Fortna Customer Analysis October 2009

1. Fortna Customer AnalysisOctober 2009

2. EXECUTIVE SUMMARY & PURPOSE • CONTENTS AT A GLANCE • Summary & Purpose (this page) • What is the wRating System? • How The W Score™ is Calculated • wRatings Coverage & Fortna Customer List • Summary Analysis • Year-Over-Year Highlights • Retail Sector Analysis • Industrials & Materials Sector Analysis • Conclusions • Appendix • Backtest: Ratings = Market Return • The Data Factory • Key Principles • Contact wRatings • PURPOSE • The wRatings Corporation possesses the only known database measuring the competitive strengths of market leading companies. By blending scores of economic profit with the ability to meet customer expectations, wRatings reliably predicts the performance of companies for investors, business and consultants. • To predict the potential impact of using Fortna on a corporation, wRatings isolated the top Fortna customers in its database for competitive comparison against non-Fortna customers. • This 2009 Fortna Customer report updates and replaces the 2008 analysis by wRatings. This report provides analysis at the sector level, with historical data back to 1999 to encompass a more detailed assessment of Fortna performance. • At wRatings, we cover 5,000+ companies that represent all sectors of the US economy. We limit coverage to only public companies that report financials on a quarterly basis, and are listed on a major North American stock exchange (e.g. NASDAQ, NYSE, TSE). • Fortna provided wRatings with a list of their top customers through the first half of 2009. To examine the impact of Fortna on the competitive strength of these 125+ companies, wRatings segmented our coverage into two groups: Fortna Customer Group and Non-Fortna Customer Groups. • We found 37 public companies from the Fortna list included in the wRatings coverage. We then examined the Fortna impact at three levels: Summary, Industrials & Materials and Retail. • We measured the trailing twelve month (TTM) performance of each group from 1999 through 2009-Q2. • Based on a year-over-year analysis, the Fortna Customer Group has built superior customer strength over Non-Fortna Customers of 15.0% and 13.2% on average over the past 3- and 5-years respectively. NOTE:This analysis cannot determine a cause-effect relationship, nor does it hold up at the individual company. Analysis of other technology-driven companies vs. non-technology driven companies may yield similar results. © 1999-2009 wRatings Corporation. All rights reserved.

3. WHAT IS THE wRATINGS SYSTEM? • Our objective is to measure in-flight company performance by continually interviewing customers on how well the business is meeting their expectations. • We vet both our consumer and business panels to ensure an accurate and representative sample. • We interview customers in their most natural form, which is typically at the time they need to make a buying decision. This provides several advantages for our data versus other sources: • - Recruitment is simple and non-invasive- Easily scalable by geography/industry- Limits interviewer bias- Enhances the quality of our data • Each interview is conducted online and takes only a few minutes. We blend the scores from customer interviews with a calculation of economic profit. • A W Score™ ranks the competitive strength of the company relative to every other company in our coverage. • The wRatings data is licensed for distribution by FactSet Research Systems and S&P’s CapitalIQ research platforms. An independent & proprietary data source that measures company performance through real-time monitoring of: Customer Expectations Business Execution Economic Profit Momentum 200,000+ Vetted Panel 5,000+ Stocks 5-Year & Current Average W Score™ [competitive strength] Where You’ve Seen the wRatings System © 1999-2009 wRatings Corporation. All rights reserved.

4. Network Effect Economies of Scale Switching Lock-In Cost Containment Brand Perception Economies of Skill Design Dominance Channel Lock-Out Routine Reliance HOW THE W SCORE™ IS CALCULATED Every company’s performance is ranked relative to the wRatings universe of coverage in three areas: • A company’s W Score™ is equal parts historical and forecast. Each part is a percentile rank of their raw scores relative to all other companies in the wRatings universe of coverage. This ensures that every W Score is directly comparable to across time-frame and industry. • For the historical portion, we average the percentage economic profit / revenue (EPR) over the last five years plus the current EPR year-to-date. Each company’s EPR is then percentile ranked against all others for that time period. • For the forecast portion, we average scores across the 9 moat barriers. Customers are only willing to pay for what they need and want, so we measure expectation scores separate from delivery scores. • This solves the issue where a company is building a superb product but customers no longer want to buy it – for example, a vinyl-disc record manufacturer. This also solves the issue where customers would love to buy something (high expectations) but a company cannot deliver well – for example, General Motors in early 2009. • Moat barrier scores are proven leading indicators to generating economic profit. So companies with high moat scores consistently over multiple quarters should generate economic profit, or investors should be questioning management on their performance. Customer Expectations Business Execution Economic Profit Momentum 25% Average scores across functional & emotional needs of moat barriers 25% Average scores across functional & emotional delivery of moat barriers 50% Average of the Economic Profit / Revenuein each of the previous 5 years plus current YTD Cost Containment Routine Reliance Channel Lock-Out 3 Years Ago 4 Years Ago 2 Years Ago Last Calendar Year Year to Date Economies of Scale Network Effect Economies of Skill Brand Perception Switching Lock-In 5 Years Ago Design Dominance © 1999-2009 wRatings Corporation. All rights reserved.

5. THE wRATINGS COVERAGE & FORTNA • At wRatings, we cover 5,000+ companies that represent all sectors of the US economy. For a list of our coverage, go to wRatings.com. • We limit coverage to only public companies that report financials on a quarterly basis, and are listed on a major North American stock exchange (e.g. NASDAQ, NYSE, TSE). • Fortna provided wRatings with a list of their top customers through the first half of 2009. • To examine the impact of Fortna on the competitive strength of these 125+ companies, wRatings segmented our coverage into two groups: • 1) Fortna Customer Group • 2) Non-Fortna Customer Groups • We found 37 public companies from the Fortna list included in the wRatings coverage. The remaining companies in the Fortna customer groups are privately held and do not publish detailed financials (which is a requirement to be in the wRatings universe of coverage). • To conduct the analysis, wRatings examined the Fortna impact at three levels: Summary, Industrials & Materials and Retail. Top Sectors in which Fortna Competes Total Companies: 5,056 © 1999-2009 wRatings Corporation. All rights reserved.

6. SUMMARY ANALYSIS • SCORES • A company’s W Score is a blended view of financial and customer strength. We measure financial strength by economic profit/revenues, where EP is how much money a company earns above its cost of capital. We measure customer strength by Moat Barriers, which is a proprietary measure of how well a company is creating barriers to entry to protect rivals from taking customers away. • ANALYSIS • The starting point for analysis is 1999-Q1 showing the Fortna Customer group with a W Score below that of the non-Fortna Customer group. • Over the next 10.5 years, the Fortna Customer group increased its competitive strength by a 1.22% compound annual growth rate (CAGR) whereas the non-Fortna Customer group decreased by 0.50% CAGR. • Based on this CAGR average, we found the Fortna Customer group grew more competitive than the non-Fortna customers at a rate of 1.71% per year since 1999. Taken in total over 10 years, the Fortna customer group has increased their competitive strength 17.1% more than non-Fortna customers. Source: wRatings 2009 © 1999-2009 wRatings Corporation. All rights reserved.

7. YEAR-OVER-YEAR ANALYSIS • ANALYSIS • To better examine the impact of Fortna solutions on their customer group, we extracted the W Scores at the trailing twelve month (TTM) level at year-end starting in 2005. • According to Fortna, the level of solutions available to customers was significantly expanded starting in 2007. • Averages of W Scores were then analyzed at the 1-, 3- and 5-year time periods. Note that data for the 3- and 5-year time periods only reflect scores through Q2-2009. • Based on a year-over-year analysis, the Fortna Customer Group has built superior customer strength over Non-Fortna Customers of 15.0% and 13.2% on average over the past 3- and 5-years respectively. * Through Q2 3-Year Average: 15.0% 5-Year Average: 13.2% Source: wRatings 2009 © 1999-2009 wRatings Corporation. All rights reserved.

8. RETAIL SECTOR ANALYSIS • SCORES • A company’s W Score is a blended view of financial and customer strength. We measure financial strength by economic profit/revenues, where EP is how much money a company earns above its cost of capital. We measure customer strength by Moat Barriers, which is a proprietary measure of how well a company is creating barriers to entry to protect rivals from taking customers away. • SECTOR ANALYSIS • Retail covers industries such as Department Stores, Grocery, Home Furnishing and Specialty Stores. The Retail Fortna Customer group grew at a compound annual growth rate (CAGR) of 2.91% faster than its peers over 10 years. • Economic Profit has been hit hard for all retailers over the past 7 years. Yet, during that period, the Fortna Customer Group continued to rank above its peer group. • Significant impact has been made on the retail shopper for the Fortna Retailer group, and the impact has been consistent from year to year. The average ranking has risen a total of 27.5% in terms of customer moat barriers, compared to only 13.4% for Non-Fortna retailers. • This shows the increasing impact that supply chain solutions has on the delivery chain capabilities of retailers in areas such as preventing out of stocks, merchandising mix and inventory forecasting. Source: wRatings 2009 © 1999-2009 wRatings Corporation. All rights reserved.

9. INDUSTRIALS & MATERIALS SECTOR ANALYSIS • SCORES • A company’s W Score is a blended view of financial and customer strength. We measure financial strength by economic profit/revenues, where EP is how much money a company earns above its cost of capital. We measure customer strength by Moat Barriers, which is a proprietary measure of how well a company is creating barriers to entry to protect rivals from taking customers away. • SECTOR ANALYSIS • Industrials & Materials cover industries such as Aerospace & Defense, Chemicals, Food Wholesalers, Home Building and Steel & Metals. • For each of the past 10 years, the Fortna Customer group has outperformed the non-Fortna Customer group in terms of economic profit and moat barriers. • The Fortna Customer group has performed the best during the years just following a recession when the economy is at its greatest risk. Source: wRatings 2009 © 1999-2009 wRatings Corporation. All rights reserved.

10. CONCLUSIONS • This analysis cannot determine a cause-effect relationship, nor does it hold up at the individual company level. • Analysis of other technology-driven companies vs. non-technology driven companies may yield similar results. • Although Fortna products don’t directly impact customer relationships, improvements in supply chain show a clear impact on moat barriers for retailers. Moat barriers are leading indicators to future profits since they create walls (loyalty) around customers to protect rivals from taking them away. • Fortna’s greatest impact is found with Retailers, as this customer group grew at a compound annual growth rate (CAGR) of 2.91% faster than its peers over 10 years. Since 2005, the degree of separation from its peer rivals continues to widen every year. • Industrial & Materials is the most consistently high performing sectors over the past 10 years for the Fortna Customer Group. The Fortna Customer group for Industrials & Materials has performed the best during the years just following a recession when the economy is at its greatest risk. • Based on a year-over-year analysis, the Fortna Customer Group has built superior customer strength over Non-Fortna Customers every year since 2000. © 1999-2009 wRatings Corporation. All rights reserved.

11. APPENDIX

12. BACKTEST: RATINGS = MARKET RETURN • The W Ratings are similar to the hotel industry's five-star rating system, except we rate competitive strength. The ratings are tiers of W Scores™ at the 20, 40, 60 and 80 levels. The higher the score, the more competitively strong the company. • We continually backtest our algorithms to show the power of tracking competitive strength. We benchmark using Rydex ETF Trust (RSP) with an equal dollar amount to invest in each tier of stocks (e.g. 5Ws, 4Ws). Quarterly rebalancing is required and we do not include transaction costs in this analysis. • The Market Returns chart shows that investing in just the 5W stocks (green line) in every quarter since 2006, you would have beat the S&P 500 index by 39.6% through July 2009. The 4W, 3W and 2W tiers performed better than the S&P 500 as well. • This chart shows that the W Ratings System works in a variety of market conditions. NOTE: Market Return includes reinvesting dividends, but not transaction costs. We use Rydex ETF Trust RSP as a benchmark (versus SPY or IVV) due to being an equal-weighted index. For transparency, wRatings provides our subscribers with original data to verify performance. © 1999-2009 wRatings Corporation. All rights reserved.

13. Recruit Panelists Pre-Qualification Conduct Interview 1 2 3 Vet Respondents Compute Scores Blend Financials 4 5 6 Final Ranks 7 THE DATA FACTORY Our patented data factory is a turn-key system that vets panelists, pre-screens respondents, conducts interviews and computes ratings/rankings. • Our patented, turn-key system is highly scalable across all geographies and industries. We conduct tens of thousands of interviews every month through our panel websites. • Step 1. Since 1999, we’ve recruited panelists offline at points-of-purchase such as airports, hotels, restaurants and retail districts. We now also accept panel registrations online. • Step 2. We pre-qualify respondents as current, former and potential customers of the companies they rate. For lesser known companies, we conduct special panels. • Step 3. Respondents complete an online interview in 2-4 minutes. Each receives a description of their buying style and a list of companies that meet their expectations. • Step 4. Unknown to panelists, we score their answers to vet respondents and prevent bad data from entering our system. Only genuine answers pass, which allows a respondent to be paid an incentive or entered into a drawing. Failed respondents will never pass pre-qualification again. • Step 5. Our system automatically scores their answers for customer strengths. • Step 6. We blend the scores with financial calculations of economic profit momentum. • Step 7. Each week, we publish new ratings on all 5,000+ companies in our coverage. US Patent 6,658,391 © 1999-2009 wRatings Corporation. All rights reserved.

14. KEY PRINCIPLES • Basic economic theory shows that in a highly competitive market, returns will be driven down to essentially no economic profit as rivals will imitate any advantage. To achieve a durable advantage, companies must essentially defy this very powerful force of competition. • For executives, the key is to identify new areas of competitive strength before others. The W Ratings system provides executives with unprecedented visibility into this capability. Our foundation is built on five key principles: • 1. Competitive strength is the ability of a company to allocate capital (seen in their Competitive Life Cycle) to attract, keep and hold customers captive better than its rivals (seen in their Moat Barriers). • 2. Competitive strength determines the long- and short-term ability of a company to grow revenues and earnings. • 3. Competitive strength is highly dynamic and complex, yet consists of key foundations (CLC and Moat Barriers) that can be tracked over time. • 4. Changes in competitive strength are visible at the customer level (Moat Barriers) that remain unrecognized by many executives. • 5. Executives can exploit these insights to improve their resource allocation and build durable advantages over rivals. HISTORICAL: A company’s Competitive Life Cycle measures financial competitive strength FORECAST: A company’s Moat Barriersmeasure customer competitive strength * The concept of CAP was formalized by Miller & Modigliani in 1961. The competitive life cycle is a generic concept proven useful by several Wall Street firms, including CSFB HOLT (CFROI) and Collins Stewart (CFROC). © 1999-2009 wRatings Corporation. All rights reserved.

15. CONTACT US wRatings Corporation2325 Dulles Corner BlvdSuite 500Herndon, VA 20171 USA 703.788.6532 Worldwide wRatings.commembers@wratings.com • The wRatings Corporation is a fully independent stock research firm. • The research team was originally founded in March 1998 by Gary A. Williams as part of a joint research and sales consulting firm. In January 2004, the research team split from the consulting firm to focus all resources on publishing the wRatings. • For more information on the wRatings Corporation, go to www.wratings.com. © 1999-2009 wRatings Corporation. All rights reserved.