FUTURE of LEAD CRYSTAL CONSUMER PRODUCTS IN THE UNITED STATES MARKET Timothy Maher ICF Meeting – Siena November 5, 2007

INTRODUCTION INTRODUCTION Challenging Times Changing Consumer Retail “Revolution” Shrinking Revenues & Profits Consolidations & Takeovers

Consumers Have Different Values Post war Leading edge boomer Trailing edge Boomer Generation X N Generation 23-30

Distribution Channels Department Stores*: Macy’s (Federated merger with May Co.) Macy’s (Federated merger with May Co.) J. C. Penney (Moving “Up Market”) J. C. Penney (Moving “Up Market”) Dillard’s Dillard’s Belk Stores Belk Stores Bon-Ton Bon-Ton Gottschalk’s (Eliminating “Home”) Gottschalk’s (Eliminating “Home”) 1984 = 1 National & 38 Regional Department Stores 1984 = 1 National & 38 Regional Department Stores Today = 2 National & 4 Regional Dept. Stores Today = 2 National & 4 Regional Dept. Stores * Excluding Sears * Excluding Sears

Department Store Retail Sales ($ Billions)

USA Retail Sales* *Excluding Motor Vehicles & Parts

U.S. Department Store Death Spiral (Share of Non-Automotive Retail Sales) U.S. Department Store Death Spiral (Share of Non-Automotive Retail Sales)

Distribution Channels “Independent” Tabletop Stores: China & Crystal China & Crystal Jewelry Jewelry Gourmet Gourmet Interior Design/Furniture Interior Design/Furniture Gift Gift 1984 = 3,500 – 5, = 3,500 – 5,000 Today = 250 – 350 “Tabletop” Independents Today = 250 – 350 “Tabletop” Independents

Distribution Channels “Specialty” Retailers: Bed Bath & Beyond Bed Bath & Beyond Crate & Barrel Crate & Barrel Linen’s & Things Linen’s & Things Pottery Barn Pottery Barn Williams Sonoma Williams Sonoma 1984 = Few Regional Stores or Non-existent 1984 = Few Regional Stores or Non-existent Today = Thousands of Stores Today = Thousands of Stores

USA Annual E-Commerce Retail Sales* Billions of Dollars E- Commerce will account for 10% of U.S Retail Sales by 2010 *Excluding Travel

Internet Consumers & Retailers 85% of “High Income” Consumers Buy Products on The Internet. 22% of All Regular Retail Store Sales Are “Influenced” By Internet Shopping. 46% of “Online” Customers Also Purchase Products At Regular Retail Stores. “Multi-Channel” Marketers Control 75% of Internet Sales. Internet Sales (excluding travel) Are Growing at More Than 25% per Year.

Crystal Industry Total Lead Crystal Sales Stemware & Giftware Sales Stemware & Giftware Sales Imports By Country Imports By Country Total Crystal & Glass Imports “Crystal” Retail Sales By Channel Future Direction

Market Size : U.S. Crystal Imports (Millions of Dollars) 20 YR. Average Annual Growth: 2.4% Compounded

U.S. Crystal Imports Lead Crystal Imports have Declined 41% Since 1999 (Millions of $) % Change +13% -5% -18% N/C -4% +2% -5% -17%

Crystal Imports By Product Type Stemware vs. Giftware

Crystal Imports By Exporting Region (1985 – 2005)

Crystal & Glass Imports - Stemware (Millions of Dollars) 10 YRS: Lead Crystal Stemware Increased from $98M to $100M Glass Stemware Increased from $80M to $178M

Crystal & Glass Imports – Giftware (Millions of Dollars) 10 YRS: Crystal Giftware Decreased from $247M to $205M Glass Giftware Increased from $244M to $356M

Crystal Retail Sales $762$725$711$678$665$645 Note: HFN Defines Crystal as “High Quality Glass” (Not Limited to Lead Crystal) (Millions of Dollars) $667

INDUSTRY “FUTURE” DIRECTION IDENTIFY TODAY’S CONSUMER AND REACH THEM WHERE & WHEN THEY SHOP. Crystal Is a “LIFE ENHANSING” Product & Must Be Sold As Such. Design Uniqueness & Quality Are Strategic Imperatives. Diverse Distribution Channels Are Required To Reach Today’s Consumer. “BRAND BUILDING” IS ESSENTIAL !