1. Perspectives on the Sell-Side An Examination of the Evolving Priorities and Needs of Sell-Side Analysts © 2008 Rivel Research Group. All rights reserved. The material contained in this presentation is part of a published report and the sole property of Rivel Research Group. No part of this presentation may be reproduced in any form or by any means, without permission in writing from Rivel. Presented by: Brian Rivel, President, Rivel Research Group Gene Rubin, Vice President, Rivel Research Group Webcast for NIRI Chicago Chapter April 3 rd, 2008

2. Rivel Research Group 2 Established in 1991 One core competency – marketing research A unique specialty – investment community research Thousands of interviews with investment professionals every year Clients include one third of the S&P 500 Rivel Research Group

3. Rivel Research Group 3 Broad-based, nationally representative studies Provide context for investor communications strategy Monitor attitudes and behaviors of vital IR constituencies Track key trends and developing issues among sell-side analysts, buy-side professionals, IROs and CEOs Perspectives on the Buy-Side Perspectives on Investor Communications Perspectives from the CEO Perspectives on the Sell-Side Rivels Perspectives Research Series

4. Rivel Research Group 4 Profile todays sell-side Clarify chief motivations/priorities Ascertain what prompts coverage decisions Identify drivers of sell/buy recommendations Prioritize most valued information resources Measure the impact of investor relations Implications for investor communications Study Objectives

5. Rivel Research Group 5 Methodology 251 sell-side analysts +/- 6% margin of error on total US data, the focus of this presentation 230 US interviews Additional context provided by 21 Canadian interviews Mid Sept. to Mid Nov. 2007 In-depth telephone interviews, split in US as follows: 77 Large Institutions (over 50 analysts), 61 Medium (20 to 50 analysts), 92 Small (5 to 19 analysts) 51 Bulge Bracket, 57 National, 42 Regional, 57 Specialty/Boutique, 32 Independent

6. Rivel Research Group 6 Key Takeaways Providing management access a top goal Significant hedge fund clientele Decisions hinge on same criteria as buy-side Investor communications have definitive impact Intangible: management credibility, business strategy Tangible: free cash flow, revenue growth, earnings growth

7. Rivel Research Group 7 How Brokerage Firms Judge Performance of Their Analysts (Aided) 7% 8% 16% 38% 47% 48% 56% High Institutional Investor magazine ratings Facilitating investment banking business Managing investor conferences Trading volume generated Thorough/ comprehensive research reports Accurate stock recommendations Providing client access to corporate management

8. Rivel Research Group 8 Trading Volume Accounted for by Hedge Funds (Among analysts able to make an estimate) Note: 50% unable to estimate

9. Rivel Research Group 9 Triggering the Recommendation Management credibility – 83% Effective business strategy – 82% Attractive growth in EPS – 75% At the bottom of the list … What factors drive sell-side decisions? A mixture of tangible and intangible items... Prospects of LBO/being acquired – 8% Attractive dividend – 5% Social responsibility – 3%

10. Rivel Research Group 10 87% need to meet with a firms top management before they will initiate coverage One in three say twice or more Face-to-face is most direct and tangible, thus impactful How Are Intangibles Communicated? As with the buy-side, management needs to show progress versus goals to be credible. Senior executives must be on the road communicating:

11. Rivel Research Group 11 Which Tangible Metrics Lead the Way? Free cash flow – 59% Revenue growth – 52% Operating margins – 47% Earnings per share – 47% ROIC – 45% EBITDA – 43% While free cash flow dominates when buy-siders are asked this question, sell-side analysts are more apt to give equal billing to revenue growth

12. Rivel Research Group 12 Focus on Communications Three critical stages of involvement with a stock Making the Radar Screen Influencing Buy/Sell Recommendations Sustaining the Relationship

13. Rivel Research Group 13 Making the Radar Screen Buy-side professionals – 89% Meetings with senior corporate executives – 88% Business/trade press articles – 79% Industry experts – 73% Communications from IR executives – 68% How do you make it to the radar screen?

14. Rivel Research Group 14 Be visible/management access – 30% Show tangible growth potential – 24% Outreach/be proactive – 20% Have compelling story – 20% Demonstrate management/strategy effectiveness – 16% Get bigger, larger market cap – 10% Making the Radar Screen What if we are a small-cap company? When the buy-side has been asked this question, its all about getting bigger and financial performance.

15. Rivel Research Group 15 Influencing Decisions to Recommend Senior management meetings – 95% Quarterly conference calls – 91% SEC filings – 91% Corporate websites – 81% Communications from IR executives – 79% We made it to the radar screen, how can we best reach the next stage? What resources are key? All cited more often among sell-side than on the buy- side (who again give top priority to in-house research)

16. Rivel Research Group 16 Senior management meetings – 96% SEC filings – 96% Quarterly conference calls – 96% Communications for IR executives – 83% Corporate websites – 80% Most helpful communications after coverage initiated? Again, the sell-side relies on these resources to a greater extent than the buy-side (especially IROs and the website). Sustaining the Relationship

17. Rivel Research Group 17 Insufficient disclosure/transparency – 44% Poor guidance/management of expectations – 31% Too promotional – 29% Disingenuous/withholding information – 29% Lack of communications/under-communicate – 10% Insufficient management visibility - 8% Sustaining the Relationship Where do companies go wrong? What are the biggest mistakes made when communicating with the investment community?

18. Rivel Research Group 18 Does IR Affect Valuation? Question: In your opinion, does good investor relations affect a companys valuation? Yes – 82% No – 15% Premium for superb IR – 10% (median) Discount for poor IR – 18% (median)

19. Rivel Research Group 19 How IROs Can Enhance Their Value (A sell-side view) Views often parallel those expressed by CEOs in 2006

20. Rivel Research Group 20 Believes effective investor communications impacts valuation. More often relies on IROs and company-supplied info for insight. Hangs hat on info and access disseminated/managed by IROs. Covets similar drivers/messages as buy-side. Is a bridge to hedge funds (whose views often mirror those of traditional buy-siders). Often is a companys only constant spectator over the long term. Sell-sides importance is evolving and moving toward playing more of a facilitators role. Yet, our buy-side studies consistently confirm its ongoing relevance. And, the question most often asked of sell-siders is … Should I buy/sell the stock? Sell-side still holds immense promise as an investor communications tool:

21. Rivel Research Group 21 Even if their end goal is facilitating access, its obviously crucial that the facilitator be well acquainted with the story and a supporter. As with the buy-side, management needs to be on the road talking about strategy, setting goals, meeting them and reminding people they have been attained, which leads to credibility.