Best Practices Session Currie Summit

1300 Companies, 10 Year Average Annual Performance Shareholder Value Revenue Earnings Return 90% Percentile 21% 26% 24% 80% Percentile 13% 18% 19% 50% Percentile 9% 10% 13% 1300 Companies, 10 Year Average Annual Performance 10X VALUE: THE ENGINE POWERING LONG-TERM SHAREHOLDER RETURNS. Lucier, C.E.; Moeller, L.H.; Held, R. Strategy & Business, 8, Q3 97, pp 21 - 28

Critical Elements Revenue Growth Through Account Management Financial Performance and Discipline Through a Financial Model 3

Evolution of the Market Transactional Relationship Costly Change Easy Change

Fundamental Business Strategy Target Equity Financial Model Contract Relationship Quality Factors Entry Strategy Market Analysis Account Identification Investment Revenue Stream Alliance Penetration Acquisition share ROA

Financial Model % * G&A Expenses Are a Percentage of P,S & R Sales

Financial Model $ * G&A Expenses Are a Percentage of P,S & R Sales

Calculating Absorption with the Financial Model in Currency * G&A Expenses Are a Percentage of P,S & R Sales

Absorption 108% Absorption at Model Total Rental, Parts, & Service Gross Profit 495.00 Total Company Expenses 457.50 108% Absorption at Model 495.00 457.50

Absorption & Profitability Sales Mix Impact Units Aftermarket Absorption NPBT 65% 35% 89% 7.0% 60% 40% 101% 7.7% 50% 108% 9.4% 120% 10.4%

Sales Department Financial Model Sales Personnel Expense (50%) 30% is going to be compensation of the Sales Reps 12% is going to be wages of Overhead Staff Sales Management Sales Admin (Coordinators, Order Entry, Etc.) 8% is going to be Benefits Statutory Benefits (Payroll Taxes, Workers Comp., etc.) Non-Statutory Benefits (Health Insurance, 401(K), etc.) Page 11 Rev. 4-99

Sales Department Financial Model Sales Occupancy Expense (10%) This includes all costs associated with the sales departments share of the building. Rent / Lease Payments Utilities Property Tax / Insurance Building Improvements Grounds Maintenance Sales Operating Expense (25%) Anything not associated with people or the building. Demo Marketing / Advertising Supplies Page 12 Rev. 4-99

Sales Department Critical Variables $240,000 in Annual Gross Profit Per Sales Rep New Unit Inventory Turns of 12X Used Unit Inventory Turns of 6X Allied Inventory Turns of 12X Aged Inventory of 0% for New & Used Sales Rep to Sales Admin Ratio of 3:1 Page 13 Rev. 4-99

Service Department Financial Model Sales Category (100%) Customer Breakdown Labor Revenue Customer Contract Labor Revenue Warranty Labor Revenue Internal Customer Labor Revenue New Prep Used Reconditioning Rental Cost of Goods Sold (35%) Technician W2 or T4 Wages Only Gross Profit (65%) Difference between Labor Revenue and Tech Wages Page 14 Rev. 4-99

Service Department Financial Model Service Personnel Expense (20%) 10% is going to be wages of Overhead Staff Service Management Service Sales Commissions Service Admin (Dispatcher, Warranty Clerk, Service Writer) 8% is going to be Technician Benefits Statutory Benefits (Payroll Taxes, Workers Comp., etc.) Non-Statutory Benefits (Health Insurance, 401(K), etc.) 2% is going to be Overhead Staff Benefits Statutory & Non-Statutory Page 15 Rev. 4-99

Service Department Financial Model Service Occupancy Expense (5%) This includes all costs associated with the service departments share of the building. Rent / Lease Payments Utilities Property Tax / Insurance Building Improvements Grounds Maintenance Service Operating Expense (10%) This figure includes the net recovery of: Service Vehicles Service Accessories Special Tools Etc. Page 16 Rev. 4-99

Service Critical Variables Productivity 85% Application Rate 100% Efficiency Rate 85% Productivity Key Measurements $12,000 revenue per month per tech 100% Service Vehicle Recovery 200% Service Accessories Recovery 5:1 Service Tech to Service Admin Ratio Page 17 Rev. 4-99

Service Productivity Efficiency Application Productivity 85% 100% = Page 18 Rev. 4-99

Productivity Calculations Hours Billed 1,768 100% Efficiency 85% Productivity Productive Hours 85% Application Total Hours Paid 2,080 15% Lost Time Non Productive Hours 312 Allowed Time 208 Expense Time 104

Getting to Gross Profit Productivity Profitability Revenue Multiple Revenue Cost of Wages

Parts Department Financial Model Parts Personnel Expense (10%) 8% is going to be wages of Parts Staff Parts Management Parts Sales Commissions Parts Admin (Counter, Warehouse, Clerical) 2% is going to be Employee Benefits Statutory Benefits (Payroll Taxes, Workers Comp., etc.) Non-Statutory Benefits (Health Insurance, 401(K), etc.) Parts Operating Expense (3%) This figure includes the net recovery of freight, both inbound and outbound. Page 21 Rev. 4-99

Parts Department Financial Model Parts Occupancy Expense (2%) This includes all costs associated with the parts departments share of the building. Rent / Lease Payments Utilities Property Tax / Insurance Building Improvements Grounds Maintenance Page 22 Rev. 4-99

Parts Department Best Practices Parts Freight Recovery 100% Inventory Turns of 5X Inventory Aging <5% Average Monthly Revenue Per Parts Employee $50,000 Page 23 Rev. 4-99

Rental Department Financial Model Rental Cost Goods Sold (55%) Depreciation of 30% Interest of 10% Maintenance & Repair of 15% Rental Personnel Expense (10%) 8% is going to be wages of Rental Staff Rental Management Rental Sales Commissions Rental Admin (Counter, Check In/Out, Clerical) 2% is going to be Employee Benefits Statutory Benefits (Payroll Taxes, Workers Comp., etc.) Non-Statutory Benefits (Health Insurance, 401(K), etc.) Page 24 Rev. 4-99

Rental Department Financial Model Rental Operating Expense (3%) This figure includes the net recovery of hauling/transportation, both inbound and outbound. Rental Occupancy Expense (2%) This includes all costs associated with the rental departments share of the building. Rent / Lease Payments Utilities Property Tax / Insurance Building Improvements Grounds Maintenance Page 25 Rev. 4-99

Rental Department Critical Variables 100% Recovery of Hauling/Transportation 5.0% Monthly Rental Revenue Multiple Average Monthly Rental Revenue Divided by Original Acquisition Cost of the Fleet 2.5% Wash Out GP Per Month for Rent-to-Rent Units Step 1: (Rental Revenue + Resale Price) minus (Original Acquisition Price + Interest + Maintenance & Repair) = Wash Out GP Step 2: Divide Wash Out GP by # of Months the unit was in the fleet to arrive at Wash Out GP per Month. Step 3: Then take Wash Out GP per Month and divide by Original Acquisition Price Page 26 Rev. 4-99

G&A Department Financial Model All Expenses are expressed a percentage of Parts, Service and Rental Revenues. G&A Personnel Expense (5%) 2% is going to be wages of the CEO/President/Dealer Principal 2% is going to be wages of the administrative staff Accounting, Payables, Receivables, HR, IT, etc. 1% is going to be Employee Benefits Statutory Benefits (Payroll Taxes, Workers Comp., etc.) Non-Statutory Benefits (Health Insurance, 401(K), etc.) Page 27 Rev. 4-99

G&A Department Financial Model G&A Operating Expense (3%) All Operating Expenses that are not easily allocated to an operating department are by definition G&A. G&A Occupancy Expense (2%) This includes all costs associated with the G&A departments share of the building. Rent / Lease Payments Utilities Property Tax / Insurance Building Improvements Grounds Maintenance Page 28 Rev. 4-99

Employee Mix Goal is 75% of Employees are Revenue Producers: Equipment Sales Reps Aftermarket Sales Reps Service Technicians Parts Counter Rental Coordinators And we want 50% of Employees to be Techs. 25% of Employees are Non-Revenue Producers: Management Administrative Assistants Distributor Principals Service Admin Parts Warehouse Accounting HR IT Etc.