 96% 51% 316% 27% 136% 32% 81% 59% 93% 41% 490% 25% 407% 26% 199% 27% 169% 28% 87% 44% 103% 35% 108% 34% 94% 37% 91% 37% 245% 26% 70% 61% 75% 51% 152% 28% 98% 34%

Insiders # Buys 2 1 3 4 1 17 10 13 5 7 3 3 1 5 1 9 26 3 1 1 4 7 -

# Sells 1 2 11 15 13 7 9 23 1 1 50 4 2 1 4 5 1 10 1 5 2 2 2 6 2 2 1 15 20 17 4 6 32 5 10 3

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Industry Browsers: Overview of Trading Multiples and EPS Growth Estimates 4,5

Basic Materials Chemical Manufacturing Plastics and Rubbers Containers and Packaging Fabricated Products Paper Products Wood Products Metal Mining Gold and Silver Iron and Steel Capital Goods Aerospace and Defense Machinery Construction Supplies Construction Materials Construction Services Miscellaneous Goods Mobile Homes and RVs Conglomerates All Conglomerates Consumer Cyclical Apparel Appliances Audio and Video Automotive Auto Parts Footwear Furniture Recreational Products Consumer Non-Cyclical Beverages (alcoholic) Beverages (non-alcoholic) Crops Food Processing Household Products Tobacco Energy Coal Oil and Gas (integrated) Oil and Gas (operations) Oil Well Services Financial Consumer Finance Insurance (health) Insurance (life) Insurance (property) Insurance (other) Investment Services Other Financial Services Money Center Banks Regional Banks S&Ls and Savings Banks 4 5

# Cos

Total MV ($bn)

Top Co. ($bn)

P/ Tang. Book

EV/ LTM Rev.

EV/ LTM EBIT

Last FY Act.

P/E This FY Est.

Next FY Est.

EPS Growth Ests This Next FY FY 5-Yr Est. Est. Est.

50 10 16 24 15 4 15 12 16

161 67 32 33 38 10 251 53 87

41 25 3 8 24 7 91 25 30

2.5x 1.4x 2.6x 1.6x 1.0x 1.0x 1.2x 1.3x 1.0x

.7x 1.0x .8x .5x .7x .7x .7x 2.7x .4x

8x 11x 9x 5x 11x 39x 4x 27x 3x

13x 10x 11x 8x 9x 16x 4x 7x 5x

9x 9x 11x 7x 8x 37x 6x 11x 4x

8x 9x 10x 7x 8x 28x 7x 8x 4x

24% 11% 9% -6% 2% -40% -13% 40% 36%

10% 1% 8% -2% 8% 22% -17% 32% -15%

12% 8% 11% 13% 6% 8% 11% 10% 9%

33 14 20 7 42 47 3

147 52 33 12 65 90 1

30 22 13 4 12 16 1

3.4x 1.8x 1.3x 1.6x 1.4x 2.5x 1.7x

.7x .8x .5x 1.0x .5x .7x .3x

6x 7x 7x 10x 5x 7x 14x

10x 9x 8x 9x 11x 9x 29x

8x 7x 8x 17x 8x 9x 44x

7x 6x 9x 16x 7x 9x 17x

19% 24% 6% -37% 20% 10% -58%

11% 5% 10% 5% 8% -2% 39%

14% 12% 14% 13% 12% 13% 14%

397

168

5.2x

.9x

10x

13%

19 9 6 14 19 10 14 16

23 14 53 206 17 27 11 19

5 3 30 100 6 23 3 5

2.2x 4.2x 1.0x .9x 1.5x 1.2x 1.4x 1.6x

.7x .8x .3x .4x .4x .4x .5x .6x

7x 9x 7x 8x 7x 7x 7x 8x

9x 10x 10x 5x 8x 11x 7x 10x

7x 8x 12x 5x 8x 10x 11x 10x

7x 9x 11x 7x 9x 9x 10x 9x

11% -6% -8% -20% -9% 4% -26% -6%

6% 0% 26% -3% -5% 12% -3% 9%

17% 11% 12% 11% 12% 15% 11% 10%

9 14 6 46 21 7

127 240 18 315 274 195

50 104 16 65 188 78

3.7x 4.4x 1.2x 2.6x 4.6x 22.9x

2.0x 1.2x .5x .9x 1.0x 1.9x

16x 8x 10x 13x 10x 8x

16x 14x 11x 16x 17x 13x

14x 11x 8x 14x 12x 12x

12x 10x 7x 13x 12x 11x

27% 10% -2% 19% 19% 11%

10% 7% 10% 13% 12% 8%

11% 9% 13% 10% 12% 9%

17 24 103 74

28 1,394 404 231

7 375 39 58

2.5x 1.2x 1.2x 1.3x

1.0x .6x 2.1x 1.0x

9x 4x 7x 6x

14x 7x 13x 7x

8x 5x 7x 6x

4x 6x 8x 6x

101% 23% 67% 18%

96% -11% -7% 6%

25% 6% 11% 12%

29 20 19 75 12 58 27 25 175 33

107 102 185 386 58 255 14 767 354 41

46 24 78 156 22 33 2 129 33 9

1.1x 1.4x .7x 1.0x 1.6x 1.7x .7x 1.8x 1.6x 1.7x

2.7x .3x .7x 1.1x 1.3x 1.8x 4.5x 2.7x 3.0x 3.6x

11x 6x 8x 8x 11x 6x 9x 5x 6x 9x

9x 6x 5x 7x 15x 10x 10x 8x 11x 29x

8x 7x 5x 9x 15x 10x 6x 9x 14x 19x

8x 6x 4x 7x 12x 9x 6x 8x 13x 17x

1% 9% -17% -25% -1% -2% 21% -7% -17% 9%

11% 7% 11% 11% 13% 4% -2% 3% 8% 14%

13% 12% 10% 10% 13% 14% 12% 10% 8% 10%

Ratios and earnings growth estimates represent industry medians. Analysis includes firms with at least $100 million in market value and at least one analyst estimate of this year’s and next year’s EPS.

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Industry Browsers: Overview of Trading Multiples and EPS Growth Estimates (continued)

Healthcare Biotechnology Facilities Major Pharma Medical Equipment Services Advertising Cable and Broadcasting Business Services Casinos and Gaming Communications Services Hotels and Motels Motion Pictures Personal Services Publishing Real Estate Operations Recreational Activities Rental and Leasing Restaurants Retail (apparel) Retail (online) Retail (discount and dep't) Retail (drugs) Retail (grocery) Retail (home improvement) Retail (specialty non-apparel) Retail (technology) Schools Security Waste Management Technology Comms Equipment Hardware Networks Services Data Storage Peripherals Office Equipment Electronic Instruments Scientific Instruments Semiconductors Software Transportation Air Couriers Airlines Railroads Trucking Shipping Miscellaneous Utilities Electric Natural Gas Water

# Cos

Total MV ($bn)

Top Co. ($bn)

P/ Tang. Book

EV/ LTM Rev.

EV/ LTM EBIT

Last FY Act.

P/E This FY Est.

Next FY Est.

163 45 12 90

583 62 857 254

86 13 167 42

3.9x 2.4x 4.8x 4.0x

3.3x 1.2x 2.3x 1.9x

13x 9x 11x 13x

19x 16x 16x 21x

15x 15x 10x 17x

14x 13x 9x 15x

21% 20% 32% 21%

16% 13% 6% 17%

18% 14% 7% 18%

11 32 101 18 96 13 7 14 20 104 12 16 29 39 8 9 10 18 5 48 4 17 5 11

21 224 274 21 1,085 16 6 19 71 150 25 10 97 47 4 257 104 63 69 115 14 29 2 36

8 45 108 4 175 5 2 6 19 12 16 2 63 9 2 207 42 18 35 21 9 11 1 15

1.9x 1.9x 2.6x 1.3x 2.1x .6x 2.4x 3.5x 2.9x 1.0x 1.6x 1.1x 2.1x 1.3x 1.6x 1.2x 2.0x 2.2x 2.1x 1.7x 3.0x 6.7x 2.5x 4.2x

.8x 1.8x .9x 1.5x 1.7x 1.8x 1.3x 1.4x .8x 7.3x 1.3x 1.6x .6x .3x .3x .5x .4x .3x .6x .4x .3x 2.2x .9x 1.7x

7x 12x 8x 9x 9x 12x 11x 8x 9x 22x 9x 8x 10x 4x 7x 8x 12x 10x 8x 9x 4x 21x 5x 11x

8x 11x 11x 9x 11x 7x 14x 9x 9x 15x 12x 9x 13x 8x 11x 9x 21x 15x 12x 11x 6x 27x 7x 17x

9x 11x 11x 11x 10x 8x 14x 9x 9x 14x 8x 6x 11x 9x 15x 10x 15x 15x 13x 11x 7x 25x 9x 21x

7x 9x 11x 11x 10x 11x 13x 9x 7x 16x 9x 6x 9x 9x 13x 10x 15x 12x 12x 10x 7x 20x 7x 15x

9% 8% 6% -9% 14% -5% -18% 9% -9% 6% 5% 5% 10% -9% -7% -33% 28% 4% -10% 7% -3% 24% 6% 14%

9% 2% 10% -2% 8% -10% 20% 5% 5% -9% 9% -3% 11% 8% -4% 2% 16% 13% 5% 9% 1% 26% 29% 15%

14% 12% 15% 15% 12% 11% 10% 11% 10% 6% 12% 11% 14% 13% 23% 12% 17% 13% 12% 13% 13% 22% 21% 16%

51 12 18 74 10 13 4 66 45 115 120

242 184 16 196 33 142 13 121 88 296 492

63 80 4 98 20 98 6 25 17 74 178

1.4x 1.9x 3.3x 3.5x 1.0x 1.7x 2.2x 1.5x 2.9x 1.4x 3.1x

.6x .5x .9x 1.7x .6x .7x .9x .6x 1.4x .9x 1.3x

8x 7x 12x 10x 8x 6x 15x 7x 11x 8x 10x

12x 11x 15x 17x 5x 8x 14x 9x 15x 11x 17x

12x 10x 11x 13x 6x 10x 9x 9x 14x 11x 13x

10x 12x 11x 12x 6x 10x 7x 9x 12x 11x 11x

13% 21% 27% 32% -21% -16% 69% 7% 18% 5% 36%

11% 8% 18% 15% 5% 9% 3% 9% 12% 4% 14%

14% 14% 15% 19% 12% 13% 14% 14% 16% 17% 17%

2 21 10 16 31 18

73 35 96 14 17 25

53 8 29 3 2 9

4.2x 1.3x 1.9x 1.7x .8x 2.2x

.9x .5x 2.0x .5x 3.1x 1.0x

101x 11x 9x 10x 7x 10x

83x 6x 14x 16x 5x 10x

14x 10x 12x 15x 4x 8x

13x 6x 11x 14x 5x 9x

465% -104% 22% 3% 25% 13%

7% 49% 15% 8% -12% 3%

12% 16% 14% 12% 10% 14%

68 44 14

435 97 22

33 13 11

1.5x 1.6x 1.8x

1.8x 1.4x 3.3x

12x 11x 15x

11x 12x 20x

12x 11x 20x

11x 11x 17x

6% 3% 2%

8% 5% 14%

9% 8% 8%

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Basic Materials: Chemical Manufacturing – Valuation (Sorted by market value)

Company / Ticker Monsanto Company / MON Praxair, Inc. / PX Sasol Limited (ADR) / SSL Mosaic Company, The / MOS Air Products & Chemi / APD PPG Industries, Inc. / PPG Sociedad Quimica y M / SQM Sigma-Aldrich Corpor / SIAL CF Industries Holdin / CF Airgas, Inc. / ARG FMC Corporation / FMC Lubrizol Corporation / LZ International Flavor / IFF Huntsman Corporation / HUN Celanese Corporation / CE Scotts Miracle-Gro C / SMG Valspar Corporation, / VAL Nalco Holding Compan / NLC Terra Industries Inc / TRA RPM International In / RPM Braskem SA (ADR) / BAK Intrepid Potash, Inc / IPI Cabot Corporation / CBT Sensient Technologie / SXT Cytec Industries Inc / CYT Cheniere Energy Part / CQP H.B. Fuller Company / FUL Calgon Carbon Corpor / CCC Rockwood Holdings, I / ROC Solutia Inc. / SOA Arch Chemicals, Inc. / ARJ Cabot Microelectroni / CCMP NewMarket Corporatio / NEU OM Group, Inc. / OMG WD-40 Company / WDFC SurModics, Inc. / SRDX Balchem Corporation / BCPC Ferro Corporation / FOE Chemtura Corporation / CEM Koppers Holdings Inc / KOP Innophos Holdings, I / IPHS Stepan Company / SCL American Vanguard Co / AVD Polypore Internation / PPO Central Garden & Pet / CENT Aceto Corporation / ACET Quaker Chemical Corp / KWR Innospec Inc. / IOSP Penford Corporation / PENX

Price ($) 74.10 59.46 24.11 32.47 52.78 45.38 22.66 40.84 54.97 34.59 37.00 33.96 27.86 9.26 12.91 27.85 17.29 12.39 16.30 12.56 5.88 19.82 21.38 23.83 22.63 5.18 16.11 12.85 9.00 6.88 25.52 23.34 34.26 16.10 27.06 24.65 22.95 8.87 1.51 17.97 16.71 34.39 10.14 5.84 3.06 8.66 14.58 5.50 10.83

Move to 52-Wk MV EV Low High ($mn) ($mn) -8% 97% 40,603 40,806 -16% 68% 18,337 23,257 -14% 182% 15,420 16,569 -26% 403% 14,425 13,725 -12% 101% 11,181 15,044 -5% 59% 7,452 10,883 -43% 162% 5,964 6,436 -16% 54% 5,120 5,512 -31% 215% 3,126 1,978 -22% 89% 2,800 4,782 -23% 117% 2,739 3,220 -16% 97% 2,284 3,293 -3% 81% 2,191 3,272 -24% 180% 2,171 6,026 -16% 295% 1,851 4,870 -42% 46% 1,800 2,714 -7% 52% 1,725 2,755 -15% 112% 1,705 4,883 -10% 254% 1,665 1,535 -3% 101% 1,617 2,388 -9% 222% 1,501 5,259 -24% 285% 1,483 1,345 -6% 68% 1,396 1,982 -12% 39% 1,152 1,626 -6% 187% 1,066 1,841 -23% 257% 838 na -20% 74% 780 913 -29% 79% 695 684 -10% 386% 667 3,090 -8% 216% 649 2,015 -17% 69% 635 713 -2% 85% 543 320 -8% 173% 520 706 -19% 310% 491 372 -8% 58% 447 447 -9% 126% 446 421 -21% 32% 417 428 -7% 172% 388 995 -21% 483% 366 1,355 -9% 189% 366 796 -38% 148% 351 611 -19% 77% 331 489 -6% 87% 273 352 -3% 401% 259 997 -20% 166% 218 793 -33% 18% 212 171 0% 132% 158 222 -11% 370% 130 207 -2% 198% 122 191 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 3.6x 2.1x 1.3x 1.1x 1.4x .7x 4.5x 2.5x .5x 1.1x 1.1x .6x 1.4x .6x .7x .9x .8x 1.2x .6x .6x .6x 4.0x .6x 1.3x .5x nm .7x 1.7x .9x .8x .5x .9x .4x .2x 1.4x 4.3x 1.8x .4x .4x .6x .7x .3x 1.5x 1.6x .5x .5x .4x .3x .6x 1.2x 2.0x .7x

EV/ LTM EBIT 14x 11x 5x 4x 10x 8x 18x 11x 2x 9x 7x 7x 9x 14x 5x 28x 9x 10x 2x 28x nm 8x 12x 10x 6x nm 7x 13x 8x 1x 6x 6x 6x 1x 10x 18x 15x nm nm 5x 3x 7x 10x 9x nm 7x 7x 6x nm 9x 10x 8x

Last FY Act. 21x 16x 7x 7x 11x 9x 31x 17x 8x 13x 18x 8x 10x 42x 7x nm 12x 14x 9x 32x 5x 79x 16x 14x 5x nm 10x 41x 8x nm 13x 14x 7x 4x 17x 31x 26x nm nm 7x nm 23x 15x 292x 7x 16x 10x 5x nm 23x 16x 13x

P/E This FY Est. 16x 14x 6x 3x 10x 9x 10x 15x 4x 10x 8x 8x 10x 28x 4x 14x 11x 11x 3x 7x 4x 8x 9x 13x 6x nm 11x 25x 4x 9x 12x 17x 8x 3x 15x 22x 22x 7x 3x 5x 2x 13x 13x 7x 7x 13x 8x 6x 40x 11x 11x 9x

Next FY Est. 14x 13x 5x 3x 9x 9x 10x 15x 4x 10x 7x 7x 9x 14x 4x 12x 10x 9x 4x 7x 11x 4x 8x 12x 6x 5x 9x 19x 5x 6x 10x 13x 6x 4x 14x 17x 19x 6x 4x 5x 2x 12x 11x 7x 6x 10x 7x 4x 8x 9x 10x 8x

P/ Tang. Book 8.6x 6.7x 2.1x 2.5x 2.9x nm 4.9x 5.2x 1.8x 11.2x 2.9x 4.6x nm 1.5x nm nm nm nm 1.8x nm .6x 2.4x 1.2x 3.0x 2.4x nm 2.5x 3.2x nm nm 3.7x 1.3x 1.9x .6x 15.9x 3.1x 3.8x 2.3x nm nm 3.6x 1.5x 4.8x nm 1.0x 1.6x 1.6x 1.4x .9x 3.4x 4.5x 2.5x

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Basic Materials: Chemical Manufacturing – Operating Performance

LTM Ticker ($mn) MON 11,365 PX 10,916 SSL 12,903 MOS 12,132 APD 10,415 PPG 15,535 SQM 1,416 SIAL 2,223 CF 3,702 ARG 4,373 FMC 3,052 LZ 5,087 IFF 2,404 HUN 10,533 CE 7,297 SMG 2,982 VAL 3,412 NLC 4,216 TRA 2,778 RPM 3,699 BAK 8,190 IPI 336 CBT 3,190 SXT 1,260 CYT 3,843 CQP na FUL 1,402 CCC 393 ROC 3,455 SOA 2,642 ARJ 1,529 CCMP 375 NEU 1,613 OMG 1,750 WDFC 317 SRDX 97 BCPC 232 FOE 2,437 CEM 3,747 KOP 1,403 IPHS 862 SCL 1,577 AVD 236 PPO 610 CENT 1,693 ACET 374 KWR 608 IOSP 645 PENX 346 Median

Revenue LTM Growth 36% 21% -36% 87% 14% 34% 29% 13% 52% 23% 20% 17% 7% 19% 19% 4% 7% 10% 25% 8% 14% na 22% 9% 13% na -1% 17% 16% 43% 5% 11% 23% 98% 3% 33% 56% 14% 2% 15% 52% 24% 16% 19% 0% 18% 17% 12% -5% 17%

3-Year Growth 22% 13% 23% 31% 11% 6% 15% 13% 19% 19% 9% 16% 4% 0% 9% 8% 10% 9% 16% 13% 13% na 15% 4% 27% na 2% 6% 24% 10% 10% 12% 15% 14% 6% 16% 38% 6% 18% 12% 3% 12% 13% 3% 10% 5% 11% 7% 5% 12%

Rev./ Empl. ($'000) 524 390 380 1,639 473 445 378 278 2,644 302 610 732 454 817 869 587 343 365 3,190 357 1,712 na 742 348 565 na 438 452 346 440 573 500 1,361 835 1,050 398 724 388 735 728 825 1,098 762 339 365 1,647 455 839 580 565

LTM Profit Margins Gross 54% 40% 42% 35% 26% 36% 32% 51% 30% 52% 31% 23% 41% 14% 21% 32% 29% 44% 30% 41% 15% na 15% 31% 21% na 27% 33% 31% 18% 29% 47% 19% 25% 47% 91% 22% 19% 22% 18% 34% 11% 41% 36% 31% 19% 29% 30% 14% 30%

EBIT 26% 19% 26% 32% 14% 8% 26% 23% 28% 12% 16% 9% 16% 4% 12% 3% 9% 11% 27% 2% -2% 50% 5% 13% 8% na 9% 13% 11% 57% 8% 13% 7% 16% 13% 24% 12% -2% -5% 10% 27% 4% 15% 19% -18% 7% 5% 5% -6% 12%

Net 30% 12% 31% 24% 14% 4% 20% 15% 17% 6% 10% 5% 12% 1% 8% 0% 4% 4% 19% 1% -2% 36% 3% 7% 6% na 6% 9% 7% >99% 4% 10% 5% 12% 9% 21% 8% -4% -8% 5% 17% 2% 8% 7% -15% 4% 3% 3% -4% 7%

Est. 5-Year EPS Growth 27% 13% 15% na 12% 8% na 9% 4% 12% 10% 13% na na 15% 11% 8% 14% na 9% na na na 9% 8% na 6% 26% 9% na 15% 15% 15% 10% 10% 18% na 12% 14% 9% 5% na na 20% 12% na 0% na na 12%

EBIT/ Capital Empl. 65% 24% 36% 71% 20% 26% 22% 35% 97% 21% 33% 23% 31% 8% 30% 12% 35% 35% >99% 7% nm >99% 9% 19% 19% nm 28% 24% 17% 81% 29% 19% 23% 46% >99% 51% 43% nm nm 41% 65% 18% 29% 22% nm 26% 18% 20% nm 26%

LTM ROE 37% 25% 62% 47% 27% 15% 23% 21% 43% 18% 26% 14% 44% 4% 54% -2% 11% 14% 65% 4% -6% 39% 7% 10% 12% 23% 12% 17% 15% >99% 13% 9% 24% 19% 17% 14% 18% -18% -17% na >99% 17% 14% 11% -44% 12% 13% 7% -8% 15%

LTM ROA 20% 10% 32% 26% 12% 5% 13% 13% 24% 7% 10% 6% 10% 1% 7% 0% 4% 3% 26% 1% -2% 32% 3% 6% 6% -3% 7% 9% 4% 64% 6% 8% 10% 14% 10% 11% 12% -5% -7% 10% 24% 6% 7% 3% -18% 8% 4% 3% -4% 7%

LTM Asset Turnover .7x .8x 1.0x 1.1x .8x 1.0x .7x .8x 1.4x 1.1x 1.1x 1.1x .9x 1.2x .9x 1.1x 1.0x .7x 1.3x 1.1x .8x .9x 1.1x .8x .9x na 1.0x 1.1x .6x .6x 1.3x .8x 2.0x 1.1x 1.2x .5x 1.5x 1.4x .9x 2.0x 1.4x 2.5x .8x .4x 1.2x 1.8x 1.4x 1.2x 1.1x 1.1x

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Thanksgiving 2008

Basic Materials: Chemicals (Plastics and Rubbers) – Valuation (Sorted by market value)

Company / Ticker E.I. du Pont de Nemo / DD Dow Chemical Company / DOW Rohm and Haas Compan / ROH Eastman Chemical Com / EMN Hercules Incorporate / HPC Albemarle Corporatio / ALB Westlake Chemical Co / WLK Rogers Corporation / ROG PolyOne Corporation / POL Zoltek Companies, In / ZOLT

Price ($) 27.43 21.15 72.94 35.09 19.17 22.60 14.53 27.05 3.21 8.21

Move to 52-Wk MV EV Low High ($mn) ($mn) -5% 91% 24,752 33,199 -2% 115% 19,538 30,173 -39% 5% 14,238 17,191 -13% 123% 2,543 3,686 -34% 15% 2,159 2,853 -16% 103% 2,061 2,823 -14% 56% 954 1,447 -11% 75% 487 439 -4% 167% 297 728 -14% 466% 282 257 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.0x .5x 1.7x .5x 1.2x 1.1x .4x 1.1x .3x 1.4x .9x 1.0x 1.0x

EV/ LTM EBIT 8x 11x 20x 6x 11x 9x 9x 16x 26x 11x 13x 11x 11x

Last FY Act. 9x 7x 23x 9x 13x 10x 8x 21x 27x nm 14x 12x 10x

P/E This FY Est. 8x 7x 21x 7x 13x 9x 10x 15x 9x 13x 11x 11x 9x

Next FY Est. 9x 8x 21x 8x 11x 8x 18x 14x 6x 8x 11x 12x 9x

P/ Tang. Book 3.3x 1.3x 64.7x 1.7x nm 2.6x .7x 1.4x 1.2x .8x 8.6x 15.4x 1.4x

Basic Materials: Chemicals (Plastics and Rubbers) – Operating Performance

LTM Ticker ($mn) DD 32,979 DOW 60,842 ROH 9,888 EMN 7,117 HPC 2,317 ALB 2,549 WLK 3,946 ROG 411 POL 2,828 ZOLT 178 Median

Revenue LTM Growth 9% 18% 15% 6% 11% 10% 38% -7% 9% 36% 10%

3-Year Growth 3% 10% 7% 1% 2% 16% 17% 5% 5% 64% 6%

Rev./ Empl. ($'000) 550 1,323 629 678 497 617 1,861 195 589 140 603

LTM Profit Margins Gross 28% 11% 26% 18% 32% 25% 6% 32% 11% 29% 25%

EBIT 13% 5% 9% 9% 11% 12% 4% 7% 1% 13% 9%

Net 10% 4% 6% 6% 7% 9% 3% 7% 1% 6% 6%

Est. 5-Year EPS Growth 6% 7% 10% 7% na 15% na na na 39% 8%

EBIT/ Capital Empl. 23% 13% 20% 19% 30% 20% 9% 11% 4% 8% 16%

LTM ROE 27% 13% 19% 23% 31% 19% 8% 9% 3% 3% 16%

LTM ROA 9% 5% 6% 8% 6% 8% 4% 7% 1% 2% 6%

LTM Asset Turnover .9x 1.2x 1.0x 1.2x .8x .9x 1.5x .9x 1.6x .4x 1.0x

Basic Materials: Fabricated Plastic & Rubber – Valuation (Sorted by market value)

Company / Ticker Carlisle Companies, / CSL Ashland Inc. / ASH Tredegar Corporation / TG A. Schulman, Inc. / SHLM Trex Company, Inc. / TWP Spartech Corporation / SEH

Price ($) 19.99 17.28 14.16 16.01 12.53 5.92

Move to 52-Wk MV EV Low High ($mn) ($mn) -10% 104% 1,220 1,692 -3% 239% 1,087 267 -24% 48% 480 462 -15% 59% 418 436 -57% 73% 192 282 -27% 178% 181 497 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. .6x .0x .5x .2x .9x .4x .4x .4x .4x

EV/ LTM EBIT 6x 1x 9x 10x nm 18x 9x 6x 9x

Last FY Act. 6x 6x 16x 24x nm 6x 12x 9x 6x

P/E This FY Est. 8x 8x 17x 11x 13x 17x 12x 10x 12x

Next FY Est. 8x 8x 16x 10x 12x 8x 10x 10x 9x

P/ Tang. Book 2.3x .4x 1.4x 1.0x 1.7x 46.4x 8.9x 3.6x 1.5x

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Basic Materials: Fabricated Plastic & Rubber – Operating Performance

LTM Ticker ($mn) CSL 3,023 ASH 8,435 TG 912 SHLM 1,984 TWP 330 SEH 1,419 Median

Revenue LTM Growth 14% 8% -3% 11% 0% -3% 4%

3-Year Growth 13% 5% 8% 11% 9% 9% 9%

Rev./ Empl. ($'000) 233 721 351 902 472 394 433

LTM Profit Margins Gross 20% 16% 15% 12% 24% 9% 16%

EBIT 9% 3% 6% 2% -1% 2% 2%

Net 3% 2% 4% 1% -5% 0% 1%

Est. 5-Year EPS Growth 12% 10% na na 16% 12% 12%

EBIT/ Capital Empl. 23% 11% 15% 8% nm 6% 11%

LTM ROE 8% 5% 7% 4% -16% 2% 5%

LTM ROA 4% 3% 5% 2% -5% 1% 2%

LTM Asset Turnover 1.4x 1.5x 1.2x 2.1x 1.0x 1.3x 1.4x

Basic Materials: Gold & Silver – Valuation (Sorted by market value)

Company / Ticker Anglo American plc ( / AAUK Newmont Mining Corpo / NEM Gold Fields Limited / GFI Compania de Minas Bu / BVN Lihir Gold Limited ( / LIHR Harmony Gold Mining / HMY Randgold Resources L / GOLD Royal Gold, Inc. / RGLD Coeur d'Alene Mines / CDE Hecla Mining Company / HL Corriente Resources / ETQ Western Goldfields I / WGW

Price ($) 9.53 24.23 5.98 13.03 12.03 6.24 27.85 30.88 0.52 1.33 2.56 1.04

Move to 52-Wk MV EV Low High ($mn) ($mn) -8% 282% 25,092 29,842 -12% 138% 11,008 13,625 -22% 202% 3,906 4,884 -31% 229% 3,324 3,218 -32% 240% 2,632 2,570 -12% 133% 2,516 2,988 -20% 102% 2,128 1,870 -26% 33% 1,048 857 -21% 896% 287 645 -26% 888% 225 343 -20% 131% 193 121 -66% 298% 142 191 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.1x 2.2x 1.5x 3.6x 4.7x 2.4x 4.9x 12.3x 3.1x 1.6x nm 2.7x 3.6x 2.1x 2.7x

EV/ LTM EBIT 3x 34x 7x nm 13x 61x 27x 25x 64x nm nm 30x 29x 15x 27x

Last FY Act. 5x nm 7x 15x nm nm 46x 51x 4x 3x nm nm 19x 7x 7x

P/E This FY Est. 3x 10x 11x 7x 17x 13x 33x 32x nm nm nm 9x 15x 8x 11x

Next FY Est. 4x 10x 8x 6x 9x 9x 21x 27x 7x nm nm 4x 10x 7x 8x

P/ Tang. Book 1.2x 1.4x .8x 2.3x .9x .9x 3.3x 2.2x nm .3x 1.3x 1.9x 1.5x 1.3x 1.3x

Basic Materials: Gold & Silver – Operating Performance

LTM Ticker ($mn) AAUK 27,117 NEM 6,267 GFI 3,198 BVN 888 LIHR 550 HMY 1,269 GOLD 385 RGLD 70 CDE 207 HL 221 ETQ na WGW 72 Median

Revenue LTM Growth -54% 13% -32% -26% 3% 4% 32% 37% -7% 17% na na 3%

3-Year Growth -1% 9% 19% -11% 29% 4% 62% 38% 26% 19% na -25% 19%

Rev./ Empl. ($'000) 271 418 62 357 266 31 204 4,369 198 254 na 369 266

LTM Profit Margins Gross na 51% 24% 67% 43% 12% 58% 95% 46% 23% na 35% 44%

EBIT 35% 6% 22% -5% 36% 4% 18% 49% 5% -1% na 9% 9%

Net 55% 9% 17% 31% 9% -8% 12% 28% 5% -14% na -1% 9%

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Est. 5-Year EPS Growth 10% 17% 4% na 28% na 54% 5% na 5% na na 10%

EBIT/ Capital Empl. 36% 4% 11% nm 12% 1% 23% 13% 1% nm nm 6% 11%

LTM ROE 63% 7% 11% 20% 3% -3% 7% 4% 1% -6% 2% -1% 3%

LTM ROA 32% 3% 7% 13% 2% -2% 6% 4% 0% -4% 2% 0% 3%

LTM Asset Turnover .6x .4x .4x .4x .2x .3x .5x .1x .1x .3x na .3x .3x

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Basic Materials: Metal Mining – Valuation (Sorted by market value)

Company / Ticker BHP Billiton Limited / BHP Vale (ADR) / RIO Rio Tinto plc (ADR) / RTP Southern Copper Corp / PCU Freeport-McMoRan Cop / FCX Alcoa Inc. / AA Aluminum Corp. of Ch / ACH Sterlite Industries / SLT Cliffs Natural Resou / CLF Titanium Metals Corp / TIE Alumina Limited (ADR / AWC Olin Corporation / OLN Stillwater Mining Co / SWC Brush Engineered Mat / BW HORSEHEAD / ZINC

Price ($) 32.64 11.47 149.80 13.14 24.34 10.84 10.75 4.44 20.27 7.67 3.42 16.21 2.41 9.75 3.07

Move to 52-Wk MV EV Low High ($mn) ($mn) -12% 193% 90,825 97,229 -13% 285% 60,543 74,198 -13% 273% 54,488 96,684 -31% 219% 11,445 11,481 -12% 423% 9,192 19,174 -17% 313% 8,675 18,028 -33% 475% 5,815 7,973 -30% 552% 3,146 3,273 -13% 502% 2,301 2,336 -17% 294% 1,389 1,369 0% 642% 1,248 1,959 -23% 87% 1,246 1,296 -4% 843% 225 307 -5% 382% 198 249 -26% 551% 108 28 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.6x 1.9x 2.2x 2.0x 1.0x .6x .7x .7x .7x 1.2x nm .7x .4x .3x .1x 1.0x 1.7x .7x

EV/ LTM EBIT 4x 5x 7x 4x 3x 7x 4x 2x 3x 6x nm 6x 14x 5x x 5x 5x 4x

Last FY Act. 6x 8x 7x 5x 3x 4x 4x 3x 8x 5x 3x 12x nm 4x 1x 5x 6x 4x

P/E This FY Est. 5x 4x 5x 6x 4x 7x 7x x 3x 9x 6x 7x 11x 6x 3x 5x 5x 6x

Next FY Est. 5x 5x 7x 7x 8x 11x 10x x 2x 9x 5x 7x 60x 7x nm 10x 6x 7x

P/ Tang. Book 2.4x 1.6x 6.6x 3.0x 1.0x .9x .7x .7x 1.5x 1.2x 1.2x 2.6x .4x .6x .4x 1.6x 3.0x 1.2x

Basic Materials: Metal Mining – Operating Performance

LTM Ticker ($mn) BHP 59,473 RIO 38,334 RTP 44,837 PCU 5,696 FCX 19,913 AA 29,616 ACH 11,163 SLT 5,030 CLF 3,475 TIE 1,185 AWC 1 OLN 1,735 SWC 789 BW 954 ZINC 473 Median

Revenue LTM Growth 1% -1% 23% -12% 38% -5% 20% -18% 70% -9% -81% 55% 22% 3% -18% 1%

3-Year Growth 31% 59% 32% 25% 93% 11% 33% 55% 24% 37% -32% -14% 11% 24% 36% 31%

Rev./ Empl. ($'000) 1,425 672 868 469 784 277 118 392 656 468 0 482 486 434 447 469

LTM Profit Margins Gross 40% 51% na 60% 46% 19% 25% 30% 30% 27% na 21% 17% 17% 23% 27%

EBIT 41% 43% 33% 52% 34% 9% 20% 26% 27% 20% <-99% 13% 3% 5% 17% 23%

Net 48% 23% 40% 42% 15% 6% 33% 16% 16% 19% >99% 7% 3% 4% 11% 16%

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Est. 5-Year EPS Growth na 0% na na 12% 17% 14% na na 10% na 4% na na na 11%

EBIT/ Capital Empl. 58% 28% 36% 68% 25% 14% 27% 44% 44% 23% >99% 32% 4% 12% 43% 30%

LTM ROE 91% 26% 75% 61% 19% 11% 57% 19% 40% 20% 43% 18% 4% 9% 19% 20%

LTM ROA 45% 11% 26% 37% 7% 4% 33% 11% 16% 16% 28% 7% 3% 6% 15% 15%

LTM Asset Turnover .9x .5x .6x .9x .5x .7x 1.0x .7x .9x .8x .0x 1.0x 1.0x 1.6x 1.4x .9x

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Basic Materials: Containers and Packaging – Valuation (Sorted by market value)

Company / Ticker Owens-Illinois, Inc. / OI Avery Dennison Corpo / AVY Pactiv Corporation / PTV Ball Corporation / BLL Crown Holdings, Inc. / CCK Sealed Air Corp. / SEE Bemis Company, Inc. / BMS MeadWestvaco Corp. / MWV AptarGroup, Inc. / ATR Owens Corning / OC Silgan Holdings Inc. / SLGN Greif, Inc. / GEF Packaging Corporatio / PKG Mobile Mini, Inc. / MINI EnPro Industries, In / NPO Myers Industries, In / MYE

Price ($) 20.16 30.63 24.53 32.77 16.31 15.99 24.18 12.23 29.88 13.74 41.73 32.53 13.36 13.25 17.56 7.01

Move to 52-Wk MV EV Low High ($mn) ($mn) -19% 201% 3,367 6,380 -6% 80% 3,256 5,441 -23% 166% 3,223 4,611 -16% 71% 3,100 5,645 -6% 81% 2,628 5,829 -8% 77% 2,524 3,911 -15% 23% 2,410 3,088 -9% 183% 2,089 3,975 -39% 55% 2,017 2,116 -4% 108% 1,762 3,776 -6% 40% 1,584 2,597 -9% 126% 1,518 2,187 -4% 132% 1,368 1,877 -5% 97% 462 1,552 -3% 149% 356 467 -7% 210% 247 435 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .8x .8x 1.3x .7x .7x .8x .8x .6x 1.0x .6x .8x .6x .8x 4.1x .4x .5x 1.0x .9x .8x

EV/ LTM EBIT 6x 12x 11x 10x 9x 9x 10x 8x 9x 28x 10x 6x 7x 15x 6x 13x 11x 10x 9x

Last FY Act. 11x 10x 13x 12x 5x 8x 14x 8x 15x 65x 13x 10x 8x 11x 10x 7x 14x 14x 11x

P/E This FY Est. 5x 9x 14x 9x 10x 12x 14x 15x 14x 11x 12x 8x 10x 9x 4x 12x 11x 11x 11x

Next FY Est. 5x 9x 12x 8x 8x 10x 13x 17x 13x 13x 11x 7x 10x 8x 4x 9x 10x 10x 10x

P/ Tang. Book 14.8x Nm Nm Nm Nm Nm 2.9x .9x 2.2x 2.3x 6.9x 3.7x 2.0x Nm 2.9x 2.0x 4.1x 2.8x 2.6x

Basic Materials: Containers and Packaging – Operating Performance

LTM Ticker ($mn) OI 8,174 AVY 6,913 PTV 3,560 BLL 7,585 CCK 8,299 SEE 4,925 BMS 3,824 MWV 6,890 ATR 2,100 OC 5,860 SLGN 3,063 GEF 3,681 PKG 2,395 MINI 376 NPO 1,154 MYE 911 Median

Revenue LTM Growth 11% 15% 14% 5% 10% 8% 5% 7% 15% 19% 6% 16% 5% 21% 16% 4% 11%

3-Year Growth 7% 6% 9% 11% 7% 7% 9% 5% 13% -4% 7% 15% 7% 24% 8% 13% 7%

Rev./ Empl. ($'000) 341 185 274 489 381 278 244 287 250 293 365 357 287 179 246 199 283

LTM Profit Margins Gross 23% 26% 26% 16% 14% 26% 17% 17% 32% 14% 14% 18% 21% 93% 35% 23% 22%

EBIT 12% 7% 12% 8% 8% 8% 8% 7% 11% 2% 9% 10% 11% 28% 7% 4% 8%

Net 6% 4% 6% 4% 7% 4% 5% 4% 8% -14% 4% 6% 6% 10% 4% 4% 4%

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Est. 5-Year EPS Growth 16% 13% 10% 10% 11% 11% 9% 11% 11% 12% 8% 18% na 17% na 13% 11%

EBIT/ Capital Empl. 30% 21% 28% 23% 34% 35% 18% 10% 22% 4% 18% 28% 18% 8% 26% 9% 22%

LTM ROE 19% 14% 16% 22% >99% 10% 11% 7% 13% -22% 24% 22% 20% 8% 11% 10% 13%

LTM ROA 5% 5% 5% 5% 8% 4% 5% 3% 8% -11% 5% 8% 7% 3% 3% 5% 5%

LTM Asset Turnover .8x 1.1x .9x 1.2x 1.1x .9x 1.2x .7x 1.0x .7x 1.3x 1.3x 1.2x .3x .8x 1.3x 1.1x

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Basic Materials: Forestry & Wood Products – Valuation (Sorted by market value)

Company / Ticker Weyerhaeuser Company / WY Rayonier Inc. / RYN Universal Forest Pro / UFPI Louisiana-Pacific Co / LPX

Price ($) 32.78 30.61 18.89 1.81

Move to 52-Wk MV EV Low High ($mn) ($mn) -10% 138% 6,926 8,952 -13% 62% 2,413 3,152 -7% 103% 360 496 -12% 807% 187 551 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.0x 2.7x .2x .4x 1.1x 1.4x .7x

EV/ LTM EBIT nm 15x 63x nm 39x 6x 39x

Last FY Act. nm 14x 17x nm 16x 4x 16x

P/E This FY Est. nm 15x 59x nm 37x 6x 37x

Next FY Est. nm 17x 39x nm 28x 6x 28x

P/ Tang. Book 1.0x 2.4x 1.0x .1x 1.1x 1.4x 1.0x

Basic Materials: Forestry & Wood Products – Operating Performance

LTM Ticker ($mn) WY 8,877 RYN 1,169 UFPI 2,321 LPX 1,503 Median

Revenue LTM Growth -33% -4% -7% -11% -9%

3-Year Growth -20% 2% 1% -15% -7%

Rev./ Empl. ($'000) 234 584 276 295 285

LTM Profit Margins Gross 17% 23% 11% -1% 14%

EBIT -14% 18% 0% -24% -7%

Net 0% 16% 0% -19% 0%

Est. 5-Year EPS Growth 9% 7% 11% 6% 8%

EBIT/ Capital Empl. nm 13% 1% nm 7%

LTM ROE 0% 18% -2% -17% -1%

LTM ROA 0% 9% -1% -10% -1%

LTM Asset Turnover .4x .6x 2.4x .5x .6x

Basic Materials: Misc. Fabricated Products – Valuation (Sorted by market value)

Company / Ticker Companhia Siderurgic / SID Parker-Hannifin Corp / PH Fastenal Company / FAST Allegheny Technologi / ATI Reliance Steel & Alu / RS Timken Company, The / TKR Matthews Internation / MATW Simpson Manufacturin / SSD Kaydon Corporation / KDN Actuant Corporation / ATU Crane Co. / CR Watts Water Technolo / WTS Mueller Industries, / MLI Mueller Water Produc / MWA Century Aluminum Com / CENX RBC Bearings Incorpo / ROLL Encore Wire Corporat / WIRE CIRCOR International / CIR L.B. Foster Company / FSTR RTI International Me / RTI Ladish Co., Inc. / LDSH Sun Hydraulics Corpo / SNHY A.M. Castle & Co. / CAS Olympic Steel, Inc. / ZEUS

Price ($) 9.77 35.95 33.32 21.20 19.00 13.80 40.63 22.57 27.54 16.61 14.15 22.00 20.62 5.42 12.12 19.84 16.58 22.35 27.46 11.01 15.15 13.56 8.74 16.90

Move to 52-Wk MV EV Low High ($mn) ($mn) -9% 437% 7,518 9,639 -9% 142% 5,793 7,742 -5% 70% 4,949 4,897 -13% 365% 2,041 2,285 -13% 313% 1,393 3,626 -7% 181% 1,332 1,977 -13% 44% 1,256 1,472 -16% 42% 1,098 934 -17% 124% 943 681 -18% 124% 933 1,385 -22% 227% 847 968 -8% 50% 804 1,092 -21% 78% 766 777 -10% 135% 625 1,537 -32% 564% 595 869 -6% 122% 432 474 -16% 52% 382 374 -2% 198% 378 336 -27% 118% 282 199 -8% 592% 253 206 -28% 208% 241 351 -6% 217% 226 193 -8% 351% 198 331 -7% 363% 184 271 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 5.6x .6x 2.1x .4x .4x .3x 1.8x 1.2x 1.3x .8x .4x .7x .3x .8x .4x 1.3x .3x .4x .4x .3x .8x 1.0x .2x .2x .9x 2.0x .5x

EV/ LTM EBIT 20x 5x 11x 2x 4x 4x 11x 11x 6x 7x 3x 9x 4x 11x 2x 7x 11x 4x 1x 2x 7x 5x 5x 2x 6x 10x 5x

Last FY Act. 4x 7x 21x 3x 4x 6x 16x 16x 11x 9x nm 11x 7x 15x nm 11x 13x 10x 3x 3x 7x 10x 4x 7x 9x 9x 8x

P/E This FY Est. 5x 7x 17x 4x 3x 4x 15x 17x 13x 7x 5x 12x 8x 16x 2x 10x 14x 6x 12x 4x 7x 8x 5x 3x 9x 9x 7x

Next FY Est. 4x 7x 16x 5x 4x 6x 13x 16x 13x 7x 5x 12x 8x 11x 6x 9x 14x 6x 11x 5x 6x 12x 8x 6x 9x 8x 7x

P/ Tang. Book 10.1x 5.1x 4.4x .9x 2.9x .8x 70.5x 1.7x 1.7x nm 19.8x 3.2x 1.2x nm .4x 2.2x 1.0x 1.5x 1.3x .5x 1.2x 2.1x .8x .6x 6.1x 7.5x 1.6x

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Basic Materials: Misc. Fabricated Products – Operating Performance

LTM Ticker ($mn) SID 1,716 PH 12,423 FAST 2,315 ATI 5,471 RS 8,287 TKR 5,794 MATW 819 SSD 782 KDN 514 ATU 1,664 CR 2,681 WTS 1,458 MLI 2,745 MWA 1,859 CENX 2,001 ROLL 359 WIRE 1,183 CIR 766 FSTR 483 RTI 625 LDSH 465 SNHY 187 CAS 1,502 ZEUS 1,210 Median

Revenue LTM Growth -44% 13% 16% -2% 16% 13% 9% -5% 20% 14% 6% 7% 5% 1% 12% 14% 2% 16% -5% 3% 14% 16% 6% 19% 10%

3-Year Growth 21% 15% 19% 26% 35% 7% 9% 5% 15% 20% 12% 19% 25% 3% 19% 11% 25% 20% 23% 44% 27% 21% 23% 5% 19%

Rev./ Empl. ($'000) 120 200 173 564 895 230 200 285 242 222 223 187 563 273 1,053 518 1,552 295 737 391 366 271 772 1,034 290

LTM Profit Margins Gross 44% 23% 52% 22% 26% 23% na 37% 38% 34% 32% 34% 13% 24% 22% 34% 8% 32% 17% 31% 14% 34% 15% 25% 26%

EBIT 29% 12% 19% 17% 11% 10% 16% 11% 22% 13% 10% 9% 6% 8% 19% 18% 3% 12% 35% 19% 10% 22% 4% 9% 12%

Net 36% 8% 12% 11% 6% 6% 10% 7% 15% 7% 7% 5% 4% 2% -16% 12% 2% 8% 22% 12% 7% 15% 3% 6% 7%

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Est. 5-Year EPS Growth na 13% 17% 15% na 14% na 14% 13% 15% 10% 12% na 2% 10% 13% 8% 17% na 5% 9% 23% 2% na 13%

EBIT/ Capital Empl. 19% 42% 43% 39% 34% 19% 53% 18% 39% 78% 46% 20% 25% 15% 24% 28% 9% 38% >99% 25% 15% 55% 19% 33% 28%

LTM ROE 63% 20% 26% 26% 22% 17% 18% 7% 14% 21% 20% 8% 14% 3% -43% 18% 6% 14% 50% 13% 14% 28% 11% 24% 17%

LTM ROA 14% 10% 22% 14% 11% 8% 10% 6% 9% 8% 7% 4% 7% 1% -11% 13% 4% 9% 33% 9% 8% 23% 6% 15% 9%

LTM Asset Turnover .4x 1.3x 1.9x 1.3x 1.8x 1.3x 1.0x .9x .6x 1.0x .9x .8x 1.9x .6x .7x 1.1x 2.2x 1.1x 1.4x .7x 1.1x 1.5x 1.9x 2.6x 1.1x

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Basic Materials: Iron & Steel – Valuation (Sorted by market value)

Company / Ticker ArcelorMittal (ADR) / MT POSCO (ADR) / PKX Nucor Corporation / NUE Gerdau SA (ADR) / GGB Kubota Corporation ( / KUB United States Steel / X Mechel OAO (ADR) / MTL Steel Dynamics, Inc. / STLD Ternium S.A. (ADR) / TX Commercial Metals Co / CMC AK Steel Holding Cor / AKS Worthington Industri / WOR Schnitzer Steel Indu / SCHN Carpenter Technology / CRS Grupo Simec S.A.B. d / SIM Haynes International / HAYN

Price ($) 21.31 53.31 32.73 6.07 28.06 29.75 5.80 8.12 6.64 9.81 8.72 11.30 25.22 15.97 4.33 18.95

Move to 52-Wk MV EV Low High ($mn) ($mn) -11% 392% 30,294 62,809 -25% 226% 16,646 15,841 -20% 155% 10,276 11,878 -24% 332% 8,622 20,204 -37% 55% 7,169 10,697 -11% 559% 3,459 5,891 -35% 911% 2,414 5,540 -16% 404% 1,475 4,329 -7% 593% 1,331 3,837 -14% 306% 1,116 2,233 -14% 738% 977 1,201 -14% 131% 891 1,261 -16% 370% 705 874 -8% 399% 704 632 -4% 327% 688 707 -15% 370% 227 242 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .5x .8x .5x 1.0x .9x .2x .7x .5x .5x .2x .2x .4x .2x .2x .3x .4x .5x .6x .4x

EV/ LTM EBIT 3x 4x 3x 6x 8x 2x 3x 4x 2x 6x 1x 8x 2x 1x 3x 2x 4x 4x 3x

Last FY Act. 3x 6x 7x 5x 10x 4x 3x 4x 7x 5x 3x 9x 3x 4x 5x 3x 5x 5x 5x

P/E This FY Est. 2x 4x 5x 4x 11x 2x 1x 3x 1x 5x 2x 6x 9x 5x 4x 4x 4x 4x 4x

Next FY Est. 3x 6x 6x 4x 11x 3x 1x 3x 3x 4x 3x 7x 6x 4x 5x 3x 5x 5x 4x

P/ Tang. Book .7x 1.2x 1.9x nm 1.0x .8x 2.4x 4.4x .3x .7x .7x 1.2x 1.1x 1.0x .9x .7x 1.3x 1.0x 1.0x

Basic Materials: Iron & Steel – Operating Performance

LTM Ticker ($mn) MT 130,840 PKX 18,788 NUE 23,909 GGB 20,364 KUB 12,043 X 23,787 MTL 7,596 STLD 8,321 TX 8,508 CMC 10,427 AKS 7,878 WOR 3,221 SCHN 3,642 CRS 2,817 SIM 2,194 HAYN 637 Median

Revenue LTM Growth 30% -27% 53% 53% 2% 48% 53% >99% 54% 25% 14% 9% 42% 48% -33% 24% 30%

3-Year Growth 72% 10% 13% 32% 6% 7% 23% 27% 53% 19% 10% 0% 62% 14% 60% 34% 21%

Rev./ Empl. ($'000) 401 658 1,322 552 489 485 89 1,401 360 683 1,158 467 993 828 366 588 570

LTM Profit Margins Gross 96% 30% 18% 25% 28% 16% 40% 18% 28% 11% 16% 13% 17% 23% 16% 24% 21%

EBIT 15% 23% 15% 16% 10% 11% 23% 14% 20% 4% 11% 5% 11% 15% 10% 17% 14%

Net 11% 32% 9% 10% 5% 8% 16% 8% 14% 2% 7% 5% 7% 13% 11% 10% 9%

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Est. 5-Year EPS Growth 5% 6% 7% 9% na 11% 5% 5% 11% 7% 10% 15% 16% na 10% na 9%

EBIT/ Capital Empl. 24% 35% 60% 24% 18% 33% 41% 40% 19% 18% 30% 15% 51% 44% 17% 25% 28%

LTM ROE 24% 49% 31% 46% 9% 31% 35% 38% 24% 14% 45% 19% 29% 41% 20% 19% 30%

LTM ROA 10% 33% 16% 9% 4% 11% 16% 12% 9% 6% 11% 9% 18% 20% 12% 11% 11%

LTM Asset Turnover .9x 1.0x 1.9x .9x .8x 1.4x 1.0x 1.6x .7x 2.6x 1.6x 1.7x 2.7x 1.6x 1.1x 1.1x 1.3x

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Basic Materials: Paper & Paper Products – Valuation (Sorted by market value)

Company / Ticker Kimberly-Clark Corpo / KMB International Paper / IP Sonoco Products Comp / SON Sappi Limited (ADR) / SPP Potlatch Corporation / PCH Aracruz Celulose SA / ARA Domtar Corp. (USA) / UFS Wausau Paper Corp. / WPP P.H. Glatfelter Comp / GLT Albany International / AIN Schweitzer-Mauduit I / SWM Smurfit-Stone Contai / SSCC Buckeye Technologies / BKI KapStone Paper and P / KPPC Neenah Paper, Inc. / NP

Price ($) 57.37 12.52 23.45 5.62 26.27 10.00 1.80 8.72 9.14 13.23 14.17 0.79 4.49 4.74 7.45

Move to 52-Wk MV EV Low High ($mn) ($mn) -12% 23% 23,737 30,465 -10% 178% 5,353 16,614 -11% 53% 2,339 2,978 -18% 175% 1,288 3,955 -4% 109% 1,038 1,461 -16% 822% 1,031 3,438 -8% 367% 887 2,933 -25% 25% 426 576 -17% 79% 414 712 -5% 198% 395 847 -8% 103% 218 377 -8% 1375% 202 3,866 -14% 242% 174 548 -9% 80% 135 572 -8% 339% 109 474 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.6x .7x .7x .7x .9x 1.7x .4x .5x .6x .8x .5x .5x .6x 1.4x .6x .8x 1.3x .7x

EV/ LTM EBIT 12x 10x 11x 11x 15x 7x 13x nm 4x 22x 15x 20x 6x 11x 8x 12x 11x 11x

Last FY Act. 14x 4x 11x 9x 11x 2x 12x nm 7x 22x 64x nm 4x 6x 3x 13x 12x 9x

P/E This FY Est. 14x 6x 10x 8x 12x nm 6x 291x 9x 6x 16x nm 5x 4x 6x 30x 14x 8x

Next FY Est. 13x 9x 10x 6x 14x 3x 6x 24x 8x 8x 9x nm 5x 4x 5x 9x 11x 8x

P/ Tang. Book 11.4x 1.1x 4.5x .8x 1.8x .6x .3x 1.7x .8x 1.0x .7x nm .7x 1.1x 1.6x 2.0x 7.7x 1.0x

Basic Materials: Paper & Paper Products – Operating Performance

LTM Ticker ($mn) KMB 19,575 IP 24,124 SON 4,248 SPP 5,766 PCH 1,707 ARA 2,042 UFS 6,582 WPP 1,221 GLT 1,263 AIN 1,129 SWM 780 SSCC 7,350 BKI 849 KPPC 408 NP 842 Median

Revenue LTM Growth 10% 13% 7% 11% 8% 13% 27% -1% 11% 10% 13% -1% 10% >99% 12% 10%

3-Year Growth 7% 2% 9% 4% 7% 17% 11% 6% 28% 6% 3% 3% 5% na 23% 6%

Rev./ Empl. ($'000) 369 468 228 382 474 819 506 436 328 185 225 324 566 575 343 382

LTM Profit Margins Gross 30% 26% 18% 13% 16% 35% 19% 4% 14% 34% 13% 11% 17% 38% 14% 17%

EBIT 13% 7% 6% 6% 6% 25% 3% -5% 13% 3% 3% 3% 11% 13% 7% 6%

Net 9% 3% 4% 3% 4% -13% 1% -3% 8% 1% 1% 1% 5% 6% -13% 3%

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Est. 5-Year EPS Growth 8% 5% 8% 12% 5% 2% 3% na na 33% na 6% 10% 5% na 6%

EBIT/ Capital Empl. 27% 10% 20% 9% 8% 14% 3% nm 24% 5% 5% 5% 14% 14% 10% 10%

LTM ROE 32% 9% 13% 11% 12% -12% 2% -16% 19% 2% 3% 3% 10% 17% -48% 9%

LTM ROA 9% 3% 6% 3% 5% -5% 1% -6% 7% 1% 1% 1% 4% 7% -13% 3%

LTM Asset Turnover 1.0x .9x 1.3x .9x 1.1x .4x .9x 1.7x 1.0x .7x 1.0x 1.0x .9x 1.1x 1.0x 1.0x

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Capital Goods: Aerospace and Defense – Valuation (Sorted by market value)

Company / Ticker Boeing Company, The / BA Lockheed Martin Corp / LMT General Dynamics Cor / GD Honeywell Internatio / HON Northrop Grumman Cor / NOC Rockwell Collins, In / COL FLIR Systems, Inc. / FLIR Goodrich Corporation / GR Embraer - Empr Bras / ERJ Alliant Techsystems / ATK Elbit Systems Ltd. ( / ESLT Spirit AeroSystems H / SPR Curtiss-Wright Corp. / CW TransDigm Group Inco / TDG Orbital Sciences Cor / ORB Esterline Technologi / ESL BE Aerospace, Inc. / BEAV HEICO Corporation / HEI Barnes Group Inc. / B AeroVironment, Inc. / AVAV Ceradyne, Inc. / CRDN Triumph Group, Inc. / TGI AAR Corp. / AIR Kaman Corporation / KAMN ARGON ST, Inc. / STST Force Protection, In / FRPT Herley Industries, I / HRLY Ducommun Incorporate / DCO GenCorp Inc. / GY Kratos Defense & Sec / KTOS LMI Aerospace, Inc. / LMIA Hawk Corporation / HWK Smith & Wesson Holdi / SWHC

Price ($) 41.04 72.26 55.51 27.35 40.34 33.07 29.70 32.08 14.00 76.85 43.78 11.47 30.12 27.23 17.08 31.23 8.29 30.03 11.86 29.84 22.85 34.50 14.43 21.57 21.87 2.81 12.80 15.63 2.62 1.38 12.15 13.46 2.54

Move to 52-Wk MV EV Low High ($mn) ($mn) -5% 131% 30,076 32,906 -5% 66% 28,948 30,219 -7% 71% 21,641 21,163 -7% 130% 19,864 26,765 -8% 107% 13,189 16,117 -8% 125% 5,272 5,612 -20% 53% 4,126 4,130 -12% 136% 3,949 5,342 -4% 250% 2,591 2,626 -7% 55% 2,514 3,906 -6% 47% 1,843 1,886 -13% 216% 1,605 2,019 -5% 86% 1,355 1,797 -6% 89% 1,318 2,486 -9% 63% 1,005 808 -14% 101% 926 1,170 -10% 552% 825 1,834 -12% 90% 793 829 -9% 191% 645 1,093 -38% 30% 625 512 -30% 135% 600 509 -17% 142% 572 953 -33% 173% 559 1,001 -17% 82% 549 636 -31% 27% 472 465 -63% 459% 192 113 -26% 59% 173 167 -19% 165% 165 169 -3% 373% 151 534 -20% 71% 145 210 -7% 135% 140 167 -12% 90% 121 121 -40% 346% 120 227 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. .5x .7x .7x .7x .5x 1.2x 4.1x .8x .4x .9x .8x .5x 1.0x 3.6x .7x .8x .9x 1.5x .7x 2.3x .7x .8x .7x .5x 1.4x .1x 1.1x .4x .7x .8x .7x .4x .8x 1.0x .8x .7x

EV/ LTM EBIT 6x 6x 6x 6x 6x 6x 16x 5x 6x 9x 10x 4x 9x 9x 10x 8x 6x 8x 6x 17x 3x 6x 7x 9x 19x 2x nm 5x 13x 1052x 5x 3x 11x 40x 8x 6x

Last FY Act. 8x 10x 11x 9x 8x 8x 33x 8x 5x 12x 24x 5x 13x 15x 18x 9x 5x 21x 7x 30x 4x 8x 8x 15x 34x 26x nm 8x 4x nm 10x 18x 12x 13x 10x 10x

P/E This FY Est. 9x 9x 9x 7x 8x 8x 24x 6x 5x 10x 14x 5x 12x 10x 17x 9x 4x 17x 6x 26x 6x 6x 7x 11x 23x 6x 17x 7x 7x nm 7x 6x 11x 10x 9x 8x

Next FY Est. 6x 9x 8x 7x 7x 7x 19x 6x 4x 9x 13x 5x 11x 9x 19x 8x 4x 15x 6x 22x 7x 6x 6x 9x 19x 13x 21x 7x 4x 14x 6x 7x 7x 10x 8x 7x

P/ Tang. Book 10.1x nm 10.4x nm nm 8.8x 8.6x 4.5x 1.2x nm nm 1.1x 7.6x nm 2.4x 4.8x 4.8x 14.1x 19.4x 3.4x 1.2x 2.0x 1.2x 1.9x 4.4x .7x 1.7x 1.3x nm nm 2.6x 1.5x 15.9x 5.4x 4.7x 3.4x

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Capital Goods: Aerospace and Defense – Operating Performance

LTM Ticker ($mn) BA 65,722 LMT 42,440 GD 28,963 HON 37,119 NOC 33,557 COL 4,769 FLIR 1,017 GR 7,034 ERJ 6,392 ATK 4,401 ESLT 2,379 SPR 4,106 CW 1,820 TDG 693 ORB 1,157 ESL 1,499 BEAV 2,047 HEI 566 B 1,468 AVAV 220 CRDN 733 TGI 1,240 AIR 1,439 KAMN 1,210 STST 330 FRPT 1,528 HRLY 153 DCO 396 GY 748 KTOS 271 LMIA 242 HWK 269 SWHC 300 Median

Revenue LTM Growth -1% 1% 10% 11% 8% 8% 41% 13% 44% 13% 39% 10% 24% 28% 19% 29% 33% 18% 4% 15% -2% 18% 28% 14% 25% >99% -7% 10% 6% 40% 68% 26% 14% 14%

3-Year Growth 9% 6% 13% 11% 3% 11% 17% 11% 16% 14% 28% na 19% 25% 17% 27% 32% 33% 13% 27% 52% 19% 23% 3% 30% >99% 0% 18% 15% -13% 25% 12% 33% 17%

Rev./ Empl. ($'000) 413 303 338 304 274 238 584 301 269 259 236 314 243 330 373 160 325 259 245 406 292 223 266 334 340 1,175 169 212 230 181 181 234 206 269

LTM Profit Margins Gross 19% 11% 17% 23% 18% na 56% 30% 22% 21% 28% 17% 33% 54% 18% 32% 34% 36% 38% 37% 40% 29% 19% 27% 17% 12% 22% 20% 12% 19% 26% 28% 30% 25%

EBIT 8% 12% 12% 11% 8% 20% 25% 15% 7% 10% 8% 12% 11% 41% 7% 10% 16% 18% 12% 14% 25% 12% 9% 6% 7% 4% -14% 9% 6% 0% 13% 14% 7% 11%

Net 6% 8% 8% 7% 5% 14% 22% 9% 7% 5% 5% 8% 6% 17% 6% 7% 10% 8% 8% 10% 16% 7% 5% 4% 5% 3% -11% 6% 3% -5% 8% 11% 2% 7%

Est. 5-Year EPS Growth 11% 11% 7% 10% 13% 14% 20% 15% 12% 12% 10% 11% 14% 28% 18% 21% 21% 19% 10% 19% 7% 17% 14% 15% 20% 18% 4% 11% na na 19% na 22% 14%

EBIT/ Capital Empl. nm >99% 99% 58% 68% 76% 58% 36% 18% 41% 54% 23% 30% >99% 48% 28% 35% 50% 35% 33% 37% 21% 18% 17% 27% 39% nm 25% 31% 1% 39% 35% 17% 35%

LTM ROE 43% 33% 20% 29% 10% 45% 31% 24% 22% 31% 22% 23% 12% 22% 15% 9% 14% 12% 16% 13% 20% 12% 14% 13% 6% 18% -9% 10% -55% -7% 16% 39% 8% 16%

LTM ROA 7% 11% 9% 8% 5% 17% 20% 8% 6% 8% 4% 9% 6% 6% 8% 5% 9% 7% 7% 12% 15% 6% 6% 8% 5% 9% -6% 7% 2% -4% 11% 13% 2% 7%

LTM Asset Turnover 1.1x 1.5x 1.1x 1.0x 1.0x 1.2x .9x .9x .8x 1.4x .8x 1.1x .9x .3x 1.4x .7x .9x .9x .9x 1.1x .9x .9x 1.1x 1.7x 1.0x 3.3x .6x 1.2x .7x .8x 1.4x 1.2x 1.0x 1.0x

Capital Goods: Construction (Raw Materials) – Valuation (Sorted by market value)

Company / Ticker Cemex SAB de CV (ADR / CX Martin Marietta Mate / MLM James Hardie Industr / JHX USG Corporation / USG Eagle Materials, Inc / EXP Texas Industries, In / TXI AMCOL International / ACO

Price ($) 5.14 79.46 14.90 9.12 18.75 26.91 18.21

Move to 52-Wk MV EV Low High ($mn) ($mn) -12% 534% 3,997 14,897 -21% 80% 3,292 4,640 -13% 112% 1,286 1,439 -8% 341% 904 2,209 -31% 120% 817 1,200 -18% 199% 741 1,162 -8% 134% 554 808 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. .8x 2.1x 1.0x .5x 1.8x 1.1x .9x 1.2x 1.3x 1.0x

EV/ LTM EBIT 7x 13x nm nm 19x 9x 10x 12x 8x 10x

Last FY Act. 2x 13x nm 12x 9x 9x 10x 9x 7x 9x

P/E This FY Est. 3x 18x 21x nm 20x 16x 10x 15x 12x 17x

Next FY Est. 3x 18x 33x nm 17x 14x 9x 16x 13x 16x

P/ Tang. Book .2x 7.4x nm .5x 3.1x 1.0x 2.2x 2.4x 2.6x 1.6x

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Capital Goods: Construction (Raw Materials) – Operating Performance

LTM Ticker ($mn) CX 19,165 MLM 2,179 JHX 1,409 USG 4,827 EXP 674 TXI 1,022 ACO 873 Median

Revenue LTM Growth -44% 0% -9% -9% -20% 3% 24% -9%

3-Year Growth 35% 9% 7% 5% 7% 7% 17% 7%

Rev./ Empl. ($'000) 299 415 489 326 421 409 433 415

LTM Profit Margins Gross 32% 23% 35% 5% 12% 18% 25% 23%

EBIT 12% 17% -6% -4% 9% 12% 9% 9%

Net 7% 10% -8% -3% 7% 8% 6% 7%

Est. 5-Year EPS Growth 13% 9% na na na 29% na 13%

EBIT/ Capital Empl. 12% 18% nm nm 9% 11% 20% 12%

LTM ROE 10% 23% >99% -7% 12% 10% 15% 11%

LTM ROA 3% 8% -5% -3% 4% 6% 8% 4%

LTM Asset Turnover .5x .8x .6x 1.0x .6x .7x 1.2x .7x

Capital Goods: Construction (Supplies and Fixtures) – Valuation (Sorted by market value)

Company / Ticker Tenaris S.A. (ADR) / TS Precision Castparts / PCP Plum Creek Timber Co / PCL Valmont Industries, / VMI Armstrong World Indu / AWI Minerals Technologie / MTX Beacon Roofing Suppl / BECN Griffon Corporation / GFF Ameron International / AMN Gibraltar Industries / ROCK Northwest Pipe Compa / NWPX Drew Industries, Inc / DW American Woodmark Co / AMWD Apogee Enterprises, / APOG Dynamic Materials Co / BOOM Titan Machinery Inc. / TITN Gulf Island Fabricat / GIFI General Steel Holdin / GSI Insteel Industries, / IIIN Bway Holding Company / BWY

Price ($) 22.07 55.04 33.88 50.30 17.11 44.95 11.25 6.72 41.72 12.21 29.48 11.51 16.35 7.77 15.47 10.85 13.39 3.97 7.41 5.10

Move to 52-Wk MV EV Low High ($mn) ($mn) -31% 242% 13,027 14,515 -14% 181% 7,674 7,585 -11% 77% 5,651 8,078 -18% 140% 1,315 1,543 -3% 159% 976 1,169 -4% 63% 842 793 -40% 67% 498 871 -21% 116% 397 585 -20% 232% 383 296 -21% 102% 366 767 -36% 121% 271 386 -11% 182% 247 255 -13% 98% 229 196 -5% 235% 222 280 -20% 329% 196 248 -15% 218% 191 227 -5% 293% 191 186 -47% 320% 143 465 -4% 172% 130 103 0% 165% 111 502 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. 1.3x 1.1x 4.9x .9x .3x .7x .5x .4x .4x .6x .9x .4x .3x .3x 1.1x .4x .4x .3x .3x .5x .8x 1.7x .5x

EV/ LTM EBIT 5x 5x 21x 7x 6x 7x 12x 26x 5x 8x 7x 6x nm 4x 6x 11x 3x 20x 2x 10x 9x 8x 7x

Last FY Act. 7x 8x 21x 14x 6x nm 20x 9x 6x 12x 13x 6x 56x 5x 8x 16x 6x 6x 3x nm 12x 10x 8x

P/E This FY Est. 5x 7x 33x 10x 7x 12x 16x 336x 7x 8x 9x 12x nm 5x 8x 12x 5x 18x 7x 7x 28x 15x 8x

Next FY Est. 6x 6x 31x 9x 11x 12x 13x 10x 7x 9x 9x 13x 55x 5x 7x 10x 5x 3x 6x 6x 12x 11x 9x

P/ Tang. Book 3.0x 3.8x 3.2x 3.7x .6x 1.2x nm 1.4x .8x 6.8x 1.0x 1.4x 1.1x 1.0x 12.2x 1.3x .8x 2.8x .8x nm 2.6x 3.0x 1.3x

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Capital Goods: Construction (Supplies and Fixtures) – Operating Performance

LTM Ticker ($mn) TS 11,382 PCP 7,138 PCL 1,657 VMI 1,799 AWI 3,537 MTX 1,147 BECN 1,711 GFF 1,312 AMN 669 ROCK 1,391 NWPX 428 DW 572 AMWD 576 APOG 938 BOOM 229 TITN 555 GIFI 435 GSI 1,358 IIIN 354 BWY 988 Median

Revenue LTM Growth 15% 14% 7% 25% 1% 8% 8% -13% 13% 9% 12% -15% -18% 12% 57% 69% -3% >99% 19% 3% 9%

3-Year Growth 39% 33% 3% 13% 3% 7% 36% 5% 16% 16% 10% 8% -8% 14% 45% 39% 40% >99% 5% 16% 14%

Rev./ Empl. ($'000) 487 334 1,841 298 288 424 684 248 257 352 339 163 132 172 614 775 219 1,087 633 333 336

LTM Profit Margins Gross 43% 28% 31% 27% 23% 21% 23% 22% 23% 19% 20% 23% 16% 21% 31% 17% 15% 4% 25% 13% 23%

EBIT 28% 23% 23% 12% 6% 9% 4% 2% 8% 7% 12% 8% -1% 7% 18% 4% 13% 2% 19% 5% 8%

Net 23% 15% 15% 7% 4% 7% 2% -2% 9% 3% 7% 6% 0% 5% 11% 2% 9% 1% 12% 0% 7%

Est. 5-Year EPS Growth 10% 17% 8% 14% 15% 12% 18% na 14% 9% 14% 14% 7% 14% 13% 23% 14% 8% na 25% 14%

EBIT/ Capital Empl. 50% 78% 9% 37% 13% 15% 23% 4% 15% 18% 14% 26% nm 28% 58% 13% 22% 7% 51% 21% 21%

LTM ROE 33% 28% 14% 23% 6% 10% 8% -5% 14% 8% 11% 14% 0% 17% 23% 12% 15% 18% 28% 2% 14%

LTM ROA 16% 18% 6% 11% 3% 7% 3% -3% 9% 3% 6% 10% 0% 9% 10% 4% 11% 2% 22% 1% 6%

LTM Asset Turnover .7x 1.2x .4x 1.5x .8x 1.0x 1.8x 1.4x .9x 1.1x .9x 1.6x 1.8x 1.7x .9x 2.2x 1.3x 1.9x 1.7x 1.2x 1.3x

Capital Goods: Construction and Agricultural Machinery – Valuation (Sorted by market value)

Company / Ticker Caterpillar Inc. / CAT Deere & Company / DE CNH Global N.V. (ADR / CNH Joy Global Inc. / JOYG AGCO Corporation / AG Bucyrus Internationa / BUCY Kennametal Inc. / KMT Manitowoc Company, I / MTW Lufkin Industries, I / LUFK Rofin-Sinar Technolo / RSTI Lindsay Corporation / LNN KHD Humboldt Wedag I / KHD Columbus McKinnon Co / CMCO Alamo Group, Inc. / ALG

Price ($) 36.96 33.79 14.95 25.18 27.60 25.18 17.61 6.92 45.28 18.64 42.90 9.10 11.16 11.38

Move to 52-Wk MV EV Low High ($mn) ($mn) -14% 133% 22,296 54,322 -16% 181% 14,429 34,173 -26% 368% 3,549 13,306 -24% 257% 2,714 2,972 -20% 161% 2,532 2,767 -32% 216% 1,885 2,339 -14% 137% 1,288 1,700 -1% 644% 902 974 -13% 110% 673 562 -2% 162% 538 488 -18% 206% 526 507 -20% 293% 278 -118 -4% 203% 213 264 -7% 133% 113 202 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. 1.1x 1.3x .7x 1.0x .3x 1.0x .6x .2x .8x .8x 1.1x nm .4x .4x .7x 1.0x .8x

EV/ LTM EBIT 10x 8x 7x 6x 5x 7x 7x 2x 5x 5x 8x nm 4x 7x 6x 8x 7x

Last FY Act. 7x 8x 6x 10x 11x 13x 8x 3x 9x 9x 13x 6x 6x 9x 9x 8x 9x

P/E This FY Est. 6x 7x 4x 7x 7x 8x 7x 2x 8x 10x 12x 4x 5x 7x 7x 6x 7x

Next FY Est. 7x 6x 4x 6x 6x 6x 7x 2x 7x 9x 10x 5x 5x 8x 6x 7x 6x

P/ Tang. Book 3.2x 2.4x 1.0x 4.7x 1.9x 5.0x 1.9x 1.0x 1.6x 1.3x 3.7x .8x 1.7x .8x 2.2x 2.8x 1.8x

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Capital Goods: Construction and Agricultural Machinery – Operating Performance

LTM Ticker ($mn) CAT 50,545 DE 27,177 CNH 18,869 JOYG 3,123 AG 8,439 BUCY 2,332 KMT 2,759 MTW 4,405 LUFK 668 RSTI 575 LNN 475 KHD 638 CMCO 630 ALG 561 Median

Revenue LTM Growth 15% 18% 27% 25% 34% 84% 12% 29% 17% 20% 69% 11% 8% 15% 19%

3-Year Growth 14% 8% 9% 22% 9% 53% 7% 30% 19% 15% 39% 46% 7% 14% 15%

Rev./ Empl. ($'000) 451 523 671 339 615 385 197 421 248 351 383 501 195 239 384

LTM Profit Margins Gross 24% 32% 23% 30% 18% 27% 34% 23% 28% 43% 26% 18% 30% 19% 27%

EBIT 10% 16% 10% 16% 7% 14% 9% 13% 18% 17% 13% 13% 12% 5% 13%

Net 8% 9% 4% 10% 4% 10% 6% 9% 12% 14% 8% 11% 6% 3% 9%

Est. 5-Year EPS Growth 12% 9% 12% 11% 12% 15% 12% 13% 14% 15% 19% 33% 7% na 12%

EBIT/ Capital Empl. 21% 38% 21% 57% 37% 33% 20% 70% 45% 35% 46% nm 41% 12% 37%

LTM ROE 42% 34% 13% 41% 17% 26% 11% 27% 20% 20% 23% 21% 13% 8% 21%

LTM ROA 7% 6% 3% 13% 7% 10% 6% 13% 16% 14% 13% 8% 7% 4% 8%

LTM Asset Turnover .8x .7x .7x 1.3x 1.7x 1.0x 1.0x 1.4x 1.3x 1.0x 1.6x .7x 1.1x 1.4x 1.1x

Capital Goods: Mobile Homes and RVs – Valuation (Sorted by market value)

Company / Ticker Thor Industries, Inc / THO Cavco Industries, In / CVCO Winnebago Industries / WGO

Price ($) 16.37 27.12 5.37

Move to 52-Wk MV EV Low High ($mn) ($mn) -10% 154% 908 718 -6% 53% 176 101 -21% 350% 156 135 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .3x .8x .2x .4x .3x .3x

EV/ LTM EBIT 5x 23x nm 14x 7x 14x

Last FY Act. 10x 29x 54x 31x 18x 29x

P/E This FY Est. 19x 68x nm 44x 24x 44x

Next FY Est. 17x 42x 12x 24x 20x 17x

P/ Tang. Book 1.7x 2.2x .9x 1.6x 1.7x 1.7x

Capital Goods: Mobile Homes and RVs – Operating Performance

LTM Ticker ($mn) THO 2,641 CVCO 132 WGO 604 Median

Revenue LTM Growth -8% -11% -31% -11%

3-Year Growth 1% -3% -15% -3%

Rev./ Empl. ($'000) 374 131 269 269

LTM Profit Margins Gross 12% 13% 6% 12%

EBIT 5% 3% -2% 3%

Net 4% 3% 0% 3%

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Est. 5-Year EPS Growth 14% 20% 14% 14%

EBIT/ Capital Empl. 42% 8% nm 25%

LTM ROE 14% 3% 2% 3%

LTM ROA 9% 2% 1% 2%

LTM Asset Turnover 2.6x .7x 1.8x 1.8x

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Capital Goods: Construction Services – Valuation (Sorted by market value)

Company / Ticker CRH PLC (ADR) / CRH Fluor Corporation (N / FLR Vulcan Materials Com / VMC Jacobs Engineering G / JEC Quanta Services, Inc / PWR Toll Brothers, Inc. / TOL Foster Wheeler Ltd. / FWLT Pulte Homes, Inc. / PHM URS Corporation / URS NVR, Inc. / NVR KBR, Inc. / KBR D.R. Horton, Inc. / DHI Ormat Technologies, / ORA M.D.C. Holdings, Inc / MDC Granite Construction / GVA Shaw Group Inc., The / SGR Centex Corporation / CTX Trinity Industries, / TRN KB Home / KBH Lennar Corporation / LEN EMCOR Group, Inc. / EME Chicago Bridge & Iro / CBI Perini Corporation / PCR Empresas ICA SA (ADR / ICA Ryland Group, Inc., / RYL MasTec, Inc. / MTZ Gafisa SA (ADR) / GFA Insituform Technolog / INSU Pike Electric Corpor / PEC Layne Christensen Co / LAYN Meritage Homes Corpo / MTH NCI Building Systems / NCS Comfort Systems USA, / FIX Great Lakes Dredge & / GLDD Dycom Industries, In / DY Hovnanian Enterprise / HOV Matrix Service Compa / MTRX Xinyuan Real Estate / XIN Palm Harbor Homes, I / PHHM Standard Pacific Cor / SPF M/I Homes, Inc. / MHO Sterling Constructio / STRL

Price ($) 22.42 35.73 53.25 31.01 14.12 17.42 19.94 9.08 27.45 395.00 13.11 5.79 28.57 27.27 31.65 13.71 8.98 13.93 12.01 6.30 13.80 7.93 14.42 5.29 14.43 8.08 8.05 13.79 10.23 17.07 10.30 14.74 7.10 4.22 6.23 2.98 8.75 2.38 7.32 1.66 10.50 10.72

Move to 52-Wk MV EV Low High ($mn) ($mn) -23% 87% 11,919 20,164 -19% 184% 6,485 4,418 -22% 88% 5,865 9,414 -9% 233% 3,796 3,299 -13% 151% 2,786 2,932 -11% 61% 2,768 3,529 -11% 330% 2,667 1,581 -24% 156% 2,338 4,522 -27% 134% 2,292 3,234 -14% 72% 2,154 1,483 -10% 239% 2,118 1,008 -25% 210% 1,833 4,650 -24% 103% 1,295 1,604 -8% 78% 1,269 1,137 -33% 33% 1,211 1,065 -9% 405% 1,145 1,389 -15% 237% 1,116 3,221 -5% 195% 1,108 2,685 -10% 141% 1,076 2,011 -16% 261% 1,012 2,493 -7% 161% 904 763 -7% 701% 756 714 -19% 305% 726 387 -30% 423% 659 1,261 -11% 162% 617 1,056 -17% 95% 549 722 -11% 522% 523 na -33% 39% 385 362 -34% 88% 342 498 -10% 243% 329 361 -32% 186% 316 827 -3% 178% 291 724 0% 123% 280 193 -6% 132% 247 462 -10% 375% 246 377 -17% 353% 229 2,294 -10% 225% 228 211 -35% 656% 180 363 -45% 80% 167 414 -12% 313% 167 1,097 -31% 148% 147 480 -28% 134% 141 122 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. .8x .2x 2.5x .3x .8x 1.0x .2x .6x .4x .4x .1x .6x 5.0x .6x .4x .2x .5x .7x .5x .5x .1x .1x .1x .7x .5x .6x nm .7x .8x .4x .5x .4x .1x .8x .3x .6x .3x .9x .8x .5x .6x .3x .6x .8x .5x

EV/ LTM EBIT 8x 4x 16x 5x 11x nm 3x nm 9x 4x 2x nm 30x nm 5x 4x nm 5x nm nm 3x nm 2x 10x nm 10x nm 12x 8x 5x nm 5x 3x 16x 9x nm 6x 5x nm nm nm 4x 8x 6x 5x

Last FY Act. 7x 12x 11x 9x 16x 79x 7x nm 12x 7x 12x nm 41x nm 12x 8x nm 4x nm nm 7x 5x 4x nm nm 90x 18x 29x 17x 8x nm 5x 9x 30x 10x nm 11x nm nm nm nm 9x 17x 12x 11x

P/E This FY Est. 7x 10x 27x 8x 16x nm 5x nm 10x 14x 8x nm 26x nm 12x 5x nm 4x nm nm 5x nm 4x 17x nm 9x 5x 20x 11x 7x nm 4x 6x 38x 7x nm 6x 4x nm nm nm 8x 11x 9x 8x

Next FY Est. 8x 9x 27x 8x 11x nm 5x nm 9x 19x 7x nm 19x nm 13x 5x nm 5x nm nm 5x 3x 5x 11x nm 7x 4x 16x 13x 6x nm 5x 7x 16x 6x nm 5x 3x nm nm nm 7x 9x 9x 7x

P/ Tang. Book 2.6x 2.4x nm 2.8x 3.3x .8x 3.2x .7x nm 1.6x 1.4x .5x 1.6x 1.1x 1.8x 1.2x .6x .8x 1.0x .3x 5.4x nm 2.1x .7x .8x 4.4x nm 1.7x 3.5x 1.0x .5x nm 1.6x 1.9x 1.7x .4x 1.8x .4x 1.4x .2x .5x 1.5x 1.6x 1.7x 1.4x

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Thanksgiving 2008

Capital Goods: Construction Services – Operating Performance

LTM Ticker ($mn) CRH 26,622 FLR 20,967 VMC 3,709 JEC 11,252 PWR 3,738 TOL 3,629 FWLT 6,681 PHM 7,538 URS 9,117 NVR 4,234 KBR 10,584 DHI 8,036 ORA 320 MDC 1,964 GVA 2,680 SGR 6,998 CTX 6,319 TRN 4,102 KBH 4,186 LEN 5,474 EME 6,872 CBI 5,755 PCR 5,304 ICA 1,799 RYL 2,302 MTZ 1,238 GFA na INSU 529 PEC 598 LAYN 963 MTH 1,742 NCS 1,719 FIX 1,293 GLDD 581 DY 1,230 HOV 3,979 MTRX 757 XIN 425 PHHM 508 SPF 2,108 MHO 798 STRL 394 Median

Revenue LTM Growth -29% 34% 13% 33% 58% -31% 38% -30% 93% -21% 22% -38% 10% -44% -5% 22% -39% 15% -43% -55% 25% 47% 23% -40% -35% 23% na 6% 2% 21% -32% 4% 19% 21% 8% -23% 12% >99% -12% -33% -29% 40% 7%

3-Year Growth 18% 21% 11% 26% 18% 6% 24% -7% >99% 6% -10% 1% 11% -10% 9% 29% -6% 25% -3% -1% 8% 32% 36% 20% -8% 9% 38% -3% -7% 36% 5% 14% 13% 14% 9% 5% 19% >99% -3% -5% -5% 32% 9%

Rev./ Empl. ($'000) 289 811 353 205 1,913 838 482 887 173 1,028 204 1,290 356 905 1,276 583 968 285 1,350 789 237 339 1,278 94 1,136 159 na 331 111 224 1,310 300 200 1,868 114 921 236 671 175 1,121 1,156 328 482

LTM Profit Margins Gross 30% 5% 22% 15% 17% 6% 13% -20% 5% 17% 7% -6% 30% 15% 17% 8% -29% na -7% -31% 13% 3% 5% 16% -5% 15% na 22% 19% 26% 9% 25% 19% 13% 18% 6% 11% 28% 24% -26% -8% 11% 13%

EBIT 10% 5% 16% 6% 7% -10% 9% -21% 4% 8% 4% -19% 17% -25% 7% 4% -33% 14% -23% -40% 4% -1% 3% 7% -21% 6% na 5% 11% 8% -17% 9% 6% 5% 3% -27% 5% 18% -3% -46% -24% 8% 5%

Net 13% 4% 8% 4% 4% -8% 8% -27% 2% 5% 3% -23% 15% -29% 4% 2% -35% 8% -34% -28% 3% -1% 2% -3% -23% 4% na 4% 6% 5% -20% 5% 4% 1% 2% -29% 3% -27% -5% -62% -31% 5% 2%

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Est. 5-Year EPS Growth -2% 18% 23% 16% 14% 10% 20% 10% 13% 10% 15% 9% 21% 11% 11% 22% 9% 9% 11% 9% 15% 14% 11% 8% 11% 14% 38% na 13% 11% na 13% 10% na 13% 6% 10% 25% 15% 9% na 16% 12%

EBIT/ Capital Empl. 19% >99% 17% 89% 24% 34% nm >99% 37% nm >99% >99% 5% 54% 30% >99% >99% 24% >99% >99% >99% 16% >99% 14% >99% 41% na 15% 20% 21% >99% 37% 83% 8% 13% >99% 35% 23% nm >99% nm 28% 24%

LTM ROE 36% 32% 8% 21% 7% -9% 64% -55% 6% 16% 13% -40% 6% -43% 15% 11% -92% 18% -99% -43% 18% -7% 18% -4% -56% 16% na 6% 15% 11% -49% 14% 17% 3% 5% <-99% 18% -33% -21% <-99% -60% 13% 7%

LTM ROA 14% 13% 3% 11% 4% -4% 14% -22% 3% 9% 6% -19% 3% -21% 6% 4% -27% 7% -29% -18% 6% -1% 5% -2% -23% 7% na 4% 6% 7% -21% 6% 8% 1% 3% -27% 9% -15% -5% -43% -26% 7% 3%

LTM Asset Turnover 1.1x 3.3x .4x 3.0x 1.1x .5x 1.9x .8x 1.3x 1.9x 2.0x .8x .2x .7x 1.5x 1.6x .8x .9x .8x .6x 2.3x 1.8x 2.5x .6x 1.0x 1.6x na 1.0x 1.1x 1.4x 1.1x 1.3x 2.2x .9x 1.5x .9x 2.8x .5x 1.0x .7x .9x 1.4x 1.1x

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Capital Goods: Miscellaneous Capital Goods – Valuation (Sorted by market value)

Company / Ticker Illinois Tool Works / ITW Mitsui & Co., Ltd. ( / MITSY ITT Corporation / ITT W.W. Grainger, Inc. / GWW Ingersoll-Rand Compa / IR Cummins Inc. / CMI Flowserve Corporatio / FLS Mettler-Toledo Inter / MTD Donaldson Company, I / DCI MSC Industrial Direc / MSM Harsco Corporation / HSC SPX Corporation / SPW IDEX Corporation / IEX Lincoln Electric Hol / LECO Dresser-Rand Group I / DRC Lennox International / LII Graco Inc. / GGG Zebra Technologies C / ZBRA Gardner Denver, Inc. / GDI Terex Corporation / TEX Nordson Corporation / NDSN Toro Company, The / TTC Watsco, Incorporated / WSO REGAL-BELOIT CORPORA / RBC Intermec Inc. / IN Briggs & Stratton Co / BGG Robbins & Myers, Inc / RBN Middleby Corporation / MIDD Astec Industries, In / ASTE Blount International / BLT Gorman-Rupp Company, / GRC Tennant Company / TNC Sauer-Danfoss Inc. / SHS Colfax Corporation / CFX AAON, Inc. / AAON Cascade Corporation / CAE Interline Brands, In / IBI John Bean Technologi / JBT Fuel Tech Inc. / FTEK Kadant Inc. / KAI Capstone Turbine Cor / CPST LSB Industries, Inc. / LXU Met-Pro Corporation / MPR DXP Enterprises, Inc / DXPE Harbin Electric, Inc / HRBN Flanders Corporation / FLDR PMFG Inc / PMFG

Price ($) 31.84 177.00 40.99 65.06 15.11 21.59 48.39 75.58 28.73 32.98 22.31 33.18 21.17 38.61 18.24 22.95 21.28 19.13 22.46 12.12 30.20 29.00 34.96 29.40 11.45 13.71 19.39 32.17 22.79 8.75 24.77 21.27 7.35 6.84 16.60 25.51 8.52 7.71 8.46 14.70 1.00 8.15 10.05 11.25 6.64 5.36 7.85

Move to 52-Wk MV EV Low High ($mn) ($mn) -10% 85% 16,275 19,003 -10% 201% 16,115 47,048 -13% 70% 7,443 8,628 -6% 44% 4,949 5,111 -6% 245% 4,817 9,591 -9% 252% 4,348 4,360 -15% 201% 2,736 3,152 -10% 59% 2,534 2,942 -2% 82% 2,230 2,468 -10% 65% 2,053 2,243 -21% 198% 1,863 2,885 -8% 324% 1,806 2,870 -12% 92% 1,750 1,988 -10% 125% 1,653 1,481 -7% 133% 1,495 1,762 -6% 84% 1,271 1,531 -2% 98% 1,266 1,470 -13% 104% 1,213 1,084 -15% 158% 1,162 1,258 -9% 529% 1,150 2,231 -1% 162% 1,030 1,297 -6% 104% 1,030 1,205 -14% 75% 990 1,030 -10% 70% 949 1,407 -8% 118% 707 505 -18% 82% 683 1,058 -19% 184% 673 583 -7% 145% 547 797 -25% 86% 511 482 -25% 64% 417 695 -10% 88% 414 374 -5% 125% 388 467 -6% 416% 355 788 -18% 314% 301 353 -23% 39% 286 288 -1% 154% 277 368 -6% 186% 276 655 -6% 97% 212 321 -5% 221% 203 172 -15% 117% 190 191 -9% 342% 174 128 -14% 253% 174 253 -14% 66% 152 134 -14% 203% 145 314 -4% 322% 140 137 -21% 44% 138 171 -4% 292% 103 155 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. 1.2x .7x .8x .7x .8x .3x .7x 1.5x 1.1x 1.3x .7x .5x 1.3x .6x .9x .4x 1.7x 1.1x .6x .2x 1.2x .6x .6x .6x .5x .5x .7x 1.2x .5x 1.2x 1.1x .6x .4x .6x 1.0x .6x .5x .3x 1.8x .5x 3.3x .4x 1.2x .4x 1.3x .8x 1.0x .9x .9x .7x

EV/ LTM EBIT 7x 11x 7x 7x 8x 4x 6x 10x 10x 7x 6x 5x 9x 5x 6x 6x 6x 7x 4x 2x 7x 6x 10x 6x 8x 23x 4x 7x 5x 8x 9x 8x 5x 8x 7x 5x 6x 4x 11x 5x nm 4x 8x 7x 4x nm 19x 7x 8x 7x

Last FY Act. 10x 5x 12x 13x 6x 6x 11x 16x 14x 11x 7x 6x 11x 8x 15x 9x 9x 12x 6x 2x 11x 9x 14x 8x 29x 30x 8x 10x 9x 13x 18x 10x 8x 4x 14x 5x 5x 5x 29x 8x nm 4x 13x 8x 7x nm 12x 11x 9x 9x

P/E This FY Est. 10x 3x 10x 11x 4x 5x 6x 13x 13x 12x 7x 5x 10x 7x 8x 9x 9x 12x 6x 2x 9x 9x 16x 8x 18x 15x 8x 9x 8x 12x 14x 11x 6x 6x 11x 7x 6x 6x 45x 9x nm 6x 14x 6x 5x 14x 14x 10x 8x 9x

Next FY Est. 10x 3x 10x 11x 5x 5x 6x 12x 11x 11x 7x 5x 10x 8x 7x 9x 10x 11x 7x 3x 9x 10x 16x 8x 15x 11x 8x 9x 8x 9x 14x 10x 14x 7x 11x 6x 7x 7x 28x 12x nm 7x 12x 5x 3x 14x 7x 9x 8x 9x

P/ Tang. Book 6.2x .7x nm 2.6x nm 1.3x 6.2x nm 4.0x 5.5x 2.2x nm nm 1.5x nm 3.6x 13.5x 2.4x 3.7x .9x nm 3.4x 2.7x 6.2x 1.4x 1.5x 3.1x nm 1.2x nm 2.5x 2.5x .8x 5.4x 3.1x 1.8x nm nm 2.9x 1.6x 2.5x 1.4x 2.3x nm 1.0x 1.5x nm 3.0x 2.6x 2.5x

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Capital Goods: Miscellaneous Capital Goods – Operating Performance

LTM Ticker ($mn) ITW 16,435 MITSY 65,414 ITT 11,279 GWW 6,869 IR 11,881 CMI 14,570 FLS 4,414 MTD 1,997 DCI 2,233 MSM 1,780 HSC 4,107 SPW 5,780 IEX 1,480 LECO 2,533 DRC 1,969 LII 3,631 GGG 856 ZBRA 978 GDI 2,004 TEX 10,400 NDSN 1,118 TTC 1,869 WSO 1,763 RBC 2,238 IN 923 BGG 2,243 RBN 787 MIDD 646 ASTE 999 BLT 595 GRC 327 TNC 731 SHS 2,213 CFX 589 AAON 282 CAE 579 IBI 1,218 JBT 1,084 FTEK 96 KAI 359 CPST 39 LXU 704 MPR 110 DXPE 712 HRBN 105 FLDR 225 PMFG 154 Median

Revenue LTM Growth 13% -4% 32% 10% 38% 16% 25% 16% 16% 5% 17% 26% 13% 15% 22% -3% 2% 16% 12% 21% 18% 0% 1% 32% 13% 3% 13% 43% 23% 18% 11% 13% 18% 24% 11% 11% -1% 23% 45% 1% 61% 22% 13% >99% 81% -9% 70% 16%

3-Year Growth 12% 18% 15% 8% -2% 16% 14% 9% 12% 17% 14% 10% 15% 20% >99% 8% 12% 9% 36% 24% 9% 4% 10% 34% 2% -7% 9% 23% 20% -7% 15% 9% 12% 18% 15% 13% 19% na 38% 23% 23% 17% 14% 40% >99% 7% 40% 14%

Rev./ Empl. ($'000) 274 1,481 284 437 334 385 276 210 176 434 191 325 296 282 328 227 389 306 323 495 270 355 490 125 401 314 234 385 257 186 307 263 224 286 215 241 321 na 537 179 181 394 295 444 215 81 383 295

LTM Profit Margins Gross 35% 18% 28% 41% 28% 21% 35% 50% 33% 46% 27% 30% 41% 29% 28% 29% 54% 49% 32% 20% 56% 36% 26% 22% 40% 15% 37% 38% 24% 32% 24% 42% 22% 35% 23% 29% 38% 20% 48% 40% -5% 20% 34% 28% 43% 15% 27% 30%

EBIT 16% 7% 11% 11% 11% 8% 13% 15% 11% 18% 12% 10% 16% 13% 14% 7% 26% 16% 15% 10% 17% 11% 6% 11% 7% 2% 17% 18% 10% 15% 12% 8% 7% 8% 15% 12% 8% 7% 16% 10% -98% 10% 15% 6% 32% -4% 5% 11%

Net 13% 6% 7% 7% 27% 6% 10% 10% 8% 11% 8% 8% 10% 10% 8% 4% 17% 11% 10% 6% 10% 7% 4% 6% 5% 2% 11% 10% 7% 8% 9% 5% 3% 0% 10% 7% 4% 5% 10% 7% -95% 5% 10% 3% 22% 3% 3% 7%

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Est. 5-Year EPS Growth 10% na 12% 11% 13% 14% 12% 13% 12% 13% 10% 14% 13% 11% 29% 15% 11% 15% 6% 13% 6% 12% 13% 14% 16% 10% 17% 22% 14% na 5% 15% 15% 7% 15% 7% 13% na 18% 8% 40% 16% na 21% na 25% 18% 13%

EBIT/ Capital Empl. 50% 16% 81% 40% 35% 35% 55% 71% 33% 55% 23% 54% 61% 37% >99% 36% 76% 39% 52% 47% 56% 42% 25% 33% 28% 5% 58% >99% 31% 42% 30% 26% 16% 27% 40% 30% 29% >99% 60% 35% nm 37% 33% 37% 44% nm 26% 37%

LTM ROE 22% 17% 18% 23% 34% 25% 30% 37% 24% 27% 19% 20% 12% 21% 20% 24% 62% 12% 16% 27% 20% 33% 11% 15% 9% 5% 19% 31% 16% <-99% 18% 16% 12% 2% 29% 15% 12% 50% 14% 10% -64% 34% 13% 22% 19% 6% 10% 19%

LTM ROA 13% 4% 7% 14% 16% 11% 12% 12% 12% 18% 8% 7% 7% 13% 8% 8% 25% 10% 10% 10% 10% 12% 8% 7% 5% 2% 10% 11% 11% 11% 13% 9% 4% 0% 19% 9% 5% 13% 11% 6% -47% 11% 10% 8% 13% 3% 3% 10%

LTM Asset Turnover 1.0x .6x 1.0x 2.1x .6x 1.7x 1.2x 1.2x 1.5x 1.6x 1.0x .9x .7x 1.4x 1.0x 1.9x 1.5x .9x 1.0x 1.6x .9x 1.8x 2.2x 1.1x 1.1x 1.2x .9x 1.1x 1.7x 1.3x 1.5x 1.6x 1.4x .6x 2.0x 1.2x 1.3x 2.5x 1.1x .8x .5x 2.1x 1.0x 2.2x .6x 1.3x 1.2x 1.2x

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Conglomerates – Valuation (Sorted by market value)

Company / Ticker General Electric Com / GE United Technologies / UTX Siemens AG (ADR) / SI 3M Company / MMM Emerson Electric Co. / EMR Raytheon Company / RTN Koninklijke Philips / PHG Tyco International L / TYC Dover Corporation / DOV Fortune Brands, Inc. / FO Textron Inc. / TXT Alleghany Corporatio / Y Tomkins plc (ADR) / TKS Temple-Inland, Inc. / TIN Federal Signal Corpo / FSS

Price ($) 16.02 50.23 53.60 63.06 33.40 47.91 17.12 20.50 29.21 36.07 14.73 231.00 5.99 4.41 6.84

Move to 52-Wk MV EV Low High ($mn) ($mn) -9% 141% 168,144 700,506 -14% 58% 47,750 54,507 -18% 199% 47,003 52,151 -21% 41% 43,698 47,767 -12% 77% 25,917 28,658 -13% 41% 19,838 19,350 -9% 159% 16,202 18,117 -8% 134% 9,734 12,479 -14% 87% 5,432 6,906 -11% 124% 5,407 10,037 -32% 405% 3,551 13,130 -9% 82% 1,911 2,180 -2% 177% 1,319 2,027 -11% 537% 470 3,753 -7% 156% 324 542 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 3.8x .9x .6x 1.8x 1.2x .8x .5x .6x .9x 1.2x .9x 1.8x .3x 1.0x .5x 1.1x 2.2x .9x

EV/ LTM EBIT 28x 7x 8x 8x 8x 7x 11x 6x 7x 13x 7x 9x 6x 2x 9x 9x 16x 8x

Last FY Act. 7x 12x 17x 11x 11x 13x 3x 9x 9x 8x 4x 7x 7x x 11x 9x 10x 9x

P/E This FY Est. 8x 10x 9x 12x 11x 12x 8x 7x 8x 9x 4x 19x 6x 88x 9x 15x 9x 9x

Next FY Est. 9x 10x 7x 12x 11x 10x 9x 6x 9x 10x 4x 13x 9x 28x 10x 10x 9x 10x

P/ Tang. Book 12.3x 31.3x 3.1x 8.1x 10.2x 19.1x 2.0x 7.3x nm nm 2.4x .9x 1.0x 1.3x nm 8.2x 12.2x 5.2x

Conglomerates – Operating Performance

LTM Ticker ($mn) GE 184,890 UTX 58,896 SI 86,536 MMM 25,966 EMR 24,807 RTN 23,088 PHG 34,393 TYC 20,199 DOV 7,702 FO 8,039 TXT 14,403 Y 1,235 TKS 5,791 TIN 3,848 FSS 1,060 Median

Revenue LTM Growth 12% 12% 7% 8% 12% 11% 2% 9% 8% -6% 18% -1% -24% -11% 4% 8%

3-Year Growth 9% 14% 1% 7% 13% 6% 3% 7% 17% 12% 17% 15% -14% -7% 7% 7%

Rev./ Empl. ($'000) 565 261 204 346 180 320 269 184 231 259 360 1,321 171 321 193 261

LTM Profit Margins Gross 35% 28% 31% 48% 10% 20% 33% 35% 36% 41% 25% na 27% 11% 25% 29%

EBIT 14% 13% 8% 22% 15% 11% 5% 10% 14% 10% 13% 19% 6% 51% 6% 13%

Net 13% 8% 12% 15% 10% 8% 10% 9% 9% 10% 8% 20% 2% 30% -7% 10%

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Est. 5-Year EPS Growth 11% 11% 16% 11% 13% 13% 13% 21% 16% 10% 13% na 31% na 8% 13%

EBIT/ Capital Empl. 10% 81% 38% 55% 68% >99% 23% 36% 55% 21% 17% nm 18% nm 22% 30%

LTM ROE 21% 21% 25% 31% 26% 15% 14% 12% 17% 14% 33% 10% 9% >99% -20% 16%

LTM ROA 3% 8% 9% 14% 11% 8% 8% 6% 8% 6% 6% 4% 4% 20% -7% 8%

LTM Asset Turnover .2x 1.0x .7x 1.0x 1.2x 1.0x .8x .7x .9x .6x .7x .2x 2.1x .7x 1.0x .8x

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Consumer Cyclical: Apparel and Accessories – Valuation (Sorted by market value)

Company / Ticker Coach, Inc. / COH V.F. Corporation / VFC Polo Ralph Lauren Co / RL Hanesbrands Inc. / HBI Columbia Sportswear / COLM Under Armour, Inc. / UA Phillips-Van Heusen / PVH Warnaco Group, Inc., / WRC Lululemon Athletica / LULU Jones Apparel Group, / JNY Iconix Brand Group, / ICON Liz Claiborne, Inc. / LIZ True Religion Appare / TRLG American Apparel Inc / APP Volcom, Inc. / VLCM Quiksilver, Inc. / ZQK Maidenform Brands, I / MFB G-III Apparel Group, / GIII Oxford Industries, I / OXM

Price ($) 16.20 47.20 42.15 14.16 36.00 22.94 17.14 16.16 8.24 6.32 8.72 3.69 12.77 3.94 9.21 1.62 7.86 9.12 8.96

Move to 52-Wk MV EV Low High ($mn) ($mn) -10% 136% 5,296 4,889 -6% 79% 5,196 6,529 -10% 95% 4,160 4,090 -29% 166% 1,324 3,624 -22% 40% 1,219 1,074 -30% 127% 1,131 1,128 -5% 180% 882 1,021 -5% 233% 754 878 -11% 514% 562 518 -1% 250% 527 1,110 -25% 170% 508 1,098 -4% 618% 350 1,273 -9% 149% 312 257 -11% 326% 279 382 -1% 214% 225 151 -26% 637% 207 1,162 -3% 124% 178 229 0% 126% 151 266 -2% 233% 142 359 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.5x .8x .8x .8x .8x 1.6x .4x .4x 1.6x .3x 5.2x .3x 1.0x .7x .5x .5x .6x .5x .4x 1.0x 1.1x .7x

EV/ LTM EBIT 4x 6x 6x 9x 7x 14x 4x 5x 8x 55x 7x nm 4x 14x 3x 15x 4x 10x 6x 10x 7x 7x

Last FY Act. 7x 9x 11x 11x 9x 22x 5x 9x 18x 14x 8x nm 11x 13x 7x nm 5x 9x 8x 10x 10x 9x

P/E This FY Est. 7x 8x 10x 7x 13x 21x 5x 6x 12x 7x 8x 4x 7x 10x 6x 2x 7x 7x 5x 8x 9x 7x

Next FY Est. 7x 8x 10x 6x 13x 17x 5x 6x 9x 7x 7x 5x 7x 7x 6x 2x 6x 5x 4x 7x 8x 7x

P/ Tang. Book 4.9x 4.5x 3.4x nm 1.4x 3.6x nm 1.7x 4.4x 1.2x nm .8x 2.4x 2.2x 1.3x 1.5x 10.0x 1.7x nm 3.0x 3.3x 2.2x

Consumer Cyclical: Apparel and Accessories – Operating Performance

LTM Ticker ($mn) COH 3,257 VFC 7,686 RL 5,053 HBI 4,373 COLM 1,340 UA 721 PVH 2,468 WRC 2,094 LULU 334 JNY 3,608 ICON 210 LIZ 4,196 TRLG 250 APP 511 VLCM 334 ZQK 2,437 MFB 415 GIII 589 OXM 961 Median

Revenue LTM Growth 18% 12% 11% -2% 0% 27% 9% 16% 75% -10% 51% -5% 66% 85% 30% 11% 1% 27% -11% 12%

3-Year Growth 24% 11% 14% -2% 7% 44% 14% 10% 89% -6% 32% 0% 84% na 33% 24% 8% 34% -13% 14%

Rev./ Empl. ($'000) 880 142 337 87 438 515 392 450 124 427 2,233 254 739 75 990 254 377 1,027 209 392

LTM Profit Margins Gross 75% 44% 55% 33% 43% 49% 49% 44% 53% 33% na 47% 58% 55% 49% 49% 39% 27% 41% 48%

EBIT 35% 13% 14% 9% 12% 11% 12% 9% 18% 1% 70% -14% 26% 5% 17% 3% 13% 5% 6% 12%

Net 24% 8% 9% 4% 9% 7% 7% 4% 13% 0% 34% -14% 19% 3% 11% -14% 7% 2% 3% 7%

www.manualofideas.com

Est. 5-Year EPS Growth 14% 10% 14% 20% 10% 21% 14% 20% 36% 11% 17% 18% na 30% 22% 14% na 18% 13% 17%

EBIT/ Capital Empl. >99% 41% 53% 20% 20% 29% 62% 32% >99% 2% >99% nm >99% 25% 61% 8% 55% 17% 23% 27%

LTM ROE 53% 18% 19% 57% 13% 16% 16% 11% 36% -1% 13% -41% 43% 12% 20% -43% 26% 8% 6% 16%

LTM ROA 35% 10% 11% 6% 11% 11% 8% 5% 27% 0% 5% -19% 35% 5% 17% -14% 10% 5% 3% 8%

LTM Asset Turnover 1.5x 1.1x 1.2x 1.2x 1.2x 1.7x 1.1x 1.3x 2.1x 1.1x .2x 1.3x 1.8x 1.7x 1.5x 1.0x 1.4x 2.0x 1.1x 1.3x

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Consumer Cyclical: Appliances and Tools – Valuation (Sorted by market value)

Company / Ticker Whirlpool Corporatio / WHR Stanley Works, The / SWK Black & Decker Corpo / BDK Pentair, Inc. / PNR Snap-on Incorporated / SNA Jarden Corporation / JAH Helen of Troy Limite / HELE iRobot Corporation / IRBT Advanced Battery Tec / ABAT

Price ($) 39.09 31.12 39.48 23.28 32.33 13.35 15.45 9.92 2.13

Move to 52-Wk MV EV Low High ($mn) ($mn) -5% 151% 2,873 5,468 -9% 70% 2,452 3,803 -5% 118% 2,373 3,658 -5% 76% 2,296 3,242 -8% 92% 1,857 2,255 -20% 120% 1,022 3,622 -13% 60% 467 621 -8% 126% 246 219 -1% 200% 117 77 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .3x .8x .6x .9x .8x .7x 1.0x .7x 1.7x .8x .7x .8x

EV/ LTM EBIT 6x 8x 9x 9x 6x 10x 9x 137x 5x 22x 10x 9x

Last FY Act. 5x 8x 5x 11x 10x 35x 8x 28x 10x 13x 10x 10x

P/E This FY Est. 7x 8x 8x 10x 8x 5x 8x 124x 6x 20x 10x 8x

Next FY Est. 9x 9x 9x 10x 8x 5x 8x 34x 4x 11x 9x 9x

P/ Tang. Book 7.3x nm 9.3x nm 5.8x nm 2.6x 2.2x 1.7x 4.8x 4.1x 4.2x

Consumer Cyclical: Appliances and Tools – Operating Performance

LTM Ticker ($mn) WHR 19,917 SWK 4,515 BDK 6,361 PNR 3,445 SNA 2,928 JAH 5,500 HELE 653 IRBT 316 ABAT 45 Median

Revenue LTM Growth 5% 6% -3% 6% 7% 29% 0% 49% 55% 6%

3-Year Growth 14% 14% 7% 14% 7% 77% 4% 38% >99% 14%

Rev./ Empl. ($'000) 273 245 251 215 252 220 701 625 35 251

LTM Profit Margins Gross 15% 38% 33% 30% 45% 27% 43% 31% 46% 33%

EBIT 4% 11% 7% 10% 13% 7% 10% 1% 38% 10%

Net 3% 9% 7% 8% 8% 2% 8% 5% 33% 8%

Est. 5-Year EPS Growth 11% 10% 7% 12% 11% 8% 13% 20% 25% 11%

EBIT/ Capital Empl. 20% 42% 25% 42% 48% 18% 23% 2% 60% 25%

LTM ROE 14% 23% 30% 14% 17% 6% 9% 15% 30% 15%

LTM ROA 4% 8% 8% 7% 8% 2% 5% 10% 28% 8%

LTM Asset Turnover 1.4x .9x 1.2x .8x 1.0x .9x .7x 2.0x .8x .9x

Consumer Cyclical: Audio and Video Equipment – Valuation (Sorted by market value)

Company / Ticker Panasonic Corporatio / PC Sony Corporation (AD / SNE Harman International / HAR Thomson SA (ADR) / TMS DTS Inc. / DTSI Universal Electronic / UEIC

Price ($) 14.66 21.12 14.88 1.27 15.00 15.33

Move to 52-Wk MV EV Low High ($mn) ($mn) -18% 66% 30,357 23,865 -9% 171% 21,193 20,396 -9% 407% 871 1,104 -17% 1139% 343 2,035 -4% 140% 264 173 -6% 151% 214 139 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. .3x .2x .3x .3x 2.9x .5x .8x .3x .3x

EV/ LTM EBIT 4x 8x 9x 7x 12x 7x 8x 6x 7x

Last FY Act. 11x 6x 9x 1x 29x 12x 11x 9x 10x

P/E This FY Est. 11x 12x 8x nm 28x 13x 14x 12x 12x

Next FY Est. 11x 9x 6x nm 22x 12x 12x 10x 11x

P/ Tang. Book .9x .7x 1.0x nm 2.0x 1.5x 1.2x .9x 1.0x

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Consumer Cyclical: Audio and Video Equipment – Operating Performance

LTM Ticker ($mn) PC 91,802 SNE 91,553 HAR 4,035 TMS 6,569 DTSI 59 UEIC 275 Median

Revenue LTM Growth -4% 1% 10% -54% 27% -1% 0%

3-Year Growth 1% 7% 11% -2% -5% 20% 4%

Rev./ Empl. ($'000) 293 493 345 266 370 692 357

LTM Profit Margins Gross 30% 23% 27% 23% 98% 35% 28%

EBIT 6% 3% 3% 5% 24% 8% 5%

Net 3% 3% 2% -2% -16% 6% 3%

Est. 5-Year EPS Growth 7% 5% 23% na 33% 12% 12%

EBIT/ Capital Empl. 27% 14% 13% 45% 21% 34% 24%

LTM ROE 8% 8% 7% -4% -7% 10% 8%

LTM ROA 4% 2% 4% -1% -7% 7% 3%

LTM Asset Turnover 1.2x .7x 1.5x .7x .4x 1.3x 1.0x

Consumer Cyclical: Auto and Truck Manufacturers – Valuation (Sorted by market value)

Company / Ticker Toyota Motor Corpora / TM HONDA MOTOR CO., LTD / HMC Daimler AG (USA) / DAI Nissan Motor Co., Lt / NSANY PACCAR Inc / PCAR Ford Motor Company / F General Motors Corpo / GM Tata Motors Limited / TTM Navistar Internation / NAV WABCO Holdings Inc. / WBC Oshkosh Corporation / OSK Rush Enterprises, In / RUSHA Wabash National Corp / WNC Spartan Motors, Inc. / SPAR

Price ($) 63.68 21.65 29.74 7.67 28.11 1.80 3.01 4.02 21.01 16.00 5.77 6.81 4.69 3.24

Move to 52-Wk MV EV Low High ($mn) ($mn) -10% 85% 99,824 206,293 -13% 68% 39,283 81,455 -19% 251% 30,153 60,366 -1% 202% 15,620 61,576 -22% 107% 10,195 15,855 -4% 388% 4,300 140,259 -9% 915% 1,838 30,713 -13% 399% 1,550 na -27% 276% 1,495 7,336 -28% 243% 1,119 1,021 -10% 793% 430 3,115 -1% 177% 252 592 -9% 149% 144 216 -37% 266% 106 174 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .8x .7x .5x .3x 1.0x .9x .2x nm .5x .4x .4x .3x .3x .2x .5x .7x .4x

EV/ LTM EBIT 13x 10x 6x 5x 10x nm nm nm 9x 3x 8x 9x nm 2x 8x 10x 8x

Last FY Act. 6x 6x 5x 3x 9x nm nm 5x nm 9x 5x 5x 9x 4x 6x 5x 5x

P/E This FY Est. 18x 10x 6x 5x 9x nm nm 3x 3x 4x 3x 8x nm 3x 7x 13x 5x

Next FY Est. 17x 16x 8x 4x 10x nm nm 3x 2x 6x 3x 8x nm 7x 8x 13x 7x

P/ Tang. Book .8x .8x .9x .5x 1.9x nm nm nm nm 4.7x nm .9x .9x .6x 1.3x .8x .9x

Consumer Cyclical: Auto and Truck Manufacturers – Operating Performance

LTM Ticker ($mn) TM 263,066 HMC 121,831 DAI 125,690 NSANY 211,870 PCAR 15,815 F 161,201 GM 165,483 TTM na NAV 14,058 WBC 2,813 OSK 7,138 RUSHA 1,731 WNC 863 SPAR 936 Median

Revenue LTM Growth -1% -1% -1% 32% 1% -4% -10% na -40% 25% 13% -22% -28% 65% -1%

3-Year Growth 12% 12% -11% 8% 10% 0% -3% 23% 8% 12% 34% 23% 2% 30% 11%

Rev./ Empl. ($'000) 811 658 456 1,332 725 720 657 na 895 365 503 586 278 712 658

LTM Profit Margins Gross 17% 29% 24% 21% 16% 8% 2% na 19% 27% 17% 18% 5% 16% 17%

EBIT 6% 7% 8% 6% 10% -9% -10% na 6% 11% 6% 4% -1% 8% 6%

Net 5% 5% 5% 4% 7% -7% -15% na 2% 9% 2% 2% -1% 5% 4%

www.manualofideas.com

Est. 5-Year EPS Growth na -8% 5% 4% 12% na na 10% 27% 15% 10% 15% na 46% 11%

EBIT/ Capital Empl. 12% 14% 24% 14% 13% nm nm na 22% 61% 36% 10% nm 37% 18%

LTM ROE 11% 11% 13% 22% 22% <-99% 52% na -57% 37% 8% 9% -3% 32% 12%

LTM ROA 4% 4% 4% 7% 7% -4% -19% na 3% 13% 2% 4% -2% 15% 4%

LTM Asset Turnover .8x .9x .7x 1.7x .9x .6x 1.2x na 1.2x 1.5x 1.1x 1.7x 1.8x 2.9x 1.2x

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Consumer Cyclical: Auto Parts – Valuation Company / Ticker Genuine Parts / GPC BorgWarner Inc. / BWA CLARCOR Inc. / CLC LKQ Corporation / LKQX Autoliv Inc. / ALV Goodyear Tire & Rubb / GT Gentex Corporation / GNTX Applied Industrial T / AIT Federal-Mogul / FDML Fuel Systems Solutio / FSYS Cooper Tire & Rubber / CTB TRW Automotive Holdi / TRW Superior Industries / SUP ArvinMeritor, Inc. / ARM Titan International, / TWI Dorman Products / DORM Modine Manufacturing / MOD Tenneco Inc. / TEN Lear Corporation / LEA Stoneridge, Inc. / SRI Dana Holding Corpora / DAN

Price ($) 35.95 17.42 29.47 9.74 18.69 5.42 7.81 16.41 5.36 33.66 5.16 2.88 10.81 3.80 7.61 11.13 5.50 2.50 1.40 4.29 1.05

52-Wk MV EV Low High ($mn) ($mn) -17% 38% 5,732 6,107 -9% 221% 2,025 2,728 -7% 50% 1,496 1,542 -6% 157% 1,362 1,906 -5% 235% 1,314 2,599 -7% 455% 1,308 5,093 -1% 156% 1,091 753 -2% 96% 695 746 -40% 450% 539 2,665 -71% 82% 530 508 -7% 303% 304 672 -6% 926% 291 3,023 -4% 113% 288 288 -2% 377% 280 1,140 -16% 399% 263 427 -41% 33% 196 210 -3% 307% 180 371 -22% 1139% 117 1,514 -16% 2369% 108 1,925 -22% 351% 106 199 0% 1281% 105 1,256 Average (equal-weighted) Average (market value-weighted) Median

LTM Rev. .5x .5x 1.5x 1.0x .4x .2x 1.1x .4x .4x 1.3x .2x .2x .3x .2x .4x .6x .2x .2x .1x .3x .1x .5x .6x .4x

LTM EBIT 7x 10x 11x 9x 5x 5x 6x 5x 1x 10x nm 5x nm 9x 8x 7x nm 8x 6x 5x 2x 7x 7x 7x

FY Act. 12x 7x 17x 18x 5x 8x 9x 7x x 89x 4x 3x 31x nm nm 11x nm nm x 6x nm 14x 12x 8x

FY Est. 11x 8x 16x 13x 5x 3x 13x 9x 4x 16x nm 3x nm 2x 6x 12x nm 3x 1x 10x nm 8x 9x 8x

FY Est. 11x 9x 14x 11x 6x 4x 16x 8x 5x 16x 18x nm nm 3x 4x 11x 55x 5x nm 6x 2x 11x 10x 9x

Tang. Book 2.3x .9x 4.5x 43.0x 2.6x .6x 1.5x 2.2x 17.8x 5.1x .5x .8x .5x 2.3x .9x 1.2x .5x nm nm .7x .1x 4.6x 5.5x 1.2x

Consumer Cyclical: Auto Parts – Operating Performance

LTM Ticker ($mn) GPC 11,122 BWA 5,705 CLC 1,032 LKQX 1,882 ALV 7,064 GNTX 672 AIT 2,115 FDML 7,295 FSYS 378 TRW 16,068 SUP 832 ARM 7,039 TWI 983 DORM 346 MOD 1,907 TEN 6,273 LEA 14,829 SRI 780 DAN 8,731 Median

Revenue LTM Growth 3% 11% 13% >99% 7% 6% 4% 9% 59% 14% -11% -1% 23% 8% 9% 8% -10% 9% 2% 8%

3-Year Growth 6% 15% 5% 38% 3% 9% 7% 4% 31% 7% 3% -7% 18% 10% 11% 14% -2% 2% 4% 7%

Rev./ Empl. ($'000) 348 322 188 207 197 247 440 146 377 242 157 391 364 349 235 299 163 139 249 247

LTM Profit Margins Gross 28% 18% 32% 45% 19% 34% 27% 17% 28% 8% 3% 9% 13% 33% 14% 15% 6% 24% 5% 18%

EBIT 8% 5% 14% 11% 7% 20% 7% 27% 13% 4% -1% 2% 6% 8% -2% 3% 2% 5% 6% 6%

Net 5% 2% 9% 6% 4% 16% 4% 20% 7% 1% 0% 0% 2% 5% -5% -3% 0% 2% 0% 2%

www.manualofideas.com

Est. 5-Year EPS Growth 9% 17% 12% 24% 5% 17% 9% na 25% na 15% 12% 10% na 12% 12% 9% 12% na 12%

EBIT/ Capital Empl. 29% 13% 35% 46% 27% 38% 40% 61% 65% 18% nm 13% 14% 17% nm 12% 30% 20% 20% 27%

LTM ROE 19% 5% 15% 12% 13% 13% 19% 67% 18% 7% 0% -2% 8% 9% -20% -48% 2% 8% 0% 8%

LTM ROA 11% 2% 10% 6% 5% 12% 12% 18% 10% 2% 0% 0% 4% 7% -8% -5% 0% 3% 0% 4%

LTM Asset Turnover 2.3x 1.1x 1.1x 1.1x 1.3x .8x 2.6x .9x 1.4x 1.3x 1.1x 1.5x 1.6x 1.4x 1.6x 1.7x 1.8x 1.5x 1.2x 1.4x

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Consumer Cyclical: Footwear – Valuation (Sorted by market value)

Company / Ticker NIKE, Inc. / NKE Wolverine World Wide / WWW Deckers Outdoor Corp / DECK Timberland Company, / TBL Skechers USA, Inc. / SKX K-Swiss Inc. / KSWS Brown Shoe Company, / BWS Steven Madden, Ltd. / SHOO Kenneth Cole Product / KCP Heelys, Inc. / HLYS

Price ($) 46.53 18.92 60.70 10.31 11.61 12.44 7.47 17.58 8.52 3.80

Move to 52-Wk MV EV Low High ($mn) ($mn) -7% 52% 22,577 20,730 -4% 65% 926 933 -9% 174% 793 725 -3% 91% 593 528 -12% 117% 535 401 -8% 67% 434 152 -7% 149% 316 402 -17% 65% 314 264 0% 132% 152 79 -21% 93% 105 12 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.1x .8x 1.3x .4x .3x .4x .2x .6x .2x .2x .5x 1.0x .4x

EV/ LTM EBIT 8x 6x 7x 7x 4x 51x 5x 7x nm nm 12x 9x 7x

Last FY Act. 12x 11x 12x 16x 7x 11x 5x 10x 24x 5x 11x 12x 11x

P/E This FY Est. 12x 10x 9x 13x 6x 622x 9x 10x nm 95x 87x 22x 10x

Next FY Est. 10x 9x 7x 14x 7x nm 8x 9x 37x 20x 13x 10x 9x

P/ Tang. Book 3.3x 2.2x 2.7x 1.2x .8x 1.1x .9x 1.8x .8x .9x 1.6x 3.0x 1.2x

Consumer Cyclical: Footwear – Operating Performance

LTM Ticker ($mn) NKE 19,404 WWW 1,232 DECK 580 TBL 1,417 SKX 1,445 KSWS 362 BWS 2,341 SHOO 441 KCP 498 HLYS 65 Median

Revenue LTM Growth 16% 4% 53% -4% 3% -15% -5% 0% -3% -73% -2%

3-Year Growth 11% 7% 28% -1% 15% -5% 7% 8% 0% >99% 7%

Rev./ Empl. ($'000) 597 265 1,568 225 670 633 179 596 553 1,182 596

LTM Profit Margins Gross 46% 40% 45% 46% 43% 44% 39% 40% 42% 20% 43%

EBIT 13% 12% 19% 6% 8% 1% 3% 9% -2% -19% 7%

Net 9% 8% 12% 4% 6% 9% 2% 6% -1% -9% 6%

Est. 5-Year EPS Growth 13% 15% 23% 10% 15% 19% na na na na 15%

EBIT/ Capital Empl. 42% 37% 52% 17% 24% 3% 19% 29% nm nm 27%

LTM ROE 24% 21% 22% 9% 13% 9% 9% 13% -3% -5% 11%

LTM ROA 15% 14% 18% 7% 10% 7% 5% 11% -2% -5% 9%

LTM Asset Turnover 1.6x 1.8x 1.5x 1.7x 1.6x .8x 2.1x 1.8x 1.4x .5x 1.6x

Consumer Cyclical: Furniture and Fixtures – Valuation (Sorted by market value)

Company / Ticker Masco Corporation / MAS Leggett & Platt, Inc / LEG Hillenbrand, Inc. / HI Steelcase Inc. / SCS Herman Miller, Inc. / MLHR HNI Corporation / HNI Tempur-Pedic Interna / TPX Knoll, Inc. / KNL Ethan Allen Interior / ETH La-Z-Boy Incorporate / LZB Sealy Corporation / ZZ Kimball Internationa / KBALB Furniture Brands Int / FBN LSI Industries, Inc. / LYTS

Price ($) 7.69 14.88 18.74 6.16 14.61 12.02 6.72 10.61 15.25 4.83 2.31 5.11 3.63 6.11

Move to 52-Wk MV EV Low High ($mn) ($mn) -7% 225% 2,768 5,814 -7% 65% 2,324 3,128 -12% 32% 1,170 1,247 0% 200% 827 956 -6% 132% 784 1,002 -3% 231% 532 862 -10% 392% 503 934 -14% 76% 500 814 -6% 123% 438 561 -20% 143% 248 337 -18% 504% 212 961 -3% 200% 189 168 -9% 326% 177 268 -18% 250% 132 132 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. .6x .7x 1.8x .3x .5x .3x .9x .7x .6x .2x .6x .1x .1x .5x .6x .7x .5x

EV/ LTM EBIT 12x 22x 9x 5x 4x 7x 5x 6x 7x nm 6x nm nm nm 8x 11x 7x

Last FY Act. 7x 53x 12x 7x 6x 5x 4x 7x 8x nm 3x nm nm nm 11x 17x 7x

P/E This FY Est. 19x 14x 11x 7x 7x 9x 7x 6x 12x 69x 5x 85x nm 18x 21x 15x 11x

Next FY Est. 19x 12x 10x 8x 7x 10x 8x 7x 9x 21x 5x 102x nm 14x 18x 14x 10x

P/ Tang. Book nm 3.1x 4.4x 1.4x nm 5.7x nm nm 1.6x .6x nm .5x .4x 1.1x 2.1x 1.6x 1.4x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 318 of 401

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Consumer Cyclical: Furniture and Fixtures – Operating Performance

LTM Ticker ($mn) MAS 10,319 LEG 4,248 HI 678 SCS 3,505 MLHR 2,000 HNI 2,508 TPX 1,028 KNL 1,126 ETH 937 LZB 1,428 ZZ 1,614 KBALB 1,358 FBN 1,845 LYTS 291 Median

Revenue LTM Growth -13% 0% 33% 9% 2% -3% -4% 8% -7% -9% -3% 4% -14% -15% -3%

3-Year Growth 0% -5% na 9% 10% 7% 17% 14% 1% -7% 9% 10% -5% 3% 7%

Rev./ Empl. ($'000) 198 177 na 260 318 189 734 901 162 142 265 189 155 194 194

LTM Profit Margins Gross 26% 18% 41% 32% 35% 34% 45% 35% 54% 27% 40% 18% 20% 25% 33%

EBIT 5% 3% 22% 5% 12% 5% 17% 13% 9% -1% 9% -1% -8% -6% 5%

Net 0% -2% 14% 3% 8% 3% 10% 7% 5% -1% 3% 0% -4% -6% 3%

Est. 5-Year EPS Growth 13% 14% na 5% 2% na 13% 10% 7% na 11% na na 11% 11%

EBIT/ Capital Empl. 15% 8% >99% 29% 96% 30% 59% 73% 19% nm 50% nm nm nm 30%

LTM ROE -1% -4% 50% 12% >99% 17% >99% >99% 13% -3% -49% -1% -9% -11% -1%

LTM ROA 0% -2% 23% 5% 20% 6% 12% 12% 6% -2% 5% -1% -5% -9% 5%

LTM Asset Turnover 1.0x 1.1x 1.7x 1.6x 2.7x 2.0x 1.3x 1.6x 1.2x 1.8x 1.5x 1.9x 1.3x 1.5x 1.6x

Consumer Cyclical: Recreational Products – Valuation (Sorted by market value)

Company / Ticker Mattel, Inc. / MAT Hasbro, Inc. / HAS Harley-Davidson, Inc / HOG Marvel Entertainment / MVL Polaris Industries I / PII Pool Corporation / POOL Callaway Golf Compan / ELY JAKKS Pacific, Inc. / JAKK LeapFrog Enterprises / LF Brunswick Corporatio / BC RC2 Corporation / RCRC Marine Products Corp / MPX Steinway Musical Ins / LVB Cherokee Inc. / CHKE Sturm, Ruger & Compa / RGR Arctic Cat Inc. / ACAT

Price ($) 13.91 26.94 15.35 28.11 25.01 15.48 10.10 18.98 4.60 2.44 11.33 4.82 17.46 15.52 5.84 6.26

Move to 52-Wk MV EV Low High ($mn) ($mn) -10% 70% 4,986 5,977 -20% 55% 3,750 4,336 -2% 226% 3,574 5,126 -17% 37% 2,224 2,280 -4% 117% 810 987 -9% 83% 742 1,055 -11% 80% 652 642 -6% 61% 522 428 -4% 131% 293 270 -8% 778% 214 598 -12% 169% 195 272 -6% 102% 176 157 -5% 75% 149 298 -11% 138% 138 122 -6% 74% 114 91 -7% 112% 113 124 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 1.0x 1.1x .8x 4.1x .5x .6x .6x .5x .5x .1x .6x .7x .7x 3.1x .6x .2x 1.0x 1.3x .6x

EV/ LTM EBIT 9x 8x 4x 8x 5x 9x 8x 5x nm nm 17x 10x 10x 5x 48x nm 11x 7x 8x

Last FY Act. 9x 14x 4x 17x 8x 11x 12x 7x nm 3x 11x 11x 10x 8x 13x nm 10x 10x 10x

P/E This FY Est. 10x 12x 5x 11x 7x 13x 11x 7x nm nm 7x 18x 8x 9x 22x 52x 14x 10x 10x

Next FY Est. 9x 11x 5x 20x 7x 12x 9x 6x 14x nm 7x 24x 7x 9x 14x 23x 12x 10x 9x

P/ Tang. Book 3.6x 13.0x 1.5x nm 7.2x 8.3x 1.5x 1.5x 1.5x .2x 5.6x 1.9x 1.2x 7.8x 1.6x .6x 3.8x 4.8x 1.6x

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Page 319 of 401

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Consumer Cyclical: Recreational Products – Operating Performance

LTM Ticker ($mn) MAT 6,167 HAS 4,088 HOG 6,096 MVL 561 PII 1,966 POOL 1,826 ELY 1,120 JAKK 919 LF 503 BC 5,307 RCRC 454 MPX 212 LVB 415 CHKE 40 RGR 157 ACAT 627 Median

Revenue LTM Growth 5% 12% -3% 22% 17% -6% -1% 13% 13% -5% -10% -12% 6% -47% -5% -10% -2%

3-Year Growth 5% 9% 5% -2% 0% 14% 6% 14% -12% 4% 10% -1% 3% 2% 2% -3% 3%

Rev./ Empl. ($'000) 199 693 625 2,245 614 522 373 1,537 595 196 546 193 186 1,985 143 384 534

LTM Profit Margins Gross 46% 59% 35% 78% 23% 28% 44% 37% 40% 19% 45% 20% 30% na 20% 17% 35%

EBIT 11% 13% 20% 52% 9% 6% 8% 10% -10% -11% 4% 7% 7% 62% 1% -1% 7%

Net 9% 8% 13% 30% 7% 3% 5% 10% -11% -11% 2% 6% 3% 38% 1% 0% 5%

Est. 5-Year EPS Growth 9% 9% 10% 16% 12% 10% 12% 9% 20% 10% 10% 10% na na na 10% 10%

EBIT/ Capital Empl. 36% 61% 35% nm 90% 31% 21% 47% nm nm 10% 33% 9% >99% 2% nm 33%

LTM ROE 23% 26% 31% 67% 93% 26% 9% 13% -25% -33% 2% 13% 7% 51% 3% 0% 13%

LTM ROA 11% 11% 12% 19% 18% 7% 6% 10% -17% -14% 1% 11% 3% 36% 2% 0% 8%

LTM Asset Turnover 1.3x 1.3x 1.0x .6x 2.5x 2.0x 1.2x 1.0x 1.5x 1.3x .7x 1.7x .9x .9x 1.5x 2.0x 1.3x

Consumer Non-Cyclical: Alcoholic Beverages – Valuation (Sorted by market value)

Company / Ticker Anheuser-Busch Compa / BUD Diageo plc (ADR) / DEO Companhia de Bebidas / ABV Molson Coors Brewing / TAP Constellation Brands / STZ Compania Cervecerias / CCU Vina Concha y Toro S / VCO Central European Dis / CEDC Boston Beer Company, / SAM

Price ($) 68.50 54.51 46.59 42.55 11.49 28.85 30.81 23.13 32.00

Move to 52-Wk MV EV Low High ($mn) ($mn) -34% 1% 49,529 56,903 -5% 70% 34,129 43,593 -35% 91% 28,608 32,577 -18% 40% 7,814 9,474 -7% 117% 2,571 7,384 -19% 38% 1,834 2,074 -16% 57% 1,106 1,313 -26% 235% 1,094 1,927 -3% 69% 454 443 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 3.3x 3.6x 3.7x 1.7x 1.9x 2.0x 2.8x 1.2x 1.1x 2.4x 3.3x 2.0x

EV/ LTM EBIT 20x 13x 17x 14x nm 13x 17x 12x 20x 16x 16x 16x

Last FY Act. 25x 16x 13x 15x nm 17x 20x 12x 21x 17x 18x 16x

P/E This FY Est. 22x 11x 17x 14x 7x 11x 14x 8x 18x 14x 17x 14x

Next FY Est. 19x 10x 19x 12x 6x 11x 13x 6x 18x 13x 16x 12x

P/ Tang. Book 16.7x nm 4.0x 8.9x nm 3.4x 2.8x nm 3.4x 6.5x 8.0x 3.7x

Consumer Non-Cyclical: Alcoholic Beverages – Operating Performance

LTM Ticker ($mn) BUD 17,431 DEO 11,995 ABV 8,884 TAP 5,635 STZ 3,868 CCU 1,029 VCO 477 CEDC 1,581 SAM 387 Median

Revenue LTM Growth 6% -50% 0% -8% -13% -52% -52% 44% 20% -8%

3-Year Growth 4% 7% 18% 13% -3% 12% 13% 27% 16% 13%

Rev./ Empl. ($'000) 565 502 250 581 472 314 229 470 774 472

LTM Profit Margins Gross 35% 60% 70% 40% 35% 53% 39% 23% 49% 40%

EBIT 17% 28% 21% 12% -11% 16% 16% 10% 6% 16%

Net 12% 62% 17% 8% -18% 29% 22% 7% 3% 12%

www.manualofideas.com

Est. 5-Year EPS Growth 11% 11% 7% 12% 11% 7% na na 11% 11%

EBIT/ Capital Empl. 36% 59% 77% 35% nm 20% 14% 84% 24% 36%

LTM ROE 55% >99% 19% 7% -23% 49% 29% 10% 9% 15%

LTM ROA 12% 34% 9% 4% -7% 25% 15% 5% 6% 9%

LTM Asset Turnover 1.0x .5x .6x .4x .4x .9x .7x .6x 2.0x .6x

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Consumer Non-Cyclical: Non-Alcoholic Beverages – Valuation (Sorted by market value)

Company / Ticker Coca-Cola Company, T / KO PepsiCo, Inc. / PEP Cadbury plc (ADR) / CBY Fomento Economico Me / FMX Coca-Cola FEMSA, S.A / KOF Coca-Cola HBC S.A. ( / CCH Coca-Cola Enterprise / CCE Dr Pepper Snapple Gr / DPS Pepsi Bottling Group / PBG Hansen Natural Corpo / HANS PepsiAmericas, Inc. / PAS Embotelladora Andina / AKO.A Heckmann Corporation / HEK National Beverage Co / FIZZ

Price ($) 45.02 53.52 31.27 28.07 34.45 13.45 9.17 17.56 20.84 25.36 17.61 12.10 6.71 8.08

Move to 52-Wk MV EV Low High ($mn) ($mn) -11% 46% 104,156 107,596 -6% 49% 83,123 na -3% 80% 10,627 13,278 -33% 78% 10,044 12,586 -24% 85% 6,362 7,310 -29% 273% 4,915 7,027 -10% 195% 4,474 13,483 0% 71% 4,455 7,838 -4% 106% 4,403 9,666 -19% 98% 2,344 2,074 -18% 103% 2,242 4,169 -41% 78% 1,530 1,506 -1% 60% 454 451 -18% 25% 372 na Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 3.3x nm 1.7x 1.1x 1.2x .8x .6x 1.4x .7x 2.0x .9x 1.3x nm nm 1.4x 1.7x 1.2x

EV/ LTM EBIT 13x nm 27x 8x 8x 8x nm 8x 9x 8x 9x 8x nm nm 11x 8x 8x

Last FY Act. 18x 16x 41x 15x 12x 8x 6x 9x 9x 17x 11x 12x 224x 16x 29x 17x 14x

P/E This FY Est. 14x 15x 15x 13x 11x 8x 7x 9x 9x 14x 9x 10x nm 16x 12x 14x 11x

Next FY Est. 14x 14x 13x 12x 9x 8x 7x 9x 8x 12x 9x 9x 13x 16x 11x 13x 10x

P/ Tang. Book 9.5x 9.7x nm 2.0x 18.9x 2.6x nm nm nm 4.8x nm 4.4x 1.1x 2.7x 6.2x 8.2x 4.4x

Consumer Non-Cyclical: Non-Alcoholic Beverages – Operating Performance

LTM Ticker ($mn) KO 32,149 PEP 42,868 CBY 8,036 FMX 11,768 KOF 5,934 CCH 8,597 CCE 21,869 DPS 5,770 PBG 14,023 HANS 1,026 PAS 4,904 AKO.A 1,119 HEK na FIZZ 567 Median

Revenue LTM Growth 17% 14% -59% -37% -42% 7% 7% -19% 5% 27% 13% -52% na 5% 5%

3-Year Growth 10% 11% -5% 13% 11% 14% 5% 23% 8% 71% 10% 14% na 5% 11%

Rev./ Empl. ($'000) 355 232 112 105 96 178 300 289 200 2,290 237 900 na 436 237

LTM Profit Margins Gross 64% 53% 11% 47% 49% 41% 37% 54% 45% 51% 40% 46% na 30% 46%

EBIT 26% 17% 6% 13% 15% 10% -18% 16% 8% 26% 10% 17% na 6% 13%

Net 19% 13% 17% 10% 12% 7% -13% 8% 4% 17% 5% 26% na 4% 10%

www.manualofideas.com

Est. 5-Year EPS Growth 9% 10% na 15% 10% 6% 6% 5% 9% 15% 11% 5% na 6% 9%

EBIT/ Capital Empl. 94% 61% 16% 32% 48% 21% nm 72% 23% >99% 31% 44% na 47% 44%

LTM ROE 26% 34% 24% 23% 18% 16% -68% 11% 21% 38% 12% 69% 2% 16% 19%

LTM ROA 13% 16% 9% 9% 10% 7% -13% 4% 4% 30% 4% 38% 2% 10% 9%

LTM Asset Turnover .7x 1.2x .5x .9x .9x .9x 1.0x .6x 1.0x 1.7x .9x 1.5x na 2.5x .9x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 321 of 401

Thanksgiving 2008

Consumer Non-Cyclical: Crops – Valuation (Sorted by market value)

Company / Ticker Syngenta AG (ADR) / SYT Fresh Del Monte Prod / FDP Andersons, Inc., The / ANDE Cresud Inc. (ADR) / CRESY Landec Corporation / LNDC Agria Corporation (A / GRO

Price ($) 34.35 20.30 17.58 5.06 7.45 2.09

Move to 52-Wk MV EV Low High ($mn) ($mn) -22% 94% 16,267 18,497 -36% 96% 1,290 1,708 -4% 177% 320 702 -10% 365% 254 152 -19% 88% 195 133 -26% 498% 132 -69 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.7x .5x .2x 3.1x .5x nm 1.2x 1.6x .5x

EV/ LTM EBIT 10x 11x 5x 12x 8x nm 9x 10x 10x

Last FY Act. 15x 7x 5x 28x 15x 5x 12x 14x 11x

P/E This FY Est. 9x 7x 5x 10x 17x 7x 9x 9x 8x

Next FY Est. 9x 7x 5x 6x 14x 6x 8x 9x 7x

P/ Tang. Book 4.0x 1.2x .8x nm 2.3x .5x 1.8x 3.7x 1.2x

Consumer Non-Cyclical: Crops – Operating Performance

LTM Ticker ($mn) SYT 10,845 FDP 3,548 ANDE 3,504 CRESY 49 LNDC 248 GRO 95 Median

Revenue LTM Growth -32% 9% 70% 47% 12% 30% 21%

3-Year Growth 8% 5% 23% 28% 5% 64% 16%

Rev./ Empl. ($'000) 512 101 2,503 134 2,098 225 368

LTM Profit Margins Gross 51% 10% 9% 13% 16% 50% 15%

EBIT 17% 4% 4% 27% 7% -86% 6%

Net 30% 5% 3% 14% 5% <-99% 5%

www.manualofideas.com

Est. 5-Year EPS Growth 15% 8% 10% 38% 26% 10% 13%

EBIT/ Capital Empl. 34% 11% 30% 7% 49% nm 30%

LTM ROE 52% 12% 24% 2% 12% <-99% 12%

LTM ROA 24% 7% 6% 1% 9% -79% 6%

LTM Asset Turnover .8x 1.5x 2.3x .1x 1.8x .7x 1.2x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 322 of 401

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Consumer Non-Cyclical: Food Processing – Valuation (Sorted by market value)

Company / Ticker Unilever N.V. (ADR) / UN Unilever plc (ADR) / UL Kraft Foods Inc. / KFT General Mills, Inc. / GIS Kellogg Company / K Archer Daniels Midla / ADM Campbell Soup Compan / CPB H.J. Heinz Company / HNZ Hershey Company, The / HSY ConAgra Foods, Inc. / CAG Sara Lee Corp. / SLE Bunge Limited / BG McCormick & Company, / MKC Ralcorp Holdings, In / RAH Hormel Foods Corpora / HRL Perdigao SA (ADR) / PDA Flowers Foods, Inc. / FLO Dean Foods Company / DF J.M. Smucker Company / SJM Corn Products Intern / CPO Tyson Foods, Inc. / TSN Tootsie Roll Industr / TR Del Monte Foods Comp / DLM Wimm-Bill-Dann Foods / WBD Smithfield Foods, In / SFD TreeHouse Foods Inc. / THS United Natural Foods / UNFI Lancaster Colony Cor / LANC Hain Celestial Group / HAIN Green Mountain Coffe / GMCR Lance, Inc. / LNCE Synutra Internationa / SYUT J&J Snack Foods Corp / JJSF Diamond Foods, Inc. / DMND Sanderson Farms, Inc / SAFM Chiquita Brands Inte / CQB Darling Internationa / DAR Smart Balance, Inc. / SMBL Peet's Coffee & Tea, / PEET American Italian Pas / AIPC Gruma S.A.B. de C.V. / GMK ZHONGPIN INC. / HOGS B&G Foods, Inc. / BGS Imperial Sugar Compa / IPSU Lifeway Foods, Inc. / LWAY Calavo Growers, Inc. / CVGW

Price ($) 23.12 21.73 27.44 66.23 46.93 25.92 37.53 41.02 35.96 15.18 9.47 38.70 30.79 65.22 26.76 29.35 26.48 14.55 39.00 23.91 4.90 25.00 5.73 22.52 6.93 27.33 19.75 29.05 18.06 29.25 19.04 10.81 29.46 27.49 22.06 8.58 4.57 5.94 21.72 14.75 2.00 8.53 4.90 14.47 9.35 7.00

Move to 52-Wk MV EV Low High ($mn) ($mn) -6% 61% 65,177 76,294 -6% 76% 61,259 72,359 -7% 29% 40,313 60,169 -23% 9% 22,130 28,838 -4% 25% 17,913 22,778 -48% 89% 16,627 19,862 -20% 9% 13,546 16,080 -6% 29% 12,811 17,514 -10% 23% 8,167 10,272 -1% 73% 6,787 9,879 -5% 79% 6,695 8,698 -29% 249% 4,707 8,795 -4% 37% 4,003 5,324 -26% 14% 3,652 4,307 -3% 60% 3,608 3,923 -29% 128% 3,031 4,464 -22% 23% 2,456 2,734 -8% 101% 2,240 6,851 -4% 45% 2,138 2,784 -27% 130% 1,781 2,393 -8% 298% 1,740 4,386 -14% 40% 1,377 1,341 -9% 80% 1,132 3,064 -9% 545% 991 1,511 -19% 364% 980 4,932 -30% 16% 862 1,412 -21% 61% 847 1,174 -6% 44% 812 876 -1% 89% 731 1,008 -21% 53% 711 834 -14% 32% 600 681 -14% 383% 584 615 -21% 22% 551 490 -42% 17% 448 394 -8% 129% 448 604 -2% 200% 380 1,015 -10% 283% 374 371 -23% 111% 372 449 -15% 40% 294 280 -71% 22% 286 518 -21% 603% 282 1,124 -24% 81% 234 270 -48% 142% 180 684 -33% 80% 172 98 -9% 66% 156 154 0% 215% 101 129 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 1.5x 1.4x 1.4x 2.0x 1.8x .3x 2.0x 1.7x 2.0x .8x .6x .2x 1.7x 1.5x .6x 1.0x 1.2x .5x 1.1x .6x .2x 2.7x .8x .5x .4x 1.0x .3x .9x .9x 1.7x .8x 1.4x .8x .7x .4x .3x .4x 2.2x 1.0x 1.0x .4x .5x 1.4x .1x 3.5x .4x 1.1x 1.4x .9x

EV/ LTM EBIT 9x 8x 13x 13x 12x 6x 15x 11x 18x 11x 27x 3x 14x 24x 8x nm 17x 12x 10x 5x 13x 21x 10x 7x 21x 17x 13x 13x 14x 20x 35x nm 11x 16x 11x 8x 3x nm 18x 13x 6x 7x 9x nm 35x 17x 14x 11x 13x

Last FY Act. 14x 13x 17x 18x 17x 9x 21x 16x 39x 14x nm 7x 18x 12x 12x 17x 26x 15x 13x 9x 20x 27x 9x 7x 7x 21x 17x 18x 18x 34x 25x 13x 20x 30x 6x nm 8x nm 37x 53x 2x 11x 9x 4x 49x 14x 18x 15x 16x

P/E This FY Est. 11x 10x 14x 17x 16x 8x 17x 14x 20x 10x 12x 4x 14x 18x 13x 34x 21x 12x 11x 7x 11x 34x 10x 6x 14x 18x 15x 16x 12x 24x 35x nm 17x 22x 105x 6x 5x nm 27x 22x nm 7x 11x nm 37x 19x 18x 13x 14x

Next FY Est. 16x 15x 14x 16x 15x 9x 16x 13x 19x 9x 10x 5x 13x 15x 12x 11x 19x 10x 11x 7x 6x 31x 9x 4x 4x 16x 12x 15x 10x 20x 17x 98x 15x 17x 8x 6x 7x 35x 22x 9x 29x 6x 9x nm 28x 10x 15x 14x 13x

P/ Tang. Book nm nm nm nm nm 1.3x nm nm nm 14.4x nm .7x nm nm 2.9x 2.0x 6.4x nm 61.3x 1.5x .7x 3.7x nm 1.6x .5x nm 3.1x 3.2x 11.2x 19.7x 3.8x 4.2x 2.7x 3.3x 1.1x nm 2.3x nm 2.0x 2.6x .3x 1.5x nm 1.1x 8.8x 1.4x 5.8x 1.1x 2.6x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 323 of 401

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Consumer Non-Cyclical: Food Processing – Operating Performance

LTM Ticker ($mn) UN 51,046 UL 51,046 KFT 41,830 GIS 14,077 K 12,683 ADM 78,148 CPB 7,998 HNZ 10,406 HSY 5,098 CAG 12,050 SLE 13,507 BG 48,687 MKC 3,130 RAH 2,824 HRL 6,558 PDA 4,506 FLO 2,267 DF 12,606 SJM 2,627 CPO 3,938 TSN 26,862 TR 496 DLM 3,710 WBD 2,783 SFD 11,876 THS 1,474 UNFI 3,366 LANC 1,001 HAIN 1,108 GMCR 500 LNCE 822 SYUT 431 JJSF 629 DMND 532 SAFM 1,690 CQB 3,924 DAR 835 SMBL 207 PEET 277 AIPC 517 GMK 3,059 HOGS 501 BGS 484 IPSU 687 LWAY 44 CVGW 353 Median

Revenue LTM Growth 0% 0% 18% 11% 10% 65% 8% 13% 3% 13% 11% 47% 9% 27% 8% 52% 13% 13% 20% 24% 4% 1% 10% 33% 29% 38% 22% 8% 20% 46% 10% 56% 11% 2% 26% 6% 40% >99% 16% -21% -31% >99% 8% -23% 21% 20% 13%

3-Year Growth 3% 3% 5% 7% 7% 25% 4% 8% 4% 1% 5% 15% 5% 19% 9% 11% 10% 7% 7% 14% 1% 6% 9% 27% 8% 19% 18% -2% 19% 46% 11% 79% 11% 5% 10% 15% 26% na 20% 1% 13% na 8% 4% 33% 3% 8%

Rev./ Empl. ($'000) 293 293 406 477 479 2,831 412 320 463 482 307 2,038 417 362 354 77 291 493 808 555 258 225 431 141 227 433 534 286 371 536 175 86 242 846 174 164 444 4,500 403 794 161 139 647 819 368 426 404

LTM Profit Margins Gross na na 33% 35% 43% 6% 40% 36% 33% 22% 38% 9% 40% 18% 23% 25% 48% 23% 31% 18% 5% 33% 24% 31% 9% 20% 19% 15% 26% 35% 37% 33% 30% 17% 7% 15% 27% 44% 53% 20% 32% 13% 29% 6% 29% 8% 26%

EBIT 17% 17% 11% 16% 16% 4% 14% 15% 11% 8% 2% 5% 12% 6% 8% -10% 7% 5% 11% 11% 1% 13% 9% 8% 2% 6% 3% 7% 7% 8% 2% -1% 7% 4% 3% 3% 16% -6% 6% 8% 6% 7% 16% -5% 10% 2% 7%

Net 12% 12% 9% 9% 9% 4% 15% 8% 6% 10% 0% 3% 10% 6% 5% -7% 5% 1% 8% 7% 0% 8% 3% 5% 1% 2% 1% 5% 3% 4% 1% -1% 4% 3% 2% 2% 10% -26% 4% 3% 3% 6% 3% -1% 7% 1% 4%

www.manualofideas.com

Est. 5-Year EPS Growth 8% 8% 9% 10% 10% 8% 8% 8% 7% 10% 6% 10% 11% na 9% na 11% 11% 8% 3% 15% na 6% 33% 13% 10% 15% na 16% 30% 11% na na 30% na na na 35% 22% 6% na 25% 10% na 30% 15% 10%

EBIT/ Capital Empl. >99% >99% 38% 54% 63% 21% 52% 58% 25% 23% 11% 26% 46% 29% 33% nm 27% 24% 32% 24% 6% 20% 21% 23% 5% 18% 16% 19% 22% 31% 7% nm 26% 26% 10% 19% 83% 52% 11% 11% 11% 38% 57% nm 19% 14% 24%

LTM ROE 38% 38% 14% 22% 46% 22% 74% 44% 47% 24% -2% 21% 27% 31% 16% -20% 16% 36% 12% 15% 3% 7% 8% 22% 3% 6% 11% 13% 5% 18% 5% -2% 9% 10% 8% 6% 35% -14% 7% 8% 7% 20% 10% -4% 11% 7% 12%

LTM ROA 12% 12% 6% 7% 10% 8% 17% 8% 7% 9% 0% 6% 10% 9% 9% -9% 10% 2% 7% 8% 1% 5% 3% 9% 1% 3% 5% 9% 3% 7% 3% -1% 7% 5% 5% 2% 22% -9% 6% 3% 3% 12% 2% -2% 8% 4% 6%

LTM Asset Turnover 1.1x 1.1x .6x .7x 1.1x 2.2x 1.2x 1.0x 1.2x .9x 1.2x 2.0x 1.0x 1.5x 1.9x 1.2x 2.0x 1.8x .8x 1.2x 2.6x .6x .8x 1.7x 1.4x 1.0x 3.3x 1.8x .9x 1.6x 1.9x 1.4x 1.6x 1.8x 2.6x 1.4x 2.2x .4x 1.5x .9x 1.1x 1.9x .6x 2.1x 1.3x 2.5x 1.4x

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Consumer Non-Cyclical: Personal and Household Products – Valuation (Sorted by market value)

Company / Ticker Procter & Gamble Com / PG Colgate-Palmolive Co / CL Avon Products, Inc. / AVP Clorox Company, The / CLX Ecolab Inc. / ECL Brown-Forman Corpora / BF.B Estee Lauder Compani / EL Church & Dwight Co., / CHD Newell Rubbermaid In / NWL Alberto-Culver Compa / ACV Tupperware Brands Co / TUP Herbalife Ltd. / HLF Nu Skin Enterprises, / NUS USANA Health Science / USNA Revlon, Inc. / REV Zep, Inc. / ZEP Elizabeth Arden, Inc / RDEN Inter Parfums, Inc. / IPAR Blyth, Inc. / BTH China Architectural / CAEI Gaiam, Inc. / GAIA

Price ($) 63.11 62.06 22.53 59.30 32.77 47.22 29.93 56.61 12.05 22.92 19.60 17.56 10.56 35.05 8.27 18.80 13.52 8.40 5.86 2.68 4.35

Move to 52-Wk MV EV Low High ($mn) ($mn) -13% 19% 188,428 224,725 -12% 32% 31,323 34,367 -12% 101% 9,605 11,048 -20% 13% 8,226 11,489 -10% 61% 8,122 9,058 -11% 33% 7,124 7,961 -4% 83% 5,884 6,987 -16% 16% 3,965 4,671 -6% 139% 3,340 5,986 -10% 28% 2,230 1,777 -6% 129% 1,215 1,764 -5% 191% 1,121 1,298 -5% 89% 682 767 -48% 42% 541 558 -19% 80% 424 1,691 -34% 16% 394 439 -5% 81% 390 816 -7% 138% 257 299 -5% 318% 208 264 -32% 418% 141 169 -1% 606% 105 54 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 2.6x 2.2x 1.0x 2.1x 1.5x 2.4x .9x 2.0x .9x 1.2x .8x .5x .6x 1.3x 1.2x .8x .7x .6x .2x 1.1x .2x 1.2x 2.4x 1.0x

EV/ LTM EBIT 13x 12x 9x 13x 12x 12x 8x 15x 10x 11x 8x 4x 8x 10x 9x 15x 26x 6x 11x 6x nm 11x 12x 10x

Last FY Act. 17x 19x 19x 18x 19x 17x 12x 23x 7x 22x 10x 7x 16x 13x nm 24x 20x 11x 21x 11x 13x 16x 17x 17x

P/E This FY Est. 15x 16x 11x 16x 18x 16x 13x 20x 8x 17x 7x 5x 10x 16x 10x 16x 9x 10x 5x 5x nm 12x 15x 12x

Next FY Est. 15x 15x 11x 14x 16x 15x 12x 17x 8x 15x 7x 5x 8x 14x 8x 14x 8x 8x 5x 4x 12x 11x 15x 12x

P/ Tang. Book nm nm 13.8x nm 16.7x 19.5x 3.4x nm nm 2.5x 27.6x nm 6.1x 14.4x nm 5.8x 3.4x 3.0x .9x 2.0x .9x 8.6x 1.8x 4.6x

Consumer Non-Cyclical: Personal and Household Products – Operating Performance

LTM Ticker ($mn) PG 85,330 CL 15,308 AVP 10,958 CLX 5,418 ECL 6,094 BF.B 3,333 EL 8,104 CHD 2,357 NWL 6,662 ACV 1,444 TUP 2,217 HLF 2,424 NUS 1,236 USNA 427 REV 1,395 ZEP 575 RDEN 1,154 IPAR 465 BTH 1,146 CAEI 148 GAIA 265 Median

Revenue LTM Growth 10% 15% 16% 10% 15% 15% 13% 9% 4% 10% 17% 18% 8% 3% 2% 2% 1% 29% -3% 79% 4% 10%

3-Year Growth 14% 9% 9% 6% 9% 14% 8% 15% 4% 4% 17% 18% 1% 16% 3% 2% 7% 18% -4% 44% 40% 9%

Rev./ Empl. ($'000) 618 425 261 653 234 806 253 637 296 380 173 673 142 446 249 203 543 1,875 358 452 583 425

LTM Profit Margins Gross 51% 57% 62% 41% 49% 51% 75% 40% 34% 53% 65% 80% 82% 38% 64% 56% 40% 57% 54% 30% 61% 54%

EBIT 20% 19% 11% 16% 12% 20% 10% 13% 9% 11% 10% 15% 8% 13% 14% 5% 3% 12% 2% 20% -13% 12%

Net 14% 12% 7% 9% 8% 13% 6% 8% 5% 18% 7% 10% 5% 9% 6% 3% 1% 6% 0% 17% 0% 7%

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Est. 5-Year EPS Growth 10% 10% 13% 10% 13% 9% 11% 12% 9% 12% na 14% 12% 16% 5% na 11% 14% na 25% na 12%

EBIT/ Capital Empl. 75% 88% 56% 83% 46% 49% 41% 59% 39% 40% 47% >99% 77% >99% >99% 24% 6% 32% 7% 44% nm 46%

LTM ROE 18% 83% 84% <-99% 23% 25% 31% 15% 14% 24% 27% >99% 20% 76% -8% 17% 2% 13% 0% 40% -1% 20%

LTM ROA 9% 17% 13% 10% 9% 13% 10% 7% 4% 17% 8% 22% 8% 32% 10% 6% 1% 6% 0% 20% -1% 9%

LTM Asset Turnover .6x 1.4x 1.8x 1.1x 1.2x 1.0x 1.6x .9x .9x 1.0x 1.1x 2.2x 1.8x 3.7x 1.6x 2.2x 1.2x 1.0x 1.7x 1.2x 1.1x 1.2x

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Consumer Non-Cyclical: Tobacco – Valuation (Sorted by market value) Price ($) 38.41 49.95 16.26 42.99 60.78 68.74 15.29

Company / Ticker Philip Morris Intern / PM British American Tob / BTI Altria Group, Inc. / MO Reynolds American, I / RAI Lorillard Inc. / LO UST Inc. / UST Vector Group Ltd. / VGR

Move to 52-Wk MV EV Low High ($mn) ($mn) -13% 46% 77,705 86,049 -9% 62% 49,894 60,945 -2% 51% 33,502 33,472 -13% 67% 12,530 14,620 -12% 30% 10,215 9,007 -28% 1% 10,201 11,351 -29% 43% 1,009 1,048 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.4x 3.6x 1.7x 1.6x 2.2x 5.7x 1.9x 2.6x 2.3x 1.9x

EV/ LTM EBIT 8x 12x 7x 6x 7x 13x 8x 9x 9x 8x

Last FY Act. 13x 16x 11x 10x 12x 21x 14x 14x 14x 13x

P/E This FY Est. 12x 12x 10x 9x 12x 19x 15x 13x 12x 12x

Next FY Est. 11x 11x 9x 9x 11x 18x 14x 12x 11x 11x

P/ Tang. Book nm nm 31.7x nm 14.1x nm nm 22.9x 6.2x 22.9x

Consumer Non-Cyclical: Tobacco – Operating Performance

LTM Ticker ($mn) PM 63,315 BTI 16,917 MO 19,230 RAI 8,898 LO 4,072 UST 1,996 VGR 566 Median

Revenue LTM Growth 53% 15% 3% 0% 35% 5% 3% 5%

3-Year Growth 12% -2% -41% 12% 6% 2% 4% 4%

Rev./ Empl. ($'000) 839 173 229 1,253 1,454 433 1,316 839

LTM Profit Margins Gross 25% 74% 40% 45% 42% 71% 41% 42%

EBIT 16% 29% 23% 27% 31% 44% 24% 27%

Net 11% 21% 33% 15% 21% 27% 10% 21%

Est. 5-Year EPS Growth 12% 10% 11% 7% 8% 7% na 9%

EBIT/ Capital Empl. >99% 93% >99% nm nm 97% >99% 95%

LTM ROE 70% 36% 82% 18% 95% <-99% 64% 67%

LTM ROA 28% 13% 21% 7% 34% 37% 8% 21%

LTM Asset Turnover 2.5x .6x .6x .5x 1.6x 1.4x .7x .7x

Energy: Coal – Valuation (Sorted by market value)

Company / Ticker Peabody Energy Corpo / BTU CONSOL Energy Inc. / CNX Yanzhou Coal Mining / YZC Arch Coal, Inc. / ACI Alpha Natural Resour / ANR Massey Energy Compan / MEE Walter Industries, I / WLT Natural Resource Par / NRP Alliance Resource Pa / ARLP Alliance Holdings GP / AHGP Patriot Coal Corpora / PCX Penn Virginia Resour / PVR Foundation Coal Hold / FCL Penn Virginia GP Hol / PVG International Coal G / ICO Headwaters Incorpora / HW James River Coal Com / JRCC

Price ($) 27.07 25.52 5.14 15.86 26.47 16.20 23.93 18.77 27.20 15.76 9.40 12.61 13.92 11.94 2.58 6.79 8.37

Move to 52-Wk MV EV Low High ($mn) ($mn) -11% 228% 7,218 10,266 -21% 367% 4,624 5,388 -21% 346% 2,528 1,276 -5% 388% 2,266 3,567 -17% 351% 1,866 1,827 -6% 491% 1,379 1,986 -8% 368% 1,300 2,877 -14% 122% 1,218 1,664 -19% 113% 996 na -40% 97% 943 1,131 -4% 775% 727 937 -25% 139% 653 1,201 -5% 545% 620 1,196 -26% 203% 467 1,006 -6% 439% 396 759 -11% 142% 285 796 -43% 651% 229 364 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 1.7x 1.2x .4x 1.2x .7x .7x 2.1x 6.1x nm 1.0x .7x 1.4x .7x 1.2x .7x .9x .7x 1.3x 1.4x 1.0x

EV/ LTM EBIT 9x 11x 1x 9x 7x 24x 8x 9x nm 7x 28x 8x 30x 7x nm nm nm 12x 9x 9x

Last FY Act. 17x 18x 5x 13x 62x 14x 11x 15x 7x 11x nm 13x 20x 16x nm nm nm 17x 17x 14x

P/E This FY Est. 8x 12x 2x 7x 8x 5x 5x 10x 10x 11x nm 8x 82x 7x 52x 9x nm 16x 10x 8x

Next FY Est. 5x 4x 2x 3x 2x 3x 2x 8x 5x 6x 2x 5x 3x 7x 4x 5x 2x 4x 4x 4x

P/ Tang. Book 2.5x 3.2x .8x 1.4x 2.6x 1.3x 2.6x 2.0x 3.1x 3.6x .9x 1.6x nm 3.2x .8x nm 2.5x 2.1x 2.2x 2.5x

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Energy: Coal – Operating Performance

LTM Ticker ($mn) BTU 5,925 CNX 4,328 YZC 2,890 ACI 2,898 ANR 2,469 MEE 2,820 WLT 1,366 NRP 273 ARLP 1,098 AHGP 1,098 PCX 1,368 PVR 870 FCL 1,601 PVG 870 ICO 1,044 HW 886 JRCC 554 Median

Revenue LTM Growth 25% 14% 11% 21% 35% 19% 10% 37% 5% 5% 27% 65% 8% 65% 20% -27% 4% 19%

3-Year Growth 8% 11% 11% 8% 15% 11% 8% 21% 17% 17% 10% 94% 50% 94% 84% -6% 15% 15%

Rev./ Empl. ($'000) 846 560 68 719 678 455 506 4,631 422 422 595 6,740 534 6,740 461 227 330 534

LTM Profit Margins Gross 28% 30% 54% 26% 20% 24% 46% 99% 26% 26% 14% 27% 21% 30% 11% 26% 8% 26%

EBIT 19% 12% 39% 13% 10% 3% 27% 65% 15% 15% 2% 17% 3% 17% -14% -17% -12% 13%

Net 13% 6% 41% 13% 8% 0% 11% 42% 10% 8% 2% 8% -1% 5% -11% -19% -15% 8%

Est. 5-Year EPS Growth 31% 56% 5% 30% 55% 63% 86% 11% 2% 3% 10% 4% 25% 10% 36% na na 25%

EBIT/ Capital Empl. 15% 10% 56% 14% 33% 4% 84% 16% 28% 28% 2% 19% 6% 19% nm nm nm 18%

LTM ROE 28% 21% 38% 23% 37% 1% 49% 16% 34% 32% 9% 15% -6% 20% -22% -22% -87% 20%

LTM ROA 8% 4% 31% 10% 14% 0% 5% 9% 12% 9% 1% 7% -1% 5% -9% -11% -17% 5%

LTM Asset Turnover .6x .7x .8x .8x 1.7x .9x .5x .2x 1.2x 1.2x .7x .8x .8x .8x .8x .6x 1.2x .8x

Energy: Oil and Gas (Integrated) – Valuation (Sorted by market value)

Company / Ticker Exxon Mobil Corporat / XOM Royal Dutch Shell pl / RDS.A Chevron Corporation / CVX BP plc (ADR) / BP PetroChina Company L / PTR TOTAL S.A. (ADR) / TOT Eni S.p.A. (ADR) / E ConocoPhillips / COP StatoilHydro ASA (AD / STO China Petroleum & Ch / SNP Repsol YPF, S.A. (AD / REP Marathon Oil Corpora / MRO Hess Corp. / HES Petrobras Energia Pa / PZE Atlas Energy Resourc / ATN Encore Energy Partne / ENP BreitBurn Energy Par / BBEP Pioneer Southwest En / PSE Calumet Specialty Pr / CLMT Legacy Reserves LP / LGCY Petroleum Developmen / PETD Gushan Environmental / GU Kayne Anderson Energ / KED Vanguard Natural Res / VNR

Price ($) 73.68 49.84 72.68 43.90 73.58 51.75 45.55 47.39 16.57 57.63 18.60 26.69 55.53 5.15 16.05 14.10 7.09 12.35 10.20 8.93 15.74 2.46 12.40 8.01

Move to 52-Wk MV EV Low High ($mn) ($mn) -23% 30% 374,784 346,614 -16% 78% 155,561 164,466 -24% 44% 147,671 143,649 -14% 77% 137,019 150,793 -23% 180% 134,664 133,060 -18% 77% 115,513 126,604 -22% 87% 91,222 113,482 -11% 102% 70,650 91,634 -9% 161% 52,786 53,907 -13% 190% 49,966 81,355 -14% 141% 22,708 34,210 -19% 137% 18,832 25,805 -25% 147% 18,107 20,659 -3% 230% 1,098 2,762 -17% 183% 1,038 1,888 -17% 104% 442 599 -8% 328% 373 1,080 -18% 84% 371 346 -31% 273% 329 803 -8% 188% 278 499 -16% 402% 234 440 -11% 630% 205 28 -40% 107% 125 203 -12% 131% 101 199 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. .7x .3x .5x .5x .8x .6x .8x .4x .5x .4x .2x .3x .5x .6x 2.4x 3.2x 2.9x 2.3x .3x 2.2x .9x .1x 23.6x 4.5x 2.1x .6x .6x

EV/ LTM EBIT 4x 3x 3x 4x 5x 3x 4x 3x 2x 14x 2x 3x 3x 4x 10x 7x 10x 4x 10x 5x 3x x nm 11x 5x 4x 4x

Last FY Act. 10x 5x 8x 7x 6x 7x 6x 7x 8x 6x 6x 5x 10x nm 7x nm nm 6x 4x nm 7x 5x 8x 33x 8x 8x 7x

P/E This FY Est. 8x 5x 6x 5x 7x 6x 5x 4x 5x 10x 5x 4x 6x 4x 7x 6x 3x 4x 73x 6x 4x 3x 9x 4x 8x 6x 5x

Next FY Est. 10x 6x 8x 6x 7x 6x 6x 5x 6x 6x 6x 5x 9x 4x 6x 7x 4x 5x 6x 5x 4x 2x 9x 4x 6x 7x 6x

P/ Tang. Book 3.0x 1.2x 1.8x 1.6x 1.2x 1.9x 1.9x 1.1x 2.4x 1.2x 1.2x 1.0x 1.6x .5x 1.1x 1.6x .3x 2.1x 1.6x 1.1x .7x .6x .6x 6.8x 1.6x 1.9x 1.2x

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Energy: Oil and Gas (Integrated) – Operating Performance

LTM Ticker ($mn) XOM 509,305 RDS.A 483,992 CVX 289,212 BP 324,735 PTR 159,737 TOT 208,336 E 139,008 COP 255,576 STO 102,639 SNP 201,600 REP 144,643 MRO 82,135 HES 43,343 PZE 4,715 ATN 790 ENP 188 BBEP 369 PSE 150 CLMT 2,427 LGCY 225 PETD 509 GU 213 KED 9 VNR 44 Median

Revenue LTM Growth 35% 49% 40% 19% -21% 24% 2% 40% 23% -17% 89% 35% 46% -27% 56% >99% >99% 96% 55% >99% 83% 59% 0% 3% 35%

3-Year Growth 11% 10% 13% 14% 28% 13% 14% 12% 20% 25% 12% 9% 23% 15% 38% 82% 22% na 45% 99% 5% 80% na 26% 18%

Rev./ Empl. ($'000) 6,303 4,654 4,449 3,327 342 2,160 1,832 7,840 3,479 603 3,941 2,782 3,259 944 na 516 na 88 3,793 5,926 1,989 572 na >9,999 3,020

LTM Profit Margins Gross 24% 15% 28% 20% 36% 34% 33% 19% 55% 9% 35% 15% 24% 28% 43% na 63% 70% 8% 73% 58% 40% 49% na 34%

EBIT 18% 11% 15% 13% 17% 18% 21% 14% 32% 3% 10% 9% 14% 15% 25% 47% 30% 61% 3% 47% 29% 34% 0% 39% 17%

Net 10% 8% 8% 13% 17% 9% 12% 7% 8% 7% 6% 5% 7% 7% 16% 20% 22% 60% 1% -9% 16% 20% -94% 26% 9%

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Est. 5-Year EPS Growth 7% 8% 9% 5% 14% 4% 3% 10% 4% 9% 6% 6% 3% na 5% 6% 2% 4% na 10% 15% 15% 9% 4% 6%

EBIT/ Capital Empl. 76% 46% 56% 37% 25% 51% 41% 41% 78% 9% 47% 33% 44% 17% 11% 23% 10% 70% 15% 23% 20% 55% na 14% 37%

LTM ROE 40% 28% 29% 40% 26% 32% 32% 21% 30% 33% 37% 21% 27% 16% 17% 13% 7% 68% 7% -10% 21% 13% -3% 30% 26%

LTM ROA 19% 12% 15% 16% 17% 13% 13% 10% 11% 14% 14% 9% 10% 5% 7% 8% 4% 53% 2% -3% 8% 12% -3% 7% 11%

LTM Asset Turnover 2.0x 1.6x 1.8x 1.3x 1.0x 1.3x 1.1x 1.4x 1.3x 1.9x 2.4x 1.8x 1.5x .7x .4x .4x .2x .9x 2.5x .4x .5x .6x .0x .3x 1.2x

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Energy: Oil and Gas Operations (I of II) – Valuation (Sorted by market value)

Company / Ticker Occidental Petroleum / OXY Ecopetrol S.A. (ADR) / EC CNOOC Limited (ADR) / CEO Devon Energy Corpora / DVN Apache Corporation / APA EOG Resources, Inc. / EOG XTO Energy Inc. / XTO Anadarko Petroleum C / APC Chesapeake Energy Co / CHK Southwestern Energy / SWN Valero Energy Corpor / VLO Enterprise Products / EPD Murphy Oil Corporati / MUR Noble Energy, Inc. / NBL Ultra Petroleum Corp / UPL Range Resources Corp / RRC Santos Limited (ADR) / STOSY Questar Corporation / STR Sunoco, Inc. / SUN CNX Gas Corporation / CXG Plains All American / PAA Petrohawk Energy Cor / HK Energy Transfer Equi / ETE Continental Resource / CLR Enterprise GP Holdin / EPE Ultrapar Participaco / UGP Cabot Oil & Gas Corp / COG Newfield Exploration / NFX Pioneer Natural Reso / PXD Plains Exploration & / PXP Cimarex Energy Co. / XEC Denbury Resources In / DNR Dynegy Inc. / DYN Comstock Resources, / CRK Forest Oil Corporati / FST Concho Resources Inc / CXO Whiting Petroleum Co / WLL Linn Energy, LLC / LINE AmeriGas Partners, L / APU SandRidge Energy Inc / SD EXCO Resources, Inc. / XCO Spectra Energy Partn / SEP Tesoro Corporation / TSO Unit Corporation / UNT Encore Acquisition C / EAC Penn Virginia Corpor / PVA St. Mary Land & Expl / SM Quicksilver Resource / KWK

Price ($) 48.19 17.60 76.05 70.14 76.04 80.63 33.54 37.82 21.23 30.26 19.51 22.87 46.86 50.61 44.50 40.62 35.65 28.92 37.97 28.56 34.71 16.50 17.64 22.54 20.19 20.86 26.54 19.89 22.27 22.64 27.75 9.09 2.38 42.04 19.80 22.63 43.47 15.17 29.91 10.07 7.05 19.93 10.25 29.55 25.65 31.21 20.88 7.78

Move to 52-Wk MV EV Low High ($mn) ($mn) -17% 108% 39,028 39,347 -21% 58% 35,830 na -27% 172% 33,969 29,056 -22% 82% 30,967 34,610 -24% 96% 25,448 27,947 -33% 80% 20,124 21,135 -29% 120% 19,347 29,504 -35% 115% 17,361 28,079 -44% 249% 12,758 25,304 -37% 74% 10,389 10,727 -25% 265% 10,068 13,776 -30% 43% 10,014 18,539 -19% 117% 8,926 9,008 -39% 108% 8,743 9,999 -21% 131% 6,697 7,142 -41% 89% 6,310 7,957 -35% 138% 5,307 6,511 -29% 159% 5,016 7,149 -44% 94% 4,437 5,844 -51% 59% 4,312 4,372 -33% 52% 4,266 8,883 -49% 230% 4,142 5,722 -27% 102% 3,931 10,521 -17% 272% 3,813 4,039 -28% 84% 2,810 14,629 -35% 96% 2,785 na -28% 175% 2,743 3,391 -13% 251% 2,630 4,709 -8% 269% 2,621 5,350 -25% 253% 2,436 5,893 -6% 168% 2,311 2,584 -13% 344% 2,246 2,850 -15% 317% 2,006 7,252 -42% 116% 1,935 1,809 -10% 320% 1,923 4,610 -33% 81% 1,917 2,490 -28% 159% 1,840 2,938 -28% 79% 1,747 3,471 -40% 25% 1,705 2,660 -21% 589% 1,672 3,568 -24% 481% 1,487 4,378 -39% 51% 1,434 1,847 -26% 457% 1,419 2,777 -7% 199% 1,397 1,545 -28% 210% 1,353 2,631 -20% 160% 1,306 2,305 -13% 214% 1,298 1,820 -6% 478% 1,298 3,718 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 1.5x nm 1.7x 2.2x 2.1x 3.2x 4.0x 1.9x 2.4x 4.8x .1x .8x .3x 2.4x 6.9x 6.6x 3.7x 2.1x .1x 6.2x .3x 5.4x 1.3x 4.1x .4x nm 3.7x 2.1x 2.2x 2.3x 1.2x 1.9x 2.1x 2.6x 2.7x 4.9x 2.4x 9.9x .9x 3.0x 3.3x 15.7x .1x 1.1x 2.2x 1.9x 1.4x 5.0x 3.0x 2.2x 2.2x

EV/ LTM EBIT 3x nm 4x 5x 4x 6x 8x 5x 7x 12x 3x 15x 3x 4x 11x 14x 13x 6x 6x 12x 16x 13x 11x 7x 9x nm 10x 4x 7x 5x 6x 4x 10x 5x 5x 10x 5x nm 11x 10x nm 36x 10x 3x 5x 7x 4x 12x 8x 6x 7x

Last FY Act. 8x 13x 8x 10x 9x 18x 10x 5x 8x 47x 3x 24x 12x 9x 39x 37x 17x 10x 5x 32x 14x 53x 43x 133x 21x 19x 17x 15x 11x 11x 7x 9x 16x 27x 9x 60x 13x nm 11x 112x nm 7x 3x 5x 80x 24x 7x 3x 23x 16x 12x

P/E This FY Est. 5x 9x 5x 6x 6x 10x 9x 7x 6x 20x 4x 12x 5x 7x 16x 20x 10x 8x 8x 18x 12x 25x 10x 9x 13x 13x 11x 5x 5x 3x 4x 5x 22x 11x 4x 11x 6x 8x 11x 16x 7x 15x 8x 4x 6x 10x 5x 6x 9x 8x 8x

Next FY Est. 7x 12x 5x 8x 8x 11x 7x 11x 6x 18x 5x 11x 7x 7x 16x 23x 16x 8x 11x 17x 12x 24x 8x 12x 13x 7x 12x 4x 5x 5x 6x 6x 10x 19x 6x 9x 7x 7x 11x 32x 9x 14x 7x 6x 8x 11x 6x 6x 10x 10x 8x

P/ Tang. Book 1.4x nm 1.6x 1.6x 1.4x 2.3x 1.4x 1.3x .8x 4.7x .7x 2.3x 1.5x 1.7x 6.5x 2.8x 2.4x 1.6x 1.5x 3.4x 1.8x 1.4x nm 4.0x nm 1.4x 1.6x .7x .8x .7x .9x 1.3x .5x 1.7x .7x 1.7x 1.0x .9x nm .7x .7x 1.4x .5x .8x 1.3x 1.5x 1.3x .9x 1.6x 1.5x 1.4x

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Thanksgiving 2008

Energy: Oil and Gas Operations (II of II) – Valuation (Sorted by market value)

Company / Ticker Frontier Oil Corpora / FTO W&T Offshore, Inc. / WTI Mariner Energy, Inc. / ME Goodrich Petroleum C / GDP CARBO Ceramics Inc. / CRR World Fuel Services / INT Bill Barrett Corpora / BBG Inergy, L.P. / NRGY Permian Basin Royalt / PBT Arena Resources, Inc / ARD Holly Corporation / HOC Stone Energy Corpora / SGY McMoRan Exploration / MMR Swift Energy Company / SFY Sabine Royalty Trust / SBR GMX Resources Inc. / GMXR Eagle Rock Energy Pa / EROC Berry Petroleum Comp / BRY Delta Petroleum Corp / DPTR Western Refining, In / WNR Clayton Williams Ene / CWEI BPZ Resources, Inc. / BPZ Carrizo Oil & Gas, I / CRZO Targa Resources Part / NGLS Aegean Marine Petrol / ANW Rosetta Resources In / ROSE Enbridge Energy Mana / EEQ Alon USA Energy, Inc / ALJ Genesis Energy, L.P. / GEL PetroQuest Energy, I / PQ Delek US Holdings, I / DK VAALCO Energy, Inc. / EGY Ivanhoe Energy Inc. / IVAN ATP Oil & Gas Corpor / ATPG Harvest Natural Reso / HNR Gulfport Energy Corp / GPOR Brigham Exploration / BEXP Approach Resources I / AREX EV Energy Partners, / EVEP Venoco, Inc. / VQ Energy XXI (Bermuda) / EXXI Rex Energy Corporati / REXX Warren Resources, In / WRES Callon Petroleum Com / CPE Hiland Holdings GP, / HPGP Northern Oil & Gas, / NOG FX Energy, Inc. / FXEN Global Partners LP / GLP Parallel Petroleum C / PLLL

Price ($) 12.34 14.62 12.50 27.76 40.44 31.65 20.33 18.22 18.96 23.04 17.47 20.80 11.00 24.68 46.98 33.50 8.14 13.45 5.69 8.36 46.15 6.96 17.55 10.30 11.20 9.10 30.97 9.69 8.91 6.33 5.51 4.39 0.85 6.18 6.66 5.13 4.49 9.60 14.69 3.67 1.30 4.98 3.09 7.69 6.51 4.00 3.24 10.00 3.18

Move to 52-Wk MV EV Low High ($mn) ($mn) -32% 274% 1,282 1,151 -4% 310% 1,116 1,085 -21% 199% 1,111 2,060 -43% 210% 1,042 1,070 -25% 55% 989 957 -56% 10% 926 884 -26% 229% 918 1,177 -29% 81% 908 1,823 -24% 47% 884 872 -21% 150% 879 800 -20% 225% 868 1,019 -8% 256% 829 1,444 -20% 223% 775 978 -17% 178% 761 1,269 -24% 51% 685 676 -36% 164% 632 778 -12% 167% 629 na -4% 362% 599 1,725 -32% 399% 588 1,392 -46% 270% 572 1,883 -41% 163% 559 952 -9% 329% 548 550 -14% 335% 540 993 -15% 190% 485 1,098 -25% 297% 476 743 -15% 226% 471 580 -22% 65% 457 457 -36% 226% 454 1,599 -14% 191% 352 734 -6% 361% 319 498 -31% 285% 296 493 -20% 105% 256 157 -4% 369% 238 240 -7% 745% 222 1,696 -13% 102% 219 101 -12% 317% 219 310 -9% 307% 209 442 -19% 213% 198 220 -24% 145% 191 633 -11% 564% 189 940 -11% 510% 189 1,066 -37% 501% 182 156 -14% 396% 182 248 -16% 276% 166 333 -2% 352% 141 390 -37% 310% 136 121 -15% 168% 135 122 -41% 191% 133 na -12% 647% 132 471 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. .2x .7x 1.6x 5.2x 2.5x .0x 2.0x 1.0x 7.8x 3.8x .2x 1.7x .8x 1.5x 7.9x 6.3x nm 2.2x 6.0x .2x 1.6x 11.7x 4.5x .4x .3x 1.1x nm .3x .3x 1.6x .1x .8x 4.8x 2.3x 9.0x 2.3x 3.6x 2.9x 3.1x 2.0x 1.7x 2.3x 2.2x 2.0x 1.0x 110.3x 6.6x nm 2.4x 5.1x 3.1x 2.0x

EV/ LTM EBIT 4x 2x 4x 7x 12x 6x 7x 14x 8x 6x 6x 4x 5x 3x 8x 13x nm 6x nm 10x 4x nm 11x 6x 17x nm nm 85x 54x 4x 10x 1x nm 8x nm 6x 10x 7x 6x 6x 8x 32x 5x 5x 12x nm nm nm 5x 11x 8x 6x

Last FY Act. 3x 8x 7x nm 18x 14x 34x 30x 13x 23x 3x 3x nm 5x 12x 36x nm 5x nm 2x 89x nm 31x 13x 17x 8x 14x 4x nm 8x 3x 14x nm 4x 4x 5x 20x 40x 15x nm 4x nm 15x 11x 27x nm nm 3x nm 15x 12x 12x

P/E This FY Est. 7x 4x 4x 82x 17x 10x 7x 20x 7x 10x 9x 3x 4x 3x 7x 17x nm 3x nm 6x 4x 54x 9x 5x 10x 7x 9x nm 13x 6x 9x 5x nm 2x 18x 4x 10x 8x 3x 3x 9x 26x 4x 7x 8x 100x nm 7x 5x 13x 12x 7x

Next FY Est. 5x 8x 4x 60x 15x 10x 8x 16x 9x 12x 6x 5x 9x 8x 10x 12x 9x 4x nm 9x 5x 10x 7x 5x 5x 7x 10x 9x 7x 7x 7x 8x nm 3x 9x 3x 12x 8x 4x 7x 2x nm 5x 3x 5x 9x nm 6x 4x 9x 10x 7x

P/ Tang. Book 1.1x .8x .8x 1.6x 2.4x 2.3x .9x 8.1x nm 1.9x 2.0x .6x 1.3x .7x 81.5x 1.7x 1.2x 1.0x .5x 1.2x 2.2x 3.4x 1.1x .8x 1.9x .6x 1.0x 1.5x 2.9x .9x .7x 1.5x 1.4x .6x .8x .6x .7x .9x .6x .7x .3x .8x .5x .5x nm 3.9x 3.4x 1.1x .5x 3.1x 3.7x 1.0x

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Thanksgiving 2008

Energy: Oil Well Services and Equipment – Valuation (Sorted by market value)

Company / Ticker Schlumberger Limited / SLB Transocean Inc. / RIG Halliburton Company / HAL National-Oilwell Var / NOV Diamond Offshore Dri / DO Baker Hughes Incorpo / BHI Weatherford Internat / WFT Noble Corporation / NE Smith International, / SII Energy Transfer Part / ETP Ensco International / ESV Cameron Internationa / CAM Nabors Industries Lt / NBR Kinder Morgan Manage / KMR FMC Technologies, In / FTI BJ Services Company / BJS Enbridge Energy Part / EEP Helmerich & Payne, I / HP Pride International, / PDE TEPPCO Partners, L.P / TPP NuStar Energy L.P. / NS CGG Veritas (ADR) / CGV Tidewater Inc. / TDW Magellan Midstream P / MMP Rowan Companies, Inc / RDC Patterson-UTI Energy / PTEN McDermott Internatio / MDR Buckeye Partners, L. / BPL Core Laboratories N. / CLB Atwood Oceanics, Inc / ATW Oceaneering Internat / OII Superior Energy Serv / SPN Sunoco Logistics Par / SXL Exterran Holdings, I / EXH Grey Wolf, Inc. / GW Magellan Midstream H / MGG Acergy S.A. (ADR) / ACGY Oil States Internati / OIS RPC, Inc. / RES NuStar GP Holdings, / NSH Helix Energy Solutio / HLX Dril-Quip, Inc. / DRQ GulfMark Offshore, I / GLF Cal Dive Internation / DVR Complete Production / CPX Bristow Group Inc. / BRS Key Energy Services, / KEG Atlas Pipeline Partn / APL WSP Holdings Limited / WH

Price ($) 48.76 70.89 18.11 25.81 73.73 30.94 12.80 26.89 27.12 35.61 32.37 20.62 13.61 44.94 27.18 10.93 31.18 26.00 15.68 25.56 42.39 15.90 39.79 29.56 16.04 11.54 7.80 36.16 68.39 22.53 25.85 16.75 43.25 17.34 6.05 15.98 5.09 18.82 8.61 18.56 8.45 18.51 28.37 6.58 8.37 20.58 4.89 11.20 4.77

Move to 52-Wk MV EV Low High ($mn) ($mn) -14% 130% 58,325 60,571 -20% 130% 22,626 36,188 -14% 206% 16,186 17,984 -22% 259% 10,771 10,518 -16% 102% 10,249 10,115 -11% 194% 9,515 10,019 -14% 290% 8,718 14,000 -17% 157% 7,097 7,611 -6% 226% 5,935 8,542 -37% 53% 5,414 10,591 -8% 157% 4,591 4,405 -17% 184% 4,526 4,502 -18% 272% 3,873 7,247 -26% 23% 3,431 3,431 -7% 191% 3,399 3,219 -18% 220% 3,215 3,734 -22% 73% 3,033 6,689 -17% 197% 2,736 3,094 -17% 212% 2,714 3,017 -34% 59% 2,672 na -36% 35% 2,309 4,368 -26% 286% 2,189 3,568 -18% 79% 2,051 2,206 -36% 52% 1,973 2,971 -14% 199% 1,813 2,094 -13% 225% 1,784 1,759 -8% 761% 1,778 952 -39% 48% 1,749 na -23% 114% 1,576 1,818 -12% 182% 1,443 1,411 -19% 219% 1,408 1,686 -11% 245% 1,299 1,882 -36% 28% 1,239 1,791 -9% 394% 1,122 3,472 -22% 60% 1,083 1,068 -29% 69% 1,001 2,067 -15% 452% 960 947 -14% 245% 937 1,298 -17% 120% 845 1,027 -34% 75% 789 795 -12% 407% 776 2,704 -11% 253% 722 615 -14% 150% 719 1,167 -16% 135% 697 1,009 -13% 352% 627 1,377 -16% 187% 599 1,153 -15% 311% 596 1,169 -11% 313% 515 1,969 -22% 99% 477 413 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 2.2x 3.2x 1.0x .9x 3.1x .9x 1.5x 2.3x .9x 1.3x 1.9x .8x 1.3x nm .7x .7x .6x 1.6x 1.4x nm 1.0x 1.2x 1.7x 2.3x .9x .8x .1x nm 2.4x 2.9x .9x 1.0x .2x 1.1x 1.2x 1.6x .3x .5x 1.2x 11.7x 1.3x 1.1x 3.1x 1.3x .8x 1.1x .6x 1.6x .6x 1.5x 1.7x 1.1x

EV/ LTM EBIT 8x 7x 6x 4x 6x 4x 7x 4x 5x 11x 3x 5x 6x nm 6x 4x 14x 5x 4x nm 13x 5x 6x 8x 3x 3x 2x nm 8x 6x 5x 3x 9x 9x 5x 6x 2x 3x 7x 12x 5x 4x 7x 7x 4x 8x 4x nm 3x 6x 6x 5x

Last FY Act. 12x 5x 7x 7x 12x 7x 8x 6x 8x 29x 5x 10x 4x 375x 12x 5x 15x 6x 6x 10x 15x 7x 6x 11x 4x 4x 3x 12x 14x 10x 8x 5x 13x 23x 8x 16x 7x 5x 10x 18x 3x 7x 7x 5x 4x 6x 4x nm 5x 16x 15x 7x

P/E This FY Est. 10x 5x 6x 5x 8x 6x 6x 5x 7x 10x 4x 8x 4x 19x 10x 6x 10x 6x 4x 13x 10x 5x 5x 10x 4x 5x 3x 12x 11x 7x 7x 4x 9x 8x 10x 12x 3x 3x 10x 12x 3x 7x 5x 7x 3x 7x 4x 5x 7x 7x 8x 7x

Next FY Est. 10x 4x 6x 5x 6x 6x 6x 4x 7x 9x 4x 7x 5x 18x 9x 5x 10x 5x 4x 13x 10x 4x 5x 10x 4x 8x 4x 11x 11x 4x 6x 4x 9x 6x 12x 12x 3x 4x 14x 11x 3x 6x 4x 5x 4x 6x 4x 4x 6x 7x 7x 6x

P/ Tang. Book 5.0x 2.9x 2.5x 4.1x 3.1x 1.8x 2.2x 1.4x 6.7x 2.2x 1.1x 2.8x .8x 1.6x 5.4x 1.4x 1.2x 1.3x .7x 2.0x 1.7x nm 1.2x 2.1x .7x .9x 1.3x 1.8x nm 1.9x 1.7x 2.2x 2.1x .8x 1.5x nm 1.2x 1.1x 2.0x 1.4x .8x 1.3x 1.0x 1.9x 1.3x .6x 1.3x 2.0x 1.1x 1.9x 3.0x 1.5x

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Thanksgiving 2008

Financial: Consumer Financial Services – Valuation Last FY Act. 85x 6x 5x 8x 15x nm 6x 52x 15x nm nm nm 16x 9x 12x 8x nm 19x nm 6x 53x 18x 4x 4x nm nm 2x nm 3x 17x 41x 9x

P/E This FY Est. 20x 8x 7x 6x 14x 6x 10x 11x 36x nm nm nm 17x 10x 12x 7x nm 15x 5x 5x 25x 5x 5x 4x 6x 10x nm nm 3x 11x 14x 8x

Next FY Est. 17x 8x 8x 8x 12x 4x 9x 10x 18x 16x 17x nm 8x 10x 10x 7x nm 13x 8x 5x 23x 6x 5x 4x 7x 6x nm nm 3x 10x 12x 8x

P/ Tang. Book 38.8x 1.9x 1.0x .8x nm 1.5x nm nm 15.0x .3x .3x nm 1.6x 1.2x 1.1x nm nm 4.3x nm 1.2x 1.1x 1.1x .5x nm .3x 2.5x .2x .2x 2.7x 3.7x 17.5x 1.1x

Last FY Act. 5x 24x 20x 9x 15x 15x 16x 35x 20x 12x 8x 5x 15x 14x 15x

P/E This FY Est. 6x 16x 15x 9x 17x 16x 10x 20x 14x 12x 19x 10x 14x 12x 15x

Next FY Est. 6x 13x 12x 9x 16x 15x 6x 16x 13x 9x 17x 11x 12x 10x 12x

P/ Tang. Book 1.0x nm 13.5x nm nm nm 1.6x nm 11.2x 1.5x 1.7x .7x 4.5x 3.1x 1.6x

(Sorted by market value)

Company / Ticker Visa Inc. / V American Express Com / AXP Capital One Financia / COF Discover Financial S / DFS Dun & Bradstreet Cor / DNB SLM Corporation / SLM Fidelity National In / FIS Metavante Technologi / MV Greenhill & Co., Inc / GHL CIT Group Inc. / CIT AmeriCredit Corp. / ACF Fannie Mae / FNM Nelnet, Inc. / NNI Financial Federal Co / FIF Ocwen Financial Corp / OCN Euronet Worldwide, I / EEFT Freddie Mac / FRE S1 Corporation / SONE PHH Corporation / PHH World Acceptance Cor / WRLD United Financial Ban / UBNK BGC Partners, Inc. / BGCP Hercules Technology / HTGC Dollar Financial Cor / DLLR NewStar Financial, I / NEWS China Finance Online / JRJC Advanta Corp. / ADVNB CompuCredit Corporat / CCRT Advance America, Cas / AEA

Price ($) 54.24 19.99 31.19 9.47 72.73 7.43 15.85 15.55 61.05 4.14 5.56 0.54 11.48 18.81 7.36 9.14 0.67 6.05 5.14 17.07 13.72 2.99 6.37 8.50 3.70 8.00 3.01 2.47 1.88

Move to 52-Wk MV Low High ($mn) -19% 66% 45,825 -17% 199% 23,186 -7% 104% 12,216 -21% 110% 4,545 -10% 36% 3,921 -44% 436% 3,472 -22% 60% 3,011 -26% 70% 1,861 -26% 52% 1,721 -36% 643% 1,182 -49% 188% 647 -35% 8200% 581 -25% 72% 568 -7% 43% 483 -50% 10% 462 -15% 264% 460 -63% 6310% 434 -34% 37% 324 -17% 342% 279 -12% 169% 277 -26% 25% 243 -19% 334% 242 -7% 104% 209 -3% 270% 204 -5% 173% 180 -13% 277% 176 -9% 354% 137 -37% 526% 119 -20% 469% 115 Average (equal-weighted) Average (market value-weighted) Median

Financial: Insurance (Miscellaneous) – Valuation (Sorted by market value)

Company / Ticker MetLife, Inc. / MET Marsh & McLennan Com / MMC Aon Corporation / AOC Willis Group Holding / WSH Brown & Brown, Inc. / BRO Arthur J. Gallagher / AJG Enstar Group Ltd. / ESGR Crawford & Company / CRD.B Life Partners Holdin / LPHI CNinsure Inc. / CISG eHealth, Inc. / EHTH Baldwin & Lyons, Inc / BWINB

Price ($) 28.14 23.85 42.16 24.56 20.42 23.90 62.82 11.20 30.95 7.61 10.27 16.72

Move to 52-Wk MV Low High ($mn) -11% 139% 22,332 -7% 54% 12,261 -22% 22% 11,374 -20% 66% 4,085 -20% 34% 2,889 -11% 26% 2,271 -20% 115% 837 -73% 101% 574 -61% 37% 368 -13% 162% 347 -7% 259% 258 -16% 70% 252 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

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Financial: Insurance (Accident and Health) – Valuation Last FY Act. 6x 13x 6x 7x 6x 8x 3x 7x 5x 4x 3x 10x 11x 6x 22x 8x 11x 3x 5x 6x 8x 8x 6x

P/E This FY Est. 7x 10x 6x 6x 7x 6x 4x 7x 7x 3x 5x 9x 8x 5x 17x 6x 10x 2x 6x 7x 7x 7x 7x

Next FY Est. 7x 9x 6x 6x 5x 6x 3x 6x 6x 3x 4x 9x 7x 5x 14x 6x 9x 7x 5x 7x 6x 7x 6x

P/ Tang. Book 1.2x 3.0x nm 3.1x 2.4x .8x 2.0x 1.6x .9x .8x 28.9x 2.1x nm 1.2x 20.6x 1.2x 2.0x .8x .7x 1.2x 4.1x 2.3x 1.4x

Last FY Act. 12x 5x 2x 10x 3x 3x 12x 6x 3x 8x 7x 1x 2x 4x nm 3x 4x 23x 9x 6x 8x 5x

P/E This FY Est. 22x 9x 4x 3x 4x nm 16x 5x 3x 6x 6x 1x 3x 6x 3x nm 5x 25x 3x 7x 13x 5x

Next FY Est. 16x 6x 4x 3x 3x 7x 12x 4x 3x 6x 6x 1x 2x 4x 2x 4x 4x 22x 3x 6x 10x 4x

P/ Tang. Book 3.2x 1.1x .9x 1.7x .6x .4x 1.9x 1.0x .7x .9x 1.1x .1x .4x .7x .2x .3x .7x 2.3x .4x 1.0x 1.9x .7x

(Sorted by market value)

Company / Ticker UnitedHealth Group I / UNH AFLAC Incorporated / AFL WellPoint, Inc. / WLP Aetna Inc. / AET Humana Inc. / HUM Unum Group / UNM CIGNA Corporation / CI Torchmark Corporatio / TMK Transatlantic Holdin / TRH Assurant, Inc. / AIZ Coventry Health Care / CVH AMERIGROUP Corporati / AGP HealthSpring, Inc / HS Health Net, Inc. / HNT Catalyst Health Solu / CHSI Universal American C / UAM Molina Healthcare, I / MOH WellCare Health Plan / WCG Triple-S Management / GTS Amerisafe, Inc. / AMSF

Price ($) 20.02 41.77 35.24 23.33 30.63 15.04 12.95 38.47 38.92 19.98 12.59 22.50 17.02 9.46 20.00 9.33 22.26 9.36 9.88 15.97

Move to 52-Wk MV Low High ($mn) -28% 197% 24,180 -23% 65% 19,470 -7% 155% 17,939 -13% 157% 10,758 -18% 188% 5,168 -34% 99% 4,980 -24% 340% 3,519 -18% 72% 3,271 -17% 93% 2,579 -7% 257% 2,350 -9% 407% 1,876 -29% 82% 1,192 -23% 35% 996 -4% 460% 981 -38% 77% 871 -31% 184% 632 -17% 102% 599 -35% 527% 390 -2% 125% 319 -44% 35% 301 Average (equal-weighted) Average (market value-weighted) Median

Financial: Insurance (Life) – Valuation (Sorted by market value)

Company / Ticker China Life Insurance / LFC AXA (ADR) / AXA ING Groep N.V. (ADR) / ING Prudential Public Li / PUK Prudential Financial / PRU AEGON N.V. (ADR) / AEG Nationwide Financial / NFS Principal Financial / PFG Lincoln National Cor / LNC Reinsurance Group of / RGA.A StanCorp Financial G / SFG Genworth Financial, / GNW Protective Life Corp / PL Delphi Financial Gro / DFG Conseco, Inc. / CNO Phoenix Companies, I / PNX FBL Financial Group / FFG Citizens, Inc. / CIA American Equity Inve / AEL

Price ($) 41.26 17.43 9.53 9.00 25.24 4.80 50.00 16.83 14.35 37.87 31.72 1.47 8.85 12.26 2.68 3.35 12.14 7.90 4.39

Move to 52-Wk MV Low High ($mn) -19% 114% 77,745 -15% 143% 35,919 -31% 327% 19,375 -17% 236% 11,236 -20% 295% 10,702 -24% 288% 7,856 -25% 4% 6,899 -26% 321% 4,365 -12% 341% 3,672 -31% 69% 2,360 -10% 74% 1,552 -39% 1819% 637 -17% 401% 619 0% 225% 576 -51% 428% 495 -20% 317% 383 0% 215% 366 -36% 16% 354 -17% 165% 233 Average (equal-weighted) Average (market value-weighted) Median

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Thanksgiving 2008

Financial: Insurance (Property and Casualty) – Valuation (Sorted by market value)

Company / Ticker Berkshire Hathaway I / BRK.A Allianz SE (ADR) / AZ Travelers Companies, / TRV Chubb Corporation, T / CB ACE Limited / ACE Allstate Corporation / ALL Loews Corporation / L Progressive Corporat / PGR American Internation / AIG W.R. Berkley Corpora / WRB Philadelphia Consoli / PHLY Everest Re Group, Lt / RE Cincinnati Financial / CINF Arch Capital Group L / ACGL Hartford Financial S / HIG Axis Capital Holding / AXS PartnerRe Ltd. / PRE CNA Financial Corpor / CNA White Mountains Insu / WTM Markel Corporation / MKL HCC Insurance Holdin / HCC RenaissanceRe Holdin / RNR Odyssey Re Holdings / ORH Mercury General Corp / MCY American Financial G / AFG Old Republic Interna / ORI XL Capital Ltd. / XL Fidelity National Fi / FNF Erie Indemnity Compa / ERIE Hanover Insurance Gr / THG First American Corpo / FAF MBIA Inc. / MBI Aspen Insurance Hold / AHL ProAssurance Corpora / PRA Allied World Assuran / AWH Platinum Underwriter / PTP Endurance Specialty / ENH Montpelier Re Holdin / MRH IPC Holdings, Ltd. / IPCR Zenith National Insu / ZNT RLI Corp. / RLI Selective Insurance / SIGI Harleysville Group I / HGIC State Auto Financial / STFC Argo Group Internati / AGII OneBeacon Insurance / OB Navigators Group, In / NAVG Assured Guaranty Ltd / AGO Max Capital Group Lt / MXGL Employers Holdings, / EIG

Price ($) 101,000 7.00 41.88 49.60 52.70 27.07 27.94 14.13 2.08 27.29 59.66 69.47 26.23 66.30 12.65 25.63 65.74 12.77 319.00 312.25 23.59 42.76 40.94 44.72 20.90 9.65 6.14 9.47 37.48 37.66 19.79 5.90 19.45 46.78 30.24 29.73 24.85 13.93 26.40 31.96 54.68 20.95 33.05 23.35 30.00 9.50 50.60 8.45 13.00 13.98

Move to 52-Wk MV Low High ($mn) -5% 50% 156,467 -13% 210% 31,665 -31% 40% 24,480 -33% 40% 17,643 -34% 29% 17,580 -18% 105% 14,509 -17% 84% 12,184 -27% 51% 9,547 -40% 2895% 5,595 -39% 17% 4,400 -50% 1% 4,283 -21% 54% 4,266 -48% 58% 4,259 -50% 21% 3,996 -35% 680% 3,802 -22% 69% 3,625 -27% 28% 3,619 -9% 191% 3,435 -17% 66% 3,331 -8% 59% 3,064 -40% 33% 2,706 -26% 44% 2,626 -23% 17% 2,460 -11% 39% 2,449 -35% 53% 2,415 -30% 79% 2,227 -44% 995% 2,031 -25% 121% 2,006 -48% 50% 1,926 -21% 46% 1,924 -16% 234% 1,838 -39% 562% 1,612 -18% 67% 1,585 -20% 94% 1,567 -31% 69% 1,482 -28% 30% 1,418 -22% 74% 1,416 -21% 29% 1,275 -28% 28% 1,234 -19% 51% 1,191 -20% 32% 1,171 -20% 45% 1,106 -25% 57% 933 -17% 59% 924 -18% 44% 923 -1% 151% 903 -22% 32% 849 -23% 231% 769 -8% 138% 728 -28% 48% 683 Average (equal-weighted) Average MV-weighted) Median

Last FY Act. 12x 3x 6x 7x 7x 3x 8x 9x 1x 7x 14x 5x 5x 6x 1x 4x 6x 4x 8x 8x 7x 5x 5x 10x 7x 8x 5x 16x 11x 8x nm nm 4x 10x 4x 6x 3x 4x 5x 5x 7x 8x 10x 8x 10x 4x 9x nm 3x 6x 7x 8x 6x

www.manualofideas.com

P/E This FY Est. 18x 6x 8x 9x 7x 8x 7x 11x nm 9x 16x 7x 13x 7x 3x 9x 6x 4x 37x 18x 8x 11x 24x 12x 5x nm 2x nm 14x 11x 19x nm 8x 10x 4x 6x 7x 12x 6x 10x 12x 11x 12x nm 9x 7x 12x 6x nm 8x 10x 12x 9x

Next FY Est. 16x 5x 8x 9x 7x 5x 6x 11x 1x 9x 16x 6x 12x 7x 2x 5x 7x 4x 13x 14x 8x 6x 15x 13x 6x nm 2x 18x 12x 9x 13x 13x 5x 10x 4x 6x 5x 6x 6x 12x 14x 11x 10x 11x 6x 6x 10x 4x 4x 8x 8x 11x 8x

P/ Tang. Book 1.8x 1.0x 1.2x 1.3x 1.5x .9x .8x 2.2x .1x 1.5x 2.7x .8x .9x 1.1x .4x .9x 1.0x .5x .8x 1.6x 1.6x 1.1x .9x 1.4x .9x .6x .3x 2.1x 2.1x 1.0x nm .6x .6x 1.2x .7x .8x .7x .9x .7x 1.2x 1.7x 1.2x 1.4x 1.2x .8x .7x 1.3x .4x .6x 1.7x 1.1x 1.4x 1.0x PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 334 of 401

Thanksgiving 2008

Financial: Investment Services – Valuation (Sorted by market value)

Company / Ticker UBS AG (USA) / UBS Credit Suisse Group / CS Goldman Sachs Group, / GS Merrill Lynch & Co., / MER Charles Schwab Corpo / SCHW CME Group Inc. / CME BlackRock, Inc. / BLK Morgan Stanley / MS Franklin Resources, / BEN T. Rowe Price Group, / TROW TD Ameritrade Holdin / AMTD NYSE Euronext / NYX IntercontinentalExch / ICE NASDAQ OMX Group, In / NDAQ Ameriprise Financial / AMP SEI Investments Comp / SEIC Legg Mason, Inc. / LM Federated Investors, / FII Jefferies Group, Inc / JEF Raymond James Financ / RJF Eaton Vance Corp. / EV Lazard Ltd / LAZ Blackstone Group L.P / BX Och-Ziff Capital Man / OZM AllianceBernstein Ho / AB Knight Capital Group / NITE IDACORP, Inc. / IDA Affiliated Managers / AMG Fortress Investment / FIG Janus Capital Group / JNS Stifel Financial Cor / SF Waddell & Reed Finan / WDR optionsXpress Holdin / OXPS Gamco Investors Inc. / GBL RiskMetrics Group, I / RMG Interactive Brokers / IBKR KBW, Inc. / KBW E TRADE Financial Co / ETFC Investment Technolog / ITG GLG Partners, Inc. / GLG Piper Jaffray Compan / PJC Cohen & Steers, Inc. / CNS thinkorswim Group In / SWIM Duff & Phelps Corpor / DUF GFI Group Inc. / GFIG SWS Group, Inc. / SWS MF Global Ltd. / MF TradeStation Group, / TRAD LaBranche & Co., Inc / LAB Evercore Partners In / EVR

Price ($) 11.50 26.95 66.73 13.20 16.61 209.03 110.12 12.03 54.43 31.51 12.31 24.84 70.86 21.90 18.00 15.67 15.65 20.96 12.90 17.14 17.26 25.86 6.50 4.80 17.70 15.43 29.23 29.93 2.88 7.27 38.87 11.21 15.22 27.81 13.22 18.99 22.59 1.35 16.60 2.70 31.03 10.78 6.40 11.28 3.35 12.84 2.48 6.38 4.53 7.72

Move to 52-Wk MV Low High ($mn) 0% 301% 32,631 -8% 139% 28,066 -9% 251% 26,388 -12% 378% 21,117 -35% 73% 19,188 -6% 242% 14,002 -10% 126% 13,014 -44% 360% 12,776 -9% 136% 12,751 -15% 123% 8,142 -19% 91% 7,294 -12% 273% 6,583 -25% 175% 5,119 -9% 128% 4,384 -9% 242% 3,899 -16% 111% 2,987 -29% 411% 2,201 -18% 115% 2,134 -11% 125% 2,109 -9% 123% 2,052 -14% 177% 2,003 -10% 97% 1,790 -6% 273% 1,726 -35% 510% 1,700 -11% 371% 1,550 -29% 28% 1,382 -25% 26% 1,332 -10% 343% 1,229 -13% 577% 1,171 -11% 407% 1,148 -37% 56% 997 -11% 266% 951 -31% 130% 912 -8% 164% 861 -19% 100% 812 -9% 89% 771 -20% 133% 750 -6% 347% 726 -8% 221% 718 -4% 420% 662 -31% 62% 586 -4% 211% 448 -12% 185% 426 -10% 102% 402 -22% 670% 396 -21% 75% 353 -22% 1198% 298 -23% 133% 275 -31% 79% 273 -4% 240% 247 Average (equal-weighted) Average (MV-weighted) Median

Last FY Act. nm 5x 3x nm 18x 14x 15x 5x 8x 13x 9x 9x 21x 6x 5x 12x 8x 10x 13x 8x 16x 9x 1x nm 4x 13x 16x 7x nm 7x 31x 7x 10x 10x 331x 3x 26x nm 7x nm 12x 6x 19x 226x 4x 11x nm 8x nm nm 22x 9x 10x

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P/E This FY Est. nm nm 6x nm 16x 12x 15x 3x 12x 15x 10x 8x 15x 11x 5x 12x nm 10x nm 9x 11x 15x nm 11x 6x 11x 13x 5x 7x 8x 16x 8x 10x 19x 47x 8x nm nm 7x 7x nm 14x 7x 11x 4x 11x 3x 9x 9x 17x 12x 7x 10x

Next FY Est. 7x 9x 6x 6x 14x 11x 15x 3x 10x 19x 9x 8x 13x 9x 5x 12x 6x 9x 25x 7x 12x 11x 8x 9x 7x 10x 13x 6x 4x 11x 14x 10x 9x 17x 27x 8x 17x nm 7x 8x 30x 14x 8x 9x 5x 9x 3x 10x 11x 7x 11x 9x 9x

P/ Tang. Book 1.2x 1.2x .7x .9x 5.4x nm 78.3x .4x 2.5x 4.1x nm nm nm nm .6x 6.7x nm nm 1.1x 1.1x 31.0x 16.7x 1.7x nm 1.0x 2.2x 1.1x nm 7.0x nm 2.2x 6.8x 4.2x 1.8x nm 1.6x 1.8x 3.5x 2.9x nm 1.0x 2.0x nm nm 1.7x 1.1x .3x 1.7x .8x 1.7x 4.9x 5.7x 1.7x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 335 of 401

Thanksgiving 2008

Financial: Miscellaneous Financial Services – Valuation (Sorted by market value)

Company / Ticker BP Prudhoe Bay Royal / BPT San Juan Basin Royal / SJT MSCI Inc. / MXB Apollo Investment Co / AINV American Capital Ltd / ACAS Hugoton Royalty Trus / HGT Cash America Interna / CSH Sapient Corporation / SAPE Allied Capital Corpo / ALD Ares Capital Corpora / ARCC Chimera Investment C / CIM Blackrock Kelso Capi / BKCC FBR Capital Markets / FBCM Prospect Capital Cor / PSEC MVC Capital, Inc. / MVC Global Cash Access H / GCA Meridian Interstate / EBSB Whiting USA Trust I / WHX NGP Capital Resource / NGPC Insight Enterprises, / NSIT Encore Capital Group / ECPG Gladstone Capital Co / GLAD Internet Capital Gro / ICGE Fifth Street Finance / FSC GreenHunter Energy, / GRH MV Oil Trust / MVO China BAK Battery In / CBAK

Price ($) 76.97 32.39 13.95 9.59 6.33 23.17 27.31 4.25 2.97 5.45 2.86 7.37 4.65 9.98 10.38 2.81 9.33 15.29 9.75 4.34 7.75 8.22 4.19 6.61 7.22 10.98 1.99

Move to 52-Wk MV EV Low High ($mn) ($mn) -25% 41% 1,647 1,646 -20% 46% 1,510 1,489 -9% 175% 1,396 1,557 -17% 112% 1,364 2,612 -13% 518% 1,312 5,534 -29% 63% 927 911 -8% 79% 793 1,115 -4% 135% 539 390 -5% 775% 531 2,460 -13% 190% 530 1,370 -21% 592% 507 1,621 -31% 110% 409 838 -34% 148% 302 859 -43% 65% 296 398 0% 72% 252 277 -12% 207% 233 470 -12% 11% 215 222 -28% 65% 212 na -9% 84% 211 326 -10% 369% 198 456 -21% 83% 179 466 -10% 145% 173 301 -4% 198% 160 96 -24% 102% 150 63 -55% 252% 144 215 -17% 169% 126 126 -9% 239% 107 252 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 6.9x 10.6x 3.7x 6.9x 4.7x 8.0x 1.1x .6x 4.7x 5.9x 19.8x 5.8x 3.2x 4.0x 8.6x .7x 4.2x nm 8.6x .1x 1.8x 6.7x 1.5x 2.9x 195.1x 4.3x 1.2x 12.4x 7.8x 4.5x

EV/ LTM EBIT 7x 11x 11x 14x 9x 8x 7x 8x 10x 9x nm 7x nm 6x 26x 7x 11x nm 14x nm 9x 11x nm 125x nm 4x nm 16x 10x 9x

Last FY Act. 9x 13x 15x nm 2x 13x 10x 35x 3x 4x nm 21x 58x 9x 4x 10x 104x nm 5x 3x 12x 7x nm 132x nm 4x 199x 31x 14x 10x

P/E This FY Est. 7x 10x 13x 6x 2x 7x 9x 11x 2x 4x 5x 4x nm 5x 4x 5x nm 2x 10x 3x 8x 6x nm 5x nm 9x nm 6x 7x 6x

Next FY Est. 8x 10x 12x 6x 2x 10x 8x 10x 3x 4x 7x 6x 66x 5x 6x 4x 62x 2x 7x 4x 7x 5x nm 4x 7x 4x 7x 11x 9x 6x

P/ Tang. Book nm 82.0x nm .7x .3x 6.2x 7.0x 2.4x .2x .4x 2.1x .6x .7x .7x .6x nm 1.1x nm .7x .5x 1.0x .6x .6x .5x 7.1x 2.9x .9x 5.2x 9.9x .7x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 336 of 401

Thanksgiving 2008

Financial: Money Center Banks – Valuation (Sorted by market value)

Company / Ticker JPMorgan Chase & Co. / JPM HSBC Holdings plc (A / HBC Wells Fargo & Compan / WFC Bank of America Corp / BAC Mitsubishi UFJ Finan / MTU Citigroup Inc. / C U.S. Bancorp / USB Banco Bilbao Vizcaya / BBV Bank of New York Mel / BK Westpac Banking Corp / WBK Barclays PLC (ADR) / BCS Deutsche Bank AG (US / DB National Bank of Gre / NBG HDFC Bank Limited (A / HDB Banco Santander-Chil / SAN Banco de Chile (ADR) / BCH Bancolombia S.A. (AD / CIB Allied Irish Banks, / AIB Corpbanca (ADR) / BCA Banco Macro SA (ADR) / BMA Bank of the Ozarks, / OZRK BBVA Banco Frances S / BFR Banco Latinoamerican / BLX Danvers Bancorp, Inc / DNBK Encore Bancshares, I / EBTX

Price ($) 34.47 52.60 28.73 16.42 6.00 9.52 26.30 10.52 30.24 54.18 9.29 30.70 3.90 58.01 32.33 31.39 18.69 7.26 20.03 8.69 28.07 2.47 9.71 12.33 12.47

Move to 52-Wk MV Low High ($mn) -15% 47% 128,654 -6% 68% 127,394 -29% 56% 95,534 -9% 186% 82,389 -14% 87% 66,401 -13% 271% 51,880 -22% 61% 46,145 -14% 144% 39,429 -32% 66% 34,702 -2% 146% 20,527 -3% 407% 19,440 -9% 341% 16,753 -23% 245% 9,685 -10% 151% 8,212 -22% 72% 5,853 -30% 91% 4,223 -20% 135% 3,703 -5% 563% 3,204 -15% 84% 885 -43% 224% 594 -51% 31% 473 -39% 269% 388 -12% 114% 353 -24% 14% 220 -8% 76% 127 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

Last FY Act. 8x 6x 12x 5x nm 13x 11x 5x 13x 8x 2x 2x 6x 25x 16x 11x 8x 1x 11x 5x 15x 1x 5x 49x 16x 11x 8x 8x

P/E This FY Est. 19x 9x 14x 11x 7x nm 13x 5x 11x 8x 31x nm 5x 17x 9x 7x 6x 2x 8x 3x 14x 3x 5x 103x 36x 15x 11x 9x

Next FY Est. 11x 8x 14x 6x 6x 10x 12x 6x 10x 8x 6x 5x 5x 14x 9x 7x 6x nm 8x 3x 13x 3x 4x 69x 12x 11x 9x 8x

P/ Tang. Book 1.9x 1.5x 6.9x 3.3x 1.1x 1.5x 5.1x 1.7x 6.8x 2.1x .9x .5x 1.9x 2.9x 2.7x 2.3x 1.8x .3x nm 1.0x 2.3x .6x .6x 1.0x 1.0x 2.1x 2.9x 1.8x

Insider Trades # # Buy Sell 1 5 4 2 2 5 10 1 22 -

7 4 12

30 1

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 337 of 401

Thanksgiving 2008

Financial: Regional Banks (I of III) – Valuation (Sorted by market value)

Company / Ticker Banco Itau Holding F / ITU Banco Bradesco SA (A / BBD Mizuho Financial Gro / MFG PNC Financial Servic / PNC State Street Corpora / STT BB&T Corporation / BBT SunTrust Banks, Inc. / STI Wachovia Corporation / WB Northern Trust Corpo / NTRS Unibanco - Uniao Ban / UBB Shinhan Financial Gr / SHG KB Financial Group, / KB M&T Bank Corporation / MTB Regions Financial Co / RF Fifth Third Bancorp / FITB KeyCorp / KEY National City Corpor / NCC TFS Financial Corpor / TFSL Marshall & Ilsley Co / MI Zions Bancorporation / ZION Comerica Incorporate / CMA Commerce Bancshares, / CBSH Credicorp Ltd. (USA) / BAP Cullen/Frost Bankers / CFR Woori Finance Holdin / WF BOK Financial Corpor / BOKF Huntington Bancshare / HBAN Synovus Financial Co / SNV Valley National Banc / VLY Bank of Hawaii Corpo / BOH City National Corpor / CYN First Horizon Nation / FHN TCF Financial Corpor / TCB Fulton Financial Cor / FULT First Niagara Financ / FNFG UMB Financial Corpor / UMBF Popular, Inc. / BPOP FirstMerit Corporati / FMER BancorpSouth, Inc. / BXS Wilmington Trust Cor / WL WestAmerica Bancorp. / WABC NewAlliance Bancshar / NAL Bank of Ireland (ADR / IRE Prosperity Bancshare / PRSP United Bankshares, I / UBSI SVB Financial Group / SIVB Hancock Holding Comp / HBHC National Penn Bancsh / NPBC Susquehanna Bancshar / SUSQ

Price ($) 10.95 10.19 4.95 62.34 38.89 28.05 33.52 5.49 44.92 59.60 44.25 22.17 65.83 9.67 9.54 9.60 2.33 13.10 14.70 32.69 21.95 42.41 39.82 51.92 10.81 43.11 7.79 7.89 17.55 43.46 42.54 9.78 14.48 10.39 14.81 41.85 5.97 20.73 19.89 24.01 51.74 13.48 5.70 30.47 30.14 39.69 40.54 14.81 13.70

Move to 52-Wk MV Low High ($mn) -39% 136% 32,844 -20% 148% 30,591 -28% 142% 28,193 -32% 41% 21,703 -25% 123% 16,799 -33% 62% 15,497 -24% 119% 11,870 -86% 728% 11,863 -4% 98% 10,019 -36% 171% 9,683 -7% 173% 8,819 -7% 255% 7,502 -19% 65% 7,260 -34% 184% 6,691 -18% 227% 5,509 -40% 184% 4,752 -46% 815% 4,744 -28% 5% 4,229 -26% 125% 3,826 -46% 75% 3,771 -12% 146% 3,303 -18% 25% 3,215 -24% 118% 3,176 -17% 41% 3,080 0% 481% 2,922 -11% 42% 2,907 -44% 116% 2,852 -18% 138% 2,606 -22% 41% 2,368 -14% 61% 2,074 -16% 68% 2,049 -55% 136% 1,972 -36% 93% 1,896 -29% 64% 1,818 -33% 51% 1,756 -16% 66% 1,713 -17% 138% 1,684 -34% 49% 1,679 -24% 60% 1,653 -15% 95% 1,635 -31% 52% 1,495 -30% 33% 1,443 0% 1053% 1,431 -28% 53% 1,404 -39% 39% 1,306 -7% 79% 1,302 -18% 69% 1,287 -27% 35% 1,186 -23% 102% 1,180 Average (equal-weighted) Average (MV-weighted) Median

Last FY Act. 9x 8x 15x 14x 11x 9x 7x 2x 14x 11x 5x 2x 11x 5x 5x 4x 5x 164x 8x 7x 5x 16x 9x 15x 2x 13x 31x 8x 15x 12x 9x nm 7x 12x 18x 24x nm 14x 12x 9x 17x 59x 1x 16x 14x 12x 18x 11x 11x 15x 12x 11x

www.manualofideas.com

P/E This FY Est. 7x 8x 5x 14x 8x 11x 10x nm 10x 5x 4x 4x 12x 10x 106x nm nm 82x nm 15x 13x 17x 7x 15x 2x 17x 7x 46x 20x 11x 14x nm 13x 14x 18x 17x nm 14x 13x 12x 17x 28x 1x 16x 14x 13x 17x 12x 13x 17x 12x 13x

Next FY Est. 8x 8x 4x 14x 8x 11x 16x 5x 11x 5x 4x 4x 13x 12x 13x 15x nm 109x 12x 14x 11x 16x 6x 14x 2x 13x 8x 42x 15x 12x 14x 978x 11x 13x 17x 18x 43x 15x 13x 12x 16x 25x 4x 14x 14x 12x 16x 11x 11x 35x 17x 13x

P/ Tang. Book nm nm nm 5.1x 2.5x 2.4x 1.3x .6x 2.3x nm nm nm 2.4x .9x 1.1x .8x .5x 2.2x .9x 1.2x .6x 2.2x 1.8x 2.9x nm 1.9x 1.2x .9x 3.1x 2.9x 1.8x 1.3x 2.0x 1.9x 2.8x 2.1x 1.0x 2.1x 1.7x 2.4x 5.7x 1.7x .2x 3.8x 2.9x 1.8x 2.4x 2.6x 1.9x 2.0x 1.3x 1.9x

Insider Trades # # Buy Sell 2 20 7 6 5 5 3 1 1 17 3 12 17 1 1 6 1 10 14 10 3 1 1 9 1 12 4 5 12 1 2 2 4 14 2 1 25 8 2 2 3 1 15 3 13 11 1 1 1 4 23 7 1 24 1 6 14 1 11 16 20 26 22 8 12 1

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 338 of 401

Thanksgiving 2008

Financial: Regional Banks (II of III) – Valuation (Sorted by market value)

Company / Ticker PrivateBancorp, Inc. / PVTB Old National Bancorp / ONB Trustmark Corporatio / TRMK Whitney Holding Corp / WTNY Signature Bank / SBNY First Financial Bank / FFIN F.N.B. Corporation / FNB Cathay General Banco / CATY East West Bancorp, I / EWBC CVB Financial Corp. / CVBF Glacier Bancorp, Inc / GBCI First Midwest Bancor / FMBI First BanCorp. / FBP MB Financial, Inc. / MBFI Umpqua Holdings Corp / UMPQ Park National Corpor / PRK S&T Bancorp, Inc. / STBA Webster Financial Co / WBS NBT Bancorp Inc. / NBTB First Commonwealth F / FCF Community Bank Syste / CBU PacWest Bancorp / PACW Pacific Capital Banc / PCBC BancFirst Corporatio / BANF IBERIABANK Corporati / IBKC WesBanco, Inc. / WSBC Pinnacle Financial P / PNFP City Holding Company / CHCO Chemical Financial C / CHFC United Community Ban / UCBI First Busey Corporat / BUSE Wintrust Financial C / WTFC Colonial BancGroup, / CNB Bank Mutual Corporat / BKMU First Financial Banc / FFBC Home BancShares, Inc / HOMB First Financial Corp / THFF Sterling Bancshares, / SBIB Texas Capital Bancsh / TCBI Capital City Bank Gr / CCBG Community Trust Banc / CTBI Tompkins Financial C / TMP UCBH Holdings, Inc. / UCBH Boston Private Finan / BPFH Western Alliance Ban / WAL Republic Bancorp, In / RBCAA Simmons First Nation / SFNC Santander BanCorp / SBP Independent Bank Cor / INDB

Price ($) 32.94 16.28 18.75 16.69 30.20 50.18 11.57 20.18 15.00 11.29 17.24 18.96 9.51 24.97 14.35 60.87 30.51 15.44 24.80 10.84 22.80 25.52 14.75 43.91 48.84 23.00 25.71 37.08 24.41 12.12 15.86 22.84 2.66 10.58 13.04 24.46 36.83 6.45 15.13 26.79 29.65 46.06 3.99 6.78 11.15 20.84 27.63 8.26 23.59

Move to 52-Wk MV Low High ($mn) -38% 50% 1,106 -26% 73% 1,079 -24% 81% 1,075 -16% 98% 1,068 -26% 68% 1,063 -29% 34% 1,043 -20% 79% 1,037 -52% 73% 999 -55% 100% 955 -37% 77% 940 -18% 132% 937 -28% 111% 921 -41% 47% 880 -25% 77% 871 -40% 61% 863 -28% 38% 850 -18% 54% 842 -15% 132% 814 -28% 47% 807 -26% 49% 797 -21% 45% 744 -56% 84% 694 -33% 90% 688 -10% 66% 670 -23% 45% 634 -38% 53% 611 -25% 42% 610 -16% 46% 600 -40% 76% 583 -37% 70% 577 -30% 42% 568 -25% 72% 542 -47% 573% 539 -9% 35% 511 -38% 38% 489 -28% 43% 485 -32% 36% 482 -9% 117% 472 -11% 65% 467 -28% 29% 459 -46% 56% 447 -25% 29% 445 -46% 332% 443 -33% 338% 432 -39% 148% 430 -32% 70% 429 -13% 59% 386 -20% 88% 385 -15% 66% 384 Average (equal-weighted) Average (MV-weighted) Median

Last FY Act. 63x 14x 10x 7x 33x 21x 10x 8x 6x 16x 13x 12x 30x 15x 14x 38x 14x 8x 16x 17x 16x 8x 7x 13x 15x 11x 19x 12x 15x 10x 14x 10x 2x 34x 14x 23x 19x 9x 13x 16x 12x 17x 4x 62x 11x 17x 14x nm 12x 17x 17x 14x

www.manualofideas.com

P/E This FY Est. nm 15x 12x 18x 22x 20x 12x 13x nm 14x 14x 9x 11x 16x 15x 14x 13x 12x 14x 16x 15x 21x 15x 15x 16x 14x 17x 16x 23x nm 20x 28x nm 34x 17x 20x 20x 12x 15x 22x 18x 15x 50x nm nm 11x 14x 21x 12x 17x 15x 15x

Next FY Est. 33x 17x 13x 16x 18x 19x 11x 13x 22x 13x 13x 10x 12x 15x 18x 28x 12x 11x 14x 15x 15x 17x 8x 18x 14x 16x 16x 12x 19x nm 18x 20x nm 29x 15x 18x 18x 11x 13x 24x 14x 14x 12x 15x 20x 9x 15x 11x 12x 16x 15x 15x

P/ Tang. Book 2.3x 2.4x 1.9x 1.3x 1.9x 3.6x 2.6x 1.5x 1.0x 2.6x 2.3x 2.1x 1.0x 1.8x 1.8x 1.9x 3.1x 1.0x 2.8x 2.2x 3.3x 2.0x 1.4x 1.9x 2.5x 1.9x 2.4x 2.6x 1.4x 1.2x 2.4x 1.2x .4x 1.5x 2.0x 2.1x 1.8x 1.5x 1.3x 2.2x 1.9x 2.7x .6x 1.3x 1.4x 1.6x 1.8x 1.0x 2.2x 1.9x 2.0x 1.9x

Insider Trades # # Buy Sell 3 67 6 7 11 7 5 17 1 1 2 3 17 1 6 10 2 5 4 2 7 2 1 19 3 13 11 10 1 7 16 7 9 2 21 15 5 4 15 6 2 11 1 26 10 16 2 36 26 5 1 13 10 13 1 15 10 10 8 5 1

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Page 339 of 401

Thanksgiving 2008

Financial: Regional Banks (III of III) – Valuation (Sorted by market value)

Company / Ticker Renasant Corp. / RNST First Merchants Corp / FRME SCBT Financial Corpo / SCBT Central Pacific Fina / CPF Doral Financial Corp / DRL Heartland Financial / HTLF S.Y. Bancorp, Inc. / SYBT TriCo Bancshares / TCBK Citizens Republic Ba / CRBC First Community Banc / FCBC StellarOne Corp. / STEL Provident Bankshares / PBKS Washington Trust Ban / WASH Southside Bancshares / SBSI South Financial Grou / TSFG Sandy Spring Bancorp / SASR Wilshire Bancorp, In / WIBC Union Bankshares Cor / UBSH Oriental Financial G / OFG CoBiz Financial Inc / COBZ Lakeland Financial C / LKFN Grupo Financiero Gal / GGAL Nara Bancorp, Inc. / NARA Smithtown Bancorp / SMTB Columbia Banking Sys / COLB Lakeland Bancorp, In / LBAI Sterling Bancorp / STL ESSA Bancorp, Inc. / ESSA Southwest Bancorp, I / OKSB Cascade Bancorp / CACB Green Bankshares, In / GRNB Sun Bancorp, Inc. /N / SNBC Enterprise Financial / EFSC Centerstate Banks of / CSFL Hanmi Financial Corp / HAFC Peoples Bancorp Inc. / PEBO BancTrust Financial / BTFG Shore Bancshares, In / SHBI Frontier Financial C / FTBK Sierra Bancorp / BSRR Pennsylvania Commerc / COBH Banner Corporation / BANR Old Second Bancorp I / OSBC State Bancorp, Inc./ / STBC Financial Institutio / FISI Pacific Continental / PCBK Center Financial Cor / CLFC Yadkin Valley Financ / YAVY First of Long Island / FLIC

Price ($) 18.26 20.31 31.99 12.48 6.40 20.97 24.60 20.57 2.56 27.87 13.38 8.99 18.84 21.25 3.99 17.62 9.42 20.37 10.08 10.29 19.04 1.87 8.81 19.25 12.14 8.96 11.68 12.72 14.04 7.21 15.35 8.59 14.85 15.02 3.92 17.22 9.89 20.72 3.70 17.85 26.64 10.02 11.96 10.90 14.42 12.95 9.06 13.19 21.12

Move to 52-Wk MV Low High ($mn) -24% 42% 384 -20% 48% 371 -18% 41% 360 -43% 80% 359 -6% 279% 344 -24% 29% 341 -22% 47% 331 -54% 59% 324 -34% 515% 323 -8% 40% 306 -10% 70% 302 -50% 175% 302 -7% 77% 300 -28% 27% 297 -38% 366% 295 -23% 80% 289 -36% 75% 277 -30% 43% 276 0% 154% 245 -50% 65% 240 -22% 58% 234 -21% 328% 232 -10% 98% 231 -33% 27% 227 -30% 164% 220 -22% 81% 212 -13% 60% 211 -25% 11% 210 -30% 68% 204 -13% 157% 203 -22% 105% 199 -10% 94% 193 -13% 72% 189 -35% 20% 187 -13% 162% 180 -5% 70% 180 -42% 70% 175 -16% 32% 174 -51% 467% 174 -24% 51% 173 -22% 27% 170 -29% 216% 168 -11% 146% 164 0% 56% 158 -30% 56% 156 -31% 28% 156 -12% 64% 152 -25% 36% 152 -14% 16% 152 Average (equal-weighted) Average (MV-weighted) Median

Last FY Act. 11x 12x 14x 66x nm 15x 15x 13x 2x 11x 9x 9x 11x 18x 4x 9x 10x 14x 7x 11x 12x 1x 7x 13x 6x 12x 14x 33x 10x 7x 7x 10x 11x 24x nm 10x 20x 13x 2x 9x 25x 4x 6x 24x 11x 12x 7x 10x 14x 13x 12x 11x

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P/E This FY Est. 12x 13x 18x nm nm 19x 15x 18x nm 14x 15x nm 11x 11x nm 12x 10x 18x 5x 17x 12x 5x 14x 12x 37x 11x 13x 31x 13x 28x 19x 14x 15x 42x 14x 12x 37x 15x nm 9x 13x 1002x 8x 17x nm 13x 14x 13x 12x 39x 27x 14x

Next FY Est. 13x 12x 13x 29x nm 15x 15x 15x 17x 14x 21x 9x 11x 13x nm 13x 11x 16x 4x 13x 11x 5x 13x 11x 20x 10x 12x 31x 13x 21x 12x 13x 11x 41x 7x 11x 82x 14x 62x 9x 15x 20x 8x 11x 10x 11x 9x 11x 11x 16x 15x 13x

P/ Tang. Book 1.8x 1.7x 2.3x 1.1x .7x 1.9x 2.4x 1.9x .4x 3.1x 1.1x 1.3x 2.5x 2.5x .4x 1.3x 1.5x 1.9x 1.4x 1.7x 1.6x nm 1.0x 2.1x .9x 1.6x 2.2x 1.0x .9x 1.2x 1.2x .9x 1.5x 1.6x .7x 1.4x 1.3x 1.7x .5x 1.6x 1.5x .6x 1.3x 1.4x 1.6x 1.7x .9x 1.6x 1.5x 1.5x 1.5x 1.5x

Insider Trades # # Buy Sell 9 21 1 1 30 2 8 66 14 4 5 8 1 4 1 5 4 1 3 9 3 10 29 3 12 7 4 1 1 1 1 1 5 6 1 4 2 1 1 3 4 1 4 1 2 11 44 2 5 1 5 12 2 9 3 17 2 8 2 3 2

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Page 340 of 401

Thanksgiving 2008

Financial: S&Ls and Savings Banks – Valuation (Sorted by market value)

Company / Ticker Hudson City Bancorp, / HCBK People's United Fina / PBCT New York Community B / NYB Capitol Federal Fina / CFFN Associated Banc-Corp / ASBC Astoria Financial Co / AF Sovereign Bancorp, I / SOV Investors Bancorp, I / ISBC Washington Federal I / WFSL Northwest Bancorp, I / NWSB Beneficial Mutual Ba / BNCL Provident Financial / PFS Brookline Bancorp, I / BRKL Oritani Financial Co / ORIT Dime Community Bancs / DCOM Roma Financial Corpo / ROMA Provident New York B / PBNY ViewPoint Financial / VPFG Berkshire Hills Banc / BHLB Sterling Financial C / STSA Flushing Financial C / FFIC Westfield Financial, / WFD MainSource Financial / MSFG WSFS Financial Corpo / WSFS Abington Bancorp, In / ABBC First Financial Hold / FFCH West Bancorporation, / WTBA Home Federal Bancorp / HOME OceanFirst Financial / OCFC Waterstone Financial / WSBF Cape Bancorp, Inc. / CBNJ Prudential Bancorp, / PBIP Benjamin Franklin Ba / BFBC

Price ($) 17.51 18.15 14.01 44.42 17.99 16.89 2.39 13.32 15.22 22.98 11.11 15.06 11.07 16.29 15.02 14.08 10.97 15.77 26.36 5.97 14.11 9.50 13.96 42.28 9.83 19.57 11.63 10.27 14.30 5.45 8.50 9.75 13.75

Move to 52-Wk MV Low High ($mn) -24% 43% 9,127 -23% 20% 6,312 -16% 57% 4,822 -38% 16% 3,299 -21% 78% 2,296 -6% 78% 1,619 -15% 521% 1,587 -11% 21% 1,452 -13% 80% 1,338 -13% 49% 1,114 -21% 32% 914 -29% 43% 904 -21% 45% 646 -34% 24% 622 -24% 57% 513 -16% 24% 438 -17% 49% 437 -13% 27% 393 -26% 21% 322 -60% 242% 311 -22% 52% 305 -11% 21% 298 -14% 70% 281 -5% 55% 261 -14% 26% 231 -23% 118% 229 -37% 39% 202 -6% 27% 178 -14% 61% 177 -15% 172% 170 -10% 19% 113 -15% 33% 108 -31% 6% 108 Average (equal-weighted) Average (MV-weighted) Median

Last FY Act. 30x 35x 16x 63x 8x 12x nm 89x 21x 23x nm 24x 37x 74x 22x 61x 18x 75x 18x 3x 14x 33x 12x 9x 33x 10x 11x 41x 159x 109x 33x 33x 29x 37x 31x 29x

www.manualofideas.com

P/E This FY Est. 19x 33x 14x 65x 11x 11x nm 44x 12x 22x 44x 18x 50x 51x 16x 101x 15x 69x 13x 13x 11x 35x 11x 11x 27x 10x 23x 43x 11x nm 14x nm 21x 28x 26x 19x

Next FY Est. 15x 29x 12x 50x 11x 9x 4x 32x 8x 18x 38x 17x 31x 37x 14x 88x 13x 56x 13x 11x 9x 33x 10x 11x 25x 8x 14x 45x 10x 109x 23x 33x 21x 26x 22x 17x

P/ Tang. Book 2.0x 1.7x 2.8x 3.8x 1.7x 1.6x .5x 1.7x 1.2x 2.6x 1.9x 1.8x 1.5x 2.3x 2.3x 2.0x 1.9x 2.0x 2.1x .4x 1.4x 1.1x 1.9x 1.2x .9x 1.7x 2.3x .9x 1.4x 1.0x .9x 1.5x 1.5x 1.7x 2.0x 1.7x

Insider Trades # # Buy Sell 2 5 18 13 7 3 10 26 7 2 3 1 2 2 1 1 11 3 3 8 2 6 1 24 10 1 18 4 2 1 6 8 6 8 2 5 1 3 10 -

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Page 341 of 401

Thanksgiving 2008

Healthcare: Biotechnology and Drugs – Valuation (Sorted by market value)

Company / Ticker Genentech, Inc. / DNA Sanofi-Aventis SA (A / SNY Amgen, Inc. / AMGN Gilead Sciences, Inc / GILD Novo Nordisk A/S (AD / NVO Teva Pharmaceutical / TEVA Celgene Corporation / CELG Genzyme Corporation / GENZ Cardinal Health, Inc / CAH Biogen Idec Inc. / BIIB Allergan, Inc. / AGN McKesson Corporation / MCK Shire Plc. (ADR) / SHPGY Barr Pharmaceuticals / BRL Forest Laboratories, / FRX ImClone Systems Inco / IMCL Cephalon, Inc. / CEPH Hospira, Inc. / HSP AmerisourceBergen Co / ABC Vertex Pharmaceutica / VRTX Warner Chilcott Ltd. / WCRX Elan Corporation, pl / ELN Myriad Genetics, Inc / MYGN Perrigo Company / PRGO Alexion Pharmaceutic / ALXN Edwards Lifesciences / EW Mylan Inc. / MYL Endo Pharmaceuticals / ENDP Pharmaceutical Produ / PPDI Covance Inc. / CVD Techne Corporation / TECH Watson Pharmaceutica / WPI King Pharmaceuticals / KG Invitrogen Corporati / IVGN OSI Pharmaceuticals, / OSIP United Therapeutics / UTHR Alpharma Inc. / ALO BioMarin Pharmaceuti / BMRN Onyx Pharmaceuticals / ONXX Sepracor Inc. / SEPR Inverness Medical In / IMA Valeant Pharmaceutic / VRX Cubist Pharmaceutica / CBST Regeneron Pharmaceut / REGN ISIS Pharmaceuticals / ISIS Dr. Reddy's Laborato / RDY Chattem Inc. / CHTT PDL BioPharma Inc. / PDLI NBTY, Inc. / NTY ICON plc (ADR) / ICLR

Price ($) 81.59 30.22 58.23 46.92 50.52 42.91 58.86 69.14 36.09 43.52 35.66 35.26 38.76 64.63 22.97 69.45 74.50 30.02 29.98 27.50 13.30 6.71 66.13 33.27 38.24 53.31 9.13 19.76 22.22 40.03 65.96 23.61 9.64 25.05 36.92 90.52 34.75 17.11 28.88 13.88 19.00 17.88 24.64 17.17 14.09 8.10 67.27 9.51 18.29 18.98

Move to 52-Wk MV EV Low High ($mn) ($mn) -20% 22% 85,835 82,943 -18% 62% 82,566 89,716 -33% 14% 61,696 63,115 -24% 23% 42,721 42,108 -17% 46% 36,226 35,046 -16% 17% 35,015 36,420 -30% 31% 26,969 24,515 -13% 21% 18,704 18,531 -4% 72% 12,978 16,070 -13% 81% 12,697 12,363 -13% 97% 10,837 11,423 -6% 94% 9,643 10,315 -16% 89% 7,236 7,894 -42% 6% 7,074 8,418 -13% 86% 6,923 5,033 -47% 0% 6,171 5,749 -25% 8% 5,099 5,278 -22% 49% 4,791 6,665 -7% 62% 4,751 5,062 -50% 27% 4,138 3,527 -17% 43% 3,335 4,356 -12% 458% 3,186 4,452 -48% 10% 3,075 2,767 -17% 29% 3,070 3,735 -36% 25% 2,980 3,056 -22% 26% 2,967 2,956 -37% 70% 2,782 7,824 -30% 44% 2,653 2,365 0% 122% 2,620 2,110 0% 148% 2,533 2,347 -11% 26% 2,508 2,312 -15% 39% 2,470 2,946 -28% 31% 2,376 1,472 -19% 98% 2,314 2,792 -13% 45% 2,128 2,057 -20% 30% 2,103 2,121 -49% 10% 1,868 1,602 -17% 140% 1,708 1,713 -25% 106% 1,629 1,199 -19% 120% 1,511 1,514 -22% 230% 1,484 3,520 -39% 17% 1,457 1,368 -34% 5% 1,404 1,358 -23% 47% 1,368 822 -23% 43% 1,367 1,023 -5% 130% 1,363 1,518 -15% 22% 1,273 1,720 -23% 97% 1,137 1,115 -17% 104% 1,127 1,608 -2% 136% 1,110 1,055 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 6.5x 2.5x 4.2x 8.4x 4.7x 3.4x 12.0x 4.1x .2x 3.2x 2.6x .1x 2.6x 3.0x 1.3x 8.9x 2.8x 1.8x .1x 18.2x 4.7x 4.7x 7.7x 1.9x 14.2x 2.4x 1.5x 1.9x 1.3x 1.3x 8.6x 1.2x .8x 2.0x 5.6x 8.0x 2.5x 7.1x nm 1.2x 2.3x 1.9x 3.5x 3.3x 9.2x 1.3x 3.8x 3.8x .7x 1.3x 4.1x 4.8x 2.8x

EV/ LTM EBIT 17x 13x 12x 17x 20x 16x nm 32x 8x 10x 14x 7x 18x 23x 4x nm 19x 14x 6x nm 17x nm 44x 18x 711x 19x nm 7x 8x 9x 15x 9x 4x 12x 16x 49x nm nm nm nm 92x 66x 27x nm nm 21x 14x 16x 7x 11x 37x 18x 16x

Last FY Act. 32x 12x 21x 28x 22x 18x 109x 40x 10x 22x 22x 11x nm 49x 8x 151x nm 35x 10x nm 111x nm 65x 23x nm 29x nm 12x 16x 15x 25x 19x 13x 19x 22x 103x nm nm nm 28x nm 64x 29x nm nm 14x 22x nm 8x 20x 34x 28x 22x

P/E This FY Est. 24x 8x 13x 23x 18x 15x 38x 17x 9x 12x 14x 9x 10x 22x 7x 58x 16x 12x 10x nm 10x nm 45x 17x 137x 21x 14x 9x 13x 13x 22x 12x 8x 10x 17x 42x 120x 53x 88x 11x 10x 85x 19x nm nm 12x 17x 16x 7x 15x 26x 19x 15x

Next FY Est. 21x 7x 12x 20x 18x 14x 26x 15x 8x 11x 13x 8x 12x 17x 6x 48x 13x 11x 9x nm 9x nm 33x 15x 46x 18x 9x 8x 11x 11x 20x 11x 12x 9x 14x 28x 36x 29x 29x 10x 8x 19x 14x nm nm 11x 15x 8x 6x 12x 16x 15x 13x

P/ Tang. Book 7.2x nm 11.4x 10.3x 6.9x 7.8x 10.4x 4.8x 7.9x 5.3x 23.2x 5.1x nm 16.7x 2.1x 6.9x 14.7x 19.7x 1.8x 11.8x nm nm 6.4x 7.6x 20.7x 6.6x nm 4.2x 2.6x 2.4x 5.5x 3.9x 1.2x 63.6x 13.4x 5.0x 4.2x 8.1x 3.3x 3.5x nm 7.0x 11.1x 3.1x 42.1x 4.8x nm 19.4x 2.6x 3.5x 10.0x 7.4x 6.9x

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Page 342 of 401

Thanksgiving 2008

Healthcare: Healthcare Facilities – Valuation (Sorted by market value)

Company / Ticker Fresenius Medical Ca / FMS Quest Diagnostics In / DGX Laboratory Corp. of / LH DaVita Inc. / DVA Universal Health Ser / UHS Lincare Holdings Inc / LNCR Psychiatric Solution / PSYS Community Health Sys / CYH VCA Antech, Inc. / WOOF Magellan Health Serv / MGLN Pediatrix Medical Gr / PDX Amedisys, Inc. / AMED LifePoint Hospitals, / LPNT HEALTHSOUTH Corp. / HLS Tenet Healthcare Cor / THC Centene Corporation / CNC Gentiva Health Servi / GTIV AmSurg Corp. / AMSG Genoptix, Inc. / GXDX LHC Group, Inc. / LHCG Hanger Orthopedic Gr / HGR Brookdale Senior Liv / BKD Sun Healthcare Group / SUNH Kindred Healthcare, / KND Alliance Imaging, In / AIQ Health Management As / HMA Almost Family, Inc. / AFAM Skilled Healthcare G / SKH Res-Care, Inc. / RSCR Bio-Reference Labora / BRLI Odyssey HealthCare, / ODSY Emeritus Corporation / ESC Kendle International / KNDL Ensign Group, Inc., / ENSG Healthways, Inc. / HWAY RehabCare Group, Inc / RHB IPC The Hospitalist / IPCM Assisted Living Conc / ALC Enzo Biochem, Inc. / ENZ MedCath Corporation / MDTH U.S. Physical Therap / USPH Continucare Corporat / CNU Virtual Radiologic C / VRAD American Dental Part / ADPI American Caresource / ANCI

Price ($) 45.56 47.99 64.62 51.36 39.02 25.03 30.78 17.97 17.79 34.29 29.94 50.57 23.08 10.90 1.95 17.26 23.79 21.79 35.43 30.96 17.16 4.96 10.75 11.71 8.72 1.80 46.53 9.93 11.77 23.14 9.43 7.61 20.16 14.10 8.19 14.51 15.68 3.79 4.88 7.71 12.01 1.97 7.38 8.28 6.87

Move to 52-Wk MV EV Low High ($mn) ($mn) -13% 30% 13,383 18,955 -19% 25% 9,387 12,229 -18% 25% 6,979 8,657 -18% 22% 5,331 8,599 -14% 77% 1,977 2,913 -9% 51% 1,862 2,452 -12% 33% 1,722 2,995 -21% 123% 1,721 10,287 -15% 157% 1,506 1,965 -10% 44% 1,387 959 -7% 142% 1,366 1,502 -28% 34% 1,365 1,719 -16% 56% 1,233 2,695 -34% 111% 959 3,171 -7% 253% 931 5,150 -24% 65% 741 555 -28% 23% 686 885 -8% 37% 685 854 -42% 18% 588 491 -56% 15% 564 557 -47% 22% 528 898 -20% 613% 503 2,914 -8% 75% 468 1,132 -1% 184% 456 572 -27% 38% 445 980 -13% 356% 439 3,558 -64% 16% 379 413 -6% 73% 368 842 -5% 125% 347 613 -14% 55% 319 338 -28% 20% 309 382 -8% 294% 298 1,741 -20% 158% 297 484 -47% 37% 290 294 -7% 770% 275 588 -30% 80% 262 302 -2% 82% 252 207 -8% 113% 235 353 -9% 205% 182 104 -2% 250% 151 207 -3% 75% 144 145 -47% 42% 123 113 -18% 265% 117 82 -49% 153% 107 236 -65% 38% 105 96 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. 1.8x 1.7x 2.0x 1.5x .6x 1.5x 1.7x 1.0x 1.6x .4x 1.5x 1.7x 1.0x 1.7x .6x .2x .7x 1.4x 4.9x 1.6x 1.3x 1.5x .6x .1x 2.0x .8x 2.3x 1.2x .4x 1.2x .7x 2.3x .7x .6x .8x .4x .9x 1.5x 1.3x .3x .8x .4x .8x .8x 1.9x 1.2x 1.5x 1.2x

EV/ LTM EBIT 11x 10x 11x 10x 7x 6x 12x 13x 8x 7x 6x 13x 9x 15x 22x 6x 5x 4x 22x 12x 12x nm 9x 6x 13x 9x 18x 9x 9x 12x 14x nm 8x 6x 5x 9x 10x 11x nm 5x 6x 6x 6x 8x 46x 11x 10x 9x

Last FY Act. 19x 17x 16x 14x 12x 10x 22x 29x 13x 15x 11x 20x 10x 5x nm 19x 21x 16x 169x 26x 27x nm 8x 13x 28x 4x 33x 28x 9x 23x 23x nm 16x 14x 5x 20x nm 15x nm 11x 16x 12x nm nm nm 21x 18x 16x

P/E This FY Est. 17x 15x 14x 15x 10x 8x 15x 8x 12x 17x 10x 16x 9x 18x nm 9x 16x 14x 29x 20x 21x nm 12x 9x 24x 4x 22x 10x 8x 21x 16x nm 9x 11x 5x 15x 18x 16x nm 8x 14x 10x 15x 17x 43x 15x 14x 15x

Next FY Est. 15x 13x 13x 14x 10x 11x 13x 7x 11x 16x 9x 13x 9x 14x 98x 9x 15x 13x 30x 16x 18x nm 10x 8x 17x 4x 19x 9x 7x 17x 13x nm 8x 9x 5x 12x 14x 14x nm 6x 12x 9x 12x 16x 26x 15x 14x 13x

P/ Tang. Book nm nm nm nm 2.4x nm nm nm nm 2.4x nm nm nm nm nm 2.5x nm nm 4.8x 10.9x nm .7x nm .6x nm nm nm nm nm 4.3x nm 1.7x nm 2.1x nm 3.9x 4.1x .9x 1.8x .5x 5.8x 4.9x 2.2x nm 13.4x 3.7x .5x 2.4x

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Page 343 of 401

Thanksgiving 2008

Healthcare: Major Drugs – Valuation (Sorted by market value)

Company / Ticker Johnson & Johnson / JNJ Novartis AG (ADR) / NVS Pfizer Inc. / PFE GlaxoSmithKline plc / GSK Abbott Laboratories / ABT AstraZeneca plc (ADR / AZN Merck & Co., Inc. / MRK Wyeth / WYE Bristol Myers Squibb / BMY Eli Lilly & Co. / LLY Schering-Plough Corp / SGP Alcon, Inc. / ACL

Price ($) 60.05 48.94 16.28 36.25 55.06 42.20 27.33 34.14 19.58 32.06 15.76 84.79

Move to 52-Wk MV EV Low High ($mn) ($mn) -13% 21% 166,613 166,454 -15% 25% 110,839 113,506 -12% 50% 109,775 99,330 -9% 51% 94,416 106,982 -17% 11% 85,430 92,228 -18% 18% 61,037 70,786 -14% 125% 57,781 57,872 -18% 46% 45,457 42,795 -18% 52% 38,651 37,475 -9% 79% 36,451 34,944 -24% 100% 25,630 33,368 -12% 111% 25,386 23,666 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 2.6x 2.7x 2.0x 3.1x 3.2x 2.2x 2.4x 1.8x 1.8x 1.7x 1.9x 3.8x 2.4x 2.5x 2.3x

EV/ LTM EBIT 11x 14x 9x 10x 17x 8x nm 7x 11x 11x nm 11x 11x 10x 11x

Last FY Act. 17x 17x 14x 13x 24x 11x 18x 10x 20x 12x nm 16x 16x 16x 16x

P/E This FY Est. 13x 13x 7x 10x 17x 9x 8x 10x 12x 8x 9x 14x 11x 11x 10x

Next FY Est. 13x 12x 7x 10x 15x 8x 8x 9x 10x 7x 9x 13x 10x 11x 9x

P/ Tang. Book 9.7x 3.8x 4.1x 80.2x 29.1x nm 3.3x 3.0x 5.6x 3.2x nm 6.9x 14.9x 15.6x 4.8x

Healthcare: Major Drugs – Operating Performance

LTM Ticker ($mn) JNJ 64,522 NVS 42,407 PFE 48,820 GSK 34,718 ABT 28,799 AZN 31,578 MRK 24,061 WYE 23,249 BMY 20,729 LLY 20,357 SGP 17,878 ACL 6,266 VRUS 9 PBH 322 SNTA 3 Median

Revenue LTM Growth 10% 10% 1% -17% 16% 11% 0% 6% 21% 15% 54% 17% -36% -1% na 10%

3-Year Growth 9% 13% 0% 4% 10% 11% 2% 9% 0% 10% 15% 13% 99% 4% 52% 10%

Rev./ Empl. ($'000) 540 432 564 335 424 465 402 460 494 514 325 432 261 3,465 15 432

LTM Profit Margins Gross 71% 73% 82% 75% 56% 80% 76% 72% 68% 77% 59% 76% na 52% na 73%

EBIT 24% 19% 23% 31% 19% 29% -1% 28% 16% 15% -21% 34% <-99% 28% <-99% 23%

Net 20% 18% 22% 26% 16% 19% 19% 19% 19% 12% -12% 32% <-99% 11% <-99% 19%

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Est. 5-Year EPS Growth 8% 7% 1% 4% 12% 1% 5% 3% 11% 6% 13% 13% 20% 10% 20% 8%

EBIT/ Capital Empl. 78% 51% 25% 69% 45% >99% nm 39% 46% 26% nm 81% >99% >99% nm 46%

LTM ROE 28% 15% 16% 72% 25% 40% 23% 23% 35% 17% -26% 51% -97% 7% na 23%

LTM ROA 15% 10% 9% 19% 11% 13% 10% 10% 14% 9% -7% 27% -60% 3% -81% 10%

LTM Asset Turnover .8x .5x .4x .7x .7x .6x .5x .5x .8x .7x .6x .8x .1x .3x .0x .6x

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Page 344 of 401

Thanksgiving 2008

Healthcare: Medical Equipment and Supplies – Valuation (Sorted by market value)

Company / Ticker Medtronic, Inc. / MDT Baxter International / BAX Covidien Ltd. / COV Stryker Corporation / SYK Becton, Dickinson an / BDX St. Jude Medical, In / STJ Boston Scientific Co / BSX Zimmer Holdings, Inc / ZMH C.R. Bard, Inc. / BCR Luxottica Group S.p. / LUX Smith & Nephew plc ( / SNN Intuitive Surgical, / ISRG Varian Medical Syste / VAR DENTSPLY Internation / XRAY Henry Schein, Inc. / HSIC Hologic, Inc. / HOLX Patterson Companies, / PDCO ResMed Inc. / RMD IDEXX Laboratories, / IDXX Immucor, Inc. / BLUD Steris Corporation / STE Kinetic Concepts, In / KCI Owens & Minor, Inc. / OMI Masimo Corporation / MASI NuVasive, Inc. / NUVA Haemonetics Corporat / HAE Thoratec Corporation / THOR West Pharmaceutical / WST PSS World Medical, I / PSSI Integra LifeSciences / IART Mine Safety Applianc / MSA Wright Medical Group / WMGI Datascope Corporatio / DSCP Volcano Corporation / VOLC American Medical Sys / AMMD CONMED Corporation / CNMD Cooper Companies, In / COO Sirona Dental System / SIRO China Medical Techno / CMED ev3 Inc. / EVVV Cardionet Inc / BEAT ABIOMED, Inc. / ABMD Invacare Corporation / IVC Mentor Corporation / MNT Quidel Corporation / QDEL Align Technology, In / ALGN ICU Medical, Incorpo / ICUI Conceptus, Inc. / CPTS Merit Medical System / MMSI ArthroCare Corporati / ARTC

Price ($) 37.45 60.00 38.10 44.59 67.69 32.92 7.39 42.00 82.91 17.64 37.75 148.41 40.69 29.44 40.84 14.14 22.04 34.33 32.93 25.76 30.71 22.86 39.19 27.93 39.89 54.42 23.08 35.16 17.19 33.14 23.51 22.07 51.51 17.15 11.01 25.69 15.35 12.57 24.50 5.82 22.60 13.97 15.65 14.76 15.10 6.87 30.95 14.00 15.15 15.53

Move to 52-Wk MV EV Low High ($mn) ($mn) -8% 52% 42,255 47,644 -14% 19% 37,210 38,439 -7% 50% 19,119 21,215 -2% 72% 18,003 15,816 -7% 38% 16,487 16,678 -18% 47% 11,331 12,153 -14% 92% 11,096 16,136 -11% 93% 9,432 9,221 -16% 23% 8,225 7,839 -6% 91% 8,057 11,715 -6% 83% 6,667 8,064 -3% 142% 5,805 5,397 -8% 62% 5,080 4,723 -16% 63% 4,385 4,545 -1% 56% 3,649 3,790 -25% 158% 3,622 5,724 -6% 73% 2,677 3,000 -16% 59% 2,598 2,441 -27% 96% 1,961 2,047 -33% 36% 1,816 1,727 -33% 27% 1,808 1,899 -14% 165% 1,642 3,137 -11% 40% 1,622 1,805 -13% 50% 1,592 1,471 -22% 48% 1,442 1,495 -9% 24% 1,376 1,279 -44% 29% 1,294 1,213 -8% 48% 1,150 1,424 -13% 26% 1,040 1,248 -19% 51% 916 1,337 -4% 142% 841 961 -11% 51% 839 865 -38% 3% 819 576 -38% 14% 818 642 -11% 67% 807 1,363 -18% 36% 746 935 -9% 188% 691 1,615 -1% 172% 689 1,157 -25% 135% 672 708 -14% 164% 616 580 -25% 59% 528 472 -24% 44% 511 461 -5% 70% 503 974 -93% 177% 499 552 -16% 41% 492 437 -29% 189% 461 346 -28% 25% 445 327 -36% 59% 425 488 -21% 41% 425 393 -4% 286% 414 440 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 3.4x 3.1x 2.1x 2.4x 2.3x 2.9x 2.0x 2.2x 3.3x 1.8x 2.1x 6.5x 2.3x 2.0x .6x 3.4x 1.0x 2.8x 2.0x 6.4x 1.4x 1.7x .3x 5.0x 6.7x 2.3x 4.2x 1.3x .6x 2.1x .9x 1.9x 1.4x 4.0x 2.7x 1.2x 1.5x 1.5x 4.9x 1.4x 4.3x 6.6x .6x 1.4x 3.3x 1.1x 1.7x 5.3x 1.8x 1.3x 2.6x 2.8x 2.1x

EV/ LTM EBIT 16x 16x 14x 10x 11x 12x 33x 8x 15x 12x 13x 18x 11x 12x 9x nm 8x 17x 12x 16x 12x 9x 10x 22x nm 15x 63x 13x 13x 35x 7x 60x 9x nm 18x 11x 21x 17x 10x nm 91x nm 11x 8x 14x 16x 13x nm 13x 8x 18x 15x 13x

Last FY Act. 19x 23x nm 19x 15x 21x nm 13x 22x 13x 22x 40x 18x 18x 16x nm 13x 25x 23x 26x 26x 7x 22x 63x nm 28x 385x 17x 20x 29x 13x 736x 24x nm 61x 18x nm 12x 14x nm nm nm 391x 11x 37x 14x 20x nm 28x 10x 58x 22x 21x

P/E This FY Est. 13x 18x 14x 15x 14x 14x 14x 10x 19x 14x 14x 28x 16x 15x 14x 12x 11x 19x 18x 26x 18x 6x 17x 39x 665x 23x 38x 15x 18x 16x 12x 34x 30x 858x 17x 16x 7x 8x 11x nm 63x nm 12x 13x 23x 29x 21x 1400x 20x 11x 78x 25x 16x

Next FY Est. 11x 16x 13x 13x 13x 13x 12x 10x 16x 14x 12x 21x 14x 14x 12x 10x 10x 16x 18x 21x 16x 6x 15x 34x 100x 19x 32x 13x 15x 14x 11x 26x 24x 95x 14x 14x 6x 7x 9x 146x 27x nm 10x 12x 20x 29x 17x 34x 17x 8x 22x 15x 14x

P/ Tang. Book 16.5x 7.5x 31.6x 3.7x 4.3x 9.3x nm 4.2x 7.4x nm 44.4x 5.7x 6.2x 11.8x 4.3x nm 15.4x 3.6x 9.5x 10.9x 4.3x nm 4.2x 7.7x 12.2x 3.6x 5.6x 3.0x 5.4x nm 2.1x 2.4x 2.2x 3.8x nm 12.9x 9.1x nm nm 4.7x 5.7x 5.7x nm 7.5x 4.3x 3.1x 1.9x nm 2.5x 2.9x 7.8x 10.4x 5.5x

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Page 345 of 401

Thanksgiving 2008

Healthcare: Medical Equipment and Supplies – Operating Performance

LTM Ticker ($mn) MDT 14,095 BAX 12,226 COV 9,938 SYK 6,658 BDX 7,156 STJ 4,249 BSX 8,200 ZMH 4,164 BCR 2,401 LUX 6,534 SNN 3,808 ISRG 833 VAR 2,070 XRAY 2,227 HSIC 6,539 HOLX 1,675 PDCO 3,041 RMD 868 IDXX 1,026 BLUD 271 STE 1,324 KCI 1,819 OMI 7,107 MASI 293 NUVA 222 HAE 563 THOR 292 WST 1,062 PSSI 1,923 IART 638 MSA 1,122 WMGI 449 DSCP 410 VOLC 162 AMMD 498 CNMD 753 COO 1,048 SIRO 754 CMED 145 EVVV 408 BEAT 110 ABMD 70 IVC 1,752 MNT 382 QDEL 133 ALGN 302 ICUI 194 CPTS 92 MMSI 224 ARTC 337 Median

Revenue LTM Growth 13% 11% 10% 16% 13% 17% -1% 11% 12% -16% 20% 59% 18% 15% 15% >99% 7% 18% 18% 15% 8% 18% 6% 18% 61% 19% 27% 7% 7% 23% 13% 21% 83% 35% 11% 12% 15% 22% 63% 64% 65% 34% 12% 14% 12% 13% -1% 57% 10% 23% 15%

3-Year Growth 10% 6% 4% 14% 10% 18% 14% 9% 10% 16% 39% 63% 14% 6% 15% 80% 7% 25% 19% 22% 5% 18% 15% 55% 58% 10% 11% 24% 8% 34% 6% 9% 9% 29% 31% 8% 25% >99% 62% 49% 49% 16% 5% 14% 15% 18% 36% 77% 11% 28% 15%

Rev./ Empl. ($'000) 386 266 237 415 255 354 298 548 235 102 414 1,090 460 250 545 468 444 321 218 444 250 280 1,481 218 645 300 285 164 541 255 220 427 536 254 402 235 138 331 210 255 187 185 307 321 477 231 114 430 148 313 299

LTM Profit Margins Gross 75% 49% 52% 68% 51% 73% 70% 76% 61% 66% 70% 71% 42% 52% 29% 53% 34% 59% 52% 71% 41% 50% 11% 71% 83% 50% 59% 29% 30% 61% 39% 72% 65% 62% 78% 52% 54% 46% 64% 65% 65% 73% 28% 72% 61% 74% 43% 78% 41% 73% 61%

EBIT 21% 20% 16% 23% 22% 24% 6% 29% 22% 15% 16% 36% 20% 18% 7% -12% 12% 17% 17% 41% 12% 20% 2% 23% -15% 15% 7% 10% 5% 6% 12% 3% 15% -28% 15% 11% 7% 9% 48% -38% 5% -47% 5% 18% 23% 7% 13% -8% 13% 17% 14%

Net 16% 16% 10% 17% 16% 16% 3% 23% 16% 8% 9% 24% 20% 13% 4% -23% 7% 13% 12% 27% 8% 10% 1% 15% -18% 10% 7% 7% 3% 2% 6% 2% 31% -24% 5% 6% 1% 11% 36% -37% -1% -55% 2% 15% 16% 7% 11% -8% 9% 13% 9%

www.manualofideas.com

Est. 5-Year EPS Growth 12% 12% 10% 17% 13% 15% 15% 11% 14% 9% 15% 33% 18% 14% 16% 16% 15% 22% 18% na na 11% 12% 23% 38% 17% 25% 20% 17% 21% 12% 24% na 15% 19% 13% 14% 18% na 30% 53% 22% 11% 15% 19% 17% na 20% 20% 20% 17%

EBIT/ Capital Empl. 42% 39% 34% 34% 39% 48% 25% 61% 62% 49% 37% >99% >99% 43% 45% nm 73% 25% 65% >99% 26% 64% 31% >99% nm 32% 6% 18% 28% 14% 32% 5% 34% nm 44% 25% 8% 41% nm nm 21% nm 20% 45% 71% 37% 14% nm 20% 38% 34%

LTM ROE 20% 27% 14% 20% 24% 22% 1% 17% 20% 17% 20% 20% 43% 18% 14% -8% 18% 11% 27% 25% 14% 25% 15% 25% -22% 12% 5% 14% 17% 5% 15% 2% 36% -17% 7% 9% 1% 13% 25% -16% -2% -37% 5% 40% 18% 12% 9% -41% 11% 13% 14%

LTM ROA 11% 13% 6% 15% 15% 12% 1% 14% 15% 6% 8% 17% 21% 10% 8% -5% 11% 9% 16% 21% 8% 9% 6% 18% -10% 10% 3% 6% 7% 2% 7% 1% 28% -15% 2% 5% 1% 5% 12% -15% -1% -31% 2% 13% 15% 9% 8% -7% 9% 11% 8%

LTM Asset Turnover .6x .8x .6x .9x .9x .8x .3x .6x 1.0x .7x .8x .7x 1.1x .8x 1.9x .2x 1.5x .6x 1.4x .8x 1.1x .9x 4.6x 1.2x .6x .9x .5x .9x 2.2x .7x 1.1x .6x .9x .6x .5x .8x .4x .4x .3x .4x .8x .6x 1.2x .9x 1.0x 1.4x .8x .8x 1.0x .8x .8x

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Page 346 of 401

Thanksgiving 2008

Services: Advertising – Valuation (Sorted by market value)

Company / Ticker Omnicom Group Inc. / OMC WPP Group plc (ADR) / WPPGY Interpublic Group of / IPG Clear Channel Outdoo / CCO Lamar Advertising Co / LAMR Focus Media Holding / FMCN ValueClick, Inc. / VCLK VisionChina Media In / VISN AirMedia Group Inc. / AMCN Daktronics, Inc. / DAKT China Mass Media Int / CMM

Price ($) 25.40 25.06 3.90 5.11 14.88 6.99 5.71 5.71 4.89 7.85 4.36

Move to 52-Wk MV EV Low High ($mn) ($mn) -11% 99% 7,894 10,576 -5% 160% 5,878 8,822 -11% 168% 1,859 2,801 -34% 459% 1,818 4,333 -26% 254% 1,362 4,233 -7% 766% 905 524 -4% 333% 495 406 -26% 348% 410 269 -21% 442% 326 148 -5% 216% 317 314 -28% 57% 104 15 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .8x .9x .4x 1.3x 3.5x .7x .6x 3.3x 1.5x .6x .3x 1.3x 1.0x .8x

EV/ LTM EBIT 6x 7x 5x 9x 20x 3x 5x 8x 7x 8x 1x 7x 7x 7x

EV/ LTM Rev. 2.3x 1.3x 1.4x 1.3x 1.8x 1.3x 1.8x 2.4x 5.9x .8x .8x 2.1x 2.2x 2.9x 1.1x 2.2x .4x 2.6x 3.0x 1.2x 1.8x 1.3x 1.8x 2.6x 4.4x .4x 1.9x 2.1x 1.4x 1.7x 2.0x 1.8x 1.8x

EV/ LTM EBIT 12x 7x 8x 9x 10x 6x 74x 7x 46x 5x nm 17x 13x 13x 8x 17x nm 11x nm 3x nm nm nm 14x 49x nm 25x 9x nm 67x 20x 13x 12x

Last FY Act. 9x 8x 15x 7x 32x 6x 8x 52x nm 12x 2x 15x 11x 8x

P/E This FY Est. 8x 6x 9x 9x 135x 4x 10x 9x 9x 12x 4x 19x 16x 9x

Next FY Est. 8x 5x 8x 10x nm 4x 9x 7x 7x 11x 3x 7x 7x 7x

P/E This FY Est. 17x 10x 8x 15x 16x 7x 12x 11x 1x 5x 4x 67x 21x 14x 5x 37x nm 15x nm 4x nm nm 6x nm nm nm nm 3x 3x 48x 15x 13x 11x

Next FY Est. 15x 9x 8x 12x 17x 7x 9x 10x 7x 5x 5x 74x 12x 13x 5x 9x 308x 34x nm 4x nm nm 7x nm nm nm 87x 7x 3x 34x 28x 14x 9x

P/ Tang. Book nm nm nm 3.7x nm 1.3x 5.2x 1.9x 1.2x 1.8x 11.2x 3.7x .6x 1.9x

Services: Broadcasting and Cable TV – Valuation (Sorted by market value)

Company / Ticker Comcast Corporation / CMCSA Walt Disney Company, / DIS Time Warner Inc. / TWX DIRECTV Group, Inc., / DTV Time Warner Cable In / TWC Viacom, Inc. / VIA.B British Sky Broadcas / BSY Grupo Televisa, S.A. / TV Liberty Media Corp ( / LMDIA DISH Network Corp. / DISH CBS Corporation / CBS Liberty Global Inc. / LBTYA Cablevision Systems / CVC Discovery Communicat / DISCA Liberty Media Corpor / LINTA Net Servicos de Comu / NETC Echostar Corporation / SATS Hearst-Argyle Televi / HTV Sirius XM Radio Inc. / SIRI CTC Media, Inc. / CTCM TiVo Inc. / TIVO Liberty Media Corpor / LCAPA Cox Radio, Inc. / CXR Mediacom Communicati / MCCC Crown Media Holdings / CRWN Limelight Networks, / LLNW Knology, Inc. / KNOL Sinclair Broadcast G / SBGI Belo Corp. / BLC Outdoor Channel Hold / OUTD

Price ($) 15.53 21.08 9.15 20.64 18.87 16.78 23.48 15.09 12.80 11.00 6.62 14.13 13.90 13.92 3.01 5.22 15.42 11.33 0.26 4.45 5.86 3.78 4.52 3.71 2.20 2.68 5.21 2.16 1.70 5.72

Move to 52-Wk MV EV Low High ($mn) ($mn) -41% 47% 44,723 75,494 -7% 66% 38,427 50,065 -12% 91% 32,825 66,762 -45% 41% 21,678 24,540 -12% 67% 18,436 30,904 -14% 171% 10,295 18,722 -15% 126% 10,289 13,232 -14% 86% 8,480 8,490 -12% 124% 6,617 7,831 -5% 316% 4,918 9,466 -11% 323% 4,499 11,046 -15% 194% 4,139 21,448 -8% 137% 4,129 15,537 -28% 85% 3,915 7,777 -13% 609% 1,787 8,710 -26% 204% 1,768 4,409 -3% 171% 1,381 778 -6% 116% 1,065 1,900 -15% 1415% 924 3,937 -22% 613% 677 747 -16% 61% 599 493 0% 543% 369 1,117 -4% 190% 367 781 -26% 127% 352 3,627 -4% 253% 231 1,213 -35% 219% 223 46 -29% 205% 186 752 -4% 430% 175 1,560 -4% 749% 174 1,306 -7% 59% 145 87 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

Last FY Act. 19x 9x 8x 17x 16x 7x nm 13x nm 7x 4x nm 174x nm 5x 13x nm 16x nm 5x nm x 226x nm nm nm nm 9x nm nm 34x 14x 11x

P/ Tang. Book nm 16.4x nm 25.1x nm nm nm 3.5x .6x nm nm nm nm nm nm nm .5x nm nm nm 22.9x .5x nm nm nm 1.4x nm nm nm 1.6x 7.5x 5.5x 1.9x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 347 of 401

Thanksgiving 2008

Services: Business Services (I of II) – Valuation (Sorted by market value)

Company / Ticker International Busine / IBM Accenture Ltd. / ACN MasterCard Incorpora / MA Automatic Data Proce / ADP Yahoo! Inc. / YHOO Paychex, Inc. / PAYX Johnson Controls, In / JCI Moody's Corporation / MCO Satyam Computer (ADR / SAY Iron Mountain Incorp / IRM Equifax Inc. / EFX Global Payments Inc. / GPN Robert Half Internat / RHI Hewitt Associates, I / HEW Manpower Inc. / MAN FTI Consulting, Inc. / FCN AECOM Technology Cor / ACM IHS Inc. / IHS DST Systems, Inc. / DST Rollins, Inc. / ROL Corrections Corporat / CXW Charles River Labora / CRL Watson Wyatt Worldwi / WW Broadridge Financial / BR Gartner, Inc. / IT Teledyne Technologie / TDY Monster Worldwide, I / MWW Huron Consulting Gro / HURN Chemed Corporation / CHE athenahealth, Inc / ATHN Celera Corporation / CRA Corporate Executive / EXBD Navigant Consulting, / NCI ABM Industries, Inc. / ABM Geo Group, Inc., The / GEO First Advantage Corp / FADV Stanley, Inc. / SXE Resources Connection / RECN Fair Isaac Corporati / FIC Healthcare Services / HCSG MPS Group, Inc. / MPS VistaPrint Limited / VPRT Heartland Payment Sy / HPY Korn/Ferry Internati / KFY Forrester Research, / FORR NetSuite Inc. / N UniFirst Corporation / UNF Wright Express Corpo / WXS CSG Systems Internat / CSGS Phase Forward Incorp / PFWD

Price ($) 80.33 28.67 143.68 35.12 10.82 25.70 15.36 19.33 13.16 20.75 23.53 36.76 17.81 24.80 27.78 41.16 19.81 32.73 35.23 16.16 12.84 23.51 37.27 11.10 15.78 39.98 11.62 48.51 39.93 26.68 10.92 24.53 17.16 14.50 14.39 12.02 30.21 14.84 13.42 13.96 6.26 12.77 14.91 11.61 23.80 8.60 26.26 13.03 14.42 11.68

Move to 52-Wk MV EV Low High ($mn) ($mn) -6% 63% 107,920 132,577 -14% 50% 20,919 17,304 -16% 123% 18,569 15,833 -12% 35% 17,837 1,561 -10% 180% 14,994 11,780 -8% 58% 9,272 5,151 -5% 158% 9,124 12,684 -8% 140% 4,635 5,588 -16% 127% 4,432 3,383 -11% 87% 4,185 7,282 -6% 70% 2,972 4,211 -5% 36% 2,948 2,871 -20% 68% 2,762 2,392 -8% 73% 2,337 2,596 -10% 155% 2,166 2,506 -8% 94% 2,092 2,514 -27% 74% 2,031 1,949 -8% 121% 2,029 1,958 -3% 152% 1,748 2,927 -42% 39% 1,630 1,656 -8% 146% 1,614 2,741 -2% 194% 1,591 1,921 -9% 66% 1,586 1,624 -10% 118% 1,570 1,639 -13% 80% 1,484 1,764 -8% 66% 1,434 1,708 -14% 222% 1,432 1,040 -23% 73% 1,011 1,332 -27% 46% 893 1,104 -23% 76% 885 815 -19% 61% 879 562 -9% 185% 835 795 -36% 33% 832 1,101 -17% 89% 737 1,016 -12% 105% 735 1,203 -42% 95% 715 720 -25% 29% 710 885 -10% 70% 672 550 -6% 203% 650 1,034 -9% 81% 600 507 -12% 104% 578 523 -2% 259% 569 448 -7% 121% 561 667 -15% 79% 553 344 -15% 52% 551 343 -13% 435% 523 390 -2% 92% 508 717 -5% 214% 505 669 -27% 40% 505 570 -17% 117% 501 346 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 1.3x .7x 3.3x .1x 1.6x 2.5x .3x 3.0x 1.4x 2.4x 2.1x 2.1x .5x .8x .1x 2.0x .4x 2.4x 1.3x 1.7x 1.7x 1.4x .9x .7x 1.4x .9x .7x 2.1x 1.0x 6.5x 3.3x 1.4x 1.3x .3x 1.1x .9x 1.3x .6x 1.4x .8x .2x 1.0x .4x .4x 1.5x 2.7x .7x 1.7x 1.2x 2.2x 1.4x 1.4x 1.3x

EV/ LTM EBIT 8x 6x nm 1x 24x 6x 9x 7x 7x 15x 9x 10x 5x 8x 4x 11x 9x 16x 8x 15x 10x 8x 7x 5x 10x 9x 5x 15x 9x 85x nm 7x 14x 10x 11x 7x 16x 6x 8x 12x 4x 10x 10x 4x 11x nm 7x 3x 7x 22x 11x 8x 9x

Last FY Act. 11x 11x 18x 16x 23x 16x 9x 7x 11x 27x 12x 18x 10x 13x 5x 21x 14x 24x 3x 25x 12x 10x 11x 8x 23x 15x 10x 21x 16x nm nm 11x 26x 14x 17x 6x 27x 14x 8x 21x 7x 15x 17x 8x 30x nm 8x 10x 10x 16x 15x 13x 14x

P/E This FY Est. 9x 10x 16x 15x 26x 16x 8x 11x 9x 28x 10x 15x 11x 12x 6x 18x 12x 17x 9x 23x 11x 8x 11x 8x 16x 12x 8x 22x 12x 53x 109x 12x 20x 13x 11x 13x 21x 16x 8x 23x 8x 9x 13x 10x 18x nm 8x 7x 9x 24x 16x 13x 12x

Next FY Est. 9x 9x 14x 13x 23x 14x 7x 11x 8x 26x 9x 14x 25x 11x 9x 15x 10x 13x 8x 22x 9x 8x 10x 7x 15x 11x 11x 14x 12x 33x 36x 11x 16x 10x 10x 13x 17x 15x 7x 19x 15x 7x 11x 10x 16x 860x 8x 7x 9x 19x 30x 13x 11x

P/ Tang. Book 19.2x 12.3x 16.1x 3.7x 2.1x 12.4x 4.4x nm 2.6x nm nm 37.5x 3.3x 29.5x 1.9x nm 3.3x 45.0x 6.6x nm 1.2x 2.5x 17.4x 6.3x nm 33.1x 4.3x nm nm 10.9x 2.3x nm nm 18.4x 1.4x 10.8x nm 3.1x nm 3.3x 2.3x 2.3x nm 1.6x 2.6x 6.4x 2.2x nm nm 3.0x 9.6x 12.8x 3.7x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 348 of 401

Thanksgiving 2008

Services: Business Services (II of II) – Valuation (Sorted by market value)

Company / Ticker Portfolio Recovery A / PRAA CBIZ, Inc. / CBZ Viad Corp / VVI Kelly Services, Inc. / KELYA American Reprographi / ARP Team, Inc. / TISI Administaff, Inc. / ASF G&K Services, Inc. / GKSR Exponent, Inc. / EXPO inVentiv Health Inc. / VTIV Monro Muffler Brake, / MNRO EnergySolutions, Inc / ES Heidrick & Struggles / HSII Advisory Board Compa / ABCO ATC Technology Corp. / ATAC Compass Diversified / CODI The9 Limited (ADR) / NCTY Computer Programs & / CPSI Cornell Companies, I / CRN Standard Parking Cor / STAN TrueBlue, Inc. / TBI AMN Healthcare Servi / AHS CRA International, I / CRAI COMSCORE, Inc. / SCOR ICF International, I / ICFI Kforce Inc. / KFRC Cross Country Health / CCRN eTelecare Global Sol / ETEL eResearch Technology / ERES Michael Baker Corpor / BKR Marchex, Inc. / MCHX DICE HOLDINGS, INC. / DHX On Assignment, Inc. / ASGN Furmanite Corporatio / FRM Hill International I / HIL CDI Corp. / CDI 51job, Inc. (ADR) / JOBS National Research Co / NRCI Asset Acceptance Cap / AACC ExlService Holdings, / EXLS eLong, Inc. (ADR) / LONG Spherion Corporation / SFN MYR Group Inc. / MYRG Midas, Inc. / MDS Kenexa Corporation / KNXA Hudson Highland Grou / HHGP Barrett Business Ser / BBSI Volt Information Sci / VOL .LECG Corporation / XPRT SM&A / WINS

Price ($) 31.87 7.50 21.71 12.42 9.22 22.34 16.18 21.25 28.09 11.18 19.28 3.96 21.24 21.52 16.73 10.74 12.04 27.90 19.90 16.87 6.52 8.62 25.22 9.44 18.00 6.77 8.51 8.60 4.65 26.26 5.91 3.44 5.90 5.64 4.91 10.54 6.80 28.12 6.07 6.40 7.10 2.71 6.90 9.23 5.59 4.33 10.14 4.90 4.07 5.55

Move to 52-Wk MV EV Low High ($mn) ($mn) -14% 65% 487 726 -24% 31% 464 618 -27% 82% 445 304 -7% 87% 432 433 -7% 137% 421 751 -8% 81% 421 519 -7% 110% 410 221 -12% 95% 403 682 -16% 38% 384 332 -29% 221% 372 655 -24% 36% 358 457 -40% 618% 350 867 -11% 79% 347 164 -5% 223% 344 323 -9% 82% 339 334 -13% 47% 339 402 -7% 137% 332 29 -39% 11% 304 280 -21% 43% 294 610 -9% 51% 285 385 -7% 168% 283 225 -10% 136% 281 431 -12% 99% 275 252 -5% 301% 275 209 -19% 57% 266 353 -4% 76% 262 278 -5% 104% 262 394 -52% 24% 255 221 -1% 305% 237 174 -45% 67% 232 191 0% 139% 227 199 -7% 251% 214 236 -27% 64% 211 298 -2% 123% 206 208 -21% 301% 202 183 -4% 175% 199 123 -11% 201% 193 36 -18% 27% 188 188 -2% 141% 185 366 -25% 322% 185 83 -56% 44% 180 23 -18% 211% 140 211 -28% 161% 136 143 -9% 107% 129 249 -3% 330% 126 100 -12% 200% 111 67 -11% 92% 108 57 -11% 303% 108 289 -3% 328% 104 92 -66% 23% 102 91 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 2.9x .9x .3x .1x 1.0x 1.0x .1x .7x 1.5x .6x 1.0x .5x .2x 1.4x .6x .3x .1x 2.4x 1.6x .6x .2x .4x .6x 1.9x .5x .3x .6x .7x 1.3x .3x 1.3x 1.5x .5x .7x .5x .1x .3x 3.8x 1.5x .4x .5x .1x .2x 1.3x .5x .1x .2x .1x .3x .9x .8x .8x .5x

EV/ LTM EBIT 9x 10x 5x 11x 6x 11x 3x 9x 9x 6x 11x 7x 2x 9x 5x 12x 1x 13x 11x 10x 3x 6x 8x 18x 6x 6x 9x 28x 5x 4x nm 6x 7x 7x 9x 3x 2x 17x 9x 5x nm 6x 13x 9x 3x 4x 6x 11x 6x 14x 8x 8x 7x

Last FY Act. 10x 15x 11x 8x 6x 19x 9x 9x 22x 8x 19x nm 7x 13x 9x 67x 9x 23x 24x 19x 5x 8x 9x 10x 7x 7x 11x 11x 16x 12x nm nm 23x 16x 11x 7x 13x 29x 10x 7x nm 5x nm 10x 6x 23x 7x 3x 8x 17x 13x 13x 10x

P/E This FY Est. 11x 14x 10x 15x 7x 14x 9x 10x 20x 7x 16x 6x 9x 15x 9x 6x 5x 20x 14x 17x 6x 8x 17x 47x 10x 10x 11x 28x 9x 9x 16x 10x 11x 10x 9x 8x 16x 26x 12x 12x nm 9x 8x 15x 4x 24x 10x 7x 10x 22x 13x 12x 10x

Next FY Est. 9x 13x 12x 24x 8x 12x 9x 9x 18x 7x 14x 5x 14x 15x 8x 7x 5x 18x 13x 15x 9x 8x 10x 26x 13x 14x 12x 15x 7x 7x 16x 11x 11x 9x 7x 11x 12x 24x 10x 10x 237x 12x 7x 14x 5x 108x 9x 5x 8x 14x 18x 16x 11x

P/ Tang. Book 2.1x nm 1.9x .7x nm 6.2x 2.0x 7.2x 3.0x nm 3.6x nm 1.8x 4.9x 2.3x nm .9x 7.8x 1.4x nm 1.5x nm 3.3x 4.5x nm 3.4x nm 2.2x 2.4x 1.9x 4.4x nm nm 2.5x 2.5x .8x 1.1x 55.4x 1.6x 1.3x 1.1x .5x 1.5x 25.9x 1.8x .8x 1.7x .6x .7x 3.2x 4.4x 3.0x 2.0x

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Services: Casinos and Gaming – Valuation (Sorted by market value)

Company / Ticker Wynn Resorts, Limite / WYNN International Game T / IGT MGM MIRAGE / MGM Las Vegas Sands Corp / LVS Melco Crown Entertai / MPEL Scientific Games Cor / SGMS Penn National Gaming / PENN WMS Industries Inc. / WMS Bally Technologies I / BYI Live Nation, Inc. / LYV Churchill Downs, Inc / CHDN Boyd Gaming Corporat / BYD Ameristar Casinos, I / ASCA Pinnacle Entertainme / PNK Shuffle Master, Inc. / SHFL Dover Downs Gaming & / DDE Monarch Casino & Res / MCRI Isle of Capri Casino / ISLE

Price ($) 43.00 10.74 10.45 6.11 3.53 14.58 16.37 21.11 17.18 5.50 31.35 4.21 6.16 4.07 3.09 3.89 7.45 3.25

Move to 52-Wk MV EV Low High ($mn) ($mn) -35% 221% 4,473 7,677 -9% 360% 3,189 5,118 -15% 792% 2,890 15,928 -29% 1912% 2,172 11,246 -35% 329% 1,554 1,823 -10% 140% 1,354 2,464 -28% 270% 1,279 3,561 -23% 95% 1,056 1,062 -11% 208% 942 1,173 -1% 241% 430 811 -10% 84% 429 466 -12% 835% 370 2,870 -15% 428% 353 1,900 -37% 589% 244 1,036 -16% 339% 172 293 -10% 223% 124 213 -31% 281% 120 152 -5% 490% 100 1,470 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 2.5x 2.0x 2.1x 2.6x 1.4x 2.2x 1.5x 1.6x 1.2x .2x 1.1x 1.6x 1.5x 1.0x 1.6x .9x 1.0x 1.3x 1.5x 2.0x 1.5x

EV/ LTM EBIT 18x 8x 7x 34x nm 19x 6x 9x 6x 12x 9x 26x 37x nm 16x 5x 8x nm 15x 13x 9x

Last FY Act. 18x 10x 2x 19x nm 21x 9x 18x 9x nm 25x 3x 5x nm 7x 5x 6x nm 11x 12x 9x

P/E This FY Est. 15x 9x 8x 20x 88x 13x 11x 14x 8x 5x 21x 4x 6x nm 14x 6x 12x nm 16x 17x 11x

Next FY Est. 21x 8x 10x 16x 353x 11x 11x 12x 7x nm 16x 7x 6x nm 10x 6x 14x nm 34x 37x 11x

P/ Tang. Book 3.3x nm .8x 1.0x 1.4x nm nm 2.6x 6.0x nm 1.7x .8x 14.8x .3x nm 1.2x 1.1x nm 2.9x 1.7x 1.3x

Services: Casinos and Gaming – Operating Performance

LTM Ticker ($mn) WYNN 3,084 IGT 2,529 MGM 7,513 LVS 4,345 MPEL 1,342 SGMS 1,123 PENN 2,438 WMS 669 BYI 948 LYV 4,398 CHDN 434 BYD 1,837 ASCA 1,277 PNK 1,005 SHFL 188 DDE 243 MCRI 145 ISLE 1,129 Median

Revenue LTM Growth 21% -4% -1% 71% >99% 11% 1% 19% 32% 10% 8% -10% 25% 10% 9% 1% -9% 12% 10%

3-Year Growth na 2% 24% 35% >99% 13% 30% 19% 24% 14% 10% 5% 8% 26% 28% 5% 7% 6% 14%

Rev./ Empl. ($'000) 187 468 137 155 272 187 159 437 337 936 434 109 142 117 330 297 79 132 187

LTM Profit Margins Gross 37% 56% 45% 38% 18% 41% 41% 60% 57% 20% 20% 46% 44% 38% 58% 23% 55% 47% 43%

EBIT 14% 26% 30% 8% -1% 11% 26% 17% 22% 1% 12% 6% 4% -7% 10% 16% 13% -4% 12%

Net 14% 14% 17% 0% -1% 8% 11% 11% 12% 0% 6% 2% -2% -4% 7% 9% 9% -8% 7%

www.manualofideas.com

Est. 5-Year EPS Growth 16% 12% 11% 37% na 20% 3% 22% 24% na 10% 14% 5% 15% 23% na 15% na 15%

EBIT/ Capital Empl. 11% 67% 13% 4% nm 17% 44% 28% 62% 25% 16% 4% 3% nm 23% 22% 17% nm 17%

LTM ROE 26% 28% 24% -1% -1% 13% 21% 14% 38% -1% 7% 2% -5% -4% 11% 23% 12% -43% 12%

LTM ROA 7% 8% 6% 0% -1% 4% 5% 10% 12% 0% 4% 1% -1% -2% 3% 9% 8% -5% 4%

LTM Asset Turnover .5x .6x .3x .3x .4x .5x .5x .9x 1.0x 1.5x .7x .4x .5x .4x .5x 1.0x .9x .6x .5x

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Page 350 of 401

Thanksgiving 2008

Services: Communications Services (I of II) – Valuation (Sorted by market value)

Company / Ticker China Mobile Ltd. (A / CHL AT&T Inc. / T Vodafone Group Plc ( / VOD Telefonica S.A. (ADR / TEF Verizon Communicatio / VZ France Telecom SA (A / FTE America Movil S.A.B / AMX China Telecom Corpor / CHA Telecom Italia S.p.A / TI Telefonaktiebolaget / ERIC Chunghwa Telecom Co. / CHT Telefonos de Mexico, / TMX China Unicom (Hong K / CHU BT Group plc (ADR) / BT Telecomunicacoes de / TSP SK Telecom Co., Ltd. / SKM American Tower Corpo / AMT Turkcell Iletisim Hi / TKC Mobile TeleSystems O / MBT PT Telekomunikasi In / TLK Vimpel-Communication / VIP Telmex Internacional / TII Philippine Long Dist / PHI Hellenic Telecom Org / OTE Portugal Telecom, SG / PT Sprint Nextel Corpor / S KT Corporation (ADR) / KTC Qwest Communications / Q Tele Norte Leste Par / TNE Embarq Corporation / EQ MetroPCS Communicati / PCS Crown Castle Interna / CCI Rostelecom OAO (ADR) / ROS Vivo Participacoes S / VIV Windstream Corporati / WIN Telephone & Data Sys / TDS TIM Participacoes SA / TSU Brasil Telecom SA (A / BTM United States Cellul / USM Maxcom Telecomunic S / MXT NII Holdings, Inc. / NIHD Tata Communications / TCL Magyar Telekom Plc. / MTA Partner Communicatio / PTNR Frontier Communicati / FTR CenturyTel, Inc. / CTL Cellcom Israel Ltd. / CEL Telecom Corp of New / NZT Brasil Telecom Parti / BRP Equinix, Inc. / EQIX

Price ($) 43.73 27.65 18.09 56.94 30.00 24.61 30.76 35.33 12.73 6.52 15.72 18.37 11.99 18.50 22.50 17.12 26.64 11.95 27.60 20.14 9.32 9.75 45.64 7.52 7.61 2.30 12.56 2.86 12.31 30.16 11.77 14.06 33.20 10.80 8.43 30.04 14.02 15.65 32.47 3.56 16.77 19.27 13.15 17.02 8.49 25.25 25.39 6.77 33.21 52.91

Move to 52-Wk MV EV Low High ($mn) ($mn) -21% 121% 175,308 149,520 -24% 55% 162,942 238,122 -15% 121% 97,307 139,911 -18% 82% 89,378 147,030 -23% 52% 85,215 128,316 -16% 61% 64,112 105,069 -25% 119% 52,984 59,581 -27% 160% 28,593 38,888 -31% 159% 24,545 73,392 -7% 125% 21,165 16,288 -17% 43% 18,182 15,673 -18% 48% 17,110 23,526 -11% 110% 16,381 15,989 -10% 226% 14,324 32,319 -25% 36% 11,382 12,102 -18% 94% 11,285 13,343 -16% 73% 10,568 14,924 -20% 151% 10,516 8,317 -27% 283% 10,439 12,962 -9% 148% 9,512 10,321 -31% 388% 9,465 16,237 -19% 105% 8,992 na -21% 68% 8,624 12,502 -29% 154% 7,372 13,263 -29% 95% 7,173 14,618 -23% 592% 6,571 25,095 -18% 141% 5,148 8,992 -28% 159% 4,936 18,405 -17% 129% 4,706 7,391 -10% 73% 4,287 10,044 -10% 86% 4,122 6,160 -14% 208% 4,059 10,389 -34% 126% 4,032 3,837 -28% 189% 3,968 5,733 -24% 78% 3,704 8,988 -29% 126% 3,458 4,091 -26% 216% 3,286 4,017 -39% 146% 2,856 4,059 -15% 176% 2,837 3,666 -29% 402% 2,812 2,862 -22% 240% 2,780 3,681 -28% 109% 2,746 na -10% 114% 2,739 4,240 -3% 45% 2,686 3,229 -19% 55% 2,643 7,301 -9% 70% 2,529 5,614 -5% 46% 2,481 3,395 -15% 162% 2,473 3,710 -34% 158% 2,408 2,939 -11% 110% 1,976 2,907 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 2.6x 1.9x 2.5x 2.0x 1.3x 1.6x 2.4x 1.5x 1.9x .7x 2.5x 2.5x 1.0x 1.0x 1.8x 1.5x 9.5x 1.2x 1.3x 2.0x 1.9x nm 9.3x 1.6x 1.7x .7x .7x 1.4x .9x 1.6x 2.4x 6.9x 1.6x .9x 2.8x .8x .7x .8x .9x 14.2x .9x nm 1.3x 2.0x 3.2x 2.1x 2.0x 1.2x .6x 4.5x 2.3x 2.1x 1.6x

EV/ LTM EBIT 7x 10x 17x 9x 8x 8x 9x 8x 12x 9x 8x 8x 8x 9x 7x 13x 27x 4x 4x 5x 6x nm 46x 10x 13x nm 7x 9x 4x 6x 17x 59x 35x 11x 8x 7x 18x 10x 9x 117x 5x nm 6x 8x 11x 8x 8x 6x 4x 59x 15x 10x 8x

Last FY Act. 14x 14x 10x 8x 16x 8x 12x 8x 8x 7x 12x 8x 11x 6x 10x 10x 121x 8x 5x 9x 6x 24x 11x 9x 10x nm 7x 2x 3x 7x 38x nm 52x nm 4x 10x 78x 8x 9x 178x 8x nm 10x 11x 13x 7x 11x 6x 7x nm 19x 13x 9x

P/E This FY Est. 11x 10x 8x 8x 12x 9x 9x 9x 8x 9x 12x 8x 15x 5x 9x 12x 52x 6x 4x 9x 5x 15x 11x 8x 8x 29x 16x 7x 5x 6x 25x nm 41x 31x 8x 12x nm 3x 11x 13x 7x 35x 5x 9x 14x 8x 10x 9x 7x 80x 14x 10x 9x

Next FY Est. 9x 9x 7x 8x 11x 9x 8x 10x 9x 9x 11x 8x 12x 6x 9x 11x 39x 6x 4x 8x 4x 13x 9x 8x 9x nm 11x 7x 5x 6x 17x 1406x 28x 12x 8x 13x 12x 5x 11x 11x 6x 43x 5x 8x 12x 8x 10x 10x 6x 34x 40x 15x 9x

P/ Tang. Book 3.2x nm 9.2x nm nm nm 7.4x .9x nm 1.9x 1.7x 5.8x 1.1x 87.9x 2.3x 1.8x nm 2.3x 3.4x 3.5x nm nm 5.0x 24.9x nm nm 1.0x 14.3x 1.1x nm nm nm 2.0x 1.6x nm 2.3x 2.5x 1.3x 2.6x 7.7x 1.5x nm 3.2x 31.6x nm nm nm 2.5x 1.2x 5.4x 7.6x 3.7x 2.5x

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Page 351 of 401

Thanksgiving 2008

Services: Communications Services (II of II) – Valuation (Sorted by market value)

Company / Ticker SBA Communications C / SBAC Virgin Media Inc. / VMED Leap Wireless Intern / LEAP Cia de Telecom de Ch / CTC Level 3 Communicatio / LVLT Telecom Argentina S. / TEO Clearwire Corporatio / CLWR tw telecom inc. / TWTC Mahanagar Telephone / MTE NTELOS Holdings Corp / NTLS Centennial Communica / CYCL j2 Global Communicat / JCOM Starent Networks Cor / STAR Infinera Corp. / INFN Syniverse Holdings, / SVR Shenandoah Telecommu / SHEN Telemig Celular Part / TMB Global Crossing Ltd. / GLBC Neutral Tandem Inc. / TNDM Iowa Telecommunicati / IWA Alaska Communication / ALSK Cincinnati Bell Inc. / CBB Premiere Global Serv / PGI GeoEye Inc. / GEOY DG FastChannel Inc. / DGIT General Communicatio / GNCMA Consolidated Communi / CNSL Cbeyond, Inc. / CBEY Atlantic Tele-Networ / ATNI Hughes Communication / HUGH USA Mobility, Inc. / USMO Fairpoint Communicat / FRP RCN Corporation / RCNI UTStarcom, Inc. / UTSI Aruba Networks, Inc. / ARUN Terremark Worldwide, / TMRK Alvarion Ltd. (USA) / ALVR Cogent Communication / CCOI ShoreTel, Inc. / SHOR SureWest Communicati / SURW RRSat Global Communi / RRST PAETEC Holding Corp. / PAET iBasis, Inc. / IBAS Vonage Holdings Corp / VG iPCS, Inc. / IPCS ORBCOMM Inc. / ORBC

Price ($) 15.50 5.02 21.64 5.97 0.87 6.80 7.05 6.76 3.05 22.49 7.52 16.79 9.25 6.75 8.66 22.61 27.74 8.77 15.05 15.04 9.75 1.79 6.52 19.04 15.64 6.11 10.74 11.01 20.51 12.55 9.55 2.66 6.04 1.67 2.50 3.44 2.99 3.99 3.99 12.33 9.73 1.15 2.15 0.89 7.42 2.44

Move to 52-Wk MV EV Low High ($mn) ($mn) -27% 148% 1,807 4,195 -27% 285% 1,647 10,189 -13% 185% 1,502 3,258 -12% 54% 1,426 1,966 -31% 415% 1,402 7,578 -36% 301% 1,339 1,735 -21% 159% 1,159 2,029 -35% 254% 997 2,038 -15% 252% 961 na -20% 47% 949 1,491 -76% 33% 814 2,703 -14% 63% 737 596 -14% 167% 648 292 -14% 233% 633 385 -3% 165% 593 985 -45% 14% 533 544 -8% 152% 502 278 -35% 182% 494 1,494 -13% 53% 486 383 -23% 40% 481 1,001 -10% 64% 425 956 -82% 192% 412 2,524 0% 159% 402 658 -16% 96% 343 440 -10% 67% 332 479 -26% 80% 322 1,099 -23% 88% 317 1,186 -26% 322% 313 270 -7% 91% 312 309 -1% 382% 270 650 -33% 63% 260 156 -9% 514% 237 2,549 -17% 171% 226 907 -4% 256% 211 -120 -12% 534% 209 107 -13% 123% 205 489 -3% 243% 189 43 -11% 528% 178 349 -17% 301% 173 66 -41% 57% 172 403 -25% 131% 168 107 -34% 909% 166 976 -35% 176% 153 122 -36% 173% 139 303 0% 397% 127 533 -10% 223% 103 16 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 9.3x 1.7x 1.7x 2.0x 1.7x .6x 9.4x 1.8x nm 2.8x 2.7x 2.5x 1.2x .8x 2.0x 3.8x .5x .6x 3.5x 4.1x 2.4x 1.8x 1.1x 2.9x 3.5x 2.0x 3.0x .8x 1.5x .6x .4x 2.5x 1.3x nm .6x 2.2x .2x 1.7x .5x 1.8x 1.5x .7x .1x .3x 1.0x .5x 2.0x 2.6x 1.7x

EV/ LTM EBIT 97x nm 51x 23x nm 3x nm 26x nm 14x 11x 6x 8x 5x 6x 13x 3x nm 13x 14x 18x 10x 9x 13x 16x 19x 18x 27x 4x 9x nm 36x nm nm nm 34x nm nm nm 41x 8x nm 10x nm 27x nm 19x 18x 13x

Last FY Act. nm nm nm 27x nm 4x nm nm 19x 29x 30x 12x 77x nm 11x 28x 7x nm 72x 17x 3x 7x 14x 12x 24x 27x 24x 15x 8x 6x nm 17x nm nm nm nm 27x nm 67x 103x 15x 12x 7x nm nm nm 25x 13x 17x

P/E This FY Est. nm nm nm 75x nm 4x nm 97x 10x 18x 21x 10x 10x nm 5x 22x 5x nm 23x 21x 44x 4x 6x 41x 24x 51x 15x 85x 8x 17x 7x nm nm nm 19x nm 21x nm nm 51x 13x nm 43x nm nm nm 27x 17x 19x

Next FY Est. nm nm nm 54x nm 4x nm 28x 11x 16x 16x 9x 13x nm 6x 21x 7x nm 17x 21x 30x 4x 6x 28x 22x 28x 14x 73x 8x 6x 9x 7x nm nm 9x 11x 14x nm 40x 43x 10x nm 31x nm 41x nm 20x 12x 14x

P/ Tang. Book nm nm nm 1.1x nm 1.4x nm 7.3x nm nm nm 5.5x 2.1x 1.6x nm 3.1x 1.0x nm 2.9x nm nm nm nm 1.5x nm nm nm 2.2x 2.0x 1.0x 1.5x nm nm .4x 2.0x nm 1.1x 2.2x 1.5x .7x 2.1x nm nm nm nm .7x 2.0x 1.0x 1.6x

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Thanksgiving 2008

Services: Hotels and Motels – Valuation (Sorted by market value)

Company / Ticker Marriott Internation / MAR Starwood Hotels & Re / HOT InterContinental Hot / IHG Choice Hotels Intern / CHH Wyndham Worldwide Co / WYN Hospitality Properti / HPT Orient-Express Hotel / OEH Marcus Corporation, / MCS Gaylord Entertainmen / GET Home Inns & Hotels M / HMIN DiamondRock Hospital / DRH Landry's Restaurants / LNY Morgans Hotel Group / MHGC

Price ($) 15.66 14.99 7.20 23.80 5.63 9.73 6.51 11.67 8.14 9.14 3.56 11.46 3.79

Move to 52-Wk MV EV Low High ($mn) ($mn) -2% 142% 5,467 8,396 -7% 274% 2,744 6,691 -5% 178% 2,056 3,407 -23% 59% 1,496 1,657 -14% 448% 999 4,584 -17% 296% 914 3,974 -4% 869% 394 1,175 -22% 71% 347 596 -6% 448% 333 1,569 -23% 354% 324 351 -5% 461% 321 1,281 -36% 122% 185 1,026 -17% 428% 111 782 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .6x 1.1x 1.8x 2.5x 1.0x 3.1x 1.9x 1.6x 1.8x 1.5x 1.8x .9x 2.4x 1.7x 1.3x 1.8x

EV/ LTM EBIT 8x 8x 7x 9x 7x 13x 14x 12x 40x 30x 12x 10x 17x 14x 10x 12x

Last FY Act. 9x 6x 11x 14x 3x 5x 6x 17x 3x 65x 5x 8x nm 13x 10x 7x

P/E This FY Est. 10x 7x 7x 13x 3x 8x 8x 16x nm 26x 6x 8x nm 10x 9x 8x

Next FY Est. 11x 11x 7x 14x 3x 7x 12x 16x 39x 14x 30x 10x nm 14x 11x 11x

P/ Tang. Book nm nm nm nm nm .4x .6x 1.2x .4x 2.1x .3x .7x 5.9x 1.4x .2x .6x

Services: Hotels and Motels – Operating Performance

LTM Ticker ($mn) MAR 13,184 HOT 6,184 IHG 1,914 CHH 656 WYN 4,402 HPT 1,297 OEH 620 MCS 379 GET 889 HMIN 229 DRH 705 LNY 1,171 MHGC 330 Median

Revenue LTM Growth 4% 1% >99% 11% 2% 7% 10% 10% 21% 93% 10% 1% 6% 8%

3-Year Growth 9% 5% -26% 13% 13% 26% 17% 12% 1% >99% >99% 13% 11% 12%

Rev./ Empl. ($'000) 87 40 185 361 133 na 84 57 142 28 >9,999 48 75 84

LTM Profit Margins Gross 14% 27% 54% na 53% 51% 51% 49% 40% 16% 28% 46% 60% 48%

EBIT 8% 13% 27% 29% 16% 24% 14% 13% 4% 5% 15% 8% 14% 14%

Net 4% 6% 15% 17% 9% 10% 3% 6% 0% -2% 9% -1% -7% 6%

Est. 5-Year EPS Growth 11% 11% 17% 8% 13% na 17% 3% 11% 47% na 9% 12% 11%

EBIT/ Capital Empl. 51% 22% 64% nm 70% 6% 6% 9% 2% 8% 5% 9% 10% 9%

LTM ROE 39% 20% >99% -87% 11% 6% 2% 7% 0% -2% 6% -2% -21% 4%

LTM ROA 6% 4% 10% 32% 4% 2% 1% 3% 0% -1% 3% -1% -3% 3%

LTM Asset Turnover 1.5x .6x .7x 1.9x .4x .2x .3x .5x .4x .5x .3x .8x .4x .5x

Services: Motion Pictures – Valuation (Sorted by market value)

Company / Ticker DreamWorks Animation / DWA Regal Entertainment / RGC Cinemark Holdings, I / CNK CKX Inc. / CKXE National CineMedia, / NCMI BigBand Networks, In / BBND Rentrak Corporation / RENT

Price ($) 25.11 9.53 8.52 4.04 8.40 4.34 10.74

Move to 52-Wk MV EV Low High ($mn) ($mn) -15% 30% 2,250 1,982 -8% 121% 1,463 3,374 -19% 106% 924 2,216 -19% 183% 401 426 -41% 247% 353 1,097 -46% 83% 279 114 -7% 47% 114 78 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 2.7x 1.3x 1.3x 1.4x 3.1x .7x .8x 1.6x 1.9x 1.3x

EV/ LTM EBIT 8x 17x 15x 6x 7x nm 15x 11x 11x 11x

Last FY Act. 12x 4x 10x 21x 17x nm 26x 15x 10x 14x

P/E This FY Est. 14x 11x 17x 14x 14x 18x 33x 17x 14x 14x

Next FY Est. 15x 10x 13x 13x 12x 15x 15x 13x 13x 13x

P/ Tang. Book 2.4x nm nm nm nm 2.3x 2.5x 2.4x 1.1x 2.4x

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Thanksgiving 2008

Services: Personal Services – Valuation Move to 52-Wk MV EV Low High ($mn) ($mn) -15% 58% 5,801 6,588 -6% 69% 3,210 3,980 -9% 344% 2,238 2,723 0% 88% 2,048 3,632 -13% 208% 1,526 1,339 -9% 148% 1,457 3,177 -8% 219% 432 1,114 -24% 139% 391 333 -6% 160% 354 756 -13% 108% 354 326 -10% 193% 339 620 -16% 183% 336 633 -12% 148% 160 98 -30% 86% 147 292 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.5x 1.0x .9x 2.4x 6.6x 1.4x .4x .5x 1.4x .6x 2.2x 1.5x 1.0x 1.7x 1.7x 1.8x 1.4x

EV/ LTM EBIT 9x 7x 5x 9x 19x 10x 7x 3x 9x 7x 10x 6x 4x 20x 9x 9x 8x

Last FY Act. 13x 10x 8x 11x 27x 7x 5x 4x 10x 9x 11x 5x 5x 41x 12x 12x 9x

P/E This FY Est. 11x 9x 6x 10x 23x 10x 5x 7x 9x 8x 8x 5x 9x 22x 10x 10x 9x

Next FY Est. 9x 9x 6x 9x 17x 11x 5x 7x 8x 8x 7x 8x 10x 18x 9x 9x 9x

P/ Tang. Book nm 4.0x nm nm 6.1x 6.2x nm 3.2x 2.7x 3.7x nm nm 2.3x 1.2x 3.7x 1.9x 3.5x

Move to 52-Wk MV EV Low High ($mn) ($mn) -13% 190% 19,419 27,408 -21% 95% 14,881 na -8% 74% 8,626 8,626 -27% 110% 7,347 8,366 -6% 78% 7,105 9,804 -18% 109% 3,681 3,785 -5% 213% 2,556 6,511 -42% 70% 1,909 2,799 -4% 393% 1,859 5,645 -1% 188% 1,055 2,136 -6% 263% 727 1,163 -4% 146% 577 1,036 -11% 144% 457 784 -7% 258% 317 591 -1% 181% 215 165 -13% 195% 192 494 -7% 250% 174 188 -9% 912% 135 2,198 -9% 483% 109 845 -31% 773% 107 277 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .8x nm 2.8x 1.3x 1.5x .9x .5x 1.7x .8x .7x .7x .3x .4x .5x .5x .7x .1x 1.1x 1.0x 1.6x .9x 1.0x .8x

EV/ LTM EBIT 5x nm 14x 6x 12x 14x 10x 13x nm nm 5x 4x 9x 4x 6x 12x nm nm nm 10x 9x 6x 9x

Last FY Act. 4x 12x 12x 8x 14x 13x nm 13x 2x 10x 6x 5x 7x 4x 20x 5x nm nm 11x nm 9x 9x 9x

P/E This FY Est. 7x 10x 11x 9x 9x 14x 4x 12x 2x 10x 7x 9x 7x 5x 65x 12x 3x 2x 10x 6x 11x 9x 9x

Next FY Est. 6x 9x 10x 9x 9x 15x 4x 10x 3x 12x 6x 7x 6x 6x 13x 5x 6x 3x 11x 4x 8x 8x 7x

P/ Tang. Book nm nm 11.0x nm nm 2.9x nm nm nm 17.6x nm 1.4x .8x nm 4.1x nm .4x nm nm nm 5.5x 1.8x 2.9x

(Sorted by market value)

Company / Ticker H&R Block, Inc. / HRB Cintas Corporation / CTAS Expedia, Inc. / EXPE Weight Watchers Inte / WTW Ctrip.com Internatio / CTRP Service Corporation / SCI Regis Corporation / RGS NutriSystem Inc. / NTRI Stewart Enterprises, / STEI Steiner Leisure Limi / STNR Jackson Hewitt Tax S / JTX Interval Leisure Gro / IILG Ambassadors Group, I / EPAX StoneMor Partners L. / STON

Price ($) 17.68 21.01 7.80 26.63 22.99 5.70 10.01 13.22 3.84 22.79 11.76 5.99 8.40 12.42

Services: Publishing – Valuation (Sorted by market value)

Company / Ticker News Corporation / NWS.A Thomson Reuters PLC / TRIN Reed Elsevier plc (A / RUK McGraw-Hill Companie / MHP Pearson PLC (ADR) / PSO Washington Post Comp / WPO R.R. Donnelley & Son / RRD Wiley John & Sons In / JW.A Gannett Co., Inc. / GCI New York Times Compa / NYT Meredith Corporation / MDP Scholastic Corporati / SCHL American Greetings C / AM Harte-Hanks, Inc. / HHS Martha Stewart Livin / MSO infoGROUP Inc / IUSA E.W. Scripps Company / SSP McClatchy Company, T / MNI Media General, Inc. / MEG Dolan Media Company / DM

Price ($) 7.43 108.32 31.29 23.36 8.78 393.00 12.47 32.26 8.15 7.34 16.11 15.28 10.07 5.01 3.91 3.38 3.24 1.63 4.77 3.57

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Services: Real Estate Operations (I of II) – Valuation (Sorted by market value)

Company / Ticker Simon Property Group / SPG Public Storage / PSA Vornado Realty Trust / VNO Equity Residential / EQR Annaly Capital Manag / NLY Boston Properties, I / BXP HCP, Inc. / HCP Kimco Realty Corpora / KIM AvalonBay Communitie / AVB Host Hotels & Resort / HST Health Care REIT, In / HCN Ventas, Inc. / VTR Federal Realty Inv. / FRT St. Joe Company, The / JOE Regency Centers Corp / REG Nationwide Health Pr / NHP Digital Realty Trust / DLR Realty Income Corp / O Essex Property Trust / ESS Liberty Property Tru / LRY UDR, Inc. / UDR Alexandria Real Esta / ARE Senior Housing Prope / SNH Douglas Emmett, Inc. / DEI AMB Property Corpora / AMB Duke Realty Corporat / DRE BRE Properties, Inc. / BRE Camden Property Trus / CPT Taubman Centers, Inc / TCO Weingarten Realty In / WRI ProLogis / PLD CapitalSource, Inc. / CSE Macerich Company, Th / MAC Mack-Cali Realty Cor / CLI Washington Real Esta / WRE Healthcare Realty Tr / HR Apartment Investment / AIV National Retail Prop / NNN Homex Development Co / HXM MFA Mortgage Investm / MFA CB Richard Ellis Gro / CBG BioMed Realty Trust, / BMR Entertainment Proper / EPR Tanger Factory Outle / SKT Equity One, Inc. / EQY American Campus Comm / ACC PS Business Parks, I / PSB Mid-America Apartmen / MAA W. P. Carey & Co. LL / WPC Equity Lifestyle Pro / ELS

Price ($) 52.20 64.46 56.28 27.66 13.29 52.40 21.58 17.25 55.46 7.15 35.42 23.96 51.16 25.17 32.71 21.31 28.99 19.23 72.97 18.85 13.56 56.80 14.69 11.94 14.75 9.71 27.81 26.65 26.75 15.92 5.08 4.64 17.11 19.45 23.93 20.69 12.09 13.12 18.25 4.94 4.84 12.16 28.75 29.72 12.03 21.38 42.56 29.52 20.77 33.43

Move to 52-Wk MV EV Low High ($mn) ($mn) -6% 104% 11,787 29,764 -1% 59% 10,920 14,304 -5% 92% 8,687 20,173 -2% 77% 7,524 17,305 -25% 60% 7,193 57,471 -2% 103% 6,330 12,386 -4% 95% 5,452 11,571 -7% 177% 4,593 8,866 -5% 104% 4,277 7,625 -5% 181% 3,736 9,245 -3% 52% 3,664 6,634 -10% 117% 3,433 6,453 -11% 86% 3,017 4,733 -6% 86% 2,321 2,265 -7% 150% 2,290 4,684 -1% 88% 2,117 3,661 -12% 77% 2,116 4,020 -6% 81% 2,005 3,700 -3% 78% 1,955 3,810 -6% 137% 1,850 4,552 -1% 110% 1,847 5,352 -3% 105% 1,831 4,999 -10% 72% 1,683 2,242 -6% 118% 1,454 5,185 -13% 336% 1,453 5,148 -2% 193% 1,431 6,804 -3% 235% 1,421 3,404 -3% 108% 1,419 4,213 -7% 147% 1,418 4,166 -5% 151% 1,386 4,651 -29% 1313% 1,350 12,456 -4% 321% 1,308 11,417 -2% 379% 1,302 7,287 -13% 121% 1,281 3,530 -2% 63% 1,254 2,542 -8% 55% 1,217 1,870 -17% 261% 1,072 8,415 -1% 93% 1,028 2,222 -18% 287% 1,022 1,383 -19% 124% 1,021 9,972 -27% 411% 992 4,012 -2% 143% 977 2,743 -6% 140% 945 2,152 -11% 56% 941 1,796 -4% 122% 922 1,949 -5% 73% 905 2,122 -20% 42% 871 1,595 -2% 105% 832 2,147 -21% 77% 831 1,140 0% 68% 831 2,446 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 7.9x 8.0x 7.0x 8.3x 18.6x 8.4x 11.1x 11.9x 9.0x 1.7x 12.2x 6.9x 9.2x 7.4x 9.7x 10.0x 8.3x 11.3x 9.5x 6.0x 9.5x 11.3x 10.4x 9.1x 7.2x 5.3x 9.7x 6.7x 6.3x 7.5x 2.5x 8.0x 8.0x 4.4x 9.2x 8.7x 5.2x 10.0x 1.0x 19.9x .7x 9.7x 7.8x 7.5x 8.1x 10.6x 5.6x 5.9x 4.9x 6.1x 8.2x 8.8x 8.1x

EV/ LTM EBIT 20x 21x 23x 28x 59x 21x 26x 24x 26x 10x 23x 18x 22x 267x 23x 18x 37x 17x 29x 16x 26x 27x 16x 34x 23x 23x 23x 25x 20x 18x 13x 54x 26x 16x 31x 31x 28x 15x 5x 74x 9x 26x 12x 26x 26x 55x 19x 22x 17x 21x 30x 29x 23x

Last FY Act. 25x 55x 20x 66x 10x 6x 32x 13x 18x 7x 28x 21x 30x 168x 15x 15x 362x 19x 57x 14x nm 24x 14x nm 7x 15x 30x 33x 30x 11x 1x 5x 18x 18x 34x 59x nm 11x 8x 21x 3x 15x 10x 41x 18x nm 52x 47x 12x 36x 34x 33x 19x

P/E This FY Est. 24x 16x 15x 18x 6x 23x 12x 19x 10x 10x 12x 16x 25x nm 15x 8x 88x 18x 37x 14x 3x 18x 14x nm 8x 28x 17x 15x 43x 9x 3x 4x 7x 19x 35x 30x 6x 9x 5x 45x 6x 16x 9x 43x 13x nm 44x 34x 11x 32x 19x 17x 15x

Next FY Est. 23x 25x 34x 66x 5x 30x 20x 14x 19x 19x 19x 15x 23x 194x 15x 19x 58x 17x 43x 16x nm 20x 13x nm 12x 121x 23x 41x 32x 9x 7x 4x 13x 29x 37x 32x nm 10x 5x 5x 5x 26x 9x 31x 19x nm 38x 28x 11x 25x 28x 28x 20x

P/ Tang. Book 4.6x 2.1x 1.8x 1.5x 1.1x 1.7x 1.2x 1.1x 1.3x .7x 1.3x 1.6x 2.7x 2.3x 1.5x 1.3x 2.4x 1.7x 2.3x 1.0x 1.4x 1.3x 1.0x .8x .6x .8x 1.6x .9x nm 1.0x .2x .5x .9x .8x 2.1x 1.5x 1.2x .7x 1.2x .8x nm .8x .7x 5.7x 1.0x 1.1x 2.1x 1.8x 1.5x 10.1x 1.7x 1.8x 1.3x

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Services: Real Estate Operations (II of II) – Valuation (Sorted by market value)

Company / Ticker Jones Lang LaSalle I / JLL EastGroup Properties / EGP Extra Space Storage, / EXR Inland Real Estate C / IRC Forest City Enterpri / FCE.A DCT Industrial Trust / DCT Developers Diversifi / DDR Post Properties, Inc / PPS HRPT Properties Trus / HRP Brandywine Realty Tr / BDN Sovran Self Storage, / SSS Cousins Properties I / CUZ Hatteras Financial C / HTS Capstead Mortgage Co / CMO Investors Real Estat / IRET Anworth Mortgage Ass / ANH LTC Properties, Inc. / LTC Tejon Ranch Company / TRC Redwood Trust, Inc. / RWT E-House (China) Hold / EJ Acadia Realty Trust / AKR Medical Properties T / MPW LaSalle Hotel Proper / LHO CBL & Associates Pro / CBL First Industrial Rea / FR U-Store-It Trust / YSI Cedar Shopping Cente / CDR Colonial Properties / CLP American Capital Age / AGNC Pennsylvania R.E.I.T / PEI Parkway Properties, / PKY LoopNet, Inc. / LOOP Anthracite Capital I / AHR Sun Communities, Inc / SUI First Potomac Realty / FPO IRSA Inversiones Rep / IRS Northstar Realty Fin / NRF CapLease, Inc. / LSE Care Investment Trus / CRE Sunstone Hotel Inves / SHO Cogdell Spencer Inc. / CSA iStar Financial Inc. / SFI RAIT Financial Trust / RAS Forestar Real Estate / FOR Move Inc. / MOVE Ashford Hospitality / AHT Capital Trust, Inc. / CT Maguire Properties, / MPG Newcastle Investment / NCT Glimcher Realty Trus / GRT

Price ($) 24.07 31.28 8.79 10.47 6.64 3.71 5.22 14.11 2.68 6.91 26.17 11.01 20.83 8.96 8.74 5.27 19.04 25.00 12.31 4.95 12.34 5.77 9.02 4.86 7.03 5.23 6.62 6.03 18.25 6.57 16.09 6.41 2.82 11.48 7.64 3.60 3.30 4.13 9.13 3.76 10.26 1.22 2.45 4.39 1.01 1.62 5.89 2.64 2.30 3.15

Move to 52-Wk MV EV Low High ($mn) ($mn) -7% 277% 831 1,329 -17% 63% 784 1,452 -4% 104% 752 1,939 -15% 62% 695 1,581 -2% 679% 687 8,497 -4% 184% 645 1,780 -23% 813% 628 7,063 -4% 217% 624 1,663 -1% 227% 610 4,199 -6% 221% 609 3,621 -2% 78% 575 1,176 0% 166% 566 1,564 -24% 30% 558 5,029 -16% 108% 527 7,915 -37% 35% 509 1,562 -22% 95% 472 537 -3% 64% 441 651 -10% 78% 425 371 -23% 279% 412 6,994 -9% 516% 408 236 -1% 129% 407 1,090 -3% 125% 383 979 -8% 332% 370 1,332 -10% 505% 323 6,279 -28% 480% 311 2,295 -7% 157% 303 1,291 -1% 112% 295 1,335 -2% 355% 289 1,974 -34% 11% 274 257 -1% 461% 259 2,762 -12% 163% 246 1,329 -5% 163% 220 150 -38% 263% 216 3,304 -8% 128% 211 1,418 -8% 162% 209 856 -7% 355% 208 501 -14% 225% 208 1,949 -11% 146% 196 898 -11% 40% 192 4 -2% 550% 182 1,985 -12% 94% 180 594 -36% 2646% 159 12,440 -27% 379% 159 6,651 0% 572% 157 464 0% 244% 155 211 -47% 554% 150 2,787 -38% 559% 132 2,121 -8% 1064% 126 4,984 -21% 573% 121 6,062 -5% 1797% 119 1,943 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. .5x 8.9x 7.2x 8.2x 6.2x 7.0x 7.5x 6.0x 5.1x 4.6x 5.8x 7.6x 37.3x 20.3x 6.9x 2.0x 9.2x 9.4x 11.5x 1.5x 8.3x 8.5x 1.9x 5.6x 4.8x 5.4x 7.7x 6.1x 6.8x 5.8x 5.1x 1.8x 9.2x 5.6x 6.9x 1.5x 4.9x 4.8x .2x 2.0x 2.3x 8.3x 8.4x 2.9x .8x 2.4x 23.8x 8.8x 11.9x 6.0x 7.0x 7.4x 6.1x

EV/ LTM EBIT 6x 25x 21x 21x 31x 30x 19x 105x 15x 19x 15x 55x 86x 63x 20x 12x 13x 161x 92x 4x 24x 13x 13x 16x 1208x 38x 20x 32x 11x 29x 31x 5x 68x 24x 21x 8x 27x nm 3x 14x 42x 227x nm 15x nm 17x 31x 68x nm 19x 62x 53x 21x

Last FY Act. 3x 28x 17x 17x nm 186x 5x 6x 12x 29x 14x nm 260x 47x 49x nm 14x 60x nm 9x 23x 7x 12x 6x nm nm 22x 1x nm 11x 17x 12x 2x nm 382x 12x 7x nm nm 6x nm 1x nm 6x nm nm 1x nm nm nm 39x 30x 12x

P/E This FY Est. 8x 24x 16x 15x nm 31x 6x 88x 17x 18x 15x 79x 6x 4x 58x 7x 15x 45x nm 8x 11x 8x 32x 7x 4x nm 19x 3x 8x nm 146x 13x 2x nm 8x 2x 1x nm 13x 3x nm nm 1x 24x nm nm 20x nm nm nm 21x 19x 13x

Next FY Est. 6x 28x 18x 15x nm nm 5x 21x 67x nm 17x 367x 5x 4x 44x 4x 15x 42x 10x 6x 12x 9x nm 8x nm nm 25x 50x 5x nm nm 13x 3x nm 32x 1x 5x nm 9x nm nm nm 2x 88x 8x nm 3x nm 2x nm 28x 24x 10x

P/ Tang. Book nm 1.9x .9x 2.1x .7x .6x .3x .6x .3x .4x 1.1x 1.9x 1.1x .9x 2.0x .9x 1.6x 2.5x 1.0x 1.0x 1.8x .6x .4x .4x .4x .6x .7x .3x 1.0x .4x .9x 3.3x .3x nm .6x nm .2x .7x .7x .3x nm .1x .1x .4x 2.7x .1x .3x 1.4x nm nm .9x .9x .7x

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Services: Recreational Activities – Valuation (Sorted by market value)

Company / Ticker Carnival Corporation / CCL Royal Caribbean Crui / RCL Netflix, Inc. / NFLX International Speedw / ISCA World Wrestling Ente / WWE Vail Resorts, Inc. / MTN Cedar Fair, L.P. / FUN Speedway Motorsports / TRK Life Time Fitness, I / LTM Warner Music Group C / WMG Orbitz Worldwide, In / OWW Blockbuster Inc. / BBI

Price ($) 18.97 10.42 22.03 26.24 12.42 22.36 13.60 13.45 13.09 2.77 3.00 0.96

Move to 52-Wk MV EV Low High ($mn) ($mn) -5% 144% 15,888 24,615 -5% 322% 2,225 7,794 -19% 86% 1,293 1,081 -6% 71% 1,279 1,653 -5% 60% 904 733 -3% 158% 825 1,219 -8% 84% 749 2,387 -14% 170% 584 1,130 -2% 325% 520 1,160 -4% 227% 426 2,360 -16% 233% 250 767 -25% 336% 185 1,094 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.7x 1.2x .8x 2.0x 1.4x 1.1x 2.4x 1.8x 1.6x .7x .9x .2x 1.3x 1.6x 1.3x

EV/ LTM EBIT 9x 9x 10x 6x 10x 7x 12x 6x 7x 11x nm 9x 9x 9x 9x

Last FY Act. 6x 4x 23x 16x 17x 8x nm 15x 7x nm nm nm 12x 8x 12x

P/E This FY Est. 7x 4x 17x 9x 20x 13x 11x 6x 6x nm nm 5x 10x 8x 8x

Next FY Est. 7x 5x 15x 10x 16x 11x 10x 6x 6x nm nm 3x 9x 8x 9x

P/ Tang. Book 1.0x .4x 6.5x 1.5x 2.5x 1.6x nm 1.7x .8x nm nm nm 2.0x 1.3x 1.6x

Services: Recreational Activities – Operating Performance

LTM Ticker ($mn) CCL 14,468 RCL 6,567 NFLX 1,307 ISCA 836 WWE 534 MTN 1,152 FUN 992 TRK 621 LTM 747 WMG 3,506 OWW 887 BBI 5,470 Median

Revenue LTM Growth 14% 13% 11% 3% 25% 23% 0% 9% 20% 4% 6% 0% 10%

3-Year Growth 10% 11% 34% 8% 10% 13% 22% 8% 28% 10% 52% -3% 10%

Rev./ Empl. ($'000) 189 143 848 760 936 329 551 807 136 923 558 431 555

LTM Profit Margins Gross 51% 34% 33% 54% 40% 23% 46% 53% 42% 47% 81% 52% 47%

EBIT 19% 14% 8% 32% 13% 15% 20% 31% 21% 6% -28% 2% 15%

Net 16% 10% 6% 15% 10% 9% 5% 10% 10% -2% -36% 0% 9%

www.manualofideas.com

Est. 5-Year EPS Growth 12% 12% 17% 8% 13% 10% 9% 7% 16% 4% 17% na 12%

EBIT/ Capital Empl. 12% 8% 89% 22% 31% 21% 11% 19% 13% nm >99% 25% 20%

LTM ROE 12% 9% 20% 11% 14% 14% 23% 8% 13% 80% -48% 3% 12%

LTM ROA 7% 4% 12% 6% 11% 5% 2% 4% 5% -1% -16% 1% 5%

LTM Asset Turnover .4x .4x 2.1x .4x 1.1x .6x .4x .3x .5x .8x .5x 2.0x .5x

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Services: Rental and Leasing – Valuation (Sorted by market value)

Company / Ticker Ryder System, Inc. / R Hertz Global Holding / HTZ Aaron Rents, Inc. / RNT Rent-A-Center, Inc / RCII AMERCO / UHAL RSC Holdings Inc. / RRR Textainer Group Hold / TGH TAL International Gr / TAL McGrath RentCorp / MGRC United Rentals, Inc. / URI AerCap Holdings N.V. / AER Electro Rent Corpora / ELRC H&E Equipment Servic / HEES Babcock & Brown Air / FLY Genesis Lease Limite / GLS Avis Budget Group In / CAR

Price ($) 36.91 4.70 22.73 13.37 40.23 6.92 9.12 13.18 17.80 6.26 4.05 11.30 6.22 6.06 3.10 1.03

Move to 52-Wk MV EV Low High ($mn) ($mn) -7% 108% 2,053 4,864 -23% 317% 1,518 13,631 -42% 33% 1,216 1,363 -25% 94% 893 1,788 -28% 84% 789 2,001 -25% 102% 715 3,344 -15% 152% 434 1,008 -5% 115% 431 1,702 -9% 82% 421 643 0% 307% 375 3,899 -14% 480% 344 3,771 -17% 42% 292 238 -25% 223% 216 563 -9% 234% 203 1,612 -3% 587% 112 1,182 -3% 1648% 105 9,136 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. .7x 1.5x .9x .6x 1.0x 1.9x 3.6x 4.2x 2.2x 1.1x 3.1x 1.6x .5x 7.7x 5.4x 1.5x 2.3x 1.6x 1.6x

EV/ LTM EBIT 8x 14x 10x 8x 12x 8x 7x 10x 8x 7x 9x 8x 4x 34x 10x nm 11x 10x 8x

Last FY Act. 9x 6x 16x 12x 14x 6x 5x 11x 11x 2x 2x 14x 4x 87x 3x nm 13x 11x 9x

P/E This FY Est. 8x 6x 15x 7x 26x 5x 5x 6x 10x 2x 2x 15x 4x 4x 3x 2x 8x 9x 6x

Next FY Est. 8x 7x 13x 6x 36x 6x 5x 6x 10x 3x 2x 13x 5x 4x 3x 21x 9x 10x 6x

P/ Tang. Book 1.9x nm 2.1x nm .9x nm 1.1x 1.3x 1.7x nm .3x 1.2x 1.0x .4x .2x nm 1.1x 1.0x 1.1x

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Services: Restaurants – Valuation (Sorted by market value)

Company / Ticker McDonald's Corporati / MCD Yum! Brands, Inc. / YUM Starbucks Corporatio / SBUX Burger King Holdings / BKC Darden Restaurants, / DRI Wendy's Arby's Group / WEN Chipotle Mexican Gri / CMG Panera Bread Company / PNRA Jack in the Box Inc. / JBX Brinker Internationa / EAT Bob Evans Farms, Inc / BOBE Sonic Corporation / SONC Papa John's Int'l, I / PZZA P.F. Chang's China B / PFCB Cheesecake Factory I / CAKE CEC Entertainment, I / CEC Texas Roadhouse, Inc / TXRH Buffalo Wild Wings / BWLD CKE Restaurants, Inc / CKR CBRL Group, Inc. / CBRL Domino's Pizza, Inc. / DPZ BJ's Restaurants, In / BJRI DineEquity, Inc. / DIN Red Robin Gourmet Bu / RRGB California Pizza Kit / CPKI Krispy Kreme Doughnu / KKD Denny's Corporation / DENN Luby's, Inc. / LUB Steak n Shake Compan / SNS

Price ($) 56.13 24.98 8.61 21.11 17.36 3.62 44.32 39.08 15.37 7.20 16.95 8.08 16.74 16.83 6.69 17.51 5.54 21.64 6.42 14.39 3.87 8.06 12.14 12.16 7.04 2.50 1.59 4.04 3.91

Move to 52-Wk MV EV Low High ($mn) ($mn) -18% 19% 62,559 70,951 -10% 67% 11,555 14,880 -6% 177% 6,333 7,274 -22% 47% 2,843 3,700 -6% 138% 2,408 4,293 -27% 170% 1,701 2,396 -10% 251% 1,462 1,250 -22% 66% 1,198 1,167 -8% 110% 872 1,303 -4% 237% 733 1,572 -10% 105% 524 819 -10% 205% 488 1,241 -3% 83% 468 609 -3% 96% 400 571 0% 270% 400 619 -3% 126% 397 787 0% 145% 388 526 -16% 108% 386 354 -4% 137% 338 682 -5% 170% 322 1,098 -6% 292% 220 1,905 -9% 148% 215 220 -53% 363% 212 2,420 -11% 258% 205 415 -2% 140% 170 217 -30% 126% 169 211 -26% 178% 152 469 -12% 183% 113 108 -5% 236% 112 275 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. 3.0x 1.3x .7x 1.5x .6x 1.9x 1.0x .9x .4x .4x .5x 1.5x .5x .5x .4x 1.0x .6x .9x .5x .5x 1.3x .6x 1.6x .5x .3x .5x .6x .3x .5x .9x 2.3x .6x

EV/ LTM EBIT 11x 11x 19x 11x 7x 31x 10x 11x 6x 23x 8x 7x 11x 13x 6x 8x 8x 12x 8x 7x 10x 15x 20x 7x 9x nm 6x nm nm 11x 12x 10x

Last FY Act. 29x 15x 20x 15x 7x 23x 21x 22x 8x 15x 9x 8x 15x 12x 7x 10x 11x 20x 11x 5x 7x 18x nm 7x 14x nm 5x 45x nm 15x 24x 13x

P/E This FY Est. 16x 13x 11x 14x 7x 20x 19x 18x 8x 7x 9x 8x 10x 12x 8x 7x 11x 16x 8x 5x 5x 20x 11x 7x 11x 42x 6x nm nm 12x 14x 11x

Next FY Est. 15x 12x 9x 12x 6x 14x 18x 15x 7x 6x 8x 7x 9x 11x 8x 7x 11x 13x 7x 5x 5x 16x 8x 7x 12x 17x 5x 202x nm 17x 13x 9x

P/ Tang. Book 5.8x nm 2.9x nm 5.5x nm 2.4x 3.4x 2.1x 1.6x 1.0x nm 10.5x 1.4x .9x 3.0x 1.7x 2.5x 2.2x 3.5x nm .9x nm 1.5x 1.0x 4.2x nm .6x .4x 2.7x 4.3x 2.1x

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Services: Restaurants – Operating Performance

LTM Ticker ($mn) MCD 23,711 YUM 11,158 SBUX 10,383 BKC 2,527 DRI 6,933 WEN 1,247 CMG 1,276 PNRA 1,242 JBX 2,986 EAT 4,325 BOBE 1,762 SONC 805 PZZA 1,136 PFCB 1,203 CAKE 1,612 CEC 815 TXRH 833 BWLD 393 CKR 1,508 CBRL 2,385 DPZ 1,443 BJRI 360 DIN 1,472 RRGB 835 CPKI 678 KKD 412 DENN 796 LUB 318 SNS 610 Median

Revenue LTM Growth 6% 10% 10% 10% 22% -2% 26% 24% 5% 7% 4% 4% 8% 14% 10% 4% 19% 22% -3% 1% -1% 21% >99% 19% 10% -7% -17% -1% -7% 7%

3-Year Growth 7% 5% 18% 8% 10% 57% 32% 31% 7% 4% 6% 9% 5% 16% 16% 3% 27% 25% 0% 3% 0% 35% 11% 24% 14% -15% -1% 0% 0% 8%

Rev./ Empl. ($'000) 61 232 60 62 39 47 68 159 70 43 36 2,101 64 42 50 44 36 483 58 37 115 42 1,711 33 46 102 38 41 28 50

LTM Profit Margins Gross 36% 25% 19% 59% 22% 31% 22% 32% 15% 14% na 61% 26% 17% 17% 57% 19% 46% 42% 68% 25% 40% 27% 20% 19% 11% 29% 13% 20% 25%

EBIT 26% 12% 4% 14% 8% 6% 10% 8% 7% 2% 6% 21% 5% 4% 6% 13% 8% 8% 6% 6% 14% 4% 8% 7% 4% -5% 10% -1% -3% 7%

Net 19% 9% 3% 8% 6% -4% 6% 5% 5% 1% 3% 7% 3% 2% 4% 7% 5% 5% 2% 3% 4% 3% -3% 4% 3% -7% 4% 2% -4% 4%

www.manualofideas.com

Est. 5-Year EPS Growth 11% 12% 18% 16% 12% 12% 23% 18% 13% 10% 6% 12% 12% 17% 14% 13% 18% 24% 14% 11% 1% 25% 29% 17% 17% na 24% na na 14%

EBIT/ Capital Empl. 34% 47% 13% 46% 26% 19% 26% 27% 25% 5% 11% 31% 32% 10% 12% 16% 18% 20% 19% 16% >99% 6% 20% 16% 10% nm 73% nm nm 19%

LTM ROE 32% >99% 13% 23% 29% -14% 13% 14% 37% 6% 10% -67% 25% 10% 11% 32% 11% 14% 21% 79% -4% 5% -24% 12% 9% -45% -20% 4% -8% 11%

LTM ROA 16% 14% 6% 7% 8% -4% 10% 9% 11% 2% 5% 8% 8% 5% 5% 7% 7% 10% 5% 5% 13% 4% -1% 6% 5% -14% 9% 3% -4% 6%

LTM Asset Turnover .8x 1.6x 1.9x 1.0x 1.5x .9x 1.6x 1.9x 2.2x 1.9x 1.5x 1.0x 2.8x 1.9x 1.4x 1.1x 1.5x 1.8x 1.9x 1.8x 3.1x 1.2x .4x 1.5x 1.8x 1.9x 2.2x 1.4x 1.1x 1.6x

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Services: Retail (Apparel) – Valuation (Sorted by market value)

Company / Ticker TJX Companies, Inc., / TJX Gap Inc., The / GPS Ross Stores, Inc. / ROST Limited Brands, Inc. / LTD Urban Outfitters, In / URBN Nordstrom, Inc. / JWN American Eagle Outfi / AEO Foot Locker, Inc. / FL Abercrombie & Fitch / ANF Guess?, Inc. / GES Carter's, Inc. / CRI Aeropostale, Inc. / ARO Buckle, Inc., The / BKE J. Crew Group, Inc. / JCG Collective Brands In / PSS Children's Place Ret / PLCE Men's Wearhouse, Inc / MW Gymboree Corporation / GYMB bebe stores, inc. / BEBE DSW Inc. / DSW Dress Barn, Inc., Th / DBRN Genesco Inc. / GCO Cato Corporation, Th / CTR Finish Line, Inc., T / FINL AnnTaylor Stores Cor / ANN Chico's FAS, Inc. / CHS Jos. A. Bank Clothie / JOSB Wet Seal, Inc., The / WTSLA Zumiez Inc. / ZUMZ Stage Stores, Inc. / SSI Talbots, Inc., The / TLB Coldwater Creek Inc. / CWTR Charlotte Russe Hold / CHIC Citi Trends, Inc. / CTRN New York & Company, / NWY Shoe Carnival, Inc. / SCVL Christopher & Banks / CBK Tween Brands Inc. / TWB Charming Shoppes, In / CHRS

Price ($) 21.32 11.55 26.23 9.01 16.04 11.74 8.88 11.22 17.79 13.97 19.69 16.00 19.79 11.22 10.85 22.13 12.10 21.32 6.11 10.86 7.40 22.12 12.83 6.70 6.37 1.99 19.05 2.65 7.09 5.31 2.99 1.57 6.36 9.22 2.15 10.18 3.55 5.00 0.97

Move to 52-Wk MV EV Low High ($mn) ($mn) -5% 76% 8,942 9,303 -9% 91% 8,217 6,725 -19% 58% 3,450 3,288 -10% 146% 3,061 4,984 -10% 139% 2,690 2,494 -5% 246% 2,529 5,203 -5% 168% 1,828 1,523 -19% 62% 1,739 1,433 0% 375% 1,548 1,350 -7% 247% 1,315 1,079 -39% 17% 1,109 1,389 -8% 134% 1,070 999 -8% 125% 912 705 -5% 363% 701 687 -18% 94% 693 1,375 -33% 96% 651 589 -11% 250% 625 590 -7% 124% 618 575 -2% 126% 544 424 -16% 116% 478 345 -11% 142% 448 372 -23% 75% 427 514 -12% 57% 379 226 -78% 86% 368 303 -6% 415% 363 256 0% 487% 351 74 -1% 119% 346 335 -32% 109% 254 135 -6% 330% 208 144 -11% 239% 205 258 -1% 501% 166 532 -4% 452% 143 68 -8% 224% 133 87 0% 205% 132 127 -8% 464% 129 65 -1% 81% 129 112 -3% 370% 126 42 -1% 575% 124 235 -16% 622% 110 180 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. .5x .4x .5x .5x 1.4x .6x .5x .3x .4x .5x 1.0x .6x 1.0x .5x .4x .3x .3x .6x .6x .2x .3x .3x .3x .2x .1x .0x .5x .2x .4x .2x .2x .1x .1x .3x .1x .2x .1x .2x .1x .4x .5x .3x

EV/ LTM EBIT 6x 4x 7x 5x 8x 7x 3x nm 2x 3x 10x 4x 5x 4x 24x nm 4x 4x 6x 5x 3x 2x 6x nm 2x 5x 4x 5x 4x 3x nm nm 3x 6x 1x 6x 2x 4x nm 5x 5x 4x

Last FY Act. 13x 11x 14x 5x 17x 4x 5x 36x 3x 7x nm 9x 12x 7x 17x nm 4x 8x 9x 9x 6x 61x 12x nm 4x 4x 7x 12x 8x 4x nm nm 8x 9x 5x 10x 8x 3x nm 11x 11x 8x

P/E This FY Est. 10x 9x 11x 6x 12x 5x 7x 14x 5x 6x 15x 7x 9x 8x 8x 9x 9x 7x 15x 14x 6x 10x 13x 11x 8x nm 6x 7x 13x 7x nm nm 9x 9x 11x 12x 13x 7x nm 9x 9x 9x

Next FY Est. 10x 8x 10x 6x 10x 6x 7x 12x 6x 5x 14x 7x 8x 7x 7x 8x 9x 6x 13x 11x 6x 9x 12x 9x 10x 20x 6x 7x 13x 7x 19x nm 10x 9x 11x 10x 10x 5x nm 9x 9x 9x

P/ Tang. Book 4.6x 1.9x 3.4x nm 2.6x 2.3x 1.3x .9x .9x 1.9x nm 4.4x 2.4x 3.3x nm 1.3x .8x 2.3x 1.1x 1.1x 1.4x 1.6x 1.4x .9x .7x .4x 1.2x 1.6x 1.4x .5x 2.0x .5x .8x .9x .5x .6x .6x .6x .3x 1.5x 2.3x 1.3x

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Services: Retail (Apparel) – Operating Performance

LTM Ticker ($mn) TJX 19,108 GPS 15,412 ROST 6,317 LTD 9,408 URBN 1,792 JWN 8,485 AEO 3,069 FL 5,449 ANF 3,771 GES 1,988 CRI 1,462 ARO 1,717 BKE 705 JCG 1,410 PSS 3,452 PLCE 1,998 MW 2,084 GYMB 977 BEBE 690 DSW 1,423 DBRN 1,444 GCO 1,550 CTR 860 FINL 1,293 ANN 2,386 CHS 1,640 JOSB 638 WTSLA 621 ZUMZ 402 SSI 1,554 TLB 2,214 CWTR 1,129 CHIC 823 CTRN 471 NWY 1,202 SCVL 659 CBK 577 TWB 1,052 CHRS 2,744 Median

Revenue LTM Growth 6% -4% 8% -15% 28% -5% 3% -4% 3% 59% 5% 16% 25% 13% 22% 8% 2% 16% 2% 4% 1% 3% -2% -3% 1% -6% 11% 5% 16% -1% -6% -3% 11% 13% 2% -4% 2% 12% -7% 3%

3-Year Growth 8% -1% 12% 3% 22% 7% 18% 1% 23% 23% 20% 18% 10% 18% 5% 23% 11% 16% 11% 14% 13% 11% 2% 3% 9% 17% 18% 12% 35% 8% 11% 25% 17% 29% 5% 4% 10% 15% 9% 12%

Rev./ Empl. ($'000) 148 103 602 485 366 154 495 324 419 201 531 535 503 455 111 470 162 208 414 167 253 111 88 349 434 287 211 288 268 872 351 333 398 294 468 366 240 300 266 324

LTM Profit Margins Gross 25% 37% 23% 35% 40% 36% 44% 27% 67% 46% 34% 35% 42% 44% 31% 39% 45% 49% 45% 27% 39% 50% 34% 30% 53% 54% 63% 33% 35% 29% 32% 35% 25% 37% 30% 28% 39% 35% 26% 35%

EBIT 8% 10% 7% 10% 18% 8% 17% 0% 17% 18% 9% 13% 19% 12% 2% -1% 7% 15% 11% 5% 8% 16% 5% -4% 6% 1% 14% 4% 9% 5% -10% -4% 3% 4% 4% 3% 3% 6% -6% 7%

Net 6% 6% 5% 6% 12% 6% 11% 1% 11% 11% 5% 8% 13% 7% 0% -1% 5% 9% 9% 3% 5% 8% 4% -3% 4% 1% 8% 4% 6% 3% -9% -3% 2% 3% 1% 2% 2% 3% -6% 5%

www.manualofideas.com

Est. 5-Year EPS Growth 12% 12% 15% 12% 23% 10% 13% 14% 12% 18% 10% 15% na 14% 13% 10% na 12% 10% na 11% 15% na 18% 12% 16% na 13% 17% na 26% 18% 6% 18% 13% 15% 13% 14% 14% 13%

EBIT/ Capital Empl. 53% 41% 45% 40% 40% 18% 49% 0% 39% 88% 36% 80% 61% 82% 8% nm 21% 58% 25% 17% 29% 55% 14% nm 23% 2% 35% 32% 27% 15% nm nm 11% 19% 20% 9% 10% 17% nm 28%

LTM ROE 53% 23% 30% 28% 23% 49% 25% 3% 25% 32% 20% 61% 26% 62% 1% -5% 11% 38% 12% 10% 14% 31% 11% -10% 11% 2% 20% 19% 16% 9% -42% -10% 8% 11% 3% 6% 6% 19% -23% 14%

LTM ROA 17% 12% 12% 8% 17% 10% 18% 2% 16% 18% 8% 26% 20% 18% 0% -3% 8% 21% 10% 6% 8% 15% 7% -6% 7% 2% 12% 11% 11% 5% -13% -5% 5% 8% 1% 4% 5% 6% -10% 8%

LTM Asset Turnover 2.8x 1.9x 2.6x 1.3x 1.4x 1.5x 1.6x 1.7x 1.4x 1.6x 1.5x 3.2x 1.5x 2.6x 1.4x 1.9x 1.7x 2.3x 1.2x 2.0x 1.5x 1.8x 2.0x 2.0x 1.7x 1.3x 1.5x 2.6x 1.8x 1.7x 1.4x 1.7x 2.0x 2.2x 2.4x 2.2x 1.8x 1.8x 1.7x 1.7x

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Services: Retail (Online) – Valuation EV/ LTM Rev. .3x 2.5x .4x .2x .2x .5x .8x .0x .6x .7x .3x

EV/ LTM EBIT nm 15x 3x nm nm 7x 15x 2x 9x 4x 7x

Last FY Act. nm 28x 2x 2x nm 17x 17x 5x 12x 7x 11x

P/E This FY Est. 53x 16x 4x nm nm 15x 14x 6x 18x 32x 15x

Next FY Est. 16x 16x 5x 5x nm 13x 15x 8x 11x 13x 13x

P/ Tang. Book 1.2x 4.9x nm nm nm 3.5x 1.6x .6x 2.4x 1.7x 1.6x

EV/ LTM Rev. .6x .7x .7x .1x .3x .8x .5x .3x .2x .5x .6x .5x

EV/ LTM EBIT 11x 8x 7x 7x 4x 11x 8x 12x 21x 10x 10x 8x

Last FY Act. 17x 10x 9x 7x 4x 18x 4x 13x 5x 10x 15x 9x

P/E This FY Est. 15x 10x 10x 17x 6x 16x 6x nm nm 11x 14x 10x

Next FY Est. 14x 10x 10x 31x 7x 14x 7x nm nm 13x 14x 10x

P/ Tang. Book 4.1x 1.9x 1.4x .9x .7x 3.7x nm .5x .1x 1.7x 3.6x 1.2x

(Sorted by market value)

Company / Ticker IAC/InterActiveCorp / IACI Gmarket Inc. (ADR) / GMKT Ticketmaster Enterta / TKTM HSN, Inc. / HSNI Overstock.com, Inc. / OSTK Liquidity Services, / LQDT Stamps.com Inc. / STMP PC Connection, Inc. / PCCC

Price ($) 15.92 14.65 5.87 4.67 9.04 6.50 8.54 4.07

Move to 52-Wk MV EV Low High ($mn) ($mn) -17% 58% 2,235 867 -14% 87% 733 482 -9% 360% 336 550 -34% 254% 263 595 -15% 227% 206 202 -2% 134% 182 131 -2% 85% 154 71 -7% 250% 110 68 Average (equal-weighted) Average (market value-weighted) Median

Services: Retail (Department and Discount) – Valuation (Sorted by market value)

Company / Ticker Wal-Mart Stores, Inc / WMT Target Corporation / TGT Kohl's Corporation / KSS Sears Holdings Corpo / SHLD J.C. Penney Company, / JCP Dollar Tree, Inc. / DLTR Macy's, Inc. / M Saks Incorporated / SKS Dillard's, Inc. / DDS

Price ($) 52.71 33.03 29.09 38.27 17.27 38.53 7.52 4.06 3.35

Move to 52-Wk MV EV Low High ($mn) ($mn) -18% 21% 207,360 248,510 -8% 85% 24,926 43,054 -13% 93% 8,860 10,956 0% 219% 4,838 6,918 -5% 198% 3,836 5,717 -46% 10% 3,484 3,638 -8% 320% 3,163 12,697 -1% 447% 576 1,086 -7% 590% 246 1,534 Average (equal-weighted) Average (market value-weighted) Median

Services: Retail (Department and Discount) – Operating Performance

LTM Ticker ($mn) WMT 403,919 TGT 64,981 KSS 16,641 SHLD 49,526 JCP 19,117 DLTR 4,441 M 25,552 SKS 3,327 DDS 7,242 Median

Revenue LTM Growth 9% 5% 1% -5% -5% 6% -5% 6% -6% 1%

3-Year Growth 10% 11% 12% 37% 3% 11% 19% 6% -2% 11%

Rev./ Empl. ($'000) 192 178 640 164 123 334 140 259 145 178

LTM Profit Margins Gross 25% 31% 37% 27% 38% 34% 40% 38% 34% 34%

EBIT 6% 8% 10% 2% 8% 8% 6% 3% 1% 6%

Net 4% 4% 6% 1% 4% 5% 3% 1% 0% 4%

www.manualofideas.com

Est. 5-Year EPS Growth 12% 13% 14% 10% 10% 14% 9% 12% 6% 12%

EBIT/ Capital Empl. 24% 17% 20% 9% 19% 30% 13% 6% 2% 17%

LTM ROE 26% 19% 16% 4% 15% 21% 7% 4% 0% 15%

LTM ROA 10% 6% 9% 2% 6% 12% 3% 2% 0% 6%

LTM Asset Turnover 2.4x 1.5x 1.5x 1.8x 1.4x 2.4x .9x 1.4x 1.3x 1.5x

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Services: Retail (Drugs) – Valuation (Sorted by market value)

Company / Ticker CVS Caremark Corpora / CVS Walgreen Company / WAG Medco Health Solutio / MHS Express Scripts, Inc / ESRX Omnicare, Inc. / OCR PharMerica Corporati / PMC PetMed Express, Inc. / PETS China Nepstar Chain / NPD Rite Aid Corporation / RAD drugstore.com, inc. / DSCM

Price ($) 29.31 23.43 39.93 58.49 23.57 19.15 17.30 3.33 0.35 1.11

Move to 52-Wk MV EV Low High ($mn) ($mn) -17% 51% 42,096 50,736 -9% 72% 23,181 24,158 -25% 37% 19,886 23,963 -17% 35% 14,474 16,087 -35% 39% 2,790 5,378 -32% 35% 583 781 -40% 10% 407 355 -10% 530% 360 43 0% 1249% 296 6,684 -14% 215% 110 83 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .6x .4x .5x .8x .9x .4x 1.7x .1x .3x .2x .6x .6x .4x

EV/ LTM EBIT 9x 7x 13x 13x 18x 21x 11x 1x nm nm 12x 10x 12x

Last FY Act. 15x 11x 24x 26x 25x nm 21x 11x nm nm 19x 18x 21x

P/E This FY Est. 12x 10x 17x 19x 11x 21x 18x 13x nm nm 15x 14x 15x

Next FY Est. 11x 9x 15x 16x 10x 17x 16x 11x nm 37x 16x 12x 15x

P/ Tang. Book nm 2.0x nm nm nm 4.1x 5.2x .8x nm 2.0x 2.8x .5x 2.0x

Services: Retail (Drugs) – Operating Performance

LTM Ticker ($mn) CVS 85,272 WAG 59,034 MHS 49,675 ESRX 21,166 OCR 6,269 PMC 1,960 PETS 206 NPD 313 RAD 26,436 DSCM 391 Median

Revenue LTM Growth 28% 10% 13% 2% 0% >99% 15% 14% 33% 10% 13%

3-Year Growth 36% 12% 8% 7% 15% 50% 20% 32% 13% 7% 14%

Rev./ Empl. ($'000) 711 362 2,614 1,791 398 399 804 22 434 460 447

LTM Profit Margins Gross 21% 28% 7% 9% 25% 15% 39% 48% 27% 27% 26%

EBIT 7% 6% 4% 6% 5% 2% 15% 10% 0% -4% 5%

Net 4% 4% 2% 4% 2% 1% 11% 10% -5% -3% 3%

www.manualofideas.com

Est. 5-Year EPS Growth 14% 13% 17% 18% 13% 19% 18% 20% 7% 30% 17%

EBIT/ Capital Empl. 51% 28% >99% nm 17% 12% 70% 30% nm nm 29%

LTM ROE 10% 21% 17% >99% 3% 4% 30% 9% <-99% -15% 9%

LTM ROA 6% 12% 6% 17% 1% 2% 27% 7% -12% -8% 6%

LTM Asset Turnover 1.6x 2.8x 3.1x 4.0x .8x 2.9x 2.5x .8x 2.3x 2.2x 2.4x

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Services: Retail (Grocery) – Valuation (Sorted by market value)

Company / Ticker Kroger Co., The / KR SYSCO Corporation / SYY Safeway Inc. / SWY Delhaize Group (ADR) / DEG Companhia Brasileira / CBD SUPERVALU INC. / SVU Distribucion y Servi / DYS Casey's General Stor / CASY Whole Foods Market, / WFMI Ruddick Corporation / RDK Weis Markets, Inc. / WMK Winn-Dixie Stores, I / WINN Spartan Stores, Inc. / SPTN Pantry, Inc., The / PTRY Nash-Finch Company / NAFC Great Atlantic & Pac / GAP Susser Holdings Corp / SUSS Core-Mark Holding Co / CORE

Price ($) 28.02 22.68 20.99 58.28 29.58 11.92 18.93 29.50 9.38 26.75 31.29 14.03 23.38 22.28 38.55 4.54 15.32 18.21

Move to 52-Wk MV EV Low High ($mn) ($mn) -20% 11% 18,282 25,638 -4% 54% 13,589 15,222 -7% 72% 8,998 14,486 -25% 56% 5,792 9,011 -28% 71% 3,479 4,027 -4% 263% 2,524 11,050 -31% 93% 2,053 2,913 -32% 6% 1,498 1,531 -9% 389% 1,316 2,215 -4% 49% 1,292 1,594 -17% 37% 844 751 -28% 38% 762 629 -28% 21% 516 638 -60% 39% 495 1,642 -20% 24% 493 811 -16% 597% 262 1,288 -50% 86% 261 678 -6% 69% 196 216 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .3x .4x .3x .4x .4x .3x 1.0x .3x .3x .4x .3x .1x .2x .2x .2x .2x .2x .0x .3x .4x .3x

EV/ LTM EBIT 11x 8x 8x 8x 22x 7x 17x 11x 9x 9x 14x 26x 9x 15x 10x nm 12x 9x 12x 10x 10x

Last FY Act. 17x 13x 11x 12x 27x 4x 26x 18x 11x 13x 17x 58x 16x 19x 14x 2x 16x 8x 17x 15x 15x

P/E This FY Est. 15x 12x 9x 10x 19x 4x 21x 18x 13x 12x 20x 78x 14x 19x 12x nm 22x 15x 18x 14x 15x

Next FY Est. 13x 11x 9x 10x 15x 4x 17x 17x 12x 10x 18x 44x 12x 14x 10x nm 21x 10x 15x 12x 12x

P/ Tang. Book 6.3x 6.8x 2.0x 5.7x 1.6x nm 2.4x 2.4x 1.7x 1.6x 1.3x 1.4x 12.4x nm 5.4x nm nm .7x 3.7x 4.6x 2.2x

Services: Retail (Grocery) – Operating Performance

LTM Ticker ($mn) KR 74,530 SYY 37,994 SWY 43,645 DEG 23,205 CBD 9,566 SVU 44,170 DYS 3,049 CASY 5,114 WFMI 7,954 RDK 3,992 WMK 2,406 WINN 7,337 SPTN 2,572 PTRY 8,502 NAFC 4,570 GAP 8,553 SUSS 4,267 CORE 5,926 Median

Revenue LTM Growth 9% 6% 5% -5% 23% -1% -55% 22% 21% 10% 5% 2% 14% 29% 0% 57% 79% 8% 8%

3-Year Growth 8% 7% 6% 3% 6% 31% 9% 20% 19% 10% 3% 2% 7% 26% 5% -16% 23% 10% 8%

Rev./ Empl. ($'000) 231 760 217 371 145 232 6,135 684 177 161 142 326 598 756 1,002 541 693 1,469 456

LTM Profit Margins Gross 23% 19% 28% 25% 27% 23% 29% 14% 34% 30% 26% 27% 20% 10% 9% 30% 9% 6% 24%

EBIT 3% 5% 4% 5% 2% 4% 6% 3% 3% 4% 2% 0% 3% 1% 2% -1% 1% 0% 3%

Net 2% 3% 2% 2% 1% 1% 6% 2% 1% 2% 2% 0% 2% 0% 1% 0% 0% 0% 1%

www.manualofideas.com

Est. 5-Year EPS Growth 9% 12% 11% 9% 17% 8% 15% 14% 13% 11% na na 7% 15% na 20% 14% 17% 13%

EBIT/ Capital Empl. 20% 45% 18% 25% 8% 22% 13% 18% 14% 18% 9% 4% 32% 11% 20% nm 18% 7% 18%

LTM ROE 25% 33% 14% 12% 5% 10% 22% 13% 8% 12% 6% 1% 19% 4% 12% -5% 9% 6% 11%

LTM ROA 6% 11% 5% 5% 2% 3% 9% 7% 4% 6% 5% 1% 6% 1% 4% -1% 2% 3% 4%

LTM Asset Turnover 3.4x 3.8x 2.5x 2.0x 1.6x 2.1x 1.4x 4.2x 2.4x 2.4x 2.8x 4.3x 4.2x 4.1x 4.7x 2.6x 4.9x 9.9x 3.1x

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Services: Retail (Home Improvement) – Valuation (Sorted by market value)

Company / Ticker Home Depot, Inc., Th / HD Lowe's Companies, In / LOW Sherwin-Williams Com / SHW Tractor Supply Compa / TSCO Lumber Liquidators, / LL

Price ($) 20.54 18.23 54.50 34.48 9.65

Move to 52-Wk MV EV Low High ($mn) ($mn) -17% 51% 34,887 45,491 -14% 56% 26,719 31,135 -18% 19% 6,371 7,574 -23% 38% 1,256 1,265 -41% 88% 259 234 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .6x .6x .9x .4x .5x .6x .6x .6x

EV/ LTM EBIT 8x 7x 9x 8x 8x 8x 8x 8x

Last FY Act. 9x 10x 12x 14x 23x 14x 10x 12x

P/E This FY Est. 12x 12x 13x 14x 13x 13x 12x 13x

Next FY Est. 13x 13x 12x 12x 11x 12x 13x 12x

P/ Tang. Book 2.0x 1.5x 35.1x 2.1x 2.3x 8.6x 4.9x 2.1x

Services: Retail (Home Improvement) – Operating Performance

LTM Ticker ($mn) HD 75,517 LOW 48,462 SHW 8,134 TSCO 2,932 LL 471 Median

Revenue LTM Growth -3% 1% 2% 12% 23% 2%

3-Year Growth 2% 10% 9% 16% 33% 10%

Rev./ Empl. ($'000) 228 303 258 425 703 303

LTM Profit Margins Gross 34% 35% 44% 31% 35% 35%

EBIT 8% 9% 10% 5% 7% 8%

Net 4% 5% 6% 3% 4% 4%

Est. 5-Year EPS Growth 10% 11% 12% 15% 25% 12%

EBIT/ Capital Empl. 19% 20% 57% 24% 51% 24%

LTM ROE 19% 16% 36% 17% 19% 19%

LTM ROA 7% 8% 11% 8% 13% 8%

LTM Asset Turnover 1.7x 1.5x 1.6x 2.6x 3.3x 1.7x

Services: Retail (Technology) – Valuation (Sorted by market value)

Company / Ticker Best Buy Co., Inc. / BBY GameStop Corp. / GME RadioShack Corporati / RSH CONN'S, Inc. / CONN

Price ($) 22.06 23.28 9.65 8.37

Move to 52-Wk MV EV Low High ($mn) ($mn) -9% 144% 9,096 11,242 -9% 174% 3,811 3,817 -4% 111% 1,207 1,145 -2% 202% 188 141 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .3x .5x .3x .2x .3x .3x .3x

EV/ LTM EBIT 5x 6x 3x 2x 4x 5x 4x

Last FY Act. 7x 13x 6x 5x 8x 9x 6x

P/E This FY Est. 8x 9x 6x 5x 7x 8x 7x

Next FY Est. 9x 8x 6x 5x 7x 8x 7x

P/ Tang. Book 4.5x 6.2x 1.5x .6x 3.2x 4.6x 3.0x

Services: Retail (Technology) – Operating Performance

LTM Ticker ($mn) BBY 42,137 GME 8,095 RSH 4,330 CONN 852 Median

Revenue LTM Growth 11% 36% 0% 7% 9%

3-Year Growth 13% 57% -4% 13% 13%

Rev./ Empl. ($'000) 281 623 128 304 293

LTM Profit Margins Gross 24% 25% 46% 36% 31%

EBIT 5% 7% 9% 7% 7%

Net 3% 4% 5% 4% 4%

www.manualofideas.com

Est. 5-Year EPS Growth 13% 20% 10% 13% 13%

EBIT/ Capital Empl. 56% >99% 56% 23% 56%

LTM ROE 31% 19% 29% 12% 24%

LTM ROA 9% 10% 12% 9% 10%

LTM Asset Turnover 2.9x 2.2x 2.2x 2.1x 2.2x

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Services: Retail (Specialty Non-Apparel) – Valuation

Company / Ticker Costco Wholesale Cor / COST Amazon.com, Inc. / AMZN eBay Inc. / EBAY Staples, Inc. / SPLS AutoZone, Inc. / AZO Bed Bath & Beyond In / BBBY Family Dollar Stores / FDO O'Reilly Automotive, / ORLY Tiffany & Co. / TIF Advance Auto Parts, / AAP Copart, Inc. / CPRT BJ's Wholesale Club, / BJ PetSmart, Inc. / PETM CarMax, Inc / KMX Dick's Sporting Good / DKS Big Lots, Inc. / BIG AutoNation, Inc. / AN Suburban Propane Par / SPH Ferrellgas Partners, / FGP Barnes & Noble, Inc. / BKS 99 Cents Only Stores / NDN Sally Beauty Holding / SBH Williams-Sonoma, Inc / WSM Penske Automotive Gr / PAG EZCORP, Inc. / EZPW Sotheby's / BID Office Depot, Inc. / ODP Ulta Salon, Cosmetic / ULTA Cabela's Incorporate / CAB Hibbett Sports, Inc. / HIBB Bare Escentuals, Inc / BARE First Cash Financial / FCFS Fred's, Inc. / FRED Zale Corporation / ZLC OfficeMax Incorporat / OMX Jo-Ann Stores, Inc. / JAS Blue Nile, Inc. / NILE Hot Topic, Inc. / HOTT 1-800-FLOWERS.COM, I / FLWS Pep Boys - Manny, Mo / PBY Group 1 Automotive, / GPI Haverty Furniture Co / HVT hhgregg, Inc. / HGG Borders Group, Inc. / BGP Sonic Automotive, In / SAH America's Car-Mart, / CRMT Asbury Automotive Gr / ABG West Marine, Inc. / WMAR

Price ($) 48.06 41.75 12.36 17.09 105.76 20.60 26.67 23.24 20.31 26.04 27.93 34.76 15.77 8.36 12.01 15.41 6.35 32.67 14.27 15.75 11.33 3.90 6.46 7.41 15.35 8.85 2.03 7.60 6.42 14.65 4.45 13.78 9.89 11.99 4.92 14.47 23.76 7.00 3.93 3.58 7.86 8.00 4.92 2.31 3.37 10.80 3.72 4.63

Move to 52-Wk MV EV Low High ($mn) ($mn) -36% 57% 20,746 19,818 -8% 133% 17,904 16,015 -8% 184% 15,783 12,139 -21% 55% 12,152 16,335 -12% 36% 6,131 8,139 -5% 69% 5,350 5,051 -45% 22% 3,726 3,818 -14% 49% 3,126 3,765 -8% 152% 2,519 3,006 -7% 75% 2,466 3,098 -1% 77% 2,328 2,306 -24% 27% 2,063 1,960 -2% 83% 1,997 2,549 -9% 186% 1,843 2,070 -11% 182% 1,341 1,497 -20% 129% 1,264 1,368 -37% 209% 1,123 2,476 -38% 32% 1,069 1,499 -42% 63% 899 na -7% 151% 866 959 -53% 14% 792 717 -12% 178% 707 2,481 -3% 376% 682 669 -32% 218% 681 3,355 -35% 25% 636 609 -14% 373% 596 873 -26% 847% 558 1,104 -6% 304% 437 552 -11% 167% 428 829 -16% 76% 417 432 -17% 572% 407 629 -45% 45% 403 466 -22% 61% 395 391 -4% 252% 382 643 -42% 458% 374 2,028 -38% 87% 371 521 -11% 245% 344 319 -44% 10% 306 255 -4% 180% 250 391 -16% 309% 186 467 -45% 285% 183 1,608 -10% 72% 171 174 -9% 232% 159 276 -21% 473% 140 562 -40% 629% 135 1,890 -16% 114% 127 170 -53% 384% 119 1,372 -27% 108% 102 125 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. .3x .9x 1.4x .8x 1.2x .7x .5x 1.2x 1.0x .6x 2.9x .2x .5x .3x .4x .3x .2x 1.0x nm .2x .6x .9x .2x .3x 1.3x 1.0x .1x .5x .3x .8x 1.1x 1.3x .2x .3x .2x .3x 1.0x .3x .4x .2x .3x .2x .2x .2x .2x .6x .3x .2x .6x .8x .4x

EV/ LTM EBIT 10x 19x 5x 11x 7x 7x 10x 12x 5x 7x 10x 9x 7x 15x 6x 5x nm 10x nm 4x nm 9x 2x 11x 8x 4x 11x 12x 5x 9x 3x 9x 29x 55x nm 10x 15x 10x 10x nm 15x nm 5x 624x 9x 5x 10x nm 25x 11x 9x

Last FY Act. 17x 37x 49x 12x 11x 10x 16x 14x 8x 11x 16x 18x 8x 10x 9x 10x 4x 10x 37x 8x 283x 16x 4x 5x 13x 3x 1x 29x 5x 15x 5x 14x 37x 133x 2x 23x 23x 19x 12x nm 3x 100x 7x nm 1x 9x 2x nm 24x 24x 11x

This FY Est. 16x 29x 7x 12x 10x 12x 16x 15x 7x 10x 14x 16x 11x 27x 9x 8x 6x 9x 19x 10x 45x 8x 22x 6x 10x 7x 6x 14x 6x 14x 4x 11x 14x 13x 3x 13x 26x 18x 11x 60x 4x nm 6x nm 2x 7x 3x nm 13x 15x 11x

Next FY Est. 14x 26x 7x 11x 9x 11x 14x 13x 7x 10x 12x 15x 10x 17x 9x 8x 6x 9x 18x 10x 27x 6x 21x 7x 9x 8x 9x 11x 6x 12x 4x 10x 13x 10x 5x 12x 26x 17x 9x 13x 4x 200x 6x 58x 4x 6x 4x nm 16x 14x 10x

P/ Tang. Book 2.3x 8.4x 3.9x 28.8x nm 1.9x 3.0x 2.0x 1.4x 2.5x 3.9x 2.1x 2.0x 1.2x 2.3x 1.9x 1.4x nm nm 1.6x 1.5x nm .6x nm 2.6x 1.0x .3x 1.9x .5x 3.5x nm 4.1x 1.0x .8x .9x .9x 23.1x 1.3x 6.9x .4x nm .6x 1.8x .4x nm .9x 1.3x .5x 3.2x 6.0x 1.7x

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Services: Retail (Specialty Non-Apparel) – Operating Performance

LTM Ticker ($mn) COST 72,483 AMZN 18,135 EBAY 8,686 SPLS 20,452 AZO 6,523 BBBY 7,230 FDO 6,984 ORLY 3,066 TIF 3,081 AAP 4,998 CPRT 785 BJ 9,658 PETM 4,899 KMX 7,978 DKS 4,050 BIG 4,700 AN 15,621 SPH 1,574 FGP 2,291 BKS 5,403 NDN 1,238 SBH 2,616 WSM 3,871 PAG 12,633 EZPW 457 BID 871 ODP 15,092 ULTA 1,006 CAB 2,563 HIBB 549 BARE 554 FCFS 349 FRED 1,825 ZLC 2,138 OMX 8,582 JAS 1,915 NILE 321 HOTT 735 FLWS 932 PBY 2,031 GPI 6,050 HVT 735 HGG 1,330 BGP 3,655 SAH 7,763 CRMT 292 ABG 5,171 WMAR 639 Median

Revenue LTM Growth 13% 38% 20% 8% 6% 4% 2% 24% 12% 4% 40% 10% 11% 1% 13% -2% -11% 9% 15% 0% 6% 6% 2% 0% 23% 4% -3% 22% 14% 4% 16% 22% 1% -1% -6% 2% 8% -3% 1% -8% -4% -8% 15% -2% -2% 23% -10% -7% 4%

3-Year Growth 11% 29% 33% 10% 5% 11% 6% 14% 10% 9% 21% 7% 12% 16% 23% 4% -1% -1% 9% 4% 7% 6% 8% 16% 22% 23% 5% 23% 15% 11% 53% 29% 7% -4% -12% 1% 24% 4% 11% -2% 6% 0% 16% -1% 9% 10% 6% 0% 9%

Rev./ Empl. ($'000) 966 885 560 475 201 185 279 76 350 196 264 464 233 510 389 333 625 501 653 135 106 141 466 800 143 560 308 252 337 289 838 106 180 138 238 88 1,683 293 233 168 677 175 360 259 681 347 623 298 303

LTM Profit Margins Gross 12% 23% 75% 28% 50% 41% 34% 45% 57% 48% 41% 10% 30% 13% 29% 40% 16% 34% 29% 31% 39% 46% 38% 15% 70% 81% 28% 31% 41% 32% 72% 57% 27% 49% 25% 47% 21% 35% 42% 22% 16% 51% 31% 26% 16% 48% 16% 27% 33%

EBIT 3% 5% 26% 7% 17% 11% 5% 10% 19% 9% 30% 2% 7% 2% 6% 6% -8% 10% 5% 4% -1% 11% 7% 2% 16% 25% 1% 5% 6% 9% 33% 15% 1% 1% -17% 3% 6% 3% 4% -1% 2% 0% 5% 0% 3% 11% 3% -11% 5%

Net 2% 3% 22% 5% 10% 7% 3% 6% 12% 5% 20% 1% 4% 1% 4% 4% -8% 10% 1% 2% 0% 3% 5% 1% 11% 16% 1% 2% 3% 5% 18% -6% 0% 1% -14% 1% 5% 2% 2% -2% 0% 0% 2% -4% 0% 6% 1% -15% 2%

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Est. 5-Year EPS Growth 13% 26% 14% 14% 12% 12% 13% 15% 12% 12% 17% 11% 14% 18% 18% 14% 9% 9% 7% 9% 8% 17% 13% 10% 19% 15% 10% 25% 13% 16% 14% 17% 13% 8% 9% na 19% 13% 20% 12% 15% na 16% na 11% 15% 12% na 13%

EBIT/ Capital Empl. 25% >99% >99% 40% 54% 35% 28% 17% 25% 26% 42% 21% 24% 8% 31% 30% nm 36% 13% 21% nm 54% 21% 13% 48% 39% 4% 13% 12% 32% >99% 34% 3% 1% nm 9% nm 11% 23% nm 8% nm 52% 0% 14% >99% 11% nm 23%

LTM ROE 14% 34% 17% 17% >99% 19% 20% 10% 20% 24% 18% 13% 19% 6% 16% 24% -38% 66% 13% 14% -1% -10% 16% 11% 21% 21% 3% 10% 10% 24% <-99% -11% 2% 1% -71% 6% 45% 7% 10% -8% 3% 0% 38% -31% 3% 13% 7% -43% 12%

LTM ROA 6% 10% 13% 9% 13% 13% 9% 7% 12% 9% 15% 6% 8% 4% 7% 11% -15% 15% 2% 4% -1% 5% 9% 3% 18% 7% 1% 4% 4% 13% 40% -7% 2% 1% -21% 3% 16% 5% 5% -2% 1% 0% 9% -6% 1% 9% 2% -25% 6%

LTM Asset Turnover 3.5x 2.9x .6x 1.9x 1.3x 1.8x 2.7x 1.1x 1.0x 1.7x .8x 4.7x 2.2x 3.5x 1.9x 3.1x 2.0x 1.5x 1.5x 1.8x 1.9x 1.8x 1.9x 2.6x 1.6x .4x 2.1x 2.0x 1.2x 2.4x 2.2x 1.2x 3.2x 1.4x 1.5x 2.1x 3.4x 2.2x 2.3x 1.3x 2.4x 1.8x 3.7x 1.6x 2.3x 1.5x 2.5x 1.7x 1.9x

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Services: Schools – Valuation (Sorted by market value)

Company / Ticker Apollo Group, Inc. / APOL DeVry Inc. / DV ITT Educational Serv / ESI Strayer Education, I / STRA New Oriental Educati / EDU Career Education Cor / CECO Corinthian Colleges, / COCO Capella Education Co / CPLA American Public Educ / APEI K12 Inc. / LRN Universal Technical / UTI Lincoln Educational / LINC Princeton Review, In / REVU Learning Tree Intern / LTRE Nobel Learning Commu / NLCI China Distance Educa / DL ATA Inc.(ADR) / ATAI

Price ($) 68.11 55.04 82.51 216.94 54.85 14.84 14.43 50.80 38.77 20.85 16.27 13.56 5.16 10.00 13.75 3.84 4.99

Move to 52-Wk MV EV Low High ($mn) ($mn) -44% 20% 10,831 10,344 -29% 12% 3,943 3,923 -49% 45% 3,193 3,056 -34% 9% 3,087 2,969 -17% 67% 2,087 1,821 -22% 110% 1,331 834 -55% 26% 1,235 1,260 -32% 48% 847 733 -29% 37% 696 655 -21% 49% 599 574 -59% 36% 408 336 -27% 18% 345 350 -9% 74% 174 233 -16% 177% 166 99 -13% 18% 144 159 -22% 82% 136 131 -29% 250% 114 63 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 3.3x 3.4x 3.2x 8.0x 7.7x .5x 1.1x 2.8x 6.8x 2.2x 1.0x 1.0x 1.7x .5x .7x 9.0x 2.0x 3.2x 3.9x 2.2x

EV/ LTM EBIT 14x 22x 10x 25x 32x 12x 26x 20x 29x 35x 41x 11x nm 6x 13x 30x 11x 21x 19x 21x

Last FY Act. 24x 32x 22x 49x 44x 15x 38x 38x 61x 19x 29x 26x nm 10x 20x 20x 31x 30x 30x 27x

P/E This FY Est. 20x 25x 17x 38x 31x 24x 24x 31x 48x 47x 49x 19x 103x 12x 18x 64x 12x 34x 26x 25x

Next FY Est. 17x 20x 15x 31x 22x 20x 17x 25x 34x 30x 33x 16x 22x 11x 16x 11x 7x 20x 20x 20x

P/ Tang. Book 14.9x 29.5x 24.3x 17.2x 6.7x 2.7x 6.1x 6.7x 14.7x 4.3x 4.8x 4.3x nm 1.9x nm 17.5x 2.1x 10.5x 15.6x 6.7x

Services: Schools – Operating Performance

LTM Ticker ($mn) APOL 3,141 DV 1,145 ESI 966 STRA 371 EDU 237 CECO 1,716 COCO 1,114 CPLA 261 APEI 97 LRN 256 UTI 346 LINC 360 REVU 141 LTRE 181 NLCI 213 DL 15 ATAI 32 Median

Revenue LTM Growth 15% 19% 14% 22% -81% -2% 18% 22% 59% 58% -3% 12% 23% 12% 13% >99% 67% 17%

3-Year Growth 12% 12% 12% 20% -32% -1% 5% 24% 44% 38% 12% 8% 9% 3% 9% 62% >99% 12%

Rev./ Empl. ($'000) 177 188 261 285 51 191 183 201 106 335 164 155 276 366 45 32 91 183

LTM Profit Margins Gross 56% 54% 62% 66% 62% 62% 41% 55% 59% 41% 45% 59% 63% 58% 39% 63% 63% 59%

EBIT 24% 15% 31% 31% 24% 4% 4% 14% 23% 6% 2% 9% -9% 9% 6% 30% 19% 14%

Net 15% 12% 20% 21% 46% 2% 3% 10% 15% 8% 2% 5% -23% 10% 4% 17% 15% 10%

www.manualofideas.com

Est. 5-Year EPS Growth 16% 23% 17% 20% 31% 11% 25% 25% 36% 42% 15% 18% 20% na 13% 40% 33% 22%

EBIT/ Capital Empl. >99% >99% >99% 96% 24% 14% 19% 35% >99% 22% 15% 40% nm nm >99% nm >99% 23%

LTM ROE 60% 18% >99% 43% 14% 4% 8% 20% 35% 14% 6% 11% -80% 23% 13% 36% 11% 14%

LTM ROA 27% 12% 35% 24% 11% 3% 5% 15% 24% 10% 3% 7% -21% 11% 7% 19% 8% 11%

LTM Asset Turnover 1.7x 1.0x 1.8x 1.2x .2x 1.3x 1.6x 1.5x 1.6x 1.3x 1.6x 1.5x .9x 1.1x 2.0x 1.1x .6x 1.3x

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Services: Security – Valuation (Sorted by market value)

Company / Ticker Brink's Company, The / BCO Checkpoint Systems, / CKP China Security & Sur / CSR ArcSight Inc. / ARST Ituran Location and / ITRN

Price ($) 21.06 11.10 7.70 5.92 7.00

Move to 52-Wk MV EV Low High ($mn) ($mn) -3% 254% 964 869 -6% 156% 430 478 -2% 203% 353 445 -14% 120% 184 110 -4% 97% 164 117 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .2x .5x 1.2x 1.0x .9x .8x .6x .9x

EV/ LTM EBIT 3x 8x 8x nm 2x 5x 4x 5x

Last FY Act. 7x 8x 8x nm 3x 7x 6x 7x

P/E This FY Est. 5x 9x 5x 24x 11x 11x 8x 9x

Next FY Est. 6x 9x 4x 14x 7x 8x 7x 7x

P/ Tang. Book 1.0x 2.5x 2.5x 3.9x 1.7x 2.3x 1.9x 2.5x

Services: Security – Operating Performance

LTM Ticker ($mn) BCO 3,684 CKP 943 CSR 368 ARST 109 ITRN 136 Median

Revenue LTM Growth 20% 20% 87% 43% 21% 21%

3-Year Growth 12% 8% na 46% 17% 15%

Rev./ Empl. ($'000) 71 240 147 326 127 147

LTM Profit Margins Gross na 41% 30% 83% 46% 44%

EBIT 9% 7% 15% -1% 55% 9%

Net 5% 6% 10% 0% 34% 6%

Est. 5-Year EPS Growth 8% 13% 29% 25% 21% 21%

EBIT/ Capital Empl. 29% 23% 39% 4% >99% 26%

LTM ROE 18% 9% 15% -2% 35% 15%

LTM ROA 8% 5% 8% -1% 24% 8%

LTM Asset Turnover 1.5x .9x .8x 1.3x .7x .9x

Services: Waste Management – Valuation (Sorted by market value)

Company / Ticker Waste Management, In / WMI Stericycle, Inc. / SRCL Allied Waste Industr / AW Republic Services, I / RSG Waste Connections, I / WCN Clean Harbors, Inc. / CLHB Tetra Tech, Inc. / TTEK American Ecology Cor / ECOL Waste Services, Inc. / WSII Heritage-Crystal Cle / HCCI Casella Waste System / CWST

Price ($) 31.20 58.01 10.93 24.70 34.87 62.56 16.98 17.66 5.96 13.17 4.93

Move to 52-Wk MV EV Low High ($mn) ($mn) -21% 26% 15,306 23,231 -20% 14% 4,964 5,692 -29% 41% 4,751 11,119 -26% 48% 4,500 6,059 -20% 17% 2,780 3,056 -29% 33% 1,484 1,303 -18% 78% 1,009 1,027 -20% 92% 323 304 -13% 64% 275 636 -26% 42% 141 141 -21% 229% 126 691 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. 1.7x 5.4x 1.8x 1.9x 2.9x 1.3x .8x 1.7x 1.3x 1.4x 1.2x 1.9x 2.3x 1.7x

EV/ LTM EBIT 10x 23x 10x 11x 14x 13x 10x 9x 11x 26x 16x 14x 12x 11x

Last FY Act. 14x 44x 15x 16x 25x 29x 17x 17x nm 14x nm 21x 20x 17x

P/E This FY Est. 14x 34x 11x 14x 24x 24x 15x 15x 21x 77x 35x 26x 18x 21x

Next FY Est. 13x 29x 11x 14x 20x 21x 12x 14x 15x 18x 18x 17x 16x 15x

P/ Tang. Book 59.8x nm nm nm 9.0x 4.6x 3.9x 3.5x nm 3.5x nm 14.0x 26.7x 4.2x

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Technology: Communications Equipment – Valuation (Sorted by market value)

Company / Ticker Deutsche Telekom AG / DT QUALCOMM, Inc. / QCOM Nokia Corporation (A / NOK Corning Incorporated / GLW Motorola, Inc. / MOT L-3 Communications H / LLL Juniper Networks, In / JNPR Alcatel-Lucent (ADR) / ALU Harris Corporation / HRS Dolby Laboratories, / DLB NDS Group plc (ADR) / NNDS Foundry Networks, In / FDRY Itron, Inc. / ITRI Polycom, Inc. / PLCM Tellabs, Inc. / TLAB Comtech Telecomm. Co / CMTL InterDigital, Inc. / IDCC ADTRAN, Inc. / ADTN TEKELEC / TKLC Arris Group, Inc. / ARRS Sycamore Networks, I / SCMR Belden Inc. / BDC CommScope, Inc. / CTV ADC Telecommunicatio / ADCT JDS Uniphase Corpora / JDSU General Cable Corpor / BGC Ciena Corporation / CIEN ViaSat, Inc. / VSAT Plantronics, Inc. / PLT Harmonic Inc. / HLIT Sonus Networks, Inc. / SONS Brightpoint, Inc. / CELL NetGear, Inc. / NTGR Airvana, Inc. / AIRV Harris Stratex Netwo / HSTX ICx Technologies, In / ICXT Finisar Corporation / FNSR Applied Signal Techn / APSG Acme Packet, Inc. / APKT Ceragon Networks Ltd / CRNT SonicWALL, Inc. / SNWL Symmetricom, Inc. / SYMM Extreme Networks, In / EXTR Anaren, Inc. / ANEN DSP Group, Inc. / DSPG Novatel Wireless, In / NVTL Cogo Group, Inc. / COGO RADVISION LTD. (USA) / RVSN Audiovox Corporation / VOXX Coleman Cable, Inc. / CCIX

Price ($) 14.45 32.94 12.59 8.91 4.08 69.33 15.03 2.32 33.04 27.00 46.32 15.32 44.15 18.20 3.68 44.00 22.33 13.44 12.11 6.19 2.64 15.83 10.31 6.01 3.06 11.44 6.68 19.05 11.96 4.83 1.40 4.33 9.90 4.77 5.08 8.04 0.48 16.66 3.69 5.09 3.46 3.73 1.84 10.84 5.75 4.55 3.70 6.07 4.89 6.20

Move to 52-Wk MV EV Low High ($mn) ($mn) -19% 60% 62,994 106,548 -6% 73% 54,531 48,120 -3% 222% 47,854 44,007 -10% 215% 13,849 12,222 -4% 309% 9,247 6,288 -5% 66% 8,278 11,970 -6% 133% 7,935 5,914 -21% 258% 5,241 6,063 -9% 102% 4,447 5,015 -3% 99% 3,031 2,526 -7% 37% 2,706 1,995 -37% 25% 2,291 1,372 -7% 141% 1,522 2,605 -7% 59% 1,515 1,234 -16% 101% 1,465 298 -15% 27% 1,087 782 -27% 25% 965 788 -4% 97% 837 739 -16% 46% 801 572 -28% 74% 760 707 -24% 53% 749 -72 -16% 233% 736 1,111 -6% 448% 726 2,426 -31% 218% 708 705 -4% 401% 658 367 -10% 630% 607 1,782 -13% 567% 603 374 -20% 92% 587 497 -4% 136% 584 384 -3% 135% 459 166 -7% 391% 381 64 -7% 313% 354 438 -17% 274% 349 147 -30% 49% 305 68 -6% 269% 297 221 -53% 45% 274 238 -10% 323% 227 349 -36% 13% 213 177 -11% 260% 204 77 -16% 173% 188 112 -4% 223% 185 86 -23% 43% 166 118 -21% 117% 162 104 -28% 61% 157 172 -19% 182% 154 81 -12% 289% 138 12 -4% 419% 131 8 -33% 95% 123 40 -24% 181% 112 79 -19% 190% 104 432 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 1.4x 4.3x .6x 1.9x .2x .8x 1.7x .3x .9x 3.9x 2.4x 2.1x 1.3x 1.2x .2x 1.5x 3.5x 1.5x 1.3x .6x nm .5x .7x .5x .2x .3x .4x .8x .4x .5x .2x .1x .2x .3x .3x 1.5x .8x 1.0x .7x .5x .4x .6x .3x 1.3x .3x .0x .0x .5x .1x .4x .9x 1.8x .6x

EV/ LTM EBIT 14x 13x 5x 7x nm 7x 9x nm 7x 9x 12x 18x 22x 14x nm 7x 27x 6x 10x 10x nm 6x 8x 42x nm 4x 5x 11x 4x 4x nm 6x 2x 1x nm nm nm 14x 4x 8x nm nm 522x 21x nm x x nm nm 9x 24x 10x 8x

Last FY Act. 85x 17x 5x 7x nm 12x 24x nm 10x 16x 17x 29x nm 27x 25x 16x 56x 12x 32x 7x nm 6x 4x 6x nm 3x 8x 18x 9x 17x nm 6x 8x 1x nm nm nm 30x 12x 12x 8x nm 26x 19x nm 4x 6x 14x 17x 7x 16x 31x 12x

P/E This FY Est. 16x 16x 6x 5x 68x 9x 13x nm 8x 16x 18x 23x 13x 13x 20x 15x 36x 11x 13x 8x nm 5x 3x 6x 7x 3x 5x 12x 9x 7x nm 21x 8x 21x 7x nm 4x 27x 15x 11x 14x 11x 15x 12x 12x 24x 5x nm nm 10x 14x 14x 12x

Next FY Est. 13x 13x 7x 7x 29x 9x 11x 9x 7x 14x 15x 20x 12x 12x 19x 12x 30x 11x 13x 7x nm 7x 3x 8x 4x 3x 10x 10x 8x 8x nm 9x 9x 14x 6x 73x 3x 23x 14x 9x 12x 9x 9x 10x 13x 12x 5x nm 20x 11x 13x 12x 10x

P/ Tang. Book nm 4.1x 10.3x 1.1x 1.0x nm 3.8x nm 11.6x 4.2x 3.5x 2.1x nm 4.1x .9x 2.6x nm 2.3x 1.8x 2.4x .8x 4.6x nm 1.4x 1.2x 1.3x 1.3x 1.7x 1.2x 1.3x .8x 3.0x 1.0x 2.3x .9x 3.1x 16.8x 2.1x 1.4x 1.0x 1.7x 1.0x 1.2x 1.7x 1.0x .7x .8x 1.0x .4x nm 2.6x 3.6x 1.4x

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Technology: Communications Equipment – Operating Performance

LTM Ticker ($mn) DT 77,785 QCOM 11,142 NOK 68,166 GLW 6,446 MOT 32,656 LLL 14,696 JNPR 3,458 ALU 21,888 HRS 5,448 DLB 640 NNDS 827 FDRY 645 ITRI 1,958 PLCM 1,070 TLAB 1,790 CMTL 532 IDCC 225 ADTN 507 TKLC 456 ARRS 1,102 SCMR 116 BDC 2,173 CTV 3,617 ADCT 1,462 JDSU 1,554 BGC 6,235 CIEN 939 VSAT 612 PLT 878 HLIT 356 SONS 321 CELL 5,244 NTGR 780 AIRV 221 HSTX 742 ICXT 160 FNSR 463 APSG 184 APKT 117 CRNT 207 SNWL 220 SYMM 213 EXTR 362 ANEN 137 DSPG 319 NVTL 400 COGO 281 RVSN 84 VOXX 607 CCIX 1,045 Median

Revenue LTM Growth -3% 26% 11% 14% -16% 9% 32% 4% 20% 33% 10% 13% 71% 25% -6% 19% -8% 9% 3% 13% -26% 19% 94% 12% 8% 47% 30% 15% 6% 19% 6% 59% 13% 37% 21% 30% 11% 9% 11% 39% 16% 1% 4% 5% 57% 18% 25% -11% 16% 47% 14%

3-Year Growth 3% 25% 20% 15% 7% 27% 29% 20% 21% 25% 15% 14% 54% 20% 16% 20% 31% 2% 10% 27% 21% 33% 19% 22% 29% 33% 38% 18% 15% 8% 23% 34% 24% >99% 59% >99% 16% 6% 92% 44% 17% 5% -2% 12% 17% 61% 39% 13% 3% 45% 20%

Rev./ Empl. ($'000) 338 724 554 260 495 227 588 286 330 656 203 658 233 432 482 394 591 323 490 553 235 262 233 138 219 528 425 364 176 540 346 1,604 2,738 394 526 184 103 290 364 619 327 224 421 148 636 1,329 597 192 607 681 394

LTM Profit Margins Gross 44% 69% 36% 49% 27% 10% 67% 34% 31% 89% 61% 63% 34% 58% 36% 44% na 59% 64% 32% 46% 29% 27% 35% 43% 13% 51% 29% 42% 48% 63% 7% 33% 95% 27% 46% 34% 31% 80% 34% 69% 46% 57% 30% 38% 28% 18% 78% 18% 11% 38%

EBIT 10% 33% 13% 29% -3% 11% 19% -22% 13% 45% 20% 12% 6% 8% -55% 20% 13% 23% 13% 6% -33% 9% 9% 1% -8% 7% 8% 8% 10% 10% -3% 1% 8% 49% -2% -20% -11% 7% 15% 7% -1% -6% 0% 6% -7% 7% 6% -16% -2% 4% 7%

Net 2% 28% 10% 89% -1% 6% 15% -23% 8% 31% 15% 10% 1% 7% -52% 14% 9% 16% 11% 4% 0% 6% 4% -2% -2% 4% 10% 6% 9% 16% -1% 0% 5% 46% -2% -20% -14% 4% 11% 13% 11% -5% 2% 8% -9% 6% 7% -11% -1% 1% 6%

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Est. 5-Year EPS Growth 7% 13% 13% 13% 11% 11% 18% 11% 17% 14% 22% 13% 17% 17% 6% 23% 20% 10% 10% 13% 13% 6% 18% 10% 17% 13% 16% 15% 4% 18% 13% 13% 16% na 13% 35% 19% 15% 16% 20% 17% 11% 11% 15% 8% 20% 25% 18% na 7% 14%

EBIT/ Capital Empl. 18% 48% 80% 26% nm 74% >99% nm 57% >99% >99% 14% 23% 38% nm >99% 31% 42% 26% 18% nm 29% 30% 3% nm 29% 11% 23% 30% 24% nm 21% 35% >99% nm nm nm 14% 21% 17% nm nm 0% 7% nm 26% 32% nm nm 17% 26%

LTM ROE 4% 19% 38% 48% -3% 15% 9% -38% 21% 21% 14% 6% 3% 7% -36% 19% 17% 21% 11% 5% 0% 12% 11% -3% -2% 30% 10% 9% 13% 16% -1% 3% 10% 69% -2% -17% -44% 7% 8% 16% 9% -5% 3% 7% -7% 11% 9% -7% -1% 13% 9%

LTM ROA 1% 16% 14% 33% -1% 6% 7% -12% 10% 16% 10% 5% 1% 6% -28% 12% 4% 16% 6% 3% 0% 6% 3% -1% -1% 6% 5% 7% 10% 12% -1% 1% 7% 38% -1% -15% -12% 5% 7% 12% 6% -3% 2% 6% -6% 8% 7% -6% -1% 2% 5%

LTM Asset Turnover .5x .6x 1.4x .4x 1.0x 1.0x .5x .5x 1.2x .5x .6x .5x .6x .8x .5x .9x .5x 1.0x .6x .7x .1x 1.0x .7x .7x .5x 1.5x .4x 1.1x 1.2x .7x .5x 2.9x 1.4x .8x .7x .7x .9x 1.2x .6x .9x .5x .6x 1.1x .7x .7x 1.4x 1.1x .5x 1.1x 1.9x .7x

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Technology: Computer Hardware – Valuation (Sorted by market value)

Company / Ticker Apple Inc. / AAPL Hewlett-Packard Comp / HPQ Dell Inc. / DELL Sun Microsystems, In / JAVA Ingram Micro Inc. / IM Tech Data Corporatio / TECD Electronics For Imag / EFII Palm, Inc. / PALM Digi International I / DGII SeaChange Internatio / SEAC Rackable Systems, In / RACK Maxwell Technologies / MXWL

Price ($) 90.24 30.46 10.89 4.12 11.73 19.46 9.06 2.52 10.36 7.37 5.28 6.50

Move to 52-Wk MV EV Low High ($mn) ($mn) -6% 125% 80,218 55,728 -7% 74% 74,600 69,972 -19% 161% 21,327 14,263 -15% 423% 3,043 1,671 -5% 79% 1,934 1,584 -6% 100% 983 936 -17% 159% 467 265 -10% 255% 277 683 -34% 56% 266 193 -30% 34% 225 153 -1% 174% 158 -18 -6% 127% 142 153 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.7x .6x .2x .1x .0x .0x .5x .5x 1.0x .8x nm 2.0x .7x 1.0x .5x

EV/ LTM EBIT 9x 7x 4x nm 4x 4x nm nm 12x 26x nm nm 9x 7x 7x

Last FY Act. 17x 11x 8x 8x 8x 10x 21x nm 22x 74x nm nm 20x 13x 11x

P/E This FY Est. 17x 8x 8x nm 8x 8x 12x nm 18x 35x nm nm 14x 12x 10x

Next FY Est. 14x 8x 8x 24x 9x 7x 12x nm 17x 22x nm nm 13x 11x 12x

P/ Tang. Book 3.9x 6.3x 57.3x 1.9x .7x .5x 1.2x nm 2.4x 1.6x .6x 3.9x 7.3x 11.0x 1.9x

Technology: Computer Hardware – Operating Performance

LTM Ticker ($mn) AAPL 32,479 HPQ 113,054 DELL 64,146 JAVA 13,651 IM 35,685 TECD 24,640 EFII 577 PALM 1,325 DGII 185 SEAC 193 RACK 321 MXWL 76 Median

Revenue LTM Growth 35% 12% 10% -2% 5% 9% -7% -15% 7% 17% -8% 36% 8%

3-Year Growth 33% 9% 8% 8% 11% 6% 16% 1% 14% 5% 48% 21% 10%

Rev./ Empl. ($'000) 1,015 657 776 391 2,379 2,969 286 1,262 328 224 858 291 716

LTM Profit Margins Gross 34% 25% 18% 45% 6% 5% 56% 28% 53% 49% 20% 29% 29%

EBIT 19% 9% 5% -9% 1% 1% -5% -14% 8% 3% -19% -18% 1%

Net 15% 7% 4% -10% 1% 1% -1% -11% 7% 9% -17% -23% 1%

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Est. 5-Year EPS Growth 21% 13% 12% 9% 10% 14% 13% 14% 20% 14% 17% 25% 14%

EBIT/ Capital Empl. 77% >99% nm nm 18% 13% nm nm 13% 10% nm nm 13%

LTM ROE 26% 22% 66% -26% 8% 7% -1% <-99% 5% 10% -20% -28% 7%

LTM ROA 15% 9% 10% -10% 3% 3% -1% -13% 5% 8% -16% -16% 3%

LTM Asset Turnover 1.0x 1.2x 2.2x 1.0x 4.2x 4.5x .6x 1.1x .7x .9x 1.0x .7x 1.0x

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Thanksgiving 2008

Technology: Computer Networks – Valuation (Sorted by market value)

Company / Ticker NetApp Inc. / NTAP Cerner Corporation / CERN F5 Networks, Inc. / FFIV Jack Henry & Associa / JKHY 3Com Corporation / COMS Sykes Enterprises, I / SYKE Convergys Corporatio / CVG L-1 Identity Solutio / ID AsiaInfo Holdings, I / ASIA Black Box Corporatio / BBOX SI International, In / SINT SYNNEX Corporation / SNX Blue Coat Systems, I / BCSI NetScout Systems, In / NTCT RadiSys Corporation / RSYS Radiant Systems, Inc / RADS Radware Ltd. / RDWR Tier Technologies, I / TIER

Price ($) 12.30 36.19 22.50 17.71 1.82 16.54 5.43 5.96 10.57 25.36 30.51 12.32 9.68 8.45 7.26 5.08 6.00 5.26

Move to 52-Wk MV EV Low High ($mn) ($mn) -16% 123% 4,027 3,212 -14% 67% 2,931 2,808 -21% 59% 1,780 1,589 -17% 55% 1,497 1,491 -8% 160% 739 499 -25% 36% 682 462 -4% 230% 663 1,190 -1% 226% 514 974 -36% 41% 488 291 -22% 56% 445 628 -42% 4% 406 506 -3% 121% 398 803 -6% 313% 377 377 -16% 90% 332 351 -38% 131% 166 194 -19% 248% 165 254 -5% 158% 116 28 -11% 82% 104 57 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .9x 1.7x 2.4x 2.0x .4x .6x .4x 1.8x 1.8x .6x .9x .1x 1.1x 1.5x .5x .9x .3x .5x 1.0x 1.3x .9x

EV/ LTM EBIT 10x 12x 16x 9x nm 7x nm 55x 18x 7x 15x 6x 21x 270x nm 10x nm nm 35x 17x 12x

Last FY Act. 14x 24x 25x 15x nm 17x 4x 25x 23x 11x 21x 6x 12x nm nm 14x nm nm 16x 16x 15x

P/E This FY Est. 11x 17x 13x 14x 5x 10x 5x nm 19x 8x 26x 5x 10x 13x 15x 7x nm nm 12x 12x 11x

Next FY Est. 9x 14x 11x 13x 5x 11x 5x 66x 16x 10x 19x 5x 6x 11x 11x 7x nm 25x 14x 13x 11x

P/ Tang. Book 5.1x 3.4x 3.7x 9.8x 3.3x 1.9x 11.6x nm 2.4x nm nm .8x nm 25.6x 1.4x nm .9x 1.1x 5.5x 4.7x 3.3x

Technology: Computer Networks – Operating Performance

LTM Ticker ($mn) NTAP 3,602 CERN 1,605 FFIV 650 JKHY 751 COMS 1,318 SYKE 816 CVG 2,796 ID 529 ASIA 163 BBOX 1,000 SINT 563 SNX 7,643 BCSI 346 NTCT 241 RSYS 383 RADS 297 RDWR 94 TIER 121 Median

Revenue LTM Growth 20% 7% 24% 9% 2% 22% -2% 50% 31% -3% 15% 13% 70% >99% 34% 22% 10% 14% 15%

3-Year Growth 27% 18% 32% 12% 26% 15% 5% 79% 10% 24% 25% 11% 47% 26% 10% 23% 9% -5% 21%

Rev./ Empl. ($'000) 471 204 411 196 216 28 37 291 64 232 125 1,274 334 305 494 287 159 148 224

LTM Profit Margins Gross 60% 39% 77% 41% 53% 36% 32% 31% 49% 36% 34% 5% 74% 73% 24% 43% 79% 23% 40%

EBIT 9% 15% 15% 22% -12% 8% -3% 3% 10% 9% 6% 2% 5% 1% -4% 9% -32% -11% 6%

Net 8% 10% 11% 14% -10% 8% -1% 5% 15% 5% 3% 1% 7% -1% -3% 5% -27% -18% 5%

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Est. 5-Year EPS Growth 13% 20% 19% 13% na 15% 12% na 27% na 16% 14% 18% 15% 15% 14% 10% 20% 15%

EBIT/ Capital Empl. 39% 29% 62% 76% >99% 50% nm 21% 33% 63% 40% 18% nm 5% nm 50% nm nm 40%

LTM ROE 18% 13% 10% 17% -12% 16% -1% 2% 12% 7% 6% 12% 10% -1% -6% 9% -15% -17% 8%

LTM ROA 6% 9% 8% 11% -7% 12% -1% 2% 8% 4% 3% 4% 6% 0% -3% 5% -12% -14% 4%

LTM Asset Turnover .8x .9x .7x .8x .7x 1.6x 1.1x .3x .5x .9x 1.2x 3.9x .9x .6x 1.0x 1.0x .5x .7x .9x

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Thanksgiving 2008

Technology: Computer Services – Valuation (Sorted by market value)

Company / Ticker Google Inc. / GOOG Wipro Limited (ADR) / WIT Western Union Compan / WU Baidu.com, Inc. (ADR / BIDU Fiserv, Inc. / FISV Computer Sciences Co / CSC Scripps Networks Int / SNI Affiliated Computer / ACS Alliance Data System / ADS NCR Corporation / NCR NetEase.com, Inc. (A / NTES Total System Service / TSS IMS Health, Inc. / RX priceline.com Incorp / PCLN Akamai Technologies, / AKAM Teradata Corporation / TDC Interactive Data Cor / IDC FactSet Research Sys / FDS Shanda Interactive E / SNDA Sohu.com Inc. / SOHU SINA Corporation (US / SINA Morningstar, Inc. / MORN Perot Systems Corpor / PER Neustar, Inc / NSR CACI International I / CAI WebMD Health Corp. / WBMD Syntel, Inc. / SYNT Perfect World Co., L / PWRD Cogent, Inc. / COGT SkillSoft Public Lim / SKIL Ariba, Inc. / ARBA Riverbed Technology, / RVBD EarthLink, Inc. / ELNK CyberSource Corporat / CYBS Arbitron Inc. / ARB Net 1 Ueps Technol / UEPS HMS Holdings Corp. / HMSY CoStar Group, Inc. / CSGP TeleTech Holdings, I / TTEC Bankrate, Inc. / RATE Advent Software, Inc / ADVS United Online, Inc. / UNTD Acxiom Corporation / ACXM Tyler Technologies, / TYL MercadoLibre, Inc. / MELI Imation Corp. / IMN DealerTrack Holdings / TRAK GSI Commerce, Inc. / GSIC WNS (Holdings) Limit / WNS SAVVIS, Inc. / SVVS

Price ($) 310.02 7.07 13.49 178.89 32.75 28.53 26.00 39.30 45.13 16.17 19.65 12.16 12.47 53.80 12.76 12.01 20.99 38.18 24.22 43.32 26.25 30.23 11.72 16.52 41.68 21.45 24.10 16.91 8.90 7.33 8.46 9.73 6.36 9.76 25.11 10.97 24.51 30.03 8.69 29.68 20.58 6.62 6.78 12.60 10.27 11.38 10.09 8.30 9.00 7.00

Move to 52-Wk MV EV Low High ($mn) ($mn) -10% 134% 97,580 83,168 -19% 126% 10,345 10,211 -9% 112% 9,653 11,606 -9% 134% 6,134 5,797 -13% 73% 5,245 9,032 -9% 94% 4,322 7,354 -20% 73% 4,258 4,367 -6% 46% 3,834 5,770 -14% 75% 2,913 4,544 -12% 74% 2,552 2,127 -17% 38% 2,515 1,742 -9% 146% 2,393 2,348 -12% 104% 2,268 3,438 -16% 168% 2,184 2,199 -12% 221% 2,158 2,060 -2% 132% 2,114 1,736 -17% 60% 1,970 1,731 -16% 78% 1,809 1,666 -14% 65% 1,760 1,243 -17% 111% 1,669 1,390 -10% 123% 1,465 1,002 0% 183% 1,414 1,104 -6% 61% 1,405 1,159 -20% 112% 1,303 1,207 -11% 29% 1,246 1,775 -36% 113% 1,238 905 -33% 65% 1,000 882 -13% 98% 965 763 -11% 43% 798 418 -4% 56% 765 827 -8% 120% 728 641 -10% 231% 694 413 -4% 60% 689 501 -27% 109% 679 605 -2% 108% 663 724 -10% 203% 641 509 -26% 51% 617 604 -8% 104% 593 410 -15% 209% 568 553 -24% 93% 558 517 -15% 175% 554 478 -8% 162% 543 896 -6% 123% 529 1,028 -22% 47% 458 434 -9% 690% 455 443 -6% 143% 429 316 -12% 360% 402 209 -8% 227% 395 636 -19% 143% 383 584 -18% 385% 374 860 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 4.0x 2.2x 2.2x 13.8x 1.9x .4x 2.8x .9x 2.1x .4x 4.1x 1.2x 1.5x 1.2x 2.7x 1.0x 2.3x 2.9x 2.8x 3.7x 3.0x 2.2x .4x 2.5x .7x 2.5x 2.2x 4.1x 3.9x 2.6x 2.0x 1.3x .5x 2.9x 2.0x 1.9x 3.5x 1.9x .4x 3.4x 1.9x 1.7x .8x 1.7x 3.4x .1x .8x .7x 1.2x 1.0x 2.2x 3.4x 2.0x

EV/ LTM EBIT 13x 13x 8x 41x 11x 6x 31x 9x 11x 6x 7x 7x 8x 8x 10x 5x 9x 9x 7x 11x 15x 8x 5x 8x 10x 43x 11x 8x 9x 14x nm nm 2x nm 13x 5x 18x 10x 5x 15x 28x 10x 13x 15x 13x nm 24x nm 28x 60x 14x 13x 10x

Last FY Act. 23x 15x 12x 68x 14x 9x nm 12x 22x 17x 14x 10x 11x 16x 23x 11x 16x 15x 9x 48x 27x 20x 13x 14x 15x 20x 16x 17x 30x 13x nm 49x nm 163x 18x 7x 43x 37x 12x 29x 46x 8x nm 30x 47x nm 21x 138x 41x 2x 28x 22x 17x

P/E This FY Est. 16x 13x 10x 38x 10x 7x 14x 11x 10x 10x 12x 9x 7x 9x 8x 9x 15x 14x 10x 12x 16x 16x 12x 17x 14x 39x 13x 10x 17x 19x 12x 18x 3x 15x 19x 6x 32x 24x 7x 19x 35x 5x 10x 22x 28x 14x 13x nm 9x nm 15x 15x 13x

Next FY Est. 14x 11x 9x 25x 9x 6x 14x 9x 9x 9x 10x 9x 7x 9x 7x 9x 15x 12x 9x 10x 13x 15x 11x 11x 12x 35x 12x 7x 16x 15x 10x 14x 5x 13x 13x 5x 25x 21x 8x 16x 32x 5x 9x 20x 16x 16x 14x nm 6x nm 13x 13x 11x

P/ Tang. Book 4.5x 6.7x nm 15.9x nm 7.7x 15.8x nm nm 1.8x 3.4x 4.9x nm 13.5x 2.0x 4.0x 7.3x 8.2x 3.7x 5.8x 2.9x 5.5x 2.4x 6.2x nm 3.4x 4.3x 3.4x 1.6x nm nm 2.6x 3.6x 7.8x nm 4.2x 10.1x 2.7x 1.6x 8.7x 6.9x nm nm 51.4x 24.9x .7x 1.8x nm nm 2.4x 7.2x 4.8x 4.3x

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Technology: Computer Services – Operating Performance

LTM Ticker ($mn) GOOG 20,921 WIT 4,736 WU 5,300 BIDU 420 FISV 4,788 CSC 17,320 SNI 1,577 ACS 6,272 ADS 2,120 NCR 5,415 NTES 423 TSS 1,904 RX 2,355 PCLN 1,814 AKAM 762 TDC 1,735 IDC 739 FDS 576 SNDA 438 SOHU 373 SINA 339 MORN 501 PER 2,828 NSR 483 CAI 2,522 WBMD 368 SYNT 400 PWRD 187 COGT 108 SKIL 318 ARBA 328 RVBD 317 ELNK 1,022 CYBS 212 ARB 355 UEPS 262 HMSY 174 CSGP 210 TTEC 1,446 RATE 152 ADVS 250 UNTD 539 ACXM 1,360 TYL 256 MELI 131 IMN 2,307 TRAK 249 GSIC 911 WNS 505 SVVS 832 Median

Revenue LTM Growth 40% 31% 11% 98% 29% 12% 51% 7% 8% 13% 33% 3% 11% 36% 32% 3% 10% 21% 49% >99% 46% 24% 14% 21% 25% 17% 26% >99% -15% 31% 9% 64% -19% >99% 6% 13% 25% 14% 8% 67% 21% 4% -2% 22% 77% 27% 14% 36% 15% 5% 21%

3-Year Growth 73% 34% 11% >99% 2% 6% na 12% 22% -6% 35% 15% 12% 16% 45% 8% 13% 23% 24% 25% 7% 34% 14% 38% 14% 35% 22% na 7% 10% 1% >99% -4% 47% 5% 13% 43% 20% 9% 35% 13% 5% 4% 9% 89% 21% 50% 31% 42% 9% 15%

Rev./ Empl. ($'000) 1,040 49 869 67 192 195 na 100 216 233 179 245 296 1,370 490 294 321 283 171 157 163 223 122 503 205 313 34 134 414 280 197 390 727 428 325 126 229 158 32 548 264 603 206 132 140 1,311 249 204 28 359 229

LTM Profit Margins Gross 60% 30% 42% 64% 35% 20% na 12% 32% 22% 82% 45% 56% 50% 72% 54% 67% 67% 70% 74% 60% 74% 18% 79% 33% 65% 41% 87% 69% 87% 55% 73% 63% 51% 50% 73% 72% 64% 26% 61% 67% 74% 21% 41% 79% 17% 55% 58% 22% 43% 58%

EBIT 30% 17% 26% 34% 18% 7% 9% 11% 20% 6% 62% 19% 18% 16% 27% 19% 27% 32% 40% 35% 20% 29% 7% 30% 7% 6% 21% 52% 45% 19% -15% -2% 20% 0% 16% 43% 19% 19% 7% 22% 7% 17% 6% 11% 26% -2% 3% -2% 4% 2% 18%

Net 24% 15% 17% 34% 19% 5% -8% 6% 9% 5% 49% 12% 10% 11% 18% 14% 18% 22% 37% 31% 24% 19% 5% 16% 3% 11% 19% 52% 38% 19% -13% -2% 15% 1% 11% 36% 11% 13% 5% 14% 7% 11% 2% 6% 11% -3% 3% -3% 3% -2% 11%

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Est. 5-Year EPS Growth 21% 17% 13% 55% 16% 12% 11% 13% 17% 15% 17% 12% 12% 23% 18% 6% 13% 18% 28% 51% 28% 19% 13% 17% 15% 24% 18% 33% 19% 18% 17% 27% na 21% 20% 18% 25% 30% 24% 23% 20% na 13% 24% 63% na 16% 19% 21% na 18%

EBIT/ Capital Empl. 50% 42% nm >99% nm 24% 46% 40% 61% 41% 56% 86% >99% >99% 48% >99% >99% >99% >99% >99% 27% >99% 46% >99% 42% 15% 58% >99% 13% nm 86% nm >99% nm >99% >99% 72% 44% 33% >99% nm >99% 22% >99% 88% nm 11% nm 40% 3% 42%

LTM ROE 20% 26% na 41% 35% 17% -13% 16% 21% 16% 35% 25% <-99% 29% 10% 37% 14% 28% 29% 42% 15% 20% 10% 18% 10% 7% 34% 41% 8% 29% -11% -3% 45% 0% >99% 29% 12% 9% 16% 9% 9% 14% 4% 12% 15% -6% 2% -11% 7% -10% 15%

LTM ROA 18% 14% 16% 32% 9% 6% -8% 6% 5% 6% 27% 15% 10% 14% 8% 19% 11% 23% 20% 30% 11% 13% 7% 14% 5% 6% 26% 33% 7% 10% -7% -2% 20% 0% 22% 20% 10% 8% 9% 9% 4% 8% 2% 6% 10% -4% 2% -4% 4% -2% 9%

LTM Asset Turnover .7x 1.0x .9x .9x .5x 1.1x 1.0x 1.0x .5x 1.2x .5x 1.2x 1.0x 1.3x .4x 1.3x .6x 1.0x .5x 1.0x .5x .7x 1.5x .9x 1.4x .5x 1.4x .6x .2x .5x .5x .9x 1.3x .4x 2.1x .6x .9x .6x 1.9x .6x .7x .7x .9x 1.0x .9x 1.4x .5x 1.4x 1.3x .9x .9x

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Technology: Data Storage – Valuation (Sorted by market value)

Company / Ticker EMC Corporation / EMC Western Digital Corp / WDC Seagate Technology / STX Micron Technology, I / MU SanDisk Corporation / SNDK Brocade Communicatio / BRCD Data Domain, Inc. / DDUP Adaptec, Inc. / ADPT Xyratex Ltd. / XRTX Intevac, Inc. / IVAC

Price ($) 9.98 13.45 4.87 2.75 7.15 3.81 17.55 2.91 4.24 5.45

Move to 52-Wk MV EV Low High ($mn) ($mn) -16% 102% 20,367 17,950 -11% 197% 2,980 2,272 -11% 481% 2,378 3,255 -4% 240% 2,100 3,464 -5% 454% 1,616 1,267 -37% 139% 1,417 912 -15% 77% 1,051 837 -20% 46% 355 -15 -6% 442% 123 96 -10% 225% 119 79 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.2x .3x .3x .6x .3x .6x 3.6x nm .1x .7x .9x 1.0x .6x

EV/ LTM EBIT 10x 2x 3x nm nm 51x 137x nm 6x nm 35x 13x 8x

Last FY Act. 13x 4x 2x nm 8x 19x nm nm 5x 4x 8x 10x 5x

P/E This FY Est. 13x 4x 5x nm nm 6x 117x 29x 5x nm 26x 13x 6x

Next FY Est. 12x 4x 3x nm nm 6x 63x 73x 4x nm 24x 12x 6x

P/ Tang. Book 3.9x 1.1x 1.1x .4x .4x 1.8x 4.3x .9x .5x .7x 1.5x 2.9x 1.0x

Technology: Data Storage – Operating Performance

LTM Ticker ($mn) EMC 14,690 WDC 8,417 STX 12,456 MU 5,841 SNDK 3,733 BRCD 1,408 DDUP 234 ADPT 144 XRTX 1,012 IVAC 111 Median

Revenue LTM Growth 17% 41% 5% 3% -2% 27% >99% -23% 10% -63% 5%

3-Year Growth 17% 30% 19% 6% 30% 28% >99% -25% 27% 46% 27%

Rev./ Empl. ($'000) 390 168 231 256 1,177 510 331 369 625 230 350

LTM Profit Margins Gross 55% 22% 23% -1% 23% 57% 73% 42% 17% 41% 32%

EBIT 12% 13% 9% -27% -5% 1% 3% -15% 2% -16% 1%

Net 11% 12% 8% -28% -3% 12% 3% 7% 2% -5% 5%

Est. 5-Year EPS Growth 11% 14% 12% 13% 14% 12% 55% 10% 9% 20% 12%

EBIT/ Capital Empl. 74% 59% 37% nm nm 6% 8% nm 11% nm 24%

LTM ROE 12% 40% 20% -24% -2% 13% 3% 2% 7% -3% 5%

LTM ROA 7% 21% 9% -12% -1% 8% 3% 2% 5% -2% 4%

LTM Asset Turnover .6x 1.8x 1.2x .4x .5x .7x .8x .2x 2.3x .5x .7x

Technology: Peripherals – Valuation (Sorted by market value)

Company / Ticker Cisco Systems, Inc. / CSCO Canon Inc. (ADR) / CAJ Logitech Internation / LOGI Lexmark Internationa / LXK Avocent Corporation / AVCT Avid Technology, Inc / AVID ScanSource, Inc. / SCSC Omnicell, Inc. / OMCL Universal Display Co / PANL Sigma Designs, Inc. / SIGM Stratasys, Inc. / SSYS Rimage Corporation / RIMG Immersion Corporatio / IMMR

Price ($) 16.62 29.65 12.88 23.97 15.20 13.38 17.32 9.49 6.45 8.79 10.52 13.37 3.74

Move to 52-Wk MV EV Low High ($mn) ($mn) -6% 81% 97,853 77,961 -19% 85% 37,390 29,926 -1% 189% 2,298 1,840 -8% 58% 1,879 1,442 -17% 70% 681 746 -14% 124% 496 374 -6% 121% 457 474 -18% 219% 297 172 -1% 262% 233 154 -10% 730% 232 111 -2% 171% 221 193 -25% 105% 125 68 0% 290% 104 -15 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 1.9x .7x .7x .3x 1.2x .4x .2x .7x 14.8x .4x 1.6x .7x nm 2.0x 1.6x .7x

EV/ LTM EBIT 8x 4x 6x 4x 21x nm 5x 9x nm 2x 9x 4x nm 7x 7x 6x

Last FY Act. 13x 8x 10x 8x 17x nm 8x 7x nm 4x 16x 9x 1x 9x 11x 8x

P/E This FY Est. 12x 10x 9x 7x 8x nm 10x 14x nm 5x 13x 14x nm 10x 11x 10x

Next FY Est. 11x 10x 8x 9x 7x 29x 9x 11x nm 5x 12x 13x nm 11x 11x 10x

P/ Tang. Book 4.8x 1.2x 3.0x 1.8x nm 2.1x 1.2x 1.6x 3.0x .9x 2.0x 1.2x 1.2x 2.0x 3.7x 1.7x

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Technology: Peripherals – Operating Performance

LTM Ticker ($mn) CSCO 40,317 CAJ 45,070 LOGI 2,519 LXK 4,754 AVCT 639 AVID 897 SCSC 2,162 OMCL 248 PANL 10 SIGM 258 SSYS 123 RIMG 99 IMMR 37 Median

Revenue LTM Growth 11% -1% 15% -6% 5% -2% 6% 25% -6% 91% 10% -11% 12% 6%

3-Year Growth 17% 9% 17% -2% 18% 16% 14% 20% 17% 92% 17% 15% 13% 17%

Rev./ Empl. ($'000) 610 316 268 345 356 329 2,041 307 168 1,177 321 467 246 329

LTM Profit Margins Gross 64% 48% 35% 35% 63% 48% 10% 52% 91% 51% 54% 46% 74% 51%

EBIT 24% 15% 12% 8% 5% -10% 4% 8% <-99% 24% 18% 16% <-99% 12%

Net 20% 10% 12% 7% 5% -10% 2% 10% <-99% 28% 13% 12% <-99% 10%

Est. 5-Year EPS Growth 12% 7% 13% 7% 14% 12% 14% 26% na 17% 19% 12% na 13%

EBIT/ Capital Empl. 44% 35% 70% 30% 52% nm 23% 42% nm 78% 30% 28% nm 39%

LTM ROE 24% 15% 30% 25% 4% -14% 14% 11% -21% 24% 13% 11% -29% 13%

LTM ROA 14% 10% 19% 10% 3% -10% 7% 8% -18% 22% 11% 10% -23% 10%

LTM Asset Turnover .7x 1.0x 1.6x 1.4x .6x 1.0x 2.8x .8x .1x .8x .8x .8x .2x .8x

Technology: Office Equipment – Valuation (Sorted by market value)

Company / Ticker Xerox Corporation / XRX Pitney Bowes Inc. / PBI Diebold Incorporated / DBD VeriFone Holdings, I / PAY

Price ($) 6.36 23.37 28.17 7.93

Move to 52-Wk MV EV Low High ($mn) ($mn) -5% 178% 5,505 13,509 -11% 71% 4,817 9,569 -20% 44% 1,862 2,229 -1% 513% 669 1,037 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .7x 1.5x .7x 1.1x 1.0x 1.0x .9x

EV/ LTM EBIT 20x 12x 15x nm 15x 15x 15x

Last FY Act. 5x 14x 48x nm 22x 15x 14x

P/E This FY Est. 5x 8x 11x 9x 8x 7x 9x

Next FY Est. 5x 8x 10x 6x 8x 7x 7x

P/ Tang. Book 1.6x nm 2.8x nm 2.2x 1.1x 2.2x

Technology: Office Equipment – Operating Performance

LTM Ticker ($mn) XRX 18,120 PBI 6,374 DBD 3,242 PAY 915 Median

Revenue LTM Growth 8% 6% 12% 11% 10%

3-Year Growth 3% 8% 8% 32% 8%

Rev./ Empl. ($'000) 316 176 191 412 254

LTM Profit Margins Gross 40% 52% 25% 31% 35%

EBIT 4% 13% 5% -2% 4%

Net 3% 5% 3% -4% 3%

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Est. 5-Year EPS Growth 14% 11% 15% 16% 14%

EBIT/ Capital Empl. 11% 54% 15% nm 15%

LTM ROE 8% 55% 8% -7% 8%

LTM ROA 3% 3% 3% -3% 3%

LTM Asset Turnover .8x .7x 1.2x .6x .8x

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Technology: Electronic Instruments – Valuation (Sorted by market value)

Company / Ticker ABB Ltd (ADR) / ABB Agilent Technologies / A Nidec Corporation (A / NJ Eaton Corporation / ETN Tyco Electronics Ltd / TEL Cooper Industries, L / CBE LG Display Co Ltd. ( / LPL AU Optronics Corp. ( / AUO TDK CORPORATION (ADR / TDK Amphenol Corporation / APH Rockwell Automation / ROK AMETEK, Inc. / AME Molex Incorporated / MOLX Avnet, Inc. / AVT Energizer Holdings, / ENR Teleflex Incorporate / TFX Arrow Electronics, I / ARW Hubbell Incorporated / HUB.B Woodward Governor Co / WGOV AVX Corporation / AVX Jabil Circuit, Inc. / JBL Brady Corporation / BRC Energy Conversion De / ENER Thomas & Betts Corpo / TNB Acuity Brands, Inc. / AYI Anixter Internationa / AXE A. O. Smith Corporat / AOS Hexcel Corporation / HXL Franklin Electric Co / FELE Ener1, Inc. / HEV Benchmark Electronic / BHE WESCO International, / WCC Baldor Electric Comp / BEZ Plexus Corp. / PLXS GrafTech Internation / GTI Greatbatch Inc. / GB Raven Industries, In / RAVN American Superconduc / AMSC Park Electrochemical / PKE EMS Technologies, In / ELMG Littelfuse, Inc. / LFUS Ixia / XXIA EnerSys / ENS Advanced Energy Indu / AEIS Methode Electronics / MEI Nam Tai Electronics, / NTE AZZ Incorporated / AZZ Sanmina-SCI Corporat / SANM FuelCell Energy, Inc / FCEL Powell Industries, I / POWL

Price ($) 10.87 20.75 12.44 41.15 14.50 26.92 7.19 5.83 33.37 22.25 26.08 29.80 13.05 15.02 37.83 48.33 14.56 30.35 24.76 8.55 6.33 24.63 27.98 20.90 28.80 28.30 29.29 8.16 33.16 6.75 10.97 16.55 14.41 14.89 4.79 24.40 29.58 10.92 17.58 22.65 15.64 5.31 6.86 7.16 7.23 6.11 22.21 0.50 3.77 22.74

Move to 52-Wk MV EV Low High ($mn) ($mn) -8% 207% 24,883 20,057 -13% 84% 7,263 7,959 -36% 59% 7,216 7,219 -8% 142% 6,786 10,685 -11% 178% 6,718 8,813 -15% 107% 5,498 6,443 -26% 318% 5,177 5,595 -6% 241% 4,817 6,704 -14% 137% 4,304 3,727 -5% 135% 3,911 4,451 -18% 178% 3,797 4,219 -8% 78% 3,180 4,167 -11% 135% 2,298 2,082 -7% 151% 2,263 3,095 -5% 214% 2,200 5,120 -11% 41% 1,919 3,406 -7% 178% 1,737 2,752 -10% 92% 1,703 2,007 -8% 96% 1,667 1,633 -9% 82% 1,458 858 -5% 197% 1,333 1,930 -3% 64% 1,315 1,535 -27% 198% 1,279 1,140 -9% 165% 1,168 1,630 -9% 87% 1,163 1,229 -8% 165% 999 2,125 -11% 74% 882 1,202 -8% 233% 786 1,133 -7% 65% 763 904 -40% 37% 762 747 -20% 82% 714 385 -14% 181% 695 1,803 0% 177% 666 1,994 -10% 116% 584 554 -15% 484% 570 702 -37% 11% 559 891 -13% 62% 532 500 -15% 335% 473 351 -10% 80% 360 144 -28% 47% 344 259 -4% 151% 340 310 -5% 102% 338 163 -5% 450% 329 690 -1% 137% 300 165 -15% 134% 278 167 -13% 119% 274 13 -9% 118% 270 357 0% 432% 266 878 -18% 249% 259 246 -26% 155% 259 291 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. .6x 1.4x .9x .7x .6x 1.0x .5x .4x .4x 1.4x .7x 1.7x .6x .2x 1.2x 1.4x .2x .8x 1.4x .5x .2x 1.0x 3.7x .7x .6x .3x .5x .8x 1.2x 1067.7x .1x .3x 1.0x .3x .6x 1.8x 1.9x 2.3x .6x .8x .6x .9x .3x .5x .3x .0x 1.0x .1x 2.7x .5x 22.2x 7.7x .6x

EV/ LTM EBIT 4x 10x 8x 8x 5x 7x 3x 2x 6x 7x 5x 9x 7x 4x 8x 13x 4x 6x 10x 6x 8x 7x 58x 5x 5x 5x 9x 9x 11x nm 4x 5x 8x 5x 2x 31x 11x nm 5x 12x 10x nm 4x 7x 3x x 6x 9x nm 9x 8x 7x 7x

Last FY Act. 8x 11x 17x 6x 4x 7x 5x 4x 6x 11x 7x 14x 11x 5x 7x nm 4x 9x 18x 10x 10x 10x 311x 7x 8x 5x 10x 12x 27x nm 9x 3x 7x 11x 3x 36x 19x nm 10x 18x 10x 53x 6x 10x 7x 4x 10x nm nm 26x 18x 12x 10x

P/E This FY Est. 6x 11x 12x 6x 8x 7x 4x 4x 17x 9x 7x 12x 12x 6x 7x 12x 5x 8x 14x 13x 5x 10x 17x 6x 8x 4x 9x 10x 14x nm 9x 3x 6x 9x 2x 19x 17x nm 14x 17x 12x 19x 4x 18x 18x 10x 7x 6x nm 11x 10x 8x 9x

Next FY Est. 6x 10x 11x 6x 7x 8x nm nm 13x 10x 7x 10x 10x 6x 6x 11x 7x 9x 12x 13x 4x 9x 9x 6x 7x 5x 9x 7x 12x nm 10x 4x 7x 8x 2x 14x 15x 78x 11x 14x 10x 16x 4x 34x 11x 17x 6x 3x nm 8x 11x 8x 9x

P/ Tang. Book 2.9x 4.3x 2.6x nm 1.9x 18.8x .8x .5x .7x 14.3x 7.3x nm 1.1x 1.1x nm nm 1.0x 4.5x 4.2x .9x .9x 15.0x 1.9x 8.8x 11.3x 1.5x 3.9x 1.7x 4.4x 26.1x .7x nm nm 1.3x 1.1x nm 4.5x 2.5x 1.3x 1.6x 1.3x 1.3x 1.1x 1.0x 1.0x .9x 3.3x .4x 3.7x 1.5x 4.0x 3.7x 1.6x

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Technology: Electronic Instruments – Operating Performance

LTM Ticker ($mn) ABB 34,485 A 5,774 NJ 7,758 ETN 15,263 TEL 14,834 CBE 6,542 LPL 11,736 AUO 15,716 TDK 8,571 APH 3,259 ROK 5,698 AME 2,491 MOLX 3,375 AVT 18,348 ENR 4,331 TFX 2,408 ARW 17,090 HUB.B 2,667 WGOV 1,198 AVX 1,633 JBL 12,780 BRC 1,523 ENER 305 TNB 2,505 AYI 2,027 AXE 6,170 AOS 2,366 HXL 1,353 FELE 747 HEV 1 BHE 2,743 WCC 6,170 BEZ 1,938 PLXS 1,791 GTI 1,195 GB 485 RAVN 265 AMSC 151 PKE 240 ELMG 321 LFUS 560 XXIA 181 ENS 2,254 AEIS 345 MEI 563 NTE 685 AZZ 366 SANM 7,202 FCEL 91 POWL 622 Median

Revenue LTM Growth 26% 7% 8% 20% 15% 15% 25% 23% -5% 19% 14% 22% 5% 14% 29% 34% 14% 6% 22% 6% 4% 12% >99% 24% 3% 9% 4% 21% 25% >99% -6% 5% 24% 18% 23% 63% 19% >99% -2% 13% 6% 4% 34% -15% 19% -18% 21% 1% >99% 24% 14%

3-Year Growth 13% 7% 15% 10% 9% 10% 20% 42% 10% 23% 12% 20% 9% 18% 13% -7% 15% 8% 14% 8% 19% 23% 18% 12% -2% 21% 12% 4% 18% na 13% 17% 41% 14% 11% 17% 12% 25% 5% 13% 4% 16% 23% 0% 12% 14% 28% -15% 15% 40% 13%

Rev./ Empl. ($'000) 308 304 81 186 158 208 533 320 131 102 285 220 105 1,433 265 172 1,356 232 282 117 210 195 279 228 312 771 141 332 234 7 251 845 240 239 468 198 276 396 275 291 90 240 262 214 157 103 258 137 205 293 239

LTM Profit Margins Gross 32% 55% 22% 28% 25% 33% 23% 23% 25% 33% 41% 33% 30% 13% 47% 39% 14% 30% 30% 17% 7% 49% 32% 31% 40% 24% 23% 22% 30% na 7% 20% 30% 12% 35% 28% 25% 30% 24% 38% 29% 77% 19% 40% 23% 13% 26% 7% -47% 19% 28%

EBIT 15% 14% 11% 9% 12% 15% 19% 18% 7% 20% 15% 18% 9% 4% 15% 11% 4% 13% 14% 9% 2% 14% 6% 14% 13% 7% 5% 9% 11% <-99% 3% 6% 14% 6% 26% 6% 18% -10% 12% 7% 6% 0% 7% 7% 9% 6% 17% 1% -96% 5% 9%

Net 14% 12% 7% 8% 12% 11% 15% 16% 6% 13% 10% 11% 6% 3% 8% 7% 2% 8% 10% 8% 1% 9% 8% 12% 7% 4% 5% 7% 6% <-99% 3% 4% 5% 5% 18% 3% 12% -13% 13% 6% 4% 4% 4% 6% 8% 9% 10% 0% -98% 3% 7%

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Est. 5-Year EPS Growth 4% 15% 19% 12% 12% 12% na 10% na 18% 14% 15% 14% 15% 13% 16% 13% 12% 12% 14% 19% 10% 43% 12% 13% 15% 10% 22% 14% na 18% 13% 10% 14% 12% 20% 15% 27% na 20% 15% 18% 11% 16% 12% na 12% 20% 33% 14% 14%

EBIT/ Capital Empl. 79% 70% 25% 30% 28% 58% 27% 25% 13% 72% 65% 63% 17% 25% 42% 30% 25% 50% 40% 16% 13% 61% 4% 55% 87% 28% 18% 18% 25% nm 12% 39% 32% 27% 54% 12% 52% nm 14% 19% 13% nm 23% 11% 29% 37% 43% 7% nm 18% 28%

LTM ROE 39% 23% 15% 18% 16% 25% 26% 26% 7% 32% 32% 20% 8% 12% 39% 12% 10% 21% 22% 7% 5% 13% 4% 22% 27% 24% 14% 20% 12% <-99% 7% 35% 12% 17% 66% 4% 26% -9% 11% 8% 7% 2% 12% 6% 13% 18% 24% -1% -86% 11% 14%

LTM ROA 14% 9% 7% 7% 8% 11% 15% 13% 5% 15% 12% 9% 6% 6% 6% 4% 5% 11% 15% 6% 2% 7% 3% 11% 11% 8% 6% 8% 6% <-99% 5% 8% 4% 10% 23% 2% 20% -7% 9% 6% 5% 2% 5% 5% 10% 12% 14% 0% -38% 5% 7%

LTM Asset Turnover 1.1x .8x 1.1x 1.0x .7x 1.0x 1.0x .8x .8x 1.1x 1.2x .8x .9x 2.3x .8x .6x 2.1x 1.3x 1.4x .8x 1.9x .8x .4x .9x 1.5x 2.0x 1.3x 1.2x 1.0x .0x 1.6x 2.2x .7x 1.9x 1.3x .6x 1.7x .6x .7x 1.0x 1.1x .5x 1.3x .8x 1.2x 1.3x 1.4x 1.6x .4x 1.7x 1.1x

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Technology: Scientific and Technical Instruments – Valuation (Sorted by market value)

Company / Ticker Danaher Corporation / DHR Thermo Fisher Scient / TMO Applied Biosystems I / ABI Garmin Ltd. / GRMN Waters Corporation / WAT Roper Industries, In / ROP Qiagen NV / QGEN Illumina, Inc. / ILMN Beckman Coulter, Inc / BEC Pall Corporation / PLL Millipore Corporatio / MIL Gen-Probe Incorporat / GPRO Trimble Navigation L / TRMB PerkinElmer, Inc. / PKI Mindray Medical Inte / MR Bio-Rad Laboratories / BIO Hill-Rom Holdings, I / HRC Moog Inc. / MOG.A Varian, Inc. / VARI Dionex Corporation / DNEX ESCO Technologies In / ESE Cepheid / CPHD Bruker Corporation / BRKR II-VI, Inc. / IIVI Axsys Technologies, / AXYS American Science & E / ASEI Coinstar, Inc. / CSTR Coherent, Inc. / COHR Cubic Corporation / CUB Cognex Corporation / CGNX Analogic Corporation / ALOG Landauer, Inc. / LDR MTS Systems Corporat / MTSC School Specialty, In / SCHS Badger Meter, Inc. / BMI Chart Industries, In / GTLS FARO Technologies, I / FARO Clinical Data, Inc. / CLDA Newport Corporation / NEWP China Fire & Securit / CFSG OSI Systems, Inc. / OSIS IRIS International, / IRIS LaBarge, Inc. / LB Orbotech Ltd. / ORBK OYO Geospace Corpora / OYOG

Price ($) 53.92 34.04 29.29 19.04 39.14 39.71 15.63 23.86 46.91 24.43 52.26 42.86 19.24 16.80 18.31 66.00 23.50 29.80 33.65 49.90 31.11 13.99 4.61 21.68 57.33 71.77 20.11 23.47 20.75 13.88 39.16 49.71 25.82 19.47 23.92 9.81 13.44 9.42 5.65 7.21 10.96 10.49 12.40 3.90 18.56

Move to 52-Wk MV EV Low High ($mn) ($mn) -9% 65% 17,233 19,655 -4% 84% 14,304 15,236 -12% 27% 4,987 4,568 -5% 492% 3,856 3,317 -5% 109% 3,848 3,983 -11% 77% 3,563 4,753 -20% 51% 3,084 3,741 -8% 101% 2,952 2,703 -4% 64% 2,940 3,867 -11% 77% 2,898 3,221 -12% 59% 2,887 3,982 -8% 60% 2,331 1,775 -17% 215% 2,300 2,281 -8% 78% 1,984 2,340 -14% 146% 1,976 2,016 -8% 67% 1,801 2,025 -13% 48% 1,469 1,470 -16% 141% 1,272 1,856 -19% 114% 973 888 -14% 75% 897 856 -8% 74% 810 1,018 -39% 138% 807 782 -26% 274% 756 883 -1% 123% 642 579 -41% 39% 641 633 -41% 3% 630 552 -4% 93% 568 871 -7% 64% 557 339 -18% 106% 555 441 -3% 102% 549 360 -12% 96% 527 340 -6% 48% 463 431 -3% 76% 438 351 -7% 86% 366 866 -27% 162% 354 382 -5% 468% 279 373 0% 169% 224 122 -12% 174% 214 194 -8% 148% 203 245 -51% 126% 199 177 -6% 151% 196 237 -3% 114% 194 161 -24% 31% 192 199 -26% 390% 131 -24 -5% 483% 110 130 Average (equal-weighted) Average (market value-weighted) Median

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EV/ LTM Rev. 1.6x 1.5x 2.0x .9x 2.5x 2.1x 4.3x 5.2x 1.3x 1.3x 2.5x 3.8x 1.7x 1.2x 4.2x 1.1x 1.0x 1.0x .9x 2.2x 1.7x 4.5x .9x 1.7x 2.8x 3.4x 1.1x .6x .5x 1.4x .8x 4.8x .8x .8x 1.4x .5x .6x 5.3x .5x 2.8x .4x 1.8x .7x nm 1.0x 1.9x 1.9x 1.4x

EV/ LTM EBIT 10x 13x 11x 4x 10x 10x 30x 233x 15x 9x 16x 13x 11x 13x 18x 11x 14x 9x 9x 10x 15x nm 11x 8x 18x 34x nm 15x 8x 9x 14x 13x 6x 10x 10x 3x 5x nm 26x 8x 11x 16x 7x nm 6x 18x 19x 11x

Last FY Act. 14x 19x 16x 5x 15x 15x 56x nm 14x 14x 21x 27x 20x 15x 3x 19x 22x 11x 15x 18x 24x nm 15x 10x 45x 38x nm 28x 13x 23x 22x 24x 10x 9x 19x 6x 12x nm 5x 12x 14x 26x 13x 98x 6x 20x 17x 15x

P/E This FY Est. 12x 11x 15x 5x 12x 13x 20x 39x 13x 12x 15x 22x 12x 12x 19x 14x 16x 10x 12x 17x 15x nm 11x 13x 25x 23x 40x 22x 15x 20x 15x 20x 9x 9x 15x 4x 14x nm 17x 8x 14x 24x 11x 8x 7x 15x 14x 14x

Next FY Est. 12x 10x 14x 6x 11x 12x 16x 26x 12x 11x 14x 23x 12x 11x 13x 13x 14x 9x 10x 15x 13x nm 10x 11x 21x 20x 21x 15x 11x 24x 12x 19x 9x 8x 15x 4x 18x nm 11x 7x 10x 19x 10x 4x 5x 13x 12x 12x

P/ Tang. Book nm nm 4.1x 2.0x 17.2x nm nm 5.1x 6.8x 3.5x nm 3.1x 8.8x nm 7.0x 3.4x 1.4x 3.5x 2.9x 5.8x nm 10.7x 2.6x 2.4x 7.7x 4.0x nm .9x 1.5x 1.7x 1.4x 9.3x 2.2x nm 4.5x nm 1.2x 23.3x 1.1x 2.8x 1.1x 2.7x 2.7x .3x 1.0x 4.6x 2.7x 2.9x

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Thanksgiving 2008

Technology: Scientific and Technical Instruments – Operating Performance

LTM Ticker ($mn) DHR 12,662 TMO 10,473 ABI 2,257 GRMN 3,663 WAT 1,594 ROP 2,291 QGEN 866 ILMN 525 BEC 3,077 PLL 2,572 MIL 1,611 GPRO 463 TRMB 1,374 PKI 2,028 MR 478 BIO 1,776 HRC 1,508 MOG.A 1,903 VARI 1,013 DNEX 389 ESE 590 CPHD 172 BRKR 976 IIVI 333 AXYS 229 ASEI 162 CSTR 784 COHR 599 CUB 869 CGNX 256 ALOG 414 LDR 89 MTSC 461 SCHS 1,080 BMI 269 GTLS 740 FARO 212 CLDA 36 NEWP 456 CFSG 62 OSIS 640 IRIS 91 LB 289 ORBK 392 OYOG 135 Median

Revenue LTM Growth 21% 19% 7% 42% 12% 14% 53% 67% 15% 14% 7% 17% 20% 19% -77% 32% 11% 22% 10% 15% 38% 53% 19% 25% 46% -4% 42% 0% 0% 17% 21% 8% 12% 3% 17% 18% 20% 18% 1% -5% 17% 10% 18% 2% -1% 17%

3-Year Growth 17% 64% 8% 61% 10% 29% 20% 94% 5% 11% 20% 14% 22% 8% 47% 10% -8% 22% 9% 11% 8% 35% 15% 18% 18% 24% 21% 5% 7% 4% 8% 6% 7% 4% 8% 30% 26% 12% 19% na 17% 25% 15% 5% 30% 15%

Rev./ Empl. ($'000) 253 317 458 434 319 323 325 504 293 243 268 469 382 223 87 278 152 227 260 288 218 364 441 142 279 468 413 256 145 321 243 222 285 432 238 269 272 120 228 139 190 294 214 243 115 269

LTM Profit Margins Gross 47% 40% 58% 45% 58% 51% 67% 64% 46% 47% 54% 73% 50% 41% 54% 53% 44% 32% 45% 67% 38% 47% 45% 44% 34% 35% 31% 42% 19% 72% 37% 68% 41% 42% 35% 32% 61% 26% 39% 57% 35% 51% 20% 41% 34% 45%

EBIT 15% 11% 19% 26% 25% 21% 15% 2% 8% 14% 16% 30% 16% 9% 23% 10% 7% 11% 10% 21% 11% -13% 9% 20% 16% 10% 0% 4% 7% 15% 6% 37% 13% 8% 14% 17% 11% <-99% 2% 34% 3% 11% 9% 1% 16% 11%

Net 11% 9% 15% 24% 20% 13% 9% 3% 5% 8% 10% 23% 11% 7% 82% 6% 5% 6% 7% 14% 7% -12% 5% 22% 11% 9% -3% 4% 5% 14% 6% 25% 13% 3% 8% 10% 10% <-99% 5% 35% 2% 9% 6% 2% 12% 9%

www.manualofideas.com

Est. 5-Year EPS Growth 12% 16% 13% 13% 16% 15% 24% 32% 13% 13% 13% 17% 19% 14% 36% 20% 14% 10% 13% 14% 28% 23% 19% 13% 21% 15% 19% na 17% 18% na 8% 9% 15% 14% 17% 20% na 12% 30% 23% 22% na 7% 37% 16%

EBIT/ Capital Empl. 90% 44% 72% 85% 89% >99% 29% 3% 16% 31% 27% 23% 75% 51% 21% 25% 14% 21% 38% 69% 35% nm 25% 36% 50% 12% nm 7% 23% 27% 14% >99% 60% 26% 36% 78% 16% nm 4% 60% 10% 33% 36% 1% 20% 28%

LTM ROE 14% 6% 22% 38% 52% 15% 6% 3% 11% 19% 13% 13% 13% 9% 24% 10% 7% 13% 11% 28% 9% -16% 14% 26% 15% 8% -9% 4% 10% 8% 6% 35% 28% 7% 21% 20% 10% <-99% 6% 36% 6% 11% 18% 2% 15% 12%

LTM ROA 8% 4% 14% 28% 16% 8% 3% 2% 4% 8% 6% 13% 10% 5% 19% 5% 5% 6% 7% 17% 5% -12% 4% 21% 11% 6% -3% 3% 7% 7% 5% 21% 15% 3% 12% 8% 8% -85% 4% 25% 3% 10% 10% 1% 11% 7%

LTM Asset Turnover .7x .5x .9x 1.2x .8x .6x .3x .5x .8x .9x .6x .5x .9x .7x .2x .9x .9x .9x 1.1x 1.2x .7x 1.0x .8x 1.0x 1.0x .7x .8x .7x 1.4x .5x .8x .9x 1.2x .9x 1.6x .8x .9x .3x .7x .7x 1.3x 1.0x 1.8x .7x .9x .8x

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Thanksgiving 2008

Technology: Semiconductors (I of II) – Valuation (Sorted by market value)

Company / Ticker Intel Corporation / INTC Taiwan Semiconductor / TSM Texas Instruments In / TXN Applied Materials, I / AMAT Kyocera Corporation / KYO First Solar, Inc. / FSLR Broadcom Corporation / BRCM STMicroelectronics N / STM ASML Holding N.V. (A / ASML Analog Devices, Inc. / ADI United Microelectron / UMC Linear Technology Co / LLTC Altera Corporation / ALTR Xilinx, Inc. / XLNX Maxim Integrated Pro / MXIM NVIDIA Corporation / NVDA Microchip Technology / MCHP Marvell Technology G / MRVL MEMC Electronic Mate / WFR KLA-Tencor Corporati / KLAC Siliconware Precisio / SPIL National Semiconduct / NSM Flextronics Internat / FLEX Lam Research Corpora / LRCX SunPower Corporation / SPWRA Infineon Technologie / IFX LSI Corporation / LSI Advanced Semiconduct / ASX Atmel Corporation / ATML ARM Holdings plc (AD / ARMH Cree, Inc. / CREE LDK Solar Co., Ltd. / LDK Advanced Micro Devic / AMD Microsemi Corporatio / MSCC ON Semiconductor Cor / ONNN QLogic Corporation / QLGC Intersil Corporation / ISIL Varian Semiconductor / VSEA Novellus Systems, In / NVLS Silicon Laboratories / SLAB Tessera Technologies / TSRA Skyworks Solutions, / SWKS Integrated Device Te / IDTI PMC-Sierra, Inc. / PMCS Hittite Microwave Co / HITT International Rectif / IRF Atheros Communicatio / ATHR FEI Company / FEIC MKS Instruments, Inc / MKSI Teradyne, Inc. / TER

Price ($) 13.32 6.96 16.11 10.23 52.45 116.78 15.38 7.50 15.07 19.29 2.03 21.95 15.02 15.95 13.30 7.17 19.75 5.81 15.34 18.16 4.30 11.52 3.06 17.99 25.56 2.77 3.12 1.61 3.99 4.05 18.59 14.62 2.43 18.48 3.50 10.84 10.62 17.47 12.18 21.50 18.50 5.29 5.14 3.86 27.37 11.43 12.43 18.85 13.99 4.05

Move to 52-Wk MV EV Low High ($mn) ($mn) -3% 110% 74,086 64,238 -11% 71% 35,673 31,249 -3% 115% 20,885 18,892 -30% 113% 13,725 11,827 -5% 92% 9,954 4,356 -18% 171% 9,470 8,913 -16% 94% 7,852 5,605 -4% 121% 6,626 7,582 -8% 135% 6,565 5,657 -7% 88% 5,603 4,321 -28% 78% 5,308 4,768 -16% 72% 4,867 5,545 -5% 61% 4,466 3,683 -5% 77% 4,369 4,067 -15% 103% 4,204 2,948 -17% 408% 3,991 2,686 -2% 94% 3,592 3,633 -9% 215% 3,550 2,983 -10% 526% 3,443 2,354 -8% 186% 3,067 2,505 -16% 134% 2,670 2,363 -11% 117% 2,644 3,411 -2% 305% 2,477 4,219 -7% 167% 2,248 1,488 -8% 465% 2,193 2,322 -9% 371% 2,077 2,596 -4% 152% 2,013 1,554 -7% 245% 1,830 2,978 -37% 20% 1,787 1,513 -17% 108% 1,698 1,599 -13% 91% 1,642 1,356 -15% 417% 1,557 2,086 -5% 446% 1,479 5,372 -11% 54% 1,465 1,296 -15% 210% 1,438 2,241 -12% 86% 1,387 1,006 -4% 181% 1,305 1,014 -5% 149% 1,269 1,063 -5% 131% 1,190 865 -7% 83% 995 712 -53% 143% 897 636 -4% 112% 873 829 -6% 147% 869 561 -15% 158% 854 663 -13% 80% 833 648 -6% 208% 833 427 -7% 180% 750 476 -16% 55% 700 642 -5% 85% 688 449 -5% 258% 686 378 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 1.6x 2.9x 1.4x 1.5x .2x 8.8x 1.2x .7x 1.3x 1.7x 1.1x 4.6x 2.7x 2.1x 1.5x .6x 3.5x .9x 1.1x 1.1x 1.2x 1.8x .1x .7x 1.8x .4x .6x .9x .9x 4.0x 2.6x 2.0x .8x 2.5x 1.1x 1.5x 1.2x 1.3x .7x 1.7x 2.7x 1.0x .7x 1.3x 3.7x .4x 1.0x 1.1x .6x .3x 1.6x 1.9x 1.2x

EV/ LTM EBIT 6x 8x 6x 9x 2x 25x 14x nm 7x 7x 30x 10x 9x 10x 7x 7x 11x 22x 2x 7x 7x 7x 23x 5x 19x nm nm 6x 141x 22x 77x 9x nm 20x 11x 6x 6x 7x 10x 14x 31x 9x 16x 13x 8x nm 18x 17x 7x 66x 17x 10x 9x

Last FY Act. 11x 17x 9x 15x 9x 58x 42x nm 8x 13x nm 13x 18x 13x 14x 5x 14x nm 4x 9x 7x 9x nm 5x 232x nm nm 6x 40x 34x 52x 11x nm 29x 4x 16x 10x 13x 7x 31x 20x 8x 29x nm 17x nm 19x 14x 9x 10x 22x 16x 13x

P/E This FY Est. 12x 11x 10x 13x 18x 30x 9x 12x 11x 11x 102x 14x 12x 11x 23x 9x 13x 7x 4x 36x 10x 9x 3x 138x 11x 55x 7x 7x 100x 14x 42x 4x nm 12x 4x 9x 7x 250x 51x 12x 69x 6x 6x 8x 16x nm 9x 28x 17x 16x 27x 17x 12x

Next FY Est. 13x 16x 12x 9x 23x 16x 11x 11x 19x 12x nm 13x 13x 11x 16x 11x 14x 8x 4x 14x 10x 8x 3x 15x 8x nm 8x 10x 16x 12x 33x 3x nm 11x 4x 9x 11x 22x 406x 13x 18x 6x 7x 9x 15x 29x 9x 18x 35x nm 22x 15x 12x

P/ Tang. Book 2.2x 2.5x 2.3x 2.3x .7x 7.0x 3.0x 1.0x 2.6x 2.7x .9x nm 5.1x 3.0x 1.4x 2.0x 3.6x 2.7x 1.7x 1.7x 1.5x 18.7x 1.4x 1.6x 2.9x .8x 2.9x .9x 2.4x 9.4x 2.1x 2.5x 8.7x 2.2x 29.6x 2.5x 1.7x 2.5x 1.0x 2.7x 2.8x 2.0x 2.0x 4.5x 3.5x .6x 2.2x 1.5x 1.3x .8x 3.4x 2.7x 2.3x

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Technology: Semiconductors (II of II) – Valuation (Sorted by market value)

Company / Ticker Vishay Intertechnolo / VSH FormFactor, Inc. / FORM Cymer, Inc. / CYMI Verigy Ltd. / VRGY IPG Photonics Corpor / IPGP Emulex Corporation / ELX Semtech Corporation / SMTC Amkor Technology, In / AMKR Fairchild Semiconduc / FCS Evergreen Solar, Inc / ESLR Cypress Semiconducto / CY Power Integrations, / POWI Yingli Green Energy / YGE JA Solar Holdings Co / JASO Micrel, Incorporated / MCRL Cavium Networks, Inc / CAVM ASM International N. / ASMI Semiconductor Manufa / SMI NetLogic Microsystem / NETL TriQuint Semiconduct / TQNT Aixtron AG (ADR) / AIXG GT Solar Internation / SOLR Himax Technologies, / HIMX ATMI, Inc. / ATMI Monolithic Power Sys / MPWR Eagle Test Systems, / EGLT Chartered Semiconduc / CHRT RF Micro Devices, In / RFMD OmniVision Technolog / OVTI Zoran Corporation / ZRAN Standard Microsystem / SMSC Ultratech, Inc. / UTEK ReneSola Ltd. (ADR) / SOL Applied Micro Circui / AMCC Cohu, Inc. / COHU Supertex, Inc. / SUPX Cirrus Logic, Inc. / CRUS Exar Corporation / EXAR Silicon Storage Tech / SSTI Solarfun Power Holdi / SOLF Silicon Image, Inc. / SIMG Trina Solar Limited / TSL Brooks Automation, I / BRKS Canadian Solar Inc. / CSIQ Diodes Incorporated / DIOD Actel Corporation / ACTL Mellanox Technologie / MLNX Volterra Semiconduct / VLTR Entegris, Inc. / ENTG IXYS Corporation / IXYS

Price ($) 3.67 13.63 21.86 10.96 13.25 7.22 9.45 3.02 4.31 3.15 3.56 17.35 3.97 2.80 6.42 10.41 7.56 1.09 18.19 2.69 4.32 2.71 2.01 12.03 11.26 15.55 1.39 1.32 6.56 6.42 14.31 12.95 4.35 4.25 11.84 21.37 4.08 6.12 2.74 5.29 3.37 9.43 3.66 6.43 5.17 8.22 6.42 7.52 1.64 5.89

Move to 52-Wk MV EV Low High ($mn) ($mn) -8% 249% 685 734 -8% 190% 669 133 -14% 96% 647 528 -4% 155% 646 261 -10% 69% 594 586 -5% 148% 593 299 -6% 96% 584 348 -8% 321% 553 1,739 -4% 287% 535 691 -33% 498% 519 608 -18% 74% 516 381 -15% 102% 509 283 -17% 945% 504 800 -28% 864% 470 417 -25% 68% 441 359 -6% 158% 425 338 -2% 344% 410 429 -27% 389% 406 1,275 -11% 121% 397 313 -1% 163% 392 312 -18% 272% 388 312 -8% 527% 387 381 -20% 213% 387 255 -17% 178% 387 292 -8% 158% 380 295 -40% 0% 357 273 -5% 475% 353 1,934 -5% 373% 347 748 -3% 212% 336 96 -59% 286% 329 24 -3% 177% 318 221 -33% 33% 304 153 -21% 578% 295 336 -7% 156% 277 81 -5% 73% 275 104 -21% 66% 275 231 -16% 87% 266 162 -19% 61% 263 17 -9% 29% 262 151 -21% 660% 256 363 -3% 128% 250 49 -10% 499% 242 548 -4% 277% 233 89 -21% 706% 229 306 -8% 509% 212 551 -1% 129% 212 78 -5% 217% 203 35 -2% 136% 189 125 -3% 479% 185 246 -8% 135% 183 143 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. .2x .5x 1.1x .3x 2.6x .6x 1.1x .6x .4x 6.8x .2x 1.3x .9x .5x 1.3x 4.2x .4x .9x 2.2x .6x 1.0x 1.3x .3x .8x 1.8x 2.3x 1.2x .7x .1x .0x .6x 1.2x .7x .3x .5x 2.7x .8x .1x .4x .6x .2x 1.1x .2x .5x 1.2x .4x .3x 1.2x .4x .5x 1.0x 1.1x .6x

EV/ LTM EBIT nm nm 7x 3x 11x 5x 7x 5x 6x nm nm 10x 5x 11x 8x 58x 3x nm nm 11x 8x 6x 2x 5x 10x 10x nm nm 2x nm 5x 22x 4x nm 104x 14x nm nm nm 6x 6x 8x nm 6x 11x nm 1x 9x nm 4x 11x 7x 7x

Last FY Act. 5x 9x 9x 7x 20x nm 13x 3x 8x nm 2x 20x 9x 7x 11x 174x 6x nm 152x 17x 17x 11x 4x 10x 34x 34x 4x 66x 6x 5x 10x nm 6x nm 35x 17x nm nm nm 12x 15x 6x nm nm 4x nm 5x 376x 4x 8x 30x 20x 9x

P/E This FY Est. 5x nm 17x 9x 16x 9x 10x 3x 6x nm 5x 14x 1x 3x 15x 27x 9x nm 12x 7x 11x 4x 4x 13x 12x 15x nm 7x 8x 32x 10x 28x 3x 10x nm 16x 10x 68x nm 1x 11x 3x nm 3x 4x nm 7x 9x 5x 9x 11x 9x 9x

Next FY Est. 7x nm 21x 22x 14x 8x 10x 8x 12x 12x 16x 16x x 2x 17x 18x 19x nm 12x 6x 16x 3x 6x 15x 11x 14x nm 6x 7x nm 10x 21x 2x 7x 85x 14x 9x 28x nm 1x 13x 2x nm 3x 3x 20x 11x 9x 6x 8x 13x 11x 11x

P/ Tang. Book .4x .9x 1.3x 1.2x 2.6x 1.5x 1.7x 3.4x .7x .9x .5x 1.6x .9x .7x 2.0x 3.7x 1.2x .2x 4.0x .8x 2.1x nm .9x 1.1x 2.3x 2.1x .2x 1.2x .7x .7x 1.1x 1.6x .6x 1.0x 1.0x 1.7x 1.8x .9x .9x .9x 1.2x .6x .6x .9x .8x .9x 1.0x 2.3x .7x .9x 1.3x 1.3x 1.0x

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Technology: Software (I of II) – Valuation (Sorted by market value)

Company / Ticker Microsoft Corporatio / MSFT Oracle Corporation / ORCL SAP AG (ADR) / SAP Infosys Technologies / INFY Activision Blizzard, / ATVI Adobe Systems Incorp / ADBE Symantec Corporation / SYMC CA, Inc. / CA VMware, Inc. / VMW Intuit Inc. / INTU Electronic Arts Inc. / ERTS Cognizant Technology / CTSH BMC Software, Inc. / BMC Autodesk, Inc. / ADSK Check Point Software / CHKP McAfee, Inc. / MFE Citrix Systems, Inc. / CTXS Amdocs Limited / DOX Verisign, Inc. / VRSN SAIC, Inc. / SAI salesforce.com, inc. / CRM KONAMI CORPORATION ( / KNM ANSYS, Inc. / ANSS Synopsys, Inc. / SNPS Lender Processing Se / LPS Sybase, Inc. / SY Red Hat, Inc. / RHT ManTech Internationa / MANT National Instruments / NATI Nuance Communication / NUAN Compuware Corporatio / CPWR Novell, Inc. / NOVL Giant Interactive Gr / GA Quest Software, Inc. / QSFT Parametric Technolog / PMTC Nice Systems Ltd. (A / NICE MICROS Systems, Inc. / MCRS Solera Holdings, Inc / SLH Concur Technologies, / CNQR Macrovision Solution / MVSN Informatica Corporat / INFA Allscripts-Misys Hea / MDRX Cadence Design Syste / CDNS Quality Systems, Inc / QSII Digital River, Inc. / DRIV Blackboard Inc. / BBBB Take-Two Interactive / TTWO Progress Software Co / PRGS Tibco Software Inc. / TIBX SRA International, I / SRX

Price ($) 20.06 16.90 35.24 24.72 10.61 22.34 12.21 17.02 20.00 21.58 20.44 16.87 25.02 19.53 20.01 28.50 22.95 18.34 18.64 18.74 26.40 21.40 28.40 16.19 21.47 24.98 10.49 49.59 21.82 7.48 5.98 4.17 6.04 13.01 11.21 21.53 15.34 18.25 23.44 11.35 13.03 7.70 3.93 35.59 23.32 27.05 10.76 20.81 4.34 13.44

Move to 52-Wk MV EV Low High ($mn) ($mn) -7% 83% 178,445 159,698 -11% 40% 87,110 85,326 -17% 69% 41,890 39,852 -8% 103% 14,152 12,266 -11% 82% 13,989 11,053 -5% 108% 11,862 10,211 -8% 87% 10,208 10,003 -29% 58% 8,821 8,660 -9% 414% 7,792 6,551 -5% 49% 6,991 7,161 -6% 195% 6,559 4,094 -8% 120% 4,912 4,317 -18% 63% 4,691 4,077 -23% 162% 4,393 3,551 -16% 29% 4,373 3,569 -13% 44% 4,350 3,570 -17% 71% 4,169 3,708 -5% 92% 3,788 2,995 -8% 128% 3,617 4,228 -13% 17% 3,607 4,035 -10% 185% 3,194 2,616 -29% 100% 2,942 2,759 -28% 76% 2,548 2,636 -6% 72% 2,333 1,456 -7% 77% 2,046 3,545 -8% 48% 2,025 1,924 -5% 137% 2,012 1,521 -26% 25% 1,756 1,794 -3% 65% 1,728 1,452 -4% 201% 1,702 2,343 -9% 99% 1,474 1,302 -40% 82% 1,440 527 -17% 185% 1,436 668 -21% 45% 1,378 1,097 -8% 92% 1,293 1,125 -25% 67% 1,291 1,038 -13% 144% 1,233 909 -18% 73% 1,185 1,620 -15% 113% 1,179 914 -21% 137% 1,169 1,768 -20% 48% 1,143 921 -45% 168% 1,124 1,182 -38% 351% 1,023 864 -24% 35% 1,007 939 -8% 95% 865 565 -18% 66% 848 892 -7% 160% 835 496 -12% 63% 829 599 -14% 102% 780 544 -13% 131% 754 823 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 2.6x 3.7x 2.8x 2.7x 6.9x 2.9x 1.6x 2.0x 3.7x 2.3x .9x 1.6x 2.2x 1.5x 4.5x 2.3x 2.4x .9x 3.8x .4x 2.8x .9x 5.8x 1.1x 1.9x 1.7x 2.5x 1.0x 1.8x 2.9x 1.1x .6x 2.7x 1.5x 1.1x 1.7x .9x 2.9x 4.2x 6.7x 2.1x 3.9x .6x 4.4x 1.4x 3.1x .3x 1.2x .8x .5x 2.3x 2.8x 2.0x

EV/ LTM EBIT 7x 10x 12x 9x 108x 10x 10x 8x 23x 10x nm 9x 13x 8x 10x 20x 24x 7x nm 6x 54x 7x 16x 8x 8x 9x 19x 12x 14x 239x 6x nm 4x 17x 9x 38x 6x 15x 34x 104x 14x 73x 5x 14x 7x 203x 4x 8x 9x 7x 27x 14x 10x

Last FY Act. 11x 16x 17x 12x 28x 18x 23x 18x 33x 16x nm 15x 16x 13x 16x 28x 20x 11x nm 20x 176x 16x 28x 19x 8x 16x 29x 25x 17x nm 13x nm 8x 22x 16x 32x 13x 1825x 67x 14x 23x 22x 4x 25x 15x 63x nm 22x 17x 11x 64x 21x 17x

P/E This FY Est. 10x 11x 14x 11x 18x 11x 9x 11x 21x 12x 17x 12x 11x 9x 11x 14x 14x 8x 19x 17x 88x 10x 17x 10x 9x 12x 14x 19x 18x 9x 10x 16x 8x 14x 8x 13x 11x 12x 33x 17x 17x 14x 393x 21x 13x 35x 5x 11x 10x 12x 23x 13x 12x

Next FY Est. 9x 10x 13x 10x 15x 10x 8x 10x 18x 10x 11x 10x 10x 9x 11x 13x 13x 7x 13x 15x 46x 11x 15x 9x 8x 12x 18x 17x 16x 7x 9x 14x 8x 11x 7x 12x 9x 10x 25x 10x 15x 10x 66x 17x 12x 22x 8x 10x 9x 10x 14x 11x 11x

P/ Tang. Book 9.2x nm nm 4.2x 5.4x 6.3x nm nm 7.1x 68.7x 2.5x 3.0x nm 8.3x 3.7x 6.3x 6.1x 3.8x nm 8.0x 6.0x 2.2x nm 4.6x nm nm 3.4x 17.6x 3.0x nm 3.6x 2.8x 1.8x 6.8x 11.2x 3.8x 3.0x nm 3.6x nm 11.3x nm 2.0x 8.8x 3.1x nm 2.5x 3.0x 2.5x 5.1x 7.1x 5.8x 4.0x

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Thanksgiving 2008

Technology: Software (II of II) – Valuation (Sorted by market value)

Company / Ticker Eclipsys Corporation / ECLP Websense Inc. / WBSN Rackspace Hosting, I / RAX Longtop Financial Te / LFT Synaptics, Incorpora / SYNA MedAssets, Inc. / MDAS Lawson Software, Inc / LWSN Omniture, Inc. / OMTR Wind River Systems, / WIND EPIQ Systems, Inc. / EPIQ RealNetworks, Inc. / RNWK MAXIMUS, Inc. / MMS ACI Worldwide Inc / ACIW Interwoven, Inc. / IWOV Mentor Graphics Corp / MENT Blackbaud, Inc. / BLKB SPSS Inc. / SPSS MicroStrategy Incorp / MSTR Netezza Corporation / NZ Pegasystems Inc. / PEGA CommVault Systems, I / CVLT Secure Computing Cor / SCUR Patni Computer Syste / PTI JDA Software Group, / JDAS MSC Software Corp. / MSCS VASCO Data Security / VDSI Manhattan Associates / MANH SuccessFactors, Inc. / SFSF Ultimate Software Gr / ULTI China Digital TV Hol / STV Renaissance Learning / RLRN TeleCommunication Sy / TSYS THQ Inc. / THQI iGATE Corporation / IGTE VanceInfo Technologi / VIT Taleo Corporation / TLEO Synchronoss Technolo / SNCR Echelon Corporation / ELON OPNET Technologies, / OPNT CIBER, Inc. / CBR 3D Systems Corporati / TDSC Vital Images, Inc. / VTAL Actuate Corporation / ACTU Ness Technologies, I / NSTC Art Technology Group / ARTG Smith Micro Software / SMSI China Information Se / CPBY i2 Technologies, Inc / ITWO Deltek Inc. / PROJ DivX, Inc. / DIVX

Price ($) 13.79 16.43 6.24 13.19 19.69 12.23 3.94 8.78 7.61 14.80 3.88 28.53 14.75 11.00 5.35 11.31 24.30 35.51 7.10 11.35 9.82 5.72 5.48 12.07 7.94 9.55 14.75 6.29 13.57 5.77 9.92 6.30 3.98 4.75 6.88 8.04 7.94 5.91 11.27 3.82 8.91 12.94 3.16 4.77 1.45 5.84 3.85 8.32 4.17 5.54

Move to 52-Wk MV EV Low High ($mn) ($mn) -8% 91% 752 714 -6% 50% 739 816 -28% 92% 729 767 -14% 95% 665 465 -25% 107% 665 638 -13% 96% 659 924 -12% 170% 642 529 -8% 309% 640 576 -20% 71% 593 484 -29% 24% 526 578 -12% 96% 524 128 -9% 58% 522 402 -40% 71% 515 496 -12% 46% 507 344 -36% 199% 494 599 0% 167% 490 538 -10% 78% 441 284 -4% 205% 422 295 -1% 111% 420 319 -23% 33% 409 238 -25% 132% 406 305 -40% 76% 392 423 -9% 238% 381 381 -17% 84% 375 375 -11% 77% 360 212 -36% 202% 357 306 -3% 92% 355 275 -12% 143% 353 251 -21% 207% 332 311 -13% 537% 331 60 -40% 61% 289 260 -57% 39% 277 251 -8% 652% 267 104 -21% 137% 257 206 -29% 103% 257 182 -25% 325% 246 199 -21% 435% 245 175 -7% 301% 239 171 -33% 28% 232 150 -7% 135% 230 372 -23% 116% 199 193 -16% 48% 197 39 -30% 157% 191 125 -10% 173% 189 197 -30% 234% 187 131 -25% 65% 183 151 -35% 157% 182 161 -4% 113% 182 150 -16% 347% 180 345 -19% 231% 179 66 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 1.4x 2.9x 1.5x 6.3x 1.6x 3.7x .6x 2.3x 1.4x 2.7x .2x .5x 1.2x 1.4x .7x 1.8x .9x .8x 2.0x 1.2x 1.4x 1.7x .5x 1.0x .8x 2.3x .8x 2.6x 1.8x .8x 2.3x 1.4x .1x .8x 2.2x 1.3x 1.5x 1.2x 1.3x .3x 1.3x .6x .9x .3x .8x 1.6x 2.1x .6x 1.2x .7x 1.4x 1.6x 1.3x

EV/ LTM EBIT 24x nm 24x 53x 14x 30x 13x nm 403x 25x nm 5x 75x 14x 78x 10x 5x 4x 46x 28x 11x nm 4x 8x nm 9x 7x nm nm 2x 16x 10x nm 8x 16x nm 7x nm 300x 6x nm nm 10x 5x nm 216x 7x 1x 7x 11x 41x 33x 11x

Last FY Act. 18x nm 37x 120x 25x nm 49x nm nm 70x 13x 11x nm 22x 17x 16x 15x 8x nm 63x 21x nm 3x 16x nm 17x 13x nm 11x 8x 38x nm nm 16x 36x 62x 11x nm 376x 8x nm 162x 11x 18x nm 58x 12x 15x 8x 21x 40x 26x 17x

P/E This FY Est. 13x 12x 45x 15x 10x 24x 11x 20x 15x 25x nm 18x 20x 16x 11x 12x 13x 10x 39x 35x 15x 22x 4x 8x 99x 13x 11x nm 48x 9x 24x 11x nm 8x 18x 13x 21x nm 33x 7x nm nm 12x 5x 16x 10x 7x 14x 6x 9x 18x 17x 13x

Next FY Est. 16x 11x 52x 13x 10x 17x 9x 14x 13x 21x nm 9x 16x 13x 6x 11x 12x 10x 28x 34x 12x 16x 5x 7x 38x 12x 11x nm 24x 8x 20x 10x 8x 8x 13x 10x 17x nm 18x 7x 69x nm 11x 5x 10x 8x 6x 11x 6x 9x 15x 15x 11x

P/ Tang. Book 2.7x nm 2.8x 3.0x 4.9x nm nm 6.3x 3.2x nm 1.3x 2.4x nm 4.1x 2.7x nm 3.4x 3.7x 3.1x 2.5x 3.8x nm .8x 5.6x 2.6x 4.6x 3.0x nm 7.7x 1.2x 33.3x 4.2x .7x 2.4x 2.4x 5.0x 2.3x 1.9x 2.5x nm 4.3x 1.2x 2.8x 1.5x 5.2x 3.5x 2.4x nm nm 1.2x 3.9x 2.9x 2.8x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 386 of 401

Thanksgiving 2008

Transportation: Air Couriers – Valuation (Sorted by market value)

Company / Ticker United Parcel Servic / UPS FedEx Corporation / FDX

Price ($) 53.14 64.37

Move to 52-Wk Low High -18% 43% -16% 58%

MV ($mn) 52,884 20,035

EV ($mn) 62,081 20,470

EV/ LTM Rev. 1.2x .5x

EV/ LTM EBIT 190x 11x

Last FY Act. 148x 18x

P/E This FY Est. 15x 13x

Next FY Est. 15x 11x

P/ Tang. Book 6.7x 1.8x

Transportation: Air Couriers – Operating Performance

Ticker UPS FDX

LTM ($mn) 52,181 38,724

Revenue LTM Growth 7% 8%

3-Year Growth 11% 9%

Rev./ Empl. ($'000) 123 409

LTM Profit Margins Gross 15% 26%

EBIT 1% 5%

Net 0% 3%

Est. 5-Year EPS Growth 12% 13%

EBIT/ Capital Empl. 2% 13%

LTM ROE 1% 7%

LTM ROA 0% 4%

LTM Asset Turnover 1.4x 1.5x

Transportation: Airlines – Valuation (Sorted by market value)

Company / Ticker Southwest Airlines C / LUV Ryanair Holdings plc / RYAAY Lan Airlines S.A. (A / LFL Delta Air Lines, Inc / DAL AMR Corporation / AMR JetBlue Airways Corp / JBLU UAL Corporation / UAUA Continental Airlines / CAL TAM S.A. (ADR) / TAM Copa Holdings, S.A. / CPA Alaska Air Group, In / ALK China Southern Airli / ZNH Allegiant Travel Com / ALGT SkyWest, Inc. / SKYW US Airways Group, In / LCC Gol Linhas Aereas In / GOL China Eastern Airlin / CEA Republic Airways Hol / RJET AirTran Holdings, In / AAI Atlas Air Worldwide / AAWW Hawaiian Holdings, I / HA

Price ($) 10.16 23.46 9.06 7.85 7.65 5.42 10.15 11.40 7.28 24.04 24.43 6.80 40.29 12.87 5.73 3.20 11.55 12.81 3.47 15.90 6.21

Move to 52-Wk MV EV Low High ($mn) ($mn) -6% 65% 7,516 5,615 -33% 90% 6,911 7,302 -24% 71% 3,069 4,944 -49% 161% 2,422 9,480 -48% 201% 2,133 8,638 -44% 63% 1,470 4,040 -72% 328% 1,308 6,436 -48% 174% 1,261 4,273 -5% 311% 1,096 2,687 -19% 82% 1,038 1,567 -59% 17% 885 1,685 -19% 557% 824 7,741 -61% 7% 819 751 -16% 118% 734 1,802 -75% 313% 654 2,991 -8% 766% 645 1,884 -21% 826% 562 7,462 -50% 77% 438 2,466 -63% 167% 407 1,230 -3% 318% 346 553 -30% 79% 320 328 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. .5x 1.9x 1.1x .5x .4x 1.2x .3x .3x .6x 1.3x .5x .9x 1.6x .5x .2x .7x 1.2x 1.7x .5x .3x .3x .8x .9x .5x

EV/ LTM EBIT 11x 57x 11x nm nm 45x nm nm 14x 8x nm 113x 23x 6x nm nm nm 10x nm 6x 6x 26x 21x 11x

Last FY Act. 12x 14x 10x 2x 4x 54x 4x 3x 5x 6x 8x 3x 26x 5x 1x 13x 14x 6x 6x 3x 41x 12x 12x 6x

P/E This FY Est. 22x 90x 9x nm nm nm nm nm 5x 7x nm nm 29x 7x nm nm nm 6x nm 11x 15x 20x 25x 10x

Next FY Est. 16x 17x 8x 4x 5x 8x 3x 3x 3x 6x 11x nm 13x 6x 3x 6x nm 6x 6x 4x 4x 7x 10x 6x

P/ Tang. Book 1.1x 2.0x 2.9x nm nm 1.1x nm 4.1x 1.5x 1.9x 1.0x .4x 3.8x .6x nm 4.8x 6.2x 1.0x 1.1x .6x nm 2.1x 1.6x 1.3x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 387 of 401

Thanksgiving 2008

Transportation: Airlines – Operating Performance

LTM Ticker ($mn) LUV 10,781 RYAAY 3,766 LFL 4,401 DAL 20,667 AMR 23,980 JBLU 3,316 UAUA 20,677 CAL 15,293 TAM 4,352 CPA 1,227 ALK 3,689 ZNH 8,313 ALGT 483 SKYW 3,608 LCC 12,134 GOL 2,555 CEA 6,416 RJET 1,492 AAI 2,547 AAWW 1,715 HA 1,161 Median

Revenue LTM Growth 12% 16% 32% 10% 6% 21% 5% 10% 29% 25% 7% -21% 50% 9% 4% 27% -22% 21% 16% 11% 22% 12%

3-Year Growth 15% 27% 19% 8% 7% 31% 7% 13% 22% 37% 9% 32% 59% 43% 62% 36% 26% 26% 30% 3% na 26%

Rev./ Empl. ($'000) 312 636 759 395 280 353 376 381 190 323 272 179 376 249 306 289 151 320 314 994 340 320

LTM Profit Margins Gross 25% 21% 24% 30% 15% 25% 25% 17% 51% 68% 43% 21% 50% 18% 27% 13% 41% 52% 7% 57% 12% 25%

EBIT 5% 3% 10% -35% -7% 3% -18% -1% 5% 16% -1% 1% 7% 8% -9% -6% -2% 17% -5% 6% 4% 3%

Net 4% 3% 7% -37% -8% -1% -20% -2% -1% 11% -2% 7% 5% 4% -14% -3% -4% 6% -6% 3% 2% -1%

Est. 5-Year EPS Growth 11% 14% 14% 26% 25% 13% 24% 13% 18% 12% 10% 102% 18% 14% 6% 18% 58% 15% 30% 47% na 16%

EBIT/ Capital Empl. 6% 3% 16% nm nm 2% nm nm 7% 19% nm 1% 25% 8% nm nm nm 11% nm 12% 48% 10%

LTM ROE 5% 3% 30% <-99% -93% -2% <-99% -24% -5% 24% -9% 33% 11% 11% <-99% -14% -60% 20% -36% 9% 16% 4%

LTM ROA 2% 1% 8% -27% -6% 0% -18% -3% -1% 8% -2% 5% 5% 3% -22% -2% -3% 3% -7% 3% 3% 0%

LTM Asset Turnover .6x .5x 1.1x .7x .8x .5x .9x 1.2x 1.0x .7x .8x .7x 1.2x .9x 1.5x .8x .7x .5x 1.1x 1.1x 1.3x .8x

Transportation: Miscellaneous – Valuation (Sorted by market value)

Company / Ticker C.H. Robinson Worldw / CHRW Expeditors Internati / EXPD Emergency Medical Se / EMS GATX Corporation / GMT UTi Worldwide Inc. / UTIW Grupo Aeroportuario / PAC Hub Group, Inc. / HUBG Grupo Aeroportuario / ASR DynCorp Internationa / DCP Grupo Aeroportuario / OMAB Pacer International, / PACR Aircastle Limited / AYR American Commercial / ACLI Teekay Offshore Part / TOO Air Methods Corporat / AIRM Teekay Tankers Ltd. / TNK Macquarie Infrastruc / MIC OSG America L.P. / OSP

Price ($) 50.78 30.68 35.42 25.99 10.75 18.20 26.60 30.30 13.39 9.12 10.27 4.48 6.12 9.24 18.05 8.65 4.14 4.31

Move to 52-Wk MV EV Low High ($mn) ($mn) -28% 33% 8,592 8,277 -22% 63% 6,506 5,809 -42% 7% 1,480 1,824 -7% 98% 1,266 3,818 -19% 127% 1,073 1,225 -20% 170% 1,021 878 -15% 67% 1,002 938 -10% 110% 909 771 -26% 106% 763 1,226 -24% 210% 453 na -12% 145% 359 395 -13% 542% 352 2,974 -15% 238% 310 738 -31% 194% 276 1,808 -18% 219% 219 317 -17% 202% 216 522 -25% 890% 186 1,731 -4% 334% 129 732 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 1.0x 1.0x .8x 2.6x .4x 3.2x .5x 3.2x .5x nm .2x 5.5x .6x 2.2x .6x 4.0x 1.6x 2.7x 1.8x 1.2x 1.0x

EV/ LTM EBIT 15x 13x 12x 9x 9x 8x 10x 7x 9x nm 4x 10x 7x 13x 9x 10x 21x 236x 24x 13x 10x

Last FY Act. 27x 25x 25x 8x 11x 7x 17x 45x 16x nm 7x 3x 8x 9x 8x 5x nm 14x 15x 22x 10x

P/E This FY Est. 24x 22x 19x 8x 10x 9x 16x 10x 11x 8x 6x 3x 7x 7x 11x 3x 2x 6x 10x 18x 8x

Next FY Est. 22x 20x 18x 9x 9x 10x 15x 9x 9x 8x 6x 3x 6x 7x 8x 4x 2x 7x 10x 17x 9x

P/ Tang. Book 11.3x 4.9x 14.3x 1.1x 5.0x 2.2x 15.9x .9x nm nm 6.9x .3x 2.0x nm 1.6x 1.5x nm nm 5.2x 7.2x 2.2x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 388 of 401

Thanksgiving 2008

Transportation: Railroads – Valuation (Sorted by market value)

Company / Ticker Union Pacific Corpor / UNP Burlington Northern / BNI Norfolk Southern Cor / NSC CSX Corporation / CSX Kansas City Southern / KSU Wabtec Corporation / WAB Genesee & Wyoming In / GWR FreightCar America, / RAIL American Railcar Ind / ARII Greenbrier Companies / GBX

Price ($) 57.27 79.63 51.98 38.82 22.74 34.51 29.13 20.72 8.85 6.43

Move to 52-Wk MV EV Low High ($mn) ($mn) -11% 50% 29,160 36,765 -7% 44% 27,260 35,484 -20% 45% 19,247 25,161 -1% 82% 15,313 22,252 -4% 146% 2,076 3,896 -17% 76% 1,673 1,637 -25% 63% 1,049 1,327 -15% 119% 246 118 -18% 194% 189 173 -10% 359% 107 703 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 2.1x 2.0x 2.4x 2.0x 2.1x 1.1x 2.3x .2x .2x .5x 1.5x 2.1x 2.0x

EV/ LTM EBIT 10x 9x 9x 8x 10x 8x 12x nm 3x 9x 9x 9x 9x

Last FY Act. 17x 16x 14x 14x 14x 15x 16x 10x 5x 5x 13x 15x 14x

P/E This FY Est. 13x 13x 11x 11x 11x 13x 16x 20x 7x 5x 12x 12x 12x

Next FY Est. 11x 11x 11x 9x 10x 11x 13x 14x 13x 3x 11x 11x 11x

P/ Tang. Book 1.9x 2.3x 1.9x 1.8x 3.1x 4.8x 4.6x 1.5x .6x nm 2.5x 2.1x 1.9x

Transportation: Railroads – Operating Performance

LTM Ticker ($mn) UNP 17,881 BNI 17,890 NSC 10,613 CSX 11,158 KSU 1,889 WAB 1,535 GWR 587 RAIL 612 ARII 768 GBX 1,290 Median

Revenue LTM Growth 11% 16% 14% 13% 10% 19% 18% -43% 9% 5% 12%

3-Year Growth 10% 13% 9% 8% 40% 18% 19% 19% 25% 8% 16%

Rev./ Empl. ($'000) 364 435 345 319 291 255 255 1,062 343 304 331

LTM Profit Margins Gross 35% 36% 33% 59% 62% 27% 40% 8% 11% 13% 34%

EBIT 21% 21% 28% 24% 21% 14% 18% -6% 7% 6% 20%

Net 12% 11% 16% 13% 10% 8% 10% -3% 4% 2% 10%

www.manualofideas.com

Est. 5-Year EPS Growth 18% 13% 13% 18% 18% 15% 13% 3% 31% 12% 14%

EBIT/ Capital Empl. 11% 13% 14% 12% 13% 54% 15% nm 20% 15% 14%

LTM ROE 14% 18% 17% 17% 10% 20% 13% -11% 10% 8% 14%

LTM ROA 6% 6% 6% 6% 4% 11% 5% -5% 5% 2% 5%

LTM Asset Turnover .5x .5x .4x .4x .4x 1.3x .5x 1.5x 1.1x 1.1x .5x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 389 of 401

Thanksgiving 2008

Transportation: Trucking – Valuation (Sorted by market value)

Company / Ticker J.B. Hunt Transport / JBHT Landstar System, Inc / LSTR Heartland Express, I / HTLD Con-way Inc. / CNW Werner Enterprises, / WERN Knight Transportatio / KNX Old Dominion Freight / ODFL Forward Air Corporat / FWRD Arkansas Best Corpor / ABFS Marten Transport, Lt / MRTN Universal Truckload / UACL Dynamex, Inc. / DDMX YRC Worldwide Inc. / YRCW Celadon Group, Inc. / CLDN USA Truck, Inc. / USAK Saia Inc. / SAIA

Price ($) 24.71 32.92 13.93 29.15 18.52 14.47 23.87 23.11 23.93 19.04 14.35 20.64 3.17 7.35 14.61 9.78

Move to 52-Wk MV EV Low High ($mn) ($mn) -6% 63% 3,114 3,803 -11% 80% 1,725 1,812 -12% 44% 1,340 1,271 -5% 89% 1,336 2,265 -18% 55% 1,315 1,179 -18% 51% 1,216 1,149 -15% 68% 890 1,103 -21% 69% 669 708 -25% 89% 605 389 -44% 19% 416 422 -16% 108% 230 212 -8% 57% 205 185 -13% 610% 188 1,269 -12% 107% 162 243 -35% 34% 152 275 -28% 104% 132 249 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. 1.0x .7x 2.0x .4x .5x 1.5x .7x 1.5x .2x .7x .3x .4x .1x .4x .5x .2x .7x .9x .5x

EV/ LTM EBIT 10x 9x 14x 8x 10x 13x 8x 9x 5x 15x 7x 7x nm 12x 32x 10x 11x 10x 10x

Last FY Act. 16x 17x 18x 10x 18x 20x 12x 15x 11x 28x 13x 13x nm 25x 1461x 8x 112x 32x 16x

P/E This FY Est. 15x 15x 20x 10x 19x 22x 12x 14x 12x 24x 12x 13x nm 17x 37x 15x 17x 16x 15x

Next FY Est. 14x 14x 19x 11x 18x 20x 13x 14x 12x 20x 12x 10x nm 11x 23x 11x 15x 15x 14x

P/ Tang. Book 6.4x 7.8x 3.7x 1.3x 1.5x 2.5x 1.7x 5.7x 1.0x 1.7x 1.7x 4.2x .4x 1.3x 1.0x .8x 2.7x 3.9x 1.7x

Transportation: Trucking – Operating Performance

LTM Ticker ($mn) JBHT 3,797 LSTR 2,686 HTLD 636 CNW 5,112 WERN 2,201 KNX 779 ODFL 1,561 FWRD 466 ABFS 1,901 MRTN 612 UACL 754 DDMX 456 YRCW 9,360 CLDN 579 USAK 542 SAIA 1,043 Median

Revenue LTM Growth 12% 9% 9% 22% 7% 11% 15% 25% 4% 12% 12% 10% -3% 14% 16% 10% 11%

3-Year Growth 8% 7% 9% 6% 7% 17% 19% 12% 4% 14% 23% 12% 12% 9% 10% 15% 11%

Rev./ Empl. ($'000) 240 2,097 193 189 153 177 135 272 160 233 1,175 228 149 149 152 127 183

LTM Profit Margins Gross 19% 16% 64% 13% 23% 29% 25% 54% 9% 26% 16% 27% 8% 34% 22% 48% 24%

EBIT 10% 7% 15% 6% 5% 11% 9% 16% 4% 5% 4% 6% -16% 3% 2% 2% 5%

Net 5% 4% 11% 3% 3% 7% 5% 10% 3% 3% 2% 3% -16% 1% 0% 1% 3%

www.manualofideas.com

Est. 5-Year EPS Growth 12% 15% 11% 12% 9% 14% 13% 13% 9% 14% 11% 17% 11% na 66% 12% 12%

EBIT/ Capital Empl. 25% 59% 31% 18% 11% 16% 16% 48% 15% 8% 23% 98% nm 9% 3% 7% 16%

LTM ROE 50% 52% 19% 15% 8% 11% 14% 25% 8% 6% 11% 17% <-99% 5% 1% 5% 11%

LTM ROA 11% 17% 12% 5% 5% 8% 7% 17% 5% 4% 8% 12% -31% 2% 0% 2% 6%

LTM Asset Turnover 2.1x 4.0x 1.2x 1.6x 1.6x 1.2x 1.5x 1.7x 1.9x 1.5x 3.5x 3.4x 1.9x 1.9x 1.5x 1.8x 1.8x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 390 of 401

Thanksgiving 2008

Transportation: Shipping – Valuation (Sorted by market value)

Company / Ticker Frontline Ltd. (USA) / FRO Kirby Corporation / KEX Alexander & Baldwin, / AXB Teekay Corporation / TK Overseas Shipholding / OSG Ship Finance Interna / SFL Dampskibsselskabet T / TRMD Tsakos Energy Naviga / TNP Diana Shipping Inc. / DSX Teekay LNG Partners / TGP DryShips Inc. / DRYS Seaspan Corporation / SSW Hornbeck Offshore Se / HOS General Maritime Cor / GMR Genco Shipping & Tra / GNK Eagle Bulk Shipping / EGLE Golar LNG Limited (U / GLNG Excel Maritime Carri / EXM Danaos Corporation / DAC Safe Bulkers, Inc. / SB Martin Midstream Par / MMLP K-Sea Transportation / KSP Knightsbridge Tanker / VLCCF TBS International Li / TBSI Star Bulk Carriers C / SBLK DHT Maritime Inc. / DHT Navios Maritime Hold / NM Arlington Tankers Li / ATB Euroseas Ltd. / ESEA Paragon Shipping Inc / PRGN Horizon Lines, Inc. / HRZ

Price ($) 29.55 25.92 28.78 13.86 34.96 12.60 13.06 21.68 10.59 13.04 9.11 8.27 16.87 13.61 13.03 8.71 5.71 8.64 6.36 5.87 19.16 16.49 13.83 6.23 3.35 4.63 1.66 9.77 4.37 4.88 3.86

Move to 52-Wk MV EV Low High ($mn) ($mn) -15% 145% 2,212 5,179 0% 138% 1,385 1,653 -12% 91% 1,190 1,706 -3% 336% 1,002 6,638 -8% 151% 991 2,098 -22% 161% 917 3,092 -12% 205% 904 2,594 -10% 82% 817 1,858 -3% 288% 795 963 -30% 149% 574 3,101 -7% 1178% 574 3,144 -6% 280% 550 2,034 -2% 252% 436 1,075 -36% 128% 426 976 -5% 549% 411 1,145 -37% 316% 408 1,117 -17% 337% 382 2,231 -7% 606% 373 1,855 -7% 400% 347 2,299 -29% 236% 320 747 -37% 107% 279 786 -27% 134% 260 675 -28% 153% 237 267 -4% 894% 186 432 -18% 363% 183 350 -35% 207% 176 476 -7% 848% 171 420 -37% 149% 151 366 -18% 300% 133 119 -11% 376% 132 461 -24% 574% 116 721 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 3.1x 1.2x .9x 2.4x 1.3x 6.7x 2.7x 3.1x 3.1x 11.6x 2.9x 9.2x 2.6x 3.2x 3.1x 6.9x 9.9x 3.3x 7.9x 4.5x .6x 2.0x 2.9x .7x 3.3x 5.1x .3x 5.2x .9x 3.1x .6x 3.7x 3.5x 3.1x

EV/ LTM EBIT 6x 6x 8x 17x 4x 9x 8x 6x 5x 27x 3x 19x 7x 11x 4x 14x 31x 5x 16x 6x 21x 16x 3x 2x 7x 10x 4x 13x 2x 5x 10x 10x 9x 7x

Last FY Act. 4x 11x 11x 6x 6x 5x 1x 5x 5x nm 1x nm 5x 10x 3x 7x 3x 2x 3x 2x 11x 8x 3x 2x 37x 5x 1x 13x 2x 17x 5x 7x 6x 5x

P/E This FY Est. 4x 9x 9x 4x 3x 4x 3x 5x 4x 12x 1x 7x 4x 6x 2x 5x 34x 1x 3x 2x 11x 9x 5x 1x 3x 4x 2x 8x 2x 2x 4x 6x 6x 4x

Next FY Est. 7x 8x 11x 4x 6x 4x 4x 7x 5x 8x 1x 7x 4x 7x 2x 4x 6x 2x 3x 2x 9x 8x 6x 4x 2x 5x 1x 8x 5x 2x 6x 5x 6x 5x

P/ Tang. Book 3.6x 2.1x 1.0x .5x .6x 1.4x .8x .9x 1.0x .9x .4x .5x .7x 2.0x .5x .8x .7x .4x .6x nm nm 1.0x 1.1x .3x .4x 1.1x .3x 1.7x .5x .4x nm .9x 1.2x .8x

PHOTOCOPYING & FAXING WITHOUT PERMISSION IS PROHIBITED.

Page 391 of 401

Thanksgiving 2008

Transportation: Shipping – Operating Performance

LTM Ticker ($mn) FRO 1,683 KEX 1,341 AXB 1,940 TK 2,789 OSG 1,588 SFL 459 TRMD 974 TNP 598 DSX 312 TGP 268 DRYS 1,096 SSW 222 HOS 412 GMR 305 GNK 370 EGLE 161 GLNG 225 EXM 568 DAC 292 SB 166 MMLP 1,248 KSP 346 VLCCF 91 TBSI 587 SBLK 105 DHT 93 NM 1,214 ATB 70 ESEA 134 PRGN 148 HRZ 1,306 Median

Revenue LTM Growth 16% 20% 18% 26% 43% 6% 52% 24% 87% 22% >99% 23% 36% 20% >99% 37% -6% >99% 19% 52% 92% 42% 3% 93% na 11% >99% 1% >99% >99% 11% 23%

3-Year Growth -11% 20% 4% 3% 12% -7% -32% 16% 44% 27% >99% 77% 37% -29% >99% na 11% 50% 8% na 38% 39% -13% 19% na -16% 40% 7% 24% na 36% 16%

Rev./ Empl. ($'000) >9,999 433 860 498 423 >9,999 2,218 na 729 656 6,023 >9,999 377 631 599 416 375 463 349 na 2,355 331 na 4,515 6,538 >9,999 6,527 >9,999 373 294 604 599

LTM Profit Margins Gross 54% 37% 14% 37% 48% 78% 44% 61% 84% 99% 91% 76% 60% 64% 88% 80% 67% 80% 68% 92% 14% 75% 76% 55% na 80% 15% 71% 98% 87% 18% 70%

EBIT 51% 20% 10% 14% 31% 75% 33% 50% 66% 43% 88% 48% 39% 30% 79% 48% 32% 60% 50% 81% 3% 13% 113% 35% 45% 52% 8% 41% 46% 57% 5% 45%

Net 47% 11% 7% 5% 26% 45% 26% 38% 65% -11% 94% 10% 26% 15% 69% 43% -9% 56% 47% 73% 2% 7% >99% 33% 49% 33% 27% 15% 46% 45% 2% 30%

www.manualofideas.com

Est. 5-Year EPS Growth na 17% 7% 16% 15% na na na 2% 7% na 16% na na 10% 11% 62% na 11% 5% 8% 5% na na na na 30% na 7% na na 10%

EBIT/ Capital Empl. 23% 26% 13% 6% 17% 51% 14% 15% 26% 6% 39% 4% 14% 13% 26% 11% 5% 21% 11% 63% 10% 7% 37% 35% 10% 13% 11% 9% 27% 15% 24% 14%

LTM ROE >99% 18% 13% 6% 22% 33% 21% 25% 26% -4% 62% 3% 18% 22% 40% 14% -4% 37% 23% <-99% <-99% 8% 45% 43% 14% 33% 44% 11% 22% 23% 23% 22%

LTM ROA 20% 10% 6% 1% 10% 7% 8% 9% 20% -1% 27% 1% 8% 5% 15% 6% -1% 14% 6% 60% 4% 3% 30% 24% 10% 7% 16% 3% 17% 10% 4% 8%

LTM Asset Turnover .4x .9x .8x .3x .4x .2x .3x .2x .3x .1x .3x .1x .3x .4x .2x .1x .1x .2x .1x .8x 1.8x .5x .3x .7x .2x .2x .6x .2x .4x .2x 1.4x .3x

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Page 392 of 401

Thanksgiving 2008

Utilities: Electric – Valuation (Sorted by market value)

Company / Ticker Exelon Corporation / EXC Southern Company, Th / SO National Grid plc (A / NGG Dominion Resources, / D Duke Energy Corporat / DUK FPL Group, Inc. / FPL FirstEnergy Corp. / FE Entergy Corporation / ETR Public Service Enter / PEG PG&E Corporation / PCG American Electric Po / AEP PPL Corporation / PPL Edison International / EIX Consolidated Edison, / ED Empresa Nacional de / EOC Spectra Energy Corp. / SE Progress Energy, Inc / PGN Enersis S.A. (ADR) / ENI Xcel Energy Inc. / XEL Companhia Energetica / CIG Ameren Corporation / AEE CPFL Energia S.A. (A / CPL Huaneng Power Intern / HNP DTE Energy Company / DTE AES Corporation, The / AES NRG Energy, Inc. / NRG Wisconsin Energy Cor / WEC Allegheny Energy, In / AYE Constellation Energy / CEG CenterPoint Energy, / CNP SCANA Corporation / SCG Calpine Corporation / CPN Northeast Utilities / NU Pepco Holdings, Inc. / POM NSTAR / NST Puget Energy, Inc. / PSD Integrys Energy Grou / TEG Covanta Holding Corp / CVA Alliant Energy Corpo / LNT Pinnacle West Capita / PNW Mirant Corporation / MIR TECO Energy, Inc. / TE OGE Energy Corp. / OGE CMS Energy Corporati / CMS DPL Inc. / DPL Hawaiian Electric In / HE Great Plains Energy / GXP Westar Energy, Inc. / WR ITC Holdings Corp. / ITC Sierra Pacific Resou / SRP

Price ($) 50.57 35.21 53.77 36.39 15.64 47.30 52.75 79.99 28.60 37.21 30.95 32.62 33.47 39.19 38.06 16.73 38.84 14.16 17.98 15.75 33.67 40.33 20.66 36.77 8.28 22.65 42.17 28.70 24.53 11.85 34.02 8.72 23.17 17.74 32.00 25.58 43.38 21.19 29.17 29.23 17.30 12.08 26.54 10.76 20.65 26.68 18.24 20.03 43.06 9.02

Move to 52-Wk MV EV Low High ($mn) ($mn) -18% 82% 33,271 45,775 -15% 15% 27,273 45,741 -15% 62% 26,113 58,847 -14% 36% 21,104 36,836 -14% 33% 19,789 32,652 -29% 56% 19,333 35,021 -22% 59% 16,080 29,474 -23% 59% 15,145 25,534 -23% 83% 14,543 23,807 -28% 28% 13,432 24,860 -17% 60% 12,490 28,852 -18% 69% 12,219 20,078 -20% 73% 10,905 21,322 -13% 29% 10,724 18,660 -24% 51% 10,386 13,437 -9% 74% 10,223 20,445 -16% 29% 10,218 21,035 -29% 46% 9,229 15,114 -15% 31% 8,074 16,384 -41% 69% 7,817 8,878 -24% 63% 7,120 14,928 -13% 93% 6,452 9,082 -20% 120% 6,227 19,461 -24% 39% 5,994 14,732 -24% 172% 5,483 20,967 -36% 102% 5,279 8,926 -17% 20% 4,931 9,504 -17% 128% 4,852 8,755 -47% 340% 4,377 11,228 -28% 56% 4,078 14,183 -18% 30% 3,998 8,150 -13% 168% 3,741 12,768 -26% 43% 3,608 8,850 -14% 70% 3,587 9,115 -20% 25% 3,418 6,412 -26% 11% 3,317 6,422 -15% 24% 3,315 4,904 -27% 43% 3,269 5,310 -22% 49% 3,222 4,709 -10% 52% 2,947 6,487 -31% 144% 2,709 2,953 -6% 82% 2,570 5,785 -26% 41% 2,463 4,903 -23% 68% 2,434 9,322 -3% 50% 2,395 3,923 -21% 12% 2,271 4,230 -14% 67% 2,169 5,168 -20% 34% 2,169 4,637 -25% 39% 2,138 4,265 -24% 97% 2,112 6,686 Average (equal-weighted) Average (market value-weighted) Median www.manualofideas.com

EV/ LTM Rev. 2.4x 2.7x 3.5x 2.4x 2.5x 2.2x 2.2x 2.0x 1.8x 1.7x 2.0x 2.8x 1.5x 1.4x 4.4x 3.9x 2.3x 1.8x 1.5x 3.3x 1.9x 2.1x 2.1x 1.6x 1.3x 1.3x 2.2x 2.5x .6x 1.3x 1.6x 1.3x 1.6x .9x 2.0x 1.9x .4x 3.2x 1.3x 1.9x 1.2x 1.7x 1.1x 1.4x 2.5x 1.4x 2.5x 2.5x 7.4x 1.9x 2.1x 2.3x 1.9x

EV/ LTM EBIT 9x 13x 13x 5x 13x 14x 11x 11x 9x 11x 10x 12x 8x 15x 15x 13x 13x 7x 12x nm 10x 7x 89x 11x 5x 4x 15x 10x 14x 11x 12x 14x 12x 12x 12x 16x 13x 16x 6x 12x 4x 10x 10x 22x 10x 17x 15x 17x 16x 13x 13x 12x 12x

Last FY Act. 13x 15x 11x 9x 13x 14x 13x 14x 11x 13x 11x 12x 10x 11x 39x 11x 14x 31x 13x 10x 11x 8x 7x 8x 11x 12x 15x 12x 5x 10x 12x 2x 15x 10x 15x 16x 17x 25x 8x 10x 11x 6x 10x nm 11x 26x 10x 11x 26x 10x 13x 13x 11x

P/E This FY Est. 12x 15x 14x 12x 13x 12x 12x 12x 10x 13x 10x 16x 9x 13x 15x 9x 13x 21x 12x 8x 11x 12x nm 12x 7x 9x 15x 12x 5x 10x 11x 25x 13x 9x 14x 16x 12x 22x 11x 12x 7x 14x 10x 9x 10x 16x 12x 15x 21x 10x 12x 12x 12x

Next FY Est. 12x 14x 13x 11x 12x 12x 10x 10x 9x 12x 9x 17x 8x 12x 16x 10x 12x 21x 12x 7x 10x 14x 65x 11x 7x 9x 13x 9x 5x 9x 11x 12x 12x 9x 14x 15x 11x 20x 10x 12x 5x 9x 10x 8x 9x 15x 11x 11x 19x 9x 13x 13x 11x

P/ Tang. Book 3.7x 2.0x 13.0x 3.9x 1.2x 1.7x 4.3x 2.0x 1.9x 1.5x 1.2x 2.9x 1.3x 1.2x nm 3.9x 2.0x 2.4x 1.2x 2.2x 1.2x 2.6x 2.0x 1.5x 2.4x 1.9x 1.7x 1.9x .9x 11.2x 1.3x .8x 1.3x 1.4x 1.9x 1.3x 1.5x 4.4x 1.1x .9x .8x 1.3x 1.3x 1.0x 2.5x 1.8x .9x 1.0x nm .7x 2.3x 2.9x 1.6x

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Thanksgiving 2008

Utilities: Electric – Operating Performance

LTM Ticker ($mn) EXC 18,921 SO 16,665 NGG 17,048 D 15,124 DUK 12,845 FPL 16,089 FE 13,505 ETR 12,825 PEG 13,342 PCG 14,400 AEP 14,480 PPL 7,137 EIX 13,788 ED 13,614 EOC 3,043 SE 5,210 PGN 9,208 ENI 8,386 XEL 11,099 CIG 2,722 AEE 7,738 CPL 4,310 HNP 9,307 DTE 9,370 AES 16,268 NRG 6,690 WEC 4,379 AYE 3,464 CEG 20,241 CNP 11,150 SCG 5,189 CPN 10,110 NU 5,628 POM 10,552 NST 3,279 PSD 3,323 TEG 13,691 CVA 1,646 LNT 3,671 PNW 3,502 MIR 2,490 TE 3,463 OGE 4,343 CMS 6,658 DPL 1,580 HE 3,127 GXP 2,032 WR 1,826 ITC 575 SRP 3,549 Median

Revenue LTM Growth 5% 10% -37% -7% 3% 6% 9% 14% 9% 11% 11% 11% 6% 9% -45% 15% 2% -50% 12% 18% 5% 4% -29% 13% 27% 17% 5% 6% -1% 18% 12% 28% -7% 18% -1% 4% 51% 21% 8% 0% 15% -1% 18% 1% 6% 28% 24% 9% 48% 0% 9%

3-Year Growth 10% 9% 16% 4% -13% 13% 3% 6% 7% 6% -2% 4% 9% 11% 17% -29% 4% 18% 7% 10% 14% 12% 18% 6% 16% 42% 8% 6% 21% 6% 6% -3% -4% 9% 3% 14% 28% 36% 7% 8% -15% 10% -8% 5% 8% 10% 10% 6% 50% 8% 8%

Rev./ Empl. ($'000) 1,063 623 623 890 722 1,102 929 904 5,257 718 694 640 798 895 5,176 1,022 837 691 1,017 252 853 601 407 913 581 1,961 876 795 1,984 1,301 910 4,861 959 2,056 1,041 na 2,617 470 709 461 1,431 805 1,350 843 1,185 907 812 786 1,905 1,085 895

LTM Profit Margins Gross 74% 96% 28% 96% 97% 32% 35% 78% 6% 27% 91% 69% 72% 47% 32% 45% 86% 31% 84% na 13% 43% -20% 26% 24% 46% 73% 88% -11% 21% 51% 25% 26% 93% 89% 51% 13% 42% 86% 95% 32% 77% 29% na 60% 8% 70% 36% 81% 67% 46%

EBIT 26% 21% 26% 44% 20% 15% 20% 18% 20% 15% 19% 23% 19% 9% 30% 30% 18% 25% 12% -10% 19% 31% 2% 14% 25% 31% 15% 26% 4% 11% 13% 9% 14% 7% 16% 12% 3% 20% 20% 16% 29% 17% 11% 6% 26% 8% 17% 15% 45% 15% 17%

Net 14% 11% 43% 24% 10% 9% 9% 10% 12% 7% 10% 15% 9% 10% 26% 31% 9% 10% 6% -16% 10% 14% 3% 7% 9% 15% 8% 14% 2% 4% 7% 0% 5% 3% 7% 5% 1% 11% 12% 8% 28% 9% 6% 2% 14% 4% 10% 9% 17% 6% 9%

www.manualofideas.com

Est. 5-Year EPS Growth 7% 6% 10% 9% 4% 10% 10% 11% 3% 7% 5% 12% 8% 3% 8% 9% 6% 7% 6% 10% 3% 2% 5% 7% 13% 13% 9% 17% 17% 12% 5% 27% 7% 9% 7% 6% 9% 10% 6% 5% 12% 8% na 10% 11% 11% 8% 4% 18% 13% 8%

EBIT/ Capital Empl. 19% >99% 12% >99% >99% >99% >99% >99% >99% nm nm >99% nm >99% >99% 11% >99% 14% >99% nm 9% >99% 2% >99% 17% 17% >99% >99% 40% >99% >99% 41% >99% >99% >99% >99% 37% 11% >99% >99% 24% >99% >99% 34% >99% 6% nm 6% nm >99% 16%

LTM ROE 25% 14% >99% 39% 6% 13% 14% 16% 23% 12% 14% 20% 14% 15% 28% 24% 10% 18% 9% -13% 12% 26% 5% 11% 40% 22% 11% 18% 9% 24% 12% -1% 9% 7% 14% 6% 6% 17% 16% 8% 17% 16% 14% 4% 24% 9% 11% 8% 12% 7% 14%

LTM ROA 6% 4% 14% 9% 3% 3% 4% 4% 6% 3% 4% 5% 3% 5% 10% 7% 3% 5% 3% -7% 4% 8% 2% 3% 4% 5% 3% 5% 2% 3% 3% 0% 2% 2% 3% 2% 1% 4% 6% 3% 6% 5% 4% 1% 6% 1% 4% 3% 3% 2% 3%

LTM Asset Turnover .4x .4x .3x .4x .3x .4x .4x .4x .5x .4x .3x .3x .4x .5x .4x .2x .3x .5x .5x .4x .4x .6x .5x .4x .4x .3x .4x .3x .8x .6x .5x .5x .5x .7x .4x .4x 1.1x .4x .5x .3x .2x .5x .8x .5x .4x .3x .4x .3x .2x .4x .4x

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Thanksgiving 2008

Utilities: Natural Gas – Valuation (Sorted by market value)

Company / Ticker Kinder Morgan Energy / KMP Sempra Energy / SRE Williams Companies, / WMB El Paso Corporation / EP Oneok Partners LP / OKS Equitable Resources, / EQT MDU Resources Group, / MDU Boardwalk Pipeline P / BWP NiSource Inc. / NI ONEOK, Inc. / OKE National Fuel Gas Co / NFG UGI Corporation / UGI Piedmont Natural Gas / PNY AGL Resources Inc. / ATG Vectren Corporation / VVC Energen Corporation / EGN Atmos Energy Corpora / ATO El Paso Pipeline Par / EPB Nicor Inc. / GAS Southern Union Compa / SUG WGL Holdings, Inc. / WGL New Jersey Resources / NJR Northwest Natural Ga / NWN Laclede Group, Inc., / LG ALLETE, Inc. / ALE Southwest Gas Corpor / SWX South Jersey Industr / SJI Copano Energy, L.L.C / CPNO Williams Partners L. / WPZ TC Pipelines, LP / TCLP MarkWest Energy Part / MWE Regency Energy Partn / RGNC PNM Resources, Inc. / PNM Williams Pipeline Pa / WMZ Western Gas Partners / WES Duncan Energy Partne / DEP Crosstex Energy, L.P / XTEX DCP Midstream Partne / DPM Clean Energy Fuels C / CLNE Quicksilver Gas Serv / KGS Crosstex Energy, Inc / XTXI Chesapeake Utilities / CPK Exterran Partners, L / EXLP Atlas Pipeline Holdi / AHD

Price ($) 50.48 42.09 16.45 7.28 51.63 30.00 18.87 21.52 11.55 26.88 31.96 23.01 32.05 28.65 25.50 28.40 22.32 16.77 39.29 13.49 31.72 35.87 47.13 49.87 34.00 24.31 35.44 14.69 15.66 23.50 14.05 9.34 8.69 14.10 13.45 14.61 5.75 9.27 5.01 8.97 4.38 28.10 13.08 5.52

Move to 52-Wk MV EV Low High ($mn) ($mn) -29% 21% 13,162 21,927 -19% 53% 10,254 16,307 -25% 148% 9,519 16,785 -10% 209% 5,086 18,013 -31% 26% 4,694 7,485 -31% 154% 3,923 5,173 -16% 87% 3,466 5,005 -35% 51% 3,370 5,754 -9% 72% 3,168 10,749 -20% 91% 2,809 8,279 -15% 99% 2,529 3,560 -19% 25% 2,477 4,308 -36% 10% 2,349 3,338 -16% 37% 2,200 4,633 -24% 26% 2,065 3,734 -13% 180% 2,037 2,609 -12% 31% 2,023 4,447 -30% 53% 1,890 na -18% 32% 1,776 2,498 -8% 133% 1,673 5,482 -29% 14% 1,583 2,556 -39% 15% 1,509 1,818 -22% 67% 1,248 1,930 -36% 12% 1,096 1,431 -7% 44% 1,075 1,558 -12% 37% 1,068 2,380 -29% 11% 1,054 1,567 -5% 171% 851 1,533 -7% 167% 827 1,745 -16% 60% 819 1,373 -16% 174% 796 1,662 -6% 273% 758 1,786 -12% 176% 752 2,972 -25% 48% 473 466 -33% 30% 357 341 -31% 62% 297 496 -2% 521% 280 1,503 -8% 397% 262 na -13% 298% 252 243 -13% 197% 213 na -2% 779% 203 1,412 -22% 29% 192 322 -37% 175% 167 568 -2% 573% 153 1,565 Average (equal-weighted) Average (market value-weighted) Median

www.manualofideas.com

EV/ LTM Rev. 1.8x 1.4x 1.3x 3.4x .9x 3.3x 1.0x 7.7x 1.2x .5x 1.5x .6x 1.6x 1.7x 1.5x 1.7x .7x nm .7x 1.8x 1.0x .5x 1.9x .7x 1.9x 1.1x 1.6x .9x 2.7x 8.9x 1.8x 1.0x 1.5x nm 2.3x .4x .3x nm 1.9x nm .3x 1.1x 3.8x 1.3x 1.8x 1.8x 1.4x

EV/ LTM EBIT 15x 10x 6x 8x 12x 11x 7x 16x 13x 9x 7x 7x 16x 10x 14x 5x 10x nm 13x 12x 11x 9x 14x 12x 13x 11x 11x 14x 13x 10x 21x 14x nm nm 6x 10x 15x nm nm nm 14x 11x 12x nm 11x 10x 11x

Last FY Act. nm 10x 12x 13x 12x 14x 11x 11x 10x 10x 10x 12x 23x 10x 14x 7x 11x 22x 13x 8x 14x 13x 17x 21x 11x 12x 17x 11x 8x 9x 117x nm 11x 2x 15x 12x nm nm nm 26x 17x 14x 10x nm 16x 11x 12x

P/E This FY Est. 21x 11x 7x 6x 9x 14x 9x 12x 9x 9x 11x 11x 21x 10x 15x 7x 11x 14x 17x 7x 13x 16x 18x 21x 12x 12x 15x 13x 5x 9x nm 8x 58x 10x 13x 14x nm 7x nm 11x 7x 14x 8x 4x 13x 12x 11x

Next FY Est. 20x 9x 8x 6x 11x 13x 9x 12x 9x 8x 11x 10x 19x 10x 12x 7x 11x 12x 15x 7x 14x 14x 17x 21x 13x 11x 15x 9x 6x 9x 10x 9x 14x 10x 10x 13x nm 5x 42x 8x 24x 13x 8x 3x 12x 12x 11x

P/ Tang. Book 4.0x 1.3x 1.3x .9x 2.1x 2.1x 1.5x 1.3x 4.8x 2.8x 1.6x nm 2.7x 1.7x 1.8x 1.2x 1.5x 3.0x 1.9x .8x 1.5x 2.3x 2.1x 2.3x 1.3x 1.1x 2.0x 1.2x 3.5x 1.0x 2.5x 1.4x .6x 1.1x .6x 1.0x 1.4x 2.1x 1.4x 2.1x nm 1.6x 3.3x nm 1.8x 2.0x 1.6x

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Utilities: Natural Gas – Operating Performance

LTM Ticker ($mn) KMP 11,898 SRE 11,575 WMB 12,726 EP 5,282 OKS 8,321 EQT 1,552 MDU 4,940 BWP 749 NI 8,717 OKE 17,299 NFG 2,400 UGI 6,648 PNY 2,055 ATG 2,680 VVC 2,422 EGN 1,545 ATO 6,052 EPB 133 GAS 3,655 SUG 3,066 WGL 2,628 NJR 3,816 NWN 1,020 LG 2,081 ALE 817 SWX 2,196 SJI 954 CPNO 1,713 WPZ 655 TCLP 154 MWE 917 RGNC 1,824 PNM 1,954 WMZ na WES 147 DEP 1,149 XTEX 5,227 DPM 1,177 CLNE 130 KGS 66 XTXI 5,227 CPK 290 EXLP 151 AHD 1,248 Median

Revenue LTM Growth 34% 0% 23% 23% 62% 17% 21% 16% 13% 38% 18% 21% 20% 7% 8% 6% 3% 1% 18% 19% -1% 26% -2% 13% -1% 2% 1% 73% 16% 32% 36% 69% -1% na 13% 36% 50% 45% 13% >99% 50% 17% na >99% 17%

3-Year Growth 5% 7% -5% -1% >99% 9% 16% 35% 6% 33% 9% 11% 4% 11% 11% 15% -36% 15% 5% 72% 7% 6% 13% 17% 6% 13% 5% 38% 7% 34% 26% 35% 6% na 20% 5% 25% 2% 27% na 25% 13% -29% 94% 11%

Rev./ Empl. ($'000) 1,565 809 2,947 1,058 7,325 1,109 402 691 1,146 3,798 1,230 700 1,096 1,149 677 1,002 1,301 na 937 1,312 1,605 4,723 897 1,140 584 865 1,580 5,385 2,461 na 2,576 5,753 625 na na 821 7,467 8,060 1,070 na 7,467 651 na 3,346 1,148

LTM Profit Margins Gross 21% 97% 27% 95% 14% 54% 85% 72% 37% 12% 49% 24% 27% 41% 50% 79% -10% 75% 21% 38% 27% 13% 37% 19% 21% 50% 28% 12% 36% na 28% 21% 8% na 90% 5% -13% 2% 24% 72% -17% 31% 55% -1% 28%

EBIT 13% 14% 22% 43% 8% 31% 14% 47% 9% 6% 20% 9% 10% 17% 11% 37% 7% 54% 5% 15% 9% 5% 14% 6% 14% 10% 15% 7% 21% 90% 9% 7% -6% na 37% 4% 2% -7% -17% 43% 2% 10% 30% -11% 10%

Net 5% 9% 12% 19% 7% 18% 8% 38% 1% 2% 11% 3% 6% 8% 5% 22% 4% 69% 3% 7% 4% 3% 6% 4% 10% 3% 7% 4% 23% 63% 0% 3% -12% na 31% 2% 0% -11% -16% 31% 1% 5% 19% -2% 5%

www.manualofideas.com

Est. 5-Year EPS Growth 6% 7% 19% 9% 5% 12% 10% 8% 3% 9% 5% 6% 8% 5% 6% 6% 5% 8% 4% 9% 4% 6% 5% na 5% 6% 6% 9% 8% 5% 9% 9% 12% 7% 17% 5% 9% 8% 28% 15% 9% 5% 8% 9% 8%

EBIT/ Capital Empl. 13% >99% 16% 12% 18% nm >99% nm >99% >99% >99% >99% >99% 62% 55% >99% 10% 12% >99% >99% 84% 72% >99% 88% 10% nm 97% 17% 21% >99% 8% 11% nm 47% 15% 5% nm nm nm 9% nm >99% 13% nm 16%

LTM ROE 14% 13% 20% 21% 21% 21% 15% 13% 2% 17% 17% 15% 13% 12% 10% 24% 12% 20% 13% 10% 11% 17% 11% 18% 11% 7% 14% 8% 79% 11% 1% 8% -14% 38% 10% 9% -1% -65% -9% 19% 20% 11% 19% -31% 13%

LTM ROA 4% 4% 6% 4% 8% 6% 7% 6% 1% 3% 7% 4% 4% 3% 3% 11% 4% 9% 3% 3% 4% 5% 3% 5% 5% 2% 5% 4% 12% 7% 0% 3% -4% 38% 9% 3% 0% -11% -8% 6% 2% 3% 6% -1% 4%

LTM Asset Turnover .7x .4x .5x .2x 1.3x .4x .8x .2x .5x 1.5x .6x 1.1x .7x .4x .6x .5x .9x .1x .8x .4x .8x 1.6x .5x 1.3x .5x .6x .6x .9x .5x .1x .4x .9x .3x na .3x 1.1x 1.9x 1.0x .5x .2x 1.9x .7x .3x .4x .6x

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Utilities: Water – Valuation (Sorted by market value) Price ($) 24.46 19.50 19.76 21.41 38.62 31.92 24.47 5.95 15.27 22.82 10.47 11.23 14.80 4.10

Company / Ticker Veolia Environnement / VE American Water Works / AWK Aqua America, Inc. / WTR Companhia de Saneame / SBS California Water Ser / CWT American States Wate / AWR SJW Corp. / SJW Energy Recovery, Inc / ERII Middlesex Water Comp / MSEX Connecticut Water Se / CTWS Consolidated Water C / CWCO York Water Company, / YORW Artesian Resources C / ARTNA SouthWest Water Comp / SWWC

Move to 52-Wk MV EV Low High ($mn) ($mn) -15% 295% 11,188 31,482 -16% 21% 3,120 8,234 -38% 17% 2,671 3,976 -35% 168% 2,439 4,995 -28% 9% 800 1,122 -15% 38% 552 884 -18% 58% 451 685 -23% 123% 298 218 -20% 30% 205 360 -8% 27% 193 301 -28% 221% 152 141 -45% 49% 127 212 -12% 32% 109 202 -2% 227% 101 291 Average (equal-weighted) Average (market value-weighted) Median

EV/ LTM Rev. .7x 3.5x 6.5x 1.9x 2.8x 2.9x 3.1x 5.0x 4.0x 4.9x 2.5x 6.7x 3.7x 1.3x 3.5x 2.3x 3.3x

EV/ LTM EBIT 10x nm 18x 6x 14x 14x 15x 25x 15x 22x 15x 15x 13x nm 15x 10x 15x

Last FY Act. 9x nm 28x 5x 26x 20x 24x 43x 18x 22x 13x 20x 16x nm 20x 11x 20x

P/E This FY Est. 9x 17x 27x 4x 20x 20x 21x 43x 16x 21x 19x 20x 18x 19x 19x 13x 20x

Next FY Est. 8x 14x 24x 4x 19x 18x 18x 25x 16x 19x 13x 17x 15x 10x 15x 11x 17x

P/ Tang. Book nm 1.3x 2.7x .5x 2.0x 1.8x 1.8x 2.9x 1.5x 1.9x 1.3x 1.9x 1.2x .7x 1.7x .8x 1.8x

Utilities: Water – Valuation

LTM Ticker ($mn) VE 44,702 AWK 2,322 WTR 616 SBS 2,685 CWT 396 AWR 309 SJW 218 ERII 44 MSEX 91 CTWS 61 CWCO 57 YORW 32 ARTNA 55 SWWC 222 Median

Revenue LTM Growth -31% 40% 4% -1% 10% 5% 7% >99% 8% 9% 23% 2% 6% 2% 6%

3-Year Growth 13% 3% 11% 11% 5% 10% 7% >99% 7% 9% 28% 12% 10% 7% 10%

Rev./ Empl. ($'000) 140 332 389 160 427 539 600 677 333 297 589 291 267 159 332

LTM Profit Margins Gross 17% 43% 58% 58% 44% 77% 84% 60% 33% 49% 33% 79% 48% 24% 48%

EBIT 7% -20% 36% 31% 20% 20% 22% 20% 27% 22% 17% 44% 28% 0% 21%

Net 5% -36% 16% 20% 10% 8% 10% 14% 16% 15% 17% 19% 11% -5% 12%

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Est. 5-Year EPS Growth 9% 11% 8% 8% 8% 4% na na 8% na na 8% 5% 5% 8%

EBIT/ Capital Empl. 28% >99% >99% 24% nm >99% >99% 82% >99% >99% 13% nm 6% 0% 19%

LTM ROE 29% -28% 10% 11% 10% 8% 9% 16% 11% 9% 8% 9% 7% -8% 9%

LTM ROA 4% -9% 3% 6% 3% 3% 3% 13% 4% 2% 7% 3% 2% -2% 3%

LTM Asset Turnover .8x .2x .2x .3x .3x .3x .3x 1.0x .2x .2x .4x .1x .2x .4x .3x

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Favorite Third-Party Resources Tracking Down the Best Ideas and Opinion on the Internet Note the syntax of the Internet links shown below: http://tinyurl.com/moi### For example, the full URL of link 01 is http://tinyurl.com/moi01 The links below are not clickable – you must type the complete URL (as noted above) in your web browser. TIMELY IDEAS AND OPINION

ALL-TIME FAVORITE IDEAS AND INVESTMENT PHILOSOPHY

Leaders on current financial crisis: • Bill Ackman: Charlie Rose, 11/11/08, 100; Q3 letter to Pershing Square investors, 103 • Jack Bogle: Morningstar, 9/23/08, 05 • Warren Buffett: Charlie Rose, 10/1/08, 04 • Jeremy Grantham: October letter, 17 • Jim Rogers: Bloomberg, 10/10/08, 11 • George Soros: Fareed Zakaria, 10/14/08, 01; Bill Moyers, 10/10/08, 02

Investors: • Claire Barnes: 40 • Warren Buffett: 22 • Marc Faber: 41 • Ben Graham: 43, 44 • Jeremy Grantham: 42 • Ace Greenberg: 24, 30 • Bill Gross: 35 • Charlie Munger: 46, 52, 53, 55 • Mohnish Pabrai: 57, 59, 62 • Bob Rodriguez: 64 • Jim Rogers: 66, 13, 70, 73, 74 • Walter Schloss: 19 • George Soros: 89, 91, 96, 97, 79, 76

Articles: • “Fuld Sought Buffett Offer He Refused as Lehman Sank,” Bloomberg, 11/10/08, 101 • Michael Lewis, “The End,” 11/11/08, 102

Business Leaders: • Bill Gates and Steve Jobs: 33 • Steve Wynn: 23, 36

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Glossary Terms, Acronyms and Abbreviations Commonly Used In Financial Publications 10-K. A company’s annual report, as filed with the SEC according to the requirements of SEC Form 10-K. Public companies are required to file a 10-K each year. 10-Q. A company’s quarterly report, as filed with the SEC according to the requirements of SEC Form 10-Q. Public companies are required to file a 10-Q each quarter. ADR. American Depository Receipt. ADS. American Depository Share. Functionally equivalent to an ADR. ASPs. Average selling prices. AUM. Assets under management. bps. Basis points. 100 basis points equal 1%. capex. Capital expenditure. Typically represents investment in equipment or facilities; creates long-term asset that is depreciated over time. EBIT. Earnings before interest and taxes; also known as “operating income.” ETF. Exchange-traded fund. GAAP. Generally accepted accounting principles. Guidance. Forward-looking financial estimates provided by company management. NOL or NOLs. Net Operating Losses. Operating loss carryforwards available to offset future income taxes, subject to certain change-of-ownership restrictions. NOLs may or may not be capitalized on a company’s balance sheet as deferred tax assets. Unprofitable companies are likely to have few or no deferred tax assets, but may nonetheless have large NOLs. The amount of NOLs is disclosed in the footnotes to a company’s financial statements, as presented in 10-K filings with the SEC. SPAC. Special-purpose acquisition company. A publicly traded cash shell with the stated goal of acquiring another company, typically in a previously disclosed industry. PO. Purchase order. y-y. Year over year.

Terms, Acronyms and Abbreviations Used By Companies In Specific Industries Energy Bbl. Barrel. Standard measure of crude oil volume; equals 42 gallons or 159 liters. Bboe. See BOE. bcf. Billions cubic feet. BOE. Barrel of oil equivalent. Used by energy companies when combining information on oil and gas reserves and © 2008 by BeyondProxy LLC. All rights reserved.

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production. One barrel of crude oil contains the energy equivalent of 6 mcf of natural gas. For example, 1 barrel of crude oil and 7 mcf of natural gas amount to a combined 2 BOE. BOPD. Barrels of oil per day. A measure of crude oil production. Same as bpd. bpd. Barrels per say. Same as BOPD. DD&A. Depreciation, depletion and amortization. MBbls. One million barrels. A measure of crude oil volume. Mcf. 100 cubic feet. A measure of natural gas volume. MCFD. Million cubic feet per day. A measure of natural gas production. MMcf. One million cubic feet. A measure of natural gas volume. NGL. Natural gas liquids. Insurance Frequency business. Consists of (re)insurance contracts containing a potentially large number of smaller losses emanating from multiple events. Frequency business is typically less volatile line than severity business. Severity business. Typically consists of contracts with the potential for significant losses emanating from one event or multiple events. Severity business is more lumpy and typically more profitable than frequency business. Acquisition cost ratio. Typically calculated by dividing acquisition expenses by net premiums earned. Combined ratio. Sum of loss ratio, acquisition cost ratio, and internal expense ratio. Composite ratio. Sum of loss ratio and acquisition cost ratio. Internal expense ratio. Typically calculated by dividing G&A expenses by net premiums earned. Loss ratio. Typically calculated by dividing underwriting losses incurred and loss adjustment expenses by premiums earned. Media & Technology API. Application program interface. A software interface that enables other software programs to use and access the functionality of the API-connected software platform. ASIC. Application-specific integrated circuit. A semiconductor designed to support a specific application, such as computer-aided design. CPU. Central processing unit. CTO. Chief Technology Officer. DBS. Direct broadcast satellite. Commercial satellite TV providers, such as DirecTV and Dish Network. DRAM. Dynamic random access memory. DTH. Direct to home.

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EDA. Electronic design automation. Refers to software ad hardware technologies that assist semiconductor companies in designing, verifying and preparing integrated circuits for manufacturing. IC. Integrated circuit, aka semiconductor. IDM. Integrated device manufacturer. ISP. Internet service provider. A company that provides Internet access and related data services, such as Internetbased email and virus protection. IT. Information technology. J2EE. Java 2 Platform Enterprise Edition. MSO. Multiple system operator. Cable companies that operate a large number of cable systems, e.g., Comcast, Cox or Time Warner Cable. OEM. Original Equipment Manufacturer. For example, Apple (Nasdaq: AAPL) is the OEM of the iPod device. Companies selling disk drives to Apple for inclusion in the iPod would label their sales to Apple as “OEM sales.” PCB. Printed circuit board. PDA. Personal digital assistant. PMP. Personal Media Player. POP. Point of presence. PPV. Pay per view. Cable or satellite programming available for an additional fee at a specific time. For example, live championship boxing is often available on a PPV basis only. (Contrast with VOD, which is available to the viewer at a time of the viewer’s choosing.) SoC (or SOC). System-on-a-Chip. SiP (or SIP). System-in-a-Package. VAR. Value Added Reseller. A vendor that redistributes software or hardware products to third-party customers, either individually or as part of an integrated product. VOD. Video on demand. Fee-based programming available at cable or satellite television subscribers at a time of their choosing. Pharma and Biotech CNS. Central nervous system. GAD. Generalized anxiety disorder. NMDA. N-methyl-D-aspartate. SSRI. Selective serotonin reuptake inhibitor. Other Hectare. Metric unit of area equal to 10,000 square meters or 2.47105381 acres. MRO. Maintenance, repair and operations. NDA. New drug application.

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About the MOI © 2008 by BeyondProxy LLC. All rights reserved. All content is protected by U.S. and international copyright laws and is the property of BeyondProxy and any thirdparty providers of such content. The U.S. Copyright Act imposes liability of up to $150,000 for each act of willful infringement of a copyright. The Manual of Ideas is published quarterly by BeyondProxy. Subscribers may download content to their computer and store and print materials for their individual use only. Any other reproduction, transmission, display or editing of the content by any means, mechanical or electronic, without the prior written permission of BeyondProxy is strictly prohibited. Terms of use: Use of this newsletter and its content is governed by the Terms of Use described in detail at www.manualofideas.com. See a summary of key terms below. Contact information: For all customer service, subscription or other inquiries, please visit www.manualofideas.com, or contact us at BeyondProxy, P.O. Box 1375, New York, NY 10150; telephone: 212308-1989. Editor-in-chief: John Mihaljevic. Annual subscription price: $999.

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or needs of individual investors. The price and value of securities referred to in this newsletter will fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of all of the original capital invested in a security discussed in this newsletter may occur. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Disclaimers There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth in this newsletter. BeyondProxy will not be liable to you or anyone else for any loss or injury resulting directly or indirectly from the use of the information contained in this newsletter, caused in whole or in part by its negligence in compiling, interpreting, reporting or delivering the content in this newsletter. Related Persons BeyondProxy’s officers, directors, employees and/or principals (collectively “Related Persons”) may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter. John Mihaljevic, Chairman of BeyondProxy, is also a principal of Mihaljevic Capital Management LLC (“MCM”), which serves as the general partner of a private investment partnership. MCM may purchase or sell securities and financial instruments discussed in this newsletter on behalf of the investment partnership or other accounts it manages. It is the policy of MCM and all Related Persons to allow a full trading day to elapse after the publication of this newsletter before purchases or sales of any securities or financial instruments discussed herein are made.

General Publication Information and Terms of Use The Manual of Ideas is published by BeyondProxy. Use of this newsletter and its content is governed by the Terms of Use described in detail at www.manualofideas.com/terms. For your convenience, a summary of certain key policies, disclosures and disclaimers is reproduced below. This summary is meant in no way to limit or otherwise circumscribe the full scope and effect of the complete Terms of Use.

Compensation BeyondProxy receives compensation in connection with the publication of this newsletter only in the form of subscription fees charged to subscribers and reproduction or re-dissemination fees charged to subscribers or others interested in the newsletter content.

No Investment Advice This newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. This newsletter is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. It does not constitute a general or personal recommendation or take into account the particular investment objectives, financial situations, © 2008 by BeyondProxy LLC. All rights reserved.

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