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The Value of Timing

May 6-7, 2008Value Investing Congress

Randall AbramsonCEO and Portfolio Manager

Trapeze Asset Management Inc.

DISCLAIMERInformation contained herein is intended for information purposes only, in order to illustrate some of the techniques that

Trapeze Asset Management Inc. ("TAMI") uses to make investment decisions. This is not intended to be a formal research report and should not be construed as an offer, solicitation, or recommendation to buy or sell any security, or as investment advice. Opinions and information provided are as of the date submitted by TAMI. Statements referring to future actions or events are not guarantees of future performance.

TAMI may or may not continue to hold any of the securities mentioned. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that the investment decisions TAMI makes in the future will be profitable or will equal the investment performance of the securities discussed herein.

Composite returns are net of fees and commissions. Composites include all accounts with like objectives which are managed based on model portfolios at TAMI and its affiliate, Trapeze Capital Corp., excluding certain accounts based on relatively small size and exceptional mandates (including "balanced" accounts). Accounts are managed on the same basis at both companies. Composites include accounts which are subject to different fee and commission schedules (primarily "legacy" accounts) than new accounts. The aggregate amount of charges to legacy accounts approximates charges to new accounts over most periods. Performance of individual accounts may differ from composites. TAMI's growth accounts may hold or have held a large percentage of small cap securities and a high concentration in specific securities and industries; and certain growth accounts use leverage and short selling for clients who approve such strategies. Our strategies include investment in new issues, such as private placements. Results reflect the reinvestment of dividends and other earnings. Composite returns have been translated from Canadian to US Dollars. Returns have benefited during the reporting period from accounts holding Canadian securities, as the Canadian dollar has risen materially relative to the US dollar. Inception date October 1, 1998. Past performance is no guarantee of future returns.

Trapeze Asset Management Inc.

• Toronto based investment firm • 29% annual return for Long/Short Composite since 10/98• Over $1 billion under administration• Separately managed accounts• Macro views influence allocations• Exclusively licensed timing tool

Structural Valuation Analysis (SVA™)

• Proprietary methodology – Timing buy and sell decisions– Forecast direction of broader market and specific sectors

• Based on balance sheet analysis– Structural valuation support and resistance at multiples of adj BV

• In addition to conventional business analysis

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COST Fair Market Value Analysis

FMVStock price

The Markets

~4.5x Adj BV

~2x Adj BV

DOW 30

Nasdaq Proxy

S&P 500

~1x Adj BV

Russell 2000 Value

TSX 60

Retail

Banks

Value Ideas

• World’s 2nd largest office supply retailer/distributor

• US Retail– 1200 locations with potential to double the store count– 80% of retail sales to small business

• Business Solutions Division– Catalog and contract sales– Servicing small, medium, Fortune 100 and Gov’t contracts

• International– Operations in 43 countries – Catalogs, contract sales, internet and retail locations

• Extremely Undervalued: 0.29x EV/Sales, 12x trough eps, 1.2x BV

• Above average business: 18% ROIC, 30% International sales

• Limited sales growth to ramp eps & FCF– Normalized margin levels (5% EBIT) translates into $2 eps (7x) – Mgmt plan calls for 8% EBIT margin by 2010– 300bps of additional margin from:

• Private label and direct sourcing (150bps)• Warehouse/DC consolidation (120bps)• IT system integration

• ODP (NYSE) $13.89• Market Cap. $3.8B• Enterprise Value $4.3B• 09 est EBITDA $900m (4.8x ebitda)• 09 est EPS $1.66 (8.4x eps)• 09 est FCF yield 12%

• 2010 Target $36 (2x adj BV)• 3 Yr. ann. ROR est = 37% with $2.60 2010 est eps (@14 p/e)assumes 4% 2009 EBIT margin and 5% sales growth assumes 6% 2010 EBIT margin and 4% sales growth

• Counter-terrorism equipment / systems

• ECMs “Jammers” standard equipment for armed forces vehicles

– IEDs “Roadside bombs” caused 40% of allied troop fatalities

• Limited Competition: only other key competitor EDO (ITT)

• Competitive Advantages– Incumbency -- installed base with US Navy and Marines– Distribution -- Lockheed Martin, General Dynamics– Technology -- performance, reliability and new products

• Extremely Undervalued: 4.3x ebitda, 6x eps, 0.8x BV– 40%+ gross margins– 22% ROIC – Minimal capex

• Large ECM market opportunity ($5-6 billion / year)• US, UK and elsewhere

• $375m min. recurring revenue stream

• Personal Protective Systems and Services (HMS) growing briskly• Homeland security potential, number of new product initiatives

• Covered by only 4 analysts

• VRS (TSX) $4.02• Market Cap. $465m • Enterprise Value $640m• 09 est EBITDA $180m (3.6x ebitda) • 09 est EPS $0.85 (4.7x eps)• 09 est FCF yield 21%

• 2010 Target $18 • 3 Yr. ann. ROR est = 65% with $1.25 2010 est eps (@14 p/e)

Favorable Oil/Gas Outlook

• E&P company operating offshore California and Alaska

• Redevelopment of proven producing oil fields

• 104m boe 2P reserves -- 147m boe 3P (acquired at < $5/bbl)

• Proven and probable reserves worth $2.3 billion (PV10%)

• Long reserve life (over 30 years)

• Production to double by year end and triple over 24 months to 18,000 bpd

• Highly leveraged to oil/gas prices (only 30% hedged)

• Asset sales and surety bond recovery could repay one-third of debt

• Large exploration upside -- Corsair, Alaska (500m bbl potential) and Wyoming gas play (3TCF potential)

• PFE (TSX) $1.18• Market Cap. $360m• Enterprise Value $850m • 09 est EBITDA $170m (5.0x ebitda)• 09 est CFPS $0.50 (2.4x cf)• P/NAV 0.2

• 2010 Target $8• 3 Yr. ann. ROR est = 89% at 0.8x 2010 NAVassumes $85 WTI

• Low risk development from McCully Hiram Brook alone to drive returns

• Proven + Probable NAV plus Hiram development = $9 per share

• 20 year reserve life

• Gas encountered on all 30 wells drilled

• McCully field with 3 zones• Hiram Brook: 1TCF (assume 50% recoverable)• Frederick Brook: 10TCF potential (assume 10% recoverable)

1000 metres thick -- 3x the areal extent of Hiram and 4x thickness• Dawson Settlement: 5TCF potential

• Old Harry 5 billion bbls OOIP (2 billion recoverable), PEI and Salt Springs

• CDH (TSX) $7.49• Market Cap. $614m• Enterprise Value $604m • 09 est EBITDA $75m (8.1x ebitda)• 09 est CFPS $0.90 (8.3x cf)• P/NAV (risked) 0.4x

• 2010 Target $25• 3 Yr. ann. ROR est = 49% at 2010 risked NAVassumes $8.50 NYMEX

• Over 720 company-owned and 220 franchised restaurants

• Distinguishes itself with a menu of 30 gourmet burgers

• Owned portfolio is 100% refreshed

• Extremely undervalued with 20% FCF yield

• Focused on ROIC -- returning to high-teens 4-wall margin

• Real estate owned on 330 restaurants and only 25% of chain franchised

• Considerable insider buying

• RT (NYSE) $8.63• Market Cap. $445m• Enterprise Value $1,050m• 09 est EBITDA $150m (7x ebitda)• 09 est eps $0.55 (16x eps)• 09 est FCF yield 20%

• 2010 target $20 • 3 Yr. ann. ROR est = 32% with $2.00/share FCF (@ 10x)

The Value of Timing

Randall AbramsonTrapeze Asset Management Inc.

22 St. Clair Avenue East, 18th FloorToronto, ON M4T 2S3 Canada

(866) 557-0774

www.TrapezeAsset.com