1. Industrials By: Brandon Harlow, Bhavik Khandhar, Tracy Marsolo & Matt Shubeck

2. Agenda Sector Analysis Business Analysis Economic Analysis Financial Analysis Valuation Analysis Recommendation Q&A

3. Industrials currently underweight in SIM Portfolio by 100 basis points. Sector Analysis

4. Sector’s Performance as of 5/6/09 MTDQTDYTD Energy 8.46%13.68%-0.05% Materials 5.65%21.59%18.17% Industrials 6.33%25.17%-2.08% Consumer Discretionary 3.65%22.86%12.28% Consumer Staples 1.88%4.97%-6.90% Health Care 2.01%1.10%-7.51% Financials 15.64%41.28%-0.39% Info Tech 2.10%14.40%18.92% Telecomm 4.25%6.58%-2.45% Utilities 3.59%4.03%-8.31%

5. Industries in Industrials Trucking Trade Cos & Dist Services-Office/Supp Services-Environmental Services-Employment Research & Consulting Railroads Machinery Industrial Machinery Const/Farm Ind'l Conglomerates Electrical Component Diversified Supp Ser Construct. & Engineer. Commercial Printing Building Products Airlines Airfreight & Logistics Aerospace/Defense

6. 10 Biggest Stocks in Industrials General Electric Caterpillar Southwest Airlines Textron Honeywell Int'l CSX Corp Boeing United Technologies Union Pacific UPS Top 10 make up 59.28% of Industrials 36.11% 4.39% 3.14% 2.66% 2.51% 2.26% 2.11% 2.07% 2.05% 1.98%

7. Business Analysis

8. Phases of Lifecycle Most companies are established companies competing with a few major competitors. Industrial Sector

9. Industrial’s Price vs. S&P 500

10. Manufacturer’s Inventories

11. Industrial Production, Capacity, & Utilization

12. Economic Analysis

13. Industry and Economic Life Cycle

14. Financial Analysis

15. Net Profit Margin

16. ROE

17. EPS YOY Growth

19. Trailing P/E Relative to S&P 500

20. Forward P/E Relative to S&P 500

21. P/CF Relative to S&P 500

22. P/B Relative to S&P 500

23. Valuation Analysis

24. Specific Industries in Sector Recommend Industrial Conglomerates Electrical Components Avoid Service-Employment Building Products Airlines

25. Industrials vs. S&P 500 P/E1.20.661.10.73 P/S1.10.810.9 P/B1.40.91.1 P/CF1.20.81.10.9 Industrials Sector HighLowMedianCurrent P/E30.57.120.49.7 P/S1.90.61.50.8 P/B6.11.43.32.3 P/CF16.74.9126.7

26. Conglomerates

27. Electrical Components

29. Services-Employment HighLowMedianCurrent P/E1582.37.730.113.3 P/S3.2.51.9.9 P/B10.1.75.22.6 P/CF49.75.821.610

30. Building Products

31. Airlines

32. Final Recommendation Increase position in portfolio by 100 basis points. Match the S&P 500

33. Q & A