1. Copyright ® 2005 Global Insight, Inc. Global Insight’s Industry Outlook Worldwide: Winners and Losers Mark Killion, CFA Managing Director World Industry Service Global Insight April 2005

2. Copyright ® 2005 Global Insight, Inc. 2 Agenda – Global Outlook for Sector Activity  World Industry Service (WIS) provides sector data and benchmark forecasts for sales, growth, returns and risks  Globally consistent views, harmonized sector indicators  Flexible benchmarks for each company’s own sector “peer group”, as well as all the sectors that represent key markets for each company  Comparative sector performances, industry forecasts  Which sectors enjoy the fastest growth?  What geographies are driving sector activity?  Global Benchmarks of Production, Trade and Capital  Sales Patterns, Profits Growth, Profit Margin  Exports, Imports, Fixed Capital Expenditures

3. Copyright ® 2005 Global Insight, Inc. 3 Introduction to the World Industry Service (WIS)  Unique set of global sector fundamental data, financial benchmarks, written reports, sector experts  Harmonized set of industries and indicators allow comparisons and aggregations across sectors and geography  71 industries and sub sectors that together comprise the entire economy; available for each of 70 countries/economies  Sales, Profits, Demand, Exports, Imports, CapEx, Prices  History since 1980 with forecasts 10+ years out  User friendly interface for navigation through choice of sector, country, indicator, time frame; all delivered via Web  Flexible metrics and reports for use in sales forecasting, credit risk management, corporate strategy, research

4. Copyright ® 2005 Global Insight, Inc. 4 Global Sectors Analysts interact with Country Macroeconomic Experts Sector Forecasts  Autos  Energy  Chemicals  Construction  Tourism  Health Care  Transport  Communications  Financial Global Sector Expertise Global Macroeconomic Expertise World Industry Service All Countries All Sectors Harmonized to Common Standard World Industry Service All Countries All Sectors Harmonized to Common Standard U.S. Macro Economics Asia, Latin America, Rest of World Macro Economics Asia, Latin America, Rest of World Macro Economics West and East Europe Macro Economics WIS sector forecasts incorporate both the country and industry perspectives

5. Copyright ® 2005 Global Insight, Inc. 5 Common Applications of WIS Available for Review 1)Custom Market Indexes Follow key customer performances, calculate market share, forecast sales for business segments and geography http://www.globalinsight.com/Highlight/HighlightDetail133.htm 2)Sector Risk Rating Manage risk exposure by tracking industry level changes in credit and operating risk, stress test portfolios with simulations and alternate “house view” scenarios http://www.globalinsight.com/Highlights/HighlightDetail1103.htm 3)Key Drivers for Technology Use Global Sector Activity and Spending as Key Drivers for technology sector forecasts, or research into industry structure http://www.globalinsight.com/Highlight/HighlightDetail133.htm 4)Stock Sector Navigator Sector earnings and capital expenditures are used to value financial securities such as stocks, bonds, loans, for investment research and portfolio management http://www.globalinsight.com/Highlight/HighlightDetail1104.htm Translating Economic Events into Implications for Global Sector Markets

6. Copyright ® 2005 Global Insight, Inc. 6 Global Sector Growth Performances Percent Annual Growth of Real Value Added - World  Strong economic recovery since the down- turn in 2001, but slower relative growth in 2005-07 compared to 2004  Manufacturing sector played key role in both the down-turn and in the subsequent recovery  Service sector growth rates are more resilient in the face of economic volatility  Strong re-bound and steady forecast for construction Outlook for Global Sector Markets

7. Copyright ® 2005 Global Insight, Inc. 7 Manufacturing Leads the Current Expansion (%Growth in Inflation Adjusted Sector Sales for World Total) Key Manufacturing SectorsKey Services Sectors Outlook for Global Sector Markets

8. Copyright ® 2005 Global Insight, Inc. 8 Transportation Equipment (%Growth in Inflation Adjusted Sector Sales for World Total) Transportation Equipment SalesMotor Vehicle Sales by Region Outlook for Global Sector Markets

9. Copyright ® 2005 Global Insight, Inc. 9 Strongest Volume Growth in Computers and Electronics % in Aggregate Sales Growth 2005 (%) 1Office & Computing Machinery1.1610.94 2Communications Equipment incl. Semiconductors3.249.06 3Computer Support and Software Services1.866.43 4Motor Cycles & Bicycles0.116.29 5Electrical Apparatus & Supplies0.505.84 6Synthetic Resins0.605.69 7Metal & Woodworking Machinery0.215.01 8Electrical Industrial Machinery0.575.00 9Small Electrical Appliances & Housewares0.264.86 10Drugs & Medicines0.794.74 Top-Ten Real Growth Performers By Worldwide Growth Rate in Value Added (Real)

10. Copyright ® 2005 Global Insight, Inc. 10 Share in Total Sales (%) Average Growth 2005-07 (%) 1Drugs and Medicines0.8111.17 2Aircraft and Aerospace0.459.60 3Educational Services2.279.22 4Health Services4.458.93 5Transport & Storage4.318.43 6Small Electrical Appliances and Housewares0.218.36 7Financial Institutions3.758.18 8Communication Equipment incl. Semiconductors1.338.06 9Computer Support and Software Services1.968.03 10Electrical Machinery2.577.93 Top-Ten Revenue Performers By Growth Rate in Sales (Nominal US$) Strongest Revenue Gains in Health Care and Services

11. Copyright ® 2005 Global Insight, Inc. 11 Ranking Sectors by the Outlook for Sales Growth Share in Total Sales (%) Average Growth 2005-07 (%) 10Furniture and Fixtures0.435.45 9Paper and Products0.864.68 8Wholesale Trade5.204.05 7Agriculture, Hunting, Forestry & Fishing3.213.29 6Industrial Chemicals1.643.09 5Footwear (Excluding Rubber or Plastic)0.103.06 4Retail Trade4.312.14 3Petroleum Refineries1.651.36 2Primary Metals1.93-0.69 1Mining and Quarrying1.90-2.09 Most Modest Performers By Growth Rate in Sales (Nominal US$)

12. Copyright ® 2005 Global Insight, Inc. 12  Goods sector accounts for 32% of total world sales, manufacturing accounts for 20%  Financials’ 25% share dominate Services Sector  Community (public) services account for 20%  “Distributive Sectors” of Wholesale, Retail Trade account for 16% How Big Are Sector Markets in the Global Economy? Sector Percent Shares of Total World Sales

13. Copyright ® 2005 Global Insight, Inc. 13 OECD Countries’ Shares in Sector and Sector Growth Based on Value Added in ’97 US$ Aggregate By ISIC One-Digit Sectors

14. Copyright ® 2005 Global Insight, Inc. 14 Rest of the World (Non OECD) Shares in Sector and Sector Growth Based on Value Added in ’97 US$ Aggregate By ISIC One-Digit Sectors

15. Copyright ® 2005 Global Insight, Inc. 15 Role of Chinese Manufacturing in the World Economy Regional Shares of Growth in Global Manufacturing Sector Sales Source: GII World Industry Service

16. Copyright ® 2005 Global Insight, Inc. 16 Role of Manufacturing Sector in the Chinese Economy Regional Shares of Manufacturing VA in GDP and Growth in GDP Source: GII World Industry Service

17. Copyright ® 2005 Global Insight, Inc. 17 Growth in Goods Imports in Selected Countries Change in Imports Since 2000  China recorded the largest growth in Goods imports for any country during 2000 to 2004  Growth in imports of US$ 245 Bill. Amounts to 23.6% annual average growth  Although increase in India’s imports were smaller in value, it was also very strong at 16% percent annual growth

18. Copyright ® 2005 Global Insight, Inc. 18 What is Role of Chinese Exports in World Trade? Greater China Manufacturing Exports Percent Share of Total World Manufacturing Exports * Export totals from China, Hong Kong and Taiwan exclude trade with each other. These are included in Intra-Regional. Source: World Industry Service

19. Copyright ® 2005 Global Insight, Inc. 19 What is Role of EU 15 Exports in World Trade? EU 15 Manufacturing Exports Percent Share of Total World Manufacturing Exports * Export totals from EU 15 Rest of World exclude trade with each other. These are included in Intra-Regional. Source: World Industry Service

20. Copyright ® 2005 Global Insight, Inc. 20 Change in World Manufacturing Export Shares (Delta on the Shares: Share at End of Period less Share at Start of Period) What is the Chinese Competitive Threat? 2005--2009: +2.0% 2000--2004: +2.9% Source: World Industry Service

21. Copyright ® 2005 Global Insight, Inc. 21 Cross Border Trade Still Growing in Importance for Sector Production  Manufacturing accounts for the largest share of merchandise exports  Of the $ 8.34 Trill. anticipated trade value, $7.54 Trill. Will be from the manufacturing sector  Agriculture and Mining provide $230 and $575 Bill. respectively  Rising trade intensity: While volume of Global exports continued to grow, share of exports in global production also continued to expand

22. Copyright ® 2005 Global Insight, Inc. 22 Did the trade intensity increase over the past decade in China? Trade Intensity = (Export+Import)/Production North Asia: High Technology Sector Trade Intensity in High-Tech in China Source: World Industry Service

23. Copyright ® 2005 Global Insight, Inc. 23 Did the trade intensity increase over the past decade in India? Trade Intensity = (Export+Import)/Production Source: World Industry Service SAARC: High Technology Sector Trade Intensity in High-Tech in India

24. Copyright ® 2005 Global Insight, Inc. 24 Did the trade intensity increase over the past decade in Brazil? Trade Intensity = (Export+Import)/Production Latin America: High Technology Sector Trade Intensity in High-Tech in Brazil Source: World Industry Service

25. Copyright ® 2005 Global Insight, Inc. 25 Comparing China’s Trade Shares with Other Countries Source: World Industry Service Trade Shares of Metals & Construction Materials (World Production US$ 1.5 Trill. in 2005) Trade Shares of Industrial Chemicals (World Production US$ 1.3 Trill. in 2005)

26. Copyright ® 2005 Global Insight, Inc. 26 Comparing China’s Trade Shares with Other Countries Source: World Industry Service Trade Shares of Communication Equip. (World Production US$ 1.04 Trill. in 2005) Trade Shares of Motor Vehicles (World Production US$ 2.1 Trill. in 2005)

27. Copyright ® 2005 Global Insight, Inc. 27 What Is the Role of Capital Expenditures in Sector Activity? CapEx Spending as % of Total Sales United States Vs Europe, (2003) US CapEx Spending as % of Total Sales Total for 446 US Corporations in the GICS Sector Classification Source: Worldscope Company Financial Statements & WIS Calculations

28. Copyright ® 2005 Global Insight, Inc. 28 Ratio of Fixed CapEx to Sales (CapEx / Total Sales) Service Sector (ISIC 6-9)Goods Sector (ISIC 1-3)

29. Copyright ® 2005 Global Insight, Inc. 29 What is the Return on Fixed CapEx Spending? (ROFIC) US Corporate Sector: Return from Investment in Fixed Capital Company Net Income / 3-year sum of Fixed Investments US Macro Economy: Marginal Efficiency of Private Fixed Investment ∆ in GDP / 3-year sum of Fixed Investments Source: US BEA, Worldscope Company Financial Statements & WIS Calculations

30. Copyright ® 2005 Global Insight, Inc. 30 Marginal Efficiency of Investment ( ∆ in GDP / Three-year sum of CapEx) OECD and LDC’sU.S. and China

31. Copyright ® 2005 Global Insight, Inc. 31 Sector Return on Fixed Capital Spending (Operating Profits / Three-year sum of CapEx) Aggregate ISIC: 1 to 9China, by Sector

32. Copyright ® 2005 Global Insight, Inc. 32 Please Contact Us for a Personal Demonstration! More Information?  Mark Killion, CFA Managing Director, World Industry Service 1-610-490-2547 mark.killon@globalinsight.com  Prem Premakumar Applications Manager, World Industry Service 1-610-490-2525 prem.premakumar@globalinsight.com

33. Copyright ® 2005 Global Insight, Inc. Custom Market Indexes A Framework to Track and Forecast Company Sales Prospects for Multiple Business Segments and Geographies World Industry Service

34. Copyright ® 2005 Global Insight, Inc. 34 Global Insight’s World Industry Service (WIS) Provides Sector Benchmarks for Global Sales Forecasting  WIS provides a unique set of global sector data, financial benchmarks, and written reports, all delivered via Global Insight’s easy-to-use Web-based platform  Harmonized industries and indicators allow for consistency and comparisons across sectors and geography  User-friendly access facilitates navigation through a multi-dimensional choice of sector, country, indicator, and timeframe  The application of WIS featured here is the Custom Market Index (CMI) framework, which uses WIS sector data to aid in company sales forecasting and market planning  An ideal tool to forecast sales in several business segments and multiple countries/regions around the world

35. Copyright ® 2005 Global Insight, Inc. 35 WIS Sectors Are the “Gear Box” that Connects Macro and Companies! WIS sector data represents a big “peer group” of all players that operate in each sector  Data derived from company tax filings  Includes public and private ownership  Creates robust financial benchmarks  Uses sector benchmarks to anticipate likely company prospects WIS Platform Drives Macro Performances through Sector Activity to Individual Company Performances Macro  Policies  Slate of Demand  Scenarios  Prices and Exchange Rates Industry  Sources of Demand  Purchases, COGS  Consumer, B2B Markets  Technology, Commercial Linkages  Trade, Competition, and Profits Company  Benchmark Global Sales Growth, Cost Structure, Risks  Market Share  Competitive Technology

36. Copyright ® 2005 Global Insight, Inc. 36 WIS provides comparative and consistent benchmarks of market size, growth, volatility, correlation, and structure  Use the WIS indicators and reports to understand demand conditions and structural changes in key customer markets The Custom Market Index (CMI) framework facilitates the tracking, analysis, and forecasting of company sales prospects for multiple business segments and regions  Use WIS sector information as the basis for custom framework  Use company sales patterns to “weight” or tie sectors together into tailored market bundles  Produce a finely targeted and informed view of sales prospects How to Use WIS Information in Sales Forecasting Translate economic events into implications for key markets

37. Copyright ® 2005 Global Insight, Inc. 37 What is the Market Size of Key Global Sectors? —Examples of WIS Benchmark Indicators  WIS indicators show the size and composition of sector markets  Comparable measures are scalable to region and world totals  Ability to scan across sector groups and regions, then drill down to more granular market segments  Metrics allow custom definition of segments and geography WIS Indicators Provide Robust Benchmarks of Sector Peer Groups (Example of total world sales for the nine top sectors)

38. Copyright ® 2005 Global Insight, Inc. 38 Drill Down from Top-Level Sectors to Sub-Industries, and Show Market Size Across Countries and Business Segments What is the Market Size of Key Global Sectors? — Examples of WIS Benchmark Indicators

39. Copyright ® 2005 Global Insight, Inc. 39 Percent Growth in Inflation- Adjusted Sector Sales (World total from 70 economies)  Sector Growth Rates are a key metric for sales forecasting  Identify and target the fastest-growing sectors, then determine the best geography for sales and production  CMI: Use custom definition of segments and geography to best represent and track a company’s own set of target market segments What Are the Growth Rates of Key Global Sectors? — Examples of WIS Benchmark Indicators

40. Copyright ® 2005 Global Insight, Inc. 40 Key Services SectorsKey Manufacturing Sectors Drill Down from Top-Level Sectors to Sub-Industries and Show Market Growth Across Countries and Business Segments What Are the Growth Rates of Key Global Sectors? — Examples of WIS Benchmark Indicators CMI Applies WIS Sector Metrics to Company Sales Patterns!

41. Copyright ® 2005 Global Insight, Inc. 41 What Are Custom Market Indexes (CMI)?  Companies that operate in or sell into various sectors and several different countries are typically more difficult to track and forecast on a comparable basis across all business components  Also, the actual size of sectors and countries are naturally “weighted” by their actual US$ market size, but these natural “weights” may not be relevant for many companies  The importance of particular sectors to a client can be quite different than the importance of the same sectors to the macro economy Solution: Create a tailored or Custom Market Index (CMI) that calibrates sector measures to an individual company and/or client business patterns  Provides a consistent framework that can be employed on a common basis across all business segments and regions

42. Copyright ® 2005 Global Insight, Inc. 42  Forecast sales growth, profits and margins, and market share  Communication tool for Wall Street analysts to best illustrate company performance relative to relevant markets  Benchmarking, segmentation, and competitive analysis  Corporate planning and strategy, resource management, expansion, procurement, and competitive investment requirements  Active risk management by sector and geographical dimensions Global Insight’s Custom Market Indexes Common Use of Custom Market Indexes

43. Copyright ® 2005 Global Insight, Inc. 43 Custom Market Indexes Take Several Forms Global Insight’s Custom Market Indexes 1) Structural models provide strategic forecasts of company sales  Sales forecasts are measured in US$ (or euro) for size, growth rates, and market share calculations  Flexible “slice and dice,” roll up across all business segments and regions 2) High-frequency models that feature turning point indicators  Advantage is shorter time forecast horizons  These models can only address segments selling to manufacturing sectors  Forecasts are produced only in growth rate terms (not US$ size or market share) 3) Leading indicator models of inflection points  Indexes whose known historical values have leading information for future company sales  Identify turning points in growth without forecasts  These models shows turning points only, not growth rates, market size, or market share

44. Copyright ® 2005 Global Insight, Inc. 44 Shares of Company Sales from Geographical Regions and Client Industries Are Used to Create Custom Market Index Example of Company Custom Market Index — Structural Model Approach  Roll up sales from all segments and region to company totals; compare CMI to actual company sales performances  Use CMI over history to analyze and explain changes in market shares  Use CMI forecasts as unbiased market growth expectations Cells show the percent shares of company sales that originate from clients in the listed sectors and regions These shares are used as “weights” that are applied to WIS data to create the company’s actual, attainable custom market

45. Copyright ® 2005 Global Insight, Inc. 45 CMI for Brazil versus Brazilian GDP (% change) CMI Is a Framework for Tracking Key Customer Markets Across Different Countries’ Business Segments CMI for the Chemicals Business Segment in Different Regions (%)

46. Copyright ® 2005 Global Insight, Inc. 46 Custom Market Index – Example of High Frequency Framework for Selling Into High Technology Sectors  Incorporate WIS high-frequency indicators for key technology and process industries  Use with company sales patterns to create Custom Market Index  Latest WIS data provide up-to-date snapshot of client markets  This version of CMI will forecast sales for a short time horizon (3-6 months), with statistical standard deviations around the forecasts  Focus on growth and inflection points in sales Use Monthly/Quarterly Indicators to Track and Forecast Near-Term Growth in Sales History Forecast

47. Copyright ® 2005 Global Insight, Inc. 47 Custom Market Index – Example of Leading Indicator Based Forecast (Lead/Lag Relationships) Nature and Length of the Lead/Lag Relationships Are Determined by the Data  Use monthly/quarterly sector indicators to develop lead/lag relationships with sector indicators  Use high-frequency data for “leading indicators” of future sales  Focus on metrics whose known values today anticipate future company sales trends  Show likelihood of turning point in sales growth

48. Copyright ® 2005 Global Insight, Inc. 48 CMIs Deliver the Global Insight Advantage  Accurately forecast your business segment sales  Determine the strength and vulnerability of your markets  Improve your performance against competitors  Target resources toward most promising areas  Minimize the impact of exposure to business cycles  Minimize your risks as a lender or investor  Translate economic events into impacts on key markets

49. Copyright ® 2005 Global Insight, Inc. 49 Please contact us for a personal demonstration! More Information?  Mark Killion, CFA Managing Director, World Industry Service 1-610-490-2547 mark.killion@globalinsight.com  Prem Premakumar Applications Manager, World Industry Service 1-610-490-2525 prem.premakumar@globalinsight.com