Chuck Odom Averitt VP Global Development 11-21-2006

1. Domestic Manufacturing/Global Marketing Chuck Odom Averitt VP Global Development 11-21-2006

2. “Extremely powerful bombs of a new type may thus be constructed. A single bomb of this type, carried by boat and exploded in a port, might very well destroy the whole port together with some of the surrounding territory.” • Letter to the President of the United States

3. “Extremely powerful bombs of a new type may thus be constructed. A single bomb of this type, carried by boat and exploded in a port, might very well destroy the whole port together with some of the surrounding territory.” • Albert Einstein-August 2, 1939 Letter to Franklin D. Roosevelt

4. Key Industries Served

5. QUICK FACTS • 104 facilities • 7,800+ associates • 5,000 power units (99% equipped with Qualcomm) • 14,000+ trailers • Non-union • Privately-held

12. Top North American Railways

14. Domestic Manufacturer Global Marketer

15. Domestic Manufacturing/Global Marketing(general Strategy) • Take advantage of existing and future trade regulations. • NAFTA • CAFTA (CBI) • AGOA • Jordan QIZ • Thailand FTA

16. AGOA • The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as Title 1 of The Trade and Development Act of 2000. The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets.

17. JORDAN QIZ • Qualified Industrial Zones (QIZ) is a unilateral act by the USA in an innovation designed to encourage Jordanian exports to the U.S market, thus inviting National and International Companies to take advantage of this unprecedented initiative enabling Jordan to offer a unique opportunity to all Manufacturers.This concept allows goods manufactured in these Zones to enter the USA Duty free & Quota free thus offering a unique opportunity to all International Manufacturers to move their Industries to these Zones.

18. GENERAL STRATEGY • Minimize risk by diversification and prudent country selection. • Build a base of large, vertical, full service manufacturers. • Use a mix of dedicated agents and factory direct relationships. • Capitalize on owned facilities. • * 2.3M Sq. ft. • * Disposable income

19. CURRENT SOURCING MIX • Owned facilities • Contractors • Agents • Factory Direct Relationships • Vertical factories • Portable factories

20. VERTICAL VERSUS PORTABLE • Vertical refers to a company that owns or controls both raw materials and manufacturing facilities/factories. Typically these companies require the use of their raw materials if you manufacture in their facilities/factories. There are price and lead time advantages to using vertical suppliers. • Portable refers to raw material producers that are willing to ship to any manufacturing contractor. A vertical supplier can be portable if they ship some of their raw materials to other companies.

21. SOURCING REGIONS • Western Hemisphere – Mexico, Guatemala, Honduras, and El Salvador. • Asia – China, Philippines, Malaysia, Vietnam, Cambodia, Thailand, Brunei, Singapore, Hong Kong, Taiwan. • Indian Sub-continent – India, Sri Lanka, Nepal. • Middle East – UAE, Egypt, Jordan. • Africa – South Africa, Mauritius, Namibia. • Europe – Turkey, Bulgaria, Russia.

22. REGIONS AVOIDED • Western Hemisphere – Haiti, Belize, Colombia • Asia – Indonesia, Myanmar • India Subcontinent – Bangladesh, Pakistan • Middle East – Israel • Africa – Kenya, Lesotho, Madagascar • North Korea • * Cuba

23. Manufacturers/Marketers Future • Take advantage of existing and future trade regulations. • Low-Cost Country sourcing • Partner with Countries providing quality manufacturing expertise • Long-term Infrastructure Investments • Provide Efficient Management/production standards

24. FUTURE CONCERNS • Quota or no-quota • Another outbreak of SARS or similar contagious disease. • Continued and increasing violence in the Middle East. • Increased delays in US Customs due to security concerns. • Port Strikes • Natural Disasters • Terrorist • Political “unrest”

25. “Our Partnership with Averitt, in which true information-sharing allows for collaborative solutions, has helped us improve our service and reduce our costs.”

26. Emergency Business Response Continuity Crisis Management The Operational Risk Environment Threat to life, safety, physical assets, infrastructure. Threat to systems, data, processes, supply chain. Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Threat to lives, brand, stock price, company reputation. Ÿ Ÿ Ÿ

27. Situation: Pandemic Outbreak in Shanghai

28. Situation: Pandemic Outbreak in Shanghai • Crisis: • 50% labor outage for 3 days, followed by government and quarantine of regional perimeter around Port of Shanghai. • Effect: • 68 containers of toys for Holiday (Mattel, Hasbro) are frozen in China, with no chance for re-routing. • Impact: • Toys miss Christmas completely - $40 million hit to top line revenue • Negative trade and consumer press • Permanent loss of market share

29. Situation: Port Strike in Los Angeles

30. Situation: Port Strike in Los Angeles • Crisis: • 100% of dock workers support strike; unloading abruptly ceases for 12 days; • Dock workers at Ports of Long Beach, San Diego, San Francisco and Oakland stage sympathy slow-downs. (reported) • Effect: • Cumulatively, 162 cargo ships are lined up twenty miles out to sea, awaiting for dockage; • Major shipments of white goods, brown goods, lumber, household goods, home furnishings are delayed; • Other ports handle only 5% of the traffic. • Impact: • ‘Spring’ season is severely impacted - $79 million hit to top line revenue • Negative trade and consumer press • Permanent loss of market share

31. Situation: ‘Katrina’ Destroys US Ports

32. Situation: ‘Katrina’ Destroys US Ports • Crisis: • Ports from Ft. Lauderdale and Miami/Everglades to New Orleans, LA are unusable during 2 day storm (Port Bienville); • Damage to port physical plant is extensive, rendering ports only 20% capable for 8 weeks; • Port work force down 45%; 14 cargo ships are lost or incapacitated in Gulf. • Effect: • Thousands of containers of back-to-school apparel from Mexico (denim jeans), Peru (woven shirts) and other southern source countries are lost at sea or cannot make other ports for offloading for 5 weeks. • Move Port Panama City • Impact: • Back-to-school season is lost - $112 million hit to top line revenue • Negative trade and consumer press • Permanent loss of market share

33. Risk • Inventory is largest asset – at factory, in transit, on shelf. • Few suppliers have “best practices” plans for operational resilience around predictable disasters. • Few retailers have visibility into vendor complete supply chain. • Biggest asset is in the hands of vendors with a high risk of supply chain breakage; We do not control this risk! • What’s at stake? (Back-to-school, Holiday, financial performance, company reputation).

34. “THIS LITTLE PIGGY WENT TO MARKET” • 3 days • 9 days • 30 days • Tomorrow ??

35. “THIS LITTLE PIGGY WENT TO MARKET” • Inventory carrying costs • “Trading inventory for information”

36. Thank You

38. Speed-to-market • Direct-to-store • DC by-pass • Sort/seg • Consolidate/deconsolidate • Rapid-fire-fulfillment • Allocate to order vs forecast

39. Dock-Surge • DockDirect • PortSide™ • Origin Country consolidation • Sequencing Centers • VMI

40. “Don’t buy it till it’s Built!” Don’t Build it till it’s Sold!” “Release it as you bill it!”

41. “Catch a man a fish, and you can sell it to him. Teach a man to fish, and you ruin a wonderful business opportunity.” Karl Marx

42. Thomas Edison: “Rules! Heck! There are no rules! We are trying to accomplish something!”

43. Domestic Manufacturing/Global Marketing Thank You! Chuck Odom Averitt VP Global Development 11-21-2006

44. Managing a Global Transportation Network Thank You! Chuck Odom Vice President Global Development 10-25-2006