INTEGRATED EXHIBITION SERVICES, INC.

Confidential Information Memorandum August 2008

CONFIDENTIAL MEMORANDUM Memorandum No. ___________

The investment bank (the Advisor) has been appointed exclusive financial advisor to Integrated Exhibition Services, Inc. (IES or the Company) to render advisory services in connection with the sale of the Company. This Confidential Memorandum contains certain information concerning the business and operations of the Company. This document is furnished to potential acquirers on a confidential basis solely for the purpose of a preliminary evaluation of the Company. This memorandum is for use only by the party to whom it is transmitted. It may not be reproduced in whole or in part or used for any other purpose without the express written permission of the Advisor or the Company. The Advisor and IES have prepared this document from information supplied by the Company or other sources deemed reliable. The Advisor has not independently verified all information contained herein and assumes no responsibility for its accuracy or completeness. Any estimates and projections contained herein have been prepared by the management of the Company and involve significant elements of subjective judgment and analysis, which may or may not be correct. The Advisor makes no representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this memorandum and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. This memorandum may not contain all of the information that may be required to evaluate the transaction. Any recipient should conduct his or her own analysis of the Company and the data contained or referenced in this document. Neither the Company nor the Advisor expects to update or otherwise revise the memorandum or other materials supplied herewith. Further, any buyer should consult his or her own counsel, accountant, and other professional advisors as to the legal, tax, accounting and related matters concerning any transaction with the Company. If you have no interest in purchasing the Company, please return this Confidential Memorandum and other documentation, if any, to the Advisor (Attention: Document Control Manager).

FORWARD LOOKING STATEMENTS Statements contained in this Confidential Information Memorandum (Memorandum) which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These statements are identified by the use of forward-looking words such as expects, believes, intends, may, will, should, or anticipates, or the negative thereof, or other variations thereon or compatible words, or by the discussion of strategy that involves risks and uncertainties. Readers are cautioned that these forward-looking statements, including without limitation statements regarding the development of the Companys business, the Companys anticipated financing requirements and capital expenditures, the Companys anticipated sources of capital, and the other statements contained herein regarding matters that are not historical, are only projections or predictions. No assurances can be given that such projections or predictions will prove correct or that the anticipated future results will be achieved. Forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by such statements. Such risks and uncertainties that may cause a difference include, but are not limited to, local, regional and national market conditions for the Companys products, and the Companys ability to protect its intellectual property, among other issues. Forward-looking statements are made only as of the date of this memorandum. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

FINANCIAL PROJECTIONS This memorandum includes financial projections of the future operating results of the Company. These financial projections were prepared by the management of the Company and are based upon managements estimates of the results of the Companys future operations. Accordingly, the financial projections are not based on actual operating results. Any error in the assumption of any of the factors stated therein could and will cause the actual results of future operations to vary considerably from those projected. Furthermore, all of the factors are subject to the effect of unforeseeable future events. In view of the foregoing, there is no assurance that the actual financial results of the operation of the Company will not vary substantially from those contained in such financial projections.

CONTENTS 1. EXECUTIVE SUMMARY 2. PRODUCTS, SERVICES AND CUSTOMERS 3. MARKET 4. CORPORATE STRUCTURE AND MANAGEMENT TEAM 5. HISTORICAL AND PROJECTED FINANCIAL PERFORMANCE 5 15 22 30 33

I.

EXECUTIVE SUMMARY

Integrated Exhibition Services, Inc (IES or the Company) is a comprehensive provider of exhibition services, offering custom exhibit design and fabrication services, on-site trade show services and custom rental exhibit services to corporate and government clients. IES a Virginia S-Corporation and is owned completely by its General Manager. COMPANY OVERVIEW Founded in 1952, the Company is an established exhibition services leader that operates in three segments: Exhibit Design, Exhibit Fabrication and Trade Show Services. Providing a full-cycle set of offerings to meet its customers exhibition needs, IES maintains a complementary services business model that promotes cross-sales, streamlines operations, and garners customer loyalty. In FY 2008, which ended on June 31, 2008, IES recorded approximately $20.0 million in revenue and approximately $3.2 million in EBITDA (15.8% margin). The companys revenue breakout by service area is given below, followed by a description of each business segment.
Figure: FY 2008 Revenue Breakout by Segment
Exhibit Fabrication $3.2 million (16.0%) I&D and Management $9.9 million (49.7%)

Trade Show Services $13.5 million (67.8%)

Exhibit Design $3.2 million (16.2%)

Shipping Services $1.8 million (9.1%)

Rental/Refurbish $1.8 million (9.0%)

Exhibit Design. In its 1,000 square foot studio, the Exhibit Design segment applies state-of-the-art design technology to create three-dimensional blueprints for trade show exhibits. IESs Design team considers such factors as branding, lighting and traffic flow to create extraordinary visual designs and works closely with the Fabrication team to ensure that the exhibit captures all the clients ideas and expectations for the exhibit. The Design team also applies graphic art to finished structures in the Companys 6,500 graphic art and paint facility. The Design segment recorded $3.2 million in FY 2008 revenue (16.2% of total revenue) and is the Companys most profitable business, generating $0.9 million in FY 2008 EBITDA (26.9% margin). Exhibit Fabrication. The Fabrication segment manufactures trade show exhibits according to the Design teams plans in its newly retooled, 17,000 square foot facility. IESs versatile Fabrication team produces the most complex trade show exhibits available, maximizing trade show visitor impact through the creative use of plastics, metals and other building materials. The segment generated $3.2 million (16.0% of total revenue) and recorded an operating loss of approximately $0.6 million. The segment has recorded operating losses for three years due to heavy capital investments in automation, increasing labor and materials costs, and a challenging recovery from a discontinued UK venture. Management expects the segment to break even in FY 2010 and begin generating positive profits in FY 2011. 5

Trade Show Services. The Trade Show Services business provides install and dismantle (I&D), shipping, exhibit rental programs and exhibit management services at show sites, and offers storage services for exhibits in IESs 66,000 square foot warehouse facility when structures are not in use. The Companys leading segment, Trade Show Services contributed $13.5 million in FY 2008 revenue (67.8% of total revenue). It is also very profitable, contributing $2.9 million in FY 2008 EBITDA (21.3 % margin). IES is the established leader in trade show support services to the aerospace and defense and government services industries. Aerospace and defense clients contribute $17.1 million (85.6% of total revenue) and encompass a loyal customer base that has an average relationship of 12 years with IES. The Companys top customers include Lockheed Martin Corporation, Raytheon Co., United Technologies Corporation, L3 Communications Corporation, Boeing Co., and many other aerospace and defense leaders. The Company has developed an understanding of the marketing requirements of aerospace and defense clients, and these customers recognize and rely on IESs knowledge to deliver top rate products and services. The Company has leveraged this reputation for quality and reliability in this market to develop a pipeline of 11 new aerospace and defense customers that are expected to contribute approximately $1.4 million in FY 2009 revenue and create strong, recurring revenue going forward. IES also serves several government agencies and generated approximately $2.9 million in FY 2008 revenue (14.4% of total revenue) from these customers. IES plays a central role in its customers trade show programs, and the Company consistently offers flexibility and a strong value proposition. The Company creates all of its exhibits with interchangeable parts, allowing new structures to be created from the components of its customers existing exhibits. The versatility and interchangeability of IESs exhibit components delivers considerable savings to the Companys customers, and enables IES to collect design revenue when a customer needs to create a reconfigured exhibit from its existing structures, fabrication revenue for making the modifications required by the design, a fee for any rental components used, and a storage fee when the exhibit is not being used. The Company also often generates additional Trade Show Services revenue for installing, managing and dismantling these exhibits at trade shows. The Company generates this revenue on a frequent basis, redesigning, modifying and managing exhibits for multiple customers up to 110 times per year for each major customer. The convenience and versatility that IES offers in quickly responding to any request for reconfigured exhibits encourages customers to retain the Company for on-site trade show support services as well. Management is aggressively promoting cross-sales of its services to its existing customer base through favorable package pricing of contracts that designate IES the customers provider of full design, fabrication and on-site support services, and is targeting new markets in which to sell these comprehensive services (namely, middle market aerospace and defense companies). The Company offers customized rental and refurbished exhibits and structural components as an alternative to purchasing new exhibits. As shrinking corporate marketing budgets continue to make purchasing new structures difficult for some of its customers, IES offers a comprehensive set of rental alternatives and support services that make trade shows viable investments for many companies seeking to initiate a program. With these services, customers are charged on either a long-term lease basis or a per-show basis for rental structures or components, and in turn enjoy fully customized structures that capture all of IESs design and fabrication expertise for a lower and more dispersed cost than the high upfront cost of new exhibits. These design and fabrication services for rental/refurbished exhibits are 6

supported by a comprehensive set of on-site support services that include all of the Companys trade show services offerings. While IESs rental exhibits and components are used by many of its large customers in tandem with their purchased structures, management believes that these services are also a strong match for growing middle market companies that wish to initiate trade show program and has started targeting these firms, securing contracts with four middle market companies for FY 2009. Management sees the value and versatility of rental properties as an ongoing trend and has made its rental/refurbished exhibit services a permanent and increasingly important component of IESs business model.

MARKET The markets for exhibit design, exhibit fabrication and trade show services represent an $8.0 billion industry that is expected to grow at a weighted average rate of 4.7% for CY 2008 and 5.8% in CY 2009. The $1.1 billion market for new exhibit design services is projected to grow 4.1% for CY 2008 and 4.5% during CY 2009. The $1.7 million exhibit manufacturing space is expected to grow 4.2% for CY 2008 and 5.1% in CY 2009. The trade show services market is sized at $5.2 billion and is forecast to grow 5.0% in CY 2008 and 6.3% in CY 2009. Management believes that the following market trends will continue to affect IESs business. Tightening corporate marketing budgets are affecting new projects. The Company believes that strained corporate marketing budgets will continue to impact its new design and fabrication projects and those of its peers. Reduced budgets have increased the average exhibit lifecycle from three years in 2004 to seven years in 2008. Rental and refurbished exhibit services are growing in importance. The impact of tightening corporate marketing budgets on new design and fabrication projects has placed greater importance on the development of rental/refurbished exhibit programs to insulate revenue. Management believes that the most agile firms will strive to establish significant streams of revenue from these alternative services. IES is a pioneer in rental/refurbished exhibit services and has grown this business every year since its inception in 2005. Management believes that its efforts in establishing this business line will mitigate future lost revenue from new projects and create a healthy, alternate stream of recurring revenue. Strong aerospace and defense market performance despite low overall growth. While the trade show market for all industries grew only 3.2% on the CEIR Index, an index that measures trade show growth by industry based on a composite of attendee growth, exhibitor growth and net square footage growth, IESs niche aerospace and defense market grew 8.3% year over year. Increases in these metrics and in the number of aerospace and defense trade shows indicate growing demand for show services in this space despite decreasing demand for new exhibit construction. These trends point to a strong market opportunity for IES and management expects these developments to continue to support IESs Trade Show Services business going forward, as the Company adds new customers and continues to garner increasing business from its existing customer base.
Figure: Key Market Sizing and Growth Data
Calender Year, Revenue ($B) Trade Show Industry Exhibit Design Market Exhibit Fabrication Market Trade Show Services Market Revenue % Grow th Trade Show Industry Exhibit Design Market Exhibit Fabrication Market Trade Show Services Market Other Key Metrics % Grow th US GDP No. Attendees No. Exhibitors Net Square Footage 2006 16.5 1.0 1.6 4.7 2007 17.5 1.0 1.6 4.9 2008E 18.0 1.1 1.7 5.2 2009E 18.6 1.2 1.8 5.5 2010E 19.4 1.2 1.9 5.9

6.3% 5.9% 5.7% 6.3%

5.5% 4.2% 3.9% 5.1%

3.0% 4.1% 4.2% 5.0%

3.4% 4.5% 5.1% 6.3%

4.2% 5.5% 5.4% 6.9%

5.4% 4.6% 1.2% 4.6%

5.0% 2.2% 3.4% 2.2%

3.6% 1.9% 3.0% 1.9%

3.0% 3.2% 3.8% 3.2%

3.9% 4.0% 4.2% 4.4%

COMPETITIVE ADVANTAGES IES has several competitive advantages that have enabled the Company to outmaneuver its competitors and establish its place as a leader in the markets for exhibit design, fabrication and trade show services. Market leadership and brand identity. The Company is one of the oldest and most reputable exhibit manufacturers in North America, with more than 60 years experience in the trade show industry. The IES name is synonymous with quality and creativity, and the Company is the recognized leader of exhibit design, manufacturing and trade show services to the aerospace & defense and government industries. The Company has developed an intimate understanding of the design specifications, fabrication requirements, and trade show services needs of aerospace and defense companies. These companies recognize IESs expertise, and consistently choose to work with IES over larger companies. The customer loyalty and reputation for quality that IES has developed over the years represents a significant competitive advantage to the Company. Customer pipeline and new opportunities in existing markets. IESs reputation for quality and reliability in the aerospace and defense market has attracted new business in this space. The Company has added 11 new aerospace & defense customers that are expected to generate $1.4 million in FY 2009 revenue and provide a strong and recurring stream of future revenue, improving IESs market share and making its market position even more defensible. Flexible, innovative service offerings. IES delivers flexibility and value to its customers through its use of interchangeable components in manufacturing its exhibits and through its growing rental/refurbish service offering. The Company is a pioneer in both of these areas. Its customers realize significant savings in the ability to create new exhibits and booths from the components of their existing exhibits and to mix and match these components with rental parts to create an even broader range of exhibit possibilities. While offering this versatility to its customers, IES generates revenue from all of its core business plus a fee for any rental parts used. The Company generates this revenue frequently, redesigning, reconfiguring and managing exhibits up to 110 times per year for major customers. Modern design and manufacturing facilities. IES has recently made significant investments in the retooling of its fabrication facilities. The new facilities added nearly 25% more fabrication capacity and feature automated tools that are fully integrated with the software used by the Design team. Management expects that the CNC Alphacam integration routers and the other CAD-driven manufacturing tools that IES has recently purchased will generate considerable production, materials, and labor cost savings, representing a significant cost advantage over its peers in the competitive, price-sensitive exhibit manufacturing market.

BUSINESS STRATEGY
The Companys management has developed a business strategy designed to increase revenue, profitability and market share within its targeted business segments. The key components of the strategy are detailed below. Increase market share in aerospace and defense space. Management believes that the Company can leverage its reputation for delivering quality products and services to the aerospace and defense to win new business and increase its market share in the space. This plan has paid off immediately: IES has already booked 11 new aerospace and defense clients for FY 2009, providing an estimated $1.4 million in additional revenue for the fiscal year. Access middle market aerospace and defense firms. Management is targeting middle market companies in the aerospace and defense industry. For FY 2009, the Company has added four middle market companies to its customer roster. Many middle market companies have grown to the point that a trade show program would represent a powerful marketing tool and a professional means of exposure to new clients and industry participants. However, most of these companies limited marketing budgets make developing a trade show program a costly and unviable option. Management is addressing this challenge by rolling out a more affordable line of services designed specifically to fit the needs of these middle market firms. In addition, management sees an especially strong opportunity to market its rental/refurbished exhibit services to these companies. Increase same-show revenue. Management intends to increase same show revenue, a central driver of business value for the Company. IESs investment in a truck fleet has enabled it to serve more customers per show. Management is aggressively seeking other means to increase per show customer volume, including employing cross-sales, adding new large aerospace and defense customers and targeting middle market aerospace and defense customers. Additionally, management believes that it can institute low single digit percentage price increases on certain services without any impact on its customer base. Capture segment synergies. Management has begun several efforts to further capture the synergies inherent in its complementary services business model. Management has introduced integrated packages designed to further promote cross sales, and has geared pricing favorably toward sales of these combined design, fabrication and on-site services packages. The Company has also started to further integrate the segments technological infrastructures. Increase revenue in profitable business lines. The company currently generates the smallest portion of its total revenue from its most profitable service lines: design, rental/refurbished exhibits and shipping. Management has introduced measures to promote design revenue growth through more competitive pricing and through cross-sales with the other segments. Management also sees great promise in rental/refurbished exhibit services and plans to promote these services with aggressive pricing to new customers, placing special focus on middle market companies that are interested in started trade show programs. Managements early recognition of customers demand for rental and refurbished exhibits rather than new exhibits allowed the Company to outplay its competitors and develop a solid rental/refurbished exhibit business early on. IES now serves eight rental/refurbished exhibit customers and this business is outpacing growth in every other business line, increasing revenue 45.6% year over year in FY 2008, to $1.8 million. Finally, management sees a strong revenue opportunity in its shipping services. With its new fleet of trucks, the Company has established a growing exhibit shipping business 10

that is contributing an increasing proportion of total revenue. In FY 2008, shipping revenue was $1.8 million, growing 20.0% year over year. To support and streamline the shipping business, management has invested in logistics and inventory optimization technology. Restore profitability in Fabrication business. A difficult recovery from a discontinued UK operation, negative demand trends for new exhibits, and large capital investments have driven operating losses in the Fabrication business segment for the last three years, deteriorating company EBITDA. The Fabrication business carries a high degree of operating leverage, magnifying profits when business is strong and compounding losses when business is slow. Reaching breakeven revenue has been a serious challenge for IES. To address this issue, management plans to increase Fabrication revenue and restore the segments cost structure to lower historical levels. To turnaround the Fabrication segment, management plans to promote cross-sales with the Trade Show Services segment, access new customer markets (namely, middle market aerospace and defense firms) and leverage its recent fabrication automation investment to realize production, labor, and materials cost savings. With these measures, management expects the segment to break even in FY 2010 and begin generating positive EBITDA in FY2011. Control costs in Trade Show Services segment. The Company is enjoying strong growth in its Trade Show Services business, and management is initiating controls to better manage this growth. The Company intends to rationalize contract labor, equipment rental and materials costs through improved forecasting and resource planning in order to create a leaner segment cost structure.

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FINANCIAL OVERVIEW In FY 2008, which ended on June 31, 2008, the Company generated approximately $20.0 million in total revenue and recorded $3.2 million in EBITDA (15.8% margin). In CY 2009, management expects revenue to increase 12.7%, to $22.5 million, and to post $4.4 million in EBITDA (19.5% margin). The Company is expected to grow revenue at a 9.9% CAGR through FY 2012, to $31.4 million, and to improve EBITDA to $7.7 million (24.5% margin), largely through the planned turnaround of the Fabrication segment and the realignment of the Trade Show Services segments cost structure. The forecasts consider the Companys margin improvement potential, strong market opportunity and brand identity within the government contracting community. Also, these forecasts assume that management will be able to unlock further segment synergies that have not been realized.

Figure: IES Segment Financial Summary (000s)

2006A Revenue Exhibit Design Exhibit Fabrication Trade Show Services Total Revenue Revenue Grow th Exhibit Design Exhibit Fabrication Trade Show Services Total Revenue Grow th EBITDA Exhibit Design Exhibit Fabrication Trade Show Services Total EBITDA EBITDA Margin Exhibit Design Exhibit Fabrication Trade Show Services Consolidated Margin EBITDA Grow th Exhibit Design Exhibit Fabrication Trade Show Services Total EBITDA Grow th 2,675 2,264 11,302 16,242 NA NA NA NA 575 (452) 2,739 2,862 21.5% NM 24.2% 17.6% NA NA NA NA 2007A 2,921 3,100 10,691 16,711 9.2% 36.9% (5.4%) 2.9% 855 (140) 2,415 3,130 29.3% NM 22.6% 18.7% 48.7% NA (11.8%) 9.4% 2008A 3,225 3,197 13,544 19,966 10.4% 3.1% 26.7% 19.5% 867 (595) 2,889 3,161 26.9% NM 21.3% 15.8% 1.5% NA 19.6% 1.0% 2009E 3,577 3,373 15,544 22,494 10.9% 5.5% 14.8% 12.7% 1,004 (204) 3,593 4,392 28.1% NM 23.1% 19.5% 15.7% NA 24.4% 38.9% 2010E 4,021 3,677 17,644 25,341 12.4% 9.0% 13.5% 12.7% 1,209 (8) 4,466 5,666 30.1% NM 25.3% 22.4% 20.4% NA 24.3% 29.0% 2011E 4,439 4,118 19,809 28,366 10.4% 12.0% 12.3% 11.9% 1,378 35 5,292 6,705 31.1% 0.8% 26.7% 23.6% 14.0% NA 18.5% 18.3% 2012E 4,971 4,530 21,876 31,376 12.0% 10.0% 10.4% 10.6% 1,567 104 6,018 7,689 31.5% 2.3% 27.5% 24.5% 13.7% 198.5% 13.7% 14.7%

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INVESTMENT CONSIDERATIONS Deep customer roster and strong pipeline. IES has served its core customers for an average of 12 years and has developed a reputation for quality and excellence. The Company has a deep understanding of aerospace and defense trade show requirements and has leveraged its stellar reputation to book 11 new aerospace and defense customers for FY 2009. With the purchase of IES, an acquirer could gain market share in a space that could take years to penetrate organically. Market opportunity. The design, fabrication and trade show services industries are all expected to outpace the growth for the overall trade show industry. The increasing number of aerospace and defense trade shows held each year, the increasing average size of these shows and the growing number of show attendees offer a strong market opportunity for a potential acquirer. IES offers an acquirer access to a growing market that has flourished despite economic downturn in recent years. Strong, defensible market position. Top aerospace and defense firms and government agencies continually choose IES over the Companys larger competitors to serve their exhibition services needs because they recognize IESs deep understanding of their exhibition requirements. For an acquirer, IES has the reputation, expertise and customer loyalty in place to sustain its leading market position going forward. Recurring revenue and pipeline visibility. The Companys Trade Show Services business serves 26 customers at more than 350 shows per year, creating a reliable and profitable stream of recurring revenue. For this segment, which generates most of the Companys revenue and profits, contract arrangements with customers are a common convention. IES has developed the scale and bargaining power to secure these bookings, which average three to five years. An acquirer would gain a predictable source of recurring revenue with the purchase of IES. Segment turnaround potential. While the Fabrication business is currently operating at a loss, all the elements are in place to prepare the segment for a profitable future. The segments high cost of sales in FY 2008 was due mainly to one-time expenses associated with the recent retooling of the Fabrication facility and residual costs associated with a discontinued UK venture in 2005. The Companys new automation is expected to generate significant production, materials and labor cost savings through increased efficiency, reduced materials waste, and reduced headcount. For both strategic and financial buyers, a turnaround of the Fabrication segment presents a strong value creation opportunity. Segment synergy opportunities. Management has yet to realize the total segment synergies available to the Company. An acquirer could exploit the complementary nature of IESs service lines to aggressively cross-sell the Companys products and services and initiate cost-savings programs (through further integration of the business segments) that could improve profitability considerably. The complementary nature of the three segments is attractive for the integration opportunities that the current business model offers a potential acquirer. Profitability with excess capacity. With its expansive facilities, management believes that the Company has the capacity to support approximately $30 million in revenue and currently operates at about 65% of its total capacity. This available capacity reduces the need for a potential acquirer to make significant capital investments in the near future, helping to drive and support future cash flows. Equally, a potential acquirer could reduce capacity and realize significant rent savings. 13

Low capital expenditure requirements. The nature of IES three business segments requires low levels of capital investment to begin with, and IES has recently completed the only major capital projects that the company will need to execute for the next several years: the retooling of the Fabrication facility and the purchase of a truck fleet. Due to these investments and the level of capacity in place, an acquirer would need to make only minimal capital outlays in coming years, allowing the acquirer to develop a strong cash position in this time. For a financial or strategic buyer, this cash could be used to pay down acquisition financing debt or to deliver strong equity returns to investors. Energetic, experienced management team. The Companys management team has developed deep operational experience and strong relationships in the trade show industry. The management team understands the subtleties of the business and is passionate about improving company performance. Managements success in containing operating costs and developing an impressive customer pipeline attests to the caliber of leadership that the Company has in place. Both strategic and financial buyers stand to gain from managements skill, expertise and understanding of the Companys business model and target markets. Clean balance sheet. The company carries no debt and $2.7 million in cash on its balance sheet. Moreover, it has a relatively strong asset base of $7.2 million to support acquisition financing, making the Company an attractive investment for both strategic and financial buyers from a balance sheet perspective.

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II.

PRODUCTS, SERVICES AND CUSTOMERS

IES is a state-of-the-art, full service exhibit manufacturer and trade show services provider. The Company provides a range of exhibit manufacturing and management services, including custom design, fabrication and on-site trade show services, as well as complete logistical support for the most aggressive exhibit programs. This comprehensive, integrated services model has driven IESs historical financial performance and its strong reputation for superior quality and service. A privately held company, IES was established in 1952 under the name IES Associates. The Company was incorporated in the Commonwealth of Virginia in 1960 and is currently owned solely by its General Manager. IESs headquarters are located in Springfield, Virginia and house the Companys offices, production facilities and storage space in a 100,000 square foot complex that has recently been renovated to streamline operations. These facilities accommodate an expansive 1,000 square foot design lab, 17,000 square feet of plastic, metal and woodworking fabrication space, a 6,500 square foot paint and graphic production facility and 66,000 feet of customer exhibit storage space to support the Trade Show Services segments operations. The Company employs approximately 75 permanent full time people. IESs Trade Show Services workforce is unionized, while non-union personnel perform fabrication and graphic production. IESs success derives largely from its product innovation, its ability to build on core strengths and its reputation for quality in the aerospace, defense and government markets. The Company remains the clear leader in its niche aerospace and defense space, due to managements commitment to developing its product and services, employing cutting edge technology, and creating a lean business model that consistently delivers value and flexibility to the IESs customers. To this end, the Company offers on both a purchase and rental basis revolutionary exhibits and structural components made with interchangeable parts that enable existing exhibits to be reconfigured into new structures. Additionally, the Company has created increasingly sophisticated management tools to match the constant development of its products and services. IESs new proprietary Job Tracking platform and its updated inventory management system are two examples of new technologies that are expected deliver considerable cost savings and improve process efficiency. The Companys products and services are outlined in detail in the following section.

PRODUCTS AND SERVICES In IESs catalog of product and service offerings, technology intersects with craftsmanship. The Company provides its clients with a complete line of in-house exhibit design and fabrication services that combine the most advanced design software available with the work of seasoned craftsmen. The Company applies its proprietary management technology at every stage of its projects to ensure efficiency, accuracy and customer satisfaction. IES has continually refined its portfolio of services while building a reputation for quality that has earned the Company a strong roster of global clients. The Companys revenue breakout by service area is given below, followed by a description of IESs core services.

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Figure: Revenue Breakout by Service Area

Revenue ($M) 35.0 $28.4
4.5

$31.4

30.0 $25.3 25.0 $20.0 20.0 $16.2

2.3 2.7 0.8 1.7

4.1 5.0 4.4 3.1 2.9 3.2 2.9

$22.5
3.4 3.6 2.1 2.1

3.7 4.0 2.5 2.5

$16.7
3.1 2.9 1.2 1.5

3.2 3.2 1.8 1.8

15.0

10.0

5.0

8.8

7.9

9.9

11.3

12.7

14.1

15.5

0.0 2006 2007 Install & Dismantle 2008 Shipping 2009E Rental 2010E Design 2011E Fabrication 2012E

Exhibit Design The IES Design team has more than 50 years experience working with clients to provide a wide range of innovative, creative and contemporary solutions to meet all of their visual communication needs. Applying state-of-the-art 3D Design software, including AutoCAD, Architectural Desktop, Autodesk Viz 4, and Vectorworks, IES delivers stunning color renderings and line drawings that clearly show all aspects of the proposed structure. These realistic blueprints feature walk-around and walk-through models and allow the designers to specify fabrication techniques that will capture every aspect of the customers vision for the exhibit structure and maintain the integrity of the design. Whether proposing new structures or working with existing components, IESs experienced designers understand the subtleties of the design process and consider traffic flow, branding, lighting, and numerous other factors that affect the success of the clients exhibit experience. Exhibit Fabrication With 173 years combined experience in solid surfacing, plastic, metalworking and casework, the Companys 12-person exhibit fabrication team brings designs to reality in the Companys 17,000 square foot fabrication shop. The recently retooled fabrication facility features new AlphaCAM Anderson CNC routing automation that is fully integrated with the advanced technology used by IESs designers. This improved technology limits wasted materials, increases accuracy and improves operating efficiency. With capabilities spanning wood, metal and wire fabrication, plastics, paint, electrical and more, the IES Fabrication team understands how to deliver its customers messages through the lightest and most cost effective exhibit structures available. The fabrication teams capabilities and experience result in the most efficient methods of constructing and refurbishing its customers event marketing assets. Each exhibit is designed and built at IES so that the structure can be broken down and stored cost effectively and so that the structure can be quickly reconfigured using minimal extra parts. Many of IESs customers feature exhibits at more than 100 shows per year, and this flexibility enables these customers to create fresh, new exhibits from their existing structures and to customize the message that they deliver at each show. In addition to its permanent staff, the Company also has licensed welders and electricians on staff to complete projects within industry safety standards.

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Trade Show Services IESs Trade Show Services offerings include shipping, install and dismantle (I&D) services, exhibit rental programs and exhibit management services. The Company currently provides these services to 26 customers at over 350 domestic and international shows. By often serving multiple customers at the same show, IES has improved operating efficiency and established a high margin set of services that create recurring revenue. The services offered by the segment are detailed below. Install and Dismantle (I&D) Services. With its I&D team, the Company employs a highly skilled labor force that provides innovative craftsmanship and attention to detail in meeting customers exhibit assembly and tear-down needs. These services make the customer experience both productive and proficient while maintaining simplicity. As its customers official services contractor IES coordinates a seamless chain of events for accuracy and precision. The Companys I&D teams travel with its customers exhibits, providing a higher level of service and delivering experienced labor whenever necessary. At shows, IESs onsite teams are easily accessible and provide immediate assistance and show site repairs when needed. Moreover, from planning to production, IESs account executives have a vested interest in the success of its customers shows and are available at every stage of the journey. Shipping, Materials Handling and Storage. IES provides exhibit shipping services to and from trade shows, materials handling services during shows, and storage services between shows at its 66,000 warehousing facility. The Company outsourced its exhibit shipping services until 2006, when it invested in a fleet of seven new trucks. This fleet has improved efficiency considerably, reducing transportation and freight costs and enabling the Company to both establish a profitable revenue stream and serve more customers per show. The company continues to use third-party air shipping services for shows that are located beyond the truck fleets capabilities. Custom Exhibit Rental Services. IES offers its customers the flexibility of selecting either new exhibits or customized rental exhibits and structural components. Rental and refurbished exhibit services are rapidly growing in popularity among exhibitors, reflecting reduced corporate marketing budgets and the increased average lifecycle of trade show exhibits. IES has the capabilities and assets in place to exploit these trends and to provide these services to a growing market of customers. These services enable the Companys customers to maintain aggressive trade show programs without the costs of purchasing new structures. The Company provides customized services ranging from fully managed lease programs to per show exhibit rentals. Exhibit Management Services. IESs management staff operates on-site at both national and international shows, coordinating and managing every aspect of the exhibition process. The Company has developed close relationships with major associations, trade show venues, and decorators, nationally. These contacts are extremely valuable to IESs clients for expediting permits, height approvals, wireless connectivity at booths, and other burdensome and time-consuming requirements. IES has developed a proprietary management database and technology platform to coordinate and drive the Trade Show Services business operations. The Companys database benefits the client by enabling real-time transfer of data and an electronic approval process for on-going projects. The database benefits the Company by tracking every aspect of trade show management information, allowing all scheduling for shipping, I&D, travel and other general information to be readily available to IES personnel with just 17

a few key strokes. Workflow based on IESs proprietary management technology is detailed in the diagram below.

Figure: Project Workflow under IESs Proprietary Management Technology

18

CUSTOMERS
The Company has 34 total customers, most of which operate in the aerospace & defense industry (85.6% of total revenue). Government defense agencies also contribute a significant level of business (14.4% of total revenue). The Company has considerable customer concentration with six companies (48.9% of total revenue). These include: Lockheed Martin Corporation (9.1%); Raytheon Company (9.0%); United Technologies Corporation (8.9%); BAE Systems (8.0%); Boeing Company (7.0%), and L-3 Communications Corporation (6.9%). IES continues to do business on a contract basis with each of its customers as it has done for an average of 12 years with these companies, promoting strong pipeline visibility. For FY 2009, management has contracts in place with 11 new customers that are expected to contribute $1.4 million in revenue (6.3% of total revenue). These include General Dynamics Corporation, QinetiQ North America, Honeywell International and other federal contractors. This list also includes four middle market aerospace and defense firms that are initiating trade show programs. Management intends to further penetrate the middle market by providing affordable packages that make fielding a trade show program viable. The Company sees a tremendous opportunity in these new pipeline customers and intends to grow each of these accounts steadily, winning new business each year. Management developed its current top customers with this approach, and believes that it can execute similarly with the Companys new customers. IESs revenue breakout by current and pipeline customers is given in the below table, followed by profiles of the Companys key customer relationships.
Figure: Revenue Breakout by Customer (000s)
2007 Corporate Cus tom e rs Lockheed Martin Corp. Raytheon Co. United Technologies Corp BAE Systems Boeing Co. L-3 Communications Corp. Northrop Grumman Corp. Computer Sciences Corporation URS Corp. Harris Corp. Other Total Corporate Gove rnm ent Custom e rs USAF US Navy US Army Other Total Governm ent Pipeline Custom ers General Dynamics QinetiQ NA Honeyw ell International EDS Corp. DRS Technologies SRA International Combat Support Associates, Inc. Other Total Pipeline Total Revenue Percentage Contribution to Total Revenue 2008 2009E 2010E 2011E 9.1% 9.0% 8.9% 8.0% 7.0% 6.9% 4.9% 4.2% 3.4% 3.6% 20.6% 85.6% 9.1% 9.0% 9.0% 7.9% 7.0% 6.9% 4.7% 4.1% 3.5% 2.8% 19.1% 83.1% 9.0% 8.8% 9.0% 7.8% 6.8% 6.8% 4.6% 3.9% 3.2% 2.5% 18.1% 80.5% 8.8% 8.6% 8.8% 7.6% 6.7% 6.7% 4.5% 3.8% 3.1% 2.5% 16.8% 77.9% 2007 1,554 1,537 1,504 1,387 1,187 1,187 836 735 618 518 3,727 14,790 Revenue Contribution by Customer 2008 2009E 2010E 2011E 1,817 1,797 1,777 1,597 1,398 1,378 978 839 679 719 4,113 17,091 2,071 2,048 2,048 1,798 1,593 1,570 1,069 933 796 637 4,346 18,908 2,327 2,275 2,327 2,017 1,758 1,758 1,189 1,008 827 646 4,679 20,812 2,547 2,489 2,547 2,199 1,939 1,939 1,302 1,100 897 723 4,862 22,544

9.3% 9.2% 9.0% 8.3% 7.1% 7.1% 5.0% 4.4% 3.7% 3.1% 22.3% 88.5%

4.1% 3.1% 2.2% 2.1% 11.5%

4.8% 3.4% 3.1% 3.1% 14.4%

3.7% 2.8% 2.1% 2.0% 10.6%

3.7% 2.8% 2.1% 2.0% 10.6%

3.5% 2.7% 1.9% 1.9% 10.0%

685 518 368 351 1,922

958 679 619 619 2,875

842 637 478 455 2,412

957 724 543 517 2,740

1,013 781 550 550 2,894

100.0%

100.0%

1.3% 1.1% 0.9% 0.6% 0.7% 0.5% 0.5% 0.7% 6.3% 100.0%

1.9% 1.6% 1.4% 1.0% 0.8% 0.6% 0.6% 1.0% 8.9% 100.0%

2.7% 2.3% 2.0% 1.4% 0.9% 0.6% 0.7% 1.5% 12.1% 100.0%

16,711

19,966

296 250 205 137 159 114 114 159 1,433 22,753

491 414 362 259 207 155 155 259 2,301 25,853

781 666 579 405 260 174 203 434 3,502 28,939

19

Lockheed Martin Corporation IES has managed the Lockheed Martin trade show program since 1994, and the Lockheed Martin account now comprises 9.1%, or $1.8 million of the Companys total revenue. The Company manages approximately 150 conferences and exhibit events for Lockheed Martin annually. Over the years, IES has worked closely with the Lockheed Martin marketing team to develop creative ways to deliver Lockheeds intended messages using advanced exhibit structures. As a leading technology company, Lockheed Martin uses very technology-oriented exhibits to communicate its innovative nature to trade show attendees. Lockheed Martins exhibit structures so that they can be quickly reconfigured for use in many different applications and when Lockheed Martin it uses more than one exhibit at a show. The Company has worked with Lockheed Martin for 14 years and has contracts in place to service Lockheeds trade show requirements until 2010. During its relationship with Lockheed Martin, the Company has enjoyed a 100% win rate for all design, fabrication and trade show services.

Raytheon Co Raytheon Co. first contacted IES to create its trade show exhibits in 1995. Since then, the Company has come to provide Raytheon with full set of exhibit structures as well as trade show support at approximately 165 annual events and conferences throughout the United States and internationally. IES now derives 9.0% of its revenue ($1.8 million) from the Raytheon account. Since becoming IESs first rental customer in 2005, Raytheon has added a considerable number of rental structures and components to its extensive set of purchased exhibits, broadening its exhibiting capabilities considerably. Like many of IESs customers, Raytheon stores its collection of purchased and rental structures in IESs expansive warehousing facilities so that the Company can rapidly meet any requests for new designs and modifications and ship the exhibits to their destination via IESs truck fleet or a competitively priced third party carrier. In its 13 year relationship with Raytheon, IES has never lost a design, fabrication or trade show services contract and remains Raytheons sole supplier of these services. IES has a contract in place with Raytheon for complete services until 2012.

United Technologies Corporation IES has managed all of United Technologies Corporations trade show requirements since 1998 and now derives 8.9% of its total revenue ($1.8 million) from this account. In its 10-year relationship with United Technologies, IES has worked alongside its marketing team to develop some of the most revolutionary trade show booths and exhibits on the aerospace and defense trade show circuit. United Technologies fields an aggressive 160 show program and strives to convey ingenuity and fresh thinking at every stop. IES is there for United Technologies every step of the way, providing support services at every show and storing all of Untied Technologies exhibit assets in its warehousing facility when the structures are not being used. The Company has a contract in place until 2012 for complete trade show and exhibit support and has never lost a re-compete for business with United Technologies.

20

BAE Systems IES generated $1.6 million in FY 2008 revenue (8.0% of total revenue) from the BAE Systems account and has served the UK-based company in both the US and internationally since 1999. IES provides 80% of the total services rendered to BAE Systems and its subsidiaries on their extensive 165-show circuit. The Company has manufactured a state-of-the-art collection of exhibits for BAE and provides extensive rental services to the aerospace and defense leader. BAE stores most of its trade show assets in IESs warehouses and continually calls on the Company to both produce new structures and reconfigure existing structures components into new exhibits. On average, IES performs this set of services 60 times per year for BAE and generates considerable revenue from these recurring business processes. IES has won 90% of its total re-competes for BAE Systems business and is contracted until 2012 to support BAE on a minimum of 130 shows annually.

Boeing Co. IES began producing exhibits for Boeing Co. in 1993 and remains Boeings sole exhibit provider and its supplier of trade show services at more than 85% of the 170 shows in which Boeing and its subsidiaries participate each year. The Boeing account delivered $1.4 million in FY 2008 revenue (7.0% of total revenue). IES has manufactured a significant collection of structures for Boeing and has worked on some of its largest and most complex projects with Boeing, including the unveiling of the new 787 Dreamliner aircraft in 2007. The Company has won more than 90% of its re-competes for Boeings business and has contacts in place until 2013 to provide services to Boeing at minimum of 110 shows annually.

L-3 Communications Corp.

The Company was worked with L-3 Communications since 2000, when it was approached by L-3s marketing team to develop a comprehensive set of trade show assets and provide services at 30 shows. Since then, IES has won increasing business with L-3, has never lost a re-compete and derived $1.4 million in FY 2008 revenue from L-3 (6.9% of total revenue). The Company now supplies an extensive mix of both new and rental structures to L-3 and its subsidiaries and provides support services at more than 120 shows annually. IES is contracted until 2011 to provide comprehensive support at all of L-3s US shows.

21

III.

MARKET

Despite a weak economy, low overall growth rate projections for trade show metrics and negative marketing budget trends, the markets in which IES operates are all expected to outpace the 3.0% growth predicted for the trade show industry in CY 2008. Moreover, while growth in the number of attendees, number of exhibitors and net square footage has decreased in almost every major industry, the aerospace & defense industry posted strong growth in these key metrics. The condition of the overall economy is a major driver of corporate marketing budgets, the trade show industry, and the markets that the Company serves. The strength of IESs customer industries also drives demand for the Companys services, and the stability of the aerospace and defense industry has helped to insulate IESs revenue and actually decrease its risk despite its considerable customer concentration in this space. The US economy, the trade show industry and IESs primary markets are discussed in greater detail below.

THE U.S. ECONOMY The markets that IES serves are affected by the overall economy and typically track GDP growth and other major economic indicators. The current macroeconomic picture for the US is mixed despite the credit crisis and other catalysts of the current recession. Despite two quarters marked by low output growth, high price levels and growing unemployment, sentiment regarding economic improvement in the remainder of CY 2008 is positive. Macroeconomic developments suggest that the US economy may be working toward recovery. The index of leading indicators ended a slow Q2 2008 with a June gain. While the index fell by the largest amount over the course of the year since 1990, reflecting increasing money supply and a steep yield curve, it ended June 2008 with a rise of 0.3%, well above the -0.2% median analyst forecast. Still, recession is expected to continue until at least mid-2009, and economic activity is likely to reflect expected stimulus efforts by the President and Congress. Banc of America Capital Markets pegs the expected fiscal package at a minimum of $300 billion (2.5% of GDP) and expects it to draw on tax cuts for middle and lower income households, subsidies for distressed homeowners, job creation programs, block grants to states and tax credits for new home buyers. The weakened economy has had a significant effect on trade show industry behavior, as discussed in the following section.
Figure: Historical and Forecast GDP Growth
GDP % Growth 8.0 6.9 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08E Q4 08E Q1 09E Q2 09E Q3 09E Q4 09E

6.3

4.3 3.5

4.1 3.4 3.2 3.0 3.0 3.1

2.9

2.3

22

THE TRADE SHOW INDUSTRY The trade show industry, which includes the markets for exhibitor space, trade show management services and the support services that IES provides (exhibit design, exhibit fabrication and on-site support services) contributes approximately $18.0 billion to US GDP. Within the trade show industry the markets for IESs services account for approximately $8.0 billion. Trade show industry revenue has been limited by weakened economic conditions and tightened corporate marketing budgets. In consequence, industry revenue grew only 3.2% in CY 2007. GDP growth forecasts for Q3 2008 onward are driving similarly moderate growth projections for the industry as a whole. Through CY 2012 industry revenue is expected to grow at a compound annual growth rate of 3.5%. Historical and forecast industry revenue and revenue growth are given in the below chart.

Figure: Trade Show Industry Revenue and Revenue Growth

Revenue ($B) 25.0 Revenue Growth % 5.0% 4.5% 20.0 4.0% 3.5% 15.0 3.0% 2.5% 10.0 2.0% 1.5% 5.0 16.3 0.0 2005 2006 2007 2008 2009E 2010E Revenue Growth 2011E 2012E 16.9 17.4 18.0 18.8 19.6 20.4 21.4 0.0% 1.0% 0.5%

Industry Revenue

The condition of the trade show industry is closely tied to the condition of the US economy and is measured primarily by growth in the number of attendees, number of exhibitors, and net square footage. The number of show attendees impacts exhibitors decisions about whether to book future shows, which in turn affects the size (net square footage) of future shows. For this reason, these metrics share high correlations with one another, and with US macroeconomic metrics, as shown in the correlation matrix provided below.
Figure: Correlation Matrix for Key Tradeshow Metrics

US GDP US GDP Number of Exhibitors Number of Attendees Net Square Footage 18.0% 35.0% 26.0%

Number of Exhibitors 18.0% 87.0% 92.0%

Number of Attendees 35.0% 87.0% 82.0%

Net Square Footage 26.0% 92.0% 82.0% -

For such trade show services providers as IES, these metrics drive same show revenue, a primary determinant of company value in the Companys trade show support services market. As attendees increase, exhibitors follow suit and trade show square footage increases. In consequence, trade show services providers are able to increase customer volumes per show and generate stronger same show revenue. Attendees, exhibitors and net square footage have each increased steadily for more than three 23

decades, and experienced accelerated growth through CY 2006. Recently, though, growth in these measures has been more moderate, reflecting a weaker economy and reduced corporate marketing budgets. The recent growth trends for these measures are given in the below chart.
Figure: Growth in Exhibitors, Attendees and Net Square Footage
Growth (%) 9.0 8.0 7.0 6.0 5.0 4.0 3.0
2.2 2.1 6.5 5.6 6.8 5.7 4.6 3.8 3.4 3.0 3.0 1.9 3.3 4.6 3.8 3.2 6.8 8.5

2.0
1.1 1.2

1.0
-0.5

0.0 -1.0 2003 2004 2005 2006 Exhibitor Growth (%) 2007 2008E 2009E

NSF Growth (%)

Attendee Growth (%)

PRIMARY MARKETS The exhibit design, exhibit manufacturing and trade show services spaces comprise an $8.0 billion market that is expected to grow 5.8% on a weighted average basis in CY 2009, considerably outpacing the 3.4% growth projected for the overall trade show industry. The exhibit design and fabrication markets are fragmented and very competitive, with the largest company, ExhibitGroup/Giltspur, commanding less than a 10% market share. The trade show services market is more concentrated, with the largest player, GES Exposition Services, claiming approximately a 20% market share. While the overall demand for trade show services is increasing, operators in this market are experiencing tightening margins due to intensifying price competition. The primary markets for IESs products and services are discussed in greater detail below.
Figure: Design, Fabrication and Trade Show Services Industry Revenue
Revenue ($B) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 1.0 0.0 2006 2007 2008 Exhibit Fabrication 2009E 2010E Exhibit Design 1.0 1.1 1.2 1.6 1.6 1.7 1.8 1.9 4.7 4.9 5.2 5.5 5.9 $7.3 $7.6 $8.5 $8.0 $9.0

1.2

Trade Show Services

24

The Exhibit Design and Fabrication Markets The $1.1 billion market for exhibit design services is expected to grow 4.1% for CY 2008 and 4.5% in CY 2009. The market for exhibit manufacturing is sized at $1.7 billion and is expected to grow 4.2% for CY 2008 and 5.1% during CY 2009. Management believes that the following trends and characteristics of the exhibit design and fabrication markets will continue to affect IESs business. Tightening corporate marketing budgets. The Company believes that strained corporate marketing budgets will continue to impact its new exhibit design and manufacturing projects and those of its peers. Reduced corporate marketing budgets have increased the average exhibit lifecycle from three years in 2004 to approximately seven years in 2008. Rental and refurbished exhibit services growing in importance. Limited corporate marketing budgets have placed greater importance on the development of rental/refurbished exhibit services to insulate revenue streams. These services enable exhibitors to field aggressive trade show programs without having to commit large one-time marketing expenditures on new structures. Management believes that the most agile firms will strive to establish significant revenue streams from these alternative services and has established a strong and growing rental/refurbished exhibit business to provide its customers flexibility and to meet their exhibition requirements. Fragmented, competitive, low barriers to entry. The exhibit design & manufacturing market is dominated by competitive small and middle market firms, many of which have very high degrees of customer concentration. These attributes create a very fragmented, low margin industry environment with few barriers to entry. Market leader ExhibitGroup/Giltspur, for example, controls less than a 10% share and has not been profitable since 2000 despite the execution of several acquisitions and cost savings programs. These competitive and market pressures make customer pipeline, customer diversification and cost advantages central to success in this competitive market. IES management has developed the market leadership and cost advantages to compete with and win business from the largest exhibit design and fabrication firms.

The Trade Show Services Market The $5.2 billion market for on-site trade show services is expected to grow 5.0% in CY 2008 and 6.3% in CY 2009. Increases in exhibitors, attendees, square footage and number of trade shows indicate stable demand for show services despite decreasing demand for new exhibit design and construction. The Company believes that the following trends and characteristics of the trade show services market continue to impact IESs business. Impressive aerospace & defense trade show performance. While the trade show market for all industries grew only 3.2% on the CEIR Index, an index that measures trade show growth by industry based on a composite of attendee growth, exhibitor growth and net square footage growth, IESs niche aerospace and defense market grew 8.3% year over year. Growth in these measures and in the number of aerospace and defense trade shows indicate growing demand for show services in this space. These trends point to a strong market opportunity for the Company and management expects these developments to continue to support the Trade Show Services business going forward, as IES adds new customers and continues to gain increasing business from its existing customer base. 25

Strong pipeline visibility. Operators in this market enjoy a high degree of pipeline visibility, as contract arrangements with customers are a common convention among operators with the scale and bargaining power to secure these three to five year bookings. IES has developed the scale to secure these long-term contracts, and has enjoyed more than a 95% win rate for its contracts over the last five years. Concentrated but competitive. The trade show services market is moderately concentrated, with the two largest players, GES Exposition Services and The Freeman Companies, commanding 40% of market share, and the remaining market consisting of competitive middle market companies. Consolidation is accelerating in this market, as larger player seek to access new spaces, expand core capabilities and gain additional market share. Price sensitivity and show rotation. The market is price sensitive, making cost advantages important differentiators for operators. The trade show services market is also seasonal in nature, with revenue peaking in the first and second quarters of the calendar year and bottoming in the third quarter. Too, the rescheduling and movement of trade shows to different months and cities and the replacement of certain trade shows with other shows create some revenue variability in this otherwise relatively predictable market.

CUSTOMER MARKETS Providers of the trade show support services that IES offers are highly sensitive to the financial condition of their customers industries. Customer industry downturns typically result in a tightening of corporate marketing budgets, including trade show budgets. The aerospace & defense industry in which IESs core customers operate has a history of strength and growth. The historical and expected revenue behavior of IESs key customers support the idea that the Company has a strong market opportunity in spite of a weak macroeconomic outlook.

Figure: Historical and Projected Customer Revenue ($B)

50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0
2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E

Lockheed Martin Corp.

Raytheon Co.

Honeywell International

General Dynamics Corp.

While nearly every sector of stocks is suffering, aerospace and defense equities are outperforming the market and showing little sensitivity to overall market conditions. Recent performance of the S&P 500 Aerospace and Defense index is plotted against S&P 500 and Nasdaq Composite indices in the chart provided below. 26

Figure: Aerospace and Defense Equities Are Outperforming the Market

163.4

153.4

143.4

133.4

123.4

113.4

103.4

93.4

5/23/2005

8/15/2005

9/26/2005

11/7/2005

1/31/2006

3/14/2006

4/25/2006

7/18/2006

8/29/2006

2/14/2007

3/28/2007

6/20/2007

9/12/2007

12/5/2007

1/17/2008

2/28/2008

12/19/2005

10/10/2006

11/21/2006

NASDAQ Com posite Index (^COM P) - Index Level

S&P 500 Index (^SPX) - Index Level

S&P 500 Aerospace and Defense Industry Index - Index Level

INDUSTRY M&A TRENDS M&A deal activity has increased consistently since 2003, suggesting a recent consolidation in the exhibit manufacturing and trade show support services spaces. Recent deal activity has been characterized by a wide variety of buyers, including private equity groups, mega exhibition companies and small strategic players, creating a competitive market for acquisitions. Aggregate deal volume and value trends are depicted below.
Figure: Aggregate Deal Value and Volume, 2001-2007
Number of Deals 70 60 50 49 40 30 20 18 10 0 2001 2002 2003 Number of Deals 2004 2005 2006 2007 0 66 2,000 52 1,500 Agg. Value ($M) 2,500

33 23

34

10/24/2007

1,000

500

Agg. Value ($M)

While the overall demand for trade show services is increasing, companies that provide these services are seeing tighter margins due to increasing competition. Organic growth is becoming more difficult to achieve, and many larger trade show services firms are using acquisitions to create growth, increase market share, access new markets and expand capabilities. Selected 2007 and 2008 trade show services transactions are provided in the table below.

27

4/10/2008

7/4/2005

6/6/2006

1/3/2007

5/9/2007

8/1/2007

Figure: Selected 2007 and 2008 Exhibition Services M&A Transactions

Target / Issuer MICE Display Works Tex-As GMBH Fairs and Exhibitions Ltd. Utility, Inc. Decorex International Ltd. Ithaca Business Media, Ltd. PLASTIMAGINE Mexico SEPIC SAS Agor SAS The Equicom Group Creative Communications, Inc. Promotor International, S.p.A. McBride Communications EXPOFormer AG Advanstar, Inc. Core Creative Nichols, Inc. Melville Exhibition & Event Services, Ltd. Convention Management Group, Inc. Talking Points Ltd. Corporate Hospitality Services Buyer / Investor JPB Capital Partners M4e AG (DB:MU4) Tarsus Group plc (LSE:TRS) Exhibit Effects East, LLC CMP Information, Ltd. CMP Information, Ltd. E.J. Krause & Associates Tarsus Group plc (LSE:TRS) GL Events (ENXTPA:GLO) TSX Group SIGMA Marketing Group, LLC GL Events (ENXTPA:GLO) E.B. Lane Marketing Communications Andreas Messerli AG New York Lif e Capital Partners Haw thorne Co. Moss, Inc. Viad Corp (NYSE:VVI) Naylor Publications, Inc. BCD Meetings & Incentives Real Aff inity plc (AIM:RAF)

MAJOR COMPETITORS GES Exposition Services, Inc. GES Exposition Services is the trade show services segment of Viad Corporation (NYSE:VVI). The company specializes in I&D services, including material handling, staging, overhead sign rigging, temporary electrical equipment, carpet and furnishings, and freight services. GES commands the largest share in the market for trade show services (approximately 20%). The company posted $750 million in FY 2007 revenue and is expecting $785 million in FY 2008 revenue. It is headquartered in Las Vegas, NV and has facilities throughout the US, Canada and the United Kingdom. ExhibitGroup / Giltspur, Inc. Exhibit group / Giltspur, Inc. is the exhibit design and fabrication segment of Viad Corporation (NYSE:VVI). It provides exhibit design, manufacturing and program management services, as well as promotions and pre-trade show marketing campaigns. The company also leases modular panel systems, double-deck systems and hanging signs. Commanding the largest share of the exhibit design and fabrication markets (approximately 10%), Exhibitgroup/Giltspur posted $152 million in FY 2007 revenue and is expecting FY 2008 revenue of $160 million. The company is headquartered in Rosselle, IL with facilities throughout the US and Europe. The Freeman Companies The Freeman Companies manufactures exhibits and provides on-site services at corporate trade shows in the US and internationally. It commands the second largest share in the trade show services market, next 28

to GES Exposition Services. Through its subsidiaries, the company provides creative services, exhibit/display design and fabrication services and comprehensive creative services for trade shows, product launches and other strategic communications initiatives. The Freeman Companies was founded in 1927 and is headquartered in Dallas, TX. Sparks Exhibits & Environments, Inc. Formerly Marlton Technologies, Sparks Exhibits & Environments, Inc. is engaged in the custom design, production and sale of exhibits and environments for trade shows, museums, theme parks, arenas and corporate lobbies for customers in the retail, government, entertainment and healthcare industries. Sparks commands a significant share of the exhibit design and fabrication markets. The company is headquartered in Philadelphia, PA.

Other Key Competitors

Cznarnowski Display Services Champion Exposition Services Blaine Exhibition Services. George E. Fern Company. E.J. Krause & Associates Skyline Exhibits Brede Exposition Services SmthBucklin Corporation Moss, Inc. Hargrove, Inc Melville Event Services EWI Worldwide The Becker Group Atlantic Expo Services

29

IV.

CORPORATE STRUCTURE AND MANAGEMENT TEAM

IES was incorporated in 1960 as a Virginia S-Corporation and is owned completely by its General Manager. The nine member senior management team has 193 years combined industry experience. The companys organizational structure is depicted below, followed by profiles of key management personnel.

Figure: Organizational Structure

Scott Jackson General Manager

Account Managers

Graphic Director

Business Development Director

HR & Accounting Director

IT Director

Design Director

Fabrication Manager

Warehouse Manager

Installation & Dismantle Manager

General Manager and Owner Joining the Company in 1981, IESs owner and General Manager develops strategic initiatives and has significant business development responsibilities. He is responsible for launching the Companys flagship tradeshow services business unit and initiating nearly all of the Companys technological infrastructure investments. He holds a B.S. from the University of Virginias McIntire School of Commerce and an MBA from the University of Virginias Darden School of Business. Business Development Director IESs Business Development Director has managed large corporate programs and accounts for more than 14 years. She has extensive experience developing and implementing business plans and budgets that serve as the basis for accomplishing and monitoring major multi-task operations over multi-year periods. She conducts both risk analysis and cost/benefit analysis to develop and recommend optimal solutions for client engagements. She holds a B.S. in Business Management from the University of Maryland and served five years in the US Army. Senior Account Manager IESs Senior Account Manager joined the Company in 2002 and serves as Senior Coordinator for the Lockheed Martin, Raytheon, United Technologies and L-3 Communications accounts, which generate more than 250 shows annually. This position requires continuous communication with various customer and IES departments. She has a thorough understanding of the trade show industry, including the special skills required to successfully negotiate complex trade show management requirements. She has an indepth knowledge of logistics, and is extremely effective in collaborating with general contractors, transportation companies, and show services providers. She holds a B.A. in Public Relations from Hofstra University. Human Resources & Accounting Director The Companys Human Resources Director has 26 years experience in accounting, finance, human resources and business administration. He has 13 years experience in the trade show industry and has 30

assembled administrative teams for Skyline Displays and the Freeman Companies. He is responsible for recruiting and hiring the Companys executive, administrative and labor teams. IT Director IESs IT Director has been with the Company for more than 17 years, guiding its IT infrastructure from an environment of a few stand-alone computers to an integrated architecture of solutions typically employed by only larger corporations. He designed and developed IESs proprietary project management technology. His responsibilities include the development and maintenance of IESs technological assets, and the application of technology to customer requirements via SaaS based information services. The IT Director has a B.S. in Computer Science from the University of Maryland. Design Director The Companys Design Director has 19 years experience managing Design operations. He currently manages a staff of four designers/detailers. Since joining IES in 2001, he has worked closely with all aspects of the Lockheed Martin, Raytheon, United Technologies, and BAE Systems accounts and has supported these customers at AUSA Fall, ITSEC, ATCA and numerous other trade shows. His detailed knowledge of these customers products and trade show requirements, combined with his work on thousands of trade show booths has contributed to his success in recording impressive increases in these customers accounts almost every year he has been with the company. The Design Director is proficient in such technologies as AutoCAD, Architectural Desktop, Autodesk Viz 4, Vectorworks, AlphaCAM Anderson CNC routing automation and many others. He holds a B.S. in Political Science from the Catholic University of America and a B.S. in Interior Design from Marymount University. Fabrication Manager With more than 26 years exhibit production experience, IESs Fabrication Manager worked his way through the ranks to his current position. He and his 12-person team ensure the highest commitment to quality, detail and accuracy in all of the Companys exhibit manufacturing operations. In his 24 years with IES, he has successfully completed more than 300 exhibit structures for more than 50 companies. He is thoroughly trained in AlphaCAM and AutoCAD technologies, advancing IESs use of automation technology in exhibit manufacturing. His proficiency with CAD integrated fabrication tools has placed the Company at a cutting edge position in todays exhibit fabrication industry. He helped oversee the recent retooling of the Companys fabrication facilities, and is charged with hiring, training and supervising all shop employees, controlling workflows through the Fabrication business, assigning teams for each project and ensuring full-cycle quality control throughout the manufacturing process. Install and Dismantle Manager IESs Install and Dismantle (I&D) Manager joined the Company in 1987 as an apprentice in the Exhibit Fabrication segment. After working on the Woodmark, Oracle, Dornier Aviation and Revlon exhibit fabrication teams, he became the lead I&D technician for these accounts, traveling the US as I&D supervisor for these customers exhibits. Handling a wide range of exhibitors and exhibit properties enabled the I&D Manager to build a breadth of knowledge about custom exhibiting, and in the process, he helped to establish the excellent service standards that have come to define IESs install and dismantle operation. The I&D Manager coordinates and manages all field operations for Raytheon, L-3 Communications, Northrop Grumman and URS Corporation, as well as several US government agencies. His department is responsible for warehousing and tracking exhibit properties, pulling and preparing exhibits for shows, and installing and dismantling exhibit structures at more than 350 events annually. 31

Warehouse and Logistics Manager In the fast-paced exhibit industry, IESs Warehouse and Logistics Manager delivers strong inventory and logistics management services in an environment of constantly changing technology. The Warehouse and Logistics Manager has a firm command of all of the technology that drives IESs inventory and logistics management processes and is responsible for training his team of 30 employees with these technologies. In addition, he is responsible for the scheduling, maintenance and logistical planning associated with IESs truck fleet. Controller The Companys Controller has 26 years of progressive experience in accounting, finance, human resources and business administration. He joined IES in 1994 and has assembled an administrative team that supports every aspect of the Companys operations. In addition to these key personnel, IES maintains a staff of welders and electricians to complete projects within industry safety standards. The Companys I&D workforce is unionized, doubling in size during the major show season.

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V.

HISTORICAL AND FORECAST FINANCIAL PERFORMANCE

IES posted approximately $20.0 million in FY 2008 revenue (19.5% year-over-year growth) and recorded $3.2 million in EBITDA (15.8% margin). In FY 2009, management expects to grow revenue 12.7%, to $22.5 million. Driven by new customer revenue, increased revenue from existing customer accounts, per show customer volume growth and other revenue enhancement initiatives, total revenue is projected to grow at a 9.5% CAGR through FY 2012, to $31.4 million.
Figure: Revenue and EBITDA by Business Segment ($M)
Revenue and EBITDA ($M) 35.0 30.0 25.0 25.3 20.0 20.0 15.0 10.0 5.0 2.9 0.0 2006 2007 2008 2009E 2010E 2011E 2012E 3.1 3.2 4.4 7.7 5.0% 16.2 16.7 10.0% 22.5 15.0% 28.4 20.0% EBITDA Margin % 30.0%

31.4

25.0%

5.7

6.7

Total Revenue

Total EBITDA

EBITDA Margin

In FY 2008, total cost of sales grew 42.2%, causing gross margin to deteriorate from 56.9% to 48.7%. In FY 2009, realignment of the Trade Show Services and Fabrication segments cost structures is expected to improve IESs gross margin to 51.2%. The Companys cost of sales and operating cost breakouts are given below.
Figure: Cost of Sales Breakout (Percentage of Revenue)
COGS % Revenue 60.0% 51.3% 50.0% 42.1% 40.0% 5.5% 4.2% 30.0% 5.8% 5.6% 20.0% 10.2% 10.0% 10.7% 0.0% 2006 2007 Materials 2008 Freight 2009E Equip Rental 2010E 2011E Labor 11.6% 12.5% 11.4% 11.3% 11.2% 5.0% 0.0% 2006 Other 2007 Total Rent 2008 2009E 2010E 2011E 9.5% 43.1% 6.2% 6.7% 5.0% 4.1% 7.6% 9.4% 6.2% 5.2% 10.4% 6.8% 8.7% 6.2% 5.3% 10.5% 48.9% 46.8% 6.5% 7.8% 5.8% 5.2% 10.2%

Figure: Operating Cost Breakout (Percentage of Revenue)

OPEX % Revenue 45.0% 40.0% 45.9% 35.0% 6.4% 30.0% 7.4% 25.0% 5.7% 4.9% 10.2% 10.0% 16.3% 14.1% 11.5% 11.4% 11.3% 11.2% 20.0% 15.0% 9.4% 9.3% 8.3% 7.8% 7.7% 7.7% 10.3% 10.3% 8.9% 4.4% 4.4% 32.8% 31.6% 4.1% 3.9% 8.4% 30.9% 3.9% 8.0% 30.4% 3.8% 7.7% 40.3% 38.2%

Manufacturing and Other

Contract Labor

Benefits and Bonuses

Salaries & Wages

FY 2008 EBITDA grew only 1.0% year-over-year and EBITDA margin decreased 2.9%, due to the cost of sales increases discussed above. The EBITDA impact of this increase would have been more severe if not partially offset by a 5.3% of revenue reduction in FY 2008 operating expenses. In FY 2009, EBITDA is expected to increase to $4.4 million, and EBITDA margin is expected to increase to 19.5%. These expected improvements, attributable to the continued turnaround of the Fabrication segment and to labor, materials and equipment rental savings, are in line with managements historical effectiveness in 33

containing operating costs. Through FY 2012, EBITDA is expected to grow at a 19.5% CAGR, to $7.7 million, and EBITDA margin is forecast to increase to 24.5%.
Figure: Consolidated Financial Summary ($000s)
2006A Total Revenue % Growth Cost of Sales % Revenue Gross Profit % Margin Operating Expenses % Revenue EBITDA % Margin % Growth Cash Flow Data Non-Cash Working Capital Depreciation Capital Expenditures 16,242 NA 6,832 42.1% 9,410 57.9% 6,548 40.3% 2,862 17.6% NA 2007A 16,711 2.9% 7,205 43.1% 9,506 56.9% 6,376 38.2% 3,130 18.7% 9.4% 2008A 19,966 19.5% 10,247 51.3% 9,719 48.7% 6,558 32.8% 3,161 15.8% 1.0% 2009E 22,494 12.7% 10,998 48.9% 11,497 51.1% 7,104 31.6% 4,392 19.5% 38.9% 2010E 25,341 12.7% 11,856 46.8% 13,485 53.2% 7,819 30.9% 5,666 22.4% 29.0% 2011E 28,366 11.9% 13,030 45.9% 15,336 54.1% 8,630 30.4% 6,705 23.6% 18.3% 2012E 31,376 10.6% 14,229 45.3% 17,148 54.7% 9,459 30.1% 7,689 24.5% 14.7%

NA 598 568

NA 585 668

770 561 799

806 170 495

842 221 507

862 272 511

864 319 471

BUSINESS UNIT FINANCIAL PERFORMANCE Exhibit Design The Companys smallest but most profitable segment, the Exhibit Design business generated $3.2 million in FY 2008 revenue (10.4% year-over-year growth) and approximately $0.9 million in FY 2008 EBITDA (26.9% margin). While negative corporate marketing budget trends limit the market opportunity for exhibit design, management is exploring strategies for growing this profitable revenue stream, including cross-sales and access to new markets. Management expects to grow segment revenue 10.9% in FY 2009, to $3.6 million, and projects approximately $1.0 million in segment EBITDA (29.7% margin). These estimates assume that management will be able to derive considerable revenue from exhibit reconfiguration and rental projects.
Figure: Exhibit Design Financial Summary (000s)
Exhibit De sign Total Revenue % Growth Cost of Sales % Revenue Gross Profit % Margin Operating Expenses % Revenue EBITDA % Margin % Grow th 2006A 2,675 NA 795 29.7% 1,880 70.3% 1,305 48.8% 575 21.5% NA 2007A 2,921 9.2% 894 30.6% 2,027 69.4% 1,172 40.1% 855 29.3% 48.7% 2008A 3,225 10.4% 1,208 37.4% 2,018 62.6% 1,150 35.7% 867 26.9% 1.5% 2009E 3,577 10.9% 1,325 37.0% 2,252 63.0% 1,248 34.9% 1,004 28.1% 15.7% 2010E 4,021 12.4% 1,461 36.3% 2,559 63.7% 1,351 33.6% 1,209 30.1% 20.4% 2011E 4,439 10.4% 1,586 35.7% 2,852 64.3% 1,474 33.2% 1,378 31.1% 14.0% 2012E 4,971 12.0% 1,777 35.7% 3,194 64.3% 1,628 32.7% 1,567 31.5% 13.7%

34

Exhibit Fabrication The Fabrication business recorded $3.2 million in FY 2008 revenue and saw an operating loss of approximately $0.6 million in FY 2008, when cost of sales for the segment grew 36.4% year over year (15.9% as a percentage of revenue) while segment revenue grew only 3.1%. Driving this proliferation in cost of sales were increased fixed manufacturing costs and rising labor and materials costs. The increase in manufacturing expenses resulted from high up-front costs associated with the recent retooling of the Companys Fabrication facilities and from residual costs related to a discontinued UK operation, and can be considered one-time expenses that will not recur in future periods. The increase in labor and materials costs resulted from overstaffing and over-purchasing of materials from expensive suppliers. Management has improved its forecasting and resource planning, made staffing adjustments, and renegotiated materials prices with its suppliers. Management has also initiated several measures to revive revenue for the Fabrication business through cross-sales, promotional pricing and access to middle market aerospace and defense customers. As revenue increases and the Companys cost structure returns to alignment, the Fabrication segment is expected to again generate positive profits and contribute to Company EBITDA. Management projects $3.4 million in FY 2009 revenue (5.5% year over year growth) and expects the segments operating loss position to improve to approximately $0.2 million. Management believes that the Fabrication segment will breakeven in FY 2010 and begin to contribute positively to company profits from FY 2011 onward.

Figure: Exhibit Fabrication Financial Summary (000s)

Exhibit Fabrication Total Revenue % Growth Cost of Sales % Revenue Gross Profit % Margin Operating Expenses % Revenue EBITDA % Margin % Growth 2006A 2,264 NA 1,050 46.4% 1,214 53.6% 1,666 73.6% (452) NM NA 2007A 3,100 36.9% 1,515 48.9% 1,585 51.1% 1,725 55.6% (140) NM NA 2008A 3,197 3.1% 2,066 64.6% 1,131 35.4% 1,726 54.0% (595) NM NA 2009E 3,373 5.5% 1,838 54.5% 1,535 45.5% 1,739 51.5% (204) NM NA 2010E 3,677 9.0% 1,820 49.5% 1,857 50.5% 1,865 50.7% (8) NM NA 2011E 4,118 12.0% 2,034 49.4% 2,084 50.6% 2,049 49.8% 35 0.8% NA 2012E 4,530 10.0% 2,192 48.4% 2,337 51.6% 2,233 49.3% 104 2.3% 198.5%

Trade Show Services In FY 2008 the Trade Show Services business recorded approximately $13.5 million in total revenue, a 26.7% year over year increase, and earned approximately $2.9 million in EBITDA (21.3% margin) for the fiscal year. While FY 2008 was a banner year for revenue and operating profits, EBITDA margins decreased negligibly as cost of sales grew 45.4%. In FY 2008, the Company grew its accounts significantly with several customers and was not fully prepared for this increase in business. As a result, the Company had to employ many temporary resources to meet the increased demand. In particular, contract labor, equipment rental and materials expenses all grew considerably in FY 2008.

35

Management expects revenue to grow 14.8% in FY 2009, to approximately $15.5 million and believes that managing this growth more effectively and applying improved resource planning will lead to a leaner segment cost structure and greater profitability. Accordingly, management is projecting approximately $3.6 million in FY 2009 segment EBITDA and expects to improve EBITDA margin to 23.1% through these cost savings measures. Management believes that segment profitability could improve even further through capacity reductions. The Trade Show Services segment uses approximately 65% of its 66,000 square feet of storage space and pays more than $1.0 million in segment rent expense (7.4% of segment revenue). Management has leased its storage and office space to third-party renters in the past and believes that it can reduce capacity and rent expense in this manner in the future. While these cost savings assumptions are not built into our model for this transaction, such capacity reductions could lead to dramatic improvements in operating profitability and represent a possibility that any potential acquirer should explore in its analysis of IES.
Figure: Trade Show Services Financial Summary (000s)
Trade Show Services Total Revenue % Growth Cost of Sales % Revenue Gross Profit % Margin Operating Expenses % Revenue EBITDA % Margin % Growth 2006A 11,302 NA 4,986 44.1% 6,316 55.9% 3,577 31.6% 2,739 24.2% NA 2007A 10,691 (5.4%) 4,796 44.9% 5,895 55.1% 3,480 32.6% 2,415 22.6% (11.8%) 2008A 13,544 26.7% 6,973 51.5% 6,570 48.5% 3,682 27.2% 2,889 21.3% 19.6% 2009E 15,544 14.8% 7,834 50.4% 7,710 49.6% 4,117 26.5% 3,593 23.1% 24.4% 2010E 17,644 13.5% 8,575 48.6% 9,069 51.4% 4,603 26.1% 4,466 25.3% 24.3% 2011E 19,809 12.3% 9,409 47.5% 10,400 52.5% 5,107 25.8% 5,292 26.7% 18.5% 2012E 21,876 10.4% 10,260 46.9% 11,616 53.1% 5,598 25.6% 6,018 27.5% 13.7%

36

Figure: Historical and Forecast Income Statements (000s)

2006A Revenue Trade Show Services Exhibit Design & Fabrication Total Revenue % Growth Cost of Sales Labor Contract Labor Equip Rental Freight Materials Other Total Cost of Sales % Revenue Gross Profit % Margin Operating Expenses Salaries & Wages Benefits Bonuses & Prof it Sharing Insurance Total Rent Other Total Operating Expenses % Revenue EBITDA % Margin % Growth Depreciation & Amortization EBIT % Margin Interest Expense Total Other Nonoperating Items Pretax Income Plus: Mezzanine Interest Book Income Taxes Net Income Net Margin Margins and Growth Rates Total Revenue Grow th (%) EBITDA Grow th (%) COGS Grow th (%) OpEx Grow th (%) COGS % of Revenue SG&A % of Revenue Gross Margin (%) EBITDA Margin (%) 11,302 4,939 16,242 NA

2007A 10,691 6,021 16,711 2.9%

2008A 13,544 6,423 19,966 19.5%

2009E 15,544 6,950 22,494 12.7%

2010E 17,644 7,697 25,341 12.7%

2011E 19,809 8,556 28,366 11.9%

2012E 21,876 9,501 31,376 10.6%

1,742 1,657 907 948 678 900 6,832 42.1% 9,410 57.9%

1,945 1,586 691 836 1,115 1,032 7,205 43.1% 9,506 56.9%

2,488 2,073 1,041 1,242 1,879 1,524 10,247 51.3% 9,719 48.7%

2,573 2,371 1,193 1,387 1,950 1,523 10,998 48.9% 11,497 51.1%

2,854 2,586 1,319 1,482 1,978 1,638 11,856 46.8% 13,485 53.2%

3,190 2,902 1,402 1,604 2,109 1,824 13,030 45.9% 15,336 54.1%

3,531 3,206 1,548 1,727 2,200 2,017 14,229 45.3% 17,148 54.7%

2,640 437 725 366 1,672 709 6,548 40.3% 2,862 17.6% NA 598 2,264 13.9% 2,264 (679) 1,585 9.8%

2,362 416 777 363 1,721 737 6,376 38.2% 3,130 18.7% 9.4% 585 2,545 15.2% (600) 1,945 (583) 1,361 8.1%

2,294 426 880 360 1,773 824 6,558 32.8% 3,161 15.8% 1.0% 561 2,600 13.0% 2,600 (780) 1,820 9.1%

2,559 446 933 384 1,897 884 7,104 31.6% 4,392 19.5% 38.9% 170 4,222 18.8% 4,222 (1,267) 2,956 13.1%

2,853 500 1,022 431 2,030 983 7,819 30.9% 5,666 22.4% 29.0% 238 5,428 21.4% 5,428 (1,628) 3,800 15.0%

3,182 559 1,143 482 2,172 1,091 8,630 30.4% 6,705 23.6% 18.3% 301 6,405 22.6% 6,405 (1,921) 4,483 15.8%

3,521 609 1,265 533 2,324 1,207 9,459 30.1% 7,689 24.5% 14.7% 364 7,325 23.3% 7,325 (2,198) 5,128 16.3%

NA NA NA NA 42.1% 40.3% 57.9% 17.6%

2.9% 9.4% 5.5% (2.6%) 43.1% 38.2% 56.9% 18.7%

19.5% 1.0% 42.2% 2.8% 51.3% 32.8% 48.7% 15.8%

12.7% 38.9% 7.3% 8.3% 48.9% 31.6% 51.1% 19.5%

12.7% 29.0% 7.8% 10.1% 46.8% 30.9% 53.2% 22.4%

11.9% 18.3% 9.9% 10.4% 45.9% 30.4% 54.1% 23.6%

10.6% 14.7% 9.2% 9.6% 45.3% 30.1% 54.7% 24.5%

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Figure: Historical and Forecast Balance Sheets (000s)

Year Ended June 31, Assets Cash Accounts Receivable Inventory Prepaid Expenses Other Current Assets Total Current Assets Net PP&E Transaction Goodw ill Deferred Financing Fees Total Assets Liabilities and Equity Accounts Payable Accruals Other Current Liabilities Total Current Liabilities Total Debt Total Liabilities Common Stock Retained Earnings Total Equity Total Liabilities & Equity Balance Check Total Revenue Cost of Sales Working Capital Noncash Working Capital Change in Noncash Working Capital Forecast Assumptions CAPEX % Revenue DSO Inventory Turns Prepaid Expenses % Revenue Other Current Assets % Revenue AP Days of COGS Accruals % Revenue Other Current Liabilities % Revenue Projected PP&E Schedule Beginning Balance CAPEX Depreciation & Amortization Ending Balance 2008A 2,670 2,465 183 170 25 5,512 1,700 7,212 2009E 5,265 2,715 196 188 28 8,392 2,025 10,417 2010E 8,755 2,990 204 212 31 12,191 2,311 14,502 2011E 13,000 3,269 217 237 35 16,757 2,550 19,306 2012E 18,005 3,530 229 262 38 22,064 2,702 24,766

389 1,251 432 2,072 2,072 5,140 5,140 7,212 0 19,966 10,247 3,440 770 NA 4.0% 45.1 56.1 0.8% 0.1% 13.9 6.3% 2.2%

418 1,386 518 2,321 2,321 5,140 2,956 8,096 10,417 0 22,494 10,998 6,071 806 36 2.2% 44.1 56.2 0.8% 0.1% 13.9 6.2% 2.3%

450 1,561 583 2,595 2,595 5,140 6,768 11,908 14,502 0 25,341 11,856 9,597 842 36 2.0% 43.1 58.2 0.8% 0.1% 13.9 6.2% 2.3%

495 1,748 653 2,895 2,895 5,140 11,271 16,411 19,306 0 28,366 13,030 13,862 862 20 1.8% 42.1 60.2 0.8% 0.1% 13.9 6.2% 2.3%

540 1,933 722 3,195 3,195 5,140 16,430 21,570 24,766 0 31,376 14,229 18,869 864 2 1.5% 41.1 62.2 0.8% 0.1% 13.9 6.2% 2.3%

1,700 495 (170) 2,025

2,025 507 (221) 2,311

2,311 511 (272) 2,550

2,550 471 (319) 2,702

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