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PORTFOLIO MANAGER’S REVIEW A Monthly Publication of BeyondProxy LLC

www.manualofideas.com

editor@manualofideas.com

April 21, 2010

When asked how he became so successful, Buffett answered: “we read hundreds and hundreds of annual reports every year.”

Edited by the

Manual of Ideas Research Team “If our efforts can further the goals of our members by giving them a discernible edge over other market participants, we have succeeded.”

Top Five Ideas In This Report Gravity Co. (Nasdaq: GRVY) ……………… p. 20

I.D. Systems (Nasdaq: IDSY) ……………….. p. 24

BEN GRAHAM-STYLE INVESTING: THE DEEP VALUE REPORT ► Snapshot of 98 deep value investment candidates ► 20 companies profiled by MOI research team ► Proprietary selection of Top 5 candidates for investment ► Plus: Exclusive interview with Allan Mecham ► Plus: Exclusive interview with Toby Carlisle ► Plus: Superinvestor holdings update

LookSmart (Nasdaq: LOOK) ………………. p. 28

Market Leader (Nasdaq: LEDR) ………………. p. 32

Maxygen (Nasdaq: MAXY) ……………… p. 36

Also Inside Editor’s Commentary …………….. p. 4 Superinvestor holdings update ….. p. 6 Interview with Allan Mecham …… p. 8 Interview with Toby Carlisle …… p. 14 Ben Graham-style investing …… p. 18 98 Deep Value Stocks …………. p. 100

About Portfolio Manager’s Review Our goal is to bring you investment ideas that are compelling on the basis of value versus price. In our quest for value, we analyze the top holdings of top fund managers. We also use a proprietary methodology to identify stocks that are not widely followed by institutional investors. Our managing editor John Mihaljevic is a member of Value Investors Club, an exclusive community of money managers, and has won the Club’s prize for best investment idea. John is a trained capital allocator, having studied under Yale chief investment officer David Swensen and served as research assistant to Nobel laureate James Tobin. John holds a BA in Economics, summa cum laude, from Yale and is a CFA charterholder.

Companies mentioned in this issue include A. H. Belo, A.C. Moore Arts, Acorn International, Actions Semiconductor, Adaptec, Agria, Albany Molecular, American Railcar, Ascent Media, Ascent Solar, Audiovox, Avatar Holdings, Axcelis Technologies, Breakwater Resources, BRT Realty Trust, Callaway Golf, Cardero Resources, Cascade Microtech, Century Casinos, China Techfaith, Comverse Technology, CONN'S, Conrad Industries, Creative Technology, Crexus Investment, dELiA*s, Denison Mines, Deswell Industries, Duckwall-ALCO Stores, EchoStar, ePlus, ExpressJet, Five Star Quality, Flexsteel Industries, Formula Systems, Frozen Food Express, Gencor Industries, Global Industries, Gravity, GTSI, Gushan Environmental, Hardinge, Harvest Natural Resources, Heelys, HQ Sustainable Maritime, Hurco, I.D. Systems, Imation, Imperial Sugar, Industrias Bachoco, Ingram Micro, Insmed, Integrated Electrical, Kaiser Aluminum, Kimball, L.S. Starrett, Lakes Entertainment, Linktone, LJ International, LookSmart, Luby's, Market Leader, Maxygen, MEMSIC, Miller Petroleum, Movado Group, Myriad Pharma, Nam Tai Electronics, Natuzzi, Ninetowns Internet, Novatel Wireless, Nu Horizons, Opnext, ORBCOMM, PC Connection, PennyMac Mortgage, Planar Systems, Providence Worcester, Qiao Xing Mobile, Qiao Xing Universal, QLT, Rewards Network, Seahawk Drilling, Silicon Image, Spectrum Group, Sycamore Networks, Synalloy, Synthesis Energy, TAT Technologies, Tecumseh Products, The9 Limited, TomoTherapy, Trans World Entertainment, TravelCenters of America, Two Harbors Investments, Volt Information, Webzen, Xinyuan Real Estate, and more.

(profiled companies are underlined)

Copyright Warning: It is a violation of federal copyright law to reproduce all or part of this publication for any purpose without the prior written consent of BeyondProxy LLC. Email support@manualofideas.com if you wish to have multiple copies sent to you. © 2008-2010 by BeyondProxy LLC. All rights reserved.


Table of Contents EDITOR’S COMMENTARY .............................................................................4 SUPERINVESTOR HOLDINGS UPDATE ......................................................6 EXCLUSIVE INTERVIEW WITH ALLAN MECHAM .......................................8 EXCLUSIVE INTERVIEW WITH TOBY CARLISLE .................................... 14 BEN GRAHAM-STYLE INVESTING ............................................................ 18 THE PARABLE OF MR. MARKET ............................................................................................... 18 VALUE HAS OUTPERFORMED ................................................................................................. 19 WHAT WE MEAN BY “BEN GRAHAM-STYLE” VALUE .................................................................. 19

TOP FIVE GRAHAM-STYLE VALUE IDEAS .............................................. 20 GRAVITY (GRVY) – OWNED BY MOON, BLACK HORSE ............................................................. 20 I.D. SYSTEMS (IDSY) – OWNED BY ARTIS, DIKER .................................................................... 24 LOOKSMART (LOOK) – OWNED BY KENNEDY, RENTECH, S SQUARED ...................................... 28 MARKET LEADER (LEDR) – OWNED BY SPRINGHOUSE, LMM, RENTECH ................................... 32 MAXYGEN (MAXY) – OWNED BY CONUS, RENTECH, LONESTAR, ROYCE ................................... 36

OTHER STOCKS THAT MEET GRAHAM-STYLE VALUE CRITERIA ...... 40 ACTIONS SEMICONDUCTOR (ACTS) – OWNED BY RENTECH, T. ROWE...................................... 40 ADAPTEC (ADPT) – OWNED BY STEEL PARTNERS, RENTECH, PZENA ....................................... 44 ASCENT MEDIA (ASCMA) – OWNED BY LIBERTY MEDIA, GABELLI ............................................. 48 AUDIOVOX (VOXX) – OWNED BY BAUPOST, AEGIS, SMITH, KAHN ............................................. 52 AXCELIS TECHNOLOGIES (ACLS) – OWNED BY SCHNEIDER, STERLING, SMITH .......................... 56 CALLAWAY GOLF (ELY) – OWNED BY ROYCE, CLEARBRIDGE ................................................... 60 HURCO COMPANIES (HURC) – OWNED BY ROYCE, PIER, KENNEDY.......................................... 64 IMATION (IMN) – OWNED BY ARTISAN, PRIVATE, LSV, THIRD AVENUE....................................... 68 INSMED (INSM) – OWNED BY ACADIAN, BLACKROCK ............................................................... 72 LINKTONE (LTON) – OWNED BY MNC, MERRY ASIA ................................................................ 76 NOVATEL W IRELESS (NVTL) – OWNED BY ROYCE, KESTREL .................................................... 80 REWARDS NETWORK (DINE) – OWNED BY ELKHORN, WC, RENTECH ....................................... 84 SILICON IMAGE (SIMG) – OWNED BY TOCQUEVILLE, RENTECH, HARVEY ................................... 88 THE9 LIMITED (NCTY) – OWNED BY QVT, RENTECH, SANSAR ................................................. 92 TRAVELCENTERS OF AMERICA (TA) – OWNED BY LEUCADIA, RENTECH .................................... 96

SNAPSHOT OF 98 DEEP VALUE STOCKS ............................................. 100 IN ALPHABETICAL ORDER ..................................................................................................... 100 BY MARKET VALUE .............................................................................................................. 102 BY SECTOR......................................................................................................................... 104 STOCK PRICE PERFORMANCE .............................................................................................. 106 FREE CASH FLOW ............................................................................................................... 108 P/E MULTIPLES ................................................................................................................... 110 NET CURRENT ASSET VALUE ............................................................................................... 112 PERCENTILE RANK WITHIN INDUSTRY .................................................................................... 114 INSIDER BUYING AND OWNERSHIP ........................................................................................ 116

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April 21, 2010 – Page 3 of 120


Editor’s Commentary Researching a report on Ben Graham-style investing following the kind of runup the stock market indices have enjoyed since the lows of March 2009 has not been easy. Nonetheless, we were able to identify a reasonable number of companies that meet all or most of Graham’s value criteria. In this report, we profile 20 “deep value” stocks and highlight five companies as particularly interesting opportunities. Not all of these companies are “net current asset value” bargains based on the requirement that current assets less total liabilities exceed equity market value. However, all of the companies profiled in this report have significant value resident on their balance sheets. Such asset value protects the downside, while upside generally depends on recovery in business performance or asset sales and associated cash distributions. Here are five companies that deserve closer investigation (advance apologies to those among you who will find the following companies too small to consider— we’ll be back with “bigger” ideas next month): Gravity (GRVY) ($58 million market value), a Korean developer and marketer of online games, remains one of the cheapest asset-rich stocks we have come across in a long time. Despite improved management execution, including the achievement of profitability over the past year, the stock continues to trade at a discount to net cash (most of the cash is held in Korean won). Our analysis of the earning power of Gravity’s Internet-based game franchises suggests that the operating business may be worth several times the recent market value. As a result, investors enjoy an enviable combination: strong downside protection due to the net cash balance and large upside potential due to the high-return, scalable nature of the operating business. We note that majority shareholder GungHo, a Japanese gaming company run by the son of the founder of technology giant Softbank, could stand in the way of value realization by minority shareholders. However, this risk appears more relevant in the context of liquidation value rather than going-concern value. A potential catalyst for Gravity shares is the upcoming launch of the long-delayed sequel to the flagship game Ragnarok Online. The game should be released within the next twelve months, perhaps even by the end of this year, as stated by management in March. We believe there is pent-up demand for Ragnarok Online 2, and it is difficult to conceive a scenario in which RO 2 is launched yet Gravity’s revenue and profitability do not increase substantially. I.D. Systems (IDSY) ($34 million market value) is a best-in-class player in the growing market for wireless solutions for managing and securing enterprise assets, including industrial vehicles, such as forklifts and airport ground support equipment, and rental vehicles. IDSY equity traded at a valuation of more than $200 million only a few years ago, reflecting the company’s patented technology leadership and rapid growth. However, customer concentration produced rapid revenue declines in the recent recession, with a spending freeze at the U.S. Postal Service accounting for more than one-half the revenue drop in 2009. I.D. Systems shares recently traded at close to the company’s net cash balance, pro forma for the $16 million acquisition of GE’s Asset Intelligence unit in January. Asset Intelligence, which provides trailer and container tracking solutions, should aid I.D.’s effort to reach profitability in 2011. While it is impossible to forecast I.D. Systems’ eventual “normalized” earning power, the size and growth profile of the target market suggest that long-term profitability could compare favorably to recent market value. Insiders own 19% of the shares and have been recent buyers of the stock.

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April 21, 2010 – Page 4 of 120


LookSmart (LOOK) ($19 million market value), founded in 1996, was an early innovator in the online advertising industry, implementing a paid placement model for Internet search results. The company’s model never quite reached the “tipping point” of mass-market acceptance and was eventually overtaken by Google’s widely adopted AdWords technology. Nonetheless, LookSmart’s AdCenter search platform continues to be used by online advertisers and publishers. While equity investors ascribe negative value to LookSmart’s enterprise—as implied by net cash amounting to 130% of recent market value—LookSmart should be able to reach profitability on a lower cost base. Moreover, the company likely retains value to a strategic buyer. Respected quant fund Renaissance Technologies owns more than 6% of LookSmart. Market Leader (LEDR) ($51 million market value) provides online marketing and technology software and services to real estate professionals, helping them generate and convert leads. Investors appear to have shunned Market Leader, as it derives revenue from the battered real estate industry. However, at an enterprise value of roughly zero, and with “net net” current assets exceeding recent market value, Mr. Market appears to have overreacted. Market Leader operates a business that is not capital-intensive and should generate respectable cash flow in “normal” times. The company has recently lost money, but investors may be missing an important shift in Market Leader’s business model toward software-as-a-service (SaaS), which generates recurring revenue. SaaS revenue doubled in Q4 and now accounts for more than 50% of total revenue. As the move toward SaaS progresses, it appears likely that Market Leader will grow overall revenue in 2010. The company has multiple profitability levers—whether or not Market Leader turns profitable this year will depend more on management priorities than the ability of the underlying business to turn a profit. Maxygen (MAXY) ($218 million market value) develops improved versions of protein drugs by utilizing its proprietary MolecularBreeding directed evolution technology platform. Maxygen recently reorganized, leaving it with a substantial cash balance and various operating assets. Maxygen’s net cash and the assumed market value of the company’s 21% stake in biofuel maker Codexis (scheduled to IPO this week) approximate the recent market value of the entire company. Other assets include an 83% stake in joint venture Perseid, a patent-protected technology platform, licensing deals, and a potential $30 million milestone payment from Bayer. Maxygen shares look attractive on a sum-of-the-parts basis. Finally, we are pleased to feature two exclusive interviews in this report. We recently had the pleasure of gaining insights from Allan Mecham of Arlington Value and Toby Carlisle of Eyquem Value. It’s impossible to read what Allan and Toby have to say on value investing without coming away a bit better prepared for the challenges of investment management. Sincerely,

John Mihaljevic, CFA and The Manual of Ideas research team

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April 21, 2010 – Page 5 of 120


Superinvestor Holdings Update In the February issue of Portfolio Manager’s Review, we profiled the top holdings of more than twenty top investors, based on then-available Schedule 13F-HR filings with the SEC. On this page, we provide an update on purchase and sale activity since yearend 2009 by the same set of investment managers. This information is based on Schedule 13G or 13D filings and Form 3 or 4 filings made by investors when changes in holdings require disclosure with the SEC. Increases in Superinvestor Holdings Filing Date 4/13 4/12 4/1 3/31 3/31 3/31 3/31 3/22 3/19 3/9 3/3 3/2 2/16 2/11 2/5 1/21 *

Filing Type 4 13D 4 13G 13D 13G 13G 13G 13G 13D 13D 4 13D 4 13G 3

Investor ESL Riley Icahn Fairholme Icahn Baupost Baupost Lone Pine Bares Pershing Riley ESL Icahn Fairholme Greenlight Berkshire

Company / Ticker AutoNation / AN WPCS International / WPCS Take-Two Interactive / TTWO AIG / AIG Icahn Enterprises / IEP Viasat / VSAT Theravance / THRX Live Nation / LYV Hallmark Financial / HALL General Growth / GGP DDi / DDIC AutoNation / AN Lions Gate / LGF AmeriCredit / ACF CIT Group / CIT Symetra Financial / SYA*

Market Value ($mn) 3,254 22 886 5,283 3,598 1,256 1,007 2,596 206 5,315 107 3,165 711 3,142 7,629 1,547

Latest Date 19.08 3.17 10.65 39.15 44.53 34.58 15.68 15.39 10.23 16.75 5.38 18.56 6.03 23.47 38.14 13.11

Price ($) Filing ∆ Since Date Filing 19.15 0% 3.14 1% 10.05 6% 34.14 15% 39.95 11% 31.78 9% 13.07 20% 13.67 13% 7.96 29% 11.56 45% 4.89 10% 19.15 -3% 5.81 4% 19.04 23% 27.61 38% 12.00 9%

Shares Owned Latest ∆ Since (mn) 12/31/09 78.0 1% 0.7 new 2.4 8% 15.0 new 77.3 3% 8.7 77% 13.0 29% 9.6 new 2.0 47% 24.0 3% 2.0 9% 77.1 <1% 4.4 4% 34.8 10% 10.6 68% 17.4 new

Holdings as % of Co. Fund 46% 13% 10% 6% 3% 1% 11% 6% 96% 77% 24% 19% 20% 13% 6% 1% 10% 9% 8% 28% 10% 30% 45% 13% 4% 1% 26% 8% 5% 13% 15% 0%

Price ($) Filing ∆ Since Date Filing 4.90 15% 17.55 54% 0.67 -40% 0.59 -37% 439.60 22% 26.80 2% 18.45 24% 17.55 54% 2.78 -9% 20.25 32% 13.23 38% 9.81 -19% 27.25 7%

Shares Owned Latest ∆ Since (mn) 12/31/09 5.2 -24% 1.5 -57% 1.0 -61% 0.8 -27% 0.4 -13% 30.8 -3% 9.2 >-1% 2.0 -43% 5.0 -22% 1.0 -33% 2.1 -7% 1.0 -78% 17.4 -18%

Holdings as % of Co. Fund 11% 3% 6% 3% 1% 0% 1% 0% 5% 1% 13% 1% 13% 1% 8% 3% 4% 1% <5% 11% 7% 0% 2% 0% 5% 2%

Owned by Berkshire Hathaway subsidiary General Re.

Decreases in Superinvestor Holdings Date of Filing 4/13 4/8 4/7 4/1 3/31 3/26 3/16 3/16 2/26 2/24 2/17 1/31 1/31

Filing Type 13D 13D 13D 13D 13G 4 13G 13D 13D 13G 4 13G 13G

Investor Third Point Baupost Icahn Icahn Southeastern Berkshire Southeastern Baupost Third Point Bares Fairholme Fairholme Southeastern

Company / Ticker Nabi Biopharma / NABI Facet Biotech / FACT Blockbuster / BBI Blockbuster / BBI.B Wash. Post / WPO Moody’s / MCO Dillard’s / DDS Facet Biotech / FACT Phoenix / PNX Stratasys / SSYS TAL International / TAL United Rentals / URI Marriott / MAR

Market Value ($mn) 276 677 49 27 4,343 6,482 1,595 678 293 543 562 479 10,419

Latest Date 5.64 26.99 0.40 0.37 535.70 27.41 22.84 27.01 2.53 26.80 18.29 7.96 29.06

Portfolio Manager’s Review follows the portfolio moves of the following investment managers: Bill Ackman of Pershing Square, Zeke Ashton of Centaur, Brian Bares of Bares Capital, Bruce Berkowitz of Fairholme, Warren Buffett of Berkshire Hathaway, Ian Cumming and Joe Steinberg of Leucadia National, David Einhorn of Greenlight, Glenn Greenberg of Chieftain, Brian Gaines of Springhouse, Tom Gayner of Markel Gayner, Mason Hawkins of Southeastern, Chris Hohn of Children’s Investment Fund, Carl Icahn of Icahn Partners, Seth Klarman of Baupost, Eddie Lampert of ESL Investments, Dan Loeb of Third Point, Steve Mandel of Lone Pine, Mohnish Pabrai of Pabrai Funds, Bryant Riley of Riley Investment Management, Ken Shubin Stein of Spencer Capital, Prem Watsa of Fairfax Financial, and Wally Weitz of Weitz Funds.

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April 21, 2010 – Page 6 of 120


Excerpt from latest issue of 10x45 Bargain Hunter:

Do you benefit from 10x45 Bargain Hunter, our bi-weekly stock screening report? As a subscriber to Portfolio Manager’s Review, you already have FREE access to 10x45 Bargain Hunter. Simply visit the members-only section of the Manual of Ideas website: www.manualofideas.com/members/members_index.html

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April 21, 2010 – Page 7 of 120


Exclusive Interview with Allan Mecham We recently had the pleasure of interviewing Allan Mecham who heads Arlington Value Management. The firm has established an impressive ten-year record, including a positive return in 2008 despite no reliance on short selling. We are pleased to bring you this interview exclusively in Portfolio Manager’s Review. Allan Mecham

The Manual of Ideas: Over the ten years ended Arlington Value December 31st, 2009, the S&P 500 delivered an underwhelming return of negative 9.1%, equaling a 1.0% annual loss. Bruce Berkowitz’s Fairholme Fund achieved a net annualized return of 13.2% during the same period, while your fund returned 15.5% annually net of fees. Berkowitz’s record has made him somewhat of a “rock star” in the investment business. How come you are still flying below the radar?

“Taking emotion out of the equation, or at least minimizing it as much as possible, is vitally important and difficult to do if you have investors peering over your shoulder in real time, questioning ideas.”

Allan Mecham: Ha! Good question… I’m eagerly awaiting The Little Book on Becoming a Hedge Fund Rock-Star. In all seriousness, it’s likely a combination of factors (Salt Lake City-based LLC, only $10+ million under management for the first five years with no serious marketing), but certainly my limitations marketing Arlington are partly to blame. Additionally, and probably the biggest reason for our obscurity, stems from our fanaticism about accepting the “right” capital. Maintaining a culture that’s conducive to rational thinking and investment success has been the top priority since inception. We have turned down significant sums of money on many occasions because of this stubborn commitment. As I said in my most recent letter, we get far more satisfaction from producing top returns than from the size of our paycheck… though we’re hopeful this distinction won’t need to be highlighted for much longer! Many potential investors require monthly transparency into the portfolio and are overly focused on short-term results. Accepting “hot” money would endanger the culture and my ability to perform. My partner Ben [Raybould] considers it his most critical job to cultivate and maintain a culture that minimizes emotional noise and short-term performance pressures, to which I must say he has done a fantastic job. We believe patience and discipline are critically important to investment success. Taking emotion out of the equation, or at least minimizing it as much as possible, is vitally important and difficult to do if you have investors peering over your shoulder in real time, questioning ideas. That’s like telling someone what’s wrong with their golf game in the middle of their backswing — it’s the last thing you need when you’re trying to concentrate and execute a shot. MOI: We could conduct this entire interview simply by revisiting quotes from your past letters, which are a tour de force. You recently didn’t hold back on your view of certain types of institutional investors: “Many times these gatekeepers of capital have expressed admiration for our results. Yet for them to invest we would need to not only continue to find undervalued stocks, we’d

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April 21, 2010 – Page 8 of 120


need to find more of them; additionally, we would need to identify overvalued stocks – and short them – as well as find ideas across the globe in both large and obscure markets. Such comments are flattering, yet we see nothing but wildeyed hubris attempting to outsmart people, more often, in more ways, and in more markets, as opposed to sticking with what produced top-tier results in the first place.” Clearly, the proliferation of investment vehicles whose partners’ interests are at odds with those of the ultimate owners of capital has resulted in misallocation of capital. Do you see owners waking up to this inherent conflict and demanding a more sensible approach to investment? Is it feasible for a fund like yours to bypass the agents and go directly to the owners of capital? Mecham: I think it’s possible to gain traction but I’m not optimistic about change on a large scale as there are multiple factors at play. Bypassing the agents is a laborious process that’s difficult for a two-man shop like ours. The fees throughout the financial system are crazy and make no sense when thinking about the industry as a whole. A lot of financial intermediaries and hedge funds operate using a form of the “Veblen” principle — where status is attached to the high cost and exclusivity of the product. The financial middlemen satisfy the clients’ emotional needs more than the financial needs. The comfort of crowds is strongly at play throughout the system. At the end of the day I think managers are giving clients what they want — peace of mind and smoother returns, albeit at the expense of long-term results.

“The financial middlemen satisfy the clients’ emotional needs more than the financial needs. The comfort of crowds is strongly at play throughout the system. At the end of the day I think managers are giving clients what they want — peace of mind and smoother returns, albeit at the expense of long-term results.”

MOI: Short-term thinking seems to be alive and well in the investment industry despite overwhelming evidence that a longer-term perspective yields better results. You have alluded to the fact that good ol’ career risk may be the culprit: “Non-activity in the face of short-term underperformance is simply not tolerated, even though realistic assumptions (you can’t outsmart other smart people all the time) and basic math (lower frictional costs) confirm its worth. Most fund managers’ capital would not stick around long enough so they simply comply with more standard methods of operation in the spirit of keeping their jobs.” Incentives are one of the most powerful forces driving behavior, so it’s little surprise investment managers have adjusted to the prevailing industry incentives. What could be done to better align career risk with investment risk? Mecham: I am a strong believer in the power of incentives. That being said, I’m not sure I have a silver bullet on how to solve the problem. You need investors to think and act like owners, rather than short-term renters, and to judge performance over longer time frames. I remember reading a talk that Mark Sellers gave at Harvard a few years back. He basically said good investors have the right temperament by age 15, and there’s not much one can do to improve later in life. So I don’t think arguing the merits of one’s philosophy is going to gain a lot of traction — it seems people either get it or they don’t. If you could somehow get investors to accept annual reporting (which is arguably too often), or some type of soft or hard lock-up, that may help, but again, it’s a hard problem to solve as you’re dealing with human nature to a large degree. We are fanatical about partnering with compatible investors — those who “get it” — and we still have soft lock-ups at Arlington Value Capital. The sophisticated family offices (and others) often ask, “What’s your edge?” I firmly believe it is our investor base — they act and think like owners rather than traders, which enables us to wait for exceptional opportunities. Such an investor base really adds value when you go through periods of distress and

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April 21, 2010 – Page 9 of 120


underperformance; precisely the time when you need confidence and stability is apt to be the time when investors are rushing for the exits and questioning the approach. Our investor base is unique: despite above-average volatility we’ve had minuscule withdrawals over the years. Part of the genius in the structure of the Buffett partnerships (which has largely been maintained at Berkshire), is the culture and environment Buffett created and insisted upon; Buffett wouldn’t disclose positions and reported just once a year — he created an environment where nobody was questioning how or when he swung the investment bat. MOI: Let’s switch gears and discuss the investment philosophy behind your track record. Help us understand the kind of investor you are, perhaps by highlighting a couple of examples of companies you have invested in or decided to pass up. What are the key criteria you employ when making an investment decision? Mecham: It’s really quite simple. I need to understand the business like an owner. The firm needs to have staying power; I want to be confident about the general nature of the business and industry landscape on a longer term basis. I’m big on track records, and generally stay away from unproven companies with short operating histories. I also believe a heavy dose of humility and intellectual honesty is important when looking at potential ideas.

“When looking at ideas, I have a Richard Feynman quote tattooed in the back of my brain: ‘Don’t fool yourself, and remember you are the easiest person to fool.’”

There’s a strong undercurrent constantly percolating to buy something — it’s fun, exciting and feels like that’s what you’re getting paid for. This makes it easy to trick yourself into thinking you understand something well enough when you don’t, especially if you are in the investment derby of producing quarterly and yearly returns! When looking at ideas, I have a Richard Feynman quote tattooed in the back of my brain: “Don’t fool yourself, and remember you are the easiest person to fool.” Ultimately, what tends to cover all the bases is the mentality of buying the business outright and retaining management. Critical to implementing this approach is, again, having a compatible investor base. “Whose bread I eat his song I sing”… An owner’s mentality forces you to think hard about the important variables and makes you think long term, as opposed to in quarterly increments. In fact, I think very little about quarterly earnings and more about the barriers to entry, competitive landscape/threats, the ongoing capital needs and overall economics, and most importantly, the durability of the business. Over the years I’ve come to realize the importance of management, so we look hard at the people running the business as well. And, obviously, the price needs to make sense. The criteria bar is set high; we really try to avoid mediocre situations where restlessness causes you to relax investment standards in one area or another. We also stress test the business under various economic scenarios and look to a normalized earnings power. We passed up many seemingly attractive ideas over the years as we would ask, “What happens under 7-10% unemployment (when unemployment was in the 4-5% range) and 6-8% interest rates?” And we would ask, “Is the business overly reliant on loose credit extension and frivolous spending?” Many names didn’t hold up under these stress test scenarios, so we passed. We bought AutoZone [AZO] a few years back as it held up under various adverse macro scenarios, and in fact performed exceptionally well throughout the Great Recession. I constantly try and guard against investing in

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April 21, 2010 – Page 10 of 120


situations where the intrinsic value of the business is seriously impaired under adverse macro conditions. We prefer cockroach-like businesses — very hardy and almost impossible to kill! MOI: You have said that “analysts tend to overweight what can be measured in numerical form, even when the key variable(s) cannot easily be expressed in neat, crisp numbers.” Can you give us an example of how this tendency occasionally creates an attractive investment opportunity for the rest of us? Mecham: Sure. In a generic form, I think there are many instances where a company hits a speed bump and reports ugly “numbers,” yet the long-term earnings power and franchise value remain intact. Oftentimes a key cog of value is in a form that’s difficult to measure — brands, mindshare/loyal customers, exclusive distribution rights, locations, management, etc. Sometimes it’s the location of assets that can be hugely valuable. Waste Management [WM] and USG [USG] both have assets that are uniquely located and almost impossible to duplicate, which provides a low-cost advantage in certain geographies. Reputation is valuable in business, though hard to measure in numerical form. Reputation throughout the value chain can be a strong source of value and competitive advantage. I think Berkshire Hathaway’s reputation is very valuable in a variety of areas, most obviously in acquiring other companies.

“Oftentimes a key cog of value is in a form that’s difficult to measure… Sometimes it’s the location of assets that can be hugely valuable. Waste Management and USG both have assets that are uniquely located and almost impossible to duplicate, which provides a low-cost advantage in certain geographies.”

The various cogs of value differ between companies, but many times the key variable(s) are difficult to capture in a spreadsheet model and/or are not given the weight they deserve. MOI: You wrote recently that your “appetite is paltry for risky investments, almost regardless of potential reward. Theoretically this stance is illogical as ‘pot odds’ can dictate taking a ‘flyer’ — where the potential payoff compensates for the chance of loss — however these situations are difficult to handicap, and can entice one to skew probabilities and payoffs.” You put your finger on an interesting phenomenon: Many investors systematically overestimate the probability and magnitude of favorable outcomes. We recall the countless times we have read investment write-ups that peg the expected return at 50-100%, yet virtually no investor manages to achieve even 20+% performance over any meaningful period of time. What kinds of situations do you consider too risky or, more appropriately, too susceptible to the skewing of probabilities and payoffs? Mecham: I’m not sure I can categorize the situations… Any time you are paying a price today that’s dependent on heroics tomorrow — fantastic growth far into the future, favorable macro environment, R&D breakthroughs, patent approval, synergies/restructurings, dramatic margin improvements, large payoff from capex, etc. — you run the risk of inviting pesky over-optimism (psychologists have shown overconfidence tends to infect most of us), which can result in skewed probabilities and payoffs. We want to see a return today and not base our thesis on optimistic projections about the future. Many earlystage companies with short track records fall into the “too risky” category for us. Investments based on projections that are disconnected from any historical record make us leery. Investments dependent upon a continued frothy macro environment (housing, loose credit) are prone to over-optimism as well — how many housing-related/consumer credit companies were trading at 6x multiples growing 15%+ inviting IV estimates 5x the current quote?

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April 21, 2010 – Page 11 of 120


Many times I think it can be a situation where you just don’t understand the business well enough and the bullish thesis is the nudge that sedates the lingering risks you don’t fully grasp. It’s important to keep the litany of subconscious biases in mind when investing. Charlie Munger talks about using a two-track analysis when looking at ideas. I think that’s an extremely valuable concept to implement when looking at investment opportunities. You have to understand the nature and facts governing the business/idea and, equally important, you need to understand the subconscious biases driving your decision making — you need to understand the business, but you also need to understand yourself! MOI: How do you generate investment ideas? Mecham: Mainly by reading a lot. I don’t have a scientific model to generate ideas. I’m weary of most screens. The one screen I’ve done in the past was by market cap, then I started alphabetically. Companies and industries that are out of favor tend to attract my interest. Over the past 13+ years, I’ve built up a base of companies that I understand well and would like to own at the right price. We tend to stay within this small circle of companies, owning the same names multiple times. It’s rare for us to buy a company we haven’t researched and followed for a number of years — we like to stick to what we know.

“The average stock price fluctuates by roughly 80% annually (when comparing 52-week high to 52-week low). Certainly, the underlying value of a business doesn’t fluctuate that much on an annual basis, so the public markets are a fantastic arena to buy businesses if you can sit still without growing tired of sitting still.”

That’s the beauty of the public markets: If you can be patient, there’s a good chance the volatility of the marketplace will give you the chance to own companies on your watch list. The average stock price fluctuates by roughly 80% annually (when comparing 52-week high to 52-week low). Certainly, the underlying value of a business doesn’t fluctuate that much on an annual basis, so the public markets are a fantastic arena to buy businesses if you can sit still without growing tired of sitting still. MOI: You have stated that your “old fashioned style embraces humble skepticism and is wary of most modern risk management tools and ideas.” Give us a glimpse into how you construct and manage your portfolio — and how you protect it from the kind of upheaval the markets experienced in late 2008 and early 2009. Mecham: There’s no substitute for diligence and critical thinking. It’s ingrained in my DNA to think about the downside before any potential upside. We try and stick with companies we understand, where we have a high degree of confidence in the staying power of the firm. We spend considerable effort thinking critically about competitive threats (Porter’s five forces, etc). We really stress long-term staying power and management teams with proven track records that are focused on building long-term value. Then we always “stress test” the thesis against difficult economic environments. As I said earlier, we try and guard against investing in businesses reliant on some type of macro tailwind. If you have the above, combined with the freedom to take the long view, managing the portfolio is based more on intellectual honesty and common sense rather than any sophisticated “tools,” “models,” or “formulas.” If the financial crisis taught nothing else, it showed how elegant financial models that calculate risk to decimal point precision act like a sedative towards critical thinking and even common sense — “risk models” were like the bell that told the brain it was time for recess! I also think risk management by groups can have similar effects.

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April 21, 2010 – Page 12 of 120


Being diligent, humble and thinking independently are key ingredients to solid risk management. MOI: What is the single biggest mistake that keeps investors from reaching their goals?

“Most investors are their own worst enemies — buying and selling too often, ignoring the boundaries of their mental horsepower.”

Mecham: Patience, discipline and intellectual honesty are the main factors in my opinion. Most investors are their own worst enemies — buying and selling too often, ignoring the boundaries of their mental horsepower. I think if investors adopted an ethos of not fooling themselves, and focused on reducing unforced errors as opposed to hitting the next home run, returns would improve dramatically. This is where the individual investor has a huge advantage over the professional; most fund managers don’t have the leeway to patiently wait for the exceptional opportunity. MOI: What books have you read in recent years that have stood out as valuable additions to your investment library? Mecham: I enjoy all the behavior psychology stuff and would recommend Predictably Irrational [by Dan Ariely], Nudge [by Richard Thaler], How We Decide [by Jonah Lehrer], and Think Twice [by Michael Mauboussin]. The Big Short [by Michael Lewis] is a good book and a very entertaining read. Roger Lowenstein’s new book, The End of Wall Street, is very good as well. I’d also recommend The Relentless Revolution [by Oldham Appleby]. I like reading history of all sorts and think it’s beneficial to investing. MOI: Allan, thank you very much for your time.

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April 21, 2010 – Page 13 of 120


Exclusive Interview with Toby Carlisle We recently interviewed Toby Carlisle, author of the widely followed Greenbackd value investing blog and founder of the newly launched Eyquem Global Value fund. The name Eyquem derives from Michel Eyquem de Montaigne (1533-1592), “one of the most influential writers of the French Renaissance, known for popularizing the essay as a literary genre. He became famous for his effortless ability to merge serious intellectual speculation with casual anecdotes…” 1

Toby Carlisle Eyquem Global Value

The Manual of Ideas: Tell us a little about your background—what drew you to deep value-style investing?

“I’m not trying to reinvent the wheel. I’m just looking for overwhelming value and a good chance I’ll get my money back in the foreseeable future.”

Toby Carlisle: I’m a recovering corporate advisory and securities lawyer. I’ve practiced in Australia and San Francisco, California. I became interested in value investing and the stock market generally at the end of my undergraduate studies when a friend introduced me to Warren Buffett’s Berkshire Hathaway shareholder letters. I read Roger Lowenstein’s book Buffett: The Making of an American Capitalist, reverse engineered Buffett’s investment methodology, read the 1951 edition of Security Analysis in a desultory fashion and then started investing in a similarly desultory fashion. I had predictably poor results. I say “predictably” because I wasn’t doing nearly enough work, and wasn’t nearly patient enough. Regardless, at the time I figured it was because there was something wrong with my methodology. That dissatisfaction with my results and my methodology meant that I was open to something else. I started down the deep value road when I began working as a lawyer in 2002. One of my first big matters was a defense against two reasonably wellknown greenmailers from the ‘80s. They had acquired a blocking stake in a going-private management buy-out and were trying to squeeze out an extra $1 from the bidders. Around the same time I noticed a number of investors taking positions in busted dot coms and making money raiding the cash. None of these investments were comprehensible in the context of the investment methodology discernable from Buffett’s letters, where he regularly pooh-poohs these stocks as cigar butts. I revisited Security Analysis, this time the 1934 edition, studied it properly, found the chapter on liquidations, and I’ve been doing that ever since. I started working in a deep value sometimes activist fund manager in 2008. I’ve now launched my own firm, Eyquem Fund Management. I’ve raised some modest seed capital from outside investors for the maiden fund, Eyquem Global Value. The fund’s focus is similar to Greenbackd, which is to say deep-valuewith-a-catalyst, including sub-liquidation value stocks, and activist and private equity targets. It’s a pretty prosaic strategy. I’m not trying to reinvent the wheel. I’m just looking for overwhelming value and a good chance I’ll get my money back in the foreseeable future.

1

Source: Wikipedia, http://en.wikipedia.org/wiki/Michel_de_Montaigne

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April 21, 2010 – Page 14 of 120


MOI: You have studied extensively the historical performance of Ben Graham’s “net net” investment strategy. Tell us what you’ve found. Carlisle: It’s a testament to Ben Graham’s genius that his net current asset value strategy should be so robust, by which I mean that it should continue to work in different markets, both temporally and geographically, 76 years after it was first published. The strategy has been the subject of numerous papers. Two notable papers are Professor Henry Oppenheimer’s Ben Graham’s Net Current Asset Values: A Performance Update and James Montier’s Graham’s Net-Nets: Outdated or Outstanding? Professor Oppenheimer studied net current asset value stocks in the U.S. between 1970 and 1983, finding a mean return of 29.4% per year against an index return of 11.5%. Montier looked at the performance of net current asset value stocks globally between 1985 and 2007, finding a mean return of 35% per year against an index return of 17% per year.

“There is a natural limit to the amount of capital that can be invested in net current asset value stocks because they are so few, small and illiquid… I have read a comment from Joel Greenblatt that professional net current asset value investors eventually outgrow the strategy, by which he means that sooner or later their capital exceeds that low natural limit…”

MOI: Returns of 29-35% certainly sound mouthwatering. Have you looked at the robustness of the underlying data, for example in terms of the number of companies that could have been bought and the amount of capital that could have been deployed. It seems that especially during the period from 1985 through 2007, the bull market significantly narrowed the field of available “net nets.” Do we know what the geographic distribution of net current asset value stocks looked like during that time period? Carlisle: That’s an excellent question, and it really gets to the heart of why the net current asset value opportunity persists despite the fact that the strategy is very well known. There is a natural limit to the amount of capital that can be invested in net current asset value stocks because they are so few, small and illiquid. The natural limit is quite low. I would suggest that it is so low that most professional fund managers wouldn’t even consider it worthy of study. I have read a comment from Joel Greenblatt that professional net current asset value investors eventually outgrow the strategy, by which he means that sooner or later their capital exceeds that low natural limit, and they get bored with it. I have fairly modest aspirations for my fund, and it’s only one of the strategies that I pursue, so I don’t foresee that being a concern for me. One solution to the problem is to expand the markets under consideration to those outside the U.S. Montier’s research suggests that by investing outside the U.S. you increased your net current asset universe threefold. Approximately 30% of all net current asset value opportunities were in the U.S., more than 50% were in Japan, and the remainder were in South-East Asia and Europe. MOI: Conceptually, buying stocks for less than liquidation value makes sense because there is a legal mechanism to recovering more cash than needs to be invested to set this mechanism in motion. However, in some countries, let’s say Japan, the legal mechanism may be non-existent or not enforceable. Is a strategy of investing in net current asset value stocks still appropriate in such countries? Carlisle: That’s the million dollar question. The prima facie answer would have to be “no” because the entire basis for the strategy as described by Graham is the shareholder’s ultimate right to wind up the company and retrieve her or his capital. This is, almost by definition, capitalism at work. Seth Klarman has written in his book Margin of Safety:

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April 21, 2010 – Page 15 of 120


“A liquidation is, in a sense, one of the few interfaces where the essence of the stock market is revealed. Are stocks pieces of paper to be endlessly traded back and forth, or are they proportional interests in underlying businesses? A liquidation settles this debate, distributing to owners of pieces of paper the actual cash proceeds resulting from the sale of corporate assets to the highest bidder. A liquidation thereby acts as a tether to reality for the stock market, forcing either undervalued or overvalued share prices to move into line with actual underlying value.” Without a culture that elevates the rights of shareholders to their own capital over other “stakeholders’” rights, however, there’s a strong argument that Grahamite liquidation value investing won’t work.

“…as Seth Klarman points out, a liquidation analysis is a theoretical exercise in valuation, but not usually an actual approach to value realization… In my experience, most ‘net net’ companies have been turned around, rather than liquidated.”

The caveat to the prima facie position is threefold. First, as Seth Klarman points out, a liquidation analysis is a theoretical exercise in valuation, but not usually an actual approach to value realization. The assets of a company are typically worth more as part of a going concern than in liquidation, so liquidation value is generally a worst-case outcome. In my experience, most “net net” companies have been turned around, rather than liquidated. Although he wasn’t considering this point for this reason, I think Montier’s research suggests that “net nets” are liquidated in only around one-in-twenty cases (Montier actually says that “net net” stocks suffer a permanent loss of capital – defined as a stock price that drops 90% or more in a year – in around 5% of cases. Although I’m not sure how he constructed his data, it’s possible that these losses are in fact stock prices dropping following a liquidating distribution. It’s also possible that these losses indicate nothing more than a permanent loss of capital, as Montier suggests.) Together, this might suggest that a culture accepting liquidation as a natural part of a company’s lifecycle is not necessary for acceptable returns to sub-liquidation value stocks. Second, the data seem to suggest that net current asset value is predictive of investment returns in Japan, and in the same order of magnitude as it is in the U.S. and other western countries. I hesitate to raise that data in support of an investment in Japan because I believe that, as a general rule, the data should follow the logic, rather than the other way around. That said, I believe the fact that the returns are in the same order of magnitude as the U.S. and other western countries is significant. It lends some credence to the theory that net current asset values are predictive of returns in countries like Japan, where shareholders are considered to be but one of many stakeholders interested in the company. Finally, activist investors – predominantly foreign, although there are some local activists – seem to be making some headway in Japan. It’s possible that the Japanese market is opening up to change. I think this is the weakest of the arguments for a “net net” investment strategy in Japan, but nonetheless worth considering as a possibility. There are many counterpoints to suggest that the market is as hostile to external capitalists as it has always been.

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April 21, 2010 – Page 16 of 120


MOI: It would seem that the strategy of buying “net nets” and embracing an activist approach to investing go hand-in-hand. What is your view of activism and do you intend to pursue it? Carlisle: Activist investors are absolutely essential to the operation of a healthy market. They’ve worn some brickbats for their more extreme tactics, and a few dusted a lot of investor money in the crash, but I believe they’ve provided a net benefit to the market. Like short sellers, activists identify and police the more egregious examples of management waste and self-dealing. They also foment catalysts in otherwise neglected stocks. Both of these roles are important in the universe of small to micro companies outside the glare of analysts and the media, which is the universe inhabited by “net net” investors.

“Activist investors are absolutely essential to the operation of a healthy market. They’ve worn some brickbats for their more extreme tactics, and a few dusted a lot of investor money in the crash, but I believe they’ve provided a net benefit to the market.”

I will always support an activist where it makes sense to do so, but I think it’s highly unlikely that I will enter a position with the intention of being the lead activist. That’s a personal choice for me. I don’t have the personality for activism. I am prepared to be the lead activist where the activist strategy is used as a shield, but I would need another activist to take the lead, not to mention a very compelling value proposition with a clear path to unlocking the value, to consider using it as a sword. That latter strategy – riding the coattails of activist investors – is essentially the one I pursued with Greenbackd, and, with some refinements, it’s one I’ll be pursuing in the fund. MOI: The strategy of investing in net current asset value stocks seems almost ideally suited for a purely quantitative approach. Most “net nets” are companies that have a lot of “hair” and uncertainty, making it tough for emotional investors to set aside their cognitive biases. How does judgment help you improve upon the results that might be achieved by an algorithm-driven approach? Carlisle: My view is that it doesn’t help much, and might even hurt the results. That view is based upon the numerous studies identified in James Montier’s excellent article, Painting by Numbers: An Ode to Quant. Montier’s thesis is that simple statistical or quantitative models consistently outperform expert judgments. This phenomenon persists even when the experts are provided with the models’ predictions. Montier argues that the models outperform because humans are overconfident, suffer from “inertia,” which is an unwillingness to change, and, as you have identified, struggle to put aside cognitive biases. The theoretical conclusion to be drawn from this research is that the model’s output should be favored over expert judgment, meaning discretion should be limited. In practice this is an exceptionally difficult thing to do. I think the proper place for judgment is in refining the model, rather than in waving off any of the model’s predictions. MOI: Toby, thank you very much for your time. To butcher the Chinese proverb, May you live in “net net”-laden times!

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April 21, 2010 – Page 17 of 120


Ben Graham-Style Investing Former Columbia professor Benjamin Graham once said, “Price is what you pay; value is what you get.” Many investors agree with this statement – though only outside the investment arena. Few of us would refuse to buy an item in a department store just because it is on sale, yet many do just that when it comes to the stock market. The fear associated with buying a depressed stock, obviously, is that the price Ben Graham “Father of Security Analysis” decline signifies a fundamental problem. Yet Author, The Intelligent Investor even if the decline has been caused by a decline in intrinsic value, the question is whether the price has declined more than the value erosion warrants. Disciplined investors try to estimate the intrinsic value of companies within their circle of competence and buy them when the price drops far below estimated value.

The Parable of Mr. Market Graham’s 1949 classic The Intelligent Investor describes something akin to a free option contract available to every investor: At any time, you can choose to buy or sell a share of a business in the market at the prevailing bid price. If you believe the price is sufficiently below or above intrinsic value, you may exercise your option to buy or sell (short) the stock. Writes Graham, “Imagine that you own a small share of a private company that cost you $1,000. One of your partners, named Mr. Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers either to buy you out or to sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.” If you are a prudent investor or a sensible businessman, you may be happy to sell out to Mr. Market when he quotes you a high price for your $1,000 interest in the business, and equally happy to buy from him when his price is low. But the rest of the time it may be wiser to form your own ideas of the value of your holdings, based on independent research and analysis. Contrary to what is taught in most finance curricula, “Mr. Market,” at least in the short term, is not an infallible appraiser of businesses (a “weighing machine”) but rather the sum product of the opinions of a herd-like group of investors susceptible to subjective influences and cognitive biases (a “voting machine”).

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April 21, 2010 – Page 18 of 120


Value Has Outperformed Economists Eugene Fama and Ken French have extensively studied the relationship between stock performance and book-to-market ratios. Their seminal paper covered the period from 1963-1990 and included nearly all stocks on the NYSE, Amex and Nasdaq stock markets. The stocks were divided into ten groups (deciles) based on book-to-market and were re-ranked annually. The highest book-to-market stocks outperformed the lowest book-to-market stocks by 21% to 8%, on average, with each descending decile performing worse than the previous. Fama and French also examined the beta of each decile and found that value stocks had lower risk, while growth stocks had the highest risk. The study had a profound impact in part because Fama was a long-time champion of the capital asset pricing model. Relative Annual Performance of Value versus Growth Stocks, 1928-2009 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% 1927

1937

1947

1957

1967

1977

1987

1997

2007

Source: Kenneth R. French data library, http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html

What We Mean By “Ben Graham-Style” Value The parable of Mr. Market states that investors should participate in the market based on an understanding of intrinsic value, but the parable does not address the issue of how one goes about assessing value. While there are many approaches to selecting winning investments, Ben Graham’s favorite approach to valuation was to emphasize the values evident on a company’s balance sheet. Unlike values derived from income statement and cash flow analysis, balance sheet values were deemed “safer” because they depended less on the value of a business as a going concern. If Graham could buy companies for less than the carrying value of their current assets net of all liabilities, he reasoned that he was might be a good deal. Graham’s so-called “net nets” have outperformed the market over long periods of time, but quantitative screens searching for such companies inevitably turn up many near-worthless businesses. In this report, we look at companies whose prices Ben Graham might have liked, but that also meet other, more subjective criteria of value.

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April 21, 2010 – Page 19 of 120


Top Five Graham-Style Value Ideas Gravity (GRVY) – Owned by Moon, Black Horse

Seoul, South Korea, 82-2-201-6000 www.gravity.co.kr/eng

Technology: Software & Programming Trading Data Price: $2.10 (as of 4/16/10) 52-week range: $0.81 - $2.63 Market value: $58 million Enterprise value: -$7 million Shares out: 27.8 million

Consensus EPS Estimates Month Latest Ago This quarter n/a n/a Next quarter n/a n/a FYE 1/0/00 n/a n/a

# of Ests n/a n/a n/a

Valuation P/E FYE 12/31/08 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01 EV/ LTM revenue

n/m n/a n/a n/a n/m

Ownership Data Insider ownership: 60%

FYE 12/30/00 FYE 12/30/01

EV/ LTM EBIT P / tangible book

n/m 0.9x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 8%

EPS Surprise n/a

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Common equity EBIT/capital employed

12/31/02 9 8 2 (0) (0.02) 13 (4) 3 (6) 1 7 0 10 3 7 3 10 (0) 56%

n/a n/a

n/a n/a

n/a n/a

n/a

n/a

n/a

Actual n/a

Greenblatt Criteria

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 44 57 48 37 36 38 48 33 21 19 26 34 (2) (15) (20) 17 25 (3) (20) (21) 0.83 1.13 (0.10) (0.74) (0.74) 21 22 27 28 28 14 29 16 (1) (10) 4 11 13 3 9 10 18 3 (3) (18) 6 23 84 72 56 16 42 97 79 65 0 1 13 11 12 32 61 129 109 86 2 1 0 0 0 9 11 17 14 9 1 0 0 0 0 12 16 22 22 19 20 45 108 87 67 >100% >100% -16% -461% -673%

LTM EBIT yield LTM pre-tax ROC

12/31/08 47 23 (0) (3) (0.09) 28 6 5 1 54 65 11 85 0 8 0 17 68 -3%

LTME 9/30/09 54 33 11 8 0.29 28 (23) (6) (17) 65 76 11 94 0 9 0 20 75 >100%

FQE 9/30/08 11 5 0 1 0.03 28 7 0 7 50 59 11 86 0 7 0 17 69 n/m

-165% >100% FQE 9/30/09 12 8 1 0 0.00 28 16 (3) 19 65 76 11 94 0 9 0 20 75 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$16 $14 $12 $10 $8 $6 $4 $2 $0 Mar 05

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Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

April 21, 2010 – Page 20 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA – CONSOLIDATED 1

Gravity, based in Korea, develops and publishes online games via three wholly-owned subsidiaries in the U.S., France and Russia, as well as 15 global licensees. Gravity raised $71 million ($13.50/share) in its IPO in 2005.

FYE December 31 Δ revenue 2 Revenue (KRW, bn) % of revenue by type: Online games – royalties Online games – subscriptions Mobile games Character merchandising Revenue growth by type: Online games – royalties Online games – subscriptions Mobile games Character merchandising Selected items as % of revenue: Gross profit SG&A expense R&D expense Adjusted EBIT Interest income, net D&A and impairments Capex 3 Capitalized software Δ shares out (period end)

INVESTMENT HIGHLIGHTS •

• •

Owns flagship Internet game Ragnarok Online, a massively multiplayer online role-playing game (MMORPG) that has been commercialized since 2002. In addition, Gravity offers three other MMORPGs and one “casual” online game. Japanese users contributed 51% of 2008 revenue with users in Korea and U.S./Canada 26% and 7%. Ragnarok Online is most popular in Japan and Korea, but is played in an additional 30+ countries. Improved execution after CEO change in 2008, with further changes in 2009, including a co-CEO structure between Yoon Kang (42) and Toshiro Ohno (49), who was appointed co-CEO and chairman in April 2009 to support Kang. Reported trailing EBIT of $11 million, including $2.5 million EBIT in 3Q09 (before a $1.4 million litigation accrual), after years of losses. Mobile game revenue has grown to $8 million annualized. Global MMOG market size is $4.2 billion, based on DFC Intelligence estimates for 2009, and is projected to grow at a 30% CAGR from $0.3 billion in 2001 to $5.9 billion by 2012. It is part of a larger “online gaming” market worth ~$11 billion in 2009. Potential takeover by majority owner? Softbankcontrolled Japanese game publisher GungHo (Osaka: 3765), Gravity’s largest licensee, increased its stake to 59% in 2008. Gravity’s below-cash valuation may entice GungHo to make an offer. $62 million of cash and no debt as of September, 30, 2009. Gravity’s financials are audited by a Korean member firm of PricewaterhouseCoopers. Net-net current assets approximate market cap.

INVESTMENT RISKS & CONCERNS •

GungHo became majority owner in 2008 by acquiring 52% of shares from a related firm that had paid ~$25 per share to buy the stake from Gravity’s founder in 2005. GungHo is also an online game developer, which presents conflicts of interest. 70+% of revenue from Ragnarok Online. Delays to the sequel may cause users to abandon the game. Gravity now intends to launch RO2 in 4Q10.

2005 -17% 53.4

2006 -23% 41.0

2007 -2% 40.2

2008 32% 53.2

YTD 9/30/09 17% 44.4

70% 21% 3% 6%

64% 21% 9% 6%

61% 23% 10% 5%

57% 24% 13% 7%

60% 22% 13% 5%

-17% -31% 343% 15%

-30% -25% 131% -17%

-5% 12% 6% -20%

22% 34% 69% 75%

28% 1% 16% -13%

70% 58% 17% -5% 1% 13% 16% 11% 0%

57% 67% 23% -33% 7% 23% -16% 0% 0%

52% 72% 14% -35% 7% 21% 7% 13% 0%

48% 44% 4% 0% 5% 16% 3% 7% 0%

63% 38% 3% 22% 4% n/a n/a n/a 0%

1

Based on U.S. GAAP and local currency results (Korean Won=KRW). 2009 consolidated results have not been made available as of April 15, 2010. 2 Recent revenue growth is partly driven by strengthening of Yen versus KRW. 3 Capex was negative in 2006 due to gain on disposal of PP&E.

SELECTED OPERATING DATA – NON-CONSOLIDATED 1 FYE December 31 2005 Non-consolidated revenue… … % of consolidated revenue 92% … Growth (y-y) -16% Selected items as % of revenue: Gross profit 71% Adjusted EBIT -4% Interest income, net 6%

2006

2007

2008

2009

85% -30%

84% -3%

79% 25%

n/a 5%

65% -29% 9%

59% -30% 9%

62% 18% 6%

69% 27% 5%

1

Based on Korean GAAP and local currency results (Korean Won). 2009 consolidated results have not been made available as of April 15, 2010.

• •

Competitive, hit-driven online gaming industry. Larger rivals include NCsoft, Shanda and Neowiz. Transaction costs, as Gravity is a low-priced ADS.

MAJOR HOLDERS Insiders <1% | Japanese public company GungHo 59% | Moon 5% | Black Horse 2% | RenTech 1% | Sprott 1%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Gravity is one of the cheapest stocks we have come across in a long time. Despite better management execution, including achievement of profitability over the last year, the stock continues to trade at a discount to the net cash balance (majority of cash is held in Korean won). If minority shareholders get to participate in future shareholder value creation, Gravity appears poised to deliver multiples on investors’ investment. While majority shareholder GungHo could stand in the way of potential value creation, we find the risk-reward at the current share price compelling. A potential catalyst is the Korean launch of the long-delayed sequel to the flagship game Ragnarok Online by the end of 2010, according to a management update in March. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 21 of 120


GRAVITY – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

12/31/07

57 8 7 -

54 8 6 -

51 8 5 -

47 7 6 -

47 3 5 -

46 2 7 -

45 5 4 -

48 8 4 -

4

4

5

5

5

5

5

5

76 3 11 2

72 4 11 2

70 4 11 2

65 5 11 2

59 6 11 6

60 6 12 3

59 7 12 4

65 6 12 -

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

3

3

3

3

3

3

3

4

94

92

90

85

86

84

85

86

Accounts payable Short-term debt

5 -

2 -

3 -

3 -

3 -

3 -

3 -

4 -

Other current liabilities

5

5

4

5

5

5

5

5

Total current liabilities Long-term debt

9 -

7 -

7 -

8 -

7 -

8 -

8 -

9 -

Other long-term liabilities

10

10

10

10

10

10

10

10

20

17

17

17

17

18

18

19

Total assets Liabilities and Shareholders' Equity

Total liabilities Preferred stock

-

-

-

-

-

-

-

-

Shareholders' equity

75

75

73

68

69

67

67

67

Shares out (avg) (mn)

28

28

28

28

28

28

28

28

67 67 76 9 8x 8x 76 20 56 75 11 63 76% <0% 4

64 64 72 7 11x 10x 72 17 55 75 11 64 79% <0% 7

62 62 70 7 10x 10x 70 17 53 73 11 62 79% <0% 7

56 56 65 8 9x 8x 65 17 47 68 11 57 77% <0% 8

56 56 59 7 8x 8x 59 17 42 69 11 57 77% <0% 8

52 52 60 8 8x 7x 60 18 42 67 12 55 76% <0% 10

54 54 59 8 8x 7x 59 18 42 67 12 55 76% <0% 8

56 56 65 9 7x 7x 65 19 46 67 12 56 74% <0% 7

3% 0% 0% 0% 4% 1% 16% n/m 100% -35%

2% 2% 2% 2% 4% 4% 8% n/m -15% -10%

6% 7% 9% 9% 10% 12% -10% n/m -4% -10%

0% -1% -1% -1% 0% 12% 16% n/m 12% -2%

1% 3% 4% 4% 8% 1% -25% n/m -24% -15%

0% 0% -1% -1% -3% 1% 60% n/m 10% 13%

-2% 0% 0% 0% -3% -9% -2% n/m -27% 29%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 22 of 120


…additional insight into Gravity: SLIDES FROM COMPANY PRESENTATION, AUGUST 2009

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 23 of 120


I.D. Systems (IDSY) – Owned by Artis, Diker

Hackensack, NJ, 201-996-9000 www.id-systems.com

Services: Communications Services Trading Data Price: $3.04 (as of 4/16/10) 52-week range: $2.75 - $4.20 Market value: $34 million Enterprise value: -$8 million Shares out: 11.3 million

Consensus EPS Estimates Month Latest Ago This quarter -$0.31 -$0.31 Next quarter -0.20 -0.20 FYE 12/31/10 -0.51 -0.51

# of Ests 2 2 2

Valuation P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 P/E FYE 12/30/12 EV/ LTM revenue

n/m n/m 20x n/a n/m

Ownership Data Insider ownership: 12%

FYE 12/31/11 FYE 12/30/12

EV/ LTM EBIT P / tangible book

n/m 0.6x

Insider buys (last six months): 4

LT growth

Insider sales (last six months): 1 Institutional ownership: 45%

EPS Surprise 3/10/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 8 4 (1) (1) (0.17) 7 (0) 0 (1) 7 10 0 14 0 2 1 3 0 11 -54%

0.15 n/a

0.15 n/a

1 n/a

n/a

n/a

n/a

Actual -$0.21

Greenblatt Criteria

Estimate -$0.19

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 14 19 25 17 27 7 9 11 8 14 0 1 (5) (11) (6) 0 1 (2) (7) (4) 0.05 0.09 (0.15) (0.66) (0.38) 7 8 11 11 11 2 (4) (1) 1 (5) 0 1 1 1 0 1 (5) (2) 0 (5) 12 8 70 27 21 16 18 83 35 34 0 0 0 0 0 17 20 85 75 70 0 0 0 0 0 3 4 3 3 3 0 0 0 0 0 4 5 4 3 3 0 0 0 0 0 14 15 81 72 67 4% 10% -48% -117% -69%

LTM EBIT yield LTM pre-tax ROC

12/31/09 10 5 (14) (13) (1.20) 11 (7) 0 (7) 53 62 1 71 12 14 0 15 0 56 -164%

LTME 12/31/09 10 5 (14) (13) (1.20) 11 (7) 0 (7) 53 62 1 71 12 14 0 15 0 56 -164%

FQE 12/31/08 8 4 (1) (1) (0.11) 11 1 0 1 21 34 0 70 0 3 0 3 0 67 n/m

189% -164% FQE 12/31/09 3 1 (5) (5) (0.43) 11 (3) 0 (3) 53 62 1 71 12 14 0 15 0 56 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$30

$25

$20

$15

$10

$5

$0 Mar 01

Mar 02

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Mar 05

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Mar 06

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Mar 08

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Mar 10

April 21, 2010 – Page 24 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

I.D. Systems provides wireless technology for the real-time tracking and management of vehicles, containers, etc. The company acquired the Asset Intelligence (AI) business unit of GE for $16 million in cash in January. The business provides trailer and container tracking products and services.

INVESTMENT HIGHLIGHTS •

• •

Specializes in fleet management applications. , For example, I.D.’s products allow rental car firms to increase revenue by more accurately tracking vehicle data such as fuel consumption, and improve customer service by speeding up vehicle returns. Products offer advantages over traditional inventory and logistics tracking systems. These include 1) ability to function with only periodic radio frequency (RF) connectivity, 2) tracking of assets indoors, and 3) no recurring service costs. Expects to “achieve profitability in 2011” on AI revenue and cost synergies. I.D. expects $12-15 million of revenue from AI in 2010. Combined gross margin should remain “consistent with our historical gross margins.” Combined operating costs are to be cut by ~$8 million to $22 million annually. Owns nine U.S. patents and has 19 pending U.S. patent applications. The majority of patents, which primarily cover wireless asset management and RF identification systems, do not expire until 2020-27. Outsources hardware production to contract manufacturers such as Flextronics. This enables I.D. to operate a capital-light business focused on product innovation and customer service. Net cash of $32 million, pro-forma for $16 million to acquire AI (including M&A-related costs but excluding $2 million of contingent payment). Pro-forma net cash approximates market value. “Net net” current assets (including $7 million of long-term investments) are 120+% of market value.

COMPARABLE PUBLIC COMPANY ANALYSIS

ZBRA IN IDSY

MV ($mn) 1,780 830 30

EV ($mn) 1,630 590 -10

EV / Rev. 2.0x .9x n/m

P/ Tang. Book 3.5x 1.7x .5x

This FY P/E 22x 32x n/m

2

Holdings of insiders exclude 1.7 million of vested stock options as of December 31, 2009. The average option exercise price is $9.51 per share.

2006 30% 46% 25

2007 -31% 11% 17

2008 58% 0% 27

2009 -62% 16% 10

78% 22%

66% 34%

65% 35%

74% 26%

63% 37%

39% 34%

9% 108%

-32% -29%

82% 15%

-68% -45%

48% 54% 49%

49% 36% 45%

47% 49% 48%

50% 50% 50%

40% 57% 46%

9% 3% 4% 2% 3% 61 -5 78% 4%

11% -18% -7% 2% 3% 89 -2 92% 35%

17% -62% -43% 3% 3% 99 0 96% 7%

11% -22% -15% 2% 1% 99 -5 96% -3%

25% -139% -128% 5% 3% 115 -7 87% 1%

INVESTMENT RISKS & CONCERNS •

Will Asset Intelligence acquisition add value? I.D. used $16 million of cash to buy a business that had a $14 million net loss on $27 million of revenue in 2009. The deal created $10 million of intangibles. Lost $14 million on an EBIT basis in 2009, representing the fourth consecutive year of losses. Assuming no recovery in existing business, it could be difficult to achieve profitability, even with AI. Competitors include much larger companies such as Motorola (including its Symbol Technologies subsidiary), Intermec, Zebra Technologies, Savi Technology (owned by Lockheed Martin), and Crown Equipment, as well as start-ups such as ShockWatch (Media Recovery) and Access Control. Exposed to rapid technological change including risks related to frequent new product launches. Customer concentration. The U.S. Postal Service, Wal-Mart, NACCO and Ford made up 20%, 15%, 15%, and 14%, respectively, of 2009 revenue.

RATINGS

CEO Jagid 5% | Other insiders 8% | Artis 20% | Diker 10% | DFA 4% | Thomson, Horstmann 4% | BlackRock 3%

2005 38% n/a 19

Financials are not pro-forma for Asset Intelligence purchase in January 2010. Based on staff at 1/31/06, 3/1/07, 3/3/08, 2/24/09 and 3/30/10, respectively.

Next FY P/E 18x 19x 20x

MAJOR HOLDERS * *

1

FYE December 31 ∆ revenue ∆ employees 2 Revenue ($mn) % of revenue by type: Products Services Revenue growth by type: Products Services Gross margin by type: Products Services Total gross margin Selected items as % of revenue: R&D EBIT Net income D&A Capex Employees 2 Free cash flow ($mn) Tangible equity to assets ∆ shares out (avg)

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE The acquisition of Asset Intelligence should enable I.D. Systems to achieve profitability in 2011, based on management. As recent market capitalization implies an enterprise value of roughly zero, investors may want to take notice. Although the company remains small in terms of revenue, its patented products are used by some of the world’s most efficient companies including Wal-Mart and Procter & Gamble. With incentivized insiders focused on value creation, risk/reward is attractive. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 25 of 120


I.D. SYSTEMS – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

20 34 3 5

15 40 2 6

18 12 3 6

19 7 6 5

13 9 9 3

7 9 11 3

13 9 7 3

17 12 5 4

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets Total assets

1

1

0

0

1

0

0

0

62 1 1 7

63 1 0 10

40 1 0 36

37 1 0 41

34 1 0 35

29 1 0 38

32 1 0 35

37 1 30

-

-

0

0

0

0

0

0

71

74

77

79

70

69

69

69

2 12

1 13

1 13

1 13

2 -

2 -

2 -

1 -

Liabilities and Shareholders' Equity Accounts payable Short-term debt Other current liabilities

1

0

0

1

0

1

1

0

Total current liabilities Long-term debt

14 -

14 -

14 -

14 -

3 -

3 -

3 -

1 -

Other long-term liabilities

1

1

0

0

0

0

0

0

15

14

15

15

3

3

3

2

-

-

-

-

-

-

-

-

Shareholders' equity

56

60

63

65

67

66

66

67

Shares out (avg) (mn)

11

11

11

11

11

11

11

11

60 12 49 62 14 4x 4x 62 15 47 56 1 55 79% <0% 7

64 13 52 63 14 5x 4x 63 14 49 60 0 60 81% <0% 9

67 13 54 40 14 3x 2x 40 15 25 63 0 62 81% <0% 8

67 13 54 37 14 3x 2x 37 15 22 65 0 64 81% <0% 10

56 56 34 3 13x 11x 34 3 31 67 0 67 96% <0% 11

54 54 29 3 10x 9x 29 3 26 66 0 65 95% <0% 12

56 56 32 3 12x 11x 32 3 30 66 0 66 96% <0% 10

58 58 37 1 29x 26x 37 2 36 67 67 98% <0% 9

-5% -7% -8% -8% -6% -3% 38% -20% 250% -21%

-4% -4% -4% -5% -5% 96% -20% 2% -50% 2%

-3% -3% -3% -3% 0% 14% -49% 22% 50% -17%

13% -4% -4% -4% -3% -28% -31% 36% -64% -6%

1% 2% 2% 2% 4% 17% -21% 32% -4% -9%

0% 0% 0% -1% -5% -12% 47% -24% 28% 25%

1% -1% -2% -2% -3% -17% 40% -8% 80% 3%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Total liabilities Preferred stock

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 26 of 120


…additional insight into I.D. Systems: FINANCIAL INFORMATION RELATED TO THE ACQUISITION OF ASSET INTELLIGENCE (AI) ON JANUARY 8, 2010 The preliminary allocation of the AI purchase price consists of the following ($ millions): Current assets Inventory Other assets Current liabilities Intangibles Goodwill and other intangibles Less: Contingent consideration Fair value of assets acquired

$4.8 7.0 0.9 (6.4) 3.2 6.6 (1.2) $15.0

Combined pro forma balance sheet as of December 31, 2009 ($ millions):

Cash and cash equivalents Investments – short term Accounts receivable - net Inventory - net Other current assets Total current assets Total other assets Total assets Total current liabilities Total long term liabilities Total liabilities Total stockholders’ equity Total liabilities and stockholders’ equity

Historical $19.5 33.9 3.3 4.5 0.8 $61.9 8.7 $70.6

Pro Forma Combined $4.5 33.9 8.1 11.5 0.8 $58.8 19.4 $78.2

$14.2 0.5 $14.7 55.9 $70.6

$21.8 0.5 $22.3 55.9 $78.2

Combined pro forma revenue and earnings for 2009 ($ millions, except per share data):

Revenue Net loss Net loss per share – basic and diluted

Historical $10.3 (13.2) (1.2)

Pro Forma Combined $37.6 (27.2) (2.5)

Source: I.D. Systems' 2009 10-K.

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April 21, 2010 – Page 27 of 120


LookSmart (LOOK) – Owned by Kennedy, RenTech, S Squared

San Francisco, CA, 415-348-7000 www.looksmart.com

Technology: Computer Services Trading Data Price: $1.10 (as of 4/16/10) 52-week range: $0.88 - $1.56 Market value: $19 million Enterprise value: -$6 million Shares out: 17.2 million

Consensus EPS Estimates Month Latest Ago This quarter -$0.08 -$0.08 Next quarter -0.05 n/a FYE 12/31/10 -0.24 n/a

# of Ests 1 1 1

Valuation P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 P/E FYE 12/30/12 EV/ LTM revenue

n/m n/m n/m n/a n/m

Ownership Data Insider ownership: 9%

FYE 12/31/11 FYE 12/30/12

1 n/a

EV/ LTM EBIT P / tangible book

n/m 0.7x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 35%

EPS Surprise 3/18/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 135 65 9 6 0.34 21 19 6 13 70 95 17 126 0 36 0 40 0 86 n/m

-0.19 n/a

n/a n/a

20.0%

20.0%

Actual n/a

Greenblatt Criteria

1

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 77 41 49 52 65 32 14 18 22 26 (12) (20) (16) (11) (14) (10) (18) (14) 4 (15) (0.50) (0.79) (0.60) (0.36) (0.74) 22 23 23 23 18 (7) (8) (6) (2) (2) 3 4 4 2 2 (10) (11) (10) (4) (4) 53 51 40 56 33 59 55 46 64 41 22 20 18 11 0 101 83 73 80 47 1 2 1 2 2 10 10 12 15 15 0 0 0 1 1 15 15 15 17 16 0 0 0 0 0 86 69 58 63 30 -1573% -905% n/m n/m n/m

LTM EBIT yield LTM pre-tax ROC

12/31/09 52 18 (7) (6) (0.39) 17 (3) 1 (4) 28 33 0 38 1 11 2 12 0 26 n/m

LTME 12/31/09 52 18 (7) (6) (0.39) 17 (3) 1 (4) 28 33 0 38 1 11 2 12 0 26 n/m

FQE 12/31/08 15 5 (12) (13) (0.67) 17 3 0 3 33 41 0 47 2 15 1 16 0 30 n/m

117% n/m FQE 12/31/09 13 4 (1) (1) (0.06) 17 1 0 1 28 33 0 38 1 11 2 12 0 26 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$140 $120 $100 $80 $60 $40 $20 $0 Mar 01

Mar 02

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April 21, 2010 – Page 28 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

LookSmart operates in the online search advertising market by serving ads that target user queries on Internet sites.

INVESTMENT HIGHLIGHTS •

• • • • •

One of the largest independent pay-per-click Internet ad platforms* with 243 million paid clicks in 4Q09 (up 21% y-y). LookSmart acts as a broker matching advertisers with online search queries. Generates revenue mainly from “per-click fees” charged to advertising customers. Advertisers bid for keywords on the company’s AdCenter platform and pay if an ad is clicked by potential customers. Private-label licensing of AdCenter technology platform represents another revenue source. Online content publishers who want to create their own ad networks can license AdCenter. Net cash represents ~ 130% of market cap. Cash and short-term investments were $28 million at yearend 2009, offset by $3 million of capital leases. Free cash flow positive in 4Q09. Net cash from operations was positive $1.2 million versus capex of $0.7 million, including capitalization of software. “Committed to evaluating strategic alternatives on an opportunistic basis” based on CEO comment during 4Q09 earnings call in March. $175 million of federal NOLs at yearend 2009. “Net net” current assets are $1.17 per share.

INVESTMENT RISKS & CONCERNS •

• • •

2007 11% 9% 15% -23% 56

2008 72% -44% 16% -3% 65

2009 21% -27% -20% -28% 52

82% 10% 8%

91% 9% 0%

92% 8% 0%

20% -8%

28% 9%

-19% -34%

43% 27% 2% 5% 9% 3%

40% 17% -22% -20% 5% 3%

36% 19% -13% -13% 6% 2%

117 0.12 63% 93 0%

201 0.07 67% 90 -22%

243 0.05 67% 65 -4%

2008 and 2009 figures reflect continuing operations (exclude results of consumer products activities, which were discontinued in 2008). As of December 31, 2009, the company continues to own the Wisenut search engine technology, intellectual property rights in such technology and related assets. 2 Revenue derives from “per-click fees” charged to advertising customers. 3 Revenue derives mainly from private-label licensing of AdCenter platform. 4 “Product development and technical operations” costs reported by LookSmart. 5 Includes capitalized software development and purchase of intangible assets. 6 Expressed as a percentage of advertiser network revenue.

COMPARABLE PUBLIC COMPANY ANALYSIS

Competes against Google, Yahoo! and Microsoft. LookSmart is a niche provider that may find it challenging to retain distribution network partners and advertising customers on economic terms. Average revenue-per-click (RPC) decreased 29% from $0.079 in 2008 to $0.056 in 2009. RPC has more than halved since 2006, while traffic acquisition costs as a percentage of ad network revenue are up from 61% in 2006 to 67% in 2009. Cumulative free cash flow is negative $34 million in 2005-09, including negative $4 million in 2009. CEO West resigned in December 2009. West was replaced on an interim basis by executive chairman Dexmier (57) “until a replacement is named.” IAC Search and Media (IACI) accounted for 16% of 2009 revenue including 81% of publisher segment revenue. The publisher contract with IACI ends on June 30, 2010 and is on a monthly notice.

*

1

FYE December 31 2005 2006 -37% 46% ∆ total paid clicks 14% -31% ∆ avg revenue per click -46% 18% ∆ revenue -12% -6% ∆ employees, period-end Revenue ($mn) 41 49 % of revenue by segment: Advertiser networks 2 89% 79% Publisher solutions 3 4% 12% Consumer sites 7% 9% Revenue growth by segment: Advertiser networks n/a 4% Publisher solutions n/a 296% Selected items as % of revenue: Gross profit 33% 37% R&D 4 44% 33% EBIT -48% -32% Net income -43% -28% D&A 19% 13% Capex 5 9% 8% Selected operating metrics (as of 4Q for each period): Total paid clicks (mn) 72 105 Avg revenue per click ($) 0.16 0.11 Traffic acquisition costs 6 62% 61% Employees, period-end 127 120 ∆ shares out (avg) 2% 0%

For information on online advertising trends, including search advertising, see the IAB/PwC report released in April 2010 at http://bit.ly/cF5Tcq

GOOG YHOO LOOK

MV ($mn) 174,930 25,440 20

EV ($mn) 148,420 22,230 0

EV / Rev. 6.0x 3.4x n/m

P/ Tang. Book 5.4x 3.0x .8x

This FY P/E 20x 38x n/m

Next FY P/E 18x 30x n/m

MAJOR HOLDERS CEO Dexmier <1% | Other insiders 4% | Mercury 10% | Kennedy 8% | RenTech 6% | DFA 6% | S Squared 5%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Since its founding in 1996, LookSmart has been a pioneer in the fast-growing Internet advertising industry. While the company faces much stronger rivals in Google and Yahoo!, its AdCenter search platform remains used by online advertisers and publishers. The market, however, ascribes a negative enterprise value to the company. While this may be justified by a lack of historical free cash flow generation, LookSmart has considerable option value. With net cash representing about 130% of market value, and potential for a strategic event including a sale of the company, we find the risk-reward appealing. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 29 of 120


LOOKSMART – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

23 5 4 -

15 12 6 -

24 6 5 -

26 5 5 -

22 10 7 -

12 17 10 -

13 21 6 -

12 21 8 -

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets Total assets

1

1

1

1

2

1

2

3

33 4 -

34 3 0 -

36 3 0 -

37 3 0 -

41 3 0 -

40 3 10 1

42 3 10 -

43 3 10 -

2

2

2

2

2

3

3

3

38

39

41

43

47

58

58

60

3 1

4 2

3 2

3 2

4 2

4 2

4 2

4 2

Liabilities and Shareholders' Equity Accounts payable Short-term debt Other current liabilities

7

6

6

7

8

8

7

9

Total current liabilities Long-term debt

11 2

11 2

11 2

12 2

15 1

14 1

13 -

15 -

Other long-term liabilities Total liabilities Preferred stock

-

-

-

-

-

1

2

2

12

13

13

14

16

16

15

17

-

-

-

-

-

-

-

-

Shareholders' equity

26

27

28

29

30

42

43

43

Shares out (avg) (mn)

17

17

17

17

17

17

17

20

28 3 25 33 11 3x 3x 33 12 20 26 26 68% <0% (1)

27 3 24 34 11 3x 3x 34 13 21 27 0 27 68% <0% 1

30 4 26 36 11 3x 3x 36 13 23 28 0 28 69% <0% (0)

31 4 27 37 12 3x 3x 37 14 23 29 0 29 67% <0% (0)

33 4 29 41 15 3x 3x 41 16 25 30 0 30 65% <0% (1)

30 3 27 40 14 3x 3x 40 16 25 42 10 32 67% <0% 3

34 2 33 42 13 3x 3x 42 15 27 43 10 33 69% <0% (1)

33 2 31 43 15 3x 3x 43 17 26 43 10 33 66% <0% 0

-2% -3% -2% -2% 4% -6% -32% n/m -17% -250%

-4% -6% -6% -6% -9% -7% 20% n/m 9% -300%

-4% -2% -2% -2% -2% -1% -6% n/m -3% 50%

-9% -5% -5% -5% -8% -7% -26% n/m -25% -67%

-19% -28% -6% -6% 9% 1% -29% n/m 13% -121%

-1% -3% -3% -4% -19% -9% 62% n/m -9% -380%

-2% 1% 2% 22% 5% 3% -19% n/m 10% -433%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 30 of 120


…additional insight into LookSmart: SELECTED CHARTS FROM IAB INTERNET ADVERTISING REVENUE REPORT, APRIL 2010 Access the full report at http://www.iab.net/AdRevenueReport

U.S. Internet Advertising Revenue, 1999-2009 ($ in millions)

Industry Concentration: Percentage Share of U.S. Internet Advertising Revenue, 2001-2009

U.S. Internet Advertising Revenue by Ad Format, 2009

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 31 of 120


Market Leader (LEDR) – Owned by Springhouse, LMM, RenTech

Kirkland, WA, 425-952-5500 www.marketleader.com

Services: Real Estate Operations Trading Data Price: $2.09 (as of 4/16/10) 52-week range: $1.51 - $2.48 Market value: $51 million Enterprise value: $0 million Shares out: 24.6 million

Consensus EPS Estimates Month Latest Ago This quarter n/a n/a Next quarter n/a n/a FYE 1/0/00 n/a n/a

# of Ests n/a n/a n/a

Valuation P/E FYE 12/31/09 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01 EV/ LTM revenue

n/m n/a n/a n/a n/m

Ownership Data Insider ownership: 13%

FYE 12/30/00 FYE 12/30/01

EV/ LTM EBIT P / tangible book

n/m 0.9x

Insider buys (last six months): 3

LT growth

Insider sales (last six months): 0 Institutional ownership: 59%

EPS Surprise n/a

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 25 0 6 2 0.18 11 6 1 6 7 8 1 11 0 3 0 3 4 4 n/m

n/a n/a

n/a n/a

n/a n/a

n/a

n/a

n/a

Actual n/a

Greenblatt Criteria

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 48 79 86 60 38 0 0 0 0 0 11 20 1 (13) (12) 5 15 (3) (12) (13) 0.34 0.53 0.13 (0.51) (0.54) 12 25 25 25 24 14 24 11 0 2 3 8 8 3 3 11 16 3 (3) (1) 75 85 78 63 59 78 89 84 66 60 2 11 4 10 4 85 112 101 85 69 0 0 0 2 0 9 14 13 8 4 0 2 2 0 0 10 18 16 9 5 0 0 0 0 0 75 94 86 76 65 n/m n/m 30% -353% -523%

LTM EBIT yield LTM pre-tax ROC

12/31/09 24 0 (12) (7) (0.30) 24 (4) 3 (7) 51 57 2 64 0 4 0 5 0 60 -294%

LTME 12/31/09 24 0 (12) (13) (0.31) 24 (4) 3 (7) 51 57 2 64 0 4 0 5 0 60 -294%

FQE 12/31/08 8 0 (8) (9) (0.37) 24 0 0 0 59 60 4 69 0 4 0 5 0 65 n/m

n/m -294% FQE 12/31/09 6 0 (3) 1 0.06 24 (2) 0 (2) 51 57 2 64 0 4 0 5 0 60 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$25

$20

$15

$10

$5

$0 Mar 05

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www.manualofideas.com

Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

April 21, 2010 – Page 32 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA

Market Leader provides business development software and related services to U.S. residential real estate brokers. It also offers free online real estate information to individuals.

INVESTMENT HIGHLIGHTS •

• •

Pioneered Internet-based marketing services for real estate professionals through lead generation websites housevalues.com and justlisted.com which were launched in 1999 and 2004, respectively. Shifted from lead generation to software-as-aservice (SaaS) with purchase of RealtyGenerator in 2007. The company offers real estate agents and brokers a personalized website and customer relationship management tools. SaaS revenue doubled in Q4 and accounted for 52% of revenue. The recurring nature of SaaS results in higher retention rates than those of lead generation products. Revenue/client rose 4% in ‘09. Revenue growth from SaaS to “offset traditional product revenue declines in 2010.” As a result, the company expects that 4Q09 “marked the end of the sequential quarterly revenue declines.” Ex-Microsoft leadership. CEO Morris (41) helped launch MSN HomeAdvisor in 1997. Chairman Higgins (52) was a member of Microsoft’s Office of the President reporting to Bill Gates. $2.11 per share of cash/investments and no debt. $1.07 per share of investments consists mainly of U.S. Treasury bills and short-term CDs. “Net-net” current assets exceed market value.

• •

2006 9% 86

2007 -30% 60

2008 -36% 38

2009 -38% 24

65% 13% 14% 1% 4% 7% 9% 14,596 -3% 9% $406 -14% 525 36% $163 -20%

66% 15% 20% -12% -21% 11% 5% 10,465 -28% 9% $363 -11% 384 -27% $156 -5%

65% 17% 24% -21% -34% 16% 7% 7,245 -31% 8% $330 -9% 193 -50% $199 28%

81% 21% 29% -51% -31% 20% 11% 5,360 -26% 6% $344 4% 153 -21% $157 -21%

6.5 59.4 3.4 4%

5.7 49.8 -2.8 -7%

4.9 44.5 -0.9 -1%

5.2 41.4 -6.9 0%

Excludes special items such as gain/loss fixed asset sales and impairments. Includes amortization of acquired intangible assets. 3 Consists of real estate agents subscribing to HouseValues or other products, and brokers subscribing to RealtyGenerator product. Customers are included when their service is active and are paying monthly service or advertising fees. 4 Refers to monthly average based on last quarter in the respective period. It is calculated by dividing the number of customers who canceled during the quarter by the average customers in the quarter, divided by three. 5 Refers to monthly average based on last quarter in the respective period. It is calculated as real estate professional revenue for the quarter divided by the average number of customers in the quarter, divided by three. Real estate professional revenue represents more than 99% of total company revenue. 2

MAJOR HOLDERS CEO Morris 6% | Other insiders 13% | Legg Mason 19% | MS 7% | Continental 7% | F&I Mgmt 5% | Springhouse 5%

INVESTMENT RISKS & CONCERNS •

1

FYE December 31 2005 Δ revenue 66% Revenue ($mn) 79 Selected items as % of revenue: Sales & marketing 51% R&D 9% General & administrative 12% EBIT 1 25% Net income 19% D&A 2 3% Capex 9% Customers, period-end 3 14,971 Δ customers 36% Avg churn rate 4 7% Avg revenue/customer 5 $473 Δ avg rev./customer 8% Avg employees 387 Δ avg employees n/a Revenue/head in 000s $204 Δ revenue/head n/a Selected industry data: Exist. home sales (mn) 6.8 RE commissions ($bn) 67.1 Free cash flow in $mn 16.5 Δ shares out (avg) 2%

Continuing operating losses. The adjusted EBITDA loss was $1.8 million in 4Q09, compared to losses of $1.2 million in 3Q09 and $0.5 million in 4Q08. FCF was negative for three consecutive years, including a $6.9 million outflow in 2009. Evolving business model. Market Leader’s SaaS products were launched recently, and their acceptance is not yet clear. Revenue growth may not result in profit for a while given high overhead. Continued pressure on real estate commissions suggests brokers may remain cautious on making new marketing expenditures. Competes for brokers’ marketing dollars against traditional and online companies as well as larger brokerage firms who offer similar services. Internetbased competition ranges from Google to focused rivals such as Move, Tree.com and Zillow.

COMPARABLE PUBLIC COMPANY ANALYSIS

MOVE PRM TREE LEDR

RATINGS

MV ($mn) 340 160 100 50

EV ($mn) 410 380 90 0

EV / Rev. 1.9x 1.5x .4x n/m

P/ Tang. Book 6.3x n/m 2.0x .9x

This FY P/E 44x n/a n/m n/a

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

Next FY P/E 24x n/a 23x n/a

      

THE BOTTOM LINE Market Leader is a Graham-style “net net,” as current assets less total liabilities exceed market value. While the company lost money again in 2009, including in the fourth quarter, the strategy of focusing on software-as-a service appears to be paying off in lower customer churn. A doubling in SaaS revenue in 4Q09 has been obscured by ongoing declines in the company’s legacy products. As SaaS products now represent a majority of revenue, the company is likely to grow the top-line in 2010. Given that net cash exceeds recent market value, the market may be too pessimistic regarding the company’s prospects. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 33 of 120


MARKET LEADER – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

25 26 -

32 21 -

34 21 0 -

31 26 -

48 11 0 -

62 0 -

63 0 -

63 0 -

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

6

1

1

1

2

3

3

3

57 5 2 0

54 5 3 0

57 5 3 0

58 4 4 1

60 5 4 1

65 5 9 2

66 5 10 2

66 5 10 2

-

-

-

-

-

-

-

-

64

62

65

67

69

81

82

83

Accounts payable Short-term debt

1 -

0 -

1 -

1 -

1 -

1 2

1 2

1 2

Other current liabilities

3

3

3

3

4

3

4

4

Total current liabilities Long-term debt

4 -

3 -

4 -

3 -

4 -

6 -

7 -

7 -

Other long-term liabilities

1

1

1

0

0

1

1

1

5

4

4

4

5

7

7

8

-

-

-

-

-

-

-

-

Shareholders' equity

60

58

60

63

65

74

75

76

Shares out (avg) (mn)

24

24

24

24

24

24

24

25

52 52 57 4 15x 14x 57 5 53 60 2 58 93% <0% 7

54 54 54 3 16x 16x 54 4 50 58 3 55 93% <0% 2

56 56 57 4 16x 15x 57 4 52 60 3 57 93% <0% 2

58 58 58 3 17x 17x 58 4 54 63 4 59 94% <0% 2

59 59 60 4 14x 14x 60 5 56 65 4 61 93% <0% 2

64 2 62 65 6 10x 10x 65 7 58 74 9 65 90% <0% 3

65 2 63 66 7 10x 9x 66 7 58 75 10 65 90% <0% 3

65 2 64 66 7 9x 9x 66 8 58 76 10 66 89% <0% 3

4% 3% 4% 3% -4% 5% n/m n/m 800% 214%

-4% -4% -4% -3% -3% -4% n/m n/m -86% -5%

-3% -4% -3% -3% -3% -4% n/m n/m 0% 29%

-4% -3% -3% -2% -3% -3% n/m n/m 0% 0%

-14% -12% -6% -5% -4% -4% n/m n/m -30% -45%

-2% -1% -1% -1% -2% -1% n/m n/m 0% 15%

-1% -1% -1% 0% -1% 1% n/m n/m 0% 0%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Total assets Liabilities and Shareholders' Equity

Total liabilities Preferred stock

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 34 of 120


…additional insight into Market Leader: SELECTED HOUSING MARKET DATA, by THE NATIONAL ASSOCIATION OF REALTORS Existing Home Sales

Source: National Association of REALTORS.

Sales Price of Existing Homes

Source: National Association of REALTORS.

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 35 of 120


Maxygen (MAXY) – Owned by Conus, RenTech, Lonestar, Royce

Redwood City, CA, 650-298-5300 www.maxygen.com

Health Care: Biotechnology & Drugs Trading Data Price: $6.72 (as of 4/16/10) 52-week range: $4.78 - $8.30 Market value: $218 million Enterprise value: $58 million Shares out: 32.4 million

Consensus EPS Estimates Month Latest Ago This quarter n/a n/a Next quarter n/a n/a FYE 1/0/00 n/a n/a

# of Ests n/a n/a n/a

Valuation P/E FYE 12/31/09 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01 EV/ LTM revenue

n/m n/a n/a n/a 1.6x

Ownership Data Insider ownership: 12%

FYE 12/30/00 FYE 12/30/01

EV/ LTM EBIT P / tangible book

n/m 1.4x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 6 Institutional ownership: 61%

EPS Surprise n/a

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 23 0 (36) (34) (0.93) 35 (23) 3 (26) 113 130 12 234 0 14 0 36 0 198 n/m

n/a n/a

n/a n/a

n/a n/a

n/a

n/a

n/a

Actual n/a

Greenblatt Criteria

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 16 15 25 23 101 0 0 0 0 0 (52) (41) (42) (57) 25 8 (19) (16) (49) 30 (1.42) (0.98) (0.95) (1.34) 0.81 35 36 36 37 37 (32) (32) (22) (41) 59 3 2 2 2 1 (34) (34) (24) (43) 59 219 154 180 146 207 228 164 187 157 211 12 12 12 12 0 263 215 206 173 214 1 0 0 0 0 16 12 12 19 16 2 0 0 0 0 52 17 16 19 19 0 0 0 0 0 211 197 190 154 195 n/m n/m n/m n/m n/m

LTM EBIT yield LTM pre-tax ROC

12/31/09 36 0 (34) (32) (0.85) 38 (20) 1 (21) 160 176 0 177 0 21 0 26 0 152 n/m

LTME 12/31/09 36 0 (34) (34) (0.85) 38 (20) 1 (21) 160 176 0 177 0 21 0 26 0 152 n/m

FQE 12/31/08 6 0 (9) (8) (0.21) 37 (8) 0 (8) 207 211 0 214 0 16 0 19 0 195 n/m

-58% n/m FQE 12/31/09 13 0 (4) (4) (0.09) 39 (4) 0 (4) 160 176 0 177 0 21 0 26 0 152 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Mar 01

Mar 02

© 2009-2010 by BeyondProxy LLC. All rights reserved.

Mar 03

Mar 04

Mar 05

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Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

April 21, 2010 – Page 36 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

Maxygen is a biopharmaceutical company focused on developing protein drugs through DNA shuffling technology.

INVESTMENT HIGHLIGHTS •

• •

Completed strategic restructuring in 2009, leaving the company with four main sources of value: 1) cash; 2) an 83% equity stake in Perseid; 3) a 21% stake in Codexis; and 4) various other assets. $160 million of cash and short-term investments and no debt at year-end 2009. In March, Maxygen paid $8 million of cash to acquire $1.4 million of its own shares held by GlaxoSmithKline. Pro-forma net cash of $152 million includes $20 million held by Perseid (only to be used for Perseid operations). Created Perseid joint venture with Japanese pharma company Astellas in September 2009. Perseid, to which Maxygen contributed substantially all of its protein assets plus $10 million, develops protein drugs to treat autoimmune disorders such as rheumatoid arthritis and transplant rejection. Astellas has an option to acquire Maxygen’s 83% JV stake at prices that increase each quarter from currently $57 million to $123 million over the term of the option, which expires in September 2012. Codexis stake may be worth $78-90 million based on Maxygen’s 6.0 million shares and Codexis’ IPO pricing range of $13-15 per share. Maxygen also receives revenue from a biofuels license to Codexis. Other assets: 1) MAXY-G34 protein therapeutic for acute radiation syndrome, and licensing deal with Cangene; 2) MolecularBreeding platform with 130+ patents; and 3) $30 million possible milestone payment from Bayer dependent on phase II trial of hematology asset MAXY-VII (sold to Bayer in ’08). Director James Sulat (59) assumed CEO and CFO roles in October 2009. Sulat, a director since 2003, served in executive roles at various firms including CFO of Chiron from 1998 to 2003. Aims to “maximize return to its stockholders.” Maxygen completed a 7.3 million share repurchase through a “Dutch auction” for $39 million in 2009. Reported roughly breakeven EBIT in 4Q09, excluding $4 million restructuring cost. In the first full quarter under new structure, Maxygen had $13 million of revenue ($12 million at Perseid) offset by $11 million of R&D and $3 million of G&A costs. Net cash and “net net” current assets represent 73% and 68% of recent market cap, respectively. Both are based on yearend 2009 balance sheet, adjusted for $8 million Glaxo share repurchase.

1

FYE December 31 2005 Selected financial data ($ millions): Revenue 2 15 R&D 42 EBIT -41 Net income -19 D&A 4 Capex 2 Free cash flow -32 % of revenue by type: Collaborative R&D 80% Technology and license 0% Related party 3 0% Grant 20% % of revenue by geography: U.S. 95% Japan 0% Other 5% ∆ shares out (avg) 2%

2006

2007

2008

2009

25 49 -42 -16 2 1 -24

23 60 -57 -49 2 1 -43

101 46 25 30 1 1 59

36 37 -34 -32 1 0 -20

82% 0% 0% 18%

38% 7% 36% 20%

0% 90% 5% 5%

0% 0% 87% 12%

100% 0% 0% 1%

99% 0% 1% 2%

96% 4% 0% 1%

25% 75% 0% 3%

Historical data is not fully representative of current company structure. 2008 revenue includes $91 million received from Bayer related to the sale of Maxygen’s hematology assets and licensing of MolecularBreeding platform. 3 Related party revenue for 2009 includes $27 million from Astellas, which is received under Perseid’s collaboration agreements with Astellas. 2

INVESTMENT RISKS & CONCERNS •

Poor visibility on future cash generation with profitability largely dependent on the success of drug development. Restructuring appears largely complete, however. As of February 28, Maxygen has 64 employees, 46 of whom are at Perseid. “May be required to fund the operations of Perseid” if Astellas does not buy Maxygen’s stake. While Perseid operations are “expected to be funded almost entirely by Astellas,” funding depends on Perseid achieving drug development milestones. Existing cash may be used for M&A. While management appears to be on a path of asset sales and return of capital to shareholders, the risk remains that existing cash is used for acquisitions. Potential dilution. At yearend 2009, Maxygen had options and awards outstanding over 9.5 million shares at an average exercise price of $9.73/share.

MAJOR HOLDERS CEO Sulat 2% | Other insiders 6% | Conus 10% | R. Howard 7% | DFA 6% | RenTech 5% | Lonestar 5% | Royce 4%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Protein drug developer Maxygen recently completed a reorganization leaving it with a substantial cash balance and various operational assets. Existing cash and a 21% stake in IPO-candidate Codexis approximate recent market value. Other assets include an 83% stake in joint venture Perseid, a patent-protected technology platform, licensing deals, and a potential $30 million milestone payment from Bayer. While these sources of potential upside require closer scrutiny, shares look cheap. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 37 of 120


MAXYGEN – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

126 34 14 -

153 50 10 -

154 49 4 -

146 55 9 -

155 52 4 -

172 41 2 -

80 42 0 -

78 55 1 -

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

2

2

1

1

1

1

2

2

176 2 -

214 2 -

207 2 -

211 2 -

211 2 -

216 3 -

124 3 0

137 3 12 0

-

-

-

-

-

-

-

-

177

216

210

213

214

218

127

152

1 -

6 -

1 -

2 -

1 -

2 -

3 -

4 -

Other current liabilities

20

16

14

11

15

14

8

6

Total current liabilities Long-term debt

21 -

21 -

15 -

13 -

16 -

16 -

11 -

10 -

Total assets Liabilities and Shareholders' Equity Accounts payable Short-term debt

Other long-term liabilities Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn)

4

5

2

3

3

4

-

-

26

26

17

16

19

20

11

10

-

-

-

-

-

-

-

-

152

190

193

198

195

198

116

142

39

38

38

38

37

37

37

37

160 160 176 21 8x 8x 176 26 150 152 152 86% <0% (3)

203 203 214 21 10x 10x 214 26 188 190 190 88% <0% (8)

202 202 207 15 14x 14x 207 17 191 193 193 92% <0% (8)

201 201 211 13 16x 16x 211 16 196 198 198 93% <0% (0)

207 207 211 16 13x 13x 211 19 192 195 195 91% <0% (9)

213 213 216 16 13x 13x 216 20 195 198 198 91% <0% (11)

123 123 124 11 11x 11x 124 11 113 116 116 91% <0% (6)

134 134 137 10 13x 13x 137 10 127 142 12 130 93% <0% (4)

-18% -20% -20% -21% -21% -20% 48% n/m -79% -58%

3% -1% -1% -2% 0% -1% 121% n/m 427% 8%

-2% -3% -3% -3% 1% -3% -53% n/m -39% 1775%

0% 2% 2% 0% -3% 2% 163% n/m 29% -96%

-2% -2% -2% -2% -3% -2% 94% n/m -36% -17%

72% 71% 71% 70% 74% 72% 350% n/m -33% 70%

-16% -18% -10% -10% -8% -11% -64% n/m -18% 64%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 38 of 120


…additional insight into Maxygen: SELECTED TRADING AND VALUATION DATA Recent stock price Diluted shares out 1 Market value Plus: Debt Plus: Post-retirement Plus: Non-controlling interest Minus: Cash Enterprise value 1 2 3

$6.72 31.0 million $208 million $0 $0 $4 million $152 million $61 million

Net cash / market value 2 Net net current assets / market value 2 Tangible book value / market value 2 Codexis shares owned by Maxygen Codexis share price (assumed) 3 Assumed market value of Codexis shares Unrestricted cash Cash + assumed market value of Codexis stake ... as % of recent Maxygen market value

73% 68% 69% 6.0 million $14.00 $84 million $131 million $215 million 103%

After repurchase of 1.4 million shares held by GlaxoSmithKline in a private transaction for a purchase price of $8.0 million in March 2010. Adjusted for $8 million payment to GlaxoSmithKline in March 2010. Codexis was schedule to go public at a range of $13-15 per share during the week of April 19, 2010.

CASH FLOWS, 2007-2009 Years Ended December 31, 2007 2008 2009

($ in thousands) Operating activities Net income (loss) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization Goodwill impairment Non-cash stock compensation Non-cash restructuring charges Common stock issued and stock options granted to consultants Changes in operating assets and liabilities: Related party receivable Accounts receivable and other receivables Prepaid expenses and other current assets Deposits and other assets Accounts payable Accrued compensation Accrued restructuring charges Accrued project costs Other accrued liabilities Taxes payable Related party deferred revenue Deferred revenue Net cash provided by (used in) operating activities Investing activities Purchases of available-for-sale securities Maturities of available-for-sale securities Acquisition of property and equipment Net cash provided by investing activities Financing activities Proceeds from issuance of common stock Sale of subsidiary shares to non-controlling interest Purchase of treasury stock Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents

($49,315)

$30,325

($32,157)

1,671 — 6,644 — 560

1,447 12,192 8,598 — 44

1,048 — 8,251 11,426 3

(7,493) 2,716 450 — 436 2,172 4,413 2,380 (301) (140) — (5,593) ($41,400)

4,790 560 1,482 85 (1,433) (4,301) (3,299) (352) (29) — — 9,244 $59,353

(10,905) 350 (648) — (199) (928) 3,270 1,359 67 — (1,324) 436 ($19,951)

($179,619) 247,590 (1,469) $66,502

($81,948) 99,055 (734) $16,373

($55,230) 73,000 (478) $17,292

$5,142 — — $5,142

$2,027 — — $2,027

$2,866 10,000 (39,171) ($26,305)

382

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period

30,626 46,504

77,753 77,130

(28,964) 154,883

Cash and cash equivalents at end of period

77,130

154,883

125,919

Supplemental Cash Flow Information Cash paid during the period for income taxes © 2009-2010 by BeyondProxy LLC. All rights reserved.

140 www.manualofideas.com

— April 21, 2010 – Page 39 of 120


Other Stocks That Meet Graham-Style Value Criteria Actions Semiconductor (ACTS) – Owned by RenTech, T. Rowe Technology: Semiconductors Trading Data Price: $2.38 (as of 4/16/10) 52-week range: $1.65 - $2.90 Market value: $205 million Enterprise value: -$24 million Shares out: 86.0 million

Consensus EPS Estimates Month Latest Ago This quarter n/a n/a Next quarter n/a n/a FYE 12/31/10 -0.04 -0.04

Ownership Data Insider ownership: 0%

FYE 12/31/11 FYE 12/30/12

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 6%

EPS Surprise 2/3/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Common equity EBIT/capital employed

12/31/03 6 2 0 0 0.00 80 (0) 0 (1) 2 4 0 5 0 1 0 1 4 14%

-0.02 -0.07

-0.02 -0.07

n/a

n/a

Actual n/a

Zhuhai, GN, China, 86-76-339-2353 www.actions-semi.com Valuation P/E FYE 12/31/09 n/m P/E FYE 12/31/10 n/m P/E FYE 12/31/11 n/m P/E FYE 12/30/12 n/m EV/ LTM revenue n/m

# of Ests n/a n/a 1 1 1

EV/ LTM EBIT P / tangible book Greenblatt Criteria

n/a

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 57 150 170 117 95 30 89 94 60 48 27 72 76 35 17 27 74 75 52 26 0.33 0.91 0.87 0.60 0.31 80 81 86 86 84 30 77 77 47 10 1 3 8 7 4 29 74 69 40 6 32 132 204 240 266 44 154 226 264 281 0 2 5 7 6 45 159 238 285 306 0 2 0 2 2 14 27 28 25 15 0 0 0 0 0 14 28 29 26 17 31 131 209 259 289 >100% n/m n/m >100% >100%

n/m 0.7x

LTM EBIT yield LTM pre-tax ROC

12/31/09 44 14 (14) (4) (0.05) 77 28 10 18 228 237 5 292 0 10 0 12 280 -119%

LTME 12/31/09 44 14 (14) (4) (0.05) 77 28 11 16 228 237 5 292 0 10 0 12 280 -129%

FQE 12/31/08 16 7 (1) 1 0.01 82 (19) 1 (20) 267 281 6 306 2 15 0 17 289 n/m

58% -129% FQE 12/31/09 8 3 (4) (1) (0.01) 76 2 2 (0) 228 237 5 292 0 10 0 12 280 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$14 $12 $10 $8 $6 $4 $2 $0 Mar 06

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Mar 07

Mar 08

Mar 09

Mar 10

April 21, 2010 – Page 40 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

Actions is a China-based fabless semiconductor company that provides mixed-signal and multimedia system-on-a-chip (SoC) products for portable consumer electronics.

INVESTMENT HIGHLIGHTS •

60%+ share of color and mono display segments of non-Apple market shipments of MP3 SoCs. These segments had estimated market shipments of more than 50 million units in 2009. This is down from nearly 100 million units in 2008. Seeks to grow in MP4 and gift/automotive SoCs for non-Apple portable media player (PMP) applications, which had estimated total shipments of ~80 million units in 2009. Actions has partnered with Disney’s Digital Blue in the U.S. gift market. Generated $200+ million of cumulative free cash flow from 2005 to 2009. While FCF was negative $1 million in 2009, this is a resilient performance given the challenging operating environment. Repurchased 10.9 million ADS equivalent shares for $26 million in 2009. The company has another 11 million ADS equivalent shares remaining in its share repurchase program (~15% of existing ADS). Expects revenue to be up 10-20% y-y in 2010, based on CEO comment on February earnings call. While traditional MP3-based revenue is to “slightly decrease” due to price erosion, this should be offset by revenue growth in MP4 and other products. $251 million of cash/marketable securities and no debt at yearend 2009. ~80% of cash is invested in liquid RMB-principal-guaranteed products with state-owned banks in China. Financials are audited by Deloitte Touche Tohmatsu of Hong Kong. “Net net” current assets are 130%+ of market value. Cash and securities are 96% of current assets.

INVESTMENT RISKS & CONCERNS •

Declining unit shipments and price erosion in core market segments of color and mono display SoCs for non-Apple portable media player applications. The company may not be able to expand into other market segments quickly enough to offset the rapid decline in core revenue. Guiding for 1Q10 revenue down 39-47% y-y despite full-year 2010 guidance of higher revenue. The company expects 1Q10 revenue of $6.5-7.5 million, a ~35% gross margin (1Q09: 33.6%), and operating costs “slightly higher” sequentially (includes share-based comp of $0.9-1.0 million). Treated as a PFIC for U.S. income tax purposes.

1

FYE December 31 Δ revenue Δ selling price of SoCs Δ SoC units shipped Δ employees, period-end Revenue ($mn) 2 Selected items as % of revenue: Gross profit R&D EBIT Net income D&A 3 Capex 4 Selected operating metrics: Selling price per SoC ($) SoC units shipped (mn) Employees, period-end Top 5 customers as % of revenue Free cash flow ($mn) 5 Return on tangible equity Tangible equity to assets ∆ shares out (avg)

2005 161% -32% 300% 29% 150

2006 14% -26% 56% 64% 170

2007 -31% -29% -3% 32% 117

2008 -18% -16% -3% 18% 95

2009 -54% n/a n/a n/a 44

60% 5% 48% 49% 0% 2%

55% 6% 45% 44% 1% 5%

51% 11% 30% 44% 3% 6%

50% 20% 18% 27% 6% 4%

32% 44% -29% -9% 11% 22%

3.00 49 258 76% 74 92% 79% 1%

2.22 76 423 64% 69 45% 85% 7%

1.58 74 560 59% 40 23% 89% 0%

1.34 71 658 69% 26 10% 93% -2%

n/a n/a n/a n/a -1 -1% 95% -8%

Certain 2009 data is unavailable as the company has yet to file its 2009 20-F. Includes related party revenue. 3 Includes amortization of bought intangibles. 4 Includes purchases of intangibles. 5 Net cash from operations less capex. Net cash from operations excludes purchases and proceeds from disposal of trading securities, which are reported within net cash from operations in the company’s financial statements. 2

• •

Long-time CEO Yeh resigned in 2009 to “pursue personal interests.” New CEO Niccolo Chen joined in 2007 and had served as chief strategy officer. Exposed to cyclical semiconductor industry and consumer electronics end-markets.

COMPARABLE PUBLIC COMPANY ANALYSIS

TXN BRCM STM SIMO ACTS

MV ($mn) 33,010 17,420 9,000 170 200

EV ($mn) 30,090 15,490 8,870 110 -30

EV / Rev. 2.9x 3.4x 1.0x 1.2x n/m

P/ Tang. Book 3.9x 7.2x 1.7x 1.6x .7x

This FY P/E 13x 18x 21x n/m n/m

Next FY P/E 12x 17x 13x 75x n/m

MAJOR HOLDERS Insiders 3% | RenTech 3% | T. Rowe 2% | RBF Capital 1%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Actions’ core business in MP3 SoCs for the color and mono display segments of non-Apple portable media players appears to be of little value due to rapidly declining industry shipments and price erosion (apparently brought on by technology obsolescence). However, the company remains cash flow breakeven and is buying back stock substantially below liquidation value. As a result, the downside appears low. Upside could come from buybacks, new products or synergistic M&A. © 2009-2010 by BeyondProxy LLC. All rights reserved.

www.manualofideas.com

April 21, 2010 – Page 41 of 120


ACTIONS SEMI – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

88 140 2 5

46 159 3 5

77 159 3 6

45 194 3 7

47 221 3 9

53 205 9 8

127 140 6 7

122 131 5 10

2

2

4

3

3

10

4

3

237 14 5 35

214 12 5 65

250 9 6 35

252 7 5 35

281 7 6 11

286 7 6 6

285 7 7 7

271 7 7 7

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets Total assets

0

0

2

2

1

11

0

0

292

296

301

302

306

316

306

292

2 -

5 -

6 2

5 4

4 2

7 2

8 2

7 2

Liabilities and Shareholders' Equity Accounts payable Short-term debt Other current liabilities

7

7

8

7

9

14

8

6

Total current liabilities Long-term debt

10 -

11 -

15 -

17 -

15 -

23 -

18 -

15 -

Other long-term liabilities Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn)

2

3

3

2

2

2

2

1

12

14

18

19

17

25

20

16

-

-

-

-

-

-

-

-

280

283

283

283

289

292

286

276

76

76

77

78

82

84

84

85

263 263 237 10 25x 24x 237 12 225 280 5 275 96% <0% 14

269 269 214 11 19x 19x 214 14 200 283 5 277 95% <0% 10

271 2 270 250 15 17x 16x 250 18 232 283 6 278 94% <0% 9

275 4 270 252 17 15x 15x 252 19 234 283 5 278 94% <0% 7

279 2 277 281 15 19x 18x 281 17 264 289 6 283 94% <0% 8

265 2 263 286 23 13x 12x 286 25 261 292 6 285 92% <0% 14

274 2 273 285 18 16x 15x 285 20 265 286 7 279 93% <0% 8

260 2 259 271 15 19x 18x 271 16 255 276 7 269 94% <0% 11

-2% -1% -1% 0% -2% 12% -17% -4% -47% 32%

-2% 0% 0% 1% 0% -14% -15% -25% -22% 13%

0% 0% 0% 1% 0% -1% 31% -6% 14% 25%

-2% -2% -2% 3% -3% -12% 4% -23% 24% -5%

-3% -1% -1% 1% 5% 1% -73% 9% -44% -44%

3% 2% 2% 3% -3% -1% 54% 8% -12% 69%

5% 4% 4% 4% 5% 4% 31% -25% 20% -27%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 42 of 120


…additional insight into Actions Semiconductor: CASH FLOWS, 2008-2009 Three Months Ended 12/31/09

Year Ended 12/31/09

Year Ended 12/31/08

(1,105)

(4,265)

25,957

516 475 20 2 302 941 (178) -

2,107 (56) 2,833 (226) (16) (5) 826 4,006 (40) 484 (1,736) 1,010

2,085 496 3,232 (602) 901 70 (6) 576 2,295 (92) 2,083 -

907 2,421 83 224 (492) 67 (2,189) (206) (33) 22 1,777

30,649 (11,310) (1,305) 967 74 3,462 (492) (526) (301) 1,664 (93) (7) 27,704

17,111 (36,318) 2,169 (554) 315 3,611 52 1,601 (8,999) (5,522) (576) 45 9,930

Investing activities: Increase in investment in affiliate Proceeds from the disposal of other investments Purchases of other investments Decrease (Increase) in marketable securities Proceeds from disposal of property, plant and equipment Increase in deposit paid for acquisition of property, plant and equipment Purchase of property, plant and equipment Purchase of intangible assets Decrease in restricted cash Decrease in time deposits Cash outflow from disposal of subsidiary, net of cash equivalent disposed Net cash used in investing activities

48,022 3 (1,695) (453) 40 45,917

(1,500) 44 37,233 30 (1,733) (6,613) (3,140) 439 7 (2,707) 22,060

(3,000) (2,215) (25,575) 18 (368) (2,429) (1,194) 1,389 2,691 (30,683)

Financing activities: Repayment of short-term bank loan Advance subsidy from local authorities of Zhuhai and Shenzhen Proceeds from loan from minority shareholders Repurchase of ordinary shares Proceeds on issue of shares of subsidiary Net cash used in financing activities

(215) (2,777) (2,992)

(2) 750 (10,130) 1,885 (7,497)

(1,580) 1,025 1,500 (9,368) (8,423)

44,702 43,001 3 87,706

42,267 45,435 4 87,706

(29,176) 72,054 2,557 45,435

($ in thousands) Operating activities: Net (loss) income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, plant and equipment Allowance for doubtful accounts receivable Amortization of acquired intangible assets Utilization of subsidy from local authorities of Zhuhai, China Write down of inventories (Gain) loss on disposal of property, plant and equipment Gain on disposal of other investment Equity in net loss of an equity method investee Share-based compensation Fair value change in trading securities Deferred taxes Gain on disposal of a subsidiary Other-than-temporary impairment loss on investments Changes in operating assets and liabilities: Proceeds from disposal of trading securities Purchase of trading securities Accounts receivable Amount due from a related party Notes receivable Inventories Amount due from an equity method investee Prepaid expenses and other current assets Accounts payable Accrued expenses and other current liabilities Income tax payable Rental deposit paid Net cash provided by operating activities

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of exchange rate changes on cash Cash and cash equivalents at the end of the period © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 43 of 120


Adaptec (ADPT) – Owned by Steel Partners, RenTech, Pzena

Milpitas, CA, 408-945-8600 www.adaptec.com

Technology: Computer Storage Devices, Member of S&P SmallCap 600 Trading Data Price: $3.27 (as of 4/16/10) 52-week range: $2.25 - $3.56 Market value: $394 million Enterprise value: $14 million Shares out: 120.4 million

Consensus EPS Estimates Month Latest Ago This quarter -$0.02 -$0.03 Next quarter -0.02 n/a FYE 3/31/10 -0.07 -0.11

Ownership Data Insider ownership: 0%

FYE 3/31/11 FYE 3/30/12

Insider buys (last six months): 35

LT growth

Insider sales (last six months): 8 Institutional ownership: 81%

EPS Surprise 1/29/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

3/31/03 408 205 (35) (15) (0.14) 107 60 8 52 742 893 101 1,103 82 248 250 500 0 603 -54%

# of Ests 2 1 2

-0.09 0.00

n/a n/a

1 1

n/a

n/a

n/a

Actual -$0.01

Estimate -$0.04

Operating Performance and Financial Position Fiscal Years Ended 3/31/04 3/31/05 3/31/06 3/31/07 3/31/08 3/31/09 396 403 344 227 146 115 186 162 114 76 57 49 (10) (82) (149) (39) (33) (35) 63 (145) (148) 31 (10) (10) 0.61 (1.17) (1.20) 0.33 (0.05) (0.12) 109 111 113 117 119 120 95 (10) (7) 15 23 14 8 11 7 4 2 1 88 (21) (14) 11 21 13 664 527 557 572 626 377 858 685 661 681 681 410 117 171 33 7 0 20 1,051 964 737 715 700 450 0 0 11 0 225 1 142 178 139 65 257 24 260 260 225 225 0 0 406 453 368 293 276 39 0 0 0 0 0 0 645 510 369 422 424 411 -11% -112% -684% -117% -68% -120%

Valuation P/E FYE 3/31/09 P/E FYE 3/31/10 P/E FYE 3/31/11 P/E FYE 3/30/12 EV/ LTM revenue

n/m n/m n/m n/m 0.2x

EV/ LTM EBIT P / tangible book

n/m 1.0x

Greenblatt Criteria LTM EBIT yield LTM pre-tax ROC LTME 1/1/10 81 38 (46) (28) (0.24) 120 11 2 10 380 405 17 437 0 21 0 32 0 405 -212%

FQE 12/26/08 28 11 (7) (1) 0.00 120 (4) 0 (4) 371 417 38 476 2 32 0 48 0 429 n/m

-337% -212% FQE 1/1/10 17 8 (11) (7) (0.06) 119 (3) 1 (4) 380 405 17 437 0 21 0 32 0 405 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$30

$25

$20

$15

$10

$5

$0 Mar 01

Mar 02

© 2009-2010 by BeyondProxy LLC. All rights reserved.

Mar 03

Mar 04

Mar 05

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Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

April 21, 2010 – Page 44 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

Adaptec provides storage products that protect digital data. Following the disposition of the Snap Server NAS in 2008, Adaptec operates in one segment. It provides application specific integrated circuits (ASICs), and input/output (I/O) and redundant array of independent disks (RAID) controllers. Adaptec sells mainly to OEMs and systems integrators, who build server/storage products based on Adaptec technologies.

INVESTMENT HIGHLIGHTS •

• • • •

Offers broad range of RAID controllers and addin cards, providing companies with a range of price and performance options to connect their storage. Options range from low-cost host bus adapters (HBAs) to high-performance RAID controller cards. Adaptec owns more than 400 technology patents. New products target fast-growing iSCSI segment of the external storage technology market. Industrywide unit shipments in the iSCSI segment are expected to grow at a 37% CAGR from 2009-2013.* Activist Steel Partners ousted CEO Sundaresh (52) in January and installed own representative Quicke (60) as interim CEO. Quicke, who has been a director since 2007, is a Steel operating partner. Hired Blackstone Advisory Partners to sell the company’s operating assets in December 2009. Solid balance sheet, with net cash of $380 million. Significant NOLs. At 3/09, federal and state NOLs were $143 million and $168 million, respectively. Most NOL’s are not recognized on balance sheet. Net-net current assets approximate market cap.

Operating business continues to lose money. Non-GAAP net loss was $1 million in fiscal 3Q of 2010. Trailing free cash flow is +$9 million. Technology obsolescence affecting core SCSI** products. Ongoing revenue declines are largely due to falling sales of parallel products. Meanwhile, the company faces challenges in obtaining design wins from OEMs for next-generation serial products. Bought Aristos Logic from position of weakness for $41 million in 2008. Aristos makes a RAID storage processor and has blade server technology.

MAJOR HOLDERS Insiders <1%* | Steel Partners 20%* | DFA 8% | BlackRock 8% | RenTech 7% | Vanguard 4% | Wells Fargo 3% *

Adaptec’s chairman and CEO are both Steel Partners employees

2007 -26% -47% 255

2008 -34% -35% 167

2009 -31% -41% 115

YTD 1/1/10 -38% n/a 57

84% 11% 5%

87% 13% 0%

100% 0% 0%

100% 0% 0%

17% -25% -28% -17%

18% -28% -35% -22%

n/a n/a n/a -32%

n/a n/a n/a -40%

32% 22% 12% 7% 1%

37% 24% -6% 5% 1%

43% 23% -12% 7% 1%

45% 38% -20% 13% 3%

44% 27% 29%

42% 29% 29%

35% 32% 33%

39% 32% 29%

34% <10% 13% 8% 53% 3%

34% 11% <10% -2% 60% 2%

36% <10% <10% -3% 72% 1%

21% 15% <10% -3% 91% 0%

Fiscal 2009 and YTD figures are for continuing operations. In June 2008, Adaptec sold the snap server network attached storage business, which represented the majority of the SSG segment. The remaining portion, which is comprised of block-based Internet Small Computer System Interface (iSCSI) storage products, was retained. However, the reporting structure was collapsed such that all operations are grouped together now. 2 Data Protection Storage. 3 Storage Solutions Group.

COMPARABLE PUBLIC COMPANY ANALYSIS

INVESTMENT RISKS & CONCERNS •

1

FYE March 31 2006 ∆ revenue -15% Δ employees -26% Revenue ($mn) 344 % of revenue by segment: DPS 2 82% SSG 3 10% Other 8% EBIT margin by major segment: DPS 22% SSG -15% Corporate -26% Total EBIT margin -10% Selected items as % of revenue: Gross profit 33% R&D 20% Net income -43% D&A 8% Capex 2% % of revenue by geography: North America 41% Europe 29% Pacific Rim 30% % of revenue by major customer: IBM 28% Ingram Micro <10% Dell 15% Return on tangible equity -44% Tangible equity to assets 45% ∆ shares out (avg) 2%

LSI ELX AMCC HILL ADPT

MV ($mn) 4,250 1,040 670 80 390

EV ($mn) 3,640 770 470 20 10

EV / Rev. 1.6x 2.2x 2.5x .1x .1x

P/ Tang. Book 8.0x 2.4x 2.6x 1.3x 1.0x

This FY P/E 14x 22x 78x n/m n/m

Next FY P/E 11x 16x 25x n/a n/m

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends? *

IDC, 2008, Adaptec, March 2009

**

      

Small Computer System Interface

THE BOTTOM LINE Adaptec has been a laggard in the storage technology industry for years due to the rapid obsolescence of parallel SCSI, which has historically been Adaptec’s core technology. While the company has developed products based on newer technologies such as iSCSI and SATA/SAS, those products have not gained sufficient acceptance to offset declining sales of legacy products. As a result, we view Adaptec mainly as a pile of cash without much intrinsic business value. Prospective investors may ultimately be buying into an acquisition vehicle controlled by Steel Partners rather than a soon-to-be-sold company. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 45 of 120


ADAPTEC – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

1/1/10

10/2/09

7/3/09

3/31/09

12/26/08

9/26/08

6/30/08

3/31/08

86 295 7 2

90 295 8 3

102 281 11 4

112 265 12 4

90 281 17 7

147 310 18 7

236 396 20 6

240 386 23 10

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments

15

13

14

17

22

23

23

22

405 11 17 -

410 11 19 -

411 11 19 -

410 12 20 -

417 12 38 -

505 13 40 -

681 13 -

681 13 -

Other long-term assets

3

7

10

9

9

7

7

5

437

446

450

450

476

564

700

700

9 0

8 0

10 0

11 1

12 2

17 87

15 225

12 225

Other current liabilities

11

14

12

13

19

18

15

19

Total current liabilities Long-term debt

21 -

23 -

22 -

24 -

32 -

122 -

256 -

257 -

Other long-term liabilities

11

13

14

15

15

18

18

19

32

36

35

39

48

140

273

276

Total assets

Liabilities and Shareholders' Equity Accounts payable Short-term debt

Total liabilities Preferred stock

-

-

-

-

-

-

-

-

Shareholders' equity

405

410

415

411

429

424

426

424

Shares out (avg) (mn)

119

119

119

120

120

120

119

119

380 0 380 405 21 20x 19x 405 32 373 405 17 387 92% <0% 16

386 0 385 410 23 18x 17x 410 36 374 410 19 392 92% <0% 12

383 0 382 411 22 19x 18x 411 35 376 415 19 396 92% <0% 18

377 1 376 410 24 17x 16x 410 39 370 411 20 391 91% <0% 21

371 2 369 417 32 13x 12x 417 48 370 429 38 391 89% <0% 28

457 87 370 505 122 4x 4x 505 140 365 424 40 385 73% <0% 26

632 225 406 681 256 3x 3x 681 273 407 426 426 61% <0% 32

626 225 401 681 257 3x 3x 681 276 405 424 424 61% <0% 37

-2% -1% -1% -1% -1% 0% -6% -24% 12% 25%

-1% -1% -1% -1% 1% 0% -29% -19% -13% -33%

0% 1% 1% 2% 2% 1% -8% -12% -10% -12%

-6% -4% 0% 0% 2% 0% -30% -41% -13% -25%

-16% 1% 2% 1% 0% 1% -9% 8% -29% 9%

-19% -1% -10% -10% -9% -10% -7% 7% 16% -19%

0% 1% 1% 1% 1% 0% -16% -38% 20% -15%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 46 of 120


…additional insight into Adaptec: SLIDES FROM COMPANY PRESENTATION, AUGUST 2009

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April 21, 2010 – Page 47 of 120


Ascent Media (ASCMA) – Owned by Liberty Media, Gabelli

Englewood, CO, 720-875-5622 www.ascentmediacorporation.com

Services: Broadcasting & Cable TV Trading Data Price: $29.75 (as of 4/16/10) 52-week range: $22.05 - $29.93 Market value: $422 million Enterprise value: $129 million Shares out: 14.2 million

This quarter Next quarter FYE 1/0/00

Ownership Data Insider ownership: 6%

FYE 12/30/00 FYE 12/30/01

Insider buys (last six months): 1

LT growth

Insider sales (last six months): 0 Institutional ownership: 79%

EPS Surprise n/a

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

Consensus EPS Estimates Latest n/a n/a n/a

Month Ago n/a n/a n/a

# of Ests n/a n/a n/a

Valuation P/E FYE 12/31/09 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01 EV/ LTM revenue

n/m n/a n/a n/a 0.3x

n/a n/a

n/a n/a

n/a n/a

EV/ LTM EBIT P / tangible book

n/m 0.7x

n/a

n/a

n/a Actual n/a

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/05 12/31/06 12/31/07 12/31/08 613 571 571 582 216 180 163 146 6 (113) (176) (123) 9 (83) (132) (65) 0.64 (6.25) (10.75) (8.21) 14 14 14 14 88 80 61 21 88 72 39 37 0 8 22 (16) 155 202 342 317 363 490 292 95 2 953 831 745 0 0 0 114 120 91 0 0 0 138 144 120 0 0 0 815 687 625 -35% -56% -43%

12/31/09 454 125 (43) (53) (4.19) 14 36 30 6 293 417 6 683 0 71 0 100 0 583 -17%

Greenblatt Criteria LTM EBIT yield LTM pre-tax ROC LTME 12/31/09 454 125 (43) (73) (4.19) 14 36 30 6 293 417 2 683 0 71 0 100 0 583 -17%

FQE 12/31/08 124 35 (106) (98) (7.18) 14 (7) 8 (16) 342 490 0 745 0 91 0 120 0 625 n/m

-33% -17% FQE 12/31/09 117 33 (7) (33) (2.46) 14 17 8 10 293 417 2 683 0 71 0 100 0 583 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$40 $35 $30 $25 $20 $15 $10 $5 $0 Mar 09

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Mar 10

April 21, 2010 – Page 48 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

Ascent provides content and creative services to media and entertainment industries. It operates in two segments: Content Services enables content owners such as motion picture studios to manage their media assets for global distribution. It also supports cable and broadcast networks in the assembly and distribution of their programming. Creative Services provides post-production and visual effects for feature films and TV content including commercials. Ascent was spun off from Discovery Holding in 2008.

INVESTMENT HIGHLIGHTS •

• •

“Rollup” of businesses acquired from 2000-‘04, including the systems integration business of Sony Electronics. The acquisitions give Ascent scale and enable it to provide integrated outsourcing services. Company losses mask profitable creative services business which grew revenue 15% y-y in 4Q09. The business, which generated adjusted EBIT of $21 million in 2007 (2009: $6 million), may benefit from an advertising recovery as it processes 35% of U.S. and 70%+ of U.K. television commercials.* Received $35 million of cash in February from the sale of a U.K.-based content services business to Discovery Communications. Ascent expects to recognize a pre-tax gain on sale of $26 million. Appointed John Malone as a board director in January. The appointment may indicate Malone is taking a more active role in company strategy and value creation. Chairman and CEO Fitzgerald (53) and other executives have worked at Liberty Media. Owns 270,000 square feet of properties. 210,000 is in Southern California, 45,000 in New Jersey, New York and Minnesota, and 15,000 in London. $384 million of cash and no debt. Cash includes $56 million of non-current securities and $35 million received in February. “Net net” current assets are $401 million, adjusted for the above. Net cash and securities approximate market cap.

INVESTMENT RISKS & CONCERNS •

*

Lost $37 million on adjusted EBIT basis in 2009, continuing years of losses. Free cash flow from continuing operations was negative $2 million in 2009 and negative $17 million in total since 2007. Content services commitments are down 28% to $196 million at 2/26/10 versus yearend 2008. The segment has not been profitable since 2006.

Source: Company website.

1

FYE December 31 2006 2007 ∆ revenue -3% 3% Revenue ($mn) 571 571 % of revenue by segment: Content services 68% 68% Creative services 32% 32% Revenue growth by segment: Content services n/a 4% Creative services n/a 1% Adjusted EBITDA margin by segment: 2 Content services 10% 9% Creative services 22% 19% Corporate -5% -4% Total adjusted EBITDA margin 9% 9% Content services – items as % of segment revenue: Adjusted EBIT 1% 0% D&A 9% 10% Capex 14% 7% Creative services – items as % of segment revenue: Adjusted EBIT 11% 11% D&A 11% 8% Capex 7% 5% % of revenue by major geography: U.S. 73% 78% U.K. 23% 18% Selected items as % of revenue: Gross profit 31% 29% Adjusted EBIT -2% -2% Net income -15% -23% D&A 11% 10% Capex 13% 7%

2008 2% 582

2009 -22% 454

70% 30%

62% 38%

6% -7%

-31% 0%

9% 13% -5% 5%

9% 11% -6% 4%

0% 9% 6%

-4% 14% 6%

6% 7% 6%

4% 7% 4%

78% 18%

80% 15%

25% -4% -11% 10% 6%

28% -8% -12% 13% 7%

2007-09 figures reflect continuing operations (exclude results of the Chiswick Park content services business in the U.K., which was sold in February 2010. 2 The company refers to adjusted EBITDA as “adjusted OIBDA,” i.e., adjusted operating income before D&A (excluding stock-based and long-term incentive compensation and accretion expense on asset retirement obligations).

Competitors include Technicolor, Laser-Pacific (bought by H.I.G. Capital from Kodak in April), Deluxe, DG FastChannel, and Lucasfilm ILM.

MAJOR HOLDERS Shares outstanding: 13.4 million class A shares (ASCMA; one vote per share) and 0.7 million class B shares (ASCMB; ten votes per share). Chairman Malone owns 84% of class B shares and 1% of class A shares, giving him 30% of the vote. Economic ownership: Chairman Malone 5% | Other insiders 1% | BlackRock 8% | Gabelli 8% | T. Rowe 6% | FMR 6%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Ascent Media is a spinoff that remains largely unnoticed by investors. Shares trade barely above cash or “net net” current assets, including non-current securities and $35 million of cash received from a business sale in February. This gives investors a business with $450 million of revenue and $125 million of gross profit nearly for “free.” Shares offer downside protection as well as meaningful upside if the underperforming content services business can be turned around.

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April 21, 2010 – Page 49 of 120


ASCENT MEDIA – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

293 109 -

296 123 -

309 123 -

337 121 -

342 122 -

356 137 -

225 165 -

15

23

23

23

27

33

28

417 188 2 56

442 207 42

455 216 32

482 215 -

490 212 -

526 235 95 -

418 252 127 -

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

20

33

33

31

44

29

48

683

724

736

727

745

885

845

Accounts payable Short-term debt

19 -

21 -

21 -

21 -

22 -

30 -

42 -

Other current liabilities

52

57

64

59

69

94

101

Total current liabilities Long-term debt

71 -

78 -

86 -

80 -

91 -

124 -

142 -

Total assets Liabilities and Shareholders' Equity

Other long-term liabilities Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn)

29

31

31

28

29

24

21

100

109

117

109

120

148

163

-

-

-

-

-

-

-

583

615

619

618

625

738

682

14

14

14

14

14

14

14

349 349 417 71 6x 6x 417 100 317 583 2 581 85% <0% 241

338 338 442 78 6x 5x 442 109 334 615 615 85% <0% 275

341 341 455 86 5x 5x 455 117 338 619 619 84% <0% 276

337 337 482 80 6x 6x 482 109 373 618 618 85% <0% 279

342 342 490 91 5x 5x 490 120 370 625 625 84% <0% 269

356 356 526 124 4x 4x 526 148 378 738 95 642 81% <0% 281

225 225 418 142 3x 3x 418 163 255 682 127 554 77% <0% 303

-6% -5% -6% -6% 3% -5% -11% n/m -11% -13%

-2% -1% -1% -1% -1% -1% 0% n/m -2% 0%

1% 0% 0% 0% 1% -9% 1% n/m 1% -1%

-2% -1% -1% -1% -1% 1% 0% n/m -6% 4%

-16% -15% -3% -3% -4% -2% -11% n/m -25% -4%

5% 8% 16% 16% 58% 48% -17% n/m -29% -7%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 50 of 120


…additional insight into Ascent Media: Reconciliation for Total Segment Adjusted OIBDA 1

1

“Segment adjusted OIBDA” is a non-GAAP financial measure for each of Ascent Media Group (AMG)’s two operating segments, and on a combined basis for both the Content Services segment and the Creative Services segment. Ascent Media defines “segment adjusted OIBDA” as revenue less cost of services and selling, general and administrative expense (excluding stock-based and long-term incentive compensation and accretion expense on asset retirement obligations), determined in each case on a separate basis for the indicated operating segment only. The operating segments do not include corporate level general and administrative expenses, which amounted to $25.5 million in 2009, compared to a $28.4 million in corporate level general and administrative expenses in 2008. Segment adjusted OIBDA excludes depreciation and amortization, stock-based and long-term incentive compensation, accretion expense on asset retirement obligations, restructuring and impairment charges, gains/losses on the sale of operating assets and other income and expenses that are included in the measurement of loss from continuing operations before income taxes pursuant to GAAP.

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April 21, 2010 – Page 51 of 120


Audiovox (VOXX) – Owned by Baupost, Aegis, Smith, Kahn

Hauppauge, NY, 631-231-7750 www.audiovox.com

Technology: Communications Equipment, Member of S&P SmallCap 600 Trading Data Price: $7.94 (as of 4/16/10) 52-week range: $4.48 - $8.45 Market value: $182 million Enterprise value: $142 million Shares out: 22.9 million

Consensus EPS Estimates Month Latest Ago This quarter $0.00 $0.00 Next quarter n/a n/a FYE 2/28/10 0.16 0.16

# of Ests 1 n/a 1

Valuation P/E FYE 2/28/09 P/E FYE 2/28/10 P/E FYE 2/28/11 P/E FYE 2/28/12 EV/ LTM revenue

n/m 50x 23x n/a 0.3x

Ownership Data Insider ownership: 19%

FYE 2/28/11 FYE 2/28/12

EV/ LTM EBIT P / tangible book

n/m 0.7x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 66%

EPS Surprise 1/11/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

11/30/03 511 85 14 11 0.36 22 28 5 23 5 521 16 583 43 216 16 258 3 323 4%

0.35 n/a

0.35 n/a

1 n/a

n/a

n/a

n/a

Actual $0.11

Estimate $0.26

Operating Performance and Financial Position Fiscal Years Ended 11/30/04 11/30/05 2/28/06 2/28/07 2/29/08 2/28/09 564 540 103 457 591 603 90 61 16 79 111 100 (1) (28) (3) (5) 5 (53) 77 (10) 0 3 8 (71) 0.00 (0.30) 0.02 0.16 0.29 (3.11) 22 22 23 22 23 23 87 (42) 55 43 (65) 30 5 3 1 3 7 5 82 (45) 55 40 (72) 25 168 123 177 156 39 70 482 407 390 379 358 330 15 27 27 75 124 89 543 486 466 499 533 461 10 6 7 4 3 3 120 66 47 73 82 89 14 12 12 11 7 11 139 85 65 95 110 121 3 3 3 0 0 0 402 399 398 404 424 341 0% -12% -1% -3% 2% -23%

Greenblatt Criteria LTM EBIT yield LTM pre-tax ROC LTME 11/30/09 516 91 (49) (54) (2.37) 23 53 4 49 55 352 87 488 4 98 12 127 0 361 -20%

FQE 11/30/08 196 39 12 7 0.29 23 (34) 1 (34) 14 363 123 532 3 94 12 118 0 415 n/m

-34% -20% FQE 11/30/09 156 30 3 13 0.55 23 (11) 1 (11) 55 352 87 488 4 98 12 127 0 361 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$40 $35 $30 $25 $20 $15 $10 $5 $0 Mar 01

Mar 02

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Mar 03

Mar 04

Mar 05

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Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

April 21, 2010 – Page 52 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

Audiovox provides mobile and consumer electronics as well as accessories in two product categories: Electronics: Includes car entertainment and security systems, LCD televisions, camcorders, music and DVD players, clock radios, voice recorders, picture frames and other products. Accessories: Includes HDTV/WiFi antennas, TV remotes, headphones, cordless phones, rechargeable battery backups, connectivity products, iPod-related and other accessories.

INVESTMENT HIGHLIGHTS •

• • • •

Brands include Audiovox, RCA, Jensen, Acoustic Research, Energizer, Advent, Code Alarm, Terk, Prestige and Surface. Some of the brands are licensed, including RCA and Energizer. #1 share in “mobile video and multimedia” products including car entertainment systems, based on company data. The company is also #1 in remote controls, antenna and TV reception products. Outsourced manufacturing leads to capital-light business model focused on product design and engineering. Most products are imported from Asiabased suppliers under short-term purchase orders. $39 million of net cash. In addition, Audiovox has $16 million of long-term investment securities and $11 million of equity investments at 11/30/09. $37 million of U.S. federal NOLs, as of February 2009. NOL’s expire between 2027 and 2029. Net-net current assets are 120%+ of market cap. Shares trade at trailing EV-to-revenue of 0.3x and trailing EV-to-gross profit of 1.6x.

INVESTMENT RISKS & CONCERNS • •

COMPARABLE PUBLIC COMPANY ANALYSIS

PC PHG VOXX

EV ($mn) 34,730 30,280 140

EV / Rev. .5x 1.0x .3x

P/ Tang. Book 2.3x 7.3x .7x

This FY P/E n/m 28x 50x

Next FY P/E 19x 21x 23x

2007 n/a 457

2008 29% 591

2009 2% 603

YTD 11/30/09 -18% 400

95% 5%

74% 26%

75% 25%

67% 33%

n/a n/a

1% 550%

3% 0%

-29% 20%

86% 2% 10% 2%

85% 2% 10% 2%

84% 5% 9% 2%

n/a n/a n/a n/a

17% 2% -1% 1% 1% 1% 1% 83% n/a

19% 2% 1% 1% 1% 1% 2% 77% 2%

17% 2% -9% -12% 1% 1% -26% 71% 0%

19% 2% 1% 4% 1% 1% 6% 70% 0%

Figures reflects continuing operations. Y-Y comparisons for fiscal 2007 are not available given fiscal year and segment reporting changes in 2006/07. Fiscal 2008 revenue growth is mainly due to 2007 acquisitions of Thomson’s audio/video and accessory businesses, as well as rights to RCA brand for the audio/video and accessories fields. The company also acquired Technuity in 2007, giving it the exclusive license to the Energizer brand in North America. 3 Includes both mobile and consumer electronics products. 4 Represents engineering and technical support expenses. 2

Audiovox products compete primarily on price. This may explain the razor-thin profit margins and lack of sustainable free cash flow generation. Competition includes well-known electronics brands such as Sony, Panasonic, Philips, Pioneer, and JVC, as well as niche providers such as Alpine, Directed Electronics and Monster Cable. Car-based systems compete with car OEM-supplied products. ~ 50% of tangible book is inventory, which is a depreciating asset at risk of rapid obsolescence.

MV ($mn) 30,670 30,440 180

1

FYE February 28 ∆ revenue 2 Revenue ($mn) % of revenue by product category: Electronics 3 Accessories Revenue growth by product category: Electronics Accessories % of revenue by geography: North America Latin America Germany Other Selected items as % of revenue: Gross profit R&D 4 EBIT Net income D&A Capex Return on tangible equity Tangible equity to assets ∆ shares out (avg)

“We have a number of banks out, looking for particular companies and channels that we would like to enter,” based on CEO comment in January. The company has been acquisitive in the past, but has not demonstrated it can create value with M&A. Top five customers were 36% of FY09 revenue.

MAJOR HOLDERS Shares outstanding: 20.6 million class A shares (VOXX; one vote per share) and 2.3 million class B shares (not listed; ten votes per share). Chairman Shalam controls the company by owning 100% of class B shares and 9% of class A shares. Economic stake: Chairman Shalam 18% | Other insiders 6% | Smith & Co. 9% | Kahn Brothers 8% | Baupost 8% | DFA 8%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Audiovox’s acquisition-led growth strategy has built up a portfolio of consumer electronics brands across various product groups. The hard part continues to be creating shareholder value given commoditized products and technological change. Downside may not be protected as well as the below-book valuation suggests, given that “perishable” inventory is a large part of the asset base. Voting control by chairman Shalam makes Audiovox a less attractive takeover candidate. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 53 of 120


AUDIOVOX – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

11/30/09

8/31/09

5/31/09

2/28/09

11/30/08

8/31/08

5/31/08

2/29/08

55 144 125

71 109 121

62 132 119

70 117 125

14 180 149

49 125 163

70 124 147

39 142 156

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

28

18

17

18

20

19

20

21

352 20 87 27

318 20 87 27

330 20 88 22

330 20 89 21

363 21 123 22

357 22 127 25

360 22 124 27

358 22 124 28

2

2

2

2

4

2

1

1

488

454

462

461

532

533

534

533

Accounts payable Short-term debt

41 4

34 3

40 4

42 3

43 3

40 3

34 4

24 3

Other current liabilities

52

43

43

45

48

45

46

55

Total current liabilities Long-term debt

98 12

80 12

86 12

89 11

94 12

88 13

84 14

82 7

Total assets Liabilities and Shareholders' Equity

Other long-term liabilities Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn)

17

17

20

20

12

19

20

20

127

108

118

121

118

119

117

110

-

-

-

-

-

-

-

-

361

346

344

341

415

414

417

424

23

23

23

23

23

23

23

23

82 16 67 352 98 4x 2x 352 127 225 361 87 275 68% <0% 223

97 15 82 318 80 4x 2x 318 108 210 346 87 259 71% <0% 191

84 15 69 330 86 4x 2x 330 118 212 344 88 256 68% <0% 205

90 14 76 330 89 4x 2x 330 121 209 341 89 252 68% <0% 194

36 15 21 363 94 4x 2x 363 118 246 415 123 292 71% <0% 279

75 16 58 357 88 4x 2x 357 119 237 414 127 286 71% <0% 245

97 17 79 360 84 4x 2x 360 117 243 417 124 293 71% <0% 232

68 10 57 358 82 4x 2x 358 110 249 424 124 299 73% <0% 261

7% 4% 6% 6% -19% 7% 33% 3% 21% 17%

-2% 1% 1% 1% 19% -1% -18% 2% -15% -7%

0% 1% 2% 2% -9% 1% 13% -5% -4% 6%

-13% -18% -14% -14% 269% -15% -35% -16% -3% -30%

0% 0% 2% 2% -64% 3% 44% -9% 9% 14%

0% -1% -2% -2% -27% -2% 1% 11% 16% 6%

0% -2% -2% -2% 39% -2% -13% -6% 40% -11%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 54 of 120


…additional insight into Audiovox: SLIDES FROM COMPANY PRESENTATION, SEPTEMBER 2009

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April 21, 2010 – Page 55 of 120


Axcelis Technologies (ACLS) – Owned by Schneider, Sterling, Smith

Beverly, MA, 978-787-4000 www.axcelis.com

Technology: Semiconductors Trading Data Price: $2.22 (as of 4/16/10) 52-week range: $0.32 - $2.36 Market value: $231 million Enterprise value: $186 million Shares out: 103.9 million

Consensus EPS Estimates Month Latest Ago This quarter n/a n/a Next quarter n/a n/a FYE 1/0/00 n/a n/a

# of Ests n/a n/a n/a

Valuation P/E FYE 12/31/09 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01 EV/ LTM revenue

n/m n/a n/a n/a 1.4x

Ownership Data Insider ownership: 1%

FYE 12/30/00 FYE 12/30/01

EV/ LTM EBIT P / tangible book

n/m 1.1x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 57%

EPS Surprise n/a

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 328 110 (47) (114) (1.16) 99 (54) 12 (66) 108 330 67 585 0 98 125 232 0 353 -23%

n/a n/a

n/a n/a

n/a n/a

n/a

n/a

n/a

Actual n/a

Greenblatt Criteria

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 508 373 462 405 250 212 154 192 153 63 51 (16) 24 (21) (187) 74 (4) 41 (11) (197) 0.73 (0.04) 0.40 (0.11) (1.91) 100 100 101 102 103 (57) 72 (12) 19 (31) 5 6 8 7 10 (62) 66 (20) 12 (42) 187 165 204 84 38 406 395 475 379 241 64 63 60 53 0 689 661 754 670 455 0 0 74 0 83 107 94 190 94 130 125 125 77 80 0 245 235 276 184 136 0 0 0 0 0 444 426 478 486 319 26% -8% 11% -8% -80%

LTM EBIT yield LTM pre-tax ROC

12/31/09 133 28 (70) (78) (0.75) 104 (49) 3 (52) 45 194 0 251 0 30 0 34 0 216 -39%

LTME 12/31/09 133 28 (69) (129) (0.75) 104 n/a n/a n/a 45 194 0 251 0 30 0 34 0 216 -38%

FQE 12/31/08 42 (11) (137) (141) (1.37) 103 (15) 0 (15) 38 241 0 455 83 130 0 136 0 319 n/m

-37% -38% FQE 12/31/09 39 11 (10) (10) (0.10) 104 n/a n/a n/a 45 194 0 251 0 30 0 34 0 216 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$35 $30 $25 $20 $15 $10 $5 $0 Mar 01

Mar 02

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April 21, 2010 – Page 56 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA

Axcelis provides semiconductor capital equipment.

INVESTMENT HIGHLIGHTS •

• •

• • • •

“Market leader in high-energy ion implanters” based on Axcelis 2009 10-K. Implanters are machines which cost $2-3 million, and are used by chip makers to embed transistors into silicon wafers. ~4,000 Axcelis products are in use in 50 countries worldwide. This installed base is a source of aftermarket sales, which represented 74% of 2009 revenue (reflects low new product sales in 2009). Received $122 million cash from sale of 50% SEN stake in 2009. Axcelis retains a cross-license with SEN, which produces ion implantation equipment in Japan. The company used majority of proceeds to repay $83 million of convertible debt. “Believe we will be cash flow positive in 2010” Axcelis generated $4 million of FCF in 4Q09. Free cash flow generation benefits from low capex needs. “Experiencing a significant increase in recent order flow” and “forecasting sales to be up across all product lines and service programs” in 2010, based on CEO comments in February. Owns 417,000 sq ft HQ in Beverly, MA. The site, which also houses manufacturing operations, is carried at ~$35 million but may be worth more. $168 million of federal and state NOLs and $16 million of foreign NOLs expire from 2018 to 2029, as of yearend 2009. These are fully reserved against. $45 million of non-restricted cash and no debt. Shares trade at 1.1x tangible book.

INVESTMENT RISKS & CONCERNS • •

Cyclical business, dependent on semi makers’ capacity investments, which exhibit large volatility (particularly in the case of memory manufacturers). Systems backlog is only $17 million at yearend 2009 (down 20% y-y), including deferred systems revenue. This represents less than 15% of 2009 revenue, which makes new order wins essential. Playing catch-up in high-current 300 millimeter ion implant market, which is a “substantial portion of the total market opportunity” for Axcelis. The company was late to market with a single wafer high-current product in 2006 and lost market share.

MAJOR HOLDERS CEO Puma 1% | Other insiders 2% | FMR 14% | Smith & Co. 10% | Schneider 9% | Sterling 9% | DFA 3% | Ingalls 2%

1

FYE December 31 ∆ revenue Revenue ($mn) % of revenue by segment: Ion implantation systems 1 Other products 2 Revenue growth by segment: Ion implantation systems Other products “Aftermarket” as % of revenue 3 % of revenue by type: Product Service Royalties 4 Revenue growth by major type: Product Service Gross margin by major type: Product Service Total gross margin % of revenue by geography: U.S. Europe Asia Pacific Selected items as % of revenue: R&D EBIT Net income D&A 5 Capex Return on tangible equity Tangible equity to assets ∆ shares out (avg)

2005 -27% 373

2006 24% 462

2007 -12% 405

2008 -38% 250

2009 -47% 133

80% 20%

74% 26%

75% 25%

82% 18%

83% 17%

-28% -21% 42%

15% 58% 38%

-11% -16% 42%

-33% -55% 57%

-46% -51% 74%

82% 16% 2%

86% 12% 2%

85% 14% 1%

78% 21% 2%

74% 25% 0%

n/a n/a

31% -9%

-14% 2%

-43% -6%

-49% -35%

40% 36% 41%

48% 15% 41%

42% 20% 38%

16% 56% 25%

13% 60% 21%

78% 9% 13%

80% 8% 12%

78% 9% 13%

70% 12% 18%

63% 17% 20%

19% -4% -1% 6% 2% -1% 61% 1%

16% 5% 9% 4% 1% 10% 60% 1%

18% -5% -3% 5% 3% -3% 65% 1%

25% -75% -79% 9% 1% -52% 70% 1%

25% -52% -58% 6% 0% -29% 76% 1%

Includes high current, medium current and high energy implanters. Includes dry strip equipment, curing, and thermal processing systems. Aftermarket refers to sales of spare parts and product upgrades, combined with the sale of maintenance labor and service contracts. Some revenue in the reportable segment “Product” is therefore included in “Aftermarket” revenue. 4 Majority of royalties was derived from the SEN joint venture, with Axcelis selling its 50% stake to JV partner Sumitomo Heavy Industries in March 2009. 5 Includes amortization of intangible assets. 2 3

COMPARABLE PUBLIC COMPANY ANALYSIS

VSEA MTSN ACLS

RATINGS

MV ($mn) 2,610 250 230

EV ($mn) 2,340 190 190

EV / Rev. 5.9x 4.4x 1.4x

P/ Tang. Book 4.9x 2.7x 1.1x

This FY P/E 23x n/m n/a

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

Next FY P/E 15x n/m n/a

      

THE BOTTOM LINE Axcelis avoided bankruptcy in early 2009 as it was able to pay off maturing debt with proceeds from the sale of its 50% stake in Japanese chip equipment producer SEN. Shares are up about tenfold since then as the market has re-rated Axcelis as a going concern. While risk-reward has risen, shares still trade near tangible book. Operations have turned free cash flow positive and business should continue to improve in 2010. Axcelis retains potential take-out upside in the context of a prior bid by Sumitomo Heavy Industries and Texas Pacific Group, which offered $6.00 per share for the company in March 2008. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 57 of 120


AXCELIS TECHNOLOGIES – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

45 19 115

41 27 124

50 23 133

71 21 141

38 28 150

50 37 177

60 51 179

68 55 186

15

18

18

24

26

32

32

42

194 41 -

210 42 -

224 43 -

256 44 -

241 44 157

295 64 51 136

322 66 52 140

351 67 52 149

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

16

11

11

12

13

33

35

36

251

263

278

312

455

580

616

655

Accounts payable Short-term debt

10 -

6 -

7 -

11 -

8 83

13 82

16 82

24 81

Other current liabilities

20

26

30

39

39

39

42

47

Total current liabilities Long-term debt

30 -

32 -

36 -

51 -

130 -

134 -

139 -

151 -

Total assets Liabilities and Shareholders' Equity

Other long-term liabilities Total liabilities Preferred stock

4

5

5

5

6

8

9

10

34

37

41

56

136

142

148

161

-

-

-

-

-

-

-

-

Shareholders' equity

216

226

237

256

319

437

468

494

Shares out (avg) (mn)

104

103

103

103

103

103

102

102

45 45 194 30 6x 2x 194 34 159 216 216 86% <0% 160

41 41 210 32 7x 2x 210 37 173 226 226 86% <0% 178

50 50 224 36 6x 2x 224 41 183 237 237 85% <0% 181

71 71 256 51 5x 2x 256 56 200 256 256 82% <0% 178

194 83 111 241 130 2x 1x 241 136 105 319 319 70% <0% 201

186 82 103 295 134 2x 1x 295 142 153 437 51 386 73% <0% 258

200 82 118 322 139 2x 1x 322 148 174 468 52 416 74% <0% 271

217 81 136 351 151 2x 1x 351 161 190 494 52 442 73% <0% 280

-5% -4% -4% -5% 9% -8% -28% -7% 52% -10%

-6% -5% -5% -5% -17% -5% 14% -7% -6% -1%

-11% -7% -7% -7% -30% -9% 11% -5% -39% 1%

-31% -20% -20% -20% -36% 90% -24% -6% 38% -11%

-21% -27% -17% -17% 8% -31% -25% -15% -36% -22%

-6% -6% -7% -8% -13% -12% -29% -1% -19% -5%

-6% -5% -6% -6% -13% -8% -7% -4% -34% -3%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 58 of 120


…additional insight into Axcelis: CASH FLOWS, 2007-2009

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April 21, 2010 – Page 59 of 120


Callaway Golf (ELY) – Owned by Royce, Clearbridge

Carlsbad, CA, 760-931-1771 www.callawaygolfpreowned.com

Consumer Cyclical: Recreational Products, Member of S&P SmallCap 600 Trading Data Price: $9.74 (as of 4/16/10) 52-week range: $4.66 - $10.19 Market value: $627 million Enterprise value: $549 million Shares out: 64.4 million

Consensus EPS Estimates Month Latest Ago This quarter $0.25 $0.26 Next quarter 0.32 0.33 FYE 12/31/10 0.29 0.29

# of Ests 12 12 13

Valuation P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 P/E FYE 12/30/12 EV/ LTM revenue

n/m 34x 16x n/a 0.6x

Ownership Data Insider ownership: 1%

FYE 12/31/11 FYE 12/30/12

11 n/a

EV/ LTM EBIT P / tangible book

n/m 1.2x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 3 Institutional ownership: 95%

EPS Surprise 1/26/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 814 369 66 46 0.68 66 119 8 111 47 384 170 749 0 130 0 159 0 589 18%

0.62 n/a

0.63 n/a

11.0%

11.0%

Actual -$0.27

Greenblatt Criteria

3

Estimate -$0.28

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 935 998 1,018 1,125 1,117 359 414 398 493 487 (25) 17 37 90 84 (10) 13 23 55 66 (0.15) 0.19 0.34 0.81 1.04 68 69 68 66 63 9 70 17 152 42 26 34 33 33 51 (18) 36 (16) 119 (9) 32 50 46 50 38 394 439 493 497 490 180 175 175 173 177 736 765 846 838 855 13 0 80 37 90 121 140 224 224 253 0 0 0 0 0 149 169 269 270 277 0 0 0 0 0 586 596 577 568 578 -6% 4% 9% 22% 21%

LTM EBIT yield LTM pre-tax ROC

12/31/09 951 344 (31) (21) (0.33) 63 43 39 4 78 513 174 876 0 152 0 169 0 707 -7%

LTME 12/31/09 951 344 (31) (21) (0.34) 63 43 39 4 78 513 174 876 0 152 0 169 0 707 -7%

FQE 12/31/08 171 60 (29) (3) (0.05) 63 (19) 18 (36) 38 490 177 855 90 253 0 277 0 578 n/m

-6% -7% FQE 12/31/09 186 58 (29) (18) (0.29) 63 (15) 9 (24) 78 513 174 876 0 152 0 169 0 707 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$30

$25

$20

$15

$10

$5

$0 Mar 01

Mar 02

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April 21, 2010 – Page 60 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA

Callaway Golf manufactures golf clubs and golf balls, as well as related accessories such as bags and apparel.

INVESTMENT HIGHLIGHTS •

• •

Owns golf brands including Callaway, Odyssey, Top-Flite, Ben Hogan and uPro. According to the company, “it is the leader, or one of the leaders, in every golf club market in which it competes.” In golf balls, it was #2 in U.S. revenue share in 2009. Designs products for golfers of all skill levels, amateur and professional. Professional use of the company’s products, including the #2 position on the PGA Tour in 2009, contributes to retail sales. Margin improvement potential. Margins may be improved through outsourcing and transfer of production to lower cost countries as nearly half of production remains in the U.S. The golf balls segment, in particular, has turnaround potential. Reduced inventory to “lowest yearend levels for the past five years.” Yearend 2009 inventory represents 23% of trailing revenue. The percentage is stable y-y despite a 15% decline in 2009 revenue. In addition, retail inventories are “conservative.” 1Q10 revenue increased 6% y-y on a currencyneutral basis according to preliminary results released on April 15. This indicates demand may be starting to recover following declines in 2009. Guiding for EPS of $0.25-0.35 in 2010 (2009: loss of $0.27), including a $0.16 per share reduction related to preferred stock and excluding a $0.10 per share restructuring charge. Revenue is expected at $990-1,050 million, up 4-10% y-y on improved market conditions and favorable currency impact. Shares trade at 1.6x tangible book. Recent share price implies EV-to-2009 revenue of 0.8x. $78 million of cash and no debt.

2

2006 2% 1,018

2007 10% 1,125

2008 -1% 1,117

2009 -15% 951

79% 21%

81% 19%

80% 20%

81% 19%

3% 0%

13% -1%

-2% 5%

-14% -19%

13% -3% -6% 3%

17% 0% -6% 8%

15% 3% -4% 9%

5% -8% -6% -3%

56% 16% 10% 18%

53% 17% 11% 19%

50% 17% 15% 18%

50% 14% 17% 19%

1% -4% 2%

5% 21% 14%

-7% -1% 39%

-14% -30% -2%

39% 3% 4% 2% 3% 3% 6% 66% -1%

44% 3% 8% 5% 3% 3% 14% 60% -2%

44% 3% 8% 6% 3% 5% 17% 59% -5%

36% 3% -3% -2% 4% 4% -4% 68% 0%

2009 revenue declined 12% y-y on a currency neutral basis. Includes accessories, which represented 23% of company revenue in 2009.

• •

Low growth in mature markets. While the recent entry into new markets such as India offers growth potential, competition may erode profitability. Lost patent case against Acushnet in March. Callaway argued that the Fortune Brands subsidiary infringed its golf ball patents. The ruling may make it harder to turn around the golf ball business.

MAJOR HOLDERS *

INVESTMENT RISKS & CONCERNS •

1

FYE December 31 2005 ∆ revenue 1 7% Revenue ($mn) 998 % of revenue by segment: Golf clubs 2 78% Golf balls 22% Revenue growth by segment: Golf clubs 11% Golf balls -7% Pre-tax income margin by segment: Golf clubs 9% Golf balls -2% Corporate -5% Total pre-tax income margin 1% % of revenue by geography: U.S. 56% Europe 17% Japan 10% Other 17% Revenue growth by geography: U.S. 3% Europe -2% Japan 47% Selected items as % of revenue: Gross profit 42% R&D 3% EBIT 2% Net income 1% D&A 4% Capex 3% Return on tangible equity 3% Tangible equity to assets 72% ∆ shares out (avg) 1%

Competition includes Fortune Brands-owned Acushnet, which owns Titleist and FootJoy brands and has 50%+ share of the U.S. golf ball market. Other rivals are Adidas-owned TaylorMade, Nike, Sumitomo-owned SRI Sports (Cleveland, Dunlop Srixon), Puma, Bridgestone, Ping and Yamaha. Dilution. The company sold $140 million of 7.5% convertible preferred stock in 2009. Proceeds were used to eliminate debt. The preferred is convertible at any time at a price of $7.05 per common share. If converted, shares outstanding would rise by 31%.

CEO Fellows 2% | Other insiders 2% | FMR 10% | BlackRock 8% | Royce 6% | Fisher 6% | Axa 6% *

Assumes outstanding preferred stock is not converted into common shares.

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Callaway’s brands have over the years proven their staying power in the golf business. This is despite competition from much larger companies including Nike, Adidas, and Fortune Brands. However, given exposure to mature markets, and expensive marketing required to enter new, higher-growth markets, we are skeptical the company’s go-it-alone strategy will deliver adequate returns on capital. Having said that, Callaway may be an attractive target for a trade buyer (EV-to-revenue is 0.8x). In March, Puma bought the Cobra golf brand from Fortune Brands to complement its golf footwear and apparel business. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 61 of 120


CALLAWAY GOLF – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

78 160 219

105 155 199

51 263 228

20 241 262

38 136 257

51 153 220

55 287 236

39 301 264

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets Total assets

56

60

57

60

59

67

75

76

513 143 174 -

518 148 175 -

599 145 176 -

582 141 175 -

490 142 177 -

490 135 170 -

653 135 172 -

680 132 173 -

46

54

49

48

47

72

68

59

876

894

968

946

855

867

1,028

1,043

118 -

110 -

170 -

159 147

126 90

116 40

138 135

159 156

Liabilities and Shareholders' Equity Accounts payable Short-term debt Other current liabilities

33

36

41

34

37

48

65

54

Total current liabilities Long-term debt

152 -

146 -

211 -

340 -

253 -

203 -

338 -

368 -

Other long-term liabilities

17

23

60

24

24

68

67

65

169

170

271

364

277

271

405

434

-

-

-

-

-

-

-

-

707

725

697

582

578

596

623

610

63

63

63

63

63

62

63

64

78 78 513 152 3x 2x 513 169 344 707 174 533 76% <0% 427

105 105 518 146 4x 2x 518 170 349 725 175 550 76% <0% 415

51 51 599 211 3x 1x 599 271 328 697 176 522 66% <0% 482

20 147 (128) 582 340 2x 1x 582 364 218 582 175 407 53% 0 510

38 90 (52) 490 253 2x 1x 490 277 213 578 177 402 59% 0 430

51 40 11 490 203 2x 1x 490 271 219 596 170 427 61% <0% 412

55 135 (80) 653 338 2x 1x 653 405 248 623 172 451 53% 0 529

39 156 (116) 680 368 2x 1x 680 434 247 610 173 437 50% 0 560

-2% -2% -3% -3% -25% -1% 3% 10% 8% 3%

-8% 4% 5% 5% 107% 6% -41% -13% -35% -14%

2% 20% 28% 28% -140% 50% 9% -13% 7% -6%

11% 1% 1% 1% 147% 3% 78% 2% 26% 19%

-1% -3% -6% -6% -588% -3% -11% 17% 9% 5%

-16% -4% -5% -4% -113% -11% -47% -7% -16% -22%

-1% 2% 3% 4% -31% 0% -4% -11% -13% -5%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn) Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 62 of 120


…additional insight into Callaway Golf: EXCERPTS from LETTER TO SHAREHOLDERS by PRESIDENT AND CEO GEORGE FELLOWS, MARCH 22, 2010 •

In 2009, Callaway Golf confronted conditions unlike any in our 27-year history. Testing the competitive spirit that has propelled us to the top of our industry, we faced challenges that included the worst economic downturn since the Great Depression, contracting consumer purchases and retail inventories and an unfavorable foreign currency environment. As a result of these factors, the Company reported net sales of $951 million, which represented a 15 percent decrease from the previous year, with a net loss of $0.33 per share. While these results were very disappointing, the decline in revenue was less severe in comparison to the declines that beset the overall golf and consumer markets.

To spur consumer spending, Callaway took a leadership position as the first mover in the market with consumer promotions that helped mitigate the impact of a depressed marketplace. While these actions had an adverse effect on the Company’s gross margins, they helped stimulate retail sales and reinforced Callaway as the proactive leader in the marketplace.

To ensure we had sufficient liquidity to weather these challenging conditions, we raised $140 million through a convertible preferred stock offering. The ability to raise that much capital in such a tough economic climate reflected strong investor confidence in Callaway Golf’s long-term business prospects.

The Company committed early in the year to tight management of expenses and working capital. As a result, operating expenses were reduced by 7 percent to $374 million and we captured continued savings from our Gross Margin Initiatives, totaling $70 million over the past three years.

Looking to the future, it was equally important that we balanced these expense reductions with targeted investment spending to position ourselves to take full advantage of an economic recovery as it develops. Those investments included funding of key gross margin improvement initiatives, global expansion in China and India, further investment in our uPro GPS device business, and our steadfast dedication to R&D in order to develop the most innovative products in the game.

This balanced approach, while costly to short-term profitability, allowed us to accomplish a great deal in 2009 and set a positive base going into what we believe will be a solid recovery year in 2010. We outperformed most of our competitors in the consumer arena. In the major golf club categories, our woods, irons and putters saw an increase in market share, illustrating the strength of our product line. In fact, Callaway finished as the #1 Irons in Golf for the 13th straight year, Odyssey continued its strong position as the #1 Putter in Golf, our woods gained momentum and we grew our leadership position in Asia with our Legacy brand of products.

Our uPro business, a late 2008 acquisition, was fully integrated into the Callaway family and saw immediate acceptance as golfers discovered just how impressive and helpful this unique GPS distance measurement device was to their games.

Spearheading our strategic initiatives, we recently opened a new subsidiary, Callaway Golf India. India is a country that has a rich history in the game. In fact, the Royal Calcutta Golf Club was established in 1829, making it the oldest golf club in the world outside of Great Britain. To raise Callaway’s profile in India, we added Jeev Milkha Singh, the country’s top-ranked golfer, as one of our newest staff players and he will serve as our brand ambassador for Callaway Golf India.

We remain cautiously optimistic that 2010 will be a year of recovery. Global economic conditions have started to stabilize and look to be on the upswing. A continuation of these trends, together with foreign currency rate improvement, will set the stage for a much improved financial performance in the coming year. The difficult steps undertaken in 2009 have positioned us to take full advantage of the economic recovery as it unfolds.

There’s no doubt that Callaway Golf faced an unprecedented series of obstacles in 2009, but we have emerged a leaner, more resilient Company better able to deal with adversity.

Legendary author and humorist Mark Twain once said, “The miracle, or the power, that elevates the few is to be found in their industry, application, and perseverance under the prompting of a brave, determined spirit.” The determined spirit that was instilled when our Company was founded runs as deep as ever. And we’re just as committed to helping make every golfer a better golfer today as Ely Callaway was 27 years ago.

To access the complete letter, visit http://bit.ly/99mxsY

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 63 of 120


Hurco Companies (HURC) – Owned by Royce, Pier, Kennedy

Indianapolis, IN, 317-293-5309 www.hurco.com

Technology: Scientific & Technical Instruments Trading Data Price: $18.30 (as of 4/16/10) 52-week range: $12.01 - $20.45 Market value: $118 million Enterprise value: $85 million Shares out: 6.4 million

Consensus EPS Estimates Month Latest Ago This quarter -$0.18 -$0.07 Next quarter -0.02 0.00 FYE 10/31/10 -0.28 0.14

# of Ests 1 1 1

Valuation P/E FYE 10/31/09 P/E FYE 10/31/10 P/E FYE 10/31/11 P/E FYE 10/30/12 EV/ LTM revenue

n/m n/m 21x n/a 1.0x

Ownership Data Insider ownership: 5%

FYE 10/31/11 FYE 10/30/12

EV/ LTM EBIT P / tangible book

n/m 1.1x

Insider buys (last six months): 2

LT growth

Insider sales (last six months): 0 Institutional ownership: 63%

EPS Surprise 3/11/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

10/31/03 76 21 2 1 0.08 6 2 1 1 5 42 2 58 1 20 9 29 0 29 8%

0.88 n/a

1.11 n/a

1 n/a

n/a

n/a

n/a

Actual -$0.29

Greenblatt Criteria

Estimate -$0.04

Operating Performance and Financial Position Fiscal Years Ended 10/31/04 10/31/05 10/31/06 10/31/07 10/31/08 100 126 149 188 224 30 43 53 71 83 9 17 23 31 36 6 16 16 21 23 1.04 2.60 2.42 3.24 3.49 6 6 6 6 6 7 12 14 14 0 2 3 3 5 6 5 9 11 10 (5) 8 18 30 40 46 57 74 103 139 151 3 4 6 6 6 73 94 126 164 177 0 0 0 4 3 30 31 44 63 51 4 4 4 0 0 35 35 50 66 54 0 0 0 0 0 39 59 75 98 124 32% 54% 62% 69% 59%

LTM EBIT yield LTM pre-tax ROC

10/31/09 91 26 (5) (2) (0.36) 6 (2) 4 (5) 29 118 7 145 1 21 0 24 0 120 -7%

LTME 1/31/10 83 21 (8) (5) (0.70) 6 5 3 2 34 114 7 140 1 18 0 22 0 118 -11%

FQE 1/31/09 28 9 1 0 0.05 6 (2) 1 (3) 39 129 6 156 3 30 0 33 0 123 n/m

-10% -11% FQE 1/31/10 21 4 (3) (2) (0.29) 6 5 1 4 34 114 7 140 1 18 0 22 0 118 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$70 $60 $50 $40 $30 $20 $10 $0 Mar 01

Mar 02

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April 21, 2010 – Page 64 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA

Hurco provides computerized machine tools, computer control systems and software to the metal-working industry.

INVESTMENT HIGHLIGHTS •

• • • •

Helps automate metal parts manufacturing. Hurco pioneered conversational software for use on machine tools. Hurco’s control systems enable tool operators on production floors to create a program for machining a part from a blueprint or CAD file. Core products include vertical machining (mills) and turning centers (lathes), which are integrated with proprietary software and computer controls. Machine prices range from $40,000 to $350,000. Demand drivers: advances in industrial technology and related demand for process improvements; need to improve productivity and shorten cycle time; replacement of aging machine tool installed base; industrial development in Asia and Eastern Europe; and the declining supply of skilled machinists. End-markets are mainly independent job shops and short-run manufacturing operations of large companies in industries such as aerospace, defense, medical equipment, energy, and transportation. Low-cost manufacturing operations are based in Taiwan and China. In 2009, Hurco expanded the China facility to produce machines specifically for the Chinese market. Asia Pacific revenue roughly quadrupled to $2.5 million in fiscal 1Q of 2010. Michael Doar (54) has been chairman and CEO since 2001 after spending over a decade as a senior executive at Ingersoll Milling Machine Company. Remains cash flow generative despite revenue and profitability pressures. Trailing FCF is $2 million. $32 million of cash and no debt. Shares trade at 1.1x tangible book. EV-to-trailing twelve months’ revenue is 1.0x.

INVESTMENT RISKS & CONCERNS •

“We continue to be significantly impacted by the ongoing global recession” based on CEO comment in March. New orders declined 16% y-y in fiscal 1Q of 2010, with 33% and 23% falls in North America and Europe partly offset by a rise in Asia Pacific. Cyclical and competitive machine tool industry. Hurco is highly exposed to changes in demand for capital goods. “Competitive pricing pressures on a global basis” may exacerbate gross margin pressure. Products are based on industry-standard computer components. Despite “proprietary” products, Hurco appears vulnerable to competition.

1

FYE October 31 2005 ∆ revenue 26% ∆ orders 1 19% Revenue ($mn) 126 % of revenue by type: Machine tools 86% Service fees and other 14% Revenue growth by type: Machine tools 28% Service fees and other 14% % of revenue by geography: Europe 60% North America 34% Asia Pacific 6% Revenue growth by geography: Europe 25% North America 33% Asia Pacific 5% Selected items as % of revenue: Gross profit 34% EBIT 13% Net income 13% D&A 1% Capex 2 2% Return on tangible equity 36% Tangible equity to assets 56% ∆ shares out (avg) 7%

2006 18% 26% 149

2007 27% 29% 188

2008 19% 7% 224

2009 -59% -62% 91

YTD 1/31/10 -27% -16% 21

87% 13%

88% 12%

89% 11%

83% 17%

82% 18%

20% 8%

29% 14%

20% 11%

-62% -36%

-29% -15%

59% 34% 7%

67% 28% 6%

73% 22% 5%

66% 28% 6%

58% 30% 12%

17% 17% 44%

43% 3% 2%

31% -7% 13%

-63% -47% -56%

-33% -37% 309%

36% 15% 10% 1% 2% 25% 59% 2%

38% 16% 11% 1% 2% 26% 58% 1%

37% 16% 10% 1% 2% 22% 64% 1%

28% -6% -3% 4% 4% -2% 75% 0%

19% -12% -9% 4% 2% -2% 81% 0%

We do not list backlog as Hurco typically converts backlog to revenue within 60 days. Backlog is therefore not a useful indicator of future performance. Includes capitalized software development costs.

2

• •

Dependent on recovery in Europe, the key market for Hurco’s high-margin vertical machining centers. Currency/commodity risks. Strong USD vs. Euro/ Pound and firming iron/steel prices may hurt profit.

COMPARABLE PUBLIC COMPANY ANALYSIS

KMT ATU HDNG HURC

MV ($mn) 2,630 1,510 110 120

EV ($mn) 2,870 1,890 90 90

EV / Rev. 1.5x 1.6x .4x 1.1x

P/ Tang. Book 3.7x n/m .7x 1.1x

This FY P/E 44x 23x n/m n/m

Next FY P/E 19x 18x 48x 21x

MAJOR HOLDERS CEO Doar <1% | Other insiders 4% | Royce 12% | FMR 10% DFA 7% | Thomson Horstmann 5% | Pier 3% | Kennedy 2%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Hurco delivered 20%+ returns on tangible equity from 2005 to 2008, a period of booming industrial production globally. While revenue has fallen off a cliff in the economic crisis, the company has turned free cash flow positive over the last twelve months. Assuming global industrial production recovers from historically low levels, shares are cheap trading near tangible book and EV-to-peak EBIT of 2x (based on FY08 EBIT). With no debt, Hurco should survive even a prolonged downturn. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 65 of 120


HURCO – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

1/31/10

10/31/09

7/31/09

4/30/09

1/31/09

10/31/08

7/31/08

4/30/08

32 1 12 54

29 0 14 60

27 0 13 65

28 1 16 65

30 9 19 63

26 19 32 66

31 2 30 75

26 4 36 69

Assets Cash Short-term investments Accounts receivable Inventory Other current assets

14

15

13

10

8

8

17

15

114 13 7 -

118 13 7 -

118 14 6 -

121 14 6 -

129 14 6 -

151 14 6 -

154 14 6 5

149 13 6 5

7

7

7

7

7

7

7

7

140

145

145

148

156

177

185

179

8 1

8 2

7 4

11 2

15 3

28 3

37 -

37 -

Other current liabilities

9

10

10

11

12

20

26

27

Total current liabilities Long-term debt

18 -

21 -

21 -

23 -

30 -

51 -

63 -

63 -

Other long-term liabilities

4

4

3

3

3

3

3

3

22

24

24

26

33

54

66

66

-

-

-

-

-

-

-

-

118

120

121

122

123

124

119

113

6

6

6

6

6

6

6

6

34 1 33 114 18 6x 3x 114 22 92 118 7 112 84% <0% 76

29 2 27 118 21 6x 2x 118 24 94 120 7 114 82% <0% 84

27 4 23 118 21 6x 2x 118 24 94 121 6 115 83% <0% 87

29 2 28 121 23 5x 2x 121 26 95 122 6 116 82% <0% 83

39 3 36 129 30 4x 2x 129 33 96 123 6 117 78% <0% 77

46 3 43 151 51 3x 2x 151 54 97 124 6 118 69% <0% 71

38 38 154 63 2x 1x 154 66 88 119 6 113 63% <0% 71

34 34 149 63 2x 1x 149 66 82 113 6 107 62% <0% 69

-4% -2% -2% -2% 22% -2% -11% -11% -4% -10%

0% -1% -1% -1% 15% 0% 7% -8% 14% -4%

-2% 0% -1% -1% -16% 0% -18% 1% -32% 5%

-5% -1% -1% -1% -22% -2% -15% 3% -27% 8%

-12% 0% -1% -1% -16% -1% -42% -5% -48% 9%

-4% 4% 4% 4% 14% 11% 8% -11% -23% -1%

3% 6% 6% 6% 11% 7% -17% 8% 0% 4%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets Total assets Liabilities and Shareholders' Equity Accounts payable Short-term debt

Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn) Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 66 of 120


…additional insight into Hurco: EXCERPTS from 2009 LETTER TO SHAREHOLDERS by CHAIRMAN, PRESIDENT AND CEO MICHAEL DOAR •

We achieved record profitability in fiscal 2005, 2006, 2007, and 2008, but all financial metrics for 2009 declined due to the severe global recession. Despite a net loss of $2 million for fiscal 2009 compared to net income of $22.5 million for fiscal 2008, I continue to believe in Hurco’s promising future. I am more convinced than ever in the value of preparation and strategic planning.

Our strong balance sheet, a cash position of $28.7 million, no outstanding debt, and the ability to borrow, has been advantageous in helping us weather this storm, and positions us to be able to seize future growth opportunities. Our financial position has enabled us to continue with scheduled product releases, technology innovation, and carefully targeted expansion in emerging markets. While this crisis has forced some competitors to adjust product plans and cut R&D, our ability to stay focused on our core competencies means Hurco stands ready to fully participate in the recovery as it occurs.

As with any crisis, past decisions are tested. In addition to a culture of fiscal conservatism, I am encouraged by the agility of the organization. We were able to quickly implement processes and procedures to minimize the impact of this economic event. We instituted management and employee cost control measures for staffing, salaries and benefits, intensified inventory control, and managed spending where possible in areas of sales and marketing and administration. Much like our target customer, we continually must do more with less. I believe we successfully navigated that requirement during 2009 without sacrificing investment in the company’s future.

We added four new models to our product lineup this year, including our largest machining center to date, the DCX32; a high performance turning center; and two 5-axis machining centers.

During the last three years, we have made substantial investment in our 5-axis product lines because these products yield maximum productivity opportunities for our customers. We devoted much of 2009 to the development of numerous productivity features that warrant a new release of our WinMax control software.

While our customers throughout the world have had to make difficult decisions in 2009, the resiliency and fortitude of the entrepreneur is astounding. While many customers have been hurt by slowing orders, others are busier than ever. Many of the customers who are thriving had the foresight to expand the capabilities of their business by investing in technology, which means they have been able to acquire new customers and gain more business from existing customers…

Our core competencies include software and product innovation, efficient manufacturing, and targeted expansion in emerging markets. We continue to cultivate relationships in emerging markets, such as South Korea, Indonesia, Vietnam, and South Africa, and I am pleased with the progress we have made in India.

Our competency in software development has resulted in a number of WinMax features that expand the capabilities of our customers around the world.

…during the current recession, customers who might have wanted to purchase capital goods found it difficult to obtain financing due to disruptions in the credit markets. Annual sales and service fees for fiscal 2009 were $91.0 million, a decrease of $132.9 million, or 59.4% from fiscal 2008. During fiscal 2009, these conditions had the greatest impact on our European sales region, the primary market for our more expensive, higher performance machines. The European sales region accounted for 66% of sales in fiscal 2009 and 73% in fiscal 2008.

Even though the company experienced a severe decline in revenue, we were able to minimize losses so we could keep technology development plans on track. I am confident we have done everything we can to prepare for the future—to seize the opportunities and to meet the challenges.

We will introduce new products and technology at the September International Manufacturing Technology Show that is held every two years in Chicago. We will continue to monitor expenses and work diligently to develop new markets and develop new products that will strengthen our position and expand our customers’ capabilities.

To access the complete letter, visit http://bit.ly/a3zSni

© 2009-2010 by BeyondProxy LLC. All rights reserved.

www.manualofideas.com

April 21, 2010 – Page 67 of 120


Imation (IMN) – Owned by Artisan, Private, LSV, Third Avenue

Oakdale, MN, 651-704-4000 www.imation.com

Consumer Cyclical: Audio & Video Equipment Trading Data Price: $11.70 (as of 4/16/10) 52-week range: $7.34 - $12.02 Market value: $446 million Enterprise value: $283 million Shares out: 38.2 million

Consensus EPS Estimates Month Latest Ago This quarter $0.12 $0.12 Next quarter 0.09 0.09 FYE 12/31/10 0.40 0.40

# of Ests 1 1 1

Valuation P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 P/E FYE 12/30/12 EV/ LTM revenue

n/m 29x 42x n/a 0.2x

Ownership Data Insider ownership: 2%

FYE 12/31/11 FYE 12/30/12

EV/ LTM EBIT P / tangible book

n/m 0.8x

Insider buys (last six months): 8

LT growth

Insider sales (last six months): 0 Institutional ownership: 68%

EPS Surprise 1/21/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 1,111 321 109 82 2.06 36 81 96 (15) 411 838 30 1,173 0 297 0 353 0 820 30%

0.28 n/a

0.28 n/a

1 n/a

n/a

n/a

n/a

Actual $0.22

Greenblatt Criteria

Estimate $0.15

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 1,174 1,258 1,585 1,896 1,981 288 302 344 346 339 45 103 108 (39) (34) 30 88 76 (50) (33) 1.03 2.36 2.14 (1.52) (1.01) 35 34 35 37 38 128 88 98 88 85 36 22 16 15 14 92 66 82 73 71 415 508 253 136 97 786 888 877 1,119 994 35 20 298 427 381 1,111 1,146 1,383 1,751 1,540 0 0 0 10 0 275 245 392 631 509 0 0 0 21 0 324 291 437 697 595 0 0 0 0 0 787 855 946 1,054 945 13% 32% 29% -8% -6%

LTM EBIT yield LTM pre-tax ROC

12/31/09 1,650 264 (62) (42) (1.17) 38 68 11 57 163 878 361 1,394 0 372 0 467 0 927 -13%

LTME 12/31/09 1,650 264 (62) (42) (1.18) 38 68 11 57 163 878 361 1,394 0 372 0 467 0 927 -13%

FQE 12/31/08 514 73 (50) (46) (1.24) 37 (2) 4 (6) 97 994 381 1,540 0 509 0 595 0 945 n/m

-22% -13% FQE 12/31/09 452 69 5 7 0.19 38 43 2 41 163 878 361 1,394 0 372 0 467 0 927 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$60

$50

$40

$30

$20

$10

$0 Mar 01

Mar 02

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April 21, 2010 – Page 68 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA

Imation provides removable data storage and other electronic products through owned brands Imation, Memorex and XtremeMac, as well as licensed brand TDK Life on Record.

INVESTMENT HIGHLIGHTS •

• • •

~25% market share in optical/magnetic storage. According to Imation, global data storage is a $100+ billion market, of which removable storage is ~$20 billion. Imation is #1 in optical storage and magnetic tape, which represent roughly 25% of the removable storage market (flash storage is 50%+). Distributors and retailers are main distribution channels with 51% and 43% of 2009 revenue, respectively. The company’s products are primarily aimed at consumers and small businesses. Made $14 million of EBIT in 2009, excluding special items. Imation generated free cash flow of $57 million in 2009 despite lower revenue. 2007-09 FCF of $201 million is nearly 50% of market value. Settled all legal disputes with Philips in 2009. Imation paid $20 million to Philips in 2009 and will pay an additional $33 million through 2012. Strong balance sheet with cash of $163 million, no debt, and “net net” current assets of $412 million. Shares trade at about 80% of tangible book.

1 2

INVESTMENT RISKS & CONCERNS •

3

Revenue declined 12% y-y in 4Q09. Although business and consumer spending is recovering, ongoing revenue pressure indicates structural challenges of legacy magnetic and optical business. Competitive industry characterized by elastic demand and technological change. Competitors include SanDisk, Fuji, Hitachi, and Sony. Changes in technology (e.g. “cloud computing”) may lead to more competition and product obsolescence. M&A strategy may not succeed in transforming Imation into “brand and product management company.” Imation acquired Memorex for $332 million in 2006, and spent another $80 million to buy three more businesses in 2007 and 2008. The enlarged electronic products business lost $7 million of EBIT in 2009 and another $13 million in 2008. CEO Russomanno (61) to retire in May. COO and CEO-to-be Mark Lucas (55) wants to “continue this transformation journey,” i.e., cash may be spent on additional value-destroying acquisitions.

FYE December 31 2005 7% ∆ revenue 1 Δ headcount -18% Revenue ($bn) 1.1 % of revenue by type: Optical 26% Magnetic 64% Flash 5% Electronic Products 5% Revenue growth by type: Optical n/a Magnetic n/a Flash n/a Electronic Products n/a % of revenue by geography: Americas 2 50% Europe 29% Asia Pacific 21% Selected items as % of revenue: Gross profit 26% R&D 5% 3 EBIT (adjusted) 8% D&A 4% Capex 2% Selected operating metrics: Days sales outstanding 46 Days of inventory supply 66 Headcount 2,100 Return on tangible equity 11% Tangible equity to assets 72% ∆ shares out (avg) -3%

2006 26% -1% 1.4

2007 38% 9% 1.9

2008 4% -30% 2.0

2009 -17% -23% 1.6

34% 48% 11% 7%

42% 37% 8% 13%

43% 33% 5% 19%

45% 29% 5% 21%

66% -6% 154% 98%

68% 7% 7% 154%

8% -8% -37% 56%

-13% -26% -9% -10%

58% 26% 16%

55% 27% 17%

51% 27% 22%

51% 25% 24%

24% 4% 8% 3% 1%

18% 2% 5% 2% 1%

17% 1% 1% 2% 1%

16% 1% 1% 3% 1%

56 90 2,070 10% 67% 2%

64 94 2,250 -8% 53% 7%

63 112 1,570 -6% 48% 1%

60 75 1,210 -7% 52% 0%

2006 and 2007 revenue growth is primarily due to acquisition of Memorex. Includes all of Electronic Products revenue. Excludes restructuring, litigation, impairment and other special items.

MAJOR HOLDERS CEO Russomanno <1% | Other insiders 3% | TDK 20% | Wells Fargo 11% | DFA 8% | Wellington 7% | Artisan 5%

COMPARABLE PUBLIC COMPANY ANALYSIS

SNE HIT SNDK IMN

RATINGS

MV ($mn) 35,690 18,180 8,630 450

EV ($mn) 33,260 39,480 7,720 290

EV / Rev. .4x .4x 2.2x .2x

P/ Tang. Book 1.5x 2.0x 2.2x .8x

This FY P/E n/m n/a 14x 29x

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

Next FY P/E 25x n/a 13x 42x

      

THE BOTTOM LINE Imation has historically held strong market share in magnetic and optical storage. Facing falling revenue in these core areas, management attempted to transform Imation into a “brand and product management company.” This has led to a series of questionable acquisitions, including the 2006 purchase of Memorex for $332 million. On a more positive note, management has returned more than $200 million to shareholders since 2006 and cut costs aggressively (headcount is down nearly 50% since year-end 2007). While the strong balance sheet, brand recognition and large installed base may make it an acquisition target, Imation has a staggered board. The change of CEO in May looks unlikely to bring a change in strategy. With “net net” current assets approximating market value, shares are too cheap to ignore, especially given recently improved profitability. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 69 of 120


IMATION – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

Cash Short-term investments Accounts receivable Inventory

163 315 236

111 296 320

89 324 333

103 307 324

97 378 363

113 355 365

118 395 346

106 417 370

Other current assets

164

170

162

143

156

141

112

119

Total current assets PP&E Goodwill and other intangibles Long-term investments

878 110 361 -

898 115 365 -

909 119 369 -

877 121 374 -

994 122 381 -

974 138 419 -

971 163 427 20

1,011 167 423 -

Assets

Other long-term assets

45

39

50

39

43

37

16

37

1,394

1,417

1,446

1,411

1,540

1,567

1,597

1,638

Accounts payable Short-term debt

201 -

220 -

235 -

230 -

296 -

297 -

287 -

286 -

Other current liabilities

171

196

208

179

213

195

213

252

Total current liabilities Long-term debt

372 -

415 -

443 -

409 -

509 -

492 -

500 -

539 -

Total assets Liabilities and Shareholders' Equity

Other long-term liabilities Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn)

95

84

98

73

86

56

45

45

467

499

542

482

595

548

545

584

-

-

-

-

-

-

-

-

927

918

905

929

945

1,019

1,052

1,054

38

38

38

37

37

37

37

38

163 163 878 372 2x 1x 878 467 412 927 361 566 55% <0% 453

111 111 898 415 2x 1x 898 499 399 918 365 553 53% <0% 487

89 89 909 443 2x 1x 909 542 367 905 369 535 50% <0% 495

103 103 877 409 2x 1x 877 482 395 929 374 555 54% <0% 486

97 97 994 509 2x 1x 994 595 399 945 381 564 49% <0% 511

113 113 974 492 2x 1x 974 548 425 1,019 419 600 52% <0% 507

138 138 971 500 2x 1x 971 545 426 1,052 427 625 53% <0% 516

106 106 1,011 539 2x 1x 1,011 584 428 1,054 423 632 52% <0% 534

-2% 1% 2% 2% 47% 3% 6% -26% -8% -7%

-2% 1% 3% 3% 24% 9% -9% -4% -7% -1%

3% -3% -4% -4% -13% -7% 6% 3% 2% 2%

-8% -2% -2% -2% 7% -1% -19% -11% -22% -5%

-2% -7% -6% -6% -14% -6% 7% 0% 0% 1%

-2% -3% -4% -4% -18% 0% -10% 5% 3% -2%

-2% 0% -1% 0% 31% -1% -5% -6% 0% -3%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 70 of 120


…additional insight into Imation: EXCERPTS from Q4 2009 EARNINGS CONFERENCE CALL, JANUARY 21, 2010 •

We finished the year very strong on a number of fronts. We began to see encouraging signs in terms of revenue, where our rate of decline in our core tape and optical storage businesses moderated from recent quarters. In addition, we saw growth in several important other storage categories, including external and removable hard disk, flash products, as well as Blu-Ray optical media.

We generated significant earnings improvement from a difficult fourth quarter last year, and though we still have some room to go in terms of our margins, we're encouraged by the stabilization in our business model. Finally, and very importantly, we had a very strong quarter in terms of cash generation, with cash up $50 million in the quarter, as we made significant progress on our working capital initiatives, especially in inventory.

Our revenues from optical products declined 7% to $194.1 million. Our rate of decline in this business has steadily improved since Q4 2008. We are continuing to benefit from our consolidation strategy, where we've seen momentum with our retail customers. In addition, Blu-Ray revenues were up nicely year-over-year.

Magnetic product revenues declined 12% to $127.8 million in fourth quarter. This was encouraging after having seen decline rates of about 30% in each of the last four quarters. We saw improvement in demand patterns across the broad spectrum of tape products, from the datacenter to entry level.

We saw indications of budgets freeing up in the quarter. We are currently assessing to what degree this was a function of longer-term changes in demand patterns versus being impacted by motivations to use up year-end budgets that had been cautiously managed during the year. We believe both factors were present.

Our flash revenues were up 30%, coming from our international markets, our main area of focus in this category. Europe was particularly strong.

In our remaining products, our revenues were down 26%, driven by Electronic Products, where we've intentionally lowered our exposure to the higher risk LCD TV category, which was at its peak in the fourth quarter a year ago. Partially offsetting this, we delivered very strong 40% growth in our external and removable hard disk products. Though yet on a relatively small base, we were pleased with these results.

From a regional segment standpoint, our Americas segment, which excludes Electronic Products, performed well, especially in optical products, which were actually up slightly in Q4. Revenues were also solid in Asia, led by Japan, as well as South Asia. Our revenues were up in all major product categories, aided by positive currency translation. Europe remained our weakest region with 20-plus percent declines in both tape and optical revenues. These declines were somewhat offset by strength in flash products. When you look at our overall 12% decline in revenues, [they] came from about a 7 point impact from lower volumes; a 9.5 point impact from price erosion, offset partially by a 4.5 point positive impact from currency translation.

Our worldwide employee count ended the quarter at approximately 1,210. That's down about 2% from last quarter, but down over 20% from the prior year. These reductions were driven by both manufacturing restructuring actions and our OpEx restructuring program. In terms of restructuring, our total charges were $3.8 million in the quarter, and were a continuation of our structure realignment we announced at the end of 2008.

In summary, and as we've stated in previous quarters, we remain fully committed to our corporate transformation. We are encouraged by the response to our new storage consumer electronics and accessory products, while we continue to optimize our existing storage portfolio. With a strong foundation of brands, including Imation, Memorex, TDK Life on Record, and XtremeMac, we continue to execute on our brand and product strategy. As we look back on 2009, we believe we have made very real progress in our transformation. Our focus on operational excellence and financial strength over the past several quarters has established a solid platform as we enter 2010. We are cautiously optimistic for the new year.

To access the complete letter, visit http://bit.ly/cq6W1M

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April 21, 2010 – Page 71 of 120


Insmed (INSM) – Owned by Acadian, BlackRock

Richmond, VA, 804-565-3000 www.insmed.com

Health Care: Biotechnology & Drugs Trading Data Price: $1.15 (as of 4/16/10) 52-week range: $0.70 - $2.57 Market value: $150 million Enterprise value: $28 million Shares out: 130.2 million

Consensus EPS Estimates Month Latest Ago This quarter n/a n/a Next quarter n/a n/a FYE 1/0/00 n/a n/a

# of Ests n/a n/a n/a

Valuation P/E FYE 12/31/09 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01 EV/ LTM revenue

1x n/a n/a n/a 2.7x

Ownership Data Insider ownership: 4%

FYE 12/30/00 FYE 12/30/01

EV/ LTM EBIT P / tangible book

n/m 1.2x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 19%

EPS Surprise n/a

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 0 0 (11) (10) (0.29) 36 (11) 0 (11) 30 30 0 30 0 3 0 4 0 26 n/m

n/a n/a

n/a n/a

n/a n/a

n/a

n/a

n/a

Actual n/a

Greenblatt Criteria

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 0 0 1 8 12 0 0 (1) 7 0 (27) (28) (54) (20) (14) (27) (41) (56) (20) (16) (0.69) (0.84) (0.59) (0.17) (0.13) 39 49 95 115 122 (25) (28) (42) (25) (12) 0 0 5 0 0 (25) (28) (47) (25) (12) 9 19 24 17 2 10 19 25 17 3 0 0 0 0 0 13 23 28 20 5 0 0 0 1 2 5 5 10 4 5 0 6 3 2 1 6 12 14 8 8 0 0 0 0 0 7 11 14 12 (3) n/m n/m n/m n/m n/m

LTM EBIT yield LTM pre-tax ROC

12/31/09 10 0 (9) 118 0.93 127 (11) 0 (11) 122 125 0 127 0 3 0 3 0 124 n/m

LTME 12/31/09 10 0 (9) 236 0.96 127 (11) 0 (11) 122 125 0 127 0 3 0 3 0 124 n/m

FQE 12/31/08 3 0 (3) (4) (0.03) 122 (3) 0 (3) 2 3 0 5 2 5 1 8 0 (3) n/m

-31% n/m FQE 12/31/09 3 0 0 2 0.02 129 1 0 1 122 125 0 127 0 3 0 3 0 124 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$30

$25

$20

$15

$10

$5

$0 Mar 01

Mar 02

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Mar 06

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Mar 09

Mar 10

April 21, 2010 – Page 72 of 120


BUSINESS OVERVIEW

SELECTED ANNUAL OPERATING DATA 1

Insmed is a biopharmaceutical company undergoing a strategic review process.

INVESTMENT HIGHLIGHTS •

• •

• •

Engaged RBC Capital Markets for strategic review in April 2009, following receipt of $127 million of net cash proceeds from the sale of its “follow-on biologics” platform to Merck. Considering share repurchases or distribution to shareholders of cash “if we do not find attractive acquisition, licensing or merger opportunities.” “Remain committed to protecting our capital for the full duration of the strategic review” based on chairman’s comment in March. Insmed had EBIT of $0.3 million in 4Q09 (benefited from one-time grant revenue of $0.5 million). 15 employees remain at its Richmond, VA, headquarters, which is leased at a $0.4 million annual cash cost through 2016. $172 million of NOLs at yearend 2009. NOLs, which are reserved against, expire starting in 2010. Net cash is ~85% of market value. Insmed had cash/investments of $124 million and virtually no debt at yearend ‘09. Total liabilities are <$3 million.

1

Value-destructive use of cash. Given their limited stock ownership, insiders may feel compelled to do even a bad deal as long as it enables the company to continue operating and lets executives draw salaries. Hired a chief scientific officer in March. As this is a newly-created position, it may indicate the company is progressing down the path of making an acquisition or entering into licensing deals. Chairman, CEO and president Allan resigned in June 2009 “due to a health condition.” Allan held these roles since Insmed was founded in 1999. Mel Sharoky, M.D., (58), who has been a director since 2001, became chairman. A new CEO is not to be hired “pending completion of the strategic review.” IPLEX product is only source of revenue. The proprietary IPLEX protein platform is being developed for a number of conditions, including Amyotrophic Lateral Sclerosis, also known as Lou Gehrig’s disease, and Retinopathy of Prematurity. IPLEX product inventory should run out by mid-2011. As the company does not have its own manufacturing (and outsourcing would only lead to production in “at least 12 to 18 months”), Insmed decided to conserve IPLEX for treatment of existing patients only and does “not intend to initiate further clinical trials” pending the strategic review result.

2007 640% -40%

2008 54% 3%

2009 -11% -85%

8 7 19 8 -20 -20 94 20%

12 12 21 5 -14 -16 97 6%

10 10 9 10 -9 118 15 4%

Historical data is not representative of the company’s current business. Please refer to table below for recent quarterly financials. 2 2009 net income includes $127 million gain on sale of the “follow-on biologics” platform to Merck that closed on March 31, 2009.

SELECTED QUARTERLY OPERATING DATA 1

INVESTMENT RISKS & CONCERNS •

FYE December 31 2005 2006 ∆ revenue -4% 682% 55% 85% ∆ employees, period-end Selected income statement data ($mn): Revenue 0 1 Gross profit 0 -0 R&D 22 21 SG&A 6 26 EBIT -27 -47 Net income 2 -41 -56 Employees, period-end 85 157 ∆ shares out (avg) 24% 96%

1

FYE December 31 Selected financials ($mn): Revenue 2 Gross profit R&D SG&A EBIT Net income D&A Capex Selected items as % of revenue: Gross profit R&D SG&A EBIT Net income D&A Capex

2Q09

3Q09

4Q09

3.0 3.0 1.5 2.9 -1.3 -1.6 0.4 0.0

2.5 2.5 1.1 2.1 -0.8 -0.2 0.1 0.0

2.5 2.5 0.7 1.4 0.3 2.3 0.0 0.0

100% 48% 95% -43% -53% 13% 0%

100% 46% 85% -31% -6% 2% 0%

100% 29% 57% 14% 93% 2% 0%

Quarterly data starting in April 2009 are more representative of the company’s current business as they exclude contribution from “follow-on biologics” business sold to Merck with the completion date of March 31, 2009. 2 More than 99% of 3Q09 revenue is cost recovery charges related to the IPLEX expanded access program. 4Q09 revenue includes $0.5 million of IPLEX grant revenue for the previously completed Phase II Myotonic Muscular Dystrophy trial (and therefore should not repeat going forward).

Potential dilution from warrants, options and other securities which can convert into over six million shares as of February 2010 (5% of existing shares).

MAJOR HOLDERS Chairman Sharoky <1% | Ex-CEO Allan 2% | Other insiders 2% | Blackrock 5% | Acadian 3% | Vanguard 2%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Biotech company Insmed has been in a year-long strategic review process. While it is difficult to assess intrinsic value of the company’s technology platform, it will cease to deliver revenue by mid-2011. This is because Insmed will run out of product inventory and has no manufacturing capability. With shares trading at a premium to net cash, risk-reward is not enticing. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 73 of 120


INSMED – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

13 109 2 -

27 95 0 -

36 87 0 -

128 0 -

2 0 0 -

2 4 0 -

1 8 0 -

5 7 0 -

0

0

0

-

0

0

0

0

125 2

123 2

123 2

128 2

3 -

6 -

10 0

13 0

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

-

-

-

0

2

2

2

2

127

125

125

130

5

8

12

15

Accounts payable Short-term debt

0 0

1 0

1 1

3 2

1 2

1 2

1 1

1 1

Other current liabilities

2

3

3

9

2

2

3

2

Total current liabilities Long-term debt

3 -

4 -

5 -

13 -

5 1

4 1

6 1

4 2

Total assets Liabilities and Shareholders' Equity

Other long-term liabilities Total liabilities Preferred stock

-

-

-

-

2

2

2

2

3

4

5

13

8

7

9

8

-

-

-

-

-

-

-

-

Shareholders' equity

124

121

121

116

(3)

1

3

7

Shares out (avg) (mn)

129

129

123

123

122

122

122

122

124 0 124 125 3 45x 44x 125 3 122 124 124 98% <0% (0)

124 0 124 123 4 34x 34x 123 4 119 121 121 97% <0% (3)

125 1 124 123 5 27x 27x 123 5 119 121 121 96% <0% (4)

130 2 128 128 13 10x 10x 128 13 114 116 116 90% <0% (12)

2 2 0 3 5 1x 1x 3 8 (5) (3) (3) -58% <0% (3)

6 2 3 6 4 1x 1x 6 7 (1) 1 1 9% <0% (3)

10 3 7 10 6 2x 2x 10 9 0 3 3 23% <0% (4)

12 3 9 13 4 3x 3x 13 8 5 7 7 47% <0% (2)

2% 2% 2% 3% 0% 2% 667% n/m -50% -96%

-1% 0% 0% -5% -1% 0% 50% n/m -14% -30%

-3% 4% 4% 4% -3% 4% 100% n/m -74% -68%

2604% -4257% -4257% -4248% 42533% -2386% 0% n/m 108% 271%

-41% -500% -500% -500% -91% 257% 0% n/m 18% 19%

-33% -74% -74% -74% -51% -450% 0% n/m 0% -37%

-19% -61% -61% -61% -24% -91% -67% n/m 38% 95%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 74 of 120


…additional insight into Insmed: CASH FLOWS, 2007-2009 ($ in thousands)

Years Ended December 31, 2009

2008

Operating activities Net income (loss) $118,350 ($15,667) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 707 1,043 Stock based compensation expense 2,542 850 Gain on sale of asset, net (127,474) Stock options issued for services 143 Realized loss on investments 500 Changes in operating assets and liabilities: Income tax receivable (2,023) Accounts receivable (123) 128 Inventory Prepaid expenses (85) 170 Accounts payable (965) 373 Accrued project costs & other 214 433 Payroll liabilities 127 (178) Deferred rent (36) 53 Deferred revenue 96 57 Restricted stock unit liability (113) 113 Asset retirement obligation (2,217) Interest payable (12) (10)

2007 ($19,962) 406 521 38 (9) 576 (157) (6,282) (612) (671) 61 245 591 -

Net cash used in operating activities

($11,012)

($11,992)

($25,255)

Investing activities Cash received from asset sale Change in certificate of deposits Decreases in short-term investments Purchases of short-term investments

$127,474 10 (108,744)

12,673 -

9,066 (500)

Net cash provided by investing activities

$18,740

$12,673

$8,566

Financing activities Proceeds from issuance of common stock Repayment of convertible notes Warrants converted into shares Other

$580 (1,246) 3,491 42

(2,211) 121

$16,964 1,158

Net cash provided by (used in) financing activities

$2,867

($2,090)

$18,122

$10,595 2,145

($1,409) 3,554

$1,433 2,121

12,740

2,145

3,554

82 2,795

234 -

279 -

Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental information Cash paid for interest Cash paid for taxes

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April 21, 2010 – Page 75 of 120


Linktone (LTON) – Owned by MNC, Merry Asia

Shanghai, BE, China, 86-10-510-8234 www.linktone.com

Technology: Computer Services Trading Data Price: $1.69 (as of 4/16/10) 52-week range: $1.40 - $3.21 Market value: $71 million Enterprise value: -$26 million Shares out: 42.1 million

Consensus EPS Estimates Month Latest Ago This quarter n/a n/a Next quarter n/a n/a FYE 1/0/00 n/a n/a

# of Ests n/a n/a n/a

Valuation P/E FYE 12/31/08 P/E FYE 1/0/00 P/E FYE 12/30/00 P/E FYE 12/30/01 EV/ LTM revenue

14x n/a n/a n/a n/m

Ownership Data Insider ownership: 63%

FYE 12/30/00 FYE 12/30/01

EV/ LTM EBIT P / tangible book

n/m 0.6x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 6%

EPS Surprise n/a

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/02 4 3 (1) (1) (0.07) 10 (0) 0 (0) 3 4 0 4 0 1 0 1 7 (4) n/m

n/a n/a

n/a n/a

n/a n/a

n/a

n/a

n/a

Actual n/a

Greenblatt Criteria

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 16 48 71 76 48 10 33 44 48 28 4 11 11 6 (9) 2 10 12 7 (16) 0.16 0.41 0.45 0.27 (0.31) 10 22 26 25 24 3 10 10 14 (10) 0 2 2 6 0 3 7 7 8 (10) 6 78 78 53 42 9 95 102 70 67 0 0 12 19 16 10 98 119 98 90 0 0 0 0 0 2 10 19 9 14 0 0 0 0 0 2 11 19 9 14 7 0 0 0 0 1 88 100 89 77 >100% >100% >100% 56% -67%

LTM EBIT yield LTM pre-tax ROC

12/31/08 65 31 3 (17) 0.12 37 (3) 0 (3) 96 127 15 143 0 15 0 15 0 128 20%

LTME 9/30/09 64 24 (0) 3 0.05 39 n/a n/a n/a 97 126 15 142 0 11 0 11 0 130 -2%

FQE 9/30/08 16 9 1 (2) 0.03 42 n/a n/a n/a 104 127 15 143 0 17 0 17 0 127 n/m

1% -2% FQE 9/30/09 13 5 (0) 1 0.01 42 n/a n/a n/a 97 126 15 142 0 11 0 11 0 130 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$25

$20

$15

$10

$5

$0 Mar 04

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April 21, 2010 – Page 76 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

Linktone provides entertainment-oriented telecom valueadded services to mobile phone users in China.

INVESTMENT HIGHLIGHTS •

Business model is based on revenue-sharing with China's telecommunications operators, including China Mobile. Mobile phone users are charged fees for Linktone services such as short-messaging, ringback and games. Operators collect fees and remit Linktone’s revenue share on a monthly basis. Seeks to profit from growing demand for mobile data services in China by offering a range of content and applications. Linktone partners with content owners such as Sony and Time Warner to differentiate its services from competitors. Reported non-GAAP net income of $2.4 million in 2009 after divestment of loss-making advertising business in 2008. The non-GAAP figure excludes stock-based compensation and impairments. $99 million of cash/investments and no debt at yearend 2009, based on unaudited financials. Proforma cash is down by estimated $13 million since, based on acquisitions of Chinese game developer Letang and Singapore-based InnoForm in 2010. Net cash represents ~120% of recent market value after adjusting for M&A-related cash outflow.

INVESTMENT RISKS & CONCERNS •

• •

Gross margin declined from 48% in 2008 to 35% in 2009 due to, among others, “stricter policies by the Chinese telecommunication network operators related to imbedding services into mobile phones.” Stagnant multi-year revenue trend despite apparent growth opportunities. For 1Q10, gross revenue guidance is $14-15 million, compared to $14.8 million in 1Q09 and $15.4 million in 4Q09. Operators are developing their own telecom value-added services. For example, China Mobile introduced its own integrated music service platform in 2006, by working directly with music companies to provide downloads of various songs. Derives 70%+ of revenue from China Mobile. Contracts are typically 1-2 years and non-exclusive. Controlled by Indonesian media conglomerate MNC, which owns 57%. Chairman and CEO Tanoesoedibjo (44) is also CEO of MNC. Conflicts of interest may put other shareholders at risk. Legal risks due to corporate structure include contracts with affiliated Chinese entities, which may prevent operational control and carry tax risks.

1

FYE December 31 2005 2006 ∆ revenue 47% 8% ∆ employees, period-end 59% -24% Revenue ($mn) 2 70 76 % of revenue by segment: Value-added services 98% 98% Casual games 2% 2% Gross margin by segment: Value-added services 62% 62% Casual games 87% 84% Total gross margin 62% 62% % of gross revenue by major service category: Audio-related services 3 23% 27% 2G services 4 63% 56% 2.5G services 5 11% 15% Revenue growth by major service category: Audio-related services 364% 27% 2G services 16% -4% 2.5G services 29% 41% Selected items as % of revenue: R&D 9% 10% EBIT 16% 8% Net income 18% 9% D&A 3% 5% Capex 3% 1% Employees, period-end 825 624 ∆ shares out (avg) 14% -1%

2007 -37% -39% 48

2008 34% -21% 65

2009 -7% n/a 60

97% 3%

97% 3%

n/a n/a

56% 95% 58%

46% 96% 48%

n/a n/a 35%

45% 40% 12%

42% 41% 9%

n/a n/a n/a

5% -56% -49%

25% 40% 3%

n/a n/a n/a

11% -18% -16% 6% 0% 380 -6%

5% 7% 7% 3% 0% 299 56%

6% -3% -1% n/a n/a n/a 12%

Based on continuing operations and U.S. GAAP. Certain 2009 data is not available as the company had not filed form 20-F as of April 19, 2010. Represents net revenue (stated after sales tax). 3 Includes interactive voice response services and ring-back tones. 4 Includes ringtones, icons and screen savers, SMS messaging for TV programs, games, horoscopes, news updates and other services. 5 Includes multimedia services such as animated cartoons and screensavers, comic strips, and WAP-based ringtones, screensavers, games and dating services, as well as advanced Java games. 2

COMPARABLE PUBLIC COMPANY ANALYSIS

NTES SNDA SINA KONG LTON

MV ($mn) 4,540 3,030 2,280 280 70

EV ($mn) 3,510 1,120 1,560 140 -30

EV / Rev. 6.4x 1.5x 4.4x 1.1x n/m

P/ Tang. Book 4.3x 2.1x 2.0x 1.9x .6x

This FY P/E 13x 14x 27x 20x n/a

Next FY P/E 11x 12x 20x 11x n/a

MAJOR HOLDERS Insiders <1% | MNC International 57%* | Merry Asia 5% *

MNC International is part of Indonesian-listed media company MNC.

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Indonesian media conglomerate MNC had ambitious plans for Linktone when it acquired a majority stake in 2008. Instead of growing services in China and building on Linktone’s advertising business, revenue at the former has stagnated while the ad business had to be divested because of losses. Despite these setbacks, Linktone turned profitable in 2009 and the company has a strong balance sheet, with net cash exceeding market value. Shares are cheap, but value creation is in MNC hands. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 77 of 120


LINKTONE – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

12/31/07

79 18 27 -

86 14 27 -

87 15 23 -

82 14 30 -

92 13 21 -

101 5 22 -

38 2 28 -

39 2 24 -

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets Total assets

1

1

2

2

1

2

2

2

126 1 15 -

128 1 15 -

125 1 15 -

127 1 15 -

127 1 15 -

128 1 16 -

69 2 16 -

67 2 16 -

1

1

1

1

1

1

5

5

142

144

141

143

143

146

92

90

7 -

10 -

9 -

11 -

12 -

13 -

12 -

9 -

Liabilities and Shareholders' Equity Accounts payable Short-term debt Other current liabilities

4

5

4

4

5

5

6

4

Total current liabilities Long-term debt

11 -

15 -

13 -

15 -

17 -

18 -

18 -

14 -

Other long-term liabilities Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn)

-

-

-

-

-

0

0

0

11

15

13

15

17

18

18

14

-

-

-

-

-

-

-

-

130

130

129

128

127

128

74

77

42

42

42

42

42

41

24

24

97 97 126 11 11x 11x 126 11 114 130 15 116 91% <0% 18

100 100 128 15 9x 9x 128 15 114 130 15 115 89% <0% 15

101 101 125 13 10x 10x 125 13 113 129 15 114 90% <0% 12

96 96 127 15 8x 8x 127 15 112 128 15 113 88% <0% 17

104 104 127 17 8x 8x 127 17 110 127 15 112 87% <0% 7

105 105 128 18 7x 7x 128 18 111 128 16 113 86% <0% 7

40 40 69 18 4x 4x 69 18 51 74 16 58 77% <0% 14

42 42 67 14 5x 5x 67 14 53 77 16 60 82% <0% 14

-2% 1% 1% 1% -3% 1% -1% n/m -24% 21%

2% 1% 1% 1% -1% 1% 20% n/m 14% 18%

-1% 0% 0% 0% 5% 1% -23% n/m -20% -26%

0% 1% 1% 1% -8% 2% 38% n/m -8% 143%

-2% -1% -1% -2% -1% 0% -1% n/m -10% 6%

59% 73% 93% 12% 165% 115% -22% n/m 7% -53%

2% -3% -3% -4% -5% -3% 17% n/m 30% -1%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 78 of 120


…additional insight into Linktone: INCOME STATEMENT SUMMARY, 2008-2009 Three Months Ended ($ in thousands) Gross revenues Sales tax Net revenues Cost of services Gross profit Operating expenses: Product development Selling and marketing Other general and administrative Reversal of provision for impairment/(Provision for impairment) Total operating expenses Income/(Loss) from operations Interest income Other income / (loss) Other-than-temporary impairment loss on investments Income/(loss) before tax Income tax benefit/(expense) Net income/(loss) from continuing operations Net income/(loss) from discontinued operations Net income/(loss) Other comprehensive income/(loss): Comprehensive income/(loss) Diluted income/(loss) per ADS: Continuing operations Discontinued operations Total net income/(loss) Weighted average ordinary shares: Basic Diluted Weighted average ADSs: Basic Diluted

Twelve Months Ended

Dec. 31, 2008 19,402 (769) 18,633 (9,927) 8,706

Sep. 30, 2009 13,829 (493) 13,336 (8,186) 5,150

Dec. 31, 2009 15,358 (622) 14,736 (9,490) 5,246

Dec. 31, 2008 67,026 (2,520) 64,506 (33,838) 30,668

Dec. 31, 2009 62,217 (2,303) 59,913 (38,941) 20,972

(910) (3,876) (2,574) (7,360) 1,346 737 (39) (1,477) 567 514 1,081 (466) 616 162 778

(932) (3,151) (1,553) 395 (5,240) (90) 691 19 621 (27) 594 140 734 (79) 655

(786) (1,947) (2,204) (2,463) (7,401) (2,155) 446 78 (1,631) (250) (1,881) 4 (1,878) 442 (1,436)

(3,177) (13,131) (9,901) (26,209) 4,459 1,729 385 (1,477) 5,095 (786) 4,309 (20,807) (16,498) 2,646 (13,852)

(3,317) (9,318) (8,221) (2,068) (22,924) (1,952) 1,615 431 94 (579) (486) 597 111 291 402

0.02 (0.01) 0.01

0.02 0.00 0.02

(0.04) 0.00 (0.04)

0.12 (0.56) (0.44)

(0.01) 0.01 0.00

420,636 420,712

420,681 421,543

420,756 420,756

374,286 374,847

420,678 420,678

42,064 42,071

42,068 42,154

42,076 42,076

37,429 37,485

42,068 42,068

NON-GAAP RECONCILIATION, 2008-2009 Three Months Ended

Twelve Months Ended

Net income/(loss) Stock based compensation expense Provision /(Reversal of provision) for impairment Other-than-temporary impairment loss on investments Non-GAAP net income/(loss)

Dec. 31, 2008 616 176 1,477 2,268

Sep. 30, 2009 734 52 (395) 391

Dec. 31, 2009 (1,878) 62 2,463 648

Dec. 31, 2008 (16,498) 728 6,588 1,477 (7,705)

Dec. 31, 2009 111 267 2,068 2,446

Non-GAAP diluted income/(loss) per ADS Number of ADSs used in diluted per-share calculation

0.05 42,071

0.01 42,154

0.02 42,076

(0.21) 37,485

0.06 42,068

($ in thousands)

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April 21, 2010 – Page 79 of 120


Novatel Wireless (NVTL) – Owned by Royce, Kestrel

San Diego, CA, 858-320-8800 www.novatelwireless.com

Technology: Computer Services, Member of S&P SmallCap 600 Trading Data Price: $6.77 (as of 4/16/10) 52-week range: $6.37 - $13.70 Market value: $211 million Enterprise value: $84 million Shares out: 31.2 million

Consensus EPS Estimates Month Latest Ago This quarter -$0.12 -$0.12 Next quarter -0.07 -0.08 FYE 12/31/10 -0.19 -0.20

# of Ests 8 7 9

Valuation P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 P/E FYE 12/30/12 EV/ LTM revenue

52x n/m 75x n/a 0.2x

Ownership Data Insider ownership: 2%

FYE 12/31/11 FYE 12/30/12

8 n/a

EV/ LTM EBIT P / tangible book

30x 1.0x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 86%

EPS Surprise 2/25/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 34 6 (8) (17) (2.14) 8 (0) 1 (1) 4 18 5 24 0 15 0 15 0 9 n/m

0.09 n/a

0.09 n/a

16.0%

16.0%

Actual $0.03

Greenblatt Criteria

2

Estimate $0.07

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 104 162 218 430 321 34 46 55 131 69 13 11 (7) 53 (6) 14 11 0 39 (1) 0.48 0.37 0.01 1.21 (0.04) 24 29 30 31 31 6 13 9 50 26 4 7 9 16 10 1 5 0 34 16 53 84 83 153 136 79 150 165 264 217 5 4 2 2 2 116 176 192 297 261 1 9 0 0 0 16 55 56 63 44 0 0 0 0 0 16 55 57 79 63 0 0 0 0 0 100 121 134 218 198 >100% 42% -17% 95% -9%

LTM EBIT yield LTM pre-tax ROC

12/31/09 337 88 3 4 0.13 31 37 7 30 128 200 2 283 0 51 0 71 0 211 6%

LTME 12/31/09 337 88 3 4 0.12 31 37 7 30 128 200 2 283 0 51 0 71 0 211 6%

FQE 12/31/08 65 8 (6) (3) (0.10) 30 3 3 0 136 217 2 261 0 44 0 63 0 198 n/m

3% 6% FQE 12/31/09 89 23 1 1 0.03 31 3 2 0 128 200 2 283 0 51 0 71 0 211 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$300

$250

$200

$150

$100

$50

$0 Mar 01

Mar 02

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Mar 05

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Mar 06

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Mar 10

April 21, 2010 – Page 80 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA

Novatel Wireless provides mobile broadband access products primarily to wireless network operators and OEMs.

INVESTMENT HIGHLIGHTS •

• • • • •

Core products include modems providing mobile subscribers with high-speed access to the Internet and enterprise networks. Core products, including mini cards, represented 68% of 4Q09 revenue. New “MiFi” mobile hotspot product accounted for 32% of 4Q09 revenue. MiFi, which enables mobile connectivity for five users simultaneously from devices such as computers, gaming consoles, music players and cameras, was launched in 2009. Completed “first data transmissions by any company” on 4G technology including LTE and WiMax. Current products work on third generation (3G) networks such as Evolution-Data Optimized (EV-DO) and High Speed Packet Access (HSPA). Owns 34 U.S. patents and has 60 patent applications pending. However, existing patents expire “at various times between 2010 and 2016.” Outsources manufacturing to LG Innotek and Inventec Appliances. Novatel operates a capitallight business model (53% of staff work in R&D). Grew revenue 36% y-y in 4Q09 driven by demand for core USB modems and MiFi products, which have launched with 17 network operators globally. $5.56 per share of cash/investments and no debt. Recent share price implies EV-to-2009 revenue of 0.12x and EV-to-2009 gross profit of 0.48x.

1

FYE December 31 2005 2006 ∆ revenue 56% 35% ∆ employees, period-end 54% 37% Revenue ($mn) 162 218 Selected items as % of revenue: Gross profit 29% 25% R&D 13% 14% EBIT 7% -3% Net income 7% 0% D&A 3% 4% Capex 4% 4% % of revenue by underlying product technology: HSPA 1 60% 34% EV-DO 2 39% 66% Other 1% 0% Revenue growth by underlying product technology: HSPA 20% -25% EV-DO 256% 128% % of revenue by geography: U.S. 42% 63% Other 58% 37% Revenue growth by geography: U.S. 173% 102% Other 19% -14% Employees, period-end 172 235 Free cash flow ($mn) 3 5 -0 Return on tangible equity 10% 0% Tangible equity to assets 75% 69% ∆ shares out (avg) 22% 2%

Changes in wireless data technology. Novatel derived 86% of 2009 revenue from products based on EV-DO technology. HSPA-based revenue declined 67% y-y due to “competitive pressure.” Competition includes wireless modem providers (Huawei, ZTE, Option, Sierra Wireless, Kyocera, Pantech, UTStarcom), handset/infrastructure makers (Motorola, Nokia, Siemens and Sony-Ericsson) and chipset providers (Qualcomm and Ericsson). Guiding for revenue of $70 million in 1Q10 (flat y-y, down 21% q-q) due to “lower average selling prices” on core products and “lower seasonal sales volumes.” Based on 24% gross margin, GAAP and non-GAAP loss per share guidance is $0.13/$0.08.

MAJOR HOLDERS CEO Leparulo 2% | Other insiders 2% | Wellington 9% | BlackRock 8% | Royce 7% | Vanguard 5% | Kestrel 4%

2008 -25% 2% 321

2009 5% 15% 337

30% 9% 12% 9% 3% 4%

21% 11% -2% 0% 4% 3%

26% 13% 1% 1% 4% 2%

27% 72% 0%

42% 57% 0%

13% 86% 1%

60% 116%

15% -41%

-67% 58%

75% 25%

79% 21%

82% 18%

135% 33% 301 34 22% 72% 6%

-21% -37% 307 16 -1% 74% -1%

9% -11% 352 30 2% 75% -2%

High Speed Packet Access. Includes Universal Mobile Telecommunications System (UMTS) technology prior to transition to HSPA during 2006. Evolution-Data Optimized. EV-DO products are primarily sold in the North American market. Historical EV-DO figures include CDMA technology. 3 Defined as net cash from operations less capital expenditure. 2

• •

INVESTMENT RISKS & CONCERNS •

2007 97% 28% 430

Concentration. Verizon Wireless, Hon Hai, Sprint PCS accounted for 38%, 21%, 11% of ’09 revenue. Filed shelf registration last September. The company may sell $125 million of securities. Novatel recently announced its entry into the market for machine-to-machine (M2M) applications.

COMPARABLE PUBLIC COMPANY ANALYSIS

SWIR PWAV NVTL

RATINGS

MV ($mn) 270 210 210

EV ($mn) 140 420 80

EV / Rev. .3x .7x .2x

P/ Tang. Book 2.0x >9.9x 1.0x

This FY P/E n/a 17x n/m

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

Next FY P/E n/a 11x 75x

      

THE BOTTOM LINE Novatel Wireless shares appear cheap despite questions regarding the sustainability of its wireless technology advantage and some concern regarding high-ROIC reinvestment opportunities. High-growth wireless broadband markets provide a tailwind that can support revenue increases for many years. Profitability and free cash flow generation has been volatile and likely to remain so. However, with cash and investments representing 80% of recent market capitalization, valuation is undemanding. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 81 of 120


NOVATEL WIRELESS – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

100 28 36 25

106 26 49 26

88 38 59 19

52 67 57 27

78 59 40 23

79 58 44 30

83 44 67 35

99 42 69 32

Assets Cash Short-term investments Accounts receivable Inventory Other current assets

11

11

14

17

17

19

17

14

200 15 2 48

219 17 1 43

217 18 2 20

220 19 1 15

217 20 2 7

230 22 2 7

245 22 1 9

256 22 1 5

18

15

15

14

15

10

10

10

283

294

271

270

261

271

287

295

Accounts payable Short-term debt

28 -

45 -

29 -

34 -

23 -

28 -

38 -

38 -

Other current liabilities

23

25

24

20

21

24

26

23

Total current liabilities Long-term debt

51 0

69 0

53 0

54 0

44 0

52 0

64 0

61 0

Other long-term liabilities

21

17

19

19

19

19

19

19

71

87

73

73

63

72

83

80

-

-

-

-

-

-

-

-

211

208

198

196

198

199

204

215

31

31

31

30

30

30

31

33

176 0 176 200 51 4x 3x 200 71 129 211 2 210 75% <0% 37

175 0 175 219 69 3x 3x 219 87 132 208 1 206 70% <0% 34

146 0 146 217 53 4x 3x 217 73 144 198 2 197 73% <0% 56

133 0 133 220 54 4x 3x 220 73 147 196 1 195 73% <0% 67

143 0 143 217 44 5x 4x 217 63 154 198 2 196 76% <0% 57

143 0 143 230 52 4x 3x 230 72 159 199 2 198 73% <0% 64

135 0 135 245 64 4x 3x 245 83 162 204 1 202 71% <0% 77

146 0 146 256 61 4x 3x 256 80 176 215 1 213 73% <0% 77

-4% 2% 2% 1% 1% -2% -25% -5% -38% 8%

9% 5% 5% 4% 20% -8% -17% 39% 52% -39%

1% 1% 1% 0% 10% -2% 3% -31% -14% -17%

3% -1% -1% -1% -7% -5% 43% 17% 47% 17%

-4% -1% -1% -1% 0% -3% -9% -24% -18% -10%

-6% -2% -2% 1% 6% -2% -34% -14% -26% -17%

-3% -5% -5% -2% -7% -8% -3% 9% 0% 0%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets Total assets Liabilities and Shareholders' Equity

Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn) Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 82 of 120


…additional insight into Novatel Wireless: SLIDES FROM COMPANY PRESENTATION, MARCH 2010

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April 21, 2010 – Page 83 of 120


Rewards Network (DINE) – Owned by Elkhorn, WC, RenTech

Chicago, IL, 312-521-6767 www.rewardsnetwork.com

Services: Advertising, Member of S&P SmallCap 600 Trading Data Price: $14.33 (as of 4/16/10) 52-week range: $8.01 - $15.53 Market value: $125 million Enterprise value: $112 million Shares out: 8.7 million

Consensus EPS Estimates Month Latest Ago This quarter $0.22 n/a Next quarter 0.24 n/a FYE 12/31/10 0.99 n/a

# of Ests 1 1 1

Valuation P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 P/E FYE 12/30/12 EV/ LTM revenue

24x 14x 13x n/a 0.5x

Ownership Data Insider ownership: 5%

FYE 12/31/11 FYE 12/30/12

1 n/a

EV/ LTM EBIT P / tangible book

12x 1.6x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 41%

EPS Surprise 3/11/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 354 93 29 16 1.82 8 13 6 7 20 156 10 187 0 41 70 114 0 74 27%

1.13 n/a

n/a n/a

15.0%

15.0%

Actual n/a

Greenblatt Criteria

1

Estimate n/a

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 352 290 255 227 246 93 77 84 66 76 25 3 (23) 11 9 15 (1) (15) 7 5 1.50 (0.07) (1.70) 0.77 0.53 8 9 9 9 9 (12) 17 57 (28) 32 5 3 5 8 4 (17) 15 52 (36) 28 15 32 85 36 9 179 172 182 155 104 10 8 8 8 8 201 191 207 177 124 0 0 0 55 0 36 25 37 81 25 70 70 70 0 0 108 97 122 84 25 0 0 0 0 0 92 94 85 93 99 21% 2% -23% 12% 9%

LTM EBIT yield LTM pre-tax ROC

12/31/09 214 70 10 5 0.59 9 29 3 26 13 86 8 103 0 18 0 18 0 85 13%

LTME 12/31/09 214 70 10 5 0.60 9 29 3 26 13 86 8 103 0 18 0 18 0 85 13%

FQE 12/31/08 58 18 1 0 0.03 9 6 1 5 9 104 8 124 0 25 0 25 0 99 n/m

9% 13% FQE 12/31/09 52 19 4 2 0.25 9 4 1 4 13 86 8 103 0 18 0 18 0 85 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$60

$50

$40

$30

$20

$10

$0 Mar 01

Mar 02

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April 21, 2010 – Page 84 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA

Rewards Network provides financing and marketing services to restaurants in North America. It operates in two segments: Marketing credits: Restaurants sell to the company dining credits for cash at a discount to menu prices. The company earns revenue only if members dine at restaurants by redeeming offers received from the company and paying by a credit or debit card registered with the company. Marketing services: The company acts only as a “broker” by marketing restaurants to its members. In return, it receives a share of the member spend at participating restaurants.

INVESTMENT HIGHLIGHTS •

• • • •

Provides 3.3 million members with incentives to dine at 10,000+ participating restaurants. Members benefit from offers such as airline miles and cash back for every dollar they spend on meals. Restaurants get incremental customers, upfront cash for future dining credits and marketing support. Benefits from network effect. Network size is a competitive advantage which grows as additional members and restaurants join. Majority of signed restaurants are in New York City, Dallas, Chicago, Atlanta, South Florida and San Francisco Bay area. Generated $85 million free cash flow in 2005-09, representing nearly 70% of recent market value. Returned $22 million of cash to shareholders in 2009 by paying a $17 million special cash dividend and repurchasing $5 million worth of shares. $13 million of cash and no debt at yearend 2009. Shares trade at 1.6x tangible book. Tangible book includes $57 million of net dining credits.

INVESTMENT RISKS & CONCERNS •

Stagnant network with deteriorating economics? Members and restaurants are flat with 2005 levels. Revenue as a percentage of member dining dollars is down from 29% in 2005 to 23% in 2009. Restaurant financing leads to “credit risk.” The marketing credits segment is exposed to risk from restaurant failures and members not redeeming offers at restaurants. Business growth absorbs cash. 59% of 2009 revenue derived from members enrolled through airline frequent flyer programs. 1.9 million member accounts depend on contracts with seven major airlines. The company is subject to minimum rewards currency purchase obligations.

MAJOR HOLDERS CEO Blake 3% | Other insiders 4% | Sam Zell 26% | Elkhorn 7% | DFA 6% | BlackRock 6% | Bernard Osher 6%

1

FYE December 31 2005 2006 2007 2008 2009 -5% -13% 11% 4% 4% ∆ restaurants, period-end -9% -4% -9% 5% 5% ∆ member accounts, period-end -8% -5% -11% 12% 8% ∆ qualified transactions -3% 0% 0% -5% 0% ∆ avg transaction amount -11% -5% -11% 6% 7% ∆ qualified transaction amount 1 -22% -12% -9% 2% -8% ∆ revenue -7% 7% -7% -1% 1% ∆ employees, period-end Revenue ($mn) 2 144 127 115 118 109 % of revenue by type: Marketing credits 84% 81% 78% 79% 68% Marketing services 14% 17% 21% 20% 31% Membership fees 2% 2% 1% 1% 1% Revenue growth by type: Marketing credits -21% -15% -13% 4% -21% Marketing services -25% 6% 9% -1% 42% Selected items as % of revenue: Gross profit 3 54% 66% 57% 64% 65% EBIT 2% -18% 9% 7% 9% Net income 0% -12% 6% 4% 5% D&A 3% 3% 4% 5% 5% Capex 2% 4% 7% 4% 3% Period-end restaurants: Marketing credits 7,955 6,079 6,488 6,293 4,961 Marketing services 2,002 2,548 3,054 3,595 5,279 Active member accounts (mn) 3.4 3.3 3.0 3.1 3.3 Qualified transaction amount ($mn): Marketing credits 380 330 272 290 241 Marketing services 105 131 139 147 229 Rewards Network share of qualified trans. amount (=gross amounts billed, $mn): Marketing credits 266 231 201 221 180 Marketing services 21 22 24 24 34 Redemption of dining credits ($mn): 4 Marketing credits 146 129 112 128 106 Marketing services 0 0 0 0 0 Rewards Network revenue ($mn): Marketing credits 120 103 90 93 74 Marketing services 21 22 24 24 34 Rewards Network revenue as a % of qualified transaction amount: Marketing credits 32% 31% 33% 32% 31% Marketing services 20% 17% 17% 16% 15% Ending gross dining credits ($mn) 142 89 116 96 69 % loss allowance, period-end 15% 14% 18% 21% 17% Period loss provision 5 8% 2% 5% 5% 5% ∆ shares out (avg) 5% 2% 1% 1% -2%

Represents dollar value of member dining at participating restaurants when a benefit is offered (=qualified transactions x average dollar transaction amount). 2 Stated net of the redemption of dining credits. 3 Stated after member benefits, provision for losses, and processing fees. 4 Dining credits, at cost, redeemed by members at restaurants when a benefit is offered. No credits are bought by the company in marketing services business. 5 Stated as a percentage of gross amounts billed in marketing credits segment.

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE Rewards Network has built a community of members and participating restaurants that represent one of the largest dining rewards programs in North America. Positives include high barriers to entry, cash flow generative operations and a debt-free balance sheet. Our main concern is that the network’s growth has stagnated while its economics have suffered, especially in the marketing services business. As we don’t see how this will change, we do not find the valuation sufficiently compelling. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 85 of 120


REWARDS NETWORK – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

13 66 -

27 65 -

21 66 -

16 71 -

9 83 -

19 89 -

46 98 -

33 107 -

7

8

9

10

12

12

12

12

86 8 8 -

99 9 8 -

96 9 8 -

97 10 8 -

104 11 8 -

119 11 8 -

156 11 8 -

152 12 8 -

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets Total assets

1

0

0

1

1

1

1

0

103

116

114

115

124

139

176

172

12 -

11 -

12 -

11 -

14 -

15 15

13 53

11 53

Liabilities and Shareholders' Equity Accounts payable Short-term debt Other current liabilities

6

5

5

5

11

11

13

13

Total current liabilities Long-term debt

18 -

16 -

16 -

16 -

25 -

40 -

79 -

77 -

Other long-term liabilities Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn)

-

0

0

-

-

-

-

-

18

17

16

16

25

40

79

77

-

-

-

-

-

-

-

-

85

100

97

100

99

99

97

95

9

9

9

9

9

9

9

9

13 13 86 18 5x 4x 86 18 68 85 8 77 81% <0% 63

27 27 99 16 6x 6x 99 17 83 100 8 92 85% <0% 65

21 21 96 16 6x 5x 96 16 80 97 8 89 84% <0% 68

16 16 97 16 6x 6x 97 16 82 100 8 92 85% <0% 75

9 9 104 25 4x 4x 104 25 79 99 8 91 79% <0% 81

19 15 4 119 40 3x 3x 119 40 79 99 8 91 69% <0% 86

46 53 (7) 156 79 2x 2x 156 79 77 97 8 89 53% 0 96

33 53 (20) 152 77 2x 2x 152 77 75 95 8 87 53% 0 106

-12% -15% -16% -16% -53% -18% 2% n/m 5% -2%

2% 3% 3% 5% 28% 4% -2% n/m -4% -5%

-1% -2% -3% 0% 30% -2% -7% n/m 8% -9%

-7% 0% 0% 0% 80% 3% -15% n/m -22% -8%

-11% 1% 1% 0% 143% 1% -6% n/m -8% -6%

-21% 2% 2% 2% -150% 2% -10% n/m 16% -10%

2% 3% 3% 3% -63% 3% -8% n/m 14% -10%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 86 of 120


…additional insight into Rewards Network: SELECTED MARKETING PROGRAM DATA, 2007-2009 2009 Marketing Credits

Marketing Services

Program

Program

Restaurant count as of December 31, 2009 and 2008, respectively

4,961

5,279

Number of qualified transactions (1)

5,440

Average transaction amount (1) Qualified transaction amount (1) Rewards Network percentage share of qualified transaction amount (1)(2) Rewards Network share of qualified transaction amount and membership fees (1) Redemption of dining credits (1)

2008 Total

Marketing Credits

Marketing Services

Program

Program

10,240

6,293

3,595

4,905

10,345

6,419

$44

$47

$45

$240,967

$228,919

74.5%

14.7%

$179,571

$33,713

Total revenue

105,824

Member Fees

$1,092

$73,747

$33,713

— $1,092

2007 Total

Marketing Services

Program

Program

9,888

6,488

3,054

9,542

3,178

9,597

5,704

2,900

8,604

$45

$46

$46

$48

$48

$48

$469,886

$289,979

$147,192

$437,171

$271,879

$139,172

$411,051

45.4%

76.3%

16.1%

56.0%

74.0%

17.2%

54.8%

$214,376

$221,155

$23,758

$246,184

$201,133

$23,974

105,824

128,271

128,271

111,617

$108,552

$92,884

$23,758

$117,913

$89,516

$23,974

22.9%

3200.0%

1610.0%

2670.0%

32.9%

17.2%

$1,271

— $1,271

Member Fees

Total

Marketing Credits

Member Fees

$1,712

— $1,712

$226,819

111,617 $115,202

Revenue as a percentage of qualified transaction amount (1) (2) Member benefits Bonus rewards Partner commissions

30.6%

14.7%

$11,131

$9,742

$20,873

$14,538

$6,228

$20,766

$18,589

$9,297

$27,886

$1,869

$1,839

$3,708

$3,256

$1,662

$4,918

$2,347

$1,206

$3,553

$2,395

$2,068

$4,463

$2,663

$1,313

$3,976

$3,759

$1,671

$5,430

Total member benefits

$15,395

$13,649

$29,044

$20,457

$9,203

$29,660

$24,695

$12,174

$36,869

$8,066

$11,614

$11,614

$10,896

$10,896

$537

$509

$1,046

$750

$409

$1,159

$794

$418

$1,212

$49,749

$19,555

$70,396

$60,063

$14,146

$75,480

$53,131

$11,382

Provision for losses Processing fees Gross profit

$8,066

$1,092

$1,271

27.6%

$1,712

$66,225

(1) Supplemental operating and statistical data. (2) Total percentages exclude membership fees. Source: Company data.

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 87 of 120


Silicon Image (SIMG) – Owned by Tocqueville, RenTech, Harvey

Sunnyvale, CA, 408-616-4000 www.siliconimage.com

Technology: Semiconductors Trading Data Price: $3.56 (as of 4/16/10) 52-week range: $2.06 - $3.74 Market value: $269 million Enterprise value: $118 million Shares out: 75.4 million

Consensus EPS Estimates Month Latest Ago This quarter -$0.07 -$0.07 Next quarter -0.03 -0.03 FYE 12/31/10 -0.07 -0.07

# of Ests 2 2 2

Valuation P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 P/E FYE 12/30/12 EV/ LTM revenue

n/m n/m 71x n/a 0.8x

Ownership Data Insider ownership: 1%

FYE 12/31/11 FYE 12/30/12

EV/ LTM EBIT P / tangible book

n/m 1.6x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 0 Institutional ownership: 60%

EPS Surprise 2/4/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 104 56 (13) (13) (0.18) 69 (3) 5 (8) 37 63 16 88 2 25 0 25 0 62 -136%

0.05 n/a

0.05 n/a

1 n/a

n/a

n/a

n/a

Actual -$0.07

Greenblatt Criteria

Estimate -$0.06

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 173 212 295 321 274 105 129 174 180 161 (1) 52 47 28 (8) (0) 50 43 19 10 0.00 0.59 0.49 0.22 0.13 75 79 83 86 76 36 56 46 67 26 6 6 14 32 7 30 49 33 35 19 94 152 251 250 185 130 202 337 309 226 15 14 13 59 52 155 233 380 413 327 1 0 0 0 0 33 50 75 85 40 0 0 0 0 0 33 57 75 99 48 0 0 0 0 0 122 177 305 314 279 -8% >100% >100% >100% -87%

LTM EBIT yield LTM pre-tax ROC

12/31/09 151 81 (117) (129) (1.72) 75 (30) 4 (34) 151 208 0 225 0 44 0 54 0 172 -491%

LTME 12/31/09 151 81 (117) (129) (1.72) 75 (30) 4 (34) 151 208 0 225 0 44 0 54 0 172 -492%

FQE 12/31/08 59 35 (8) 5 0.07 74 (2) 1 (3) 185 226 52 327 0 40 0 48 0 279 n/m

-99% -492% FQE 12/31/09 36 19 (51) (67) (0.89) 75 (1) 1 (3) 151 208 0 225 0 44 0 54 0 172 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Mar 01

Mar 02

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April 21, 2010 – Page 88 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA

Silicon Image provides semiconductors and licenses technology for high-definition (HD) digital content delivery.

INVESTMENT HIGHLIGHTS •

• •

Fabless chip company focused on HD content delivery applications. Products include integrated circuits based on technology standards such as Digital Visual Interface (DVI) and HD Multimedia Interface (HDMI) which the company helped create. High-margin licensing business contributed $28 million of revenue in 2009. HDMI is a key licensing technology with 898 manufacturing licensees as of yearend 2009. The company has 140+ U.S. patents (expire in 2025 or later). Spent $340 million on R&D over last five years, representing nearly 3x enterprise value. Areas of expertise are high-speed interconnect, storage, and audio-visual architecture, as well as circuit design, flat panel displays, and logic design/verification. $151 million of cash/investments and no debt. EV-to-2009 revenue is about 0.85x.

INVESTMENT RISKS & CONCERNS •

Technological change. For example, rival standard DisplayPort is challenging DVI as the default standard for digital video interconnect technology. Competes against much larger companies including Intel, Analog Devices and National Semiconductor. In-house semiconductor operations of large consumer electronics OEMs such as Sony, Panasonic and Toshiba also represent competition. To remain loss-making in first quarter of 2010. Management is guiding for 1Q10 revenue of $30-32 million (down 26-21% y-y) and a gross margin of 54-55%. Operating cost guidance is ~$26 million on a GAAP and $23 million on a non-GAAP basis. Turnover. Since 2007, resignations have included the CEO, CFO, COO and the VPs of sales and marketing. Camillo Martino (47), ex-National Semi, Zoran, Cornice and SAI, became CEO in January. Top five customers, including distributors, were 44%, 55%, 58% of revenue in 2009, 2008 and 2007.

TXN BRCM ADI SIMG

MV ($mn) 33,010 17,420 9,100 270

EV ($mn) 30,090 15,490 7,300 120

EV / Rev. 2.9x 3.4x 3.4x .8x

This FY P/E 13x 18x 15x n/m

Next FY P/E 12x 17x 14x 71x

2005 23% 14% 212

2006 39% 15% 295

2007 9% 44% 321

2008 -14% -4% 274

2009 -45% -14% 151

91% 9%

86% 14%

85% 15%

85% 15%

81% 19%

27% -11%

30% 131%

9% 8%

-14% -14%

-47% -32%

n/a n/a 61%

52% 97% 59%

50% 89% 56%

52% 97% 59%

44% 96% 54%

56% 24% 20%

66% 20% 14%

77% 13% 10%

73% 16% 11%

86% 6% 8%

40% 21% -8%

64% 16% -4%

27% -31% -22%

-19% 9% -6%

-35% -80% -59%

22% 25% 26% 6% 22%

35% 20% 21% 6% 17%

35% 17% 20% 8% 20%

24% 20% 17% 12% 28%

27% 25% 21% 12% 15%

33% 25% 13% n/m

123% 12% 16% 51%

10% -10% 2% 40%

-42% 2% -30% 27%

-38% -30% -32% -45%

21% 24% 23% 3% 3% 384 37% 75% 6%

22% 16% 14% 3% 5% 442 19% 78% 4%

24% 9% 6% 4% 10% 635 7% 76% 3%

31% -1% 4% 6% 3% 610 4% 77% -12%

45% -31% -86% 9% 3% 526 -65% 80% -1%

Licensing revenue is primarily derived from the consumer electronics market. Based on bill to location. The majority of PP&E is located in the U.S. 3 Excludes restructuring charges and impairment of goodwill/intangible assets. 4 Includes payments for intellectual property. 5 As part of restructuring, 121 employees will be terminated in first half of 2010. 2

MAJOR HOLDERS CEO Martino 1% | Other insiders 3% | FMR 9% | Tocqueville 7% | RenTech 6% | BlackRock 5% | GS 3%

RATINGS

COMPARABLE PUBLIC COMPANY ANALYSIS P/ Tang. Book 3.9x 7.2x 3.6x 1.6x

1

FYE December 31 ∆ revenue ∆ employees, period-end Revenue ($mn) % of revenue by type: Product Licensing 1 Revenue growth by type: Product Licensing Gross margin by type: Product Licensing Total gross margin % of revenue by end-market: Consumer electronics PCs Storage products Revenue growth by end-market: Consumer electronics PCs Storage products % of revenue by geography: 2 Japan Taiwan U.S. Europe Other Revenue growth by geography: Japan Taiwan U.S. Europe Selected items as % of revenue: R&D EBIT 3 Net income D&A Capex 4 Employees, period-end 5 Return on tangible equity Tangible equity to assets ∆ shares out (avg)

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE As a supplier of integrated circuits and technology for high-definition content delivery, Silicon Image has benefited from the adoption of digital television and proliferation of mobile devices. While recent demand weakness should prove temporary in the cyclical consumer electronics industry, technological change represents an ongoing risk. Positives include a history of cash-generation, a strong balance sheet and a sizable licensing business. Shares appear undervalued against these positives. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 89 of 120


SILICON IMAGE – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

30 121 22 8

28 125 25 13

19 144 19 9

21 148 18 12

95 90 6 13

72 128 24 17

107 79 29 18

126 69 27 14

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

28

24

26

28

22

15

17

16

208 14 0 -

214 15 29 -

217 17 30 -

227 18 31 -

226 19 52 -

255 22 54 -

249 24 55 -

252 25 57 -

3

23

22

21

29

26

24

22

225

281

285

296

327

356

351

355

Accounts payable Short-term debt

10 -

14 -

10 -

11 -

7 -

32 -

22 -

18 -

Other current liabilities

34

25

25

27

32

45

61

69

Total current liabilities Long-term debt

44 -

39 -

36 -

38 -

40 -

77 -

83 -

88 -

Other long-term liabilities

10

9

9

8

8

11

11

11

54

48

44

46

48

88

94

99

-

-

-

-

-

-

-

-

172

233

241

250

279

268

258

257

75

75

75

74

74

74

73

81

151 151 208 44 5x 4x 208 54 154 172 0 171 76% <0% 27

153 153 214 39 6x 5x 214 48 167 233 29 205 81% <0% 38

163 163 217 36 6x 5x 217 44 172 241 30 211 83% <0% 35

169 169 227 38 6x 5x 227 46 180 250 31 219 83% <0% 37

185 185 226 40 6x 5x 226 48 178 279 52 227 83% <0% 21

201 201 255 77 3x 3x 255 88 167 268 54 215 71% <0% (1)

185 185 249 83 3x 3x 249 94 155 258 55 202 68% <0% 4

194 194 252 88 3x 3x 252 99 153 257 57 200 67% <0% (6)

-20% -27% -16% -17% -2% -8% -11% -38% -26% -28%

-1% -3% -3% -3% -6% -3% 28% 36% 31% 8%

-4% -4% -4% -4% -4% -4% 9% -25% -3% -6%

-9% -10% -4% -4% -9% 1% 197% -5% 47% 81%

-8% 4% 6% 5% -8% 6% -75% -22% -77% -2378%

1% 4% 6% 5% 8% 8% -17% -7% 48% -121%

-1% 0% 1% 12% -5% 1% 6% 26% 18% -173%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Total assets Liabilities and Shareholders' Equity

Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn) Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 90 of 120


…additional insight into Silicon Image: SLIDES FROM COMPANY PRESENTATION, MARCH 2010

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April 21, 2010 – Page 91 of 120


The9 Limited (NCTY) – Owned by QVT, RenTech, Sansar

Shanghai, China, 86-21-321-4567 www.the9.com/en

Technology: Software & Programming Trading Data Price: $6.95 (as of 4/16/10) 52-week range: $6.28 - $12.04 Market value: $175 million Enterprise value: -$85 million Shares out: 25.1 million

Consensus EPS Estimates Month Latest Ago This quarter -$0.53 -$0.53 Next quarter -0.45 -0.47 FYE 12/31/09 -1.57 -1.57

Ownership Data Insider ownership: 55%

FYE 12/31/10 FYE 12/31/11

Insider buys (last six months): 0 Insider sales (last six months): 0 Institutional ownership: 13% ($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/02 1 0 (3) (4) (0.43) 10 1 0 0 1 2 0 3 2 7 0 7 5 (9) n/m

# of Ests 6 2 7

-1.48 0.09

-1.47 0.09

3 2

LT growth

-76.8%

-76.8%

1

EPS Surprise 11/23/09

Actual -$0.43

11x n/m n/m 77x n/m

EV/ LTM EBIT P / tangible book

n/m 0.6x

Greenblatt Criteria

Estimate -$0.46

Operating Performance and Financial Position Fiscal Years Ended 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 2 5 68 144 188 1 4 33 68 85 (1) (1) 9 40 35 5 2 11 46 35 0.28 0.13 0.43 1.99 1.28 10 10 24 24 27 9 5 27 88 90 0 8 37 18 72 8 (3) (10) 69 19 9 116 72 137 325 14 125 90 159 354 0 5 47 40 57 23 150 178 238 476 3 0 0 0 0 20 22 40 42 65 0 0 0 0 0 20 24 40 42 64 5 0 0 0 0 (2) 127 138 196 411 n/m n/m >100% >100% >100%

Valuation P/E FYE 12/31/08 P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 EV/ LTM revenue

LTM EBIT yield LTM pre-tax ROC

12/31/08 251 105 20 14 0.65 28 102 18 84 325 365 36 478 0 80 0 80 0 398 >100%

LTME 9/30/09 168 42 (56) (52) (1.80) 27 96 10 87 259 278 29 369 0 46 0 46 0 323 n/m

FQE 9/30/08 60 24 9 12 0.43 28 2 4 (2) 328 364 50 518 0 82 0 82 0 436 n/m

66% n/m FQE 9/30/09 4 (1) (17) (11) (0.36) 25 11 (54) 65 259 278 29 369 0 46 0 46 0 323 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$60

$50

$40

$30

$20

$10

$0 Mar 05

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April 21, 2010 – Page 92 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

The9 develops and operates online games in China. The company lost the vast majority of revenue in June 2009, when its four-year license to operate World of Warcraft (WoW) was not renewed by Activision Blizzard (ATVI).

INVESTMENT HIGHLIGHTS •

• •

• •

Operates six games. The9 owns World of Fighter (MMORPG* launched in 1/10) and JiuZhouZhanJi (Web game; 4/09). Licensed games: MMORPG’s SUN (5/07), GE (11/07) and Atlantica (6/09), and casual game EA Sports FIFA Online 2 (5/09). Pipeline includes three owned games (one casual game and two MMORPGs; all in development stage) and three licensed games (all in beta testing). Owns valuable Pass9 distribution system in China. Pass9 is a proprietary online membership management and payment system. It may be of value to gaming companies seeking market entry. ATVI-rival Electronic Arts (ERTS) owns 13%. Owns 3.0 million preferred shares of Korean game developer G10. This represents under 20% of the equity on an as-converted basis. The9 carries the stake at cost of $40 million as of yearend 2009. Chairman and CEO Zhu (43) co-founded the company in 1999 and is the largest holder at 28%. $245 million of cash and no debt as of yearend 2009. Financials are audited by a Shanghai-based member of Deloitte Touche Tohmatsu. Pro-forma cash is down by ~$20 million based on purchase of U.S. game developer Red5 in January. Net cash is ~130% of market value after adjusting for Red5-related cash outflow. The9 had only $46 million of total liabilities at yearend 2009, including $30 million of game refunds and deferred revenue.

INVESTMENT RISKS & CONCERNS •

*

Negative $25 million of EBIT in 4Q09 on $3 million of revenue.** The loss of WoW revenue has turned The9 into an expensive “R&D lab” with lots of overhead but very little income generation. Wants to “devote substantial resources” to own R&D to “develop our proprietary games.” This strategy is high-risk for investors as management is intent on growing into its costly infrastructure by betting cash on hit-or-miss new game development. Cash balance could quickly evaporate based on current cash burn and potential for more M&A following the acquisition of Red5 in January.

Massively multiplayer online role-playing game. EBIT excludes $7 million of impairments.

1

FYE December 31 ∆ revenue ∆ employees, period-end Revenue (RMB, bn) 2 Selected items as % of revenue: Gross profit R&D EBIT Net income D&A 3 Capex 4 % of gross revenue by segment: Online game services Other Employees, period-end ∆ shares out (avg)

2005 1239% 50% 0.5

2006 112% 13% 1.0

2007 30% 41% 1.3

2008 34% 19% 1.7

2009 -56% -38% 0.8

48% 9% 13% 16% 16% 55%

47% 3% 27% 32% 17% 13%

45% 3% 18% 19% 17% 38%

42% 4% 8% 6% 17% 7%

6% 15% -63% -53% 23% 6%

95% 5% 854 135%

99% 1% 964 1%

99% 1% 1,361 12%

100% 0% 1,626 1%

99% 1% 1,010 -8%

Figures reflect contribution from World of Warcraft licensing agreement from June 2005 to June 2009. This agreement, which represented 91% and 88% of revenue in 2008 and 2009, respectively, expired on June 7, 2009. 2 Represents net revenue (after sales taxes). The RMB/U.S. dollar exchange rate is approximately RMB6.83 to US$1.00 as of April 20, 2010. 3 Includes amortization of land use rights and intangible assets. 4 Includes purchase of land use rights and intangible assets

• • •

Competitive, hit-driven online gaming industry. There are currently over 100 online game operators in China based on The9 data. Entry barriers are low. Potential for further growth challenges as SUN and GE license deals expire in May and November. Treated as a PFIC for U.S. tax purposes.

COMPARABLE PUBLIC COMPANY ANALYSIS

NTES SNDA GA PWRD CYOU NCTY

MV ($mn) 4,540 3,030 1,800 1,710 1,700 170

EV ($mn) 3,510 1,120 1,080 1,480 1,470 -90

EV / Rev. 6.4x 1.5x 5.7x 4.7x 5.5x n/m

P/ Tang. Book 4.3x 2.1x 2.1x 5.4x 7.8x .6x

This FY P/E 13x 14x 14x 9x 10x n/m

Next FY P/E 11x 12x 12x 8x 8x n/m

MAJOR HOLDERS CEO Zhu 28%* | Other insiders 1% | Dunn/Bosma 18%* | Electronic Arts 13% | QVT 6% | Currie 6% | RenTech 2% *

CEO Zhu and Dunn/Bosma have a voting agreement.

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

**

THE BOTTOM LINE Following loss of the World of Warcraft license in mid-2009, The9 is trying to grow into legacy (and costly) overheads by monetizing own games and by pursuing M&A. This is a high-risk strategy as the company is burning cash and the success of new games is dependent on changing consumer preferences in the hit-driven and competitive gaming industry. While shares trade at a discount to net cash, cash is dwindling (~$15 million per quarter). Reward potential appears speculative. © 2009-2010 by BeyondProxy LLC. All rights reserved.

www.manualofideas.com

April 21, 2010 – Page 93 of 120


THE9 LIMITED – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

12/31/07

259 0 -

275 0 -

302 1 1 -

315 10 1 -

271 57 4 -

209 94 4 -

261 48 3 -

325 4 -

18

19

20

39

33

30

37

25

278 15 29 47

295 16 28 48

324 22 33 47

365 29 36 47

364 45 50 51

337 47 53 51

349 50 54 10

354 51 57 7

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

-

-

-

-

9

8

7

7

369

387

426

478

518

495

470

476

Accounts payable Short-term debt

12 -

21 -

13 -

15 -

16 -

15 -

12 -

14 -

Other current liabilities

34

34

66

65

66

61

58

50

Total current liabilities Long-term debt

46 -

55 -

79 -

80 -

82 -

76 -

70 -

65 -

Total assets Liabilities and Shareholders' Equity

Other long-term liabilities Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn)

0

-

0

-

-

-

-

-

46

55

79

80

82

76

70

65

-

-

-

-

-

-

-

-

323

332

346

398

436

420

401

411

25

25

26

27

28

28

28

29

307 307 278 46 6x 6x 278 46 232 323 29 294 87% <0% (12)

323 323 295 55 5x 5x 295 55 240 332 28 304 85% <0% (20)

350 350 324 79 4x 4x 324 79 244 346 33 313 80% <0% (37)

372 372 365 80 5x 4x 365 80 286 398 36 362 82% <0% (10)

379 379 364 82 4x 4x 364 82 282 436 50 386 82% <0% (1)

354 354 337 76 4x 4x 337 76 262 420 53 367 83% <0% 5

319 319 349 70 5x 4x 349 70 280 401 54 347 83% <0% 21

332 332 354 65 5x 5x 354 65 289 411 57 354 85% <0% 15

-5% -3% -3% -3% -5% -3% 0% n/m -42% -38%

-9% -4% -3% 1% -8% -2% -50% n/m 60% -47%

-11% -13% -14% -10% -6% -15% -54% n/m -11% 256%

-8% -9% -6% -6% -2% 1% -65% n/m -7% 1056%

5% 4% 5% 5% 7% 8% 6% n/m 6% -118%

5% 5% 6% 7% 11% -7% 21% n/m 26% -76%

-1% -2% -2% 3% -4% -3% -26% n/m -18% 35%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 94 of 120


…additional insight into The9 Limited: OWNED OR LICENSED GAMES IN CHINA Game

Developer/Licensor

Description

Status

SUN GE JiuZhouZhanJi EA Sports™ FIFA Online 2 Atlantica World of Fighter Audition 2 Kingdom Heroes 2 Online ShenXianZhuan Miracles: Ultimate X Tiny Tribe Monster of War

Webzen (WZEN) Hanbitsoft and IMC Games The9 EA Swiss Sàrl Ndoors Corporation The9 G10 Entertainment USERJOY Technology Hangzhou Fire Rain The9 The9 The9

3D MMORPG 3D MMORPG Web game Casual soccer game 3D MMORPG 2D MMORPG Casual dancing game 3D MMORPG 2.5D MMORPG 3D MMORPG Casual game Casual game

Commercially launched in China in May 2007 Commercially launched in China in November 2007 Commercially launched in China in April 2009 Commercially launched in China in May 2009 Commercially launched in China in June 2009 Commercially launched in China in January 2010 Preparing for beta testing In closed beta testing Preparing for beta testing In development In development In development

OPERATING CASH FLOWS, 2007-2009 (RMB or $ in millions) Cash flows from operating activities: Net income (loss) Adjustments for: Deferred taxes Gain on disposal of property, equipment and software Impairment of intangible assets Impairment of goodwill Impairment loss on investments Impairment on equipment Depreciation and amortization Amortization of land use right Amortization of intangible assets Share of loss in equity investments, net of taxes Allowance for doubtful accounts Provision for prepaid royalties and deferred costs Provision for advances to suppliers and prepayments Provision for prepayments and other current assets Exchange loss(gain) Stock based compensation expense Recognition of noncontrolling interest Change in accounts receivable Change in due from related party Change in advances to suppliers Change in prepayments and other current assets Change in prepaid royalties Change in deferred costs Change in long-term deposits Change in accounts payable Change in due to related parties Change in income tax payable Change in other taxes payable Change in advances from customers Change in deferred revenue Change in other payables and accruals Net cash provided by (used in) operating activities

© 2009-2010 by BeyondProxy LLC. All rights reserved.

2007

2008

2009

2009

RMB

RMB

RMB

$

240.9

96.2

(409.9)

(60.1)

(29.1) (0.0) 18.7 — 0.6 — 122.7 1.4 87.9 5.7 — — — — 51.0 46.7 — (12.0) — 0.9 (14.8) (44.4) (14.4) (0.5) 39.0 (0.3) 2.3 31.6 30.1 55.6 (3.2)

34.5 (0.0) 73.2 — 25.9 8.9 207.8 1.9 88.9 2.2 20.7 3.9 55.2 8.1 31.7 52.0 0.7 (7.0) (0.6) (1.2) (38.8) (70.8) (8.0) 0.5 (14.4) (0.1) (2.3) 44.2 25.3 34.7 19.4

(7.4) (0.5) 27.5 30.2 22.4 21.2 123.0 1.9 49.5 2.6 0.9 160.1 — — (1.4) 71.2 3.1 6.5 (0.5) (42.7) 32.1 17.2 15.8 (0.6) 5.5 — (0.0) (93.1) (104.6) (41.1) 5.1

(1.1) (0.1) 4.0 4.4 3.3 3.1 18.0 0.3 7.2 0.4 0.1 23.5 — — (0.2) 10.4 0.5 1.0 (0.1) (6.3) 4.7 2.5 2.3 (0.1) 0.8 — (0.0) (13.6) (15.3) (6.0) 0.7

616.6

692.6

(106.1)

(15.5)

www.manualofideas.com

April 21, 2010 – Page 95 of 120


TravelCenters of America (TA) – Owned by Leucadia, RenTech

Westlake, OH, 440-808-9100 www.tatravelcenters.com

Services: Retail (Specialty Non-Apparel) Trading Data Price: $4.81 (as of 4/16/10) 52-week range: $1.80 - $8.75 Market value: $83 million Enterprise value: $29 million Shares out: 17.3 million

Consensus EPS Estimates Month Latest Ago This quarter -$1.25 -$1.25 Next quarter -0.73 -0.73 FYE 12/31/10 -4.25 -4.25

# of Ests 1 1 1

Valuation P/E FYE 12/31/09 P/E FYE 12/31/10 P/E FYE 12/31/11 P/E FYE 12/30/12 EV/ LTM revenue

n/m n/m n/a n/a 0.0x

Ownership Data Insider ownership: 16%

FYE 12/31/11 FYE 12/30/12

EV/ LTM EBIT P / tangible book

n/m 0.3x

Insider buys (last six months): 0

LT growth

Insider sales (last six months): 1 Institutional ownership: 18%

EPS Surprise 2/24/10

($ millions, except per share data) Revenue Gross profit Operating income Net income Diluted EPS Shares out (avg) Cash from operations Capex Free cash flow Cash & investments Total current assets Intangible assets Total assets Short-term debt Total current liabilities Long-term debt Total liabilities Preferred stock Common equity EBIT/capital employed

12/31/03 2,176 501 60 9 1.26 7 77 44 33

n/a n/a

n/a n/a

n/a n/a

n/a

n/a

n/a

Actual -$2.65

Greenblatt Criteria

Estimate -$1.70

Operating Performance and Financial Position Fiscal Years Ended 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 2,678 4,075 4,784 6,166 7,658 531 625 660 812 980 69 47 96 (165) (35) 15 (2) 31 (123) (40) 2.04 (0.30) 4.09 (10.57) (2.65) 7 7 7 12 15 97 81 108 (75) 80 123 85 93 145 83 (26) (4) 15 (220) (4) 46 48 55 420 146 199 230 267 746 409 49 52 52 40 35 898 940 996 1,263 890 0 7 7 263 0 151 194 200 568 201 683 676 669 106 104 858 892 906 824 488 0 0 0 0 0 40 47 89 439 402 11% 8% 15% -30% -8%

LTM EBIT yield LTM pre-tax ROC

12/31/09 4,700 878 (77) (90) (5.38) 17 53 38 15 156 411 29 885 0 220 101 571 0 315 -16%

LTME 12/31/09 4,700 878 (77) (90) (5.37) 17 53 38 15 156 411 29 885 0 220 101 571 0 315 -16%

FQE 12/31/08 1,315 249 3 1 0.08 16 21 12 9 146 409 35 890 0 201 104 488 0 402 n/m

-268% -16% FQE 12/31/09 1,323 202 (41) (45) (2.65) 17 (15) 14 (30) 156 411 29 885 0 220 101 571 0 315 n/m

Ten-Year Stock Price Performance and Trading Volume Dynamics

$50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Mar 07

© 2009-2010 by BeyondProxy LLC. All rights reserved.

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Mar 08

Mar 09

Mar 10

April 21, 2010 – Page 96 of 120


BUSINESS OVERVIEW

SELECTED OPERATING DATA 1

TravelCenters operates and franchises truck stops primarily along the U.S. interstate highway system. The TA- and Petro-branded truck stops offer diesel and gasoline fuel, restaurants, truck repair facilities, stores and other services. The company was spun off from Hospitality Properties Trust (HPT) in a 2007 IPO. It acquired competitor Petro in 2007.

INVESTMENT HIGHLIGHTS •

#3 truck stop chain in the U.S. with 188 companyoperated and 45 franchised sites at yearend 2009. Privately-held Pilot and Flying J are the #1 and #2 companies in the 6,000+ U.S. truck stop industry with over 300 and 270 locations, respectively. Capital-light business model. The company owns only 9 locations and makes money on retailing and franchising activities. Fuel inventories are typically less than three days of sales and are sold at prices that are indexed daily. Restaurant, truck repair and other facilities are staffed by company personnel. Geared to U.S. economic recovery. The company had $910 million of mostly fixed site-level, SG&A and rental costs versus gross profit of $878 million in 2009. Rents were 27% of gross profit. Supportive landlord. HPT, which owns 79% of locations, agreed to allow rent deferral of $5 million a month from July 2008 to December 2010. While terms included issue of 1.54 million shares to HPT, HPT appears interested in TravelCenters’ survival. $156 million of cash offset by $101 million of capitalized leases and $90 million of deferred rent at yearend 2009. Liquidity sources include a $100 million credit facility (expires 2012) and real estate. Shares trade on 0.3x tangible book. 1

INVESTMENT RISKS & CONCERNS •

FYE December 31 2005 52% ∆ revenue 16% ∆ fuel gallons sold 1% ∆ TA-operated centers -5% ∆ franchisee-operated centers 0% ∆ total centers Revenue ($bn) 4.1 % of revenue by type: Fuel 79% Nonfuel 20% Rent and royalties 0.2% Revenue growth by type: Fuel 65% Nonfuel 18% Rent and royalties -7% Gross margin by type: Fuel 4% Nonfuel 58% Rent and royalties 100% Total gross margin 15% Selected items as % of revenue: EBIT 2% Net income 0% D&A 2% Capex 2% Travel centers operated by: TA 139 Franchisees 21 Total travel centers 160 % of travel centers operated by: TA 87% Franchisees 13% % of travel centers by brand affiliation: TA 100% Petro 0% Travel center growth by brand affiliation: TA 0% Petro n/m Total fuel sold (mn gallons) 2 1,771 Return on tangible equity n/m Tangible equity to assets 0% ∆ shares out (avg) 0%

2006 17% 4% 1% 10% 2% 4.8

2007 29% 18% 35% 104% 45% 6.2

2008 24% -5% -1% -4% -1% 7.7

2009 -39% -7% 0% 0% 0% 4.7

82% 18% 0.2%

82% 18% 0.2%

84% 16% 0.2%

76% 23% 0.3%

21% 4% 1%

30% 26% 29%

27% 9% 12%

-44% -8% -4%

4% 58% 100% 14%

3% 58% 100% 13%

4% 58% 100% 13%

6% 58% 100% 19%

2% 1% 1% 2%

-2% -2% 1% 2%

0% -1% 1% 1%

-2% -2% 1% 1%

140 23 163

189 47 236

188 45 233

188 45 233

86% 14%

80% 20%

81% 19%

81% 19%

100% 0%

71% 29%

71% 29%

71% 29%

2% n/m 1,850 186% 2% 0%

2% n/m 2,180 -56% 20% 68%

-1% -3% 2,078 -10% 37% 30%

0% 0% 1,933 -27% 38% 10%

2007 growth reflects the acquisition of Petro Stopping Centers in May 2007. Includes all fuel sold by the company, both at its retail travel centers sites and also on a wholesale basis including to franchisees, but excludes fuel sold at travel centers operated by franchisees. Fuel comprises mainly diesel fuel. 2

HPT rent “slave” as a result of $2+ billion of total operating leases through 2022/24. This may prove crippling if U.S. trucking activity fails to materially recover. EBITDAR was $32 million compared to rent expense of $59 million during 4Q09. Increased competition due to Pilot acquisition of Flying J. The #1 truck stop operator should acquire Flying J out of bankruptcy by the end of April, creating a rival more than twice the company’s size. Conflicts of interest with HPT and Reit Management & Research (RMR), which provides management services to HPT and the company. The company’s CEO and CFO are also employees of RMR. While conflicts are mitigated by insider stock ownership, risks to other shareholders remain.

MAJOR HOLDERS CEO O'Brien 4% | Other insiders 3%* | HPT 9% | BlackRock 6% | RenTech 6% | Whippoorwill 2% | GS 2% | Leucadia 2% *

Excludes holdings of director Portnoy who is affiliated with HPT.

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital? EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

      

THE BOTTOM LINE TravelCenters offers plenty of “hair” to investors. Issues range from ongoing losses and high operating leverage to potentially rising competition and conflicts of interest with its major landlord and insiders. While these risks explain the share price, they may not justify it. Bankruptcy may not be inevitable given that landlord HPT is deferring rent and profitability is highly geared to a U.S. economic recovery. Trading at 30% of tangible book, shares could deliver multiples on investors’ money. © 2009-2010 by BeyondProxy LLC. All rights reserved.

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April 21, 2010 – Page 97 of 120


TRAVELCENTERS – BALANCE SHEET ANALYSIS ($ in millions, except as specified)

12/31/09

9/30/09

6/30/09

3/31/09

12/31/08

9/30/08

6/30/08

3/31/08

156 79 129

185 89 123

182 90 124

168 81 121

146 76 129

144 122 149

106 183 155

121 169 156

Assets Cash Short-term investments Accounts receivable Inventory Other current assets Total current assets PP&E Goodwill and other intangibles Long-term investments Other long-term assets

47

49

52

54

58

60

55

35

411 418 29 -

447 417 32 -

448 413 33 -

424 415 34 -

409 419 35 -

475 419 37 -

500 421 38 -

480 425 39 -

28

30

31

27

28

31

27

75

885

926

925

900

890

962

985

1,018

98 -

111 -

118 -

102 -

82 -

160 -

213 -

218 -

Other current liabilities

122

119

116

109

119

132

139

158

Total current liabilities Long-term debt

220 101

230 102

234 103

211 103

201 104

292 104

351 105

376 105

Other long-term liabilities

250

235

218

201

183

164

147

146

571

567

555

515

488

560

603

627

-

-

-

-

-

-

-

-

315

359

370

384

402

402

382

391

17

17

17

17

16

15

14

14

156 101 54 411 220 2x 1x 411 571 (160) 315 29 286 33% <0% 453

185 102 83 447 230 2x 1x 447 567 (120) 359 32 327 37% <0% 448

182 103 80 448 234 2x 1x 448 555 (107) 370 33 337 38% <0% 445

168 103 65 424 211 2x 1x 424 515 (91) 384 34 351 40% <0% 460

146 104 42 409 201 2x 1x 409 488 (79) 402 35 368 43% <0% 481

144 104 40 475 292 2x 1x 475 560 (85) 402 37 365 39% <0% 458

106 105 2 500 351 1x 1x 500 603 (104) 382 38 344 36% <0% 463

121 105 16 480 376 1x 1x 480 627 (147) 391 39 352 36% <0% 408

-4% -12% -12% -13% -35% 33% -12% 5% -12% 1%

0% -3% -3% -3% 5% 13% -1% 0% -6% 1%

3% -4% -4% -4% 23% 18% 10% 2% 15% -3%

1% -4% -5% -7% 55% 16% 7% -6% 24% -4%

-7% 0% 1% -5% 5% -8% -37% -13% -49% 5%

-2% 5% 6% 0% 2553% -18% -33% -4% -25% -1%

-3% -2% -2% -2% -90% -29% 8% 0% -2% 13%

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Total assets Liabilities and Shareholders' Equity Accounts payable Short-term debt

Total liabilities Preferred stock Shareholders' equity Shares out (avg) (mn) Selected Values and Ratios Cash and investments Debt Net cash and investments Current assets Current liabilities Current ratio Acid-test ratio Current assets Total liabilities and preferred NET NET current assets Shareholders' equity Goodwill and other intangibles Tangible book value Tangible book to tangible assets Net debt to tangible equity Capital employed Balance Sheet Trends (sequential) ∆ total assets ∆ shareholders' equity ∆ tangible shareholders' equity ∆ tangible book per share ∆ net cash and investments ∆ net net current assets ∆ accounts receivable ∆ inventory ∆ accounts payable ∆ capital employed

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April 21, 2010 – Page 98 of 120


FRANCHISED LOCATIONS, as of December 31, 2009 Alabama Florida Georgia (2) Illinois Indiana Iowa Kansas Maryland (2) Minnesota Missouri North Carolina North Dakota Ohio Oregon Pennsylvania South Carolina (2) Tennessee Texas Virginia (2) Wisconsin Total

Brand Affiliation of Sites (1) TA Petro Total 1 1 2 2 — 2 2 1 3 — 2 2 1 3 4 1 — 1 2 2 4 — 1 1 1 1 2 2 2 4 1 — 1 — 1 1 2 1 3 1 — 1 1 2 3 — 1 1 3 — 3 2 — 2 — 2 2 1 2 3 23 22 45

Ownership of Sites By (1) Hospitality Trust Franchisee or Others 1 1 2 — 2 1 — 2 1 3 — 1 — 4 — 1 — 2 — 4 — 1 — 1 — 3 — 1 — 3 — 1 2 1 2 — — 2 — 3 10 35

COMPANY-OPERATED LOCATIONS, as of December 31, 2009 Alabama Arizona Arkansas California Colorado Connecticut Florida Georgia Idaho Illinois Indiana Iowa Kentucky Louisiana Maryland Michigan Minnesota Mississippi Missouri Nebraska Nevada New New Jersey New Mexico New York North Carolina Ohio Oklahoma Oregon Pennsylvania South Carolina Tennessee Texas Utah Virginia Washington West Virginia Wisconsin Wyoming Ontario, Total

Brand Affiliation of Sites (1) TA Petro Total 2 2 4 4 2 6 2 2 4 10 3 13 3 — 3 3 — 3 4 1 5 5 2 7 1 — 1 7 1 8 5 1 6 1 — 1 2 2 4 4 3 7 3 — 3 4 — 4 1 — 1 1 1 2 4 1 5 2 1 3 3 2 5 1 — 1 3 1 4 5 1 6 5 1 6 2 1 3 10 4 14 3 1 4 2 1 3 8 1 9 3 — 3 4 2 6 11 6 17 2 — 2 4 — 4 1 1 2 2 — 2 2 — 2 3 1 4 1 — 1 143 45 188

© 2009-2010 by BeyondProxy LLC. All rights reserved.

TA 1 — — 2 — — — — — 1 — — 1 1 — — — — — — — — — — — — — — — — — — 2 — — — — — — 1 9

Ownership of Sites by (1) HPT Joint Venture Others (2) 3 — — 6 — — 4 — — 9 2 — 3 — — 3 — — 5 — — 7 — — 1 — — 7 — — 6 — — 1 — — 3 — — 6 — — 3 — — 4 — — 1 — — 1 — 1 5 — — 3 — — 5 — — 1 — — 4 — — 6 — — 6 — — 3 — — 14 — — 4 — — 3 — — 9 — — 2 — 1 6 — — 15 — — 2 — — 4 — — 2 — — 2 — — 2 — — 4 — — — — — 175 2 2

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April 21, 2010 – Page 99 of 120


Snapshot of 98 Deep Value Stocks In Alphabetical Order Company / Ticker A. H. Belo / AHC A.C. Moore Arts / ACMR Acorn International / ATV Actions Semi / ACTS Adaptec / ADPT Agria / GRO Albany Molecular / AMRI American Railcar / ARII Ascent Media / ASCMA Ascent Solar / ASTI Audiovox / VOXX Avatar Holdings / AVTR Axcelis Tech / ACLS Breakwater Res. / BWLRF BRT Realty Trust / BRT Callaway Golf / ELY Cardero Resources / CDY Cascade Microtech / CSCD Century Casinos / CNTY China Techfaith / CNTF Comverse Tech / CMVT CONN'S / CONN Conrad Industries / CNRD Creative Tech / CREAF Crexus Investment / CXS dELiA*s / DLIA Denison Mines / DNN Deswell Industries / DSWL Duckwall-ALCO / DUCK EchoStar / SATS ePlus / PLUS ExpressJet / XJT Five Star Quality / FVE Flexsteel Industries / FLXS Formula Systems / FORTY Frozen Food / FFEX Gencor Industries / GENC Global Industries / GLBL Gravity / GRVY GTSI / GTSI Gushan Environmental / GU Hardinge / HDNG Harvest Natural / HNR Heelys / HLYS HQS Maritime / HQS Hurco / HURC I.D. Systems / IDSY Imation / IMN Imperial Sugar / IPSU

Industry Printing & Publishing Retail (specialty) Appliances & Tools Semiconductors Computer Storage Crops Biotechnology & Drugs Railroads Broadcasting & Cable Semiconductors Comms Equipment Real Estate Operations Semiconductors Gold & Silver Real Estate Operations Recreational Products Gold & Silver Technical Instruments Casinos & Gaming Comms Equipment Software & Programming Retail (technology) Water Transportation Computer Peripherals Investment Services Retail (apparel) Metal Mining Chemicals - Plastics Retail (dep't & discount) Broadcasting & Cable Software & Programming Airline Healthcare Facilities Furniture & Fixtures Software & Programming Trucking Construction Machinery Oil Well Services Software & Programming Computer Hardware Oil & Gas - Integrated Misc. Capital Goods Oil & Gas Operations Footwear Fish/Livestock Technical Instruments Comms Equipment Computer Services Food Processing

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Recent Price ($) 8.37 3.92 4.89 2.38 3.27 2.17 8.40 18.80 29.75 4.04 7.94 21.47 2.22 0.38 6.57 9.74 1.34 4.70 2.51 2.60 8.95 7.97 7.80 3.73 13.66 1.77 1.49 5.08 14.60 19.72 17.46 3.88 3.05 15.30 12.60 4.70 7.62 6.36 2.10 5.62 1.15 9.55 8.54 2.53 6.05 18.30 3.04 11.70 16.34

YTD Price ∆ 45% 33% 3% -1% -2% -31% -7% 71% 17% -24% 12% 26% 57% -5% 29% 29% -1% 3% -7% -15% -5% 36% 3% -17% -2% -5% 17% 26% -5% -2% 6% -20% -12% 50% 14% 42% 2% -11% 29% 13% -13% 74% 61% 16% -14% 24% -5% 34% -6%

Market Value ($mn) 172 97 145 205 394 137 266 401 422 108 182 244 231 261 92 627 79 67 60 113 1,808 179 50 257 248 55 506 82 55 1,673 144 66 109 101 166 81 73 724 58 54 97 111 284 70 89 118 34 446 199

Enter. Value ($mn) 148 70 -14 -24 14 -35 168 324 129 55 142 146 186 175 84 549 -15 34 39 2 na 273 38 14 -36 14 488 40 104 1,290 121 25 76 93 85 77 8 647 -7 47 13 91 252 10 52 85 -8 283 192

www.manualofideas.com

Notable Shareholders Lonestar, Prescott Glenhill, Royce, Adage RenTech, Northern Trust RenTech, T.Rowe Steel, RenTech, Pzena Heartland, TPG Advisory, DFA, Royce Icahn, Advisory, DFA Liberty Media, Gabelli Wells Fargo, Invesco Baupost, Kahn, Aegis Cannell, Tweedy Schneider, Sterling Dundee Corp. Aegis, Michael Price Royce, Clearbridge Luxor Capital RGM, Crosslink, Royce Beach, Perritt RenTech, FMR, HSBC RS, Westfield, Perry F&C, Lombardia, Royce Keane Capital Raffles Nominees (Pte) Jennison, Ruffer T2, North Run, Steadfast Korea Electric Power Royce, RenTech Heartland, Aegis, Price MSD, Blue Ridge, Blum Hovde, Heartland Stelliam, RenTech F&C, RenTech Perritt, Towle, Royce Emblaze, Clal Insurance Hawkshaw, Royce FMR, PNC, RBF Security, Alleghany Moon, Black Horse Netols, Athena, Raffles RenTech, KBC, Tiger Royce, Aegis, Portola Pabrai, Cumberland Capital S/W, RenTech River Road, Hound Royce, Thomson, Pier Artis, Diker, Thomson Artisan, Private, LSV Royce, Passport

Website www.ahbelo.com www.acmoore.com www.chinadrtv.com www.actions-semi.com www.adaptec.com www.agriacorp.com www.amriglobal.com www.americanrailcar.com ascentmediacorporation.com www.ascentsolar.com www.audiovox.com www.avatarhomes.com www.axcelis.com www.breakwater.ca www.brtrealty.com www.callawaygolf.com www.cardero.com www.cmicro.com www.cnty.com www.techfaithwireless.com www.cmvt.com www.conns.com www.conradindustries.com uk.europe.creative.com crexusinvestment.com www.deliasinc.com www.denisonmines.com www.deswell.com www.duckwall.com www.echostar.com www.eplus.com www.expressjet.com fivestarqualitycare.com www.flexsteel.com www.formulasystems.com www.ffex.net www.gencor.com www.globalind.com www.gravity.co.kr www.gtsi.com www.chinagushan.com www.hardinge.com www.harvestnr.com www.heelys.com www.hqfish.com www.hurco.com www.id-systems.com www.imation.com www.imperialsugar.com

April 21, 2010 – Page 100 of 120


In Alphabetical Order (continued)

Company / Ticker Industrias Bachoco / IBA Ingram Micro / IM Insmed / INSM Integr. Electrical / IESC Kaiser Aluminum / KALU Kimball / KBALB L.S. Starrett / SCX Lakes Entertainment / LACO Linktone / LTON LJ International / JADE LookSmart / LOOK Luby's / LUB Market Leader / LEDR Maxygen / MAXY MEMSIC / MEMS Miller Petroleum / MILL Movado Group / MOV Myriad Pharma / MYRX Nam Tai Electronics / NTE Natuzzi / NTZ Ninetowns Internet / NINE Novatel Wireless / NVTL Nu Horizons / NUHC Opnext / OPXT ORBCOMM / ORBC PC Connection / PCCC PennyMac Mortgage / PMT Planar Systems / PLNR Providence Worcester / PWX Qiao Xing Mobile / QXM Qiao Xing Universal / XING QLT / QLTI Rewards Network / DINE Seahawk Drilling / HAWK Silicon Image / SIMG Spectrum Group / SPGZ Sycamore Networks / SCMR Synalloy Corp. / SYNL Synthesis Energy / SYMX TAT Technologies / TATT Tecumseh Products / TECUA The9 Limited / NCTY TomoTherapy / TOMO Trans World / TWMC TravelCenters / TA Two Harbors Invest. / TWO Volt Information / VOL Webzen / WZEN Xinyuan Real Estate / XIN

Industry Fish/Livestock Computer Hardware Biotechnology & Drugs Construction Services Metal Mining Furniture & Fixtures Misc. Capital Goods Casinos & Gaming Computer Services Jewelry & Silverware Computer Services Restaurants Real Estate Operations Biotechnology & Drugs Semiconductors Oil & Gas Operations Jewelry & Silverware Biotechnology & Drugs Electronic Instruments Furniture & Fixtures Software & Programming Comms Equipment Electronic Instruments Semiconductors Comms Services Retail (online) Investment Services Electronic Instruments Railroads Comms Services Comms Services Biotechnology & Drugs Business Services Oil Well Services Semiconductors Misc. Financial Services Comms Equipment Construction Supplies Oil & Gas Operations Misc. Capital Goods Misc. Capital Goods Business Services Medical Equipment Business Services Retail (specialty) Investment Services Business Services Computer Services Construction Services

© 2009-2010 by BeyondProxy LLC. All rights reserved.

Recent Price ($) 21.44 18.36 1.15 5.51 39.93 7.92 11.08 2.04 1.69 2.83 1.10 3.93 2.09 6.72 3.30 5.10 13.15 5.09 4.84 4.61 1.78 6.77 3.54 2.33 2.19 6.75 17.45 3.50 12.35 2.90 1.83 5.76 14.33 17.76 3.56 1.78 20.03 9.28 1.05 7.88 14.40 6.95 3.56 1.80 4.81 9.20 11.61 3.03 3.93

YTD Price ∆ -7% 5% 49% -6% -4% -7% 26% -19% -1% 16% 8% 7% -1% 10% 1% 76% 35% 1% -7% 43% 2% -15% -14% 23% -19% 0% 2% 25% 15% -21% -16% 16% 13% -21% 38% -5% -4% -1% 13% -5% 23% -4% -9% 19% 9% -6% 16% 5% -12%

Market Value ($mn) 1,072 3,024 150 80 810 297 74 54 71 67 19 110 51 218 79 153 324 125 217 253 64 211 66 207 93 183 292 70 60 138 134 310 125 210 269 57 570 58 51 70 266 175 193 57 83 123 242 120 298

Enter. Value ($mn) 974 2,492 28 53 786 236 67 42 -26 82 -6 109 0 58 12 151 263 -19 22 178 -30 84 89 111 3 141 -32 36 59 -126 -47 122 112 132 118 83 126 44 10 50 206 -85 38 -6 29 122 214 -24 367

www.manualofideas.com

Notable Shareholders Royce, River Road Artisan, GS, Cambiar Acadian, BlackRock Gendell, Royce, Keeley Advisory, GS, Third Ave Barclays, DFA Royce, Gabelli Key Colony, Par MNC, Merry Asia CEDE & Co. Kennedy, RenTech Bandera, Hodges LMM, Springhouse Conus, Lonestar, Royce Still River, IDG-Accel Prospect Energy Royce, Southpoint First Eagle, Perry Royce, Kahn, Acadian Royce, Brandes Tech Pioneer, RenTech Royce, Kestrel Donald Smith, Lapides Penn, Crosslink, Royce Stephens, Jennison DFA, AXA, FMR Blue Ridge, Highbridge Royce, RenTech, DFA Keeley, Steinberg Shah, Sansar, Pope Shah, DKR Axial, Black Horse Elkhorn, WC, RenTech Chilton, MHR, Pennant Tocqueville, RenTech Afinsa Bienes Tangibles Third Ave, Donald Smith Royce, Gendell Columbia Wanger TAT Industries Tricap, Aegis, Roumell Martin Currie, QVT Soundpost, Essex Lloyd Miller, Riley RenTech, Leucadia, GS QVT, Taconic, Fortress River Road, Royce NHN Games Blue Ridge, Equity Int'l

Website www.bachoco.com.mx www.ingrammicro.com www.insmed.com www.ies-co.com www.kaiseraluminum.com www.kimball.com www.starrett.com lakesentertainment.com www.linktone.com www.ljintl.com www.looksmart.com www.lubys.com www.marketleader.com www.maxygen.com www.memsic.com www.millerpetroleum.com www.movadogroupinc.com www.myriadpharma.com www.namtai.com www.natuzzi.com www.ninetowns.com www.novatelwireless.com www.nuhorizons.com www.opnext.com www.orbcomm.com www.pcconnection.com click here www.planar.com www.pwrr.com www.qxmc.com www.cosun-xing.com www.qltinc.com www.rewardsnetwork.com seahawkdrilling.com www.siliconimage.com www.spectrumgi.com www.sycamorenet.com www.synalloy.com www.synthesisenergy.com www.tat.co.il www.tecumseh.com www.the9.com www.tomotherapy.com www.twec.com www.tatravelcenters.com twoharborsinvestment.com www.volt.com www.webzen.com www.xyre.com

April 21, 2010 – Page 101 of 120


By Market Value Recent

YTD

Market

Enter.

Tang.

NCAV/

EV /

Price

Price

Value

Value

Book/

Market

LTM

($)

($mn)

($mn)

MV

Value

Sales

18.36

5%

3,024

2,492

100%

85%

.1x

Computer Hardware

Artisan, GS, Cambiar

8.95

-5%

1,808

na

107%

91%

na

Software & Programming

RS, Westfield, Perry

EchoStar / SATS

19.72

-2%

1,673

1,290

150%

34%

.7x

Broadcasting & Cable

MSD, Blue Ridge, Blum

Industrias Bachoco / IBA

21.44

-7%

1,072

974

111%

24%

.6x

Fish/Livestock

Royce, River Road

Kaiser Aluminum / KALU

39.93

-4%

810

786

111%

14%

.8x

Metal Mining

Advisory, GS, Third Ave

Global Industries / GLBL

6.36

-11%

724

647

115%

4%

.7x

Oil Well Services

Security, Alleghany

Callaway Golf / ELY

9.74

29%

627

549

85%

55%

.6x

Recreational Products

Royce, Clearbridge

20.03

-4%

570

126

113%

79%

1.9x

Comms Equipment

Third Ave, Donald Smith

1.49

17%

506

488

133%

-10%

6.2x

Metal Mining

Korea Electric Power

Imation / IMN

11.70

34%

446

283

127%

92%

.2x

Computer Services

Artisan, Private, LSV

Ascent Media / ASCMA

29.75

17%

422

129

138%

75%

.3x

Broadcasting & Cable

Liberty Media, Gabelli

American Railcar / ARII

18.80

71%

401

324

82%

21%

.8x

Railroads

Icahn, Advisory, DFA Steel, RenTech, Pzena

Company / Ticker Ingram Micro / IM Comverse Tech / CMVT

Sycamore Networks / SCMR Denison Mines / DNN

Industry

Notable Shareholders

3.27

-2%

394

14

98%

95%

.1x

Computer Storage

13.15

35%

324

263

114%

87%

.7x

Jewelry & Silverware

Royce, Southpoint

5.76

16%

310

122

131%

83%

2.9x

Biotechnology & Drugs

Axial, Black Horse

Xinyuan Real Estate / XIN

3.93

-12%

298

367

150%

139%

.8x

Construction Services

Blue Ridge, Equity Int'l

Kimball / KBALB

7.92

-7%

297

236

126%

50%

.2x

Furniture & Fixtures

Barclays, DFA

17.45

2%

292

-32

107%

107%

nm

Investment Services

Blue Ridge, Highbridge

Harvest Natural / HNR

8.54

61%

284

252

97%

-8%

>9.9x

Oil & Gas Operations

Pabrai, Cumberland

Silicon Image / SIMG

3.56

38%

269

118

64%

57%

.8x

Semiconductors

Tocqueville, RenTech

Adaptec / ADPT Movado Group / MOV QLT / QLTI

PennyMac Mortgage / PMT

14.40

23%

266

206

174%

21%

.3x

Misc. Capital Goods

Tricap, Aegis, Roumell

Albany Molecular / AMRI

8.40

-7%

266

168

111%

46%

.9x

Biotechnology & Drugs

Advisory, DFA, Royce

Breakwater Res. / BWLRF

0.38

-5%

261

175

148%

-1%

.5x

Gold & Silver

Dundee Corp.

Creative Tech / CREAF

3.73

-17%

257

14

121%

84%

.0x

Computer Peripherals

Raffles Nominees (Pte)

Tecumseh Products / TECUA

4.61

43%

253

178

175%

63%

.2x

Furniture & Fixtures

Royce, Brandes

Crexus Investment / CXS

13.66

-2%

248

-36

103%

103%

nm

Investment Services

Jennison, Ruffer

Avatar Holdings / AVTR

21.47

26%

244

146

182%

-62%

2.0x

Real Estate Operations

Cannell, Tweedy

Volt Information / VOL

11.61

16%

242

214

116%

82%

.1x

Axcelis Tech / ACLS

2.22

57%

231

186

94%

69%

Maxygen / MAXY

6.72

10%

218

58

70%

Nam Tai Electronics / NTE

4.84

-7%

217

22

143%

Novatel Wireless / NVTL

6.77

-15%

211

84

99%

Seahawk Drilling / HAWK

17.76

-21%

210

132

2.33

23%

207

111

Actions Semi / ACTS

2.38

-1%

205

Imperial Sugar / IPSU

16.34

-6%

199

TomoTherapy / TOMO

3.56

-9%

193

PC Connection / PCCC

6.75

0%

Natuzzi / NTZ

Opnext / OPXT

Business Services

River Road, Royce

1.4x

Semiconductors

Schneider, Sterling

69%

1.6x

Biotechnology & Drugs

Conus, Lonestar, Royce

91%

.1x

Electronic Instruments

Royce, Kahn, Acadian

61%

.2x

Comms Equipment

Royce, Kestrel

216%

-7%

.5x

Oil Well Services

Chilton, MHR, Pennant

118%

88%

.3x

Semiconductors

Penn, Crosslink, Royce

-24

134%

110%

nm

Semiconductors

RenTech, T.Rowe

192

133%

-14%

.4x

Food Processing

Royce, Passport

38

95%

79%

.2x

Medical Equipment

Soundpost, Essex

183

141

102%

94%

.1x

Retail (online)

DFA, AXA, FMR Baupost, Kahn, Aegis

Audiovox / VOXX

7.94

12%

182

142

151%

124%

.2x

Comms Equipment

CONN'S / CONN

7.97

36%

179

273

192%

113%

.3x

Retail (technology)

F&C, Lombardia, Royce

The9 Limited / NCTY

6.95

-4%

175

-85

169%

133%

nm

Business Services

Martin Currie, QVT

8.37

45%

172

148

147%

13%

.3x

Printing & Publishing

Lonestar, Prescott

12.60

14%

166

85

178%

25%

.2x

Software & Programming

Emblaze, Clal Insurance

Miller Petroleum / MILL

5.10

76%

153

151

190%

-130%

>9.9x

Oil & Gas Operations

Prospect Energy

Insmed / INSM

1.15

49%

150

28

83%

81%

2.7x

Biotechnology & Drugs

Acadian, BlackRock

A. H. Belo / AHC Formula Systems / FORTY

© 2009-2010 by BeyondProxy LLC. All rights reserved.

www.manualofideas.com

April 21, 2010 – Page 102 of 120


By Market Value (continued)

Company / Ticker Acorn International / ATV ePlus / PLUS Qiao Xing Mobile / QXM Agria / GRO Qiao Xing Universal / XING Myriad Pharma / MYRX Rewards Network / DINE Two Harbors Invest. / TWO Webzen / WZEN Hurco / HURC China Techfaith / CNTF Hardinge / HDNG Luby's / LUB Five Star Quality / FVE Ascent Solar / ASTI Flexsteel Industries / FLXS A.C. Moore Arts / ACMR Gushan Environmental / GU ORBCOMM / ORBC BRT Realty Trust / BRT HQS Maritime / HQS TravelCenters / TA Deswell Industries / DSWL Frozen Food / FFEX Integr. Electrical / IESC Cardero Resources / CDY MEMSIC / MEMS L.S. Starrett / SCX Gencor Industries / GENC Linktone / LTON Planar Systems / PLNR Heelys / HLYS TAT Technologies / TATT LJ International / JADE Cascade Microtech / CSCD ExpressJet / XJT Nu Horizons / NUHC Ninetowns Internet / NINE Century Casinos / CNTY Providence Worcester / PWX Gravity / GRVY Synalloy Corp. / SYNL Spectrum Group / SPGZ Trans World / TWMC dELiA*s / DLIA Duckwall-ALCO / DUCK GTSI / GTSI Lakes Entertainment / LACO Market Leader / LEDR Synthesis Energy / SYMX Conrad Industries / CNRD I.D. Systems / IDSY LookSmart / LOOK

Recent Price ($) 4.89 17.46 2.90 2.17 1.83 5.09 14.33 9.20 3.03 18.30 2.60 9.55 3.93 3.05 4.04 15.30 3.92 1.15 2.19 6.57 6.05 4.81 5.08 4.70 5.51 1.34 3.30 11.08 7.62 1.69 3.50 2.53 7.88 2.83 4.70 3.88 3.54 1.78 2.51 12.35 2.10 9.28 1.78 1.80 1.77 14.60 5.62 2.04 2.09 1.05 7.80 3.04 1.10

© 2009-2010 by BeyondProxy LLC. All rights reserved.

YTD Price ∆ 3% 6% -21% -31% -16% 1% 13% -6% 5% 24% -15% 74% 7% -12% -24% 50% 33% -13% -19% 29% -14% 9% 26% 42% -6% -1% 1% 26% 2% -1% 25% 16% -5% 16% 3% -20% -14% 2% -7% 15% 29% -1% -5% 19% -5% -5% 13% -19% -1% 13% 3% -5% 8%

Market Value ($mn) 145 144 138 137 134 125 125 123 120 118 113 111 110 109 108 101 97 97 93 92 89 83 82 81 80 79 79 74 73 71 70 70 70 67 67 66 66 64 60 60 58 58 57 57 55 55 54 54 51 51 50 34 19

Enter. Value ($mn) -14 121 -126 -35 -47 -19 112 122 -24 85 2 91 109 76 55 93 70 13 3 84 52 29 40 77 53 -15 12 67 8 -26 36 10 50 82 34 25 89 -30 39 59 -7 44 83 -6 14 104 47 42 0 10 38 -8 -6

Tang. Book/ MV 133% 116% 277% 175% 248% 134% 62% 148% 146% 95% 178% 136% 145% 113% 143% 110% 165% 305% 168% 140% 125% 344% 150% 111% 159% 144% 118% 191% 131% 163% 90% 113% 125% 117% 101% 298% 208% 212% 173% 123% 108% 104% 135% 342% 165% 188% 179% 146% 112% 217% 139% 161% 137%

NCAV/ Market Value 110% -134% 259% 126% 202% 109% 54% -63% 121% 78% 138% 84% -17% -83% 40% 74% 78% 54% 82% -62% 102% -193% 74% 12% 108% 79% 93% 81% 120% 161% 77% 102% 87% 107% 81% 7% 197% 146% 21% -34% 95% 71% 118% 269% 51% 124% 83% -22% 103% 73% 63% 138% 107%

EV / LTM Sales nm .2x nm nm nm nm .5x nm nm .9x .0x .4x .4x .1x >9.9x .3x .1x .1x .1x 5.8x .7x .0x .3x .2x .1x nm .4x .3x .1x nm .2x .2x .6x .6x .6x .0x .1x nm .8x 2.4x nm .4x .0x nm .1x .2x .1x 1.6x nm 4.7x .3x nm nm

www.manualofideas.com

Industry Appliances & Tools Software & Programming Comms Services Crops Comms Services Biotechnology & Drugs Business Services Investment Services Computer Services Technical Instruments Comms Equipment Misc. Capital Goods Restaurants Healthcare Facilities Semiconductors Furniture & Fixtures Retail (specialty) Oil & Gas - Integrated Comms Services Real Estate Operations Fish/Livestock Retail (specialty) Chemicals - Plastics Trucking Construction Services Gold & Silver Semiconductors Misc. Capital Goods Construction Machinery Computer Services Electronic Instruments Footwear Misc. Capital Goods Jewelry & Silverware Technical Instruments Airline Electronic Instruments Software & Programming Casinos & Gaming Railroads Software & Programming Construction Supplies Misc. Financial Services Business Services Retail (apparel) Retail (dep't & discount) Computer Hardware Casinos & Gaming Real Estate Operations Oil & Gas Operations Water Transportation Comms Equipment Computer Services

Notable Shareholders RenTech, Northern Trust Hovde, Heartland Shah, Sansar, Pope Heartland, TPG Shah, DKR First Eagle, Perry Elkhorn, WC, RenTech QVT, Taconic, Fortress NHN Games Royce, Thomson, Pier RenTech, FMR, HSBC Royce, Aegis, Portola Bandera, Hodges F&C, RenTech Wells Fargo, Invesco Perritt, Towle, Royce Glenhill, Royce, Adage RenTech, KBC, Tiger Stephens, Jennison Aegis, Michael Price River Road, Hound RenTech, Leucadia, GS Royce, RenTech Hawkshaw, Royce Gendell, Royce, Keeley Luxor Capital Still River, IDG-Accel Royce, Gabelli FMR, PNC, RBF MNC, Merry Asia Royce, RenTech, DFA Capital S/W, RenTech TAT Industries CEDE & Co. RGM, Crosslink, Royce Stelliam, RenTech Donald Smith, Lapides Tech Pioneer, RenTech Beach, Perritt Keeley, Steinberg Moon, Black Horse Royce, Gendell Afinsa Bienes Tangibles Lloyd Miller, Riley T2, North Run, Steadfast Heartland, Aegis, Price Netols, Athena, Raffles Key Colony, Par LMM, Springhouse Columbia Wanger Keane Capital Artis, Diker, Thomson Kennedy, RenTech April 21, 2010 – Page 103 of 120


By Sector Market

Enter.

Tang.

NCAV/

EV /

Price

Value

Value

Book/

Market

LTM

($)

($mn)

($mn)

MV

Value

Sales

Sector

Industry

Basic Materials

Chemicals - Plastics

Deswell Industries / DSWL

5.08

82

40

150%

74%

.3x

Basic Materials

Gold & Silver

Breakwater Res. / BWLRF

0.38

261

175

148%

-1%

.5x

Dundee Corp.

Basic Materials

Gold & Silver

Cardero Resources / CDY

1.34

79

-15

144%

79%

nm

Luxor Capital

Basic Materials

Metal Mining

Denison Mines / DNN

1.49

506

488

133%

-10%

6.2x

Basic Materials

Metal Mining

Kaiser Aluminum / KALU

39.93

810

786

111%

14%

.8x

Capital Goods

Construction Machinery

Gencor Industries / GENC

7.62

73

8

131%

120%

.1x

FMR, PNC, RBF

Capital Goods

Construction Services

Integr. Electrical / IESC

5.51

80

53

159%

108%

.1x

Gendell, Royce, Keeley

Capital Goods

Construction Services

Xinyuan Real Estate / XIN

3.93

298

367

150%

139%

.8x

Blue Ridge, Equity Int'l

Capital Goods

Construction Supplies

Synalloy Corp. / SYNL

9.28

58

44

104%

71%

.4x

Royce, Gendell

Capital Goods

Misc. Capital Goods

Hardinge / HDNG

9.55

111

91

136%

84%

.4x

Royce, Aegis, Portola

Capital Goods

Misc. Capital Goods

L.S. Starrett / SCX

11.08

74

67

191%

81%

.3x

Royce, Gabelli

Capital Goods

Misc. Capital Goods

TAT Technologies / TATT

7.88

70

50

125%

87%

.6x

TAT Industries

Capital Goods

Misc. Capital Goods

Tecumseh Products / TECUA

14.40

266

206

174%

21%

.3x

Tricap, Aegis, Roumell

Consumer

Appliances & Tools

Acorn International / ATV

4.89

145

-14

133%

110%

nm

RenTech, Northern Trust

Consumer

Crops

Agria / GRO

2.17

137

-35

175%

126%

nm

Heartland, TPG

Consumer

Fish/Livestock

HQS Maritime / HQS

6.05

89

52

125%

102%

.7x

River Road, Hound

Consumer

Fish/Livestock

Industrias Bachoco / IBA

21.44

1,072

974

111%

24%

.6x

Royce, River Road

Consumer

Food Processing

Imperial Sugar / IPSU

16.34

199

192

133%

-14%

.4x

Royce, Passport

Consumer

Footwear

Heelys / HLYS

2.53

70

10

113%

102%

.2x

Capital S/W, RenTech

Consumer

Furniture & Fixtures

Flexsteel Industries / FLXS

15.30

101

93

110%

74%

.3x

Perritt, Towle, Royce

Consumer

Furniture & Fixtures

Kimball / KBALB

7.92

297

236

126%

50%

.2x

Barclays, DFA

Consumer

Furniture & Fixtures

Natuzzi / NTZ

4.61

253

178

175%

63%

.2x

Royce, Brandes

Consumer

Jewelry & Silverware

LJ International / JADE

2.83

67

82

117%

107%

.6x

CEDE & Co.

Consumer

Jewelry & Silverware

Movado Group / MOV

13.15

324

263

114%

87%

.7x

Royce, Southpoint

Consumer

Recreational Products

Callaway Golf / ELY

9.74

627

549

85%

55%

.6x

Royce, Clearbridge

Energy

Oil & Gas - Integrated

Gushan Environmental / GU

1.15

97

13

305%

54%

.1x

RenTech, KBC, Tiger

Energy

Oil & Gas Operations

Harvest Natural / HNR

8.54

284

252

97%

-8%

>9.9x

Pabrai, Cumberland

Energy

Oil & Gas Operations

Miller Petroleum / MILL

5.10

153

151

190%

-130%

>9.9x

Prospect Energy

Energy

Oil & Gas Operations

Synthesis Energy / SYMX

1.05

51

10

217%

73%

4.7x

Columbia Wanger

Energy

Oil Well Services

Global Industries / GLBL

6.36

724

647

115%

4%

.7x

Security, Alleghany

Energy

Oil Well Services

Seahawk Drilling / HAWK

17.76

210

132

216%

-7%

.5x

Chilton, MHR, Pennant

Financial

Investment Services

Crexus Investment / CXS

13.66

248

-36

103%

103%

nm

Jennison, Ruffer

Financial

Investment Services

PennyMac Mortgage / PMT

17.45

292

-32

107%

107%

nm

Blue Ridge, Highbridge

Financial

Investment Services

Two Harbors Invest. / TWO

9.20

123

122

148%

-63%

nm

QVT, Taconic, Fortress

Financial

Misc. Financial Services

Spectrum Group / SPGZ

1.78

57

83

135%

118%

.0x

Afinsa Bienes Tangibles

Health Care

Biotechnology & Drugs

Albany Molecular / AMRI

8.40

266

168

111%

46%

.9x

Health Care

Biotechnology & Drugs

Insmed / INSM

1.15

150

28

83%

81%

2.7x

Acadian, BlackRock

Health Care

Biotechnology & Drugs

Maxygen / MAXY

6.72

218

58

70%

69%

1.6x

Conus, Lonestar, Royce

Health Care

Biotechnology & Drugs

Myriad Pharma / MYRX

5.09

125

-19

134%

109%

nm

Health Care

Biotechnology & Drugs

QLT / QLTI

5.76

310

122

131%

83%

2.9x

Health Care

Healthcare Facilities

Five Star Quality / FVE

3.05

109

76

113%

-83%

.1x

F&C, RenTech

Health Care

Medical Equipment

TomoTherapy / TOMO

3.56

193

38

95%

79%

.2x

Soundpost, Essex

Services

Broadcasting & Cable

Ascent Media / ASCMA

29.75

422

129

138%

75%

.3x

Liberty Media, Gabelli

Services

Broadcasting & Cable

EchoStar / SATS

19.72

1,673

1,290

150%

34%

.7x

MSD, Blue Ridge, Blum

Services

Business Services

Rewards Network / DINE

14.33

125

112

62%

54%

.5x

Elkhorn, WC, RenTech

© 2009-2010 by BeyondProxy LLC. All rights reserved.

Company / Ticker

Recent

www.manualofideas.com

Notable Shareholders Royce, RenTech

Korea Electric Power Advisory, GS, Third Ave

Advisory, DFA, Royce

First Eagle, Perry Axial, Black Horse

April 21, 2010 – Page 104 of 120


By Sector (continued) Sector Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Technology Transportation Transportation Transportation Transportation Transportation

Industry Business Services Business Services Business Services Casinos & Gaming Casinos & Gaming Comms Services Comms Services Comms Services Printing & Publishing Real Estate Operations Real Estate Operations Real Estate Operations Restaurants Retail (apparel) Retail (dep't & discount) Retail (online) Retail (specialty) Retail (specialty) Retail (technology) Comms Equipment Comms Equipment Comms Equipment Comms Equipment Comms Equipment Computer Hardware Computer Hardware Computer Peripherals Computer Services Computer Services Computer Services Computer Services Computer Storage Electronic Instruments Electronic Instruments Electronic Instruments Semiconductors Semiconductors Semiconductors Semiconductors Semiconductors Semiconductors Software & Programming Software & Programming Software & Programming Software & Programming Software & Programming Technical Instruments Technical Instruments Airline Railroads Railroads Trucking Water Transportation

© 2009-2010 by BeyondProxy LLC. All rights reserved.

Company / Ticker The9 Limited / NCTY Trans World / TWMC Volt Information / VOL Century Casinos / CNTY Lakes Entertainment / LACO ORBCOMM / ORBC Qiao Xing Mobile / QXM Qiao Xing Universal / XING A. H. Belo / AHC Avatar Holdings / AVTR BRT Realty Trust / BRT Market Leader / LEDR Luby's / LUB dELiA*s / DLIA Duckwall-ALCO / DUCK PC Connection / PCCC A.C. Moore Arts / ACMR TravelCenters / TA CONN'S / CONN Audiovox / VOXX China Techfaith / CNTF I.D. Systems / IDSY Novatel Wireless / NVTL Sycamore Networks / SCMR GTSI / GTSI Ingram Micro / IM Creative Tech / CREAF Imation / IMN Linktone / LTON LookSmart / LOOK Webzen / WZEN Adaptec / ADPT Nam Tai Electronics / NTE Nu Horizons / NUHC Planar Systems / PLNR Actions Semi / ACTS Ascent Solar / ASTI Axcelis Tech / ACLS MEMSIC / MEMS Opnext / OPXT Silicon Image / SIMG Comverse Tech / CMVT ePlus / PLUS Formula Systems / FORTY Gravity / GRVY Ninetowns Internet / NINE Cascade Microtech / CSCD Hurco / HURC ExpressJet / XJT American Railcar / ARII Providence Worcester / PWX Frozen Food / FFEX Conrad Industries / CNRD

Recent Price ($) 6.95 1.80 11.61 2.51 2.04 2.19 2.90 1.83 8.37 21.47 6.57 2.09 3.93 1.77 14.60 6.75 3.92 4.81 7.97 7.94 2.60 3.04 6.77 20.03 5.62 18.36 3.73 11.70 1.69 1.10 3.03 3.27 4.84 3.54 3.50 2.38 4.04 2.22 3.30 2.33 3.56 8.95 17.46 12.60 2.10 1.78 4.70 18.30 3.88 18.80 12.35 4.70 7.80

Market Value ($mn) 175 57 242 60 54 93 138 134 172 244 92 51 110 55 55 183 97 83 179 182 113 34 211 570 54 3,024 257 446 71 19 120 394 217 66 70 205 108 231 79 207 269 1,808 144 166 58 64 67 118 66 401 60 81 50

www.manualofideas.com

Enter. Value ($mn) -85 -6 214 39 42 3 -126 -47 148 146 84 0 109 14 104 141 70 29 273 142 2 -8 84 126 47 2,492 14 283 -26 -6 -24 14 22 89 36 -24 55 186 12 111 118 na 121 85 -7 -30 34 85 25 324 59 77 38

Tang. Book/ MV 169% 342% 116% 173% 146% 168% 277% 248% 147% 182% 140% 112% 145% 165% 188% 102% 165% 344% 192% 151% 178% 161% 99% 113% 179% 100% 121% 127% 163% 137% 146% 98% 143% 208% 90% 134% 143% 94% 118% 118% 64% 107% 116% 178% 108% 212% 101% 95% 298% 82% 123% 111% 139%

NCAV/ Market Value 133% 269% 82% 21% -22% 82% 259% 202% 13% -62% -62% 103% -17% 51% 124% 94% 78% -193% 113% 124% 138% 138% 61% 79% 83% 85% 84% 92% 161% 107% 121% 95% 91% 197% 77% 110% 40% 69% 93% 88% 57% 91% -134% 25% 95% 146% 81% 78% 7% 21% -34% 12% 63%

EV / LTM Sales nm nm .1x .8x 1.6x .1x nm nm .3x 2.0x 5.8x nm .4x .1x .2x .1x .1x .0x .3x .2x .0x nm .2x 1.9x .1x .1x .0x .2x nm nm nm .1x .1x .1x .2x nm >9.9x 1.4x .4x .3x .8x na .2x .2x nm nm .6x .9x .0x .8x 2.4x .2x .3x

Notable Shareholders Martin Currie, QVT Lloyd Miller, Riley River Road, Royce Beach, Perritt Key Colony, Par Stephens, Jennison Shah, Sansar, Pope Shah, DKR Lonestar, Prescott Cannell, Tweedy Aegis, Michael Price LMM, Springhouse Bandera, Hodges T2, North Run, Steadfast Heartland, Aegis, Price DFA, AXA, FMR Glenhill, Royce, Adage RenTech, Leucadia, GS F&C, Lombardia, Royce Baupost, Kahn, Aegis RenTech, FMR, HSBC Artis, Diker, Thomson Royce, Kestrel Third Ave, Donald Smith Netols, Athena, Raffles Artisan, GS, Cambiar Raffles Nominees (Pte) Artisan, Private, LSV MNC, Merry Asia Kennedy, RenTech NHN Games Steel, RenTech, Pzena Royce, Kahn, Acadian Donald Smith, Lapides Royce, RenTech, DFA RenTech, T.Rowe Wells Fargo, Invesco Schneider, Sterling Still River, IDG-Accel Penn, Crosslink, Royce Tocqueville, RenTech RS, Westfield, Perry Hovde, Heartland Emblaze, Clal Insurance Moon, Black Horse Tech Pioneer, RenTech RGM, Crosslink, Royce Royce, Thomson, Pier Stelliam, RenTech Icahn, Advisory, DFA Keeley, Steinberg Hawkshaw, Royce Keane Capital April 21, 2010 – Page 105 of 120


Stock Price Performance

(sorted by price decline since December 31, 2007)

Recent

YTD

Price Performance

Tang.

NCAV/

Price

Price

Value

Value

($)

($mn)

($mn)

2009

Since December 31, 2007

2005

Book/

Market

LTM

Div.

MV

Value

Sales

Yield

Synthesis Energy / SYMX

1.05

13%

51

10

13%

-91%

-86%

217%

73%

4.7x

-

Gushan Environmental / GU

1.15

-13%

97

13

-13%

-88%

na

305%

54%

.1x

4%

ExpressJet / XJT

3.88

-20%

66

25

-20%

-84%

-95%

298%

7%

.0x

-

Stelliam, RenTech

Ascent Solar / ASTI

4.04

-24%

108

Denison Mines / DNN

1.49

17%

506

55

-24%

-84%

na

143%

40%

>9.9x

-

Wells Fargo, Invesco

488

17%

-83%

-88%

133%

-10%

6.2x

-

TomoTherapy / TOMO

3.56

-9%

193

Korea Electric Power

38

-9%

-82%

na

95%

79%

.2x

-

Soundpost, Essex

Agria / GRO

2.17

-31%

Breakwater Res. / BWLRF

0.38

-5%

137

-35

-31%

-79%

na

175%

126%

nm

-

Heartland, TPG

261

175

-5%

-78%

-36%

148%

-1%

.5x

-

Dundee Corp.

Qiao Xing Universal / XING

1.83

-16%

I.D. Systems / IDSY

3.04

-5%

134

-47

-16%

-78%

-75%

248%

202%

nm

-

Shah, DKR

34

-8

-5%

-76%

-87%

161%

138%

nm

-

Opnext / OPXT

2.33

Artis, Diker, Thomson

23%

207

111

23%

-74%

na

118%

88%

.3x

-

Penn, Crosslink, Royce

Xinyuan Real Estate / XIN

3.93

-12%

298

367

-12%

-72%

na

150%

139%

.8x

-

Blue Ridge, Equity Int'l

A.C. Moore Arts / ACMR

3.92

33%

97

70

33%

-71%

-73%

165%

78%

.1x

-

Glenhill, Royce, Adage

Integr. Electrical / IESC

5.51

-6%

80

53

-6%

-71%

na

159%

108%

.1x

-

Gendell, Royce, Keeley

Global Industries / GLBL

6.36

-11%

724

647

-11%

-70%

-44%

115%

4%

.7x

-

Security, Alleghany

Lakes Entertainment / LACO

2.04

-19%

54

42

-19%

-69%

-68%

146%

-22%

1.6x

-

Key Colony, Par

MEMSIC / MEMS

3.30

1%

79

12

1%

-67%

na

118%

93%

.4x

-

Still River, IDG-Accel

Company / Ticker

Market

Enter.

EV / Notable Shareholders Columbia Wanger RenTech, KBC, Tiger

The9 Limited / NCTY

6.95

-4%

175

-85

-4%

-67%

-55%

169%

133%

nm

-

Martin Currie, QVT

Qiao Xing Mobile / QXM

2.90

-21%

138

-126

-21%

-66%

na

277%

259%

nm

-

Shah, Sansar, Pope

LookSmart / LOOK

1.10

8%

19

-6

8%

-66%

-71%

137%

107%

nm

-

Kennedy, RenTech

ORBCOMM / ORBC

2.19

-19%

93

3

-19%

-65%

na

168%

82%

.1x

-

Stephens, Jennison

Heelys / HLYS

2.53

16%

70

10

16%

-64%

na

113%

102%

.2x

-

Capital S/W, RenTech

Trans World / TWMC

1.80

19%

57

-6

19%

-63%

-68%

342%

269%

nm

-

Lloyd Miller, Riley

Five Star Quality / FVE

3.05

-12%

109

76

-12%

-63%

-61%

113%

-83%

.1x

-

F&C, RenTech

TravelCenters / TA

4.81

9%

83

29

9%

-62%

na

344%

-193%

.0x

-

RenTech, Leucadia, GS

Luby's / LUB

3.93

7%

110

109

7%

-61%

-70%

145%

-17%

.4x

-

Bandera, Hodges

Century Casinos / CNTY

2.51

-7%

60

39

-7%

-61%

-71%

173%

21%

.8x

-

Beach, Perritt

Novatel Wireless / NVTL

6.77

-15%

211

84

-15%

-58%

-44%

99%

61%

.2x

-

Royce, Kestrel

18.30

24%

118

85

24%

-58%

-41%

95%

78%

.9x

-

Royce, Thomson, Pier

4.84

-7%

217

22

-7%

-57%

-78%

143%

91%

.1x

-

Royce, Kahn, Acadian

Duckwall-ALCO / DUCK

14.60

-5%

55

104

-5%

-55%

-36%

188%

124%

.2x

-

Heartland, Aegis, Price

China Techfaith / CNTF

2.60

-15%

113

2

-15%

-55%

-81%

178%

138%

.0x

-

RenTech, FMR, HSBC

Cascade Microtech / CSCD

4.70

3%

67

34

3%

-54%

-63%

101%

81%

.6x

-

RGM, Crosslink, Royce

CONN'S / CONN

7.97

36%

179

273

36%

-53%

-78%

192%

113%

.3x

-

F&C, Lombardia, Royce

Axcelis Tech / ACLS

2.22

57%

231

186

57%

-52%

-53%

94%

69%

1.4x

-

Schneider, Sterling

LJ International / JADE

2.83

16%

67

82

16%

-51%

-17%

117%

107%

.6x

-

CEDE & Co.

39.93

-4%

810

786

-4%

-50%

na

111%

14%

.8x

2%

3.54

-14%

66

89

-14%

-49%

-65%

208%

197%

.1x

-

Donald Smith, Lapides

Avatar Holdings / AVTR

21.47

26%

244

146

26%

-49%

-61%

182%

-62%

2.0x

-

Cannell, Tweedy

Comverse Tech / CMVT

8.95

-5%

1,808

na

-5%

-48%

-66%

107%

91%

na

-

RS, Westfield, Perry Aegis, Michael Price

Hurco / HURC Nam Tai Electronics / NTE

Kaiser Aluminum / KALU Nu Horizons / NUHC

BRT Realty Trust / BRT Movado Group / MOV Conrad Industries / CNRD Sycamore Networks / SCMR Acorn International / ATV

Advisory, GS, Third Ave

6.57

29%

92

84

29%

-48%

-67%

140%

-62%

5.8x

-

13.15

35%

324

263

35%

-48%

-28%

114%

87%

.7x

-

Royce, Southpoint

7.80

3%

50

38

3%

-48%

333%

139%

63%

.3x

-

Keane Capital

20.03

-4%

570

126

-4%

-48%

-54%

113%

79%

1.9x

-

Third Ave, Donald Smith

4.89

3%

145

-14

3%

-48%

na

133%

110%

nm

-

RenTech, Northern Trust

© 2009-2010 by BeyondProxy LLC. All rights reserved.

www.manualofideas.com

April 21, 2010 – Page 106 of 120


Stock Price Performance

Company / Ticker Synalloy Corp. / SYNL Planar Systems / PLNR Linktone / LTON Imation / IMN Ninetowns Internet / NINE Callaway Golf / ELY Hardinge / HDNG GTSI / GTSI Kimball / KBALB Actions Semi / ACTS Albany Molecular / AMRI PC Connection / PCCC TAT Technologies / TATT Tecumseh Products / TECUA HQS Maritime / HQS Volt Information / VOL Audiovox / VOXX dELiA*s / DLIA L.S. Starrett / SCX Industrias Bachoco / IBA Market Leader / LEDR Gravity / GRVY Harvest Natural / HNR Providence Worcester / PWX Gencor Industries / GENC Cardero Resources / CDY Silicon Image / SIMG Frozen Food / FFEX Webzen / WZEN Maxygen / MAXY Deswell Industries / DSWL Spectrum Group / SPGZ Imperial Sugar / IPSU Creative Tech / CREAF Rewards Network / DINE Adaptec / ADPT American Railcar / ARII Natuzzi / NTZ Ingram Micro / IM Formula Systems / FORTY EchoStar / SATS Flexsteel Industries / FLXS QLT / QLTI Insmed / INSM ePlus / PLUS PennyMac Mortgage / PMT Miller Petroleum / MILL Seahawk Drilling / HAWK Two Harbors Invest. / TWO Crexus Investment / CXS Myriad Pharma / MYRX Ascent Media / ASCMA A. H. Belo / AHC

Recent Price ($) 9.28 3.50 1.69 11.70 1.78 9.74 9.55 5.62 7.92 2.38 8.40 6.75 7.88 14.40 6.05 11.61 7.94 1.77 11.08 21.44 2.09 2.10 8.54 12.35 7.62 1.34 3.56 4.70 3.03 6.72 5.08 1.78 16.34 3.73 14.33 3.27 18.80 4.61 18.36 12.60 19.72 15.30 5.76 1.15 17.46 17.45 5.10 17.76 9.20 13.66 5.09 29.75 8.37

© 2009-2010 by BeyondProxy LLC. All rights reserved.

(sorted by price decline since December 31, 2007) (continued) YTD Price ∆ -1% 25% -1% 34% 2% 29% 74% 13% -7% -1% -7% 0% -5% 23% -14% 16% 12% -5% 26% -7% -1% 29% 61% 15% 2% -1% 38% 42% 5% 10% 26% -5% -6% -17% 13% -2% 71% 43% 5% 14% -2% 50% 16% 49% 6% 2% 76% -21% -6% -2% 1% 17% 45%

Market Value ($mn) 58 70 71 446 64 627 111 54 297 205 266 183 70 266 89 242 182 55 74 1,072 51 58 284 60 73 79 269 81 120 218 82 57 199 257 125 394 401 253 3,024 166 1,673 101 310 150 144 292 153 210 123 248 125 422 172

Enter. Value ($mn) 44 36 -26 283 -30 549 91 47 236 -24 168 141 50 206 52 214 142 14 67 974 0 -7 252 59 8 -15 118 77 -24 58 40 83 192 14 112 14 324 178 2,492 85 1,290 93 122 28 121 -32 151 132 122 -36 -19 129 148

Price Performance Since December 31, 2009 2007 2005 -1% -46% -11% 25% -45% -58% -1% -45% -84% 34% -44% -75% 2% -44% -69% 29% -44% -30% 74% -43% -45% 13% -43% -20% -7% -42% -25% -1% -42% -70% -7% -42% -31% 0% -41% 25% -5% -40% 19% 23% -38% -37% -14% -38% -7% 16% -36% -8% 12% -36% -43% -5% -35% -79% 26% -34% -29% -7% -33% 10% -1% -33% -84% 29% -32% -71% 61% -32% -4% 15% -26% -17% 2% -26% -8% -1% -23% -70% 38% -21% -61% 42% -20% -57% 5% -20% -64% 10% -16% -11% 26% -16% -53% -5% -15% -91% -6% -13% 20% -17% -12% -56% 13% -4% -25% -2% -3% -44% 71% -2% na 43% 0% -34% 5% 2% -8% 14% 2% 22% -2% 5% na 50% 28% 9% 16% 30% -9% 49% 39% -42% 6% 81% 27% 2% 166% 173% 76% >999% 311% -21% na na -6% na na -2% na na 1% na na 17% na na 45% na na www.manualofideas.com

Tang. Book/ MV 104% 90% 163% 127% 212% 85% 136% 179% 126% 134% 111% 102% 125% 174% 125% 116% 151% 165% 191% 111% 112% 108% 97% 123% 131% 144% 64% 111% 146% 70% 150% 135% 133% 121% 62% 98% 82% 175% 100% 178% 150% 110% 131% 83% 116% 107% 190% 216% 148% 103% 134% 138% 147%

NCAV/ Market Value 71% 77% 161% 92% 146% 55% 84% 83% 50% 110% 46% 94% 87% 21% 102% 82% 124% 51% 81% 24% 103% 95% -8% -34% 120% 79% 57% 12% 121% 69% 74% 118% -14% 84% 54% 95% 21% 63% 85% 25% 34% 74% 83% 81% -134% 107% -130% -7% -63% 103% 109% 75% 13%

EV / LTM Sales .4x .2x nm .2x nm .6x .4x .1x .2x nm .9x .1x .6x .3x .7x .1x .2x .1x .3x .6x nm nm >9.9x 2.4x .1x nm .8x .2x nm 1.6x .3x .0x .4x .0x .5x .1x .8x .2x .1x .2x .7x .3x 2.9x 2.7x .2x nm >9.9x .5x nm nm nm .3x .3x

Div. Yield 3% 0% 0% 3% 11% 2% 3% 1% 8% 0% 1% 12% 1% 2% -

Notable Shareholders Royce, Gendell Royce, RenTech, DFA MNC, Merry Asia Artisan, Private, LSV Tech Pioneer, RenTech Royce, Clearbridge Royce, Aegis, Portola Netols, Athena, Raffles Barclays, DFA RenTech, T.Rowe Advisory, DFA, Royce DFA, AXA, FMR TAT Industries Tricap, Aegis, Roumell River Road, Hound River Road, Royce Baupost, Kahn, Aegis T2, North Run, Steadfast Royce, Gabelli Royce, River Road LMM, Springhouse Moon, Black Horse Pabrai, Cumberland Keeley, Steinberg FMR, PNC, RBF Luxor Capital Tocqueville, RenTech Hawkshaw, Royce NHN Games Conus, Lonestar, Royce Royce, RenTech Afinsa Bienes Tangibles Royce, Passport Raffles Nominees (Pte) Elkhorn, WC, RenTech Steel, RenTech, Pzena Icahn, Advisory, DFA Royce, Brandes Artisan, GS, Cambiar Emblaze, Clal Insurance MSD, Blue Ridge, Blum Perritt, Towle, Royce Axial, Black Horse Acadian, BlackRock Hovde, Heartland Blue Ridge, Highbridge Prospect Energy Chilton, MHR, Pennant QVT, Taconic, Fortress Jennison, Ruffer First Eagle, Perry Liberty Media, Gabelli Lonestar, Prescott April 21, 2010 – Page 107 of 120


Free Cash Flow

(sorted by LTM free cash flow yield) LTM

Recent

Market

Enter.

Tang.

NCAV/

EV /

FCF

Price

∆ to 52-Wk

Value

Value

Book/

Market

LTM

Div.

Insider

Yield

($)

Low

High

($mn)

($mn)

MV

Value

Sales

Yield

Own.

Trans World / TWMC

80%

1.80

-70%

11%

57

-6

342%

269%

nm

-

69%

Lloyd Miller, Riley

Nu Horizons / NUHC

51%

3.54

-29%

32%

66

89

208%

197%

.1x

-

5%

Donald Smith, Lapides

The9 Limited / NCTY

50%

6.95

-10%

73%

175

-85

169%

133%

nm

-

55%

Martin Currie, QVT

Ninetowns Internet / NINE

32%

1.78

-43%

24%

64

-30

212%

146%

nm

-

39%

Tech Pioneer, RenTech

Synalloy Corp. / SYNL

31%

9.28

-43%

13%

58

44

104%

71%

.4x

3%

18%

Royce, Gendell

Audiovox / VOXX

27%

7.94

-44%

6%

182

142

151%

124%

.2x

-

19%

Baupost, Kahn, Aegis

Hardinge / HDNG

27%

9.55

-60%

2%

111

91

136%

84%

.4x

0%

3%

Royce, Aegis, Portola

Deswell Industries / DSWL

26%

5.08

-57%

5%

82

40

150%

74%

.3x

8%

16%

Royce, RenTech

Flexsteel Industries / FLXS

24%

15.30

-61%

8%

101

93

110%

74%

.3x

1%

13%

Perritt, Towle, Royce

Lakes Entertainment / LACO

22%

2.04

-1%

114%

54

42

146%

-22%

1.6x

-

27%

Key Colony, Par

Rewards Network / DINE

21%

14.33

-44%

8%

125

112

62%

54%

.5x

-

5%

Elkhorn, WC, RenTech

Planar Systems / PLNR

19%

3.50

-79%

7%

70

36

90%

77%

.2x

-

4%

Royce, RenTech, DFA

TravelCenters / TA

18%

4.81

-63%

82%

83

29

344%

-193%

.0x

-

16%

RenTech, Leucadia, GS

QLT / QLTI

18%

5.76

-66%

1%

310

122

131%

83%

2.9x

-

14%

Axial, Black Horse

American Railcar / ARII

17%

18.80

-63%

0%

401

324

82%

21%

.8x

1%

1%

Icahn, Advisory, DFA

Novatel Wireless / NVTL

14%

6.77

-6%

102%

211

84

99%

61%

.2x

-

2%

Royce, Kestrel

Imation / IMN

13%

11.70

-37%

3%

446

283

127%

92%

.2x

-

2%

Artisan, Private, LSV

Century Casinos / CNTY

11%

2.51

-42%

33%

60

39

173%

21%

.8x

-

12%

Beach, Perritt

L.S. Starrett / SCX

Royce, Gabelli

Company / Ticker

Notable Shareholders

10%

11.08

-41%

6%

74

67

191%

81%

.3x

2%

19%

Movado Group / MOV

9%

13.15

-49%

18%

324

263

114%

87%

.7x

-

31%

Royce, Southpoint

Seahawk Drilling / HAWK

9%

17.76

-1%

101%

210

132

216%

-7%

.5x

-

9%

Chilton, MHR, Pennant

Kimball / KBALB

9%

7.92

-37%

21%

297

236

126%

50%

.2x

3%

20%

Barclays, DFA

Albany Molecular / AMRI

9%

8.40

-9%

25%

266

168

111%

46%

.9x

-

33%

Advisory, DFA, Royce

Integr. Electrical / IESC

9%

5.51

-17%

103%

80

53

159%

108%

.1x

-

2%

Gendell, Royce, Keeley

Kaiser Aluminum / KALU

8%

39.93

-35%

11%

810

786

111%

14%

.8x

2%

0%

Advisory, GS, Third Ave

Duckwall-ALCO / DUCK

8%

14.60

-35%

31%

55

104

188%

124%

.2x

-

16%

Heartland, Aegis, Price

Gencor Industries / GENC

8%

7.62

-21%

14%

73

8

131%

120%

.1x

-

52%

FMR, PNC, RBF

Actions Semi / ACTS

8%

2.38

-31%

22%

205

-24

134%

110%

nm

-

0%

RenTech, T.Rowe

Breakwater Res. / BWLRF

6%

0.38

-76%

32%

261

175

148%

-1%

.5x

-

25%

Dundee Corp.

Agria / GRO

6%

2.17

-27%

109%

137

-35

175%

126%

nm

-

3%

Heartland, TPG

Ingram Micro / IM

6%

18.36

-30%

3%

3,024

2,492

100%

85%

.1x

-

4%

Artisan, GS, Cambiar

Avatar Holdings / AVTR

5%

21.47

-31%

7%

244

146

182%

-62%

2.0x

-

28%

Cannell, Tweedy

Natuzzi / NTZ

5%

4.61

-76%

29%

253

178

175%

63%

.2x

-

54%

Royce, Brandes

Nam Tai Electronics / NTE

4%

4.84

-21%

29%

217

22

143%

91%

.1x

-

25%

Royce, Kahn, Acadian

Comverse Tech / CMVT

3%

8.95

-27%

11%

1,808

na

107%

91%

na

-

0%

RS, Westfield, Perry

Formula Systems / FORTY

3%

12.60

-63%

29%

166

85

178%

25%

.2x

12%

69%

Emblaze, Clal Insurance

Adaptec / ADPT

2%

3.27

-31%

9%

394

14

98%

95%

.1x

-

0%

Steel, RenTech, Pzena

Conrad Industries / CNRD

2%

7.80

-38%

28%

50

38

139%

63%

.3x

-

35%

Keane Capital

Hurco / HURC

2%

18.30

-34%

12%

118

85

95%

78%

.9x

-

5%

Royce, Thomson, Pier

Ascent Media / ASCMA

1%

29.75

-26%

1%

422

129

138%

75%

.3x

-

6%

Liberty Media, Gabelli

MEMSIC / MEMS

1%

3.30

-35%

44%

79

12

118%

93%

.4x

-

11%

Still River, IDG-Accel

Callaway Golf / ELY

1%

9.74

-52%

5%

627

549

85%

55%

.6x

0%

1%

Royce, Clearbridge

Qiao Xing Universal / XING

0%

1.83

-13%

57%

134

-47

248%

202%

nm

-

64%

Shah, DKR

Crexus Investment / CXS

0%

13.66

-4%

8%

248

-36

103%

103%

nm

2%

25%

Jennison, Ruffer

PC Connection / PCCC

0%

6.75

-34%

11%

183

141

102%

94%

.1x

-

35%

DFA, AXA, FMR

© 2009-2010 by BeyondProxy LLC. All rights reserved.

www.manualofideas.com

April 21, 2010 – Page 108 of 120


Free Cash Flow

(sorted by LTM free cash flow yield) (continued)

Company / Ticker Providence Worcester / PWX Industrias Bachoco / IBA EchoStar / SATS Two Harbors Invest. / TWO Heelys / HLYS Tecumseh Products / TECUA Sycamore Networks / SCMR Miller Petroleum / MILL Cascade Microtech / CSCD TomoTherapy / TOMO Luby's / LUB GTSI / GTSI Webzen / WZEN Insmed / INSM Global Industries / GLBL Cardero Resources / CDY Maxygen / MAXY Frozen Food / FFEX Creative Tech / CREAF BRT Realty Trust / BRT Silicon Image / SIMG Market Leader / LEDR Opnext / OPXT LJ International / JADE Denison Mines / DNN Spectrum Group / SPGZ Ascent Solar / ASTI I.D. Systems / IDSY ePlus / PLUS Harvest Natural / HNR LookSmart / LOOK CONN'S / CONN China Techfaith / CNTF ExpressJet / XJT A.C. Moore Arts / ACMR Gravity / GRVY ORBCOMM / ORBC HQS Maritime / HQS Five Star Quality / FVE Volt Information / VOL Synthesis Energy / SYMX Gushan Environmental / GU Xinyuan Real Estate / XIN Myriad Pharma / MYRX Imperial Sugar / IPSU dELiA*s / DLIA A. H. Belo / AHC Acorn International / ATV Axcelis Tech / ACLS Linktone / LTON PennyMac Mortgage / PMT Qiao Xing Mobile / QXM TAT Technologies / TATT

LTM FCF Yield -1% -1% -1% -1% -2% -2% -3% -3% -4% -4% -4% -6% -6% -7% -8% -9% -9% -10% -11% -11% -13% -13% -15% -15% -16% -17% -20% -21% -22% -22% -23% -24% -26% -26% -29% -29% -32% -32% -32% -38% -38% -55% -59% -65% -84% -88% na na na na na na na

Recent Price ($) 12.35 21.44 19.72 9.20 2.53 14.40 20.03 5.10 4.70 3.56 3.93 5.62 3.03 1.15 6.36 1.34 6.72 4.70 3.73 6.57 3.56 2.09 2.33 2.83 1.49 1.78 4.04 3.04 17.46 8.54 1.10 7.97 2.60 3.88 3.92 2.10 2.19 6.05 3.05 11.61 1.05 1.15 3.93 5.09 16.34 1.77 8.37 4.89 2.22 1.69 17.45 2.90 7.88

© 2009-2010 by BeyondProxy LLC. All rights reserved.

∆ to 52-Wk Low High -22% 5% -41% 14% -27% 12% -13% 11% -36% 15% -53% 3% -6% 87% -97% 35% -44% 19% -42% 31% -17% 48% -30% 46% -21% 54% -39% 123% -22% 69% -40% 24% -29% 24% -45% 4% -45% 34% -58% 4% -42% 5% -28% 19% -28% 42% -65% 41% -28% 85% -6% 97% -21% 119% -10% 38% -33% 3% -63% 2% -20% 42% -45% 108% -49% 51% -70% 35% -52% 44% -61% 25% -43% 47% -2% 70% -58% 35% -50% 17% -49% 61% -15% 183% -16% 95% -29% 47% -61% 13% -11% 63% -89% 0% -37% 49% -86% 6% -17% 90% -9% 15% -29% 81% -36% 27%

Market Value ($mn) 60 1,072 1,673 123 70 266 570 153 67 193 110 54 120 150 724 79 218 81 257 92 269 51 207 67 506 57 108 34 144 284 19 179 113 66 97 58 93 89 109 242 51 97 298 125 199 55 172 145 231 71 292 138 70

Enter. Value ($mn) 59 974 1,290 122 10 206 126 151 34 38 109 47 -24 28 647 -15 58 77 14 84 118 0 111 82 488 83 55 -8 121 252 -6 273 2 25 70 -7 3 52 76 214 10 13 367 -19 192 14 148 -14 186 -26 -32 -126 50

Tang. Book/ MV 123% 111% 150% 148% 113% 174% 113% 190% 101% 95% 145% 179% 146% 83% 115% 144% 70% 111% 121% 140% 64% 112% 118% 117% 133% 135% 143% 161% 116% 97% 137% 192% 178% 298% 165% 108% 168% 125% 113% 116% 217% 305% 150% 134% 133% 165% 147% 133% 94% 163% 107% 277% 125%

www.manualofideas.com

NCAV/ Market Value -34% 24% 34% -63% 102% 21% 79% -130% 81% 79% -17% 83% 121% 81% 4% 79% 69% 12% 84% -62% 57% 103% 88% 107% -10% 118% 40% 138% -134% -8% 107% 113% 138% 7% 78% 95% 82% 102% -83% 82% 73% 54% 139% 109% -14% 51% 13% 110% 69% 161% 107% 259% 87%

EV / LTM Sales 2.4x .6x .7x nm .2x .3x 1.9x >9.9x .6x .2x .4x .1x nm 2.7x .7x nm 1.6x .2x .0x 5.8x .8x nm .3x .6x 6.2x .0x >9.9x nm .2x >9.9x nm .3x .0x .0x .1x nm .1x .7x .1x .1x 4.7x .1x .8x nm .4x .1x .3x nm 1.4x nm nm nm .6x

Div. Yield 1% 3% 4% 0% 11%

Insider Own. 23% 66% 56% 24% 63% 1% 29% 43% 38% 9% 28% 28% 38% 4% 15% 10% 12% 26% 39% 17% 1% 13% 40% 10% 18% 65% 40% 12% 40% 5% 9% 31% 0% 10% 2% 60% 2% 23% 12% 43% 30% 1% 0% 0% 4% 1% 17% 0% 1% 63% 1% 62% 1%

Notable Shareholders Keeley, Steinberg Royce, River Road MSD, Blue Ridge, Blum QVT, Taconic, Fortress Capital S/W, RenTech Tricap, Aegis, Roumell Third Ave, Donald Smith Prospect Energy RGM, Crosslink, Royce Soundpost, Essex Bandera, Hodges Netols, Athena, Raffles NHN Games Acadian, BlackRock Security, Alleghany Luxor Capital Conus, Lonestar, Royce Hawkshaw, Royce Raffles Nominees (Pte) Aegis, Michael Price Tocqueville, RenTech LMM, Springhouse Penn, Crosslink, Royce CEDE & Co. Korea Electric Power Afinsa Bienes Tangibles Wells Fargo, Invesco Artis, Diker, Thomson Hovde, Heartland Pabrai, Cumberland Kennedy, RenTech F&C, Lombardia, Royce RenTech, FMR, HSBC Stelliam, RenTech Glenhill, Royce, Adage Moon, Black Horse Stephens, Jennison River Road, Hound F&C, RenTech River Road, Royce Columbia Wanger RenTech, KBC, Tiger Blue Ridge, Equity Int'l First Eagle, Perry Royce, Passport T2, North Run, Steadfast Lonestar, Prescott RenTech, Northern Trust Schneider, Sterling MNC, Merry Asia Blue Ridge, Highbridge Shah, Sansar, Pope TAT Industries April 21, 2010 – Page 109 of 120


P/E Multiples

(sorted initially by P/E based on estimated EPS for next fiscal year) Recent

YTD

Market

Enter.

EV /

P/E

FY

Tang.

NCAV/

Price

Price

Value

Value

LTM

Last

This

Next

In

End

Book/

Market

Insider

Div.

($)

($mn)

($mn)

Sales

FY

FY

FY

2 Yrs

Date

MV

Value

Own.

Yield

Xinyuan Real Estate / XIN

3.93

-12%

298

367

.8x

7x

5x

4x

na

12/31/10

150%

139%

0%

-

Two Harbors Invest. / TWO

9.20

-6%

123

122

nm

11x

6x

5x

4x

12/31/09

148%

-63%

24%

-

HQS Maritime / HQS

6.05

-14%

89

52

.7x

10x

9x

6x

na

12/31/10

125%

102%

23%

-

Company / Ticker

P/E (Estimated)

17.45

2%

292

-32

nm

nm

12x

7x

6x

12/31/10

107%

107%

1%

-

Global Industries / GLBL

6.36

-11%

724

647

.7x

10x

16x

9x

6x

12/31/10

115%

4%

15%

-

Crexus Investment / CXS

13.66

-2%

248

-36

nm

nm

13x

9x

na

12/31/10

103%

103%

25%

2%

Ingram Micro / IM

18.36

5%

3,024

2,492

.1x

15x

11x

9x

9x

12/31/10

100%

85%

4%

-

CONN'S / CONN

7.97

36%

179

273

.3x

23x

13x

10x

na

1/31/11

192%

113%

31%

-

Five Star Quality / FVE

3.05

-12%

109

76

.1x

3x

13x

10x

7x

12/31/10

113%

-83%

12%

-

21.44

-7%

1,072

974

.6x

nm

16x

10x

8x

12/31/10

111%

24%

66%

3% -

PennyMac Mortgage / PMT

Industrias Bachoco / IBA Acorn International / ATV

4.89

3%

145

-14

nm

nm

12x

12x

na

12/31/10

133%

110%

0%

Comverse Tech / CMVT

8.95

-5%

1,808

na

na

32x

15x

12x

14x

1/31/06

107%

91%

0%

-

Flexsteel Industries / FLXS

15.30

50%

101

93

.3x

nm

15x

13x

14x

6/30/10

110%

74%

13%

1%

Rewards Network / DINE

14.33

13%

125

112

.5x

24x

14x

13x

na

12/31/10

62%

54%

5%

-

Gushan Environmental / GU

1.15

-13%

97

13

.1x

nm

nm

13x

na

12/31/10

305%

54%

1%

4%

Synalloy Corp. / SYNL

9.28

-1%

58

44

.4x

>99x

19x

15x

24x

12/31/10

104%

71%

18%

3%

PC Connection / PCCC

6.75

0%

183

141

.1x

nm

20x

15x

na

12/31/10

102%

94%

35%

-

Callaway Golf / ELY

9.74

29%

627

549

.6x

nm

34x

16x

na

12/31/10

85%

55%

1%

0%

L.S. Starrett / SCX

11.08

26%

74

67

.3x

nm

nm

17x

15x

6/30/10

191%

81%

19%

2%

Kaiser Aluminum / KALU

39.93

-4%

810

786

.8x

11x

24x

17x

17x

12/31/10

111%

14%

0%

2%

Cascade Microtech / CSCD

4.70

3%

67

34

.6x

nm

nm

17x

14x

12/31/10

101%

81%

38%

-

I.D. Systems / IDSY

3.04

-5%

34

-8

nm

nm

nm

20x

na

12/31/10

161%

138%

12%

-

18.30

24%

118

85

.9x

nm

nm

21x

na

10/31/10

95%

78%

5%

-

2.51

-7%

60

39

.8x

nm

50x

21x

na

12/31/10

173%

21%

12%

-

16.34

-6%

199

192

.4x

nm

1x

22x

na

9/30/10

133%

-14%

4%

0%

7.94

12%

182

142

.2x

nm

50x

23x

na

2/28/10

151%

124%

19%

-

11.70

34%

446

283

.2x

nm

29x

42x

na

12/31/10

127%

92%

2%

-

ORBCOMM / ORBC

2.19

-19%

93

3

.1x

nm

nm

44x

na

12/31/10

168%

82%

2%

-

Hardinge / HDNG

9.55

74%

111

91

.4x

nm

nm

48x

40x

12/31/10

136%

84%

3%

0%

MEMSIC / MEMS

3.30

1%

79

12

.4x

nm

nm

66x

na

12/31/10

118%

93%

11%

-

Nam Tai Electronics / NTE

4.84

-7%

217

22

.1x

>99x

>99x

69x

na

12/31/10

143%

91%

25%

-

Silicon Image / SIMG

3.56

38%

269

118

.8x

nm

nm

71x

na

12/31/10

64%

57%

1%

-

Novatel Wireless / NVTL

6.77

-15%

211

84

.2x

52x

nm

75x

na

12/31/10

99%

61%

2%

-

Hurco / HURC Century Casinos / CNTY Imperial Sugar / IPSU Audiovox / VOXX Imation / IMN

Albany Molecular / AMRI

8.40

-7%

266

168

.9x

nm

>99x

76x

na

12/31/10

111%

46%

33%

-

American Railcar / ARII

18.80

71%

401

324

.8x

26x

nm

94x

31x

12/31/10

82%

21%

1%

1%

Movado Group / MOV

13.15

35%

324

263

.7x

nm

nm

>99x

na

1/31/11

114%

87%

31%

-

EchoStar / SATS

19.72

-2%

1,673

1,290

.7x

5x

>99x

>99x

>99x

12/31/10

150%

34%

56%

-

A.C. Moore Arts / ACMR

3.92

33%

97

70

.1x

nm

nm

nm

13x

12/31/10

165%

78%

2%

-

Ascent Solar / ASTI

4.04

-24%

108

55

>9.9x

nm

nm

nm

27x

12/31/10

143%

40%

40%

-

The9 Limited / NCTY

6.95

-4%

175

-85

nm

11x

nm

nm

77x

12/31/09

169%

133%

55%

-

Integr. Electrical / IESC

5.51

-6%

80

53

.1x

nm

nm

nm

79x

9/30/10

159%

108%

2%

-

Lakes Entertainment / LACO

2.04

-19%

54

42

1.6x

15x

13x

na

na

12/31/10

146%

-22%

27%

-

Nu Horizons / NUHC

3.54

-14%

66

89

.1x

nm

35x

nm

na

2/28/10

208%

197%

5%

-

Natuzzi / NTZ

4.61

43%

253

178

.2x

nm

77x

na

na

12/31/10

175%

63%

54%

-

© 2009-2010 by BeyondProxy LLC. All rights reserved.

www.manualofideas.com

April 21, 2010 – Page 110 of 120


P/E Multiples

(sorted initially by P/E based on estimated EPS for next fiscal year) (continued)

Company / Ticker Breakwater Res. / BWLRF Insmed / INSM Qiao Xing Mobile / QXM Conrad Industries / CNRD Spectrum Group / SPGZ Miller Petroleum / MILL GTSI / GTSI ePlus / PLUS Formula Systems / FORTY Linktone / LTON China Techfaith / CNTF Kimball / KBALB LJ International / JADE TAT Technologies / TATT Cardero Resources / CDY Deswell Industries / DSWL TravelCenters / TA Creative Tech / CREAF ExpressJet / XJT dELiA*s / DLIA Volt Information / VOL Adaptec / ADPT Gencor Industries / GENC Planar Systems / PLNR Frozen Food / FFEX Duckwall-ALCO / DUCK Heelys / HLYS TomoTherapy / TOMO Tecumseh Products / TECUA Ascent Media / ASCMA A. H. Belo / AHC Opnext / OPXT Luby's / LUB Seahawk Drilling / HAWK Axcelis Tech / ACLS Maxygen / MAXY Sycamore Networks / SCMR Avatar Holdings / AVTR Providence Worcester / PWX QLT / QLTI Synthesis Energy / SYMX BRT Realty Trust / BRT Denison Mines / DNN Harvest Natural / HNR Trans World / TWMC Qiao Xing Universal / XING Ninetowns Internet / NINE Agria / GRO Webzen / WZEN LookSmart / LOOK Actions Semi / ACTS Myriad Pharma / MYRX Market Leader / LEDR

Recent Price ($) 0.38 1.15 2.90 7.80 1.78 5.10 5.62 17.46 12.60 1.69 2.60 7.92 2.83 7.88 1.34 5.08 4.81 3.73 3.88 1.77 11.61 3.27 7.62 3.50 4.70 14.60 2.53 3.56 14.40 29.75 8.37 2.33 3.93 17.76 2.22 6.72 20.03 21.47 12.35 5.76 1.05 6.57 1.49 8.54 1.80 1.83 1.78 2.17 3.03 1.10 2.38 5.09 2.09

© 2009-2010 by BeyondProxy LLC. All rights reserved.

YTD Price ∆ -5% 49% -21% 3% -5% 76% 13% 6% 14% -1% -15% -7% 16% -5% -1% 26% 9% -17% -20% -5% 16% -2% 2% 25% 42% -5% 16% -9% 23% 17% 45% 23% 7% -21% 57% 10% -4% 26% 15% 16% 13% 29% 17% 61% 19% -16% 2% -31% 5% 8% -1% 1% -1%

Market Value ($mn) 261 150 138 50 57 153 54 144 166 71 113 297 67 70 79 82 83 257 66 55 242 394 73 70 81 55 70 193 266 422 172 207 110 210 231 218 570 244 60 310 51 92 506 284 57 134 64 137 120 19 205 125 51

Enter. Value ($mn) 175 28 -126 38 83 151 47 121 85 -26 2 236 82 50 -15 40 29 14 25 14 214 14 8 36 77 104 10 38 206 129 148 111 109 132 186 58 126 146 59 122 10 84 488 252 -6 -47 -30 -35 -24 -6 -24 -19 0

EV / LTM Sales .5x 2.7x nm .3x .0x >9.9x .1x .2x .2x nm .0x .2x .6x .6x nm .3x .0x .0x .0x .1x .1x .1x .1x .2x .2x .2x .2x .2x .3x .3x .3x .3x .4x .5x 1.4x 1.6x 1.9x 2.0x 2.4x 2.9x 4.7x 5.8x 6.2x >9.9x nm nm nm nm nm nm nm nm nm

P/E Last FY 1x 1x 3x 4x 8x 9x 10x 11x 12x 14x 14x 17x 26x 36x 45x 64x nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm

P/E (Estimated) This Next In FY FY 2 Yrs na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na na nm na na na na na nm na na nm nm na na na na nm nm nm na na na nm nm na nm nm nm na na na na na na nm nm na na na na na na na na na na nm nm na na na na nm nm nm na na na na na na nm nm nm nm nm nm nm nm nm na na na nm nm na nm nm nm na na na nm na na na na na na na na nm nm nm na na na na na na nm nm na nm nm nm nm nm nm na na na

www.manualofideas.com

FY End Date 12/31/10 12/31/10 12/31/10 12/31/10 6/30/10 4/30/10 12/31/10 12/31/10 12/31/10 12/31/10 12/31/10 12/31/10 12/31/10 12/31/10 10/31/10 3/31/10 12/31/10 6/30/10 12/31/10 1/31/11 10/30/10 3/31/10 12/31/10 9/30/10 12/31/10 11/1/10 12/31/10 12/31/10 12/31/10 6/30/10 9/30/10 3/31/10 2/10/11 12/31/10 12/31/10 12/31/10 7/31/10 12/31/10 12/31/09 12/31/10 6/30/10 9/30/10 12/31/10 12/31/10 1/31/10 12/31/10 12/31/09 12/31/10 12/31/10 12/31/10 12/31/10 6/30/09 12/31/10

Tang. Book/ MV 148% 83% 277% 139% 135% 190% 179% 116% 178% 163% 178% 126% 117% 125% 144% 150% 344% 121% 298% 165% 116% 98% 131% 90% 111% 188% 113% 95% 174% 138% 147% 118% 145% 216% 94% 70% 113% 182% 123% 131% 217% 140% 133% 97% 342% 248% 212% 175% 146% 137% 134% 134% 112%

NCAV/ Market Value -1% 81% 259% 63% 118% -130% 83% -134% 25% 161% 138% 50% 107% 87% 79% 74% -193% 84% 7% 51% 82% 95% 120% 77% 12% 124% 102% 79% 21% 75% 13% 88% -17% -7% 69% 69% 79% -62% -34% 83% 73% -62% -10% -8% 269% 202% 146% 126% 121% 107% 110% 109% 103%

Insider Own. 25% 4% 62% 35% 65% 43% 28% 40% 69% 63% 0% 20% 10% 1% 10% 16% 16% 39% 10% 1% 43% 0% 52% 4% 26% 16% 63% 9% 1% 6% 17% 40% 28% 9% 1% 12% 29% 28% 23% 14% 30% 17% 18% 5% 69% 64% 39% 3% 38% 9% 0% 0% 13%

Div. Yield 12% 3% 11% 8% 1% -

April 21, 2010 – Page 111 of 120


Net Current Asset Value

(equals current assets minus total liabilities) (sorted by NCAV to market value)

Recent

Tang.

NCAV/

Price

Book/

Market

Value

Value

LTM

5-Year

($)

MV

Value

($mn)

($mn)

Sales

CAGR

Trans World / TWMC

1.80

342%

269%

57

-6

nm

-10%

-18%

Qiao Xing Mobile / QXM

2.90

277%

259%

138

-126

nm

6%

Qiao Xing Universal / XING

1.83

248%

202%

134

-47

nm

8%

Nu Horizons / NUHC

3.54

208%

197%

66

89

.1x

Linktone / LTON

1.69

163%

161%

71

-26

nm

Ninetowns Internet / NINE

1.78

212%

146%

64

-30

Xinyuan Real Estate / XIN

3.93

150%

139%

298

I.D. Systems / IDSY

3.04

161%

138%

China Techfaith / CNTF

2.60

178%

138%

The9 Limited / NCTY

6.95

169%

133%

175

Company / Ticker

Market

Enter.

EV /

Revenue Growth Last FY

LTM

Insider

Div.

Own.

Yield

-18%

69%

-

Lloyd Miller, Riley

-31%

-14%

62%

-

Shah, Sansar, Pope

-33%

-25%

64%

-

Shah, DKR

17%

1%

-20%

5%

-

Donald Smith, Lapides

33%

34%

4%

63%

-

MNC, Merry Asia

nm

-4%

3%

-10%

39%

-

Tech Pioneer, RenTech

367

.8x

66%

26%

-21%

0%

-

Blue Ridge, Equity Int'l

34

-8

nm

-6%

-62%

-62%

12%

-

Artis, Diker, Thomson

113

2

.0x

85%

46%

0%

0%

-

RenTech, FMR, HSBC

-85

nm

>99%

34%

-34%

55%

-

Martin Currie, QVT

Notable Shareholders

2.17

175%

126%

137

-35

nm

nm

-30%

-30%

3%

-

Heartland, TPG

14.60

188%

124%

55

104

.2x

4%

2%

-1%

16%

-

Heartland, Aegis, Price

Audiovox / VOXX

7.94

151%

124%

182

142

.2x

1%

2%

-17%

19%

-

Baupost, Kahn, Aegis

Webzen / WZEN

3.03

146%

121%

120

-24

nm

-10%

13%

-8%

38%

-

NHN Games

Gencor Industries / GENC

7.62

131%

120%

73

8

.1x

1%

-36%

-46%

52%

-

FMR, PNC, RBF

Spectrum Group / SPGZ

1.78

135%

118%

57

83

.0x

>99%

50%

36%

65%

-

Afinsa Bienes Tangibles

CONN'S / CONN

7.97

192%

113%

179

273

.3x

8%

-6%

-6%

31%

-

F&C, Lombardia, Royce

Acorn International / ATV

4.89

133%

110%

145

-14

nm

25%

23%

-3%

0%

-

RenTech, Northern Trust

Actions Semi / ACTS

2.38

134%

110%

205

-24

nm

-5%

-54%

-54%

0%

-

RenTech, T.Rowe

Myriad Pharma / MYRX

5.09

134%

109%

125

-19

nm

nm

-95%

-66%

0%

-

First Eagle, Perry

Integr. Electrical / IESC

5.51

159%

108%

80

53

.1x

-4%

-19%

-23%

2%

-

Gendell, Royce, Keeley

Agria / GRO Duckwall-ALCO / DUCK

17.45

107%

107%

292

-32

nm

nm

na

0%

1%

-

Blue Ridge, Highbridge

LJ International / JADE

2.83

117%

107%

67

82

.6x

19%

-10%

-20%

10%

-

CEDE & Co.

LookSmart / LOOK

1.10

137%

107%

19

-6

nm

-8%

-20%

-20%

9%

-

13.66

103%

103%

248

-36

nm

nm

na

0%

25%

2%

Market Leader / LEDR

2.09

112%

103%

51

0

nm

-13%

-38%

-38%

13%

-

LMM, Springhouse

HQS Maritime / HQS

6.05

125%

102%

89

52

.7x

28%

7%

7%

23%

-

River Road, Hound

Heelys / HLYS

2.53

113%

102%

70

10

.2x

16%

-38%

-38%

63%

-

Capital S/W, RenTech

Gravity / GRVY

2.10

108%

95%

58

-7

nm

1%

32%

23%

60%

-

Moon, Black Horse

Adaptec / ADPT

3.27

98%

95%

394

14

.1x

-22%

-21%

-37%

0%

-

Steel, RenTech, Pzena

PC Connection / PCCC

6.75

102%

94%

183

141

.1x

3%

-10%

-11%

35%

-

DFA, AXA, FMR Still River, IDG-Accel

PennyMac Mortgage / PMT

Crexus Investment / CXS

Kennedy, RenTech Jennison, Ruffer

3.30

118%

93%

79

12

.4x

33%

41%

41%

11%

-

11.70

127%

92%

446

283

.2x

7%

-17%

-17%

2%

-

Artisan, Private, LSV

Comverse Tech / CMVT

8.95

107%

91%

1,808

na

na

1%

25%

24%

0%

-

RS, Westfield, Perry

Nam Tai Electronics / NTE

4.84

143%

91%

217

22

.1x

-5%

-34%

-35%

25%

-

Royce, Kahn, Acadian

Opnext / OPXT

2.33

118%

88%

207

111

.3x

32%

12%

6%

40%

-

TAT Technologies / TATT

7.88

125%

87%

70

50

.6x

20%

-20%

-20%

1%

11%

Movado Group / MOV

13.15

114%

87%

324

263

.7x

-2%

-18%

-18%

31%

-

Ingram Micro / IM

18.36

100%

85%

3,024

2,492

.1x

3%

-14%

-14%

4%

-

Artisan, GS, Cambiar

Hardinge / HDNG

9.55

136%

84%

111

91

.4x

-2%

-38%

-38%

3%

0%

Royce, Aegis, Portola

Creative Tech / CREAF

3.73

121%

84%

257

14

.0x

-11%

-37%

-69%

39%

-

Raffles Nominees (Pte)

GTSI / GTSI

5.62

179%

83%

54

47

.1x

-7%

-7%

-7%

28%

-

Netols, Athena, Raffles

MEMSIC / MEMS Imation / IMN

QLT / QLTI Volt Information / VOL ORBCOMM / ORBC

Penn, Crosslink, Royce TAT Industries Royce, Southpoint

5.76

131%

83%

310

122

2.9x

-26%

-13%

-13%

14%

-

Axial, Black Horse

11.61

116%

82%

242

214

.1x

9%

6%

-8%

43%

-

River Road, Royce

2.19

168%

82%

93

3

.1x

20%

1%

1%

2%

-

Stephens, Jennison

© 2009-2010 by BeyondProxy LLC. All rights reserved.

www.manualofideas.com

April 21, 2010 – Page 112 of 120


Net Current Asset Value

Company / Ticker Insmed / INSM L.S. Starrett / SCX Cascade Microtech / CSCD Cardero Resources / CDY TomoTherapy / TOMO Sycamore / SCMR Hurco / HURC A.C. Moore Arts / ACMR Planar Systems / PLNR Ascent Media / ASCMA Flexsteel Industries / FLXS Deswell Industries / DSWL Synthesis Energy / SYMX Synalloy Corp. / SYNL Axcelis Tech / ACLS Maxygen / MAXY Conrad Industries / CNRD Natuzzi / NTZ Novatel Wireless / NVTL Silicon Image / SIMG Callaway Golf / ELY Rewards Network / DINE Gushan Environmental / GU dELiA*s / DLIA Kimball / KBALB Albany Molecular / AMRI Ascent Solar / ASTI EchoStar / SATS Formula Systems / FORTY Industrias Bachoco / IBA Tecumseh / TECUA Century Casinos / CNTY American Railcar / ARII Kaiser Aluminum / KALU A. H. Belo / AHC Frozen Food / FFEX ExpressJet / XJT Global Industries / GLBL Breakwater Res. / BWLRF Seahawk Drilling / HAWK Harvest Natural / HNR Denison Mines / DNN Imperial Sugar / IPSU Luby's / LUB Lakes Entertain. / LACO Providence Wor’ster / PWX Avatar Holdings / AVTR BRT Realty Trust / BRT Two Harbors Invest. / TWO Five Star Quality / FVE Miller Petroleum / MILL ePlus / PLUS TravelCenters / TA

Recent Price ($) 1.15 11.08 4.70 1.34 3.56 20.03 18.30 3.92 3.50 29.75 15.30 5.08 1.05 9.28 2.22 6.72 7.80 4.61 6.77 3.56 9.74 14.33 1.15 1.77 7.92 8.40 4.04 19.72 12.60 21.44 14.40 2.51 18.80 39.93 8.37 4.70 3.88 6.36 0.38 17.76 8.54 1.49 16.34 3.93 2.04 12.35 21.47 6.57 9.20 3.05 5.10 17.46 4.81

(equals current assets minus total liabilities) (sorted by NCAV to market value) (continued) Tang. Book/ MV 83% 191% 101% 144% 95% 113% 95% 165% 90% 138% 110% 150% 217% 104% 94% 70% 139% 175% 99% 64% 85% 62% 305% 165% 126% 111% 143% 150% 178% 111% 174% 173% 82% 111% 147% 111% 298% 115% 148% 216% 97% 133% 133% 145% 146% 123% 182% 140% 148% 113% 190% 116% 344%

© 2009-2010 by BeyondProxy LLC. All rights reserved.

NCAV/ Market Value 81% 81% 81% 79% 79% 79% 78% 78% 77% 75% 74% 74% 73% 71% 69% 69% 63% 63% 61% 57% 55% 54% 54% 51% 50% 46% 40% 34% 25% 24% 21% 21% 21% 14% 13% 12% 7% 4% -1% -7% -8% -10% -14% -17% -22% -34% -62% -62% -63% -83% -130% -134% -193%

Market Value ($mn) 150 74 67 79 193 570 118 97 70 422 101 82 51 58 231 218 50 253 211 269 627 125 97 55 297 266 108 1,673 166 1,072 266 60 401 810 172 81 66 724 261 210 284 506 199 110 54 60 244 92 123 109 153 144 83

Enter. Value ($mn) 28 67 34 -15 38 126 85 70 36 129 93 40 10 44 186 58 38 178 84 118 549 112 13 14 236 168 55 1,290 85 974 206 39 324 786 148 77 25 647 175 132 252 488 192 109 42 59 146 84 122 76 151 121 29

EV / LTM Sales 2.7x .3x .6x nm .2x 1.9x .9x .1x .2x .3x .3x .3x 4.7x .4x 1.4x 1.6x .3x .2x .2x .8x .6x .5x .1x .1x .2x .9x >9.9x .7x .2x .6x .3x .8x .8x .8x .3x .2x .0x .7x .5x .5x >9.9x 6.2x .4x .4x 1.6x 2.4x 2.0x 5.8x nm .1x >9.9x .2x .0x

Revenue Growth 5-Year Last FY LTM CAGR >99% -11% -11% 3% -16% -29% -4% -30% -30% nm na 0% 29% -20% -20% 9% -42% 14% -2% -59% -57% -1% -12% -12% -7% -33% -29% nm -22% -22% -4% -20% -18% 6% -8% -32% nm >99% >99% 1% -38% -38% -24% -47% -47% 17% -64% -64% 31% -25% -25% -3% 5% -18% 27% 5% 5% -3% -45% -45% 0% -15% -15% -9% -13% -13% 30% -58% -58% 7% 4% 4% 3% -11% -19% 3% -14% -14% nm 0% 0% 2% -11% -12% 7% -7% -27% 12% 10% 23% -4% -26% -24% 7% -6% -6% 4% -48% -48% 1% -35% -35% -8% -19% -19% -4% -24% -24% -15% -48% -48% 15% -15% -15% 15% 56% 23% nm -57% 0% -75% na 0% >99% -36% -36% -8% -12% 21% 0% -8% -12% 8% 8% 8% -1% -19% -19% -26% -33% -33% -4% -35% -42% nm na 0% 15% 9% 9% -4% >99% 53% 16% -18% -15% 12% -39% -39%

www.manualofideas.com

Insider Own. 4% 19% 38% 10% 9% 29% 5% 2% 4% 6% 13% 16% 30% 18% 1% 12% 35% 54% 2% 1% 1% 5% 1% 1% 20% 33% 40% 56% 69% 66% 1% 12% 1% 0% 17% 26% 10% 15% 25% 9% 5% 18% 4% 28% 27% 23% 28% 17% 24% 12% 43% 40% 16%

Div. Yield 2% 1% 8% 3% 0% 4% 3% 12% 3% 1% 2% 0% 1% -

Notable Shareholders Acadian, BlackRock Royce, Gabelli RGM, Crosslink, Royce Luxor Capital Soundpost, Essex Third Ave, Don. Smith Royce, Thomson, Pier Glenhill, Royce, Adage Royce, RenTech, DFA Liberty Media, Gabelli Perritt, Towle, Royce Royce, RenTech Columbia Wanger Royce, Gendell Schneider, Sterling Conus, Lonestar, Royce Keane Capital Royce, Brandes Royce, Kestrel Tocqueville, RenTech Royce, Clearbridge Elkhorn, WC, RenTech RenTech, KBC, Tiger T2, Steadfast Barclays, DFA Advisory, DFA, Royce Wells Fargo, Invesco MSD, Blue Ridge, Blum Emblaze, Clal Insur. Royce, River Road Tricap, Aegis, Roumell Beach, Perritt Icahn, Advisory, DFA Advisory, GS, Third Ave Lonestar, Prescott Hawkshaw, Royce Stelliam, RenTech Security, Alleghany Dundee Corp. Chilton, MHR, Pennant Pabrai, Cumberland Korea Electric Power Royce, Passport Bandera, Hodges Key Colony, Par Keeley, Steinberg Cannell, Tweedy Aegis, Michael Price QVT, Taconic, Fortress F&C, RenTech Prospect Energy Hovde, Heartland RenTech, Leucadia, GS

April 21, 2010 – Page 113 of 120


Percentile Rank within Industry

(sorted by LTM EBIT margin rank) Percentile Rank within Industry

Company / Ticker

Industry

Breakwater Res. / BWLRF

Gold & Silver

LTM EBIT

Tang.

NCAV/

Book/

Market

Insider

MV

Value

Own.

Notable Shareholders

25%

Dundee Corp.

Rev. Growth

EPS Growth

5-Yr

LTM

LTM

Est.

Margin

67

83

44

na

90

148%

-1%

Imperial Sugar / IPSU

Food Processing

10

82

99

na

89

133%

-14%

4%

Royce, Passport

Gravity / GRVY

Software & Programming

27

83

95

na

81

108%

95%

60%

Moon, Black Horse

Qiao Xing Mobile / QXM

Comms Services

44

36

17

na

74

277%

259%

62%

Shah, Sansar, Pope

Conrad Industries / CNRD

Water Transportation

85

23

33

na

74

139%

63%

35%

Keane Capital

Xinyuan Real Estate / XIN

Construction Services

95

26

80

97

73

150%

139%

0%

Blue Ridge, Equity Int'l

Kaiser Aluminum / KALU

Metal Mining

26

14

96

na

72

111%

14%

0%

Advisory, GS, Third Ave

Webzen / WZEN

Computer Services

8

47

29

na

70

146%

121%

38%

NHN Games

Comverse Tech / CMVT

Software & Programming

26

83

95

73

66

107%

91%

0%

RS, Westfield, Perry

Industrias Bachoco / IBA

Fish/Livestock

62

83

14

na

64

111%

24%

66%

Royce, River Road

China Techfaith / CNTF

Comms Equipment

97

62

27

na

62

178%

138%

0%

RenTech, FMR, HSBC

American Railcar / ARII

Railroads

35

7

30

64

61

82%

21%

1%

Icahn, Advisory, DFA

Rewards Network / DINE

Business Services

9

38

59

64

60

62%

54%

5%

Elkhorn, WC, RenTech

ePlus / PLUS

Software & Programming

70

35

35

na

56

116%

-134%

40%

Hovde, Heartland

CONN'S / CONN

Retail (technology)

51

50

25

43

55

192%

113%

31%

F&C, Lombardia, Royce

Flexsteel Industries / FLXS

Furniture & Fixtures

15

31

98

na

55

110%

74%

13%

Perritt, Towle, Royce

Qiao Xing Universal / XING

Comms Services

50

23

17

na

54

248%

202%

64%

Shah, DKR

TAT Technologies / TATT

Misc. Capital Goods

76

28

25

na

54

125%

87%

1%

TAT Industries

Duckwall-ALCO / DUCK

Retail (dep't & discount)

38

59

92

na

53

188%

124%

16%

Heartland, Aegis, Price

Ingram Micro / IM

Computer Hardware

33

36

93

47

53

100%

85%

4%

Artisan, GS, Cambiar

Novatel Wireless / NVTL

Comms Equipment

82

69

98

71

53

99%

61%

2%

Royce, Kestrel

Nam Tai Electronics / NTE

Electronic Instruments

13

14

21

na

52

143%

91%

25%

Royce, Kahn, Acadian

GTSI / GTSI

Computer Hardware

11

48

37

na

52

179%

83%

28%

Netols, Athena, Raffles

Kimball / KBALB

Furniture & Fixtures

32

30

na

na

52

126%

50%

20%

Barclays, DFA

EchoStar / SATS

Broadcasting & Cable

29

40

93

12

52

150%

34%

56%

MSD, Blue Ridge, Blum

PC Connection / PCCC

Retail (online)

33

42

19

na

51

102%

94%

35%

DFA, AXA, FMR

Integr. Electrical / IESC

Construction Services

14

25

na

na

50

159%

108%

2%

Gendell, Royce, Keeley

Nu Horizons / NUHC

Electronic Instruments

71

28

2

82

49

208%

197%

5%

Donald Smith, Lapides

Deswell Industries / DSWL

Chemicals - Plastics

45

16

83

na

49

150%

74%

16%

Royce, RenTech

TravelCenters / TA

Retail (specialty)

61

12

22

na

49

344%

-193%

16%

RenTech, Leucadia, GS River Road, Royce

Volt Information / VOL

Business Services

52

46

93

na

48

116%

82%

43%

MEMSIC / MEMS

Semiconductors

86

89

86

na

47

118%

93%

11%

Still River, IDG-Accel

Callaway Golf / ELY

Recreational Products

24

35

16

43

47

85%

55%

1%

Royce, Clearbridge

Imation / IMN

Computer Services

47

33

38

na

46

127%

92%

2%

Artisan, Private, LSV

Natuzzi / NTZ

Furniture & Fixtures

17

31

73

78

46

175%

63%

54%

Royce, Brandes

Lakes Entertainment / LACO

Casinos & Gaming

51

73

89

64

46

146%

-22%

27%

Key Colony, Par

Providence Worcester / PWX

Railroads

20

29

2

na

44

123%

-34%

23%

Keeley, Steinberg

Trans World / TWMC

Business Services

9

31

67

na

43

342%

269%

69%

Lloyd Miller, Riley

A.C. Moore Arts / ACMR

Retail (specialty)

20

39

58

na

43

165%

78%

2%

Glenhill, Royce, Adage

Planar Systems / PLNR

Electronic Instruments

11

18

84

na

43

90%

77%

4%

Royce, RenTech, DFA

Frozen Food / FFEX

Trucking

15

24

na

na

43

111%

12%

26%

Hawkshaw, Royce

dELiA*s / DLIA

Retail (apparel)

48

68

14

na

42

165%

51%

1%

T2, North Run, Steadfast

Audiovox / VOXX

Comms Equipment

27

33

na

na

41

151%

124%

19%

Baupost, Kahn, Aegis

ORBCOMM / ORBC

Comms Services

76

64

57

na

41

168%

82%

2%

Stephens, Jennison

L.S. Starrett / SCX

Misc. Capital Goods

31

19

10

na

41

191%

81%

19%

Royce, Gabelli

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April 21, 2010 – Page 114 of 120


Percentile Rank within Industry

Company / Ticker Hurco / HURC Albany Molecular / AMRI LookSmart / LOOK Luby's / LUB Hardinge / HDNG Gencor Industries / GENC Heelys / HLYS Global Industries / GLBL LJ International / JADE Five Star Quality / FVE Spectrum Group / SPGZ Cascade Microtech / CSCD Linktone / LTON Creative Tech / CREAF A. H. Belo / AHC Seahawk Drilling / HAWK TomoTherapy / TOMO Acorn International / ATV Actions Semi / ACTS Movado Group / MOV The9 Limited / NCTY Synalloy Corp. / SYNL Century Casinos / CNTY Gushan Environmental / GU HQS Maritime / HQS Adaptec / ADPT Opnext / OPXT Formula Systems / FORTY PennyMac Mortgage / PMT Silicon Image / SIMG Sycamore Networks / SCMR ExpressJet / XJT Avatar Holdings / AVTR Ascent Media / ASCMA Tecumseh Products / TECUA Maxygen / MAXY Market Leader / LEDR Axcelis Tech / ACLS I.D. Systems / IDSY Agria / GRO QLT / QLTI Insmed / INSM Denison Mines / DNN Miller Petroleum / MILL Crexus Investment / CXS BRT Realty Trust / BRT Synthesis Energy / SYMX Ninetowns Internet / NINE Ascent Solar / ASTI Cardero Resources / CDY Harvest Natural / HNR Myriad Pharma / MYRX Two Harbors Invest. / TWO

(sorted by LTM EBIT margin rank) (continued)

Industry Technical Instruments Biotechnology & Drugs Computer Services Restaurants Misc. Capital Goods Construction Machinery Footwear Oil Well Services Jewelry & Silverware Healthcare Facilities Misc. Financial Services Technical Instruments Computer Services Computer Peripherals Printing & Publishing Oil Well Services Medical Equipment Appliances & Tools Semiconductors Jewelry & Silverware Business Services Construction Supplies Casinos & Gaming Oil & Gas - Integrated Fish/Livestock Computer Storage Semiconductors Software & Programming Investment Services Semiconductors Comms Equipment Airline Real Estate Operations Broadcasting & Cable Misc. Capital Goods Biotechnology & Drugs Real Estate Operations Semiconductors Comms Equipment Crops Biotechnology & Drugs Biotechnology & Drugs Metal Mining Oil & Gas Operations Investment Services Real Estate Operations Oil & Gas Operations Software & Programming Semiconductors Gold & Silver Oil & Gas Operations Biotechnology & Drugs Investment Services

© 2009-2010 by BeyondProxy LLC. All rights reserved.

Percentile Rank within Industry Rev. Growth EPS Growth LTM EBIT 5-Yr LTM LTM Est. Margin 19 4 16 na 40 33 36 12 34 39 11 27 74 82 38 23 40 3 na 38 20 12 55 na 37 26 8 9 na 36 69 12 57 na 36 67 35 95 na 36 74 28 91 na 35 67 74 na 2 34 98 88 23 na 33 15 17 80 na 33 86 68 90 na 31 8 2 8 na 31 10 30 24 na 31 na na na na 31 84 28 42 90 29 81 56 95 na 28 13 5 18 na 28 19 31 na na 28 99 15 10 0 27 26 12 21 na 27 47 50 96 90 24 84 4 11 na 23 83 72 69 90 21 4 13 4 na 20 85 70 na 60 20 48 21 86 na 18 na na na 24 16 17 8 na na 16 53 78 30 na 15 6 7 84 na 15 2 15 79 na 15 na 25 54 na 14 15 23 11 na 14 72 3 7 na 12 7 12 45 na 11 3 8 66 na 11 13 3 10 na 10 na 18 3 na 8 3 38 57 na 8 99 41 na na 8 100 14 44 na 7 14 91 na na 5 na na na 22 4 15 10 0 na 4 na 100 73 na 3 15 43 na na 2 na 60 39 na na na na 99 na na 0 na 81 na na na 3 22 na na na na na na na www.manualofideas.com

Tang. Book/ MV 95% 111% 137% 145% 136% 131% 113% 115% 117% 113% 135% 101% 163% 121% 147% 216% 95% 133% 134% 114% 169% 104% 173% 305% 125% 98% 118% 178% 107% 64% 113% 298% 182% 138% 174% 70% 112% 94% 161% 175% 131% 83% 133% 190% 103% 140% 217% 212% 143% 144% 97% 134% 148%

NCAV/ Market Value 78% 46% 107% -17% 84% 120% 102% 4% 107% -83% 118% 81% 161% 84% 13% -7% 79% 110% 110% 87% 133% 71% 21% 54% 102% 95% 88% 25% 107% 57% 79% 7% -62% 75% 21% 69% 103% 69% 138% 126% 83% 81% -10% -130% 103% -62% 73% 146% 40% 79% -8% 109% -63%

Insider Own. 5% 33% 9% 28% 3% 52% 63% 15% 10% 12% 65% 38% 63% 39% 17% 9% 9% 0% 0% 31% 55% 18% 12% 1% 23% 0% 40% 69% 1% 1% 29% 10% 28% 6% 1% 12% 13% 1% 12% 3% 14% 4% 18% 43% 25% 17% 30% 39% 40% 10% 5% 0% 24%

Notable Shareholders Royce, Thomson, Pier Advisory, DFA, Royce Kennedy, RenTech Bandera, Hodges Royce, Aegis, Portola FMR, PNC, RBF Capital S/W, RenTech Security, Alleghany CEDE & Co. F&C, RenTech Afinsa Bienes Tangibles RGM, Crosslink, Royce MNC, Merry Asia Raffles Nominees (Pte) Lonestar, Prescott Chilton, MHR, Pennant Soundpost, Essex RenTech, Northern Trust RenTech, T.Rowe Royce, Southpoint Martin Currie, QVT Royce, Gendell Beach, Perritt RenTech, KBC, Tiger River Road, Hound Steel, RenTech, Pzena Penn, Crosslink, Royce Emblaze, Clal Insurance Blue Ridge, Highbridge Tocqueville, RenTech Third Ave, Donald Smith Stelliam, RenTech Cannell, Tweedy Liberty Media, Gabelli Tricap, Aegis, Roumell Conus, Lonestar, Royce LMM, Springhouse Schneider, Sterling Artis, Diker, Thomson Heartland, TPG Axial, Black Horse Acadian, BlackRock Korea Electric Power Prospect Energy Jennison, Ruffer Aegis, Michael Price Columbia Wanger Tech Pioneer, RenTech Wells Fargo, Invesco Luxor Capital Pabrai, Cumberland First Eagle, Perry QVT, Taconic, Fortress April 21, 2010 – Page 115 of 120


Insider Buying and Ownership Recent

(sorted by number of buys minus sells in past six months, then by insider ownership) Market

Enter.

Tang.

NCAV/

Price

Insider

Insider

Insider

Value

Value

Book/

Market

Div.

LTM

($)

Buys

Sales

Own.

($mn)

($mn)

MV

Value

Yield

Sales

Notable Shareholders

Adaptec / ADPT

3.27

35

8

0%

394

14

98%

95%

-

.1x

Steel, RenTech, Pzena

Trans World / TWMC

1.80

20

4

69%

57

-6

342%

269%

-

nm

Lloyd Miller, Riley

Crexus Investment / CXS

13.66

8

-

25%

248

-36

103%

103%

2%

nm

Jennison, Ruffer

Imation / IMN

11.70

8

-

2%

446

283

127%

92%

-

.2x

Artisan, Private, LSV

Luby's / LUB

3.93

6

-

28%

110

109

145%

-17%

-

.4x

Bandera, Hodges

QLT / QLTI

5.76

8

2

14%

310

122

131%

83%

-

2.9x

Axial, Black Horse

Synthesis Energy / SYMX

1.05

4

-

30%

51

10

217%

73%

-

4.7x

Columbia Wanger

PennyMac Mortgage / PMT

Company / Ticker

Last Six Months

EV /

17.45

4

-

1%

292

-32

107%

107%

-

nm

CONN'S / CONN

7.97

3

-

31%

179

273

192%

113%

-

.3x

F&C, Lombardia, Royce

Market Leader / LEDR

2.09

3

-

13%

51

0

112%

103%

-

nm

LMM, Springhouse Artis, Diker, Thomson

Blue Ridge, Highbridge

3.04

4

1

12%

34

-8

161%

138%

-

nm

14.40

3

-

1%

266

206

174%

21%

-

.3x

Tricap, Aegis, Roumell

1.78

2

-

65%

57

83

135%

118%

-

.0x

Afinsa Bienes Tangibles

18.30

2

-

5%

118

85

95%

78%

-

.9x

Royce, Thomson, Pier

GTSI / GTSI

5.62

1

-

28%

54

47

179%

83%

-

.1x

Netols, Athena, Raffles

Two Harbors Invest. / TWO

9.20

1

-

24%

123

122

148%

-63%

-

nm

QVT, Taconic, Fortress

Ascent Media / ASCMA

29.75

1

-

6%

422

129

138%

75%

-

.3x

Liberty Media, Gabelli

Myriad Pharma / MYRX

5.09

1

-

0%

125

-19

134%

109%

-

nm

First Eagle, Perry

Formula Systems / FORTY

12.60

-

-

69%

166

85

178%

25%

12%

.2x

Emblaze, Clal Insurance

Industrias Bachoco / IBA

21.44

-

-

66%

1,072

974

111%

24%

3%

.6x

Royce, River Road

1.83

-

-

64%

134

-47

248%

202%

-

nm

Shah, DKR

Linktone / LTON

1.69

-

-

63%

71

-26

163%

161%

-

nm

MNC, Merry Asia

Qiao Xing Mobile / QXM

2.90

-

-

62%

138

-126

277%

259%

-

nm

Shah, Sansar, Pope

Gravity / GRVY

2.10

-

-

60%

58

-7

108%

95%

-

nm

Moon, Black Horse

EchoStar / SATS

I.D. Systems / IDSY Tecumseh Products / TECUA Spectrum Group / SPGZ Hurco / HURC

Qiao Xing Universal / XING

19.72

-

-

56%

1,673

1,290

150%

34%

-

.7x

MSD, Blue Ridge, Blum

The9 Limited / NCTY

6.95

-

-

55%

175

-85

169%

133%

-

nm

Martin Currie, QVT

Natuzzi / NTZ

4.61

-

-

54%

253

178

175%

63%

-

.2x

Royce, Brandes

Gencor Industries / GENC

7.62

-

-

52%

73

8

131%

120%

-

.1x

FMR, PNC, RBF

Volt Information / VOL

11.61

-

-

43%

242

214

116%

82%

-

.1x

River Road, Royce

Miller Petroleum / MILL

5.10

-

-

43%

153

151

190%

-130%

-

>9.9x

Opnext / OPXT

2.33

-

-

40%

207

111

118%

88%

-

.3x

Penn, Crosslink, Royce

Creative Tech / CREAF

3.73

-

-

39%

257

14

121%

84%

-

.0x

Raffles Nominees (Pte)

Ninetowns Internet / NINE

1.78

-

-

39%

64

-30

212%

146%

-

nm

Tech Pioneer, RenTech

Webzen / WZEN

3.03

-

-

38%

120

-24

146%

121%

-

nm

NHN Games

Conrad Industries / CNRD

7.80

-

-

35%

50

38

139%

63%

-

.3x

Keane Capital

Movado Group / MOV

13.15

-

-

31%

324

263

114%

87%

-

.7x

Sycamore Networks / SCMR

20.03

-

-

29%

570

126

113%

79%

-

1.9x

0.38

-

-

25%

261

175

148%

-1%

-

.5x

Breakwater Res. / BWLRF

Prospect Energy

Royce, Southpoint Third Ave, Donald Smith Dundee Corp.

4.84

-

-

25%

217

22

143%

91%

-

.1x

12.35

-

-

23%

60

59

123%

-34%

1%

2.4x

Keeley, Steinberg

HQS Maritime / HQS

6.05

-

-

23%

89

52

125%

102%

-

.7x

River Road, Hound

Kimball / KBALB

7.92

-

-

20%

297

236

126%

50%

3%

.2x

Barclays, DFA

Audiovox / VOXX

7.94

-

-

19%

182

142

151%

124%

-

.2x

Baupost, Kahn, Aegis

L.S. Starrett / SCX

11.08

-

-

19%

74

67

191%

81%

2%

.3x

Royce, Gabelli

1.49

-

-

18%

506

488

133%

-10%

-

6.2x

Nam Tai Electronics / NTE Providence Worcester / PWX

Denison Mines / DNN

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Royce, Kahn, Acadian

Korea Electric Power

April 21, 2010 – Page 116 of 120


Insider Buying and Ownership

Company / Ticker Synalloy Corp. / SYNL BRT Realty Trust / BRT Deswell Industries / DSWL Duckwall-ALCO / DUCK Five Star Quality / FVE Century Casinos / CNTY MEMSIC / MEMS Cardero Resources / CDY LJ International / JADE LookSmart / LOOK Rewards Network / DINE Nu Horizons / NUHC Insmed / INSM Hardinge / HDNG Agria / GRO Novatel Wireless / NVTL ORBCOMM / ORBC A.C. Moore Arts / ACMR Integr. Electrical / IESC dELiA*s / DLIA Gushan Environmental / GU American Railcar / ARII TAT Technologies / TATT Silicon Image / SIMG Axcelis Tech / ACLS Acorn International / ATV Comverse Tech / CMVT Xinyuan Real Estate / XIN China Techfaith / CNTF Actions Semi / ACTS ePlus / PLUS Cascade Microtech / CSCD Lakes Entertainment / LACO TravelCenters / TA Flexsteel Industries / FLXS Imperial Sugar / IPSU Planar Systems / PLNR PC Connection / PCCC Frozen Food / FFEX Albany Molecular / AMRI A. H. Belo / AHC Callaway Golf / ELY Avatar Holdings / AVTR Global Industries / GLBL TomoTherapy / TOMO ExpressJet / XJT Maxygen / MAXY Ascent Solar / ASTI Seahawk Drilling / HAWK Kaiser Aluminum / KALU Ingram Micro / IM Heelys / HLYS Harvest Natural / HNR

Recent Price ($) 9.28 6.57 5.08 14.60 3.05 2.51 3.30 1.34 2.83 1.10 14.33 3.54 1.15 9.55 2.17 6.77 2.19 3.92 5.51 1.77 1.15 18.80 7.88 3.56 2.22 4.89 8.95 3.93 2.60 2.38 17.46 4.70 2.04 4.81 15.30 16.34 3.50 6.75 4.70 8.40 8.37 9.74 21.47 6.36 3.56 3.88 6.72 4.04 17.76 39.93 18.36 2.53 8.54

(sorted by number of buys minus number of sells in past six months) (continued)

Last Six Months Insider Insider Buys Sales 1 2 1 2 1 1 1 1 1 2 2 3 1 4 3 4 4 4 5 6 13 13 14 29 2 33 54

© 2009-2010 by BeyondProxy LLC. All rights reserved.

Insider Own. 18% 17% 16% 16% 12% 12% 11% 10% 10% 9% 5% 5% 4% 3% 3% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 40% 38% 27% 16% 13% 4% 4% 35% 26% 33% 17% 1% 28% 15% 9% 10% 12% 40% 9% 0% 4% 63% 5%

Market Value ($mn) 58 92 82 55 109 60 79 79 67 19 125 66 150 111 137 211 93 97 80 55 97 401 70 269 231 145 1,808 298 113 205 144 67 54 83 101 199 70 183 81 266 172 627 244 724 193 66 218 108 210 810 3,024 70 284

Enter. Value ($mn) 44 84 40 104 76 39 12 -15 82 -6 112 89 28 91 -35 84 3 70 53 14 13 324 50 118 186 -14 na 367 2 -24 121 34 42 29 93 192 36 141 77 168 148 549 146 647 38 25 58 55 132 786 2,492 10 252

www.manualofideas.com

Tang. Book/ MV 104% 140% 150% 188% 113% 173% 118% 144% 117% 137% 62% 208% 83% 136% 175% 99% 168% 165% 159% 165% 305% 82% 125% 64% 94% 133% 107% 150% 178% 134% 116% 101% 146% 344% 110% 133% 90% 102% 111% 111% 147% 85% 182% 115% 95% 298% 70% 143% 216% 111% 100% 113% 97%

NCAV/ Market Value 71% -62% 74% 124% -83% 21% 93% 79% 107% 107% 54% 197% 81% 84% 126% 61% 82% 78% 108% 51% 54% 21% 87% 57% 69% 110% 91% 139% 138% 110% -134% 81% -22% -193% 74% -14% 77% 94% 12% 46% 13% 55% -62% 4% 79% 7% 69% 40% -7% 14% 85% 102% -8%

Div. Yield 3% 8% 0% 4% 1% 11% 1% 0% 0% 2% -

EV / LTM Sales .4x 5.8x .3x .2x .1x .8x .4x nm .6x nm .5x .1x 2.7x .4x nm .2x .1x .1x .1x .1x .1x .8x .6x .8x 1.4x nm na .8x .0x nm .2x .6x 1.6x .0x .3x .4x .2x .1x .2x .9x .3x .6x 2.0x .7x .2x .0x 1.6x >9.9x .5x .8x .1x .2x >9.9x

Notable Shareholders Royce, Gendell Aegis, Michael Price Royce, RenTech Heartland, Aegis, Price F&C, RenTech Beach, Perritt Still River, IDG-Accel Luxor Capital CEDE & Co. Kennedy, RenTech Elkhorn, WC, RenTech Donald Smith, Lapides Acadian, BlackRock Royce, Aegis, Portola Heartland, TPG Royce, Kestrel Stephens, Jennison Glenhill, Royce, Adage Gendell, Royce, Keeley T2, North Run, Steadfast RenTech, KBC, Tiger Icahn, Advisory, DFA TAT Industries Tocqueville, RenTech Schneider, Sterling RenTech, Northern Trust RS, Westfield, Perry Blue Ridge, Equity Int'l RenTech, FMR, HSBC RenTech, T.Rowe Hovde, Heartland RGM, Crosslink, Royce Key Colony, Par RenTech, Leucadia, GS Perritt, Towle, Royce Royce, Passport Royce, RenTech, DFA DFA, AXA, FMR Hawkshaw, Royce Advisory, DFA, Royce Lonestar, Prescott Royce, Clearbridge Cannell, Tweedy Security, Alleghany Soundpost, Essex Stelliam, RenTech Conus, Lonestar, Royce Wells Fargo, Invesco Chilton, MHR, Pennant Advisory, GS, Third Ave Artisan, GS, Cambiar Capital S/W, RenTech Pabrai, Cumberland April 21, 2010 – Page 117 of 120


About PORTFOLIO MANAGER’S REVIEW © 2009-‘10 by BeyondProxy LLC. All rights reserved. All content is protected by U.S. and international copyright laws and is the property of BeyondProxy and any third-party providers of such content. The U.S. Copyright Act imposes liability of up to $150,000 for each act of willful infringement of a copyright. PORTFOLIO MANAGER’S REVIEW is published monthly by BeyondProxy. Subscribers may download content to their computer and store and print materials for their individual use only. Any other reproduction, transmission, display or editing of the content by any means, mechanical or electronic, without the prior written permission of BeyondProxy is strictly prohibited. Terms of use: Use of this newsletter and its content is governed by the Terms of Use described in detail at www.manualofideas.com. See a summary of key terms below. Contact information: For all customer service, subscription or other inquiries, please visit www.manualofideas.com, or contact us at BeyondProxy, 427 N Tatnall St #27878, Wilmington, DE 19801-2230; telephone: 415-412-8059. Editor-in-chief: John Mihaljevic, CFA. Annual subscription price: $999. To subscribe, visit www.manualofideas.com/pmr.html

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The Manual of Ideas: Ben Graham-Style Deep Value Report  

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