Fall 2011 Economic Survey

Participation 33 CEBI Members 26 Non-Members

Industry Distribution

Company Size

Expected 2011 Results

2012 Outlook

2013 Expectations

Composite

2011 Forecast (vs. 2010) 26% 74%

2012 Forecast (vs. 2011) 10% 90%

23 companies w/ Flat or Down 2011 Earnings Negative Impacts 23 companies w/ Flat or Down 2011 Earnings Other: Price Pressure Raw Mtl. Costs Federal Govt. State Budgets < New Prod Dev

Expected Upturn Quarter

Earnings Improvement Factors Other: New Products/Services New Markets Expand Geography Cap. Exp. – SB Loan Concierge Service

Likelihood of Recession (next 2-3 quarters) 2012 Avg. or Better = 76% 2013 Avg. or Better = 76% 55% 45%

What Have You Learned? Ignore Media & Govt. – Follow your own indicators Watch for changes, good or bad = opportunities Cull the Herd – bottom 10% Act sooner, rather than later Acquisition of weaker competitors Pay down debt, don’t count on banks, cash is king In Information Age, things change faster than ever Conservative capital and expense plans, watch receivables, fixed costs

What Have You Learned? Improve productivity through technology Sales cycles lengthen – step up sales activity Watch inventories, but don’t understock (recovery) Invest in innovation, R&D Maintain customer service performance

CEBI Helped Health care cost reduction Explore different channels, including Web Product/service diversification Peer lending, heads-up on tightening credit Focus on systems and processes Members’ perspective on “real” economy Cost reduction strategies Strategies for dealing with banks

Summary “CEBI 2012 Confidence Index” = .88 (38 up, 5 dn) “CEBI 2012 Growth Index” Mean = +10% “CEBI 2012 Profit Index” Mean = +10%

Fall 2011 Economic Survey