Global Insight’s Sector Risk Analysis Which are the Winners and Losers Global Insight’s Sector Risk Analysis Which are the Winners and Losers? December 2007 About Global Insight’s Sector Risk Analysis One Section for each of the U.S., Eurozone, and U.K. Global Insight’s Corporate Bankruptcy Forecast Sample View of Sector Risks (2007-08) Contact Information

About Global Insight’s Sector Risk Analysis One Section for Each of the U.S., Eurozone, and UK Bankruptcy Forecast and Sample of Sector Risk Ratings Contact Information

Introducing World Industry Service Sector Risk Ratings (SRR) All the forecasts and analyses provided in this presentation were produced using the World Industry Service’s Sector Risk Ratings. Sector Risk Ratings allow you to: Quantify the Risk/Return Profile of Sector-based Portfolios Forecast Changes in the Credit Quality Profile of Industries Globally Rank Sectors with Best and Worst Credit Profiles, Show Expected Direction of Migration in Sector Credit Quality Inform Credit Risk Analysis and Sector Rotation Strategy

Sector-based Credit and Operating Risks Using standard credit risk methodologies as applied to industries, the Sector Risk Ratings provide globally consistent, forward-looking benchmarks of credit quality for each sector and country. The service includes: Comparative metrics for each sector and country, history and forecast Globally consistent sector benchmarks of credit and operating risks Ratings are created from structural and cyclical indicators drawn from standard corporate credit risk frameworks User-friendly tool for risk management and stress testing Scientific, transparent construct, and long track record A composite rating from lowest (1) to highest (10) is created for each sector, built up from 40 separate risk factors Top-down Sector Benchmarks to Complement Traditional Bottom-up Analysis

Composite Risk Ratings Are Created from 40 Individual Risk Factors that Reflect and Predict Changes in Credit Quality Sector risk factors are derived from the standard credit risk framework used in corporate lending and fixed income portfolios Sector risk factors show the effect of industry structure, stage in lifecycle, and the sovereign/ macroeconomic environment on industry risk profiles Growth Risk Growth in real revenue Growth in sales Volatility, turning points Profitability Risk Pricing strength Operating profitability Free cash flow Return on invested capital Fixed-asset turnover Degree of operating leverage Supply Risk Capital intensity Capacity overhang Depreciation cost of sales Market Structure Risk Dependence on suppliers, customers Exposure to energy, labor Export reliance, import competition Cost of goods sold Barriers to entry and exit Technology and substitution Economic & Country Risk Sector cyclicality Sector interest rate sensitivity Country-level sovereign risks (From Global Insight’s Global Risk Service): Exchange rate Equity markets Regulation policy Tax policy

Sector Risk Ratings Help Evaluate and Anticipate Changes in Credit Profiles of Industries and Portfolios Which Sectors Have High Risk Profiles? Which Sectors Are Improving or Deteriorating? Monitor Changes in Sector Risk Profiles “Drill down” to the 40 individual sub-factors to see the drivers for changing risk profiles Compare sector risk factors on a global and country basis, compare risks across sectors Identify correlated industries that improve or deteriorate together Rigorous framework for evaluating diversification and strategy

Clients Use Sector Risk Ratings to Help Evaluate and Anticipate Changes in the Credit Quality of Industries and Portfolios Quantify the risk profile of key sectors in a loan or bond portfolio Is portfolio risk high or low? Is it improving or deterioration? Identify groups of correlated industries that improve/deteriorate together Use rigorous framework for evaluating diversification and strategy Monitor and anticipate changes in sector credit quality Monitor composite ratings, flag sectors to “drill down” for deeper investigation Which risk factors are driving the change? What is the geographical composition of the sector change? Stress test the portfolio through simulation and “what-if” scenarios Use SRR as sector benchmark for corporate credit research Compare company risk prospects to that of its own sector peer group Analyze market prospects for key client markets into which it sells product Forecast changes in bankruptcies, defaults, loan loss requirements For individual sectors as well as for entire portfolio

Sample of Sector Risk Ratings for Composites in U. S Sample of Sector Risk Ratings for Composites in U.S. and the Eurozone (Risk Ratings from Lowest (1) to Highest (10) Risk) Sector Risk Ratings for the “All Corporate” Sector, Manufacturing, Finance, & Business Services United States Eurozone Steady performance in service sector even during the economic down turn in 2000-03

Forecast of Migration in Credit Quality Across Sectors (United States, Eurozone, and United Kingdom) *Annualized % Change in Risk Rating U.S. Eurozone U.K. 2006-07 2007-08 All Corporate Sector 13.3 1.4 -4.9 4.7 2.3 11.1 Goods Sectors (ISIC 1-3) 10.0 8.7 8.0 12.0 8.9 Agriculture, Hunting, Forestry, Fishing (ISIC 1) -17.9 34.8 9.1 11.7 0.0 27.5 Mining and Quarrying (ISIC 2) 6.0 9.4 28.8 1.5 16.7 Manufacturing (ISIC 3) 20.0 2.4 4.2 10.9 Manufacturing Non-Durable Goods (ISIC 31, 32, 34, 35) -2.5 2.6 -1.9 5.7 1.9 Manufacturing Durable Goods (ISIC 33, 36 - 39) 12.8 4.5 10.2 -17.3 11.6 Basic & Fabricated Metals (ISIC 37 & 381) 21.1 4.3 11.4 16.3 -18.2 17.8 Electronics (ISIC 3825, 3832 & 385) -16.0 31.0 -1.6 1.7 -1.5 -12.1 Autos & Aircraft (ISIC 3843 & 3845) 5.5 3.4 6.5 5.9 9.3 Construction (ISIC 5) 13.6 2.0 2.9 8.3 7.0 Wholesale & Retail, Restaurants & Hotels (ISIC 6) -2.2 -2.3 Transport, Storage & Communications (ISIC 7) -9.6 -3.6 -3.4 5.3 Finance, Insurance, Bus. Services, Real Estate (ISIC 8) 23.3 1.68 -19.97 4.8 Community, Social & Personal Services (ISIC 9) -4.55 0.31 -2.1 *An increase indicates a rise in risk

About Global Insight’s Sector Risk Analysis Highlights for United States Bankruptcy Forecast and Sample of Sector Risk Ratings Contact Information

Source: World Industry Service; The American Bankruptcy Institute Global Insight Expects U.S. Corporate Bankruptcies to Rise 13% in 2008 (Forecast as of December 2007) Sector Risk Ratings Forecast “Year-Ahead” Number of U.S. Corporate Bankruptcies “Current Year” and “Year Ahead” Correlation Coefficient between WIS Composite Non-Financial Sector Risk Ratings and Corporate Bankruptcies in U.S., 2000-04 Historical Data Forecast Source: World Industry Service; The American Bankruptcy Institute

Factors Driving Changes in Risk Ratings for U.S. Time-Trends of Annualized % Change in Risk Rating (based on moving 2-year change)  I m p or o v e W o r s e n 

Growth Risk Factor in Select Sectors in United States WIS Sector Risk Rating, (1) for lowest - (10) for highest Growth Risk has risen since 2006, expected to increase in 2008 and stabilize in 2009 Growth Prospects for Electronics are weak due to slowing consumer spending Industrial Chemicals’ Growth risk is tied with prospects of Agriculture and Construction Real Estate Growth Risk will remain weak through 2008

Risks to Pricing Strength Are Rising in Select Sectors in U.S. WIS Sector Risk Rating, (1) for lowest - (10) for highest The combination of surging oil prices and a decelerating economic activity leads to worsening pricing power Energy-intensive industries (Metals, Chemicals, etc.), and industries that import from abroad, will get negatively impacted by soaring input costs A weaker dollar will ease this risk for export-oriented sectors

U.S. Industry - Anticipated Changes in Credit Profiles Summary of Composite Sector Risk Ratings for United States: Current Ratings Level and Anticipated Change in the Ratings in 2008 Red Flag Potential Recovery Yellow Flag

Which High Risk Sectors will Deteriorate/Improve in U.S. High Risk but Improving High Risk and Worsening Sector Annual percent change in Risk Rate (2007-08) Engines & Turbines -15.4% Non-Energy Mining -8.7% Textiles -4.5% Motorcycles & Bicycles -3.0% Photographic & Optical Goods -1.3% Sector Annual percent change in Risk Rate (2007-08) Energy Mining 14.3% Metal & Wood Working Machinery 10.0% Agricultural Machinery 3.6% Railroad Equipment 1.8% Leather 1.6%

About Global Insight’s Sector Risk Analysis Highlights for the Eurozone Bankruptcy Forecast and Sample of Sector Risk Ratings Contact Information

Source: World Industry Service; National Statistics Global Insight Expects Eurozone Corporate Bankruptcies to Rise 5% in 2008 (Forecast as of December 2007) Sector Risk Ratings Forecast “Year-Ahead” Number of Corporate Bankruptcies “Current Year” and “Year Ahead” Correlation Coefficient between WIS Composite Non-Financial Sector Risk Ratings and Corporate Bankruptcies in the Eurozone, 2000-04 Historical Data Forecast Source: World Industry Service; National Statistics

Factors Driving Changes in Risk Ratings for the Eurozone Time-trends of Annualized % Change in Risk Rating (based on moving 2-year change)  I m p or o v e W o r s e n 

Risks Are Rising from Slowing Sales Growth in Select Sectors in the Eurozone WIS Sector Risk Rating, (1) for lowest - (10) for highest Agriculture and Construction sales are forecast to see slower sales growth than in the recent past Metals and Industrial Chemicals, in turn, see less growth from ties to intermediate demand Forecast Growth Risk has risen since 2006, expected to stabilize but remain high in the near-term

Risks to Pricing Strength Are Rising in Select Sectors in the Eurozone WIS Sector Risk Rating, (1) for lowest - (10) for highest The combination of surging oil prices and a decelerating economic will increase the Pricing Strength Risks The ability of energy-intensive industries (Metals, Chemicals, etc.) to pass through soaring input costs is somewhat limited A strong euro will help to mitigate this risk for importing industries

Eurozone Industry - Anticipated Changes in Credit Profiles Summary of Composite Sector Risk Ratings for the Eurozone: Current Ratings Level and Anticipated Change in the Ratings in 2008 Red Flag Potential Recovery Yellow Flag

Which High Risk Sectors will Deteriorate/Improve in Eurozone High Risk but Improving High Risk and Worsening Sector Annual percent change in Risk Rate (2007-08) Computers -15.6% Communication Equipment -5.7% Leather -3.3% Electrical Appliances -1.7% Energy Mining -1.4% Sector Annual percent change in Risk Rate (2007-08) Agriculture 11.7% Iron & Steel 10.2% Scientific Equipment 8.3% Motorcycles & Bicycles 6.8% Textiles 4.5%

About Global Insight’s Sector Risk Analysis Highlights for the United Kingdom Bankruptcy Forecast and Sample of Sector Risk Ratings Contact Information

Source: World Industry Service; National Statistics Global Insight Expects U.K. Corporate Bankruptcies to Rise 3% in 2007 (Forecast as of November 2007) Sector Risk Ratings Forecast “Year-Ahead” Number of Corporate Bankruptcies “Current Year” and “Year Ahead” Correlation Coefficient between WIS Composite Non-Financial Sector Risk Ratings and Corporate Bankruptcies in UK, 1996-2006 Historical Data Forecast Source: World Industry Service; National Statistics

Factors Driving Changes in Risk Ratings for U.K. Time-trends of Annualized % Change in Risk Rating (based on moving 2-year change)  I m p or o v e W o r s e n 

Risk of Sales Growth Slowing is Increasing in Select Sectors in the U Risk of Sales Growth Slowing is Increasing in Select Sectors in the U.K. WIS Sector Risk Rating, (1) for lowest - (10) for highest Finance and Business services growth prospects are hit by the current credit squeeze Agriculture and Construction sales forecast growth is in line with a slowdown of consumer spending Metals and Industrial chemicals, in turn, see less growth prospects in intermediate demand Forecast Growth Risk has risen since 2006, expected to stabilize but remain high in the near term

Risk of Free Cash Flow Growth is Rising in Select Sectors in the United Kingdom WIS Sector Risk Rating, (1) for lowest - (10) for highest The combination of surging oil prices and a decelerating economic activity fuels Free Cash Flow Growth Risk The ability of Energy-intensive industries (Metals, Chemicals, etc.) to pass through soaring input costs is indeed not guaranteed A strong Sterling can help to mitigate this risk, but for export-dependent sectors such as Chemicals it is also a threat for sales growth

U.K. Industry - Anticipated Changes in Credit Profiles Summary of Composite Sector Risk Ratings for United Kingdom: Current Ratings Level and Anticipated Change in the Ratings in 2008 Red Flag Potential Recovery Yellow Flag

Which High-risk Sectors will Deteriorate/Improve in U.K. High Risk but Improving High Risk and Worsening Sector Annual percent change in Risk Rate (2006-08) Drugs -19.4% Railroad Equipment -9.3% Communication Equipment. -5.4% Computers -4.5% Energy Mining -1.4% Sector Annual percent change in Risk Rate (2006-08) Textiles 8.5% Paper 7.0% Beverages 5.1% Clothing Retail (non Auto) 5.0%

About Global Insight’s Sector Risk Analysis Global Insight’s Bankruptcy Forecast Sample Views (2007-2008) Contact Information

More Information? Please Contact Us for a Personal Demonstration! Mark Killion, CFA Managing Director, World Industry Service 1-610-490-2547 mark.killion@globalinsight.com Natasha Muravytska Economist, World Industry Service 1-610-490-2558 natasha.muravytska@globalinsight.com Alain Faucher Economist, World Industry Service + 44.207.452.5063 alain.faucher@globalinsight.com For More Information: www.globalinsight.com/WIS-Risk