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What We ve Been Reading In his April 2011 commentary, Bill Miller offered a starkly different perspective on oil and commodity prices than Jeremy Grantham, whom we highlighted last month. Miller writes, In the current market, it appears that no matter what happens, it is bullish for oil. If the dollar weakens, oil goes up because oil is denominated in dollars, and a weaker dollar leads to a higher oil price. If the U.S. economy slows, that is bullish for oil, because that means the Fed would continue to pump liquidity into the economy via lower interest rates, and excess liquidity means higher oil prices. If the U.S. economy strengthens, that is bullish, because it means more demand for oil. Emerging-market growth is unequivocally bullish for oil, since it means more demand. Low per-capita use of oil, such as in China, is bullish since it is bound to go higher. High per-capita use is bullish because it means lots of demand. There is a price at which demand destruction will begin which will halt, and then reverse the price. No one knows what that price is, but it is a lot closer with Brent crude up 50% and West Texas Intermediate up nearly 40% since early November. Read his full commentary here. EnergyBiz Magazine s May / June issue focuses on Nuclear: The Next Act after what it terms a seismic setback for the industry post-fukushima. As The New York Times reported, support for nuclear power plant construction in the U.S. dropped to 43% following Fukushima, which registered just below the level of a similar poll conducted in 1979 after the accident at Three Mile Island, though not quite as low as the 34%-level following Chernobyl in 1986. EnergyBiz argues that it s time for the U.S. to rethink nuclear power, and the issue features a range of interesting perspectives on the topic. The issue was apparently unavailable, or at least too late to press in Germany, which announced its plan to close all of its nuclear plants by 2022 this past month (see The New York Times coverage here). The Wall Street Journal featured Matt Ridley s Inconvenient Truths about Renewable Energy earlier in the month. Ridley references a recent study from the Intergovernmental Panel on Climate Change ( IPCC ), which argued that renewable energy sources currently represent 13.8% of our energy and, if encouraged to grow, could displace our reliance on fossil fuels. While the headline is encouraging, Ridley notes that 10.2% of the 13.8% share comes from biomass, namely wood and dung. Wind, solar, geothermal, wave, and tide power account for just 0.5% of the total. The IPCC includes wood as a renewable resource, but Ridley correctly notes that it ignores the context of time (e.g., yes, it grows back, but not as fast as it s used). He offers the example of Haiti, which uses charcoal from forests for 60% of its energy. With 98% of the country s tree cover destroyed, Haiti is now burning tree roots for energy. As Ridley points out, this does not differ greatly from other historical examples of renewable energy sources, such as blue whales or cod. He concludes, All in all, once you examine it closely, the idea that "renewable" energy is green and clean looks less like a deduction than a superstition. If you have not read it, we recommend Ridley s book, The Rational Optimist: How Prosperity Evolves, which makes the straightforward argument (with plenty of quantitative and annotated support) that, despite the naysayers, things are getting better. page 1
Industry Observations The Infrastructure and Industrial Services, Energy, and Power Stock experienced slight declines in May in the face of economic headwinds. Many commodity prices have exhibited increased instability amidst rising fears of an economic double-dip and recent economic uncertainty: Gasoline, at $2.98 per gallon, has fallen 12.4% since late-april highs. Coal prices have continued to rise as energy demand has rebounded along with the economy. The North American Rotary Rig Count is more than double its six year low of 876. 180 LTM Indexed Stock Performance 1 160 Index % Change S&P 25.64 Energy 50.51 Power 27.59 I & IS 38.45 140 120 100 80 60 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 S&P 500 Energy Power Industrial & Infrastructure Services 120 LTM EBITDA Multiples 1 Indexed LTM EBITDA Multiples 1 100 Index % Change Energy 7.09 Power (22.74) I & IS (35.69) 80 60 40 20 0 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Energy Power Industrial & Infrastructure Services page 2
Key Trading Statistics 1 Stock Price % Change TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio Industry Segment 1 Month 12 Month 5/30/09 5/30/10 Current EBITDA Current 2009 Energy Integrateds (5.6%) 41.0% 3.4x 5.1x 4.8x 3.7x 11.1x 9.0x Energy Services and Equipment (4.8%) 82.8% 4.3x 8.3x 10.1x 6.5x 22.0x 13.0x Exploration and Production (5.3%) 36.3% 3.8x 7.7x 10.0x 5.5x 34.6x 15.1x Coal Producers (7.6%) 39.9% 6.1x 7.6x 10.0x 4.5x 22.5x 8.6x Refining (2.3%) 115.1% 3.5x 14.1x 7.1x 4.6x NM 9.9x Storage & Transportation (3.4%) 26.6% 10.1x 12.5x 13.8x 10.3x 24.7x 17.1x Power Diversified Power (7.0%) 37.7% 6.5x 9.0x 10.3x 8.3x 17.9x 12.7x Mid-Cap Power (6.4%) 41.5% 7.5x 8.6x 9.2x 6.9x 21.7x 14.9x Independent Power Producers (1.1%) 16.4% 4.6x 5.8x 17.5x 9.2x 30.8x 21.4x Electric Utilities 2.0% 20.0% 7.7x 8.1x 8.8x 7.9x 14.3x 13.6x TEV / LTM Revenue 2011 Revenue Renewables (11.3%) (10.3%) 2.2x 1.6x 1.3x 1.2x 15.6x 9.3x Cleantech 0.4% (19.2%) 1.9x 1.9x 1.3x 1.1x 19.6x 15.1x Industrial & Infrastructure Services Engineering & Construction (6.4%) 23.5% 6.6x 7.6x 9.9x 6.7x 24.8x 14.5x Industrial & Infrastructure Services (7.7%) 43.2% 4.6x 9.1x 8.9x 6.9x 21.3x 13.0x Current Valuations Versus Historical 5-Year Average 1 200.0% 200.0% 180.0% 180.0% 160.0% 160.0% 140.0% 140.0% 120.0% 120.0% 100.0% 100.0% 80.0% 80.0% 60.0% 60.0% 40.0% 40.0% 20.0% 20.0% 0.0% 0.0% Refining Energy Storage Exploration Integrateds Electric Independent Mid-Cap Industrial & Coal Engineering Diversified Cleantech Renewables Services and and and Utilities Power Power Infrastructure Producers and Power Equipment Transportation Enegy Production ProducersPower Services Construction Industrial & Infrastructure Services 5-Year Average Enegy Power Industrial & Infrastructure Services Note: Based upon current EV / LTM EBITDA versus 5-year historical average. For Cleantech and Renewables, valuation is based upon EV / LTM Sales. page 3
Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 ($ per ton - Central Appalachian) ($ per ton - Rotterdam) ($ per MWg) Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 (# rigs) ($ per gallon) Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 ($ per bbl) ($ per MMBtu) Energy & Power Industry Update Oil 1 Natural Gas 1 120.00 6.00 100.00 5.00 80.00 60.00 40.00 20.00 0.00 $100.29 per bbl 4.00 3.00 2.00 1.00 0.00 $4.63 per MMBtu U.S. Rig Counts 3 Gasoline and Ethanol 1 2,500 2,000 1,500 1,000 500 1,973 rigs 3.75 3.00 2.25 1.50 0.75 $2.98 per gallon $2.65 per gallon 0 0.00 Gasoline Ethanol Coal 1 Electricity Prices 1 100.0 80.0 60.0 40.0 20.0 0.0 $77.05 per ton $122.20 per ton 160.0 120.0 80.0 40.0 0.0 100.00 80.00 60.00 40.00 20.00 0.00 $61.00 per MWg Central Appalachian Rotterdam page 4
Number of Transactions Energy & Power Industry Update Select Recently Announced Energy & Power Transactions 1,2 Date Target Business Description Acquirer 05/24/2011 FMC Tech Ltd. Ireland based developer of network management systems for the transmission grid 05/24/2011 Sietel Inc. US based provider of seismic data to the oil and gas industry 05/18/2011 MACTEC, Inc. US based engineering and environmental services company 05/18/2011 USM Services Holdings, Inc. US based provider of electrical and mechanical construction and facilities services 05/16/2011 LeTourneau Technologies, Inc. US based manufacturer of equipment for the coal mining industry 05/16/2011 Patrick Energy Services Inc., T&D Engineering Capabilities US based provider of services for power transmission, control, and distribution 05/12/2011 MXEnergy, Inc. US based supplier of natural gas and electricity to homeowners and small businesses 05/10/2011 Power Engineering Associates, Inc. US based owner and operator of consulting firm to electric, water, and gas utilities 05/06/2011 Blackeagle Energy Services US based provider of the oil and natural gas construction and engineering services 05/04/2011 TC Inspection US based provider of inspection and non-destructive testing services to the energy sector 05/02/2011 Terex-Demag Gmbh Germany based provider of industrial cranes and port automation technology 04/28/2011 Constellation Energy Group, Inc. US based provider of energy products and services in North America 04/28/2011 SunPower Corporation US based manufacturer of solar electric power technologies 04/28/2011 Total Equipment & Service, Inc. US manufacturer of a wide variety of equipment for the oil and gas industry General Electric Company Centerbridge Partners AMEC plc EMCOR Group, Inc. Joy Global, Inc. SAIC, Inc. Constellation Energy Group, Inc. Metadigm Services Deseo Corporation Clearview Capital, LLC Terex Corp. Exelon Corp. Total SA C&J Energy Service, Inc. Quarterly United States E&P M&A Activity 1 70 60 50 40 30 20 10 0 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 page 5
Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 5/30/11 Prior Month Prior Year LTM High 5/30/09 5/30/10 Current EBITDA Current 2011 5/30/2010 Integrateds Exxon Mobil Corporation $416,136.5 $82.97 (5.7%) 37.2% 94.0% 4.7x 6.6x 6.7x 4.3x 11.8x 9.2x 0.1x Chevron Corporation $202,928.0 $104.08 (4.9%) 40.9% 94.7% 3.5x 4.8x 4.9x 3.4x 10.0x 7.7x (0.2x) ConocoPhillips $122,860.1 $73.18 (7.2%) 41.1% 89.5% 2.9x 5.4x 4.8x 3.8x 8.7x 8.2x 1.0x Occidental Petroleum Corporation $89,276.1 $108.00 (5.5%) 30.9% 91.6% 4.6x 7.6x 7.9x 5.2x 17.8x 11.1x 0.3x Marathon Oil Corporation $40,405.2 $53.80 (0.4%) 73.0% 99.0% 3.4x 4.8x 4.4x 3.5x 12.2x 8.7x 0.4x Hess Corporation $30,456.1 $78.31 (8.9%) 47.2% 89.6% 0.0x 0.0x 4.5x 3.6x 10.4x 9.5x 0.7x Median (5.6%) 41.0% 92.8% 3.4x 5.1x 4.8x 3.7x 11.1x 9.0x 0.4x Energy Services and Equipment Large Cap Diversified Shl Schlumberger Limited i $119,606.4 $85.40 (4.8%) 52.1% 89.3% 81 8.1x 10.7x 15.2x 93 9.3x 24.3x 16.5x 07 0.7x Halliburton Company $47,845.9 $50.39 (0.2%) 102.9% 97.9% 4.9x 8.6x 10.5x 6.8x 21.8x 13.2x 0.7x Baker Hughes Incorporated $34,629.3 $74.21 (4.1%) 94.6% 93.6% 0.0x 0.0x 11.0x 6.4x 29.4x 14.0x 1.7x National Oilwell Varco, Inc. $28,592.4 $72.83 (5.0%) 91.0% 88.0% 4.1x 5.0x 9.7x 7.4x 18.5x 14.0x (0.8x) Weatherford International Ltd. $21,602.4 $19.75 (8.5%) 39.9% 70.3% 8.0x 11.8x 11.1x 6.3x NM 12.3x 4.7x Median (4.8%) 91.0% 89.3% 4.9x 8.6x 11.0x 6.8x 23.1x 14.0x 0.7x Mid and Small Cap Equipment and Service Providers Cameron International Corporation $11,454.5 $47.98 (9.0%) 32.5% 76.0% 6.2x 8.9x 11.0x 8.0x 21.4x 13.7x (0.2x) Oil States International Inc. $4,878.0 $78.82 (5.0%) 101.9% 94.8% 2.9x 6.6x 11.1x 6.7x 22.1x 12.6x 2.8x RPC Inc. $3,820.6 $25.00 (7.6%) 232.2% 86.1% 4.7x 10.8x 8.4x 5.2x 18.3x 10.9x 1.2x Exterran Holdings, Inc. $3,338.0 $21.46 (1.2%) (15.8%) 71.6% 6.1x 7.2x 8.1x 6.3x NM NM 3.2x Complete Production Services, Inc. $3,133.4 $33.08 (2.5%) 154.3% 95.2% 2.8x 11.1x 7.0x 4.5x 20.7x 10.0x 3.6x Key Energy Services Inc. $3,107.6 $17.71 (2.7%) 85.3% 93.6% 3.1x 17.5x 18.5x 5.9x NM 12.9x 5.9x Dril-Quip, Inc. $2,686.9 $73.68 (3.8%) 51.3% 87.9% 9.4x 10.0x 16.3x 11.7x 30.1x 19.3x (1.6x) Basic Energy Services, Inc. $1,724.3 $27.66 (10.0%) 239.0% 87.7% 3.3x 24.4x 10.7x 5.4x NM 14.5x 18.4x Median (4.4%) 93.6% 87.8% 4.0x 10.4x 10.9x 6.1x 21.4x 12.9x 3.0x Energy page 6
Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 5/30/11 Prior Month Prior Year LTM High 5/30/09 5/30/10 Current EBITDA Current 2011 5/30/2010 Construction and Equipment Contractors Transocean Ltd. $29,525.1 $69.28 (4.8%) 22.0% 80.6% 5.7x 5.0x 8.3x 6.4x 52.3x 10.8x 1.3x Noble Corp. $13,622.1 $41.61 (3.3%) 43.1% 89.1% 4.0x 3.2x 13.2x 6.7x 23.3x 10.3x 1.2x Nabors Industries Ltd. $11,745.6 $27.88 (9.0%) 46.5% 85.9% 4.6x 7.2x 7.8x 5.2x 55.1x 11.3x 3.3x Diamond Offshore Drilling Inc. $10,629.0 0 $73.20 (3.5%) 16.0% 90.2% 50x 5.0x 42x 4.2x 63x 6.3x 71x 7.1x 11.1x1x 13.3x3x 02x 0.2x Technip $9,476.2 $106.50 (5.7%) 62.0% 96.3% 2.3x 4.6x 8.6x NA 19.1x NA (1.7x) Subsea 7 SA $9,239.6 $26.48 0.6% 73.6% 92.4% 3.1x 5.9x 18.3x NA 20.0x NA (0.1x) Pride International Inc. $9,158.9 $41.50 (5.5%) 67.5% 93.9% 5.5x 9.8x 21.1x 8.8x 37.9x 12.3x 3.4x Helmerich & Payne Inc. $6,802.4 $62.34 (6.0%) 65.4% 88.5% 4.1x 6.7x 7.9x 5.9x 19.2x 14.0x 0.2x Rowan Companies Inc. $6,048.0 $39.45 (5.4%) 59.3% 88.0% 3.0x 5.5x 11.5x 6.7x 19.5x 10.5x 1.7x Patterson-UTI Energy Inc. $5,256.5 $31.54 1.3% 124.8% 99.2% 2.7x 9.0x 8.2x 4.7x 26.6x 12.1x 1.5x Oceaneering International, Inc. $4,167.0 $81.58 (6.7%) 76.3% 88.3% 6.9x 5.8x 9.2x 7.7x 21.6x 17.0x (0.4x) Hercules Offshore, Inc. $1,562.8 $, $6.29 0.2% 101.6% 90.0% 3.2x 10.8x 8.6x 9.6x NM NM 6.8x Pioneer Drilling Co. $1,062.9 $14.72 (5.0%) 148.2% 90.6% 2.6x 10.5x 8.1x 4.7x NM 20.8x 4.9x Cal Dive International Inc $773.8 $6.60 (16.0%) 19.5% 80.6% 5.1x 5.1x 11.5x 5.2x NM 13.6x 1.2x Median (5.2%) 63.7% 89.5% 4.1x 5.9x 8.6x 6.5x 21.6x 12.3x 1.3x Exploration and Production Large Cap Apache Corp. $56,290.8 $123.40 (7.5%) 37.8% 92.0% 4.2x 4.9x 5.7x 4.2x 13.3x 9.3x 1.2x Anadarko Petroleum Corporation $49,766.0 $79.09 0.2% 51.1% 92.5% 4.9x 7.3x 9.1x 5.1x 150.2x 18.5x 2.0x Devon Energy Corporation $38,996.8 8 $83.42 (8.3%) 30.6% 89.2% 41 4.1x 61 6.1x 79 7.9x 52 5.2x 22.0x 10.4x 07 0.7x EOG Resources, Inc. $32,644.7 $108.25 (4.2%) 3.3% 89.1% 4.0x 14.7x 13.6x 5.3x 155.3x 17.7x 1.8x Chesapeake Energy Corporation $31,952.5 $31.20 (7.3%) 39.7% 86.8% 1.4x 4.6x 11.1x 5.3x 26.2x 9.8x 1.6x Noble Energy, Inc. $17,685.7 $92.61 (3.8%) 55.7% 93.6% 4.1x 8.2x 11.0x 5.5x 32.6x 14.0x 1.0x Southwestern Energy Co. $16,276.3 $43.21 (1.5%) 14.9% 95.5% 6.9x 9.6x 10.3x 7.5x 26.6x 18.4x 0.8x Murphy Oil Corporation $13,077.7 $68.56 (11.5%) 28.4% 87.7% 3.6x 3.9x 4.5x 3.3x 14.4x 8.7x (0.1x) Pioneer Natural Resources Co. $12,774.1 $92.09 (9.9%) 44.6% 86.8% 5.6x 10.6x 13.6x 5.9x 69.2x 17.5x 2.1x Newfield Exploration Co. $12,177.9 $74.22 4.8% 42.6% 95.2% 1.2x 7.1x 10.2x 5.5x 37.9x 12.0x 1.9x Ultra Petroleum Corp. $9,013.2 $48.11 (5.3%) 4.5% 89.3% 7.6x 12.4x 10.7x 7.8x 22.6x 16.2x 2.5x Quicksilver Resources Inc. $4,521.0 $14.28 (3.8%) 17.0% 89.4% 7.6x 3.0x 7.6x 8.0x 7.3x 38.6x 1.3x Median (4.8%) 34.2% 89.4% 4.1x 7.2x 10.2x 5.4x 26.4x 15.1x 1.5x page 7
Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 5/30/11 Prior Month Prior Year LTM High 5/30/09 5/30/10 Current EBITDA Current 2011 5/30/2010 Mid and Small Cap Petrohawk Energy Corporation $10,970.5 $26.27 (2.7%) 36.6% 96.2% 7.4x 10.7x 15.3x 5.6x 99.9x 15.1x 3.6x Plains Exploration & Production Company $8,589.8 $36.73 (3.4%) 66.2% 91.7% 1.7x 8.3x 9.8x 5.5x 44.9x 12.9x 5.0x SandRidge Energy, Inc. $7,880.5 $11.35 (8.2%) 76.2% 85.1% 3.9x 16.1x NM 7.6x NM 23.5x 12.8x Cabot Oil & Gas Corporation $7,101.7 7 $59.38 55% 5.5% 71.2% 99.9% 9% 75x 7.5x 82x 8.2x 13.9x 79x 7.9x 70.0x0x 31.3x3x 19x 1.9x Forest Oil Corp. $5,075.2 $29.93 (16.7%) 12.3% 74.4% 3.6x 7.9x 8.7x 5.5x 29.4x 11.9x 2.9x Swift Energy Co. $2,047.0 $38.72 (1.2%) 40.0% 80.3% 2.3x 5.9x 6.8x 4.6x 29.0x 17.9x 1.8x PetroQuest Energy Inc. $590.8 $7.91 (9.7%) 26.0% 81.1% 2.5x 3.6x 5.4x 3.8x 40.7x 11.9x 0.7x Delta Petroleum Corp. $581.2 $0.71 (15.8%) (40.2%) 53.0% NM NM 46.2x 20.8x NM NM (10.6x) Median (5.8%) 38.3% 83.1% 3.6x 8.2x 9.8x 5.6x 42.8x 15.1x 2.4x Coal Producers Peabody Energy Corp. $18,072.9 $61.26 (8.3%) 57.2% 82.8% 6.2x 9.2x 10.0x 5.9x 20.4x 10.1x 1.0x CONSOL Energy Inc. $14,999.1 $51.02 (5.7%) 39.9% 90.6% 6.8x 6.8x 10.8x 6.4x 26.3x 11.6x 3.1x Massey Energy Co. $7,638.9 $64.89 (4.9%) 95.9% 91.2% 3.9x 7.6x 22.4x 6.5x NM 12.7x 2.3x Arch Coal Inc. $6,414.7 $29.66 (13.5%) 37.6% 80.2% 6.1x 11.0x 8.6x 4.6x 22.5x 7.4x 3.2x Alpha Natural Resources, Inc. $6,357.8 $53.72 (7.6%) 40.0% 78.9% 3.9x 7.8x 8.0x 4.1x 48.7x 8.4x (0.1x) Alliance Resource Partners LP $2,777.0 $72.80 (11.6%) 60.2% 86.6% 4.6x 5.1x 5.3x 4.4x 10.2x 8.7x 1.1x Patriot Coal Corporation $2,265.4 $22.88 (9.1%) 37.3% 78.4% 3.0x 5.9x 34.5x 3.6x NM 8.1x 0.8x James River Coal Co. $918.3 $21.66 (7.1%) 35.0% 80.0% 14.0x 4.2x 7.2x 3.5x 34.5x 8.0x 1.3x Farmacol SA $345.6 $12.69 5.1% 4.6% 73.8% 10.2x 8.2x 10.3x NA 11.7x NA 1.2x Mdi Median (7.6%) 39.9% 9% 80.2% 61 6.1x 76 7.6x 10.0x0 45 4.5x 22.5x 86 8.6x 12 1.2x Refining Valero Energy Corp. $19,047.1 $27.09 (4.3%) 45.0% 87.1% 2.8x 14.1x 5.3x 3.6x 13.9x 6.8x 3.1x Sunoco, Inc. $6,602.1 $40.14 (5.9%) 34.4% 85.4% 3.0x 12.6x 6.2x 6.5x 24.7x 15.8x 2.2x Tesoro Corporation $4,673.6 $24.09 (11.2%) 105.9% 83.8% 3.5x NM 5.6x 3.8x 14.8x 8.4x 75.2x Holly Corporation $4,441.4 $62.19 7.4% 140.1% 93.4% 6.9x 21.4x 7.8x 5.2x 15.2x 10.6x 4.5x Frontier Oil Corp. $2,814.9 $29.92 7.1% 115.1% 92.4% 3.4x NM 6.2x 4.6x 14.4x 9.9x 1.9x Western Refining Inc. $2,608.5 $17.39 2.5% 230.6% 89.2% 4.1x 23.0x 7.1x 4.5x 59.7x 7.4x 14.3x CVR Energy, Inc. $2,040.7 $21.72 (2.3%) 187.3% 89.1% 3.1x 6.6x 7.3x 3.7x 27.3x 8.2x 0.1x Alon USA Energy, Inc. $1,535.5 $11.89 (13.5%) 76.1% 76.3% 8.9x NM 16.0x 6.7x NM 15.8x (7.2x) Delek US Holdings Inc. $1,011.1 $14.98 11.5% 125.9% 97.9% 8.6x NM 9.7x 5.5x NM 16.9x 556.7x Median (2.3%) 115.1% 89.1% 3.5x 14.1x 7.1x 4.6x NM 9.9x 3.1x page 8
Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 5/30/11 Prior Month Prior Year LTM High 5/30/09 5/30/10 Current EBITDA Current 2011 5/30/2010 Storage & Transportation Kinder Morgan Energy Partners LP $36,206.9 $74.54 (3.6%) 17.4% 95.6% 10.7x 13.4x 13.3x 9.9x 45.1x 31.3x 5.2x El Paso Corp. $33,090.1 $20.94 8.0% 84.7% 97.2% 2.4x 7.9x 13.2x 9.1x 37.2x 16.0x 4.7x Plains All American Pipeline, L.P. $15,489.5 $62.23 (3.1%) 8.1% 94.3% 10.2x 13.4x 14.2x 11.2x 24.7x 17.2x 5.7x Enbridge Energy Partners LP $13,739.1 $30.95 (8.7%) 24.4% 89.5% 9.9x 11.4x 29.2x 10.5x NM 19.4x 5.5x Magellan Midstream Partners LP $8,592.1 $59.23 (3.7%) 35.3% 93.9% 8.2x 15.0x 15.8x 13.3x 19.4x 16.6x 4.6x Buckeye Partners LP $8,442.0 $63.46 (2.5%) 11.9% 88.5% 11.2x 13.0x 22.7x 14.0x 27.0x 17.0x 7.4x Sunoco Logistics Partners L.P. $4,190.0 $84.79 (5.8%) 28.8% 93.1% 8.2x 11.3x 11.5x 9.8x 9.1x 15.2x 4.5x Holly Energy Partners L.P $1,583.8 $55.41 1.1% 37.8% 90.8% 13.7x 12.0x 12.4x 10.0x 24.2x 20.0x 5.1x Median (3.4%) 26.6% 93.5% 10.1x 12.5x 13.8x 10.3x 24.7x 17.1x 5.2x Diversified Power General Electric Co. $592,936.9 $19.59 (4.2%) 19.8% 90.5% 19.2x 27.2x 20.7x 18.2x 15.5x 11.6x 16.6x Siemens AG $114,731.2 $129.13 (11.4%) 43.8% 91.0% 8.3x 7.2x 7.5x 6.5x 13.1x 11.3x 0.1x ABB Ltd. $58,886.9 $26.53 (3.7%) 54.6% 94.3% 6.2x 7.3x 11.9x 8.6x 20.6x 15.0x (0.5x) Schneider Electric S.A. $46,437.7 $163.25 (7.7%) 62.4% 92.5% 6.2x 8.3x 10.0x NA 16.9x NA 1.0x Emerson Electric Co. $44,371.4 $54.07 (11.0%) 16.4% 86.9% 6.3x 9.9x 9.4x 8.1x 18.9x 13.9x 0.9x Eaton Corporation $20,325.9 $51.09 (4.6%) 46.1% 90.4% 6.9x 9.7x 10.7x 7.6x 16.6x 11.2x 1.8x Alstom SA $20,232.4 $61.29 (8.0%) 27.8% 94.7% 6.4x 4.3x 6.7x NA 26.8x NA 0.9x Cooper Industries plc $10,692.1 $61.84 (6.2%) 31.7% 88.3% 6.6x 10.9x 12.5x 9.9x 21.7x 13.7x 0.6x Median (7.0%) 37.7% 90.8% 6.5x 9.0x 10.3x 8.3x 17.9x 12.7x 0.9x Mid-Cap Power Ametek Inc. $7,780.6 $42.98 (6.6%) 58.8% 91.4% 8.2x 11.9x 12.8x 10.5x 21.7x 16.7x 2.2x Thomas & Betts Corp. $3,011.5 $54.26 (6.4%) 41.5% 87.7% 5.2x 8.3x 9.2x 6.9x 19.6x 13.4x 0.6x Valmont Industries, Inc. $2,866.4 $99.74 (5.3%) 25.9% 86.0% 7.5x 9.2x 10.5x 7.7x 25.4x 14.9x 0.5x Littelfuse Inc. $1,306.8 $59.93 (3.7%) 65.8% 90.3% 11.8x 8.6x 8.5x 6.8x 15.8x 12.7x (0.6x) Powell llindustries, Inc. $288.6 $35.21 (10.9%) 19.8% 86.1% 63 6.3x 32 3.2x 62 6.2x 54 5.4x 39.0x 16.6x 6 (1.5x) Median (6.4%) 41.5% 87.7% 7.5x 8.6x 9.2x 6.9x 21.7x 14.9x 0.5x Independent Power Producers NRG Energy, Inc. $13,784.4 $24.61 1.7% 5.4% 96.4% 4.3x 4.2x 6.0x 7.1x 41.3x 21.4x 2.6x GenOn Energy, Inc. $5,147.8 $4.00 1.8% NA 92.0% NA NA 23.0x 9.2x NM NA 1.9x Dynegy Inc. $5,093.0 $6.09 (3.9%) 16.4% 91.3% 5.0x 7.4x 17.5x 12.6x NM NM 6.9x Mirrabooka Investments Limited $245.5 $1.99 (6.5%) 43.9% 92.8% NM NM NM NA 20.2x NA NM Median (1.1%) 16.4% 92.4% 4.6x 5.8x 17.5x 9.2x 30.8x 21.4x 2.6x Power page 9
Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 5/30/11 Prior Month Prior Year LTM High 5/30/09 5/30/10 Current EBITDA Current 2011 5/30/2010 Electric Utilities Southern Company $55,273.1 $39.81 2.0% 21.7% 97.4% 8.1x 8.8x 9.8x 9.1x 17.7x 14.7x 3.7x Dominion Resources, Inc. $45,391.9 $47.52 2.4% 22.0% 97.9% 7.2x 9.3x 9.1x 9.0x 8.9x 14.6x 4.2x NextEra Energy, Inc. $45,138.4 $57.70 2.0% 15.6% 97.8% 8.5x 8.1x 9.5x 8.3x 14.3x 12.1x 4.2x Duke Energy Corporation $41,952.4 4 $18.70 03% 0.3% 17.2% 95.9% 9% 76x 7.6x 81x 8.1x 83x 8.3x 78x 7.8x 17.9x 13.4x 37x 3.7x Exelon Corp. $40,700.5 $41.86 (0.7%) 8.4% 94.1% 6.0x 5.3x 6.1x 7.9x 11.1x 13.6x 1.9x FirstEnergy Corp. $36,808.9 $44.31 10.9% 25.8% 96.7% 7.8x 8.7x 12.1x 8.3x 20.5x 13.6x 6.4x American Electric Power Co., Inc. $36,237.2 $38.34 5.1% 20.0% 98.3% 7.5x 7.4x 7.5x 7.3x 15.1x 11.9x 4.0x PPL Corporation $28,732.4 $28.13 2.5% 9.0% 99.1% 8.1x 10.3x 9.5x 7.7x 11.6x 11.2x 7.7x Progress Energy Inc. $26,404.9 $47.53 0.2% 23.2% 96.9% 7.8x 7.7x 8.8x 8.5x 16.2x 14.7x 4.1x Edison International $25,454.9 $39.40 0.3% 21.8% 98.1% 5.2x 5.7x 6.7x 6.6x 10.6x 14.6x 3.1x Entergy Corporation $23,663.1 $67.77 (2.8%) (9.7%) 83.9% 7.7x 7.0x 6.3x 7.1x 9.8x 11.1x 3.1x Median 2.0% 20.0% 97.4% 7.7x 8.1x 8.8x 7.9x 14.3x 13.6x 4.0x TEV / LTM Revenue Multiple as of TEV / 2011 Renewables 5/30/09 5/30/10 Current Revenue First Solar, Inc. $10,033.8 $123.75 (11.3%) 10.1% 70.5% 10.6x 4.1x 3.9x 2.1x 17.3x 11.2x (0.5x) Vestas Wind Systems A/S $7,520.4 $29.91 (15.9%) (38.0%) 49.6% 1.8x 1.6x 0.7x NA 38.6x NA 3.3x Suntech Power Holdings Co. Ltd. $3,065.6 $8.46 (5.7%) (16.2%) 74.1% 2.2x 1.3x 1.0x 0.9x 5.9x 7.6x 5.6x SunPower Corporation $2,492.8 $21.00 (3.2%) 58.7% 92.9% 2.2x 1.1x 1.1x 0.7x 13.8x 9.3x 2.4x GT Solar International, Inc. $1,209.1 $12.37 10.7% 126.6% 92.7% 1.5x 1.0x 1.3x 1.1x 9.3x 6.6x (1.6x) Clean Energy Fuels Corp. $1,043.3 3 $14.16 16 (16.9%) (5.1%) 73.1% 38x 3.8x 61x 6.1x 44x 4.4x 27x 2.7x 76.8x 64.9x (2.1x) Evergreen Solar Inc. $391.5 $0.73 (49.7%) (87.2%) 10.2% 4.4x 1.7x 1.3x 1.7x NM NM 18.3x Rentech, Inc. $272.4 $1.00 (10.2%) (5.0%) 67.4% 0.7x 1.5x 1.8x 1.3x NM NM 1.8x FuelCell Energy Inc. $197.9 $1.86 8.8% (13.5%) 68.4% 2.7x 2.8x 2.4x 1.3x NM NM 1.2x Energy Conversion Devices, Inc. $171.3 $1.41 (29.5%) (74.6%) 24.3% 2.2x 1.6x 0.7x 0.7x NM NM (3.7x) Ballard Power Systems Inc. $102.6 $1.73 (16.2%) (10.3%) 69.0% 1.6x 1.9x 1.5x 1.0x NM NM 1.4x Median (11.3%) (10.3%) 69.0% 2.2x 1.6x 1.3x 1.2x 15.6x 9.3x 1.4x Cleantech Itron, Inc. $2,504.5 $50.69 (6.9%) (24.0%) 72.4% 1.7x 1.8x 1.1x 1.1x 19.5x 12.0x 2.0x ESCO Technologies Inc. $1,092.1 $37.03 1.0% 41.5% 85.8% 1.9x 1.5x 1.6x 1.5x 15.8x 15.1x 1.5x Ameresco, Inc. $843.4 $14.87 (7.7%) NA 85.1% 0.0x 0.0x 1.3x 1.0x 19.7x 15.7x 5.9x EnerNOC, Inc. $372.5 $18.10 1.1% (35.6%) 49.3% 4.1x 2.9x 1.3x 1.1x 102.2x 27.6x (29.4x) Echelon Corporation $360.8 $9.55 0.4% 12.2% 89.1% 2.0x 2.9x 3.0x 2.1x NM NM 1.6x PowerSecure International, Inc. $147.0 $8.09 3.1% (14.4%) 73.2% 0.5x 1.9x 1.5x 1.0x NM 13.9x (1.2x) Comverge, Inc. $89.2 $3.60 (6.7%) (62.3%) 34.5% 2.6x 2.1x 0.7x 0.5x NM NM 0.8x Median 0.4% (19.2%) 73.2% 1.9x 1.9x 1.3x 1.1x 19.6x 15.1x 1.5x page 10
Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 5/30/11 Prior Month Prior Year LTM High 5/30/09 5/30/10 Current EBITDA Current 2011 5/30/2010 Industrial & Infrastructure Services Engineering & Construction Fluor Corporation $9,621.5 $68.90 (1.5%) 46.8% 90.9% 5.1x 5.4x 12.8x 7.1x 34.0x 17.2x (1.9x) Jacobs Engineering i Group Inc. $5,449.7 $45.82 (7.6%) 97% 9.7% 82.2% 2% 59 5.9x 75 7.5x 99 9.9x 78 7.8x 23.7x 14.8x (0.5x) KBR, Inc. $4,859.9 $37.58 (2.1%) 71.0% 96.9% 3.8x 5.3x 8.7x 6.7x 14.9x 14.3x (1.3x) McDermott International Inc. $4,725.9 $21.34 (7.6%) (3.8%) 81.6% 7.0x 15.1x 10.6x 7.8x 20.2x 13.1x (1.4x) Dresser-Rand Group Inc. $4,438.7 $52.37 (0.3%) 64.5% 93.7% 6.2x 6.9x 16.1x 8.5x 33.5x 15.8x 0.8x URS Corporation $3,734.8 $43.93 (1.8%) (1.5%) 90.9% 8.2x 7.7x 6.0x 4.9x 13.8x 10.8x 0.4x Quanta Services, Inc. $3,733.8 $19.71 (9.1%) (4.9%) 81.5% 10.5x 9.9x 10.7x 6.8x 37.1x 17.3x (1.3x) Chicago Bridge & Iron Company N.V. $3,423.0 $37.89 (6.5%) 90.7% 89.2% 14.8x 5.2x 9.3x 6.8x 17.7x 13.4x (1.0x) Shaw Group Inc. $2,143.9 $36.50 (6.2%) 7.0% 87.7% 7.1x 5.9x 6.7x 5.0x 77.3x 13.4x (1.5x) MYR Group, Inc. $413.4 4 $22.64 (9.2%) 37.3% 3% 85.3% 78x 7.8x 82x 8.2x 88x 8.8x 59x 5.9x 25.9x 15.7x (0.9x) Pike Electric Corporation $371.5 $8.71 (14.3%) (11.8%) 83.0% 4.6x 10.1x 10.0x 6.4x NM 27.7x 2.1x ENGlobal Corp. $117.1 $3.91 (4.2%) 47.0% 68.8% 5.1x 42.1x NM 4.3x NM 7.0x 8.3x Median (6.4%) 23.5% 86.5% 6.6x 7.6x 9.9x 6.7x 24.8x 14.5x (0.9x) Industrial & Infrastructure Services EMCOR Group Inc. $1,551.7 $30.55 (1.5%) 22.3% 93.3% 3.4x 4.0x 5.8x 4.8x NM 12.7x (1.6x) Cape plc $1,099.7 $8.67 (7.9%) 188.3% 91.6% 4.7x 3.9x 7.4x NA 12.7x NA 0.7x Team Inc. $501.8 $22.98 (7.9%) 52.8% 80.0% 0% 56x 5.6x 91x 9.1x 98x 9.8x 75x 7.5x 21.3x 15.4x 13x 1.3x Mistras Group, Inc. $479.3 $16.96 (7.4%) 42.0% 91.9% 0.0x 11.1x 10.7x 8.0x 30.0x 21.8x 0.8x Matrix Service Co. $283.1 $13.52 (6.6%) 37.4% 92.6% 4.6x NM 8.7x 5.1x 38.3x 13.0x NM Furmanite Corporation $255.9 $7.07 (15.6%) 44.3% 82.2% 5.0x 18.8x 9.0x 6.9x 19.1x 12.1x 0.3x Median (7.7%) 43.2% 91.7% 4.6x 9.1x 8.9x 6.9x 21.3x 13.0x 0.7x page 11
Experience Focus Market Intelligence Stability Global Reach Exceptional Results Harris Williams & Co. is the premier middle market advisor with a two-decade legacy of sell side excellence serving clients worldwide. Middle market leader closed nearly 200 transactions in the last four years. Execution focus with unparalleled senior-level attention. Over 10,000 conversations with buyers and lenders each year. Unparalleled retention of senior professionals. Approximately 20% of our transactions are cross-border. Best-in-class execution produces unmatched closing rate. Locations London, UK Richmond, VA Boston, MA Cleveland, OH London, UK Minneapolis, MN Philadelphia, PA San Francisco, CA page 12
Harris Williams & Co. s Energy & Power Group has a broad range of experience including products, services, and technologies that support or enhance the overall energy and power infrastructure. Key Niches: Cleantech, Energy Efficiency, and Renewables Power Products, Services, and Technologies Oil & Gas Products, Services, and Technologies Industrial & Infrastructure Services Engineering & Construction For more information on Harris Williams & Co. s Energy & Power Group as well as archived copies of the Energy & Power Industry Update, please visit our website. Archived copies of the Group s industry whitepapers, including Transmission & Distribution Infrastructure and ESCOs Enabling Energy Efficiency, can also be found on the site. page 13
Tiff B. Armstrong Managing Director tarmstrong@harriswilliams.com +1 (804) 648-0072 Mr. Armstrong co-leads the Energy & Power Group and was Harris Williams & Co. s second employee, joining the firm in 1993. In 1999, Mr. Armstrong founded the San Francisco office and has over 19 years of transactional experience focused in middle market mergers and acquisitions assignments. Having directed over 125 mergers and acquisitions transactions during his career, Mr. Armstrong has worked across industries including energy and power, consumer products, building products, business services, distribution, retailing, specialty chemicals, and technology. As Co-Head of the Energy & Power Group, Mr. Armstrong specializes on the Power segment. Prior to joining Harris Williams & Co., Mr. Armstrong was with Wheat First Butcher Singer (now Wells Fargo). He earned a B.S. with a concentration in Finance from the University of Virginia's McIntire School of Commerce and is also a Chartered Financial Analyst. Mr. Armstrong was past president and director of the San Francisco Chapter of ACG and is currently a director of the Greater Richmond YMCA. Andrew G. Spitzer Managing Director aspitzer@harriswilliams.com +1 (804) 915-0174 Mr. Spitzer founded and co-leads the Energy & Power Group at Harris Williams & Co. Over his investment banking career, Mr. Spitzer has advised clients on a variety of merger and acquisition and strategic advisory assignments, as well as corporate financings. Mr. Spitzer has advised a diverse range of manufacturing and service businesses in the energy and power industries. Key niche focus areas have included demand response solutions, power quality equipment, infrastructure and industrial services, and oilfield products and services. Prior to focusing on energy and power companies, Mr. Spitzer developed experience in numerous industries including industrial manufacturing, chemicals, automotive, aerospace and defense, business services, and consumer products. Prior to joining Harris Williams & Co., Mr. Spitzer worked in the General Industrial Group at Banc of America Securities, LLC and in the Investment Banking Group at Goldman Sachs & Co. Mr. Spitzer earned an M.B.A. with Honors from Columbia Business School, where he served as the Caplan Fellow. Mr. Spitzer earned a B.A. in Economics from the University of Virginia. Brian S. Lucas Director blucas@harriswilliams.com +1 (804) 932-1323 Mr. Lucas re-joined Harris Williams & Co. following the completion of an M.B.A. from The Wharton School at the University of Pennsylvania. Prior to business school, Mr. Lucas served as an Associate with Harris Williams & Co., working on mergers and acquisitions transactions in a broad range of industries, including general industrial, consumer products, plastics, and waste equipment/services. Before re-joining Harris Williams & Co., Mr. Lucas worked as an Associate with Graham Partners, a private equity group in Philadelphia. Previous experience also includes work as an Investment Banking Analyst with JP Morgan. Mr. Lucas earned a B.S. in Commerce, with a concentration in Finance from The McIntire School of Commerce at the University of Virginia. Matthew G. White Vice President mwhite@harriswilliams.com +1 (804) 915-0131 Prior to joining Harris Williams & Co., Mr. White worked as an Associate in the Equity Capital Markets Group at SunTrust Robinson Humphrey. Previous experience also includes work in the Capital Finance Group at Wachovia Securities (now Wells Fargo) where he focused on acquisition financing, growth capital, and workout situations. Mr. White earned an M.B.A. from the Goizueta Business School at Emory University and a B.S. in Business Administration from the University of North Carolina at Chapel Hill. Luke R. Semple Vice President lsemple@harriswilliams.com +1 (804) 648-1158 Prior to joining Harris Williams & Co., Mr. Semple worked as a Global Banking Associate at Deutsche Bank. Within energy and power, Mr. Semple has advised a diverse range of businesses, including providers of energy efficiency and clean technology products and services, oilfield products and services, transmission distribution products and services, and power generation equipment. He earned an M.B.A. from the Darden School of Business at the University of Virginia and a B.A. from Trinity College in Hartford, Connecticut. page 14
1001 HaxallPoint 9 th Floor Richmond, VA 23219 Phone: +1 (804) 648-0072 Fax: +1 (804) 648-0073 www.harriswilliams.com 575 Market Street 31st Floor San Francisco, CA 94105 Phone: +1 (415) 288-4260 Fax: +1 (415) 288-4269 Two International Place 24th Floor Boston, MA 02110 Phone: +1 (617) 482-7501 Fax: +1 (617) 482-7503 63 Brook Street London, W1K 4HS Phone: +44 20 7518 8900 Fax: +44 20 7526 2187 222 South Ninth Street Suite 3350 Minneapolis, MN 55402 Phone: +1 (612) 359-2700 Fax: +1 (612) 359-2701 1900 East 9th Street 20th Floor Cleveland, OH 44114 Phone: +1 (216) 689-2400 Fax: +1 (216) 689-2401 1600 Market Street 21st Floor Philadelphia, PA 19103 Phone: +1 (267) 675-5900 Fax: +1 (267) 675-5901 Sources: 1. Capital IQ. 2. MergerMarket. 3. Baker Hughes. Harris Williams & Co. (www.harriswilliams.com), a member of The PNC Financial Services Group, Inc. (NYSE:PNC), is the premier middle market advisor with a two-decade legacy of sell side excellence serving clients worldwide. The firm is focused exclusively on the middle market providing sell side and acquisition advisory, restructuring advisory, board advisory, private placements and capital markets advisory services. Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, an Appointed Representative of Sturgeon Ventures LLP, which is Authorised and Regulated by the Financial Services Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business in the U.S. and Europe, respectively. THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US AT +1 804-648-0072. The information and views contained in this report were prepared by Harris Williams & Co. ( Harris Williams ). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams prior written consent. Copyright 2011 Harris Williams & Co., all rights reserved. 2011. Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, an Appointed Representative of Sturgeon Ventures LLP, which is authorised and regulated by the FSA. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business in the U.S. and Europe, respectively. page 15