health, nutrition & fitness report - indiegogo

Please refer to Appendix – Disclaimers and Other Disclosures on page 34.

Market Analysis Spring 2012

Health, Nutrition & Fitness Report

Growth Opportunities Presented by the Current Focus on Healthier Living

Kurt Roth Director [email protected] +1.312.609.4689

Christopher Harned Managing Director [email protected] +1.414.765.3908

W. Andrew Martin Managing Director [email protected] +1.704.553.6615

Joseph Pellegrini Managing Director [email protected] +1.704.553.6612

Christopher Sciortino Managing Director [email protected] +1.312.609.4923

Peter Kies Managing Director Co-Head of Equity Capital Markets [email protected] +1.414.765.7262

Vinay Ghai Managing Director European Investment Banking [email protected] +44.207.667.8225

Anthony Siu Managing Director Head of Asia Investment Banking [email protected] +86.21.6182.0980

Table of Contents Page

Please refer to Appendix – Disclaimers and Other Disclosures on page 34.

Investment Thesis.............................................................................................. 1

Growth Trends in Health, Nutrition & Fitness ..................................................... 2

Factors Driving the Trend Toward Healthier Living .......................................... 17

Selected Health, Nutrition & Fitness Companies ............................................... 24

Comparable Company Analysis ......................................................................... 28

Health, Nutrition & Fitness Deal Activity .......................................................... 31

Baird’s Health, Nutrition & Fitness Transaction Experience .............................. 32

Investment Banking Contact List ..................................................................... 33

The following report has been prepared by the Investment Banking Department of Robert W. Baird & Co. This report is an overview and analysis of industry and consolidation trends and is not intended to provide investment recommendations on any specific industry or company. A complete listing of all companies covered by Baird U.S. Equity Research and applicable disclosures can be accessed at <http://www.rwbaird.com/researchdisclosure>. You can also call 1-800-792-2473 or write: Robert W. Baird, Equity Research, 24th Floor, 777 E. Wisconsin Avenue, Milwaukee, WI 53202.

Robert W. Baird & Co. (“Baird”) is a leading middle market focused investment bank serving the M&A and equity financing needs of our clients throughout the U.S., Europe and Asia. Since 2004, we have advised on 376 M&A transactions totaling more than $57 billion and have served as an underwriter on 333 equity offerings totaling more than $85 billion in raised capital. Baird’s balanced buy- and sell-side practice provides expertise for public and private companies, while our dedicated financial sponsor coverage further expands opportunities and financing resources for our clients. Through close coordination between our U.S., European and Asian bankers, we work to optimize opportunities and results for clients in the international marketplace. Approximately one-third of our M&A activity over the past five years has involved international transactions.

Investment Thesis

Robert W. Baird & Co. 1

This Health, Nutrition & Fitness report, created by Baird’s Investment Banking Department, aggregates a wide variety of data related to healthier living in the U.S. while highlighting several sectors with impressive growth prospects. Factors driving greater emphasis on healthy living as well as growth in related products and services include better diets featuring newer sources of nutrition and energy, increased gym memberships and participation in alternative fitness activities, the aging baby boomer population, a more educated consumer, and the need to combat rising healthcare costs. Furthermore, many people have not yet embraced the shift toward healthier living, providing upside potential as attitudes and behaviors change for this group; for example, the percentage of the population not participating in any physical activity or sport over a 12-month period increased for the fourth consecutive year in 2011, reaching nearly one-quarter of the population.

Among categories profiled in this report, we are most excited about the growth opportunities for the following: Organic & Natural Food: Even after growing at a low double-digit rate over the past decade, organic

and natural foods should achieve further penetration in the massive food market. Trends favoring convenience and better eating habits should continue to drive rapid growth in the category, including for products such as fresh cut and packaged fruits and vegetables.

Sports Nutrition: Within the large and steadily growing market for vitamins and nutritional supplements, the sports nutrition segment is projected to realize the fastest growth over the next several years, helped by established appeal among athletes at many levels as well as broadening of demand to include routine exercisers.

Nutrition & Energy Bars: The market for food bars that offer nutrition and convenience experienced high single-digit percentage growth in recent years, including during the recession. Category expansion is expected to remain robust due to the widespread desire to lead healthier lifestyles, ongoing product innovation, and growing demand for convenient, healthy snacks for on-the-go consumers.

Fitness Devices: Greater focus on healthy living among consumers has helped create a market for GPS-based fitness devices that facilitate participation in various activities, including running, cycling, and golf. Increased demand for the integration of technology into active lifestyles has fueled several years of 20%+ growth for this category. The market for recreational GPS devices should experience further expansion as technology continues to improve and as consumer awareness of their applications grows.

Alternative Fitness: Alternative fitness programs emphasizing functional fitness have gained popularity over the past decade, reflecting growing demand for relevant and impactful content, techniques, and instruction. Examples of alternative fitness activities include P90X, CrossFit, Zumba, TRX Suspension Training, Spinning, Pilates, and yoga. Consumers are more focused on efficacy, leading to greater interest in innovative programs such as these. Alternatives satisfy demand for cross-fitness programs that place less emphasis on strict cardio-versus-strength approaches. In addition, recent surveys suggest a shift toward group activities such as Spinning, yoga, and Zumba, particularly among younger participants, whose heavy usage of social media has increased interaction among peer groups.

Based on substantial long-term growth potential, well positioned companies in all of these segments should represent attractive investments, either as acquisition targets or through stock offerings for companies that currently are private or owned by financial sponsors. Furthermore, more mature categories such as fitness centers, fitness equipment, and bicycling equipment should witness further consolidation as better operators seek to enhance lower growth outlooks by capturing stronger properties.

Growth Trends in Health, Nutrition & Fitness


U.S. HEALTH, NUTRITION & FITNESS MARKET Easily recognizable trends and consumption patterns point to healthier living in the U.S., including better diets, more exercise, and greater use of vitamins and supplements. In this report, we have chosen to divide the Health, Nutrition & Fitness market into two categories: Nutrition and Recreation/Fitness.

(1) Nutritional Business Journal. (2) Datamonitor. (3) Mintel International February 2011 Nutrition and Energy Bars Report. (4) IHRSA Global Reports. (5) SGMA Tracking the Fitness Movement 2011. (6) National Bicycle Dealers Association. (7) ABI Research. (8) IBISWorld and Robert W. Baird & Co. estimates. (9) Historical average for 2002-2007 (prior to economic downturn) shown in absence of third-party estimates. (10) Estimated consumer purchases, assuming 35% mark-up on wholesale sales.

The Nutrition category includes three segments representing more than $80 billion in aggregate U.S. retail sales. Over the past decade, annual percentage growth across these businesses averaged in the high single digits, including 5% growth for vitamins and supplements, 7% increases for functional beverages, and double-digit expansion in natural and organic food as well as nutrition and energy bars. Over the next several years, growth is projected to decelerate in each of these segments while remaining above the average growth for food and beverage products.

The segments included in our Recreation/Fitness Category generate about $40 billion in annual U.S. sales, led by fitness centers. While the fitness centers segment has achieved solid growth over the past decade, smaller categories such as fitness devices and alternative fitness appear likely to achieve leading growth rates in the future.

EstimatedMarket Size Long-Term

Nutrition ($ in billions) Growth Rate

Vitamins & Nutritional Supplements $28.1 4%Natural & Organic Food $39.0 7%Functional Beverages $16.0 3%Nutrition & Energy Bars $0.9 8%

Total $84.0

Recreation/Fitness

Fitness Centers $20.3 7%Commercial Fitness Equipment $1.0 5%Consumer Fitness Equipment $4.5 3%Bicycles & Supplies $5.2Fitness Devices $1.1 16%Alternative Fitness $8.0 6%

Total $40.1Overall Total $124.1

(10)

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(9)

(9)

(9)

(1)

(1)

(2)

(3)

(4)

(5)

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NUTRITION CATEGORY OVERVIEW For the purposes of our Health, Nutrition & Fitness report, the Nutrition category consists of Vitamins & Nutritional Supplements, Natural & Organic Foods, and Healthy “Fast Foods” such as Functional Beverages and Nutrition & Energy Bars.

As detailed on pages 4-7, each of these healthy living-oriented segments has experienced substantial growth for an extended period. In addition, expansion in profiled niches of the nutrition category is expected to remain significant over the next several years.

Robust growth in nutrition segments designed to promote healthy living largely reflects improved awareness and attitudes among Americans regarding the healthful nature of their diets. According to a recent International Food Information Council Foundation survey, 63% of Americans considered their diets to be healthful. In contrast, only 14% viewed their diets as unhealthful. Importantly, the percentage considering their diets healthful increased by a large margin from the levels indicated in the prior survey (in 2007). Furthermore, the study also suggested that the majority of Americans are making efforts to improve their diets, underscoring the rising importance of healthy living in the U.S.

Diet Perceptions in the U.S.

_____________________ Source: IFIC 2011 Food & Health Survey.

Perception of Diet

63%

24%

14%Healthful

Neither healthful nor unhealthful

Unhealthful

Prevalence of Dietary Changes

59%

41%Yes No

Percentage of Americans making

changes to their diets



Vitamins & Nutritional Supplements Market Overview

The Vitamins & Nutritional Supplements market includes vitamins, minerals, herbs & botanicals, specialty supplements, meal replacements, and sports nutrition products. The market generated retail sales of $28 billion in the U.S. during 2010. Consumer surveys conducted by the Nutrition Business Journal indicate that two-thirds of Americans are at least occasional users of vitamins and nutritional supplements.

The U.S. vitamins and nutritional supplements market has experienced impressive growth as awareness of product benefits and the need to manage personal health has increased. Category sales expanded more than 60% from 2000 to 2010. Furthermore, annual growth is projected to average almost 4% through 2017, reflecting the aging U.S. population (increasingly using supplements to maintain health), greater emphasis on preventive health amid rising healthcare costs, and increased focus on diet and nutrition.

U.S. Supplement Retail Sales

_____________________ Source: Nutrition Business Journal.

The Vitamins & Nutritional Supplements market includes six segments: vitamins, minerals, herbs & botanicals, specialty supplements, meal replacements, and sports nutrition products. Vitamins are the largest segment at one-third of total sales. Specialty supplement products (e.g., melatonin, probiotics, fish/animal/plant oils) have been the fastest growing segment, posting a 10-year CAGR of 10% through 2010. Sports nutrition products are expected to experience the strongest growth over the next several years, with a projected CAGR of 6% through 2017, reflecting broadening of the space to include routine exercisers. Leading companies in the Vitamins & Nutritional Supplements sector include Bio-Engineered Supplements & Nutrition (BSN), GNC, NBTY, New Vitality, Schiff Nutrition, and Vitamin Shoppe. Primary sales channels for this market include specialty retailers, mass merchants, and direct to consumer.

Vitamins & Nutritional Supplement Sales by Product Type


$17.2 $18.0 $18.7 $19.8 $20.4 $21.3 $22.5 $23.8 $25.4 $26.9 $28.1 $29.2 $30.4 $31.6 $32.8 $33.9 $35.0 $36.1

2%

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E

2000-2010 CAGR: 5.0% 2010-2017 CAGR: 3.7%

$ in

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ions

Year-over-yeargrowth

$17.2 $18.0 $18.7 $19.8 $20.4 $21.3 $22.5 $23.8 $25.4 $26.9 $28.1 $29.2 $30.4 $31.6 $32.8 $33.9 $35.0 $36.1

$0

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E

Herbs/Botanical Meal Replacements Minerals Specialty/Other Sports Nutrition Vitamins

$ in

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ions



Natural & Organic Food Market Overview

The Natural & Organic Food market, as presented in this report, includes foods classified as organic or natural by the Nutrition Business Journal. While definitions vary, natural foods typically focus on the health benefits of foods derived from natural

sources. To varying degrees, natural foods are produced without pesticides, additives, preservatives, and refined ingredients

Organic foods, which may qualify as "certified organic," are produced without chemicals, pesticides, herbicides, hormones, antibiotics and other drugs, or genetically modified feed crops. In addition, organic food farming and manufacturing feature sustainable farm management and the humane treatment of animals (e.g., cows grazing in pastures rather than being confined to farm feedlots). Certified organic food products are regulated by the U.S. Department of Agriculture and are produced by farmers and manufacturers under a strict set of rules

The market generated retail sales of $39 billion in the U.S. during 2010, representing about 6% of the total U.S. food market according to the Organic Trade Association. The leading category within organic foods is fruits and vegetables, which represent about 40% of organic food value and an estimated 12% of all fruit and vegetable sales in the U.S. Other large organic categories include dairy, breads & grains, and beverages.

The U.S. natural and organic food market has experienced substantial growth, increasing at a CAGR of 12.4% over the 10 years through 2010. Growth through 2017 is projected to be robust, with revenue expected to increase at an average rate of 6.6%. Expansion for natural and organic food has been driven by greater consumer awareness of its health benefits as well as more widespread availability via retail and direct-to-consumer channels.

U.S. Natural & Organic Food Retail Sales


U.S. Natural & Organic Food Market Penetration

_____________________ Source: Nutrition Business Journal and Organic Trade Association.

$12.1 $13.5 $15.0 $17.0 $19.6 $22.7 $26.4$30.6 $34.1 $36.0 $39.0 $42.2 $45.4 $48.6 $51.8 $54.9 $58.0 $61.1

0%

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$15

$30

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E

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2000-2010 CAGR: 12.4% 2010-2017 CAGR: 6.6%

2.4% 2.6% 2.8% 3.2%3.6%

4.0%4.4%

4.9% 5.2% 5.4% 5.8%

0%

1%

2%

3%

4%

5%

6%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Natural & Organic Food Sales % of Total Food Sales



Healthy “Fast Food” – Functional Beverages Overview

The U.S. Functional Beverages market is comprised of ready-to-drink beverages intended (depending on the type of drink) to boost energy levels, provide hydration following physical activity, or offer nutritional value. Key ingredients that enhance the functionality of beverages include fruit, milk, sugar, caffeine, herbal extracts, taurine, guarana, and vitamins.

Retail sales of functional beverages were an estimated $16.0 billion in 2010. Average annual growth of 6.7% from 2006 to 2010 included strong increases in 2007-2008, followed by near-flat results in 2009-2010. Consumers looking to recharge during the day have driven growth in energy drinks, which represent the vast majority of the market. Growth has also reflected consumers looking for new ways to balance their diets amid increased interest in health and wellness.

U.S. Functional Beverage Retail Sales

_____________________ Source: Datamonitor.

The Functional Beverages market is projected to expand steadily through 2015. Market research firm Datamonitor forecasts average annual growth of 3.0% over a five-year period, with growth for each year seen in the 2-4% range. Factors likely to support further market expansion include the ongoing quest for efficient sources of energy, new product introductions, and increased physical activity.

The Functional Beverages market can be segmented into three types: Energy drinks (83% of market) – Beverages designed to increase energy through ingredients such as

sugar, caffeine, and natural stimulants, with leading labels including Monster, Red Bull, 5-hour ENERGY, and vitaminenergy (Coca-Cola Company)

Sport drinks (11%) – Beverages that assist in rehydration and replenishment of electrolytes during and following physical activity, with established brands including Gatorade (excluding powdered variants) and Powerade

Nutraceutical drinks (6%) – Beverages with ingredients or components added to provide specific medical or physiological benefits. Examples of such drinks include BOOST (a Nestle product), Ensure (Abbott), IMPACT (Nestle), Joint Juice, and Muscle Milk (CytoSport)

As the largest category, energy drinks have represented the primary growth driver for the overall market. Nutraceutical beverages, the newest segment, appear to have the most remaining growth opportunity.

$12.4

$14.8$15.9 $15.9 $16.0 $16.4 $16.8 $17.3 $17.9 $18.6

(5%)

0%

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10%

15%

20%

$0

$5

$10

$15

$20

2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

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2006-2010 CAGR: 6.7% 2010-2015 CAGR: 3.0%



Healthy “Fast Food” – Nutrition & Energy Bars Overview

The U.S. Nutrition & Energy Bars market consists of food bars that offer nutrition and convenience while also filling a certain need, such as supporting a diet, supplying added vitamins/minerals, providing additional energy for physical activity, or building muscle. The leading reasons given by consumers for buying nutrition and energy bars include overall health and wellness, the need for a healthy snack between meals, and their appeal as pre- and post-workout snacks. Nutrition and energy bars provide health benefits similar to those associated with the functional beverages category.

Retail sales of nutrition and energy bars were estimated at $857 million in 2010 after average annual growth of 8.7% from 2005. The category performed well during the recent recession, after which growth accelerated in 2010, when category sales increased 15.0%. The nutrition and energy bar category has benefited from rising interest in overall health and wellness and increased demand for healthy, convenient snacks that fit within a weight loss program.

U.S. Nutrition & Energy Bars Retail Sales

_____________________ Source: Mintel International February 2011 Nutrition and Energy Bars Report. Note: Excludes retail sales of Wal-Mart Stores, Inc. Market expansion is expected to remain rapid through 2015, with growth projected to average 8.3% during this period. The category is poised for further growth due to the widespread desire to lead healthier lifestyles, ongoing product innovation, and growing demand for convenient, healthy snacks for on-the-go consumers.

Market research firm Mintel has segmented the Nutrition & Energy Bars market into three types: Health/wellness bars (51% of market) – General-purpose nutrition bars, including products such as Clif

Luna bars and Balance bars Diet bars (32%) – Bars designed specifically for diet or weight loss/management purposes, including

products such as Atkins Advantage, Slim-Fast, and Zone bars Athletic/sports bars (15%) – Bars created specifically for the needs of athletes and weekend warriors,

including products such as EAS Myoplex bars, PowerBars, and MET-Rx bars Health/wellness bars have experienced the fastest growth, with sales more than doubling in the five years through 2010. This segment is projected to deliver growth averaging 10% through 2015, as health/wellness bars offer a convenient way to manage health. The desire to reduce cholesterol and fat intake should support sales of diet bars, while increased exercise rates would boost demand for athletic/sports bars. Private label nutrition and energy bars represent 2% of category sales.

$565 $541$613

$684 $745$857

$939$1,021

$1,105$1,189

$1,275

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2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

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2005-2010 CAGR: 8.7% 2010-2015 CAGR: 8.3%



RECREATION/FITNESS CATEGORY OVERVIEW The Recreation/Fitness category consists of fitness centers, commercial fitness equipment, consumer fitness equipment, bicycle equipment, fitness devices, and alternative fitness products and services. Sales in each of these segments are impacted by consumer attitudes and actions regarding healthier living.

The Recreation/Fitness category experienced significant growth over the past decade (particularly if excluding the recessionary period), as reflected by increased gym memberships, rapid growth for fitness devices, and rising popularity for alternative fitness activities. Furthermore, many people have not yet embraced the shift toward healthier living, providing upside potential as sentiment and behaviors change for this group; as detailed on page 22, the percentage of the population not participating in any physical activity or sport over a 12-month period increased for four consecutive years through 2011, reaching nearly one-quarter of the U.S. population. Fitness Centers Market

The U.S. fitness centers market consists of about 30,000 membership-based exercise facilities. Fitness centers are operated as parts of multi-site chains or as single-location entities. The market surpassed $20 billion in total revenue for the first time in 2010, when aggregate membership reached 50 million.

U.S. fitness center revenue has grown steadily over the past 10 years. Since 2000, the sector has expanded at least 2% each year. The 10-year CAGR for fitness center revenue was nearly 6%, including 4% growth in 2010. Increased awareness of the benefits of physical activity has led to consistent gains in membership levels and fitness center revenues in the U.S.

U.S. Fitness Center Revenue

_____________________ Source: IHRSA Global Reports.

The evolution of the fitness center industry has resulted in a pronounced level of bifurcation for the types of clubs. Consistent with trends across various consumer sectors, people have gravitated toward either low-cost solutions or premium offerings depending on their preferences and placement on the economic spectrum. In the context of the fitness center business, this dynamic has caused two segments to emerge: Down market – The appeal of the down market value proposition with consumers has supported

explosive growth for several low-cost / high-volume platforms that were founded in the past decade, such as Planet Fitness, Equinox’s Blink Fitness, and Retro Fitness

Up market – Differentiated destinations with broad offerings and amenities, such as the facilities of Lifetime Fitness, Equinox, and ClubCorp

Importantly, the mid-market of the industry remains substantial, led by L.A. Fitness and 24 Hour Fitness.

$11.6 $12.2 $13.1 $14.1 $14.8 $15.9$17.6 $18.7 $19.1 $19.5 $20.3

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2000-2010 CAGR: 5.8%



Fitness center membership experienced an upward trend over the past decade, growing at an average annual rate of 4.3% through 2010. Membership increased substantially from 2000 to 2007, followed by slight declines in 2008-2009 as consumers cut back on discretionary spending amid the economic recession. The sector rebounded dramatically in 2010, when the number of U.S. health club members jumped 11%.

U.S. Fitness Center Membership

_____________________ Source: IHRSA Consumer 2010 and Global 2011 reports.

Although growth in the fitness center business has been broad-based over the past 10 years, people aged 55 and over have driven the largest growth in club membership. The benefits of exercise for increased life expectancy, coupled with the aging of the population, have brought a huge number of Americans over the age of 55 to fitness centers across the country. As of 2009, this age group comprised approximately 20% of all U.S. fitness center members.

Membership by Age Group

_____________________ Source: Sporting Goods Manufacturers Association.

32.8 33.8 36.339.4 41.3 41.3 42.7

46.7 45.6 45.3

50.2

(3%)

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Fitness Equipment Market

The fitness equipment market consists of a wide range of exercise equipment sold to commercial establishments (such as fitness centers) and the consumer market. On a combined basis, manufacturer sales of fitness equipment totaled $4.3 billion in the U.S. in 2010, up 4.2% from the 2009 figure. Types of fitness equipment include: Cardio equipment – stationary bikes, stair climbing machines, treadmills, elliptical machines Strength equipment – single/multi-station selectorized, plate loaded, benches/racks/free weights

Commercial Fitness Equipment Market Overview

Wholesale sales of commercial fitness equipment purchased for use in fitness centers totaled $1.0 billion in 2010, up 5.5% from the 2009 level. Annual sales were in the $0.9-1.1 billion range throughout the decade of the 2000s. Factors affecting commercial fitness equipment sales include growth in the number of fitness centers and changes in participation in various fitness activities. Leading manufacturers of commercial fitness equipment include Life Fitness (a division of Brunswick), Star Trac, Matrix Fitness (a division of Johnson Health Tech), and Cybex International.

U.S. Commercial Fitness Equipment Wholesale Sales

_____________________ Source: SGMA Tracking the Fitness Movement 2011. Growth rates for two-year period equal to the CAGR over that time period.

Sales of cardio equipment represent about 60% of the commercial segment, with strength equipment accounting for the balance. Each type of equipment experienced significant sales declines in 2008 and 2009 before rebounding in 2010.

Commercial Fitness Equipment Annual Sales Growth by Type

_____________________ Source: SGMA Tracking the Fitness Movement 2011.

$484

$662

$945 $900$1,011

$1,119 $1,149$1,041

$970 $1,023

(10%)

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(9.2%) (8.7%)

6.3%

(9.7%)

(4.5%)

4.2%

(9.4%)(7.0%)

5.5%

(12%)

(8%)

(4%)

0%

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8%

2008 2009 2010

Cardio Strength Total



Consumer Fitness Equipment Market Overview

Manufacturer sales of consumer fitness equipment, which is purchased for home use, increased 4.3% to $3.3 billion in 2010. As with the commercial market, sales of consumer fitness equipment remained in a fairly tight range over the past decade: peaking in 2007, lagging in 2008-2009, and making a partial recovery in 2010.

U.S. Consumer Fitness Equipment Wholesale Sales

_____________________ Source: SGMA Tracking the Fitness Movement 2011. Growth rates for two-year period equal to the CAGR over that time period.

Relative to the commercial segment, cardio equipment accounts for a higher proportion of products purchased for home use. Treadmills, elliptical machines, and exercise cycles have consistently represented the largest categories in the consumer segment. Share gainers since 2007 included elliptical machines and the “other consumer” category, which (as defined by SGMA) includes multi-functional machines for home use (e.g., Bowflex, Soloflex), exercise balls and bands, hand weights and weight kits, and exercise mats and accessories. Leading consumer fitness equipment companies include Escalade Sports, ICON Health & Fitness, and Nautilus.

Consumer Fitness Equipment Wholesale Sales by Category

_____________________ Source: SGMA Tracking the Fitness Movement 2011.

$2,440$2,795 $2,905 $3,075 $3,165

$3,543 $3,549$3,183 $3,183 $3,321

(12%)

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Equipment Sales ($ in millions) Percentage of Total Equipment Sales2007 2008 2009 2010 2007 2008 2009 2010

Treadmills $967 $870 $827 $889 27.3% 27.3% 25.9% 26.8%

Elliptical Machines $763 $687 $721 $786 21.5% 21.6% 22.6% 23.7%

Exercise Cycles $393 $344 $344 $358 11.1% 10.8% 10.8% 10.8%

Home Gyms $286 $232 $199 $199 8.1% 7.3% 6.2% 6.0%

Ab Machines $230 $205 $195 $195 6.5% 6.4% 6.1% 5.9%

Free Weights $175 $167 $162 $162 4.9% 5.2% 5.1% 4.9%

Exercise Benches $136 $122 $119 $119 3.8% 3.8% 3.7% 3.6%

Rowing Machines $67 $56 $56 $56 1.9% 1.8% 1.8% 1.7%

Ski Machines $38 $36 $34 $34 1.1% 1.1% 1.1% 1.0%

Aero Gliders $25 $22 $22 $23 0.7% 0.7% 0.7% 0.7%

Stair Climbing Machines $25 $20 $20 $21 0.7% 0.6% 0.6% 0.6%

Other Consumer $443 $421 $495 $479 12.5% 13.2% 15.5% 14.4%



Bicycles & Supplies Market Overview

The bicycles & supplies market consists of various bicycle categories such as road, hybrid, mountain, and racing. The market also includes accessories such as protection equipment and spare/replacement parts. The dominant sales channels for this segment are mass merchant retailers and bicycle shops (particularly for high-end products), while sporting goods chains and outdoors stores also represent significant outlets.

U.S. retail sales of bicycles and supplies increased 4.7% to $5.2 billion in 2010 after a two-year period of sales contraction in 2008 and 2009, when revenue declined a combined 7.9% from the 2007 level.

U.S. Bicycles & Supplies Retail Sales

_____________________ Source: National Bicycle Dealers Association.

After a substantial decrease in unit sales in 2009, the number of bicycles sold in the U.S. jumped 33.2% in 2010 to a 10-year high of nearly 20 million units. Following major contraction in 2009, penetration rates (in terms of per-capita sales) recovered to 6.4%+ while remaining below the 2002 level of 7.0%.

U.S. Bicycle Unit Sales and Penetration Rate

_____________________ Source: Bicycle Manufacturers Association, U.S. Department of Commerce Import Statistics, The Gluskin Townley Group, and U.S. Department of the Census. (1) Equal to the total U.S. bicycle market divided by the total U.S. population.

$5,393 $5,285 $4,968 $5,200

(9%)

(6%)

(3%)

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6%

$0

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$6,000

2007 2008 2009 2010

$ in

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Year-over-year growth

2007-2010 CAGR: (1.2%)

20,903

16,792 19,656 18,500 18,507 19,773 18,259 18,225 18,577

14,888

19,828

4%

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6%

7%

8%

0

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12,000

18,000

24,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Uni

ts in

thou

sand

s Penetration Rate

(1)

2000-2010 CAGR: (0.5%)



Bicycle shops and mass merchants accounted for 80% of U.S. bicycle sales in 2010. Approximately three out of every four bicycles were purchased at mass merchants, which generally stock lower-priced models (averaging $79). Bike shops registered under 15% of bicycle purchases in 2010 but led all channels in sales dollars, as average unit retail prices exceeded $500.

2010 U.S. Bicycle Market Sales

_____________________ Source: U.S. Department of Commerce Import Statistics and The Gluskin Townley Group. In terms of U.S. sales by bicycle type, road bicycles accounted for the leading share in 2010, comprising over one-third of all purchases. Other leading categories included 26-inch wheel bicycles (primarily mountain bikes) with 31% market share and hybrid bicycles at about 15% of the market.

2010 U.S. Bicycle Sales by Type

_____________________ Source: National Bicycle Dealers Association.

44.0%

36.0%

8.6% 6.4% 5.0%

0%

10%

20%

30%

40%

50%

Percentage of Total Sales

Bike Shops Mass Merchant Chain Sporting Other Outdoor Specialty

$535 $524

$355

$239

$79

Average Unit Retail Price$0

$200

$400

$600

37.8%

15.5%

31.3%

6.6%

5.0%

2.7% 1.0%

Road

Hybrids

26-inch Bicycles

29er Bicycles

Juvenile and Kid Bicycles

BMX/Freestyle

Miscellaneous



Fitness Devices Market Overview

Greater focus on healthy living among consumers has helped create a market for electronic fitness devices that facilitate participation in various activities, including running, cycling, and golf. The most prominent category within the fitness devices segment is dedicated devices (such as handsets and watches) featuring Global Positioning System (GPS) technology for recreational purposes.

After expanding rapidly over a five-year period, the U.S. Recreational GPS market was estimated to represent more than $800 million in wholesale sales in 2010. Increased demand for the integration of technology into active lifestyles fueled growth in the latter half of the past decade, leading to an estimated CAGR of 21.2% from 2005 through 2010. Unit growth has followed a similar pattern, rising at an average annual rate of 17.8% to 4.0 million in 2010. Leading providers of GPS-based fitness devices include Garmin, Polar, TomTom, and Casio.

U.S. Recreational GPS Wholesale Sales

_____________________ Source: ABI Research.

GPS devices have become a valuable tool for outdoor enthusiasts by providing precise locations to users. Outdoor runners, hikers, bicyclists, and outdoor adventurers are increasingly relying on GPS devices instead of paper maps, compasses, or landmarks. Newer GPS receivers enable users to transfer data to and from a computer, facilitating performance tracking and sharing of data using software applications developed to integrate with fitness device output.

The market for recreational GPS devices should experience further expansion as technology continues to improve and as consumer awareness of their applications grows. ABI Research projects double-digit percentage growth over the next several years in forecasting sales of $2 billion on 10 million units in 2016. Planned technology advancements should enhance reliability and availability for all users. For example, availability under a dense forest cover would enable additional usage by runners, hikers, and bicyclists, boosting demand for newer versions of these products.

$309$371

$445$616 $618

$807

0%

10%

20%

30%

40%

$0

$250

$500

$750

$1,000

2005 2006 2007 2008 2009 2010

$in

mill

ions




Alternative Fitness Market Overview

The alternative fitness market incorporates fitness-related services and products promoting functional fitness, including several programs not featured in full-service health clubs. Examples of alternative fitness activities include P90X, CrossFit, Zumba, TRX Suspension Training, Spinning, Pilates, and yoga. Participation in such activities can require spending on program memberships, class fees, and/or DVDs.

Alternatives to standard fitness activities have gained popularity over the past decade, reflecting growing demand for relevant and impactful content, techniques, and instruction. Consumers are more focused on efficacy, leading to greater interest in innovative programs. Alternatives satisfy demand for cross-fitness programs that place less emphasis on strict cardio-versus-strength approaches.

While data on the size of the fitness alternatives market is unavailable, the U.S. fitness DVD market, which applies to several types of fitness alternatives, is estimated by IBISWorld at $265 million in revenue. We believe this figure significantly undercounts the overall market due to the challenges of capturing sales data through all channels. IBISWorld recently cited an 11% annual market growth rate from 2007 to 2012. Rising demand for fitness DVDs partly reflects the convenience of home usage, along with the wide range of subject matter, including yoga, Pilates, dance, cardio, strength training, and cross fitness.

Below are points of interest related to several leading alternative fitness activities:

P90X P90X is a rigorous home-based exercise program designed to improve physical fitness in 90 days by

changing the order of exercises and incorporating new movements during six workout days per week By delivering powerful results to consistent users of the program, P90X has been able to charge a

premium for its DVDs, which have earned a devoted following over the past several years Beachbody, LLC sells P90X DVDs in addition to other fitness DVDs, such as Insanity and Les Mills Pump

CrossFit CrossFit is a strength and conditioning program that requires participants to perform constantly varied,

high intensity, functional movements People can participate in CrossFit via group sessions at dedicated sites featuring trainer-led instruction

or independently using web-based content As enthusiasm for CrossFit has grown rapidly in recent years, the number of licensed CrossFit

establishments in the U.S. increased from 18 in 2005 to more than 3,000 today, with annual affiliate fees currently at $3,000

Zumba Zumba is a dance fitness program with movements timed to music. Resistance training can be

incorporated into Zumba workouts Spending related to Zumba includes classes (held in more than 100,000 locations worldwide according

to Zumba Fitness) as well as DVDs (totaling 10 million units sold in aggregate) and related equipment At-home interactive participation is also available through Zumba for Wii by Majesco Entertainment For the first time, Zumba was listed among the top 10 fitness trends in the latest annual survey of

fitness professionals conducted by the American College of Sports Medicine (ACSM)



TRX Suspension Training TRX Suspension Training is a resistance training technique involving a wide range of bodyweight

exercises that use natural body movements in conjunction with TRX suspension straps This type of training has emerged over the past five to seven years as an innovative method of

strengthening multiple body parts simultaneously while also stabilizing the core muscle group, promoting balance and flexibility, and enhancing cardiovascular efficiency

Fitness Anywhere, LLC makes TRX Suspension Training equipment and produces content sold to fitness centers, trainers, and individuals

Due to its compact size and light weight, TRX suspension equipment can be used in many locations. At thousands of fitness centers, members exercise with TRX suspension training equipment by working with trainers or class instructors, many of which have been trained by Fitness Anywhere

Spinning Spinning involves vigorously exercising on a specialized stationary bicycle. Regular participants

increase strength, endurance, and cardiovascular capacity by riding for an extended period of time at varying levels of intensity

People usually take part in Spinning via group classes led by a trained instructor. Sessions often are held at fitness centers and in standalone studios, which typically charge on a per-class basis rather than assessing membership fees

Spynergy Consulting, a cycling studio operator and consulting firm, recently estimated the number of standalone indoor stationary cycling facilities in the U.S. at less than 200 while noting that 40 have opened in the past year, with dozens more planned in the near term

In 2011, fitness club leader Equinox Holdings acquired a majority stake in SoulCycle, a small chain of spin studios that incorporates upper body resistance training into its classes, with the intention of accelerating expansion of the concept to 50 additional studios in new and existing markets by 2015

Yoga/Pilates Yoga and Pilates are exercise systems oriented toward body conditioning, flexibility, and balance.

Participation in these activities has surged due to strong interest in alternative exercise practices The estimated number of U.S. participants in yoga was 14.3 million in 2010, up from 4.3 million in

2001 Participation in Pilates jumped from 2.4 million people in 2001 to an estimated 8.6 million in 2010 Due to strong growth in yoga and Pilates practitioners, the number of studios dedicated to these

activities was estimated to exceed 25,000 in 2011, up from 17,800 in 2006 IBISWorld noted revenue for yoga and Pilates studios at $6.5 billion in 2011 while forecasting yearly

growth averaging 5% over the next five years Growth for Pilates may have tapered off, as this activity was not listed among the top 20 fitness trends

in the last two annual ACSM surveys

Factors Driving the Trend Toward Healthier Living


This section reviews several factors that are contributing to the trend toward healthier living. These factors include the aging population, discretionary income, healthcare spending and coverage, consumer education and acceptance, opportunities to increase exercise, and the rising need to address obesity.

AGING POPULATION The trend of an aging U.S. population should drive an increased focus on healthy living as a means of extending one’s life expectancy and quality of life. About 13% of the U.S. population is 65 years old and above, and this figure will increase significantly over the next two decades. By 2030, the U.S. Census Bureau projects the number of people aged 65 and above will represent 19% of the U.S. population.

U.S. Population by Age Group

_____________________ Source: U.S. Census Bureau.

Due largely to the baby boom generation, the elderly population in the U.S. (defined here as aged 65 and above) will be the fastest growing segment over the next two decades. Ongoing increases in life expectancy in the U.S., supported by higher living standards as well as advances in medical technology and access to health care, are also contributing to faster growth for the elderly population. From 2010 to 2030, the number of people aged 65+ is expected to increase 79.4%, representing a CAGR of 3.0% during this period versus a 0.9% CAGR for the overall population.

Projected Growth Rate of U.S. Elderly Population (65 and Older)

_____________________ Source: U.S. Census Bureau.

34%

13%13%

14%

12%

13%

Total U.S. Population

2010: 310 million2030: 374 million

33%

13%

13%

12%

11%

19%

Under 25

25 to 34

35 to 44

45 to 54

55 to 64

65 and Over

2010 2030

29.835.0

40.2

54.8

72.1

0

20

40

60

80

100

1990 2000 2010 2020 2030

popu

latio

n in

mill

ions

1990-2010 CAGRElderly Population: 1.5% / Total Population: 1.1%

2010-2030 CAGRElderly Population: 3.0% / Total Population: 0.9%



DISCRETIONARY INCOME Income levels play a significant role in the health of Americans. As income rises, people have the ability to spend more on activities and products associated with a healthy lifestyle. With rising income, people are more likely to enroll in a gym or class (such as yoga and Pilates) and purchase nutritional supplements, vitamins, and organic food.

Increased education levels have enhanced the discretionary income of a substantial portion of the U.S. population. The percentage of the 25+ population with at least an associate’s degree increased from 31% in 2000 to 39% in 2010. As a result, aggregate disposable income for a large segment of the population has risen due to the earnings benefits associated with advanced education. In addition, more educated people are better informed of the importance of dietary habits and other factors supporting healthy living.

Education Level of Americans Over 25

_____________________ Source: U.S. Census Bureau. (1) Includes Associate’s, Bachelor’s, Master’s, Professional, and Doctoral degrees.

The chart below details the substantial income premium related to holding a college degree. Even during challenging job markets, degree holders experience much lower unemployment rates than those with less education.

Median Annual Income by Education Degree

_____________________ Source: U.S. Census Bureau (as of 2010).

20%

29%

21%

31% No HS Degree

HS Degree

Some College

College Degree

25 and Over U.S. Population

2000: 182 million 2010: 200 million

13%

31%

17%

39%

2000 2010

(1)

$19,547$28,132 $33,295 $36,440

$49,142

$60,801

$88,745 $84,572

$0

$25,000

$50,000

$75,000

$100,000

Some HS HS Degree Some College Associate's Degree

Bachelor's Degree

Master's Degree

Professional Degree

Doctoral Degree

med

ian

annu

al in

com

e



HEALTHCARE SPENDING AND COVERAGE Economic Burden of Inactivity Annual healthcare costs related to cardiovascular diseases and diabetes exceed $500 billion. This total

would be greatly reduced by increased physical activity and improved diets(1) Healthcare spending attributed to obesity represents about 9% of all spending in the U.S., rising from

6-7% over a 10-year period(2) Healthcare costs for obese Americans are 42% higher than for those at a standard weight, with costs

for an obese Medicare recipient even higher(2)

Economic Benefits of Activity An investment of $1 in physical activity leads to more than $3 of healthcare cost savings(3) People who are physically active on a regular basis lower their risk of developing coronary heart

disease, stroke, diabetes mellitus, high blood pressure, and cancer by 30-50%(4) A study showed that active employees take 27% fewer sick days and report 14-25% fewer disability

days than inactive employees(5) _____________________ (1) American Heart Association, American Diabetes Association. (2) Health Affairs. (3) World Health Organization. (4) Department of Health and Human Services. (5) Health Canada.

U.S. Healthcare Expenditures

_____________________ Source: U.S. Centers for Medicare and Medicaid Services.

U.S. Healthcare Expenditures as Percentage of GDP

_____________________ Source: U.S. Centers for Medicare and Medicaid Services and Bureau of Economic Analysis.

$2,594

$0

$700

$1,400

$2,100

$2,800

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

$ in

bill

ions

CAGR from 1960 to 2010: 9.5%

17.9%

0%

5%

10%

15%

20%

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010



As indicated on the prior page, healthcare expenditures in the U.S. have risen dramatically over the past several decades, making a transition toward healthier living increasingly important to the financial status of governments and households.

Sources of Personal Healthcare Spending

_____________________ Source: U.S. Centers for Medicare and Medicaid Services.

Enrollment in company health plans raises a worker’s awareness of the importance of healthy living and its drivers such as exercise and diet. In order to help manage their own costs, companies and their health plans are increasingly providing enrollees with information and incentives related to taking responsibility for one’s health and wellness.

Percentage of U.S. Workers Enrolled in a Healthcare Plan

_____________________ Source: Bureau of Labor Statistics. Note: Access Rate is the percentage of workers with the option to enroll in a healthcare plan. Participation Rate is the percentage of workers that are employed in a healthcare plan.

Hospital care, 37%

Physician and clinical

services, 24%Dental and

other services, 8%

Home health care, 3%

Nursing care facilities, 7%

Prescription drug sales,

12%

Medical equipment sales, 4%

Other personal care, 6%

2010 U.S. Personal Healthcare Spending: $2.2 trillion

69%

51%

45%

55%

65%

75%

2003 2004 2005 2006 2007 2008 2009 2010 2011

Access Rate Participation Rate



CONSUMER EDUCATION AND ACCEPTANCE Consumer education has played an important role in the trend toward healthier living in the U.S. An increasing awareness of the benefits of exercise and a healthy diet on life expectancy and quality of life has altered consumer habits. Group exercises such as CrossFit, yoga, and Pilates have gained popularity. In addition, consumers are spending more on supplement products as well as natural and organic foods.

Trends in Vitamins & Supplements Intake

According to the Nutrition Business Journal (NBJ), an increasing number of consumers view supplements (such as multivitamins) as a method of preventing sickness as well as an inexpensive alternative to visiting a doctor or physician

Based on NBJ’s annual business report, vitamins and herbs & botanical products have grown in popularity due to heightened consumer awareness on the importance of health surrounding sleep, stress, and the immune system

Trends in Natural & Organic Food Intake

According to the Agricultural Marketing Resource Center’s (AMRC) 2010 Industry Survey, over half of the purchases of organic foods are taking place in mainstream grocery stores

Based on AMRC’s survey, fruits and vegetables continue to be the most popular organic food choice, representing 38% of the total organic food market. Dairy products come in as the second most popular organic food product with 15% of the market, and meat products are third with 14% market share

Trends in Exercise & Fitness

Based on the Sporting Goods Manufacturers Association’s (SGMA) 2011 annual review, 215 million Americans participate in a fitness-oriented activity, which represents 76.3% of the population over the age of 6. The most common activities included fitness walking, running (outdoors and on a treadmill), and free-weight lifting. Swimming, bicycling, and hiking were also popular activities

In 2010, 11.6 million Americans became active for the first time, which represents 5.4% of all active Americans. The majority of these new entrants were women who began walking, running, and using weight resistance machines at least once a week

According to SGMA surveys, a recent key fitness trend has been a shift toward group exercise, particularly among Generation Y (those born between 1980 and 1999). Group activities such as yoga, Zumba, group cycling, and aerobic classes have surged in popularity. Generation Y’s heavy usage of social media has contributed to this trend, as mediums such as Facebook and Twitter have increased interaction among peer groups (such as on a college campus or within a company)



OPPORTUNITIES TO INCREASE EXERCISE A significant portion of the U.S. population has not yet embraced the shift toward healthier living, providing upside potential as attitudes and behaviors change for this group. For example, the percentage of the population that did not participate in any physical activity or sport over a 12-month period increased for four consecutive years through 2011 according to an SGMA survey, reaching nearly one-quarter of the population.

Inactivity Levels in the U.S.

_____________________ Source: SGMA and U.S. Census Bureau.

The problem of insufficient activity extends to the younger people, with a large percentage of high school students not attending a physical education class in a typical week. The Let’s Move program of First Lady Michelle Obama is one of the initiatives designed to address inadequate activity levels among the nation’s youth. Importantly, the latest SGMA survey suggested that efforts to engage children in physical activity are beginning to have an effect, as inactivity in the 6-12 year old age group dropped slightly in 2011.

High School Students Not Attending P.E. Class in a Typical Week

_____________________ Source: Center for Disease Control and Prevention.

21.5%

22.6%22.9%

23.5% 23.7%

20%

21%

22%

23%

24%

25%

2007 2008 2009 2010 2011

% of Population (Ages 6 and Up) That Is Inactive

43.9%

48.3%

44.3%

45.8%46.4%

43.6%

42%

44%

46%

48%

50%

1999 2001 2003 2005 2007 2009

% of High School Students Who Did Not Attend P.E. Class In An Average Week



RISING NEED TO ADDRESS OBESITY The growing frequency of obesity in the U.S. highlights the need for greater focus on healthier living. As indicated below, roughly one-third of American adults are considered obese, with the percentage doubling in the past three decades.

Percentage of Overweight Americans Aged 20-74 Years

_____________________ Source: CDC. Note: 2009-2010 data not yet available for Extremely Obese. The rising obesity trend in the U.S. extends to children. Health and fitness professionals surveyed by the American College of Sports Medicine (ACSM) identified childhood obesity as a top 10 issue, citing the need to create programs tailored to overweight and obese children.

Trends in Obesity Among U.S. Children

_____________________ Source: CDC.

35.7%

6.0%

0%

10%

20%

30%

40%

1960-1962 1971-1974 1976-1980 1988-1994 1999-2000 2001-2002 2003-2004 2005-2006 2007-2008 2009-2010

Obese (BMI > 30) Extemely Obese (BMI > 40)

12.1%

18.4%18.0%

0%

5%

10%

15%

20%

25%

1963-1970 1971-1974 1976-1980 1988-1994 1999-2000 2001-2002 2003-2004 2005-2006 2007-2008 2009-2010

2-5 Years Old 6-11 Years Old 12-19 Years Old

Perc

ento

f Obe

se C

hild

ren

Selected Health, Nutrition & Fitness Companies


Nutrition

Vitamins & Nutritional Supplements Retailers

GNC Holdings Inc. GNC Vitamin Shoppe, Inc. VSI

Vitamins & Nutritional Supplements Direct-to-Consumer Providers

Amway Corporation Blyth, Inc. BTH Forever Living Products International, Inc. Herbalife Ltd. HLF IAC/InterActiveCorp. IACI Liberty Interactive, Inc. LINT.A Melaleuca, Inc. New Vitality Nu Skin Enterprises Inc. NUS Shaklee Corporation USANA Health Sciences Inc. USNA Vitacost.com, Inc. VITC

Vitamins & Nutritional Supplements Wholesalers

Emergen-C (Pfizer Inc.) PFE EAS (Abbott Laboratories) ABT Atrium Innovations TSX: ATB BASF DB: BAS BioSan Laboratories, Inc. Glanbia plc ISE: GL9 Lifevantage Corporation LFVN Mannatech Inc. MTEX Mead Johnson Nutrition Company MJN Metagenics Milk Specialties Company Natrol, Inc. Nature's Best, Inc. Nature's Sunshine Products Inc. NATR NBTY, Inc. Nutraceutical International Corp. NUTR Omega Protein Corp. OME Perrigo Co. PRGO Reliv International, Inc. RELV ReNew Life Formulas, Inc. Royal DSM ENXTAM: DSM Santa Cruz Nutritionals, Inc. Schiff Nutrition International Inc. WNI Trygg Pharma

_____________________ (1) Includes pet food companies.

Natural & Organic Food Product Retailers/Distributors

Earth Fare, Inc. Fairway Markets Evolution Fresh (Starbucks) Fresh & Easy Neighborhood Market, Inc. Jamba, Inc. JMBA Kehe Food Distributors Mariano's (Roundy's) RNDY Sprouts Farmers Market The Fresh Market, Inc. TFM United Natural Foods, Inc. UNFI

Whole Foods Market, Inc. WFM

Natural & Organic Food Product Wholesalers(1)

Amy's Kitchen, Inc. Annie's, Inc. BNNY Apple & Eve, LLC Applegate Farms LLC Attune Foods Aurora Organic Dairy Corp. Wm. Bolthouse Farms, Inc. C.J. Foods, Inc. Cal-Maine Foods, Inc. CALM Charter Baking Company, Inc. Country Fresh, Inc. Dean Foods Company DF Earthbound Farm Eden Foods, Inc. Enjoy Life Natural Brands, LLC Fairfield Farm Kitchens, Inc. FoodShouldTasteGood (General Mills) GIS Good Health Natural Products, Inc. Healthy Food Holdings, Inc. Kashi (Kellogg Co.) K Kettle Foods (Diamond Foods) Lifeway Foods Inc. LWAY National Frozen Foods Corporation Natural Balance Pet Foods, Inc. Nature's Path Foods, Inc. Niman Ranch, Inc. Performance Pet Nutrition, LLC Pet Appeal, Inc. popchips, inc. Seneca Foods SENE.A Stonyfield Farm, Inc. The Hain Celestial Group, Inc. HAIN The Herbal Garden, Inc. The Nest Collective, Inc. WellPet LLC Westminster Cracker Company, Inc.



Nutrition (continued)

Functional Beverages Wholesalers

5-hour Energy (Living Essentials, LLC) Adina For Life, Inc. Advanced H2O LLC Boost (Nestlé S.A.) SWX: NESN Celsius Holdings, Inc. CELH CytoSport, Inc. Dreamerz Foods, Inc. Ensure (Abbott Laboratories) ABT Gatorade (PepsiCo, Inc.) PEP Joint Juice, Inc. Juice Tyme, Inc. MiO (Kraft Foods Inc.) KFT Mix1 Beverage Company (The Hershey Co.) HSY Monster Beverage Corporation MNST One Natural Experience Inc. Powerade (The Coca-Cola Company) KO Red Bull Company Limited Skinny Nutritional Corp. SKNY Slim-Fast (Unilever plc) LSE: ULVR Sunny Delight Beverages Company The FRS Company, LLC The Sqwincher Corporation Tree Top Inc. Vita Coco

Nutrition & Energy Bars Wholesalers

Clif Bar & Company Detour Bars (Forward Foods, LLC) EAS (Abbott Laboratories) ABT Elan Nutrition (ConAgra Foods, Inc.) CAG Hearthside Food Solutions LLC KIND LLC Larabar (General Mills, Inc.) GIS NutraBella, Inc. Odwalla Bars (The Coca-Cola Company) KO PowerBar (Nestlé S.A.) SWX: NESN Promax Nutrition Corp. Pure Protein, L.L.C Special K Bars (Kellogg Company) K The Balance Bar Company Tiger's Milk (Schiff Nutrition International) WNI ZonePerfect (Abbott Laboratories) ABT

Weight Management Product Companies

Atkins Nutritionals, Inc. Medifast Inc. MED Nutrisystem, Inc. NTRI Weight Watchers International, Inc. WTW



Fitness

Fitness Retailers

Big 5 Sporting Goods Corp. BGFV Dick's Sporting Goods Inc. DKS Golfsmith International Holdings Inc. GOLF Hibbett Sports, Inc. HIBB Performance Bicycle Sport Chalet Inc. SPCH.B

Fitness Centers

24 Hour Fitness USA, Inc. Anytime Fitness, Inc. Bally Total Fitness Holding Corp. Club One, Inc. ClubCorp, Inc. Crunch Fitness (BTF/CFI, Inc.) Curves International, Inc. East Bank Club Equinox Holdings LLC Extreme Fitness, Inc. Fitness 19, Inc. Fitness Formula, Ltd. Gold's Gym International, Inc. HealthFitness Corporation L.A. Fitness International, LLC Life Time Fitness Inc. LTM Midtown Athletic Clubs Millennium Partners Sports Club Management New York Health Club, Inc. Planet Fitness Company Powerhouse Gym International, Inc. Retrofitness Corp. Snap Fitness, Inc. Spectrum Clubs, Inc. Sport and Health, LLC Sports Club Co. Inc. SCYL Total Woman Gym & Day Spa (Spad Holdings) Town Sports International Holdings Inc. CLUB Urban Active (Global Fitness Holding, Inc.) Western Athletic Clubs, Inc. World Gym International, LLC Xsport Fitness (Capital Fitness, Inc.) YouFit Health Clubs

Commercial & Consumer Fitness Equipment

AlterG Cybex International Inc. CYBI EB Brands, LLC Escalade Inc. ESCA Everlast Worldwide, Inc. ICON Fitness Corp. Johnson Health Tech Co., Ltd. TSEC: 1736 Life Fitness (Brunswick Corp.) BC Nautilus Inc. NLS Octane Fitness, LLC Perfect Fitness (Implus Footcare, LLC) Precor (Amer Sports Corp.) HLSE: AMEAS Promaxima Manufacturing, Ltd. Rogue Fitness Soloflex, Inc. Star Trac & StairMaster (Core Health and Fitness, LLC)

Technogym S.p.A. The Hygenic Corporation Total Gym Global Corp. TRUE Fitness Technology, Inc. TRX (Fitness Anywhere, LLC) Woodway USA, Inc. York Barbell USA Ltd.



Fitness (continued)

Bicycle Equipment

Accell Group NV ENXTAM: ACCEL Bianchi CamelBak Campagnolo Srl Derby Cycle DB: DCT Dorel Industries TSX: DII.B DT Swiss AG Easton-Bell Sports Electra Bicycle Company ElliptiGO F.S.A. Srl (Full Speed Ahead) Felt Racing Fox Racing Shox Fuji Gary Fisher Mountain Bikes Giant Manufacturing Co. TSEC: 9921 Haro Bicycle Corporation Hawk Bikes E&M GmbH HB Performance Systems Hero Cycles Huffy Bicycle Company Jamis Bicycles Jas D. Easton Klein Bicycles KMC Chain Magura Bike Parts GmbH Marin Mountain Bikes Marzocchi Srl (Tenneco) TEN Mavic SAS (Amer Sports) HLSE: AMEAS Promax (Lee Chi Enterprises) TSEC: 1517 Raleigh Rocky Mountain Bicycles Saris Cycling Group SCOTT Sports SA Shimano TSE: 7309 Specialized Bicycle Components Sr Suntour SRAM International Sun Bicycles Trek Bicycle Corporation True Temper Sports

Fitness Devices

BodyMedia, Inc. Casio Computer Co. Ltd. TSE: 6952 Fitbit, Inc. Garmin Ltd. GRMN Jawbone (Aliph, Inc.) Magellan Navigation Inc. Nike Inc. NKE Polar Corporation Sportline (EB Brands) Suunto Oy (Amer Sports Corp.) HLSE: AMEAS Tech4o (Johnson Outdoors, Inc.) JOUT Timex Group USA, Inc. TomTom NV ENXTAM: TOM2

Alternative Fitness

Beachbody, LLC CrossFit, Inc. Gaiam Inc. GAIA Les Mills International, Ltd. Mad Dogg Athletics, Inc. Zumba Fitness, LLC

Comparable Company Analysis - Nutrition


Direct-to-Consumer

Retail

Wholesale

_____________________ Source: Capital IQ. Pricing as of March 31, 2012.

($ in millions except per share data)3/31/2012

Last Twelve Month Results PE Ratio LTM Valuation MultiplesPrice per % of 52- Enterprise Total Gross EBITDA EBIT Total

Company Name Share Week High Value Revenue Profit % Margin % Margin % 2012E 2013E Revenue EBITDA EBIT

BTH Blyth, Inc. $74.83 92.7% $505.7 $984.3 61.5% 5.8% 4.6% N/A N/A 0.5 x 8.8 x 11.0 xHLF Herbalife Ltd. 68.82 95.4% 7,951.9 3,454.5 47.4% 18.4% 16.3% 18.9 x 16.7 x 2.3 12.5 14.1IACI IAC/InterActiveCorp. 49.09 96.2% 3,321.0 2,059.4 63.0% 13.9% 10.0% 18.5 15.2 1.6 11.6 16.1LINT.A Liberty Interactive, Inc. 19.09 96.4% 16,589.9 9,616.0 36.4% 18.4% 11.8% 20.4 16.0 1.7 9.4 14.6NUS Nu Skin Enterprises Inc. 57.91 93.4% 3,499.7 1,744.0 83.4% 17.2% 15.3% 19.5 17.3 2.0 11.7 13.1USNA USANA Health Sciences Inc. 37.33 95.8% 509.2 581.9 82.5% 14.7% 13.3% 10.9 9.7 0.9 5.9 6.6VITC Vitacost.com, Inc. 7.96 92.0% 251.6 260.5 23.0% N/A N/A N/A N/A 1.0 N/A N/A

Mean 94.6% $4,661.3 56.7% 14.7% 11.9% 17.6 x 15.0 x 1.4 x 10.0 x 12.6 xMedian 95.4% 3,321.0 61.5% 15.9% 12.5% 18.9 16.0 1.6 10.5 13.6




GNC GNC Holdings Inc. $34.89 99.1% $4,497.6 $2,072.2 36.4% 16.7% 14.5% 18.2 x 15.9 x 2.2 x 13.0 x 15.0 xJMBA Jamba, Inc. 2.07 81.2% 137.6 226.4 34.4% 3.1% N/A N/A 23.0 0.6 19.4 N/ATFM The Fresh Market, Inc. 47.95 96.2% 2,357.3 1,108.0 33.1% 10.8% 7.5% N/A 36.2 2.1 19.6 N/ARNDY Roundy's, Inc. 10.70 94.0% 1,222.5 3,842.0 27.0% 5.7% 3.9% N/A N/A 0.3 5.6 8.1UNFI United Natural Foods, Inc. 46.66 94.7% 2,488.7 4,866.9 18.0% 3.8% 3.0% 24.4 21.5 0.5 13.6 17.1VSI Vitamin Shoppe, Inc. 44.21 91.4% 1,272.2 856.6 43.5% 11.4% 9.1% 23.7 20.1 1.5 13.0 16.4WFM Whole Foods Market, Inc. 83.20 96.4% 14,343.1 10,495.1 35.0% 8.5% 5.7% 35.6 31.1 1.4 16.1 23.9





ABT Abbott Laboratories $61.29 99.7% $103,773.3 $38,851.3 60.2% 28.7% 20.9% 12.2 x 11.5 x 2.7 x 9.3 x 12.8 xBNNY Annie's, Inc. 34.84 87.1% 673.2 134.9 39.5% 14.2% 13.7% N/A N/A N/A N/A N/ATSX:ATB Atrium Innovations Inc. 11.50 69.6% 637.3 414.7 54.2% 21.9% 20.0% 7.3 6.5 1.5 7.0 7.7CALM Cal-Maine Foods, Inc. 38.26 90.2% 766.8 1,080.3 19.2% 11.7% 8.9% 11.3 12.0 0.7 6.1 8.0HAIN The Hain Celestial Group, Inc. 43.81 97.7% 2,369.8 1,258.3 27.8% 11.8% 9.6% 25.4 21.9 1.9 16.0 19.5ISE:GL9 Glanbia plc 7.41 92.7% 2,831.0 3,470.2 16.4% 8.0% 6.0% 12.5 11.3 0.8 10.2 13.5LFVN Lifevantage Corporation 3.76 94.5% 364.8 70.4 85.3% 15.3% 14.9% N/A N/A N/A N/A N/ALWAY Lifeway Foods Inc. 9.25 77.7% 156.5 70.0 34.4% 10.6% 7.3% 27.6 20.6 2.2 N/A N/AMJN Mead Johnson Nutrition Company 82.48 98.2% 17,504.7 3,677.0 63.0% 25.3% 23.3% 26.5 23.1 N/A 18.8 20.4MNST Monster Beverage Corporation 62.09 98.3% 10,052.2 1,703.2 52.5% 27.8% 26.8% 32.2 27.4 N/A N/A 22.0NATR Nature's Sunshine Products Inc. 16.02 75.7% 194.1 367.8 81.5% 10.7% 9.5% 10.0 9.3 0.5 4.9 5.6NUTR Nutraceutical International Corp. 14.56 91.1% 171.5 189.5 50.1% 17.3% 13.0% 9.3 8.6 0.9 5.2 7.0OME Omega Protein Corp. 7.61 50.9% 128.9 235.2 23.2% 19.9% 13.0% 19.0 10.7 0.5 2.7 4.2PRGO Perrigo Co. 103.31 95.2% 10,616.4 2,959.7 34.8% 22.2% 18.1% 21.8 19.5 3.6 16.2 19.8ENXTAM:DSM Royal DSM N.V. 57.84 91.5% 10,085.9 11,754.5 28.4% 13.8% 9.4% 13.0 11.3 0.9 6.2 9.1WNI Schiff Nutrition International Inc. 12.29 94.4% 332.5 243.4 43.5% 12.1% 9.9% 24.9 19.4 1.4 11.3 13.8

Mean 87.8% $10,041.2 44.6% 17.0% 14.0% 18.1 x 15.2 x 1.5 x 9.5 x 12.6 xMedian 92.1% 720.0 41.5% 14.7% 13.0% 16.0 11.7 1.1 8.2 12.8

Comparable Company Analysis - Nutrition


Weight Management Product Companies

Diversified Food & Beverage Consolidators





MED Medifast Inc. $17.46 64.4% $242.7 $298.2 75.3% 11.7% 9.2% 12.3 x 10.0 x 0.8 x 7.0 x 8.9 xNTRI Nutrisystem, Inc. 11.23 69.7% 279.2 401.3 50.6% 7.8% 4.8% 22.4 15.9 0.7 8.9 14.6WTW Weight Watchers International, Inc. 77.19 88.8% 6,710.4 1,819.2 57.6% 31.7% 30.0% 15.6 13.2 3.7 11.6 12.3





KO The Coca-Cola Company $74.01 99.5% $182,420.1 $46,542.0 60.9% 27.6% 23.4% 18.1 x 16.6 x 3.9 x 14.2 x 16.7 xCAG ConAgra Foods, Inc. 26.26 96.0% 13,451.1 13,059.0 22.1% 12.4% 9.5% 14.8 13.6 1.0 8.3 10.8DF Dean Foods Company 12.11 87.1% 5,992.2 13,055.5 23.1% 5.5% 3.3% 13.3 11.1 0.5 8.3 13.8GIS General Mills, Inc. 39.45 96.1% 34,016.3 16,225.8 36.4% 19.0% 15.8% 15.5 14.3 2.1 11.1 13.3HSY The Hershey Company 61.33 98.3% 15,049.3 6,080.8 42.4% 21.2% 18.2% 19.6 18.0 2.5 11.7 13.6K Kellogg Company 53.63 92.9% 24,728.5 13,198.0 41.4% 17.9% 15.2% 15.4 14.2 1.9 10.4 12.4KFT Kraft Foods Inc. 38.01 97.3% 92,906.1 54,365.0 35.0% 15.9% 13.2% 15.1 13.6 1.7 10.7 13.0SWX: NESN Nestlé S.A. 62.90 99.2% 216,534.4 89,622.3 47.3% 18.7% 15.6% 17.1 15.6 2.4 12.9 15.5PEP Pepsico, Inc. 66.35 92.3% 127,872.6 66,504.0 52.6% 19.7% 15.6% 16.2 14.8 1.9 9.8 12.3LSE: ULVR Unilever plc 33.01 93.7% 106,893.2 60,366.4 39.9% 16.2% 14.0% 15.2 14.0 1.8 10.9 12.6


Comparable Company Analysis - Fitness


Retail

Fitness Centers

Wholesale





BGFV Big 5 Sporting Goods Corp. $7.84 63.2% $232.6 $902.1 32.3% 4.4% 2.4% 12.8 x 10.4 x 0.3 x 5.8 x 10.9 xDKS Dick's Sporting Goods Inc. 48.08 96.2% 5,269.5 5,211.8 30.6% 10.5% 8.2% 23.7 19.7 1.0 9.6 12.3GOLF Golfsmith International Holdings Inc. 4.19 72.9% 107.6 387.3 35.0% 3.7% 0.8% 9.7 5.4 0.3 7.6 N/AHIBB Hibbett Sports, Inc. 54.55 97.9% 1,381.7 732.6 35.8% 14.6% 12.8% 25.7 21.5 1.9 12.9 14.8





LTM Life Time Fitness Inc. $50.57 96.0% $2,728.2 $1,013.7 39.3% 27.0% 17.3% 18.6 x 16.1 x 2.7 x 10.0 x 15.6 xCLUB Town Sports International Holdings Inc. 12.63 94.0% 535.3 466.9 25.5% 18.7% 7.6% 18.6 15.2 1.1 6.1 15.0





ENXTAM: ACCEL Accell Group NV $21.64 77.4% $615.9 $816.5 33.2% 7.0% 5.9% 9.4 x 9.2 x 0.8 x 10.7 x 12.8 xHLSE: AMEAS Amer Sports Corp. 13.06 81.8% 2,063.6 2,443.4 43.5% 9.1% 7.2% 11.8 10.0 0.8 9.3 11.7BC Brunswick Corporation 25.75 93.0% 2,578.2 3,748.0 23.4% 8.5% 5.7% 16.8 12.9 0.7 8.1 12.0TSE:6952 Casio Computer Co. Ltd. 7.17 88.2% 2,097.4 3,971.5 34.7% 6.9% 2.8% N/A 15.1 0.5 7.7 18.8DB: DCT Derby Cycle AG 40.19 83.9% 352.1 309.1 32.7% 8.1% 7.6% 14.4 12.8 1.1 14.1 15.0TSX: DII.B Dorel Industries Inc. 28.51 88.9% 1,219.0 2,364.2 21.9% 7.3% 5.8% 8.3 7.3 0.5 7.1 8.9GRMN Garmin Ltd. 46.98 94.1% 7,745.1 2,758.6 48.5% 23.5% 20.1% 17.8 16.8 2.8 11.9 14.0TSEC: 9921 Giant Manufacturing Co. Ltd. 4.39 90.2% 1,701.0 1,522.8 22.2% 9.4% 7.8% 15.3 11.6 1.1 11.8 14.3TSEC:1736 Johnson Health Tech Co., Ltd. 3.10 95.2% 655.1 450.1 45.4% 10.1% 6.6% 15.1 13.1 1.5 14.5 22.2TSE: 7309 Shimano Inc. 60.55 99.2% 4,707.1 2,882.4 34.7% 18.8% 14.3% 19.1 17.7 1.6 8.7 11.4ENXTAM:TOM2 TomTom NV 4.60 53.9% 1,274.3 1,654.1 50.2% 14.2% 6.9% 13.4 10.6 0.8 5.4 11.2


Health, Nutrition & Fitness Deal Activity


Top Nutrition Industry Deals for 2010-2011

Date Announced Target Acquiror

Deal Value ($ in millions)

10/25/11 Daniels Group The Hain Celestial Group $250.0

08/02/11 Nutritional business of Wockhardt Danone 144.6

06/02/11 Probiotics supplements assets of Ganeden Biotech

Schiff Nutrition Group 40.0

04/26/11 Designer Whey brand of NEXT Protein GarMark Advisors, Northwood Ventures, and Stockton Road Capital

Undisclosed

04/04/11 Capsugel Kohlberg Kravis Roberts & Co. 2,375.0

03/31/11 GNC Holdings (sale of 18.3% ownership through initial public offering)

Investor Group 360.0(1)

02/16/11 Henry’s Farmers Market and Sprouts Farmers Market

Apollo Global Management 210.0

01/19/11 Bio-Engineered Supplements & Nutrition Glanbia plc 144.0

01/09/11 Danisco A/S DuPont 7,277.4

12/21/10 Martek Biosciences Corporation Royal DSM N.V. 1,024.1

10/15/10 Schiff Nutrition International (minority stake) TPG Capital 38.0

09/03/10 EPAX A.S. Trygg Pharma 142.9

08/19/10 Bariatric Advantage Metagenics Undisclosed

07/15/10 NBTY The Carlyle Group 3,784.6

06/23/10 Diversified Natural Products Thorne Research ~65.0

06/22/10 Cognis Holding GmbH BASF SE 860.9

04/12/10 Elan Nutrition ConAgra 103.5

02/25/10 Kettle Food Diamond Foods 650.0

01/21/10 Amerifit Brands Martek Biosciences Corporation 200.7

12/23/09 Tree of Life Kehe Food Distributors 190.0

Top Recreation/Fitness Industry Deals for 2010-2011

Date Announced Target Acquiror

Deal Value ($ in millions)

11/18/11 171 fitness clubs of Bally Total Fitness L.A. Fitness $153.0

11/15/11 9 fitness clubs of Lifestyle Family Fitness Life Time Fitness Undisclosed

09/23/11 Perfect Fitness Implus Footcare Undisclosed

09/21/11 Derby Cycle AG Pon Holding Germany GmbH 285.0

08/25/11 CamelBak Products Compass Diversified Holdings 331.3

08/04/11 4 fitness clubs of Sports Club Co. Equinox Holdings ~125.0

06/30/11 SRAM (minority stake owned by Trilantic Capital Management)

Recapitalization(2) Undisclosed

05/24/11 SoulCycle Holdings Equinox Holdings ~20.0

04/29/11 Hawk Bikes E&M GmbH Triginta Capital GmbH Undisclosed

04/11/11 TRX brand (minority stake) Castanea Partners Undisclosed

09/21/10 MetriGear Garmin Undisclosed

07/06/10 Star Trac Private investor Undisclosed

06/23/10 The Rowbike Company Durango Fitness Undisclosed

01/06/10 Anytime Fitness THL Undisclosed _____________________ Source: Capital IQ and Robert W. Baird & Co. M&A analysis. (1) Gross proceeds from IPO. (2) Raised debt financing to buy out Trilantic Capital Management.

Baird’s Health, Nutrition & Fitness Transaction Experience


In Process

_____________________ Note: Includes transactions executed by senior Baird team members at prior firms. Please visit rwbaird.com/investmentbanking for a complete list of Baird’s transactions.

Undisclosed Value

Acquisition of

Undisclosed Value

Sale to

$257,500,000

Sale of

to

$393,000,000

Sale to

Undisclosed Value

A Portfolio Company of

Sale to

$328,000,000Common Stock

Initial Public Offering

Co-Manager

$1,100,000,000

Sale to

Water Products Company Sale of Assets of

and

to

Undisclosed Value

Undisclosed Value

Sale to

Undisclosed Value

Sale to

Undisclosed Value

Sale to

$3,300,000,000

Acquisition of

from

Undisclosed Value

Sale to

$243,000,000

Acquisition of

Undisclosed Value

Sale to



Undisclosed Value

Sale to$300,000,000

Common Stock


Undisclosed Value

Sale to Acquisition of

Undisclosed Value






Follow-on Offering


Follow-on Offering

Investment Banking Contact List


Steven G. Booth Head of Investment Banking

414.298.7661 [email protected]

Rodney L. Tyson Managing Director

Chief Operating Officer 312.609.4984

[email protected]

Richard F. Waid Vice Chairman 404.264.2210

[email protected]

C.H. Randolph Lyon Vice Chairman 312.609.4931

[email protected]

Services Brian S. Doyal Managing Director +1.312.609.4916 [email protected] Christopher W. Hildreth Managing Director +1.312.609.4937 [email protected] Howard P. Lanser Managing Director +1.312.609.5478 [email protected] John R. Lanza Managing Director +1.414.298.7669 [email protected] Breton A. Schoch Managing Director +1.312.609.4965 [email protected] Andrew K. Snow Managing Director +1.312.609.4972 [email protected] Daniel M. Alfe Director +1.312.609.4922 [email protected] Kiran Paruchuru Director +1.414.298.7642 [email protected] Ross W. Williams Director +1.414.298.6235 [email protected]

Consumer Paul T. Rogalski Managing Director +1.312.609.4912 [email protected] Christopher Harned Managing Director +1.414.765.3908 [email protected]

Jason Abt Managing Director +1.415.627.3215 [email protected] Andrew Martin Managing Director +1.704.553.6615 [email protected]

Nicholas Pavlidis Managing Director +1.312.609.4977 [email protected] Joe Pellegrini Managing Director +1.704.553.6612 [email protected]

Christopher J. Sciortino Managing Director +1.312.609.4923 [email protected] Kurt Roth Director +1.312.609.4689 [email protected]

Industrial Paul T. Rogalski Managing Director +1.312.609.4912 [email protected] Christopher C. McMahon Managing Director Head of Global M&A +1.312.609.4983 [email protected] Brian P. McDonagh Managing Director Co-Head of M&A +1.704.553.6611 [email protected] Joel A. Cohen Managing Director +1.312.609.4924 [email protected] Stephen B. Guy Managing Director +1.414.765.7247 [email protected] Trisha K. Hansen Managing Director +1.414.765.3521 [email protected] Thomas W. Lacy Managing Director +1.414.298.7648 [email protected] Thomas E. Lange Managing Director +1.813.273.8248 [email protected] Joseph T. Packee Managing Director +1.414.298.7644 [email protected] Justin T. Albert Director +1.312.609.4995 [email protected] Christian Colucci Director +1.312.609.4475 [email protected]

Real Estate Steven Goldberg Managing Director +1.703.918.7808 [email protected] Rick Conklin Managing Director +1.312.609.5480 [email protected] James O’Brien Managing Director +1.703.918.7814 [email protected] Jeff Rogatz Managing Director +1.703.918.7823 [email protected] Justin Glasgow Director +1.703.821.5763 [email protected] Lindsey Houser Director +1.704.553.6610 [email protected]

Technology Greg Ingram Managing Director +1.415.627.3279 [email protected] John Moriarty Managing Director +1.650.424.3811 [email protected]

Louis Draper Managing Director +1.650.858.3821 [email protected] Stephen B. Guy Managing Director +1.414.765.7247 [email protected] Michael Horwitz Managing Director +1.415.627.3284 [email protected] Brian Sapp Director +1.415.627.3288 [email protected]

Energy Richard F. Waid Vice Chairman +1.404.264.2210 [email protected] Curtis Goot Managing Director +1.314.445.6540 [email protected] Frank Murphy Managing Director +1.314.445.6532 [email protected] John R. Lanza Managing Director +1.414.298.7669 [email protected] Jim Penilla Director +1.314.445.6536 [email protected]

Healthcare Brian S. Doyal Managing Director +1.312.609.4916 [email protected] Benjamin A. Brown Director +1.414.298.7013 [email protected] Ryan Mausehund Director +1.650.858.3817 [email protected]

Chad W. Moore, CPA, CFA Director +1.312.609.5475 [email protected]

Financial Institutions Mark C. Micklem Managing Director +1.703.821.5787 [email protected]

Financial Sponsors C. Christopher Coetzee Managing Director +1.312.609.4913 [email protected] Leslie Cheek IV Managing Director +1.617.426.5789 [email protected] Thomas W. Lacy Managing Director +1.414.298.7648 [email protected] Jeffrey M. Seaman Managing Director +1.312.609.4687 [email protected] David M. Wierman Managing Director +1.404.264.2211 [email protected]

Mergers & Acquisitions Christopher C. McMahon Managing Director Head of Global M&A +1.312.609.4983 [email protected] Brian P. McDonagh Managing Director Co-Head of M&A +1.704.553.6611 [email protected] Christopher Harned Managing Director +1.414.765.3908 [email protected] Howard P. Lanser Managing Director +1.312.609.5478 [email protected] J. David Cumberland, CFA Director, M&A Research +1.312.609.5429 [email protected]

Equity Capital Markets Peter S. Kies Managing Director +1.414.765.7262 [email protected] Greg Ingram Managing Director +1.415.627.3279 [email protected] Rick Conklin Managing Director +1.312.609.5480 [email protected] Lance R. Lange Managing Director +1.414.765.7079 [email protected] Gary R. Placek Managing Director +1.414.765.3611 [email protected]

Corporate Restructuring William G. Welnhofer Managing Director +1.312.609.5476 [email protected]

Europe London†

John A. Fordham Chairman of Baird International +44.207.667.8438 [email protected] David M. Silver Managing Director Head of European Investment Banking +44.207.667.8216 [email protected] Nicholas R. Sealy Managing Director Co-Head, European Investment Banking +44.207.667.8370 [email protected] Paul Bail Managing Director +44.207.667.8271 [email protected] Vinay Ghai Managing Director +44.207.667.8225 [email protected] Jonathan Harrison Managing Director +44.207.667.8414 [email protected]

Frankfurt Joachim Beickler Managing Director +49.69.13.01.49.51 [email protected] Michael Wolff Managing Director +49.69.13.01.49.49 [email protected]

Asia Shanghai

Anthony Siu Managing Director Head of Asia Investment Banking +86.21.6182.0980 [email protected]

† Robert W. Baird Limited is authorized and regulated by the Financial Services Authority.

Appendix – Disclaimers and Other Disclosures


DISCLAIMERS This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy.

ADDITIONAL INFORMATION ON COMPANIES MENTIONED HEREIN IS AVAILABLE UPON REQUEST

The Dow Jones Industrial Average, S&P 500, S&P 400 and Russell 2000 are unmanaged common stock indices used to measure and report performance of various sectors of the stock market; direct investment in indices is not available.

Baird is exempt from the requirement to hold an Australian financial services license. Baird is regulated by the United States Securities and Exchange Commission, FINRA, and various other self-regulatory organizations and those laws and regulations may differ from Australian laws. This report has been prepared in accordance with the laws and regulations governing United States broker-dealers and not Australian laws.

Copyright 2012 Robert W. Baird & Co. Incorporated. No part of this publication may be reproduced or distributed in any form or by any means without our prior written approval. However, you may download one copy of the information for your personal, non-commercial viewing only, provided that you do not remove or alter any trade mark, copyright or other proprietary notice.

OTHER DISCLOSURES UK disclosure requirements for the purpose of distributing this research into the UK and other countries for which Robert W Baird Limited holds an ISD passport.

This report is for distribution into the United Kingdom only to persons who fall within Article 19 or Article 49(2) of the Financial Services and Markets Act 2000 (financial promotion) order 2001 being persons who are investment professionals and may not be distributed to private clients. Issued in the United Kingdom by Robert W Baird Limited, which has offices at Mint House 77 Mansell Street, London, E1 8AF, and is a company authorized and regulated by the Financial Services Authority. For the purposes of the Financial Services Authority requirements, this investment research report is classified as objective.

Robert W Baird Limited ("RWBL") is exempt from the requirement to hold an Australian financial services license. RWBL is regulated by the Financial Services Authority ("FSA") under UK laws and those laws may differ from Australian laws. This document has been prepared in accordance with FSA requirements and not Australian laws.

Robert W. Baird & Co. www.rwbaird.com

800.RW.BAIRD

Equity Capital Markets and Private Equity Office Locations

U.S. Offices Atlanta One Buckhead Plaza 3060 Peachtree Road Suite 1815 Atlanta, GA 30305 888.792.9478 Boston One Post Office Square Suite 3617 Boston, MA 02109 888.661.5431 Charlotte 4725 Piedmont Row Drive Piedmont Town Center Two Suite 750 Charlotte, NC 28210 704.553.6600 Chicago 227 West Monroe Street Suite 2100 Chicago, IL 60606 800.799.5770 Milwaukee 777 East Wisconsin Avenue Milwaukee, WI 53202 888.224.7326 Nashville 2525 West End Avenue Suite 1000 Nashville, TN 37203 888.454.4981 Palo Alto 1661 Page Mill Road Suite A Palo Alto, CA 94304 650.858.3800

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International Locations* Frankfurt Neue Mainzer Strasse 28 60311 Frankfurt Germany 011.49.69.13.01.49.0 Hong Kong Suite 3304, 33/F Bank of America Tower No.12 Harcourt Road Central, Hong Kong 011.852.2827.8822

London Mint House 77 Mansell Street London E1 8AF UK 011.44.207.488.1212 Shanghai Rm 42-022, 42/F, Hang Seng Bank Tower No.1000 Lujiazui Ring Road Pudong Shanghai 200120, China 011.86.21.6182.0980

*Baird and its operating affiliates have offices in the United States, Europe and Asia. Robert W. Baird & Co. Incorporated. Member SIPC. Robert W. Baird Ltd. and Baird Capital Partners Europe are authorized and regulated in the UK by the Financial Services Authority. ©2012 Robert W. Baird & Co. Incorporated.

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