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Home My WebLink About2007 03 08 Handout Regarding Voyager Asset Management, Inc. March 8, 2007 HANDOUT GIVEN TO THE BOARD OF TRUSTEE MEMBERS AT THE SPECIAL MEETING ON MARCH 8, 2007. .# _,,;10 Contact: Institutional Services 100 South Fifth Street, Suite 2300 Minneapolis, Minnesota 55402.1240 612.376.7000. 800.553.2143 612.376.7007 fax www.voyageur.net T{}yageur ASSET MANAGEMENT INC. /It 16 "* _I VOYAGEUR ASSET MANAGEMENT INC. As of 12.31.06 Established in 1983, Voyageur Asset Management Inc. Has Over 20 Years of Investment Experience $30.7 Billion in Total Voyageur Assets Under Management* · $28.6 Billion in Voyageur Institutional Services Voyageur is Headquartered in Minneapolis, Minnesota and has Offices Located in Chicago, Illinois and Boston, Massachusetts *Please review the "Performance Presentation and Disclosures" appendix to these materials for a full description of the organization and its two divisions. **On 1.5.07, Voyageur acquired substantially all of the assets of Freedom Capital Management, LLC Freedom offered the International Equity strategy under a sub-advisory agreement with Polaris Capital. The International Equity Strategy is Sub-Advised by Polaris Capital Management, Inc.** · Polaris is Based in Boston, Massachusetts · $2.6 Billion Managed by Polaris · $1.9 Billion in International Equity by Polaris · Experienced Portfolio Management Team Voyageur International Equity . t t . . , . . . . . . t . . . . . .' . .' . .. .. .. .. .. .. . .. ., " .. . .. ~OYAGEUR REPRESENTATIVE CLIENT LIST Public Fund Alaska Permanent Fund Corporation Bristol County Retirement System* Cambridge Retirement System* City of F1. Myers Fire Fighters' Retirement Fund* City of New Haven Illinois School District Liquid Asset Fund Iowa Schools Joint Investment Trust Leon County, Florida Massachusetts Housing Finance Authority Employees Re1. Sys. Minnesota State Board of Investment Pennsylvania School Districts Liquid Asset Fund Public Employees' Retirement System of Nevada Public Employees Retirement Assoc. of New Mexico South Dakota Housing Development Authority S1. Paul Teachers' Retirement Fund Association Teachers' Retirement System of Illinois University of Puerto Rico Worcester Regional Retirement System* Taft-Hartley/Union Bakery & Confectionery Union Carpenters Pension Trust of No. California IUPAT Industry Pension Fund - U.S. Laborers International Union of North America Labourers Pension Fund of Central & Eastern Canada National Automatic Sprinkler Ind. Northern Illinois Pension Fund Plumbers and Pipefitters National Pension Fund SEIU Pension Plans Master Trust Corporate C.H. Robinson Worldwide, Inc. Case New Holland U.S. Pension Plan MAIR Holdings, Inc. The Smead Manufacturing Company Washington Savannah River Co. Insurance California Earthquake Authority HealthPartners, Inc. League of Minnesota Cities Noridian Mutual Insurance Company Northern Colorado School Districts Sun Life Financial Workers' Compensation Reinsurance Assoc. Non-Profit Evangelical Lutheran Good Samaritan Society Greater Minnesota Housing Fund Minnesota Masonic Homes North Carolina Community Foundation North Carolina State University Endowment Fund * Clients listed represent Freedom Capital Management, LLC clients as of 72.3 7.06 Clients listed represent a broad cross-section of Voyageur Asset Management clients as of 72.37.06. Performance was not a factor in developing this representative client list. It is not known whether these clients approve or disapprove of Voyageur or the advisory services provided. Voyageur International Equity 2 . . . . . . . . . , t . . . " " .. ., ., .. .. . . " ., . . . .. " .. .. .. ~ 1#1# ,# ..~ PROFESSIONALS International Equity Team Voyageur Asset Management Inc. Polaris Capital Management. Inc. Michael M. Spencer, CFA · Senior Portfolio Manager · 23 years of experience Bernard R. Horn, Jr. · President, Chief Investment Officer · International Equity Portfolio Manager · 26 years of experience Sumanta Biswas, CFA · Vice President · International Equity Assistant Portfolio Manager · 10 years of experience Richard V. Howe, CFA · International Equity Analyst · 33 years of experience Andry Sutanto · International Equity Analyst · 2 years of experience Bin Xiao · International Equity Analyst · 1 year of experience Voyageur International Equity 3 , . f .. .. .. .. . I . . . . .. .. .. .. . II . .. .. .. II " . t t " .. II ;;# ~ INTERNATIONAL EQUITY Investment Objective and Philosophy "We seek superior returns while maintaining a focus on absolute risk. " Objective: To Identify the Best Values in the World · Disciplined, bottom-up value approach · Proprietary investment technology · In-depth fundamental research Underlying Belief · Companies exist to generate cash flow for owners · Superior returns can be generated by purchasing the most undervalued streams of "free" cash flow Voyageur International Equity 4 . . . . , . . . . I! . .! " tit ~ , ., .' . .. .. .. .. .. . fit , l " . ~ INTERNATIONAL EQUITY Investment Philosophy Why Cash Flow? · Cash flow is a more reliable metric than earnings-based measures such as earnings per share, EBITDA, EBIT, etc. · Accounting standards differ by country and industry · "Management" of earnings at epidemic levels · Present value of future cash flow can be measured across countries and industries Voyageur International Equity 5 .. .. .. t .. . . if t t t . . .' . ., . .' .. .. .. .. .. .. .. . .. . .. .. .. .. .. 11> A '" _~ INTERNATIONAL EQUITY Investment Process - Global Cost of Equity Seek High Risk-Adjusted Returns that Exceed Global Cost of Equity · 6% real return (long-term real return of international equity markets) Q.l!J2 · Active management premium (top quartile manager returns) Q.l!J2 · Establish risk free premia per country Patient Investing: Only Invest When Firm Value Exceeds Global Cost of Equity Voyageur International Equity 6 . . . . . . ~ . t t f . . t . . f . . . .. .. .. .. . .. .. .. . . ". t: .. .. . ". 1# .;,# ~ INTERNATIONAL EQUITY Investment Process - Focus Our Work I. Global Valuation Model II. Company Valuation Voyageur I International Equity 7 . . . . . . . . . . . . . . . . . . . . t . . .' " . .' ., ., .' . .. . . . . . .. .. . . .. -I INTERNATIONAL EQUITY Investment Process - Company Valuation Global Universe 24,000 Companies ~ ~ Portfolios: 30-50 Companies ~ Historic Portfolio Turnover - 30% ~ 10-20 New Investments Per Year Voyageur I International Equity 8 I . . . l . I . . . . . . . . t . .' Ii II .. III tII, .' . .' .. .. . . .. .~ . . .' .. .. I INTERNATIONAL EQUITY Fundamental Analysis - 3-Step Process Our Primary Time Commitment - Fundamental Analysis · Financial analysis · Industry research · Management contact voyageur! International Equity 9 . . . . . .. . .. t . t ., .' , . . . . . . 'h .' .' I' I. '" '" '" .. .. .. .. .. .. .. .. .. .. Ji ;# Jj I INTERNATIONAL EQUITY Fundamental Analysis - Step 1 Financial Analysis and Modeling · Analyze basic industry trends · Use our proprietary financial models - Company financial reports - Get behind the published numbers - Verify cash flow - Decide whether or not to continue analysis Voyageur International Equity 10 ., .! . . ., . , l!i' I~ . . . . .' .' .' .. .. .. .. .. .. . " . I .' .. .. '" ~ '" ~ INTERNATIONAL EQUITY Fundamental Analysis - Step 2 Utilize Industry Research to Construct Complete Financial Model · Assumptions · Dupont analysis · Fully integrated financial statements - Profit and loss - Cash flow - Balance sheet Voyageur International Equity 11 . . . . . . Ii , . . . f . I . . . ',e ., ., . .. . . .. .. " I. lilt . . . "*4> ~ INTERNATIONAL EQUITY Fundamental Analysis - Step 3 Management Contact · Meet with 250 companies including portfolio companies · Meetings include investment candidates, competitors, suppliers and customers Voyageur International Equity 12 4 4 t t . . . . if . . . . . . 'i . 41 . . . . . .> Ii .. ., .. .. .. .. .. .. . fI i, ., .. . . 1# .ii, I INTERNATIONAL EQUITY Portfolio Construction Focus on Absol ute Risk Control for Diversification · Country · Industry Voyageur International Equity 13 . t . . . . 41 , , . I' .' I! .' .' . . . . ,. I' " " " II; 117 t I' .. <, '" 'I '!\ ~ :::) o w ..... <( z o ~ z a::: w .... Z ~ cv os: ~ cv > o ... c: cv E ... III cv > c: <:t .- 0\.2 c: - .- 0 "',+- .- +J 10... 10... 0.0 Eo.. o ~ u.~ '" ::::J aJ C" ----. . i: w m- o.m E g o '.ij U m o E Ln aJ I+J o c: M >- ~ " cr w '" c: o ~ '" c: ~ '" ~ c: " '" Q) '" >- o > II II , It It It It It II II ~I II II " I' " " .. .' II " " " .' .' . " .' . . .' III I~ It I~ .' . '" ill ,J ,.J ~ INTERNATIONAL EQUITY Why Voyageur International Equity? Use of Primary Sources of Information Use of Cash Flow to Determine Valuations Detailed Financial Models and Company Contact Investment Process is Dynamic, Repeatable and Scalable Long-Term Track Record Adherence to Voyageur/Polaris Capital Global Cost of Equity Voyageur International Equity 15 if (. . . It It It It .. .. . .. I. t It . " It It I' It I . , III l~ , , " It .. .. .. .. .. .. I~ It I~ . .. .1> 4J INTERNATIONAL EQUITY Portfolio Sector Weightings as of 12.31.06 Supplementallnformation* International MSCI-EAFE 30% Sector Equity Index 26.4 26.3 Consumer Discretionary 16.8% 11.4% 25% Consumer Staples 7.6% 8.0% Energy 3.8% 9.0% 20% Financials 11.2% 26.4% Health Care 0.0% 9.2% 15% Industrials 21.0% 10.7% 10% Information Technology 3.6% 10.4% Materials 26.3% 6.0% 5% Telecommunication Services 5.7% 4.0% Utilities 4.0% 4.4% 0% Consumer Consumer Energy Financials Health Care Industrials Information Materials Tele. Services Utilities Source: Standard & Poor's Research Insight, MSCI Blue Book Discretionary Staples Technology . International Equity . MSCI-EAFE Index *Supplemental information on this page complements the International Equity Composite presentation as provided in the Performance Presentation and Disclosure Appendix to these materials. Voyageur International Equity 16 I' t .. .- t .. .. . II' II: II II It . . . f . . . . .' t, t< .. '* '* .. .. . . . .. l~ 11.\ III I'" . . '" " , _~_INTERNATIONAL EQUITY Country Allocations as of 12.31.06 Supplementallnformation* International MSCI-EAFE Country Equity Index Canada 2.2% 0.0% Austria 2.3% 0.6% Belgium 3.9% 1.3% Denmark 0.0% 0.8% Finland 10.8% 1.4% France 7.6% 10.0% Germany 1.7% 7.4% Greece 0.0% 0.6% Ireland 4.4% 0.9% Italy 0.0% 3.9% Netherlands 1.9% 3.4% Norway 7.8% 0.9% Portugal 1.9% 0.3% Spain 3.7% 4.1% Sweden 3.1% 2.6% Switzerland 0.0% 6.9% UK 12.1 % 23.7% Australia 1.8% 5.6% New Zealand 0.0% 0.2% Hong Kong 0.0% 1.8% Japan 19.8% 22.6% Singapore 0.0% 1.0% Mexico/LA 2.0% 0.0% South Korea 5.6% 0.0% South Africa 7.4% 0.0% Source: Standard & Poor's Research Insight, MSCI Blue Book *Supplemental information on this page complements the International Equity TOTAL 100.0% 100.0% Composite presentation as provided in the Performance Presentation and Disclosure Appendix to these materials. Voyageur International Equity 17 . . . . . . . I . . . . . f . . . , . .' ." .. .. .. .. .. .. .. .. .. .. .. . '. . .. .. " .. . . ~ INTERNATIONAL EQUITY Top Ten Holdings as of 12.31.06 Company Name Yara International ASA KCI Konecranes PLC Andritz AG Methanex Corp. Maruichi Steel Tube LTD Cargotec Corp. CRH PLC Greencore Group PLC Meiji Dairies Corp. Bellway PLC There is no guarantee that the holdings of an actual account will always be identical to the holdings presented here. This presentation should not be construed as a recommendation to buy or sell any financial instruments. The information contained herein should not be relied upon as the sole investment- making decision. Voyageur International Equity 18 . . . . . . . . . . . . . , . It It . ., .. . .. .. .. .. .. .. . . .. .. .. . .. .. It It! I: .. .. ,. ,# J ~ INTERNATIONAL EQUITY Performance as of 12.31.06 35% 34.6 30% 25% 20% 15% 10% 5% 0% 1 Year 3 Years . International Equity (Gross) Period QlD YTD 1 Year 3 Years 5 Years Since Inception (7.1.98) International Equity (Gross) 14.5% 34.6% 34.6% 26.8% 27.3% 15.7% MSCI-EAFE Index 10.4% 26.9% 26.9% 20.4% 15.4% 7.4% 5 Years Since Inception (7.1.98) . MSCI-EAFE Index All returns for periods greater than one year are shown on an annualized basis. Inception of the performance record is 7.1.98. Performance of the International Equity composite is shown gross of fees and is presented as supplemental to the "Performance Presentation and Disclosures" Appendix to these materials. The Appendix contains additional GIPS-required disclosures and important information regarding calculation of performance data, including the general effect of advisory fees on returns. Past performance is not a guarantee of future results. Voyageur International Equity 19 . . . . t . . t . . . . . . . . . . . . .. . . .' .' ... ... . ... . . . . . . . " IJ " " .' "" . t PROFE_SSIONALS VOYAGEUR ASSET MANAGEMENT INC. Michael M. Spencer, CFA Senior Portfolio Manager Mike Spencer is responsible for large cap value portfolio management and is a member of the large cap value and concentrated large cap value management team. Prior to joining Voyageur in 2007, Mike served as the chief investment officer and chief compliance officer of Freedom Capital where he was responsible for overseeing the firm's investment processes and served on the firm's equity style committee. Prior to joining Freedom Capital in 1995, Mike worked as a senior fixed income portfolio manager for Shawmut National Corporation. Mike has been in the investment industry since 1983. He received an AB from the University of Notre Dame. Mike is a member of the Boston Economic Club, the Boston Security Analysts Society and the CFA Institute. Jack Farland Managing Director Jack Farland is responsible for institutional public fund sales and client service. Jack joined Voyageur in 2007 from Freedom Capital where he served as the firm's director of marketing for Florida public fund clients. Jack's previous experience includes working as a sales and marketing executive with Fit America, Inc., and serving as president of Farland Partners, where he specialized in training, motivational seminars, sales and product marketing. Jack has been in the financial services industry since 2001. He earned a BS from Boston University. For the past six years, Jack has served as a member of the FPPTA Education Committee. POLARIS CAPITAL MANAGEMENT. INC. Bernard R. Horn, Jr. President, Chief Investment Officer, International Equity Portfolio Manager Bernard Horn Jr. is president and portfolio manager of Polaris Capital Management, Inc., a Boston-based global and international value equity management firm that serves as the sub-advisor for Voyageur's International Equity strategy. Prior to founding Polaris Capital Management in 1995, Bernard served as an investment officer for MDT Advisers, Inc. He also worked as a portfolio manager for Freedom Capital Management Corporation. From 1980 to 1990, Bernard was the principal and founder of Horn & Company, an investment counseling firm that specialized in global portfolio management for individuals, trusts and tax-qualified accounts. Bernard began his career in the investment industry in 1980. He received a BS from Northeastern University and a MS in Management from the Massachusetts Institute of Technology. Bernard was profiled in the January 2004 issue of SmartMoney Magazine and has been highlighted in Business Week, The New York Times, The Wall Street Journal and other national publications. He has appeared on CNBC, CNNfn and Bloomberg TV to discuss global market trends. Voyageur International Equity 20 .. .. . .. .. . . .. .. .. .. . t . . . . . . . .' .. .. .. II- .. .. .. II- .. . . .. .. .. .. . . 't: I. ., .. i# jj jj J I PROFESSIONALS ~------ Sumanta Biswas, (FA Vice President, International Equity Assistant Portfolio Manager Sumanta Biswas is an assistant portfolio manager for Polaris Capital Management, the sub-advisor of Voyageur's International Equity strategy. Sumanta is responsible for quantitative and fundamental analysis of potential investment opportunities as well as day-to-day management of Polaris' Global Valuation Model. He began his career in the investment industry in 1996. Sumanta received a BE from North Bengal University and an MS in Finance from Boston College. He also earned an MBA from Calcutta University in India. Sumanta is a CFA charterholder. Richard V. Howe, (FA International Equity Analyst Rich Howe is responsible for equity research, client service and assisting with the international equity portfolio management process. Rich joined Polaris Capital Management as an account manager in June 2005. Prior to joining Polaris, Rich worked for Freedom Capital and Tucker Anthony where he helped build each firm's institutional business. Rich began his career in the investment industry in 1973. He received a BA in Economics from the University of Virginia and an MBA from the Wharton School at the University of Pennsylvania. Rich is a CFA charterholder. Andry Sutanto International Equity Analyst Andry Sutanto is an analyst for Polaris Capital Management, the sub-advisor of Voyageur's International Equity strategy. Andry's focus is on quantitative research and the proprietary investment technology that is an integral part of Polaris' investment process. Prior to working at Polaris, Andry worked in the finance and MIS departments at Northeastern University and was a computer engineer with the Cambridge Research Group. Andry began his career in the investment industry in 2005. He received a BS from Boston University and an MBA in Finance from Northeastern University. Bin Xiao International Equity Analyst Bin Xiao is responsible for quantitative and fundamental analysis of potential international equity opportunities. Bin joined Polaris Capital in 2006 after completing his internship for the firm in 2004/2005 working as an analyst. Prior to his experience at Polaris, Bin's experience includes working as a systems engineer for PNC Financial Service Group (PFPC) and a software engineer at RIT Research Corporation. Bin began his career in the investment industry in 2006. He received a BE from the Beijing Institute of Technology in China. Bin also received a MS from the Rochester Institute of Technology and an MBA from MIT Sloan School of Management. Voyageur International Equity 21 . . . . . . . . . . . . . . '. , . . . .. .. II II II II II II .. II II II .. . " 't it .. .. .. .. .,; ~ PERFORMANCE PRESENTATION AND DISCLOSURES APPENDIX International Equity as of December 31, 2006 ANNUAL RETURNS YTD YTD MSCI-EAFE Composite Number of Market Percent of Total Period Gross Net Index Dispersion Accounts Value ($MM) Firm Assets Firm Assets 1998* -12.0% -12.4% 3.7% N/A 1 $10 0.2% $6,797.2 1999 22.1% 21.0% 27.3% N/A 1 $12 0.2% $6,821.3 2000 -4.7% -5.6% -14.0% N/A 1 $12 0.1% $14,103.0 2001 0.8% -0.2% -21.2% N/A 1 $19 0.1% $15,061.3 2002 5.9% 4.9% -15.7% N/A 1 $21 0.1% $20,245.8 2003 54.9% 53.5% 39.2% N/A 1 $34 0.2% $22,518.8 2004 29.8% 28.6% 20.7% N/A 1 $90 0.3% $26,858.8 2005 16.7% 15.6% 14.0% N/A 2 $153 0.6% $27,018.8 2006 34.6% 33.3% 26.9% N/A 3 $283 1.0% $28,561.4 *Performance Calculated from 7.1.98 to 12.31.98 Prior to January 1, 2006, the firm was defined to include all discretionary and non-discretionary assets managed by VAM. (Performance Presentation and Disclosures continued on next page) Voyageur I International Equity 22 t t . + .' .' .' I' If' .' .i' 'i' . jt: i/f~ .. . . . . . " " . . . . . " .. IV I~ I., " " * . . .. ~RFORMANCE PRESENTATION AND DISCLOSURES APPENDIX International Equity as of December 31,2006 Voyageur Institutional Services ("VIS") has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS@). Compliance with GIPS has been verified firm-wide by an independent third party from January 1, 1993 through June 2006. VIS is a division of Voyageur Asset Management Inc. ('YAM") a federally registered investment adviser founded in 1983. VAM was purchased by RBC Dain Rauscher Corp. in December 2000 and was merged with Insight Investment Management ("Insight"), at that time a federally registered investment adviser and subsidiary of RBC Dain Rauscher. Effective January 1, 2006, VAM's wrap fee/SMA business was defined as a separate division under the name Voyageur Advisory Services ("VAS") for purposes of complying with the CFA Institute's Global Investment Performance Standards ("GIPS"). Prior to January 1, 2006, the firm was defined to include all discretionary and non-discretionary assets managed by VAM. The International Equity composite includes fully discretionary accounts invested in a diversified portfolio of foreign equity securities deemed to be undervalued by the strategy's investment team. For comparison purposes, this composite is measured against the MSCI-EAFE (Gross) Index (gross of withholding taxes on dividends). Effective 1.31.06, the firm changed the benchmark for comparison purposes from the MSCl-EAFE Net Index to the MSCl-EAFE Gross index in order to align the comparison against the industries more widely reported Gross index. The MSCI-EAFE Index uses withholding tax rates applicable to a Luxembourg based holding company Additional information regarding the percentage of the composite which may not be invested in countries or regions included in the MSCl-EAFE index is available upon request. Prior to January 5, 2007 the performance represents that of a composite from Freedom Capital Management, LLC ("Freedom"). On January 5, 2007, VAM purchased substantially all of the assets of Freedom. For all periods presented, Total Firm Assets is based on only those assets managed at VAM. The minimum account size for this composite is $1 million. Composite performance is presented net of foreign withholding taxes. The index grosses-up dividends, where this is appropriate, to reflect the position of an international investor with the benefit of double taxation agreements, if any Withholding taxes may vary according to the investor's domicile. Composite returns represent investors domiciled in the United States. Trade date accounting is used and returns are presented in u.s. dollars. Returns include the effect of foreign currency exchange rates. This composite was created on 1.5.07, and has an inception date of 7. 1.98. Returns are presented gross of management fees and include the reinvestment of all income. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The collection of fees produces a compounding effect on the total rate of return net of management fees. For example, a $10 million portfolio earning a 10% annualized return over 5 years would be valued at $16.4 million. The same portfolio with an annual fee of 0.95% would be valued at $15.6 million net of investment management fees. Advisory fees are described on this page and in Form ADV Part II. Prior to 1.1.07, asset weighted standard deviation was used. A complete list and description of Voyageur composites is available on request. Additional information regarding the policies for calculating and reporting returns is available upon request. All material presented is compiled from sources we believe to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. Institutional Fee Schedule: 0.95% on all assets. Voyageur reserves the right to negotiate all advisory fees. @ 2006 Voyageur Asset Management Inc. Voyageur International Equity 23 *' .' .' II' .' 1I d' ai, .', ttlil .' .' .' .' .' . . .. . . . . .. .. I" t 1~ lli: .. . . 1# ~ ,IJ- I ~~PPLEMENTAL INFORMATION: ~ARIS CAPITAL INTERNATIONAL EQUITY Performance as of 12.31.06 35% 34,2 30% 25% 20% 15% 10% 5% 0% 1 Year 3 Years 5 Years Polaris International MSCI-EAFE Period Equity (Gross) Index 1 Year 34.2% 26.9% 3 Years 26.7% 20.4% 5 Years 27.1% 15.4% 10 Years 14.8% 8.1% 15 Years 14.9% 8.2% 20 Years 13.2% 8.4% Since Inception (7.1.84) 15.4% 12.5% 10 Years 15 Years 20 Years Since Inc. (7.1.84) . Polaris International Equity (Gross) . MSCI-EAFE Index Please note: Polaris' composite data is presented by Voyageur Asset Management Inc. as supplemental information to Voyageur's International Equity Composite. Please see accompanying disclosures on the following pages. Polaris is responsible for all calculations. Voyageur International Equity 24 * . .. . . . . .. . . . . II .', II, It .' 111 III It .. . .. .. .. .. .. .. .. .. .. .. . .. .. .. I~ II' .. .. '.... i;j- SUPPLEMENTAL INFORMATION: PERFORMANCE PRESENTATION AND DISCLOSURES APPENDIX Polaris Capital International Equity as of 12.31.06 ANNUAL RETURNS Composite Polaris Composite Composite Firm Assets U.S. Dollars Percent of Number of Composite Composite MSCI-EAFE Dispersion Dispersion Year End ($MM) ($MM) Firm Assets Accounts Gross Net Index High Low 1996 31.0 4.1 13% 5 24.00% 22.79% 6.36% 26.18% 23.02% 1997 52.9 7.1 13% 7 10.93% 9.86% 2.06% 14.28% 7.32% 1998 84.8 24.1 29% 8 -5.88% -6.59% 20.33% -3.24% -11.48% 1999 92.7 26.6 29% 7 21.71% 20.93% 27.30% 39.55% 17.27% 2000 87.9 23.2 26% 5 -5.26% -5.95% -13.96% -2.54% -6.78% 2001 113.7 29.7 26% 5 -0.29% -1.17% -21.21% 0.79% -3.58% 2002 174.4 32.1 18% 5 6.27% 5.27% -15.66% 10.07% 6.02% 2003 237.2 52.0 22% 6 53.63% 52.29% 39.17% 55.36% 36.79% 2004 484.6 139.5 29% 9 29.61% 28.51% 20.70% 30.66% 22.64 % 2005 1,200.0 594.4 47% 17 16.83% 15.86% 14.02% 19.93% 15.18% 2006 2,600.0 1,200.0 46% 26 34.19% 33.39% 26.86% 36.27% 33.31% Please note: Polaris' composite data is presented by Voyageur Asset Management Inc. as supplemental information to Voyageur's International Equity Composite. (Performance Presentation and Disclosures for Polaris continued on next page) Voyageur International Equity 25 t t . . . . . . . . t " . . .' "" .', t., "" .. .. It It .. .. .. .. . . " = '" .. .. " ,. 4J ~~~~~~~;:~:g~:AND DISCLOSURES APPENDIX _ Polaris Capital International Equity as of 12.31.06 Polaris Capital's International Equity Composite contains fully discretionary international equity accounts and for comparison purposes is measured against the MSCI EAFE Index. Returns include the effect of foreign currency exchange rates. Polaris Capital Management, Inc. has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS@). Polaris Capital Management, Inc. is an independent registered investment adviser. The firm maintains a complete list and description of composites, which is available upon request. Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. Composite performance is presented net of foreign withholding taxes on dividends, interest income and capital gains. Withholding taxes may vary according to the investor's domicile. Additional information regarding the percentage of the composite, which may not be invested in countries or regions included in the Index, is available upon request. Past performance is not indicative of future results. The US. Dollar is the currency used to express performance. Returns are presented gross and net of management fees and include the reinvestment of all income. Net of fee performance was calculated using actual management fees. The annual composite dispersion presented is an asset-weighted and equal-weighted standard deviation calculated for the accounts in the composite the entire year. The "High" dispersion represents the highest return and the "Low" dispersion represents the lowest return. Additional information regarding the policies for calculating and reporting returns is available upon request. Polaris Capital's investment management fee schedule for the composite is 1% on the first $25million; 0.75% on the next $25 million; 0.60% on the next $1 billion; 0.55% on the next $2 billion, and 0.50% on the remainder. Actual investment advisory fees incurred by clients may vary The International Equity Composite was created April 1, 1995. Performance presented prior to April 1, 1995 occurred while the Portfolio Manager was affiliated with a prior firm and the Portfolio Manager was the only individual responsible for selecting the securities to buy and sell. An independent verification firm performed an examination of this track record; an Independent Verifiers Report is available upon request. Polaris Capital Management, Inc. 's compliance with the GIPS standards has been verified for the period April 1, 1995 through December 31, 2004 by Ashland Partners & Company LLP In addition, a performance examination was conducted on the International Equity Composite beginning July 1, 1984. A copy of the verification reports is available upon request. Voyageur International Equity 26 4 4 . f It It .. It It It It i. ;I . . . , it, t " .' t. .. " " .. " .. .. to . .. ill IJ If;, It " . '" APPENDIX I FINANCIAL MODEL Information reflects fundamental analysis performed by Polaris. This presentation should not be construed as a recommendation to buy or sell any financial instruments. The information contained herein should not be relied upon as the sole investment-making decision. . . . . . . . . . . . . It it II! if . t .', " " " .' " .. .. . . .. " I~ .. .. . Polaris Capital Mangement Financial Model Sales Model Assumptions are highlighted 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Manufacturing and sales companies Revenue Model (Units x price) Vehicle sales 2,496,000 2,877 ,400 3,136,300 3,267,500 3,286, I 00 3,375,300 3,409,053 3,443,144 Growth 15.28% 9.00% 4.18% 0.57% 2.71% ""iti Average Sales price 14,720 14,936 16,034 16,192 16,032 16,383 16,547 16,712 Growth 1.47% 7.35% 0.98% -0.99% 2.19% Net sales 36,740 42,978 50,288 52,906 52,683 55,297 56,408 57,542 58,699 59,879 61,082 Costs of goods and services sold (25,724) (30,091 ) (36,777) (38,155) (38,386) (41,409) (42,241) (43,090) (43,956) (44,840) (45,741) Gross profit 11,016 12,887 13,511 14,751 14,297 13,888 Gross profit margin 30.0% 30.0% 26.9% 27.9% 27.1% 25.1% Operating expenses Selling, general and administrative expenses (6,408) (7,550) (7,504) (8,251) (8,250) (7,780) Research and development costs (1,457) (1,625) (1,733) (1,865) (2,098) (2,118) Total S,G &A (7,865) (9,175) (9,237) (10,116) ( 10,348) (9,898) (10,154) (10,358) SG&A as a % of sales 21.4% 21.3% 18.4% 19.1% 19.6% 17.9% '~ N":W Depreciation and amortization (1,771) (1,877) (1,974) (2,165) (2,214) (2,389) (2,645) (2,827) % of Gross PP&E 7.1% 7.1% 6.9% 7.4% 7.2% 7.4% Operating profit 1,380 1,835 2,300 2,470 1,735 1,601 ],369 1,267 1,160 1,054 949 Operating Margin 3.8% 4.3% 4.6% 4.7% 3.3% 2.9% 2.4% 2.2% 2.0% 1.8% 1.6% Interest expense (318) (369) (502) (516) (526) (509) (509) (495) (473) (433) (420) Non-operating income/( expense) 185 Interest income 273 379 404 447 458 370 398 428 456 487 0 Capitalized interest 23 76 50 44 45 38 Revenue from investments in non-consolidated compa 9 5 5 20 8 0 0 0 0 0 0 Special items Change in supplementary retirement plan (101) 2 Early-termination plan costs (431) 32 (31 ) (158) (19) (24) Discontinued production operations (2) (19) (II) Net gains on disposal of assets 63 134 214 89 184 Net loss on retirement of convertible debentures 0 (125) 0 Reversals of reserves for convertible debenture redemption premiums 0 26 27 Exchange losses, net (37) (6) (24) 22 23 9 Net additions to contingency reserves and allowances for impairment in value of long-lived assets (43) (II) (15) -8 (8) (2) Others 7 (2) (14) 0 0 5 Total special items (443) 29 146 (156) 182 Pretax Income 924 1,955 2,403 2,309 1,902 1,678 1,258 1,199 1,143 1,107 529 Income taxes (251) (601) (750) (666) (563) (494) (403) (384) (366) (354) (169) Tax rate 27.2% 30.7% 31.2% 28.8% 29.6% 29.4% 32.0% 32.0% 32.0% 32.0% 32.0% Net Income 673 1,354 1,653 1,643 1,339 1,184 855 816 777 753 360 A-' to t .. t t .' 41 41" t., t. .. . .. .. II .. .. II .. . . .. .. .. . .. Polaris Capital Mangement Financial Model Sales Model Assumptions are highlighted 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Finance Companies Yield rate analysis Total assets finance companies 14,505 16,113 19,671 20,719 22,009 23,101 23,332 23,565 23,801 24,039 24,279 growth rate 11.09% 22.08% 5.33% 6.23% 4.96% 1% 1% 1% 1% 1% Yield 8.23% 8.61% 8.07% 8.21% 7.83% 7.54% 7.54% 7.54% 7.54% 7.54% 7.54% Totalliablities finance companies 13,247 14,805 18,292 19,138 20,298 21,024 21,234 21,447 21,661 21,878 22,096 growth rate 11.76% 23.55% 4.62% 6.06% 3.58% 1.00% 1.00% 1.00% 1.00% 1.00% Cost 3.87% 4.35% 4.32% 4.09% 3.35% 2.85% 2.85% 2.85% 2.85% 2.85% 2.85% margin 4.36% 4.26% 3.74% 4.11% 4.48% 4.68% 4.68% 4.68% 4.68% 4.68% 4.68% Interest income From third parties 1,067 1,203 1,375 1,530 1,555 1,500 From group manufacturing and sales compa 127 184 212 170 169 241 Total 1,194 1,387 1,587 1,700 ],724 1,741 1,758 1,776 1,794 1,812 1,830 Interest expense Interest and amortization expense (513) (644) (791) (783) (680) (600) (606) (612) (618) (624) (631) Net interest margin 681 743 796 917 1,044 1,141 1,152 1,164 1,176 1,187 1,199 Net interest margin(%) 4.7% 4.6% 4.0% 4.4% 4.7% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% Operating expenses Fees paid to dealer agencies (III) (152) (192) (212) (233) (254) (257) (259) (262) (264) (267) -9.3% -11.0% -12.1% -12.5% -13.5% -14.6% -14.6% -14.6% -14.6% -14.6% -14.6% Other operating expenses (248) (248) (282) (318) (311 ) (304) (307) (310) (313) (316) (320) -20.8% -17.9% -17.8% -18.7% -18.0% -17.5% -17.5% -17.5% -17.5% -17.5% -17.5% Credit losses (55) (52) (68) (62) (76) (65) (76) (77) (77) (78) (79) 0.4% 0.4% 0.4% 0.3% 0.4% 0.3% 0.4% 0.4% 0.4% 0.4% 0.4% Depreciation and amortization (25) (27) (6) (6) (6) (6) (6) (6) (6) (6) (6) Total Operating expenses (439) (479) (548) (598) (626) (629) (646) (652) (658) (665) (671) Efficiency ratio 64.5% 64.5% 68.8% 65.2% 60.0% 55.1% 56.0% 56.0% 56.0% 56.0% 56.0% Other income and (expenses) (7) (3) (4) (3) (5) (3) (3) (3) (3) (3) (3) Income before tax of fully-consolidated companies 235 261 244 316 413 509 504 509 5]4 519 525 Income taxes (105) (112) (85) (III) (122) (185) (183) (185) (187) (189) (191) 44.7% 42.9% 34.8% 35.1% 29.5% 36.4% 36.4% 36.4% 36.4% 36.4% 36.4% Net income of fully-consolidated finance companies 130 149 159 205 291 324 320 324 327 330 334 Total Net Income 803 1,503 1,812 1,848 1,630 1,508 1,176 1,139 1,104 1,083 694 Net earnings of companies at equity 31 19 9 22 46 (8) (8) (8) (8) (8) (8) Amortization of goodwill (60) (199) (140) (163) (158) (128) (128) (128) (128) (128) (128) Net income before minority interests 774 1,323 1,681 1,707 1,518 1,372 1,040 1,003 968 947 558 Income (Loss) attibutable to minority interef (45) (11) 10 (17) (21) (20) (20) (20) (20) (20) (20) Net Income 729 1,312 1,691 1,690 1,497 1,352 1,020 983 948 927 538 A-2 ~ t t iIe . t .' . .. II- .. .. .. .. .. .. .. .. .. .. .. .. .. .. - - Polaris Capital Management Financial Model PEUGEOT SA TICKER: ($ MILLIONS, EXCEPT PER SHARE) SIC: 3,711 GICS: 25102010 EUR EUR EUR EUR EUR Historical Data Projection DeeOO DeeO / Dee02 Dee03 Dee04 Dee05 Dee06 Dee07 Dee08 Dee09 As.,umpti(Jns Projected Sales Growth: 0.00% 17.41% 5.26% -0.36% 3.12% 2.0% Gross Profit Margin 29.88 29.32 30.35 29.52 27.49 Inventory Turnover 6.68 6.44 6.14 5.98 6.16 Manual Override Inventory 5171.000 6218.000 6167.000 6660.000 6546.000 6722.56 6856.60 6993.33 7132.80 7275.06 AP/Sa/es 0./92 0./77 0./82 0.184 0./9/ 0.185 0.185 0./85 0.185 0.185 Manual Override Account Payables 8503.000 9173.000 9912.000 10021.000 10732.000 10599.451 10809.263 11023.261 11241.527 11464.147 Average Collection Period 152.56 152.10 155.57 159.15 164.29 159.67 159.67 159.67 159.67 159.67 Manual Override Account Receivables 18723.5 21916.500 23597.000 24052.500 25604.500 25376.642 25878.964 26391.305 26913.867 27446.853 SGAE/Sa/es 0./7/ 0./45 0./5/ 0./52 0./4/ 0./52 0./52 0./52 0./52 0./52 Manual Override SGAE 7553.000 7504.000 8251.000 8250.000 7908.000 10541.799 10748.090 10958.472 11173.026 11391.835 Depteciation Rate 0.075 0.075 0.075 0.075 0.075 Manual Override 0.069 0.069 0.069 0.069 0.069 MCAPEX 11576.038 14902.886 13403.084 1937.244 2388.185 2500.000 2500.000 2600.000 2600.000 2600.000 Growth CAPEX Tax Rate 32.2% 31.5% 29.6% 29.6% 31.7% L T Debt Change Interest Rate on Debt 8.4% 2.1% 2.2% 2.1% 1.3% WACC 10.35% # Yrs of Projection Dilutive Share. Basic Shares Outstanding 278.219 259.109 259.109 243.109 243.109 243.109 243.109 243.109 243.109 243.109 Convertible Bonds 4.484 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Convertible Preferred 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Convertible Warrants 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Convertible Options 1.166 1.940 2.783 3.763 3.763 3.763 3.763 3.763 3.763 3.763 Less Treasury Stock -16.044 -2.994 -15.209 -4.087 -4.087 -4.087 -4.087 -4.087 -4.087 -4.087 Fully Dilutive Shares 267.825 258.055 246.683 242.785 242.785 242.785 242.785 242.785 242.785 242.785 Total Debt! Total Assets 13.10% 35.97% 37.74% 36.65% 10.19% 10.13% 10.05% 9.96% 9.66% 9.26% A. Dividend Payout Ratio 9.91% 12.69% 18.24% 22.45% 20.99% 40.44% 42.21% 44.04% 45.25% 87.64% B. Net Profit Margins 2.97% 3.49% 3.38% 3.00% 3.06% 1.56% 1.46% 1.37% 1.31% 0.66% C. Asset Turnover 98.56% 92.93% 97.50% 93.70% 85.45% 86.61% 87.57% 88.58'1'0 89.85% 91.82% D. Total Assets/Total Equity 478.85% 542.89% 509.91% 489.41% 511.10% 493.82% 480.41% 468.87% 457.44% 454.95% E. Sustainable Growth g* [(l-A)*B*C*D] 12.63% 15.39% 13.76% 10.65% 10.55% 3.96% 3.55% 3.19% 2.95% 0.34% F. g+:Potential Extra Growth~E-Sales growth 12.6% -2.0% 8.5% 11.0% 7.4% 2.0% 1.6% 1.2% 1.0% -1.6% A-3 . . * t . .. .- t II II .' fi' ltH .'" to " . . . . .. . . . . . .. . .. . 9 , --,>> Polaris Capital Management Financial Model PEUGEOT SA DecOO Decal Dec02 Dec03 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Sales 441R1.000 51R75.000 54606.000 54407.000 56105.00 57215.41 5R347.97 59503.12 606R 1.32 61RR3.01 Cost of Goods Sold 3097R.000 36667.000 3R031.000 3R344.000 40679.00 42221.14 43063.01 43921.73 44797.65 45691.10 Gross Profit 13203.000 I 520R.000 16575.000 16063.000 15426.000 14994.273 152R4.963 155R 1.390 15RR3.666 16191.909 Administrative Expense 7553.000 7504.000 8251.000 8250.000 790R.000 10541.799 1074R.090 10958.4 72 11173.026 1139l.R35 Ork>ralillg InC11111c lJerO)\.' Dc-prel' 5650.000 7704.000 R324.000 7R 13.000 751R.00 4452.474 4536.R73 4622.91R 4710.640 4ROO.074 Depreciation of Fixed Assets 0.000 0.000 0.000 0.000 2369.000 2779.0R6 2961.586 3151.386 3341.1 R6 3530.986 Amortization 0.000 0.000 0.000 0.000 1 R7.000 lZR.OOO 128.000 128.000 128.000 lZR.OOO Depreciation. Depletion, & Amortization 1904.000 19RO.000 2165.000 2214.000 2556.000 2907.0R6 30R9.5R6 3279.3R6 3469.IR6 365R.9R6 Operating Profit 2121.000 2617.000 2913.000 2195.000 2534.000 1545.38R 1447.287 1343.532 1241.454 1141.0RR Interest Expense 494.000 502.000 516.000 526.000 367.000 509.247 495.4 77 472.554 433.431 420.309 Non-Operating Income/Expense 5R9.000 417.000 22R.000 646.000 325.000 -387 -416 -445 -476 II Special Items 0.000 -115.000 -101.000 -42.000 -92.000 0 0 0 0 0 Pretax Income 2216.000 2647.000 2625.000 2315.000 2492.000 1423.281 1368.307 1315.836 1283.754 709.453 Total Income Taxes 713.000 R35.000 777.000 6R5.000 790.000 513.149 495.416 47R.473 468.157 27R.696 Minority Interest 11.000 -10.000 17.000 21.000 34.000 20 20 20 20 20 Income Before Extraordinary Items & Discontinued Operations 1312.000 1691.000 1690.000 1497.000 16R1.0oo R90.132 R52.R91 R17.363 795.597 410.75R Preferred Oi vidends 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 AdjllSt\.'d Available rut" COll111Klll 1312.000 IR12.000 I R4R.000 1630.000 1715.000 R90.132 R52.R91 817.363 795.597 410.75R Extraordinary Items 0.000 0.000 0.000 0.000 0.000 0 0 0 0 0 Discontinued Operations 0.000 0.000 0.000 0.000 0.000 0 0 0 0 0 AdjusfeLl '\Jet Income 1312.000 IR12.000 I R4R.000 1630.000 1715.000 890.132 852.891 817.363 795.597 410.758 Statement of Cash Flows INDIRECT OPERATING ACTIVITIES Income Before Extraordinary Items 1312.000 IR12.000 IR4R.000 1630.000 1715.000 R90.132 R52.R91 R 17.363 795.597 410.75R Depreciation and Amortization 1904.000 1980.000 2165.000 2214.000 3124.000 2907.0R6 3089.586 3279.386 3469.1 R6 365R.9R6 Extraordinary Items and Disc. Operations 0.000 0.000 0.000 0.000 0.000 0 0 0 0 0 Deferred Taxes 2.000 -106.000 -RO.OOO 115.000 319.000 0.000 0.000 0.000 0.000 0.000 f--.qllity ill Net Luss ([arnings) 0.000 0.000 0.000 0.000 0.000 0 0 0 0 0 Sale of Property. Plant. and Equipment and Sale of Investments - Loss (Gain) 0.000 -102.000 -17.000 -113.000 -197.000 0 0 0 0 0 Funds from Operations - Other 391.000 603.000 34.000 52.000 -11.000 0 0 0 0 0 Receivables - Decrease (Increase) 0.000 -1612.000 -56.000 -32.000 -1703.000 680.284 -514.319 -524.578 -535.042 -545.715 Inventory - Decrease (Increase) 0.000 -R02.000 -129.000 -521.000 -414.000 -176.559 -134.045 -136.72R -139.466 -142.25R Accounts Payable and Accrued Liabs . lnc (Dec) 0.000 4426.000 405.000 0.000 0.000 -132.549 209.R13 213.99R 218.266 222.620 Income Taxes - Accrued -Increase (Decrease) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Other Assets and Liabilities - Net Change 0.000 -II R2.000 667.000 66.000 425.000 0.00 0.00 0.00 0.00 0.00 Operating Activities - Net Cash Flow 3413.000 4R3R.000 51R5.000 3574.000 5035.000 4168.393 3503.925 3649.440 3808.542 3604.391 Operating Activities - Net Cash Flow Ese! WC CI 3413.000 4008.000 4298.000 4061.000 6727.000 3797.218 3942.477 4096.749 4264.783 4069.744 INVESTING ACTIVITIES Investments - Increase I R2.000 1610.000 349.000 19.000 12.000 0 0 0 0 0 Sale of Investments 53.000 23.000 5.000 6.000 30.000 0 0 0 0 0 Short- Tenn Investments - Change 0.000 0.000 0.000 0.000 0.000 0 0 0 0 0 Capital Expenditures 2932.000 2947.000 2790.000 3007.000 2791.000 2500.000 2500.000 2600.000 2600.000 2600.000 Capital Expenditures - Growth 0.000 0.000 0.000 0.000 0.000 Sale of Property. Plant. and Equipment 0.000 0.000 0.000 0.000 0.000 0 0 0 0 0 Acquisitions 0.000 0.000 0.000 225.000 166.000 0 0 0 0 0 Investing Activities - Other 2.000 126.000 RO.OOO -72.000 -73.000 0 0 0 0 0 Investing Activities ~ Net Cash Flow -2956.000 -395R.000 -2RR2.000 -3175.000 -3909.000 -2500.000 -2500.000 -2600.000 -2600.000 -2600.000 A-4 . .. . t .. .. I d; . . . . .. . II . It *' .. .. .. .. .. .. " .. .. . " .. .. .. .. # :# Polaris Capital Management Financial Model PEUGEOT SA FINANCING ACTIVITIES Sale of Common and Preferred Stock 132.000 109.000 0.000 0.000 0.000 0 0 0 0 0 Purchase of Common and Preferred Stock 0.000 0.000 0.000 0.000 0.000 0 0 0 0 0 ('ash Dividends 130.000 230.000 337.000 366.000 360.000 360.000 360.000 360.000 360.000 360.000 Long-Tenn Debt - Issuance 0.000 0.000 0.000 0.000 0.000 2903 0 0 0 0 Long-Term Debt - Reduction 0.000 0.000 0.000 0.000 0.000 2903.000 0.000 0.000 170.000 283.000 Current Debt - Changes 2325.000 1441.000 -1258.000 -100.000 0.000 0 0 0 0 0 Financing Activities - Other -352.000 1331.000 -353.000 474.000 -5.000 0 0 0 0 0 Financing Activities - Net Cash Flow -400.000 3416.000 -2474.000 -71.000 -1256.000 -360.000 -360.000 -360.000 -530.000 -643.000 Exchange Rate Effect -12.000 -24.000 -27.000 -4.000 12.000 0 0 0 0 0 Cash and Equivalents - Change 45.000 4272.000 -198.000 324.000 -118.000 1308.393 643.925 689.440 678.542 361.391 9033.64876 9718.693259 10434.713 11126.455 11879.431 ASSETS Cash & Eqlliv~lil'J1ts 4615.000 8686.000 9026.000 9194.000 8371.000 9679.393 10323.319 11012.759 11691.301 12052.692 Net Receivables 20198.000 23635.000 23559.000 24546.000 26663.000 25982.716 26497.035 27021.613 27556.655 28102.370 Inventories 5171.000 6218.000 6167.000 6660.000 6546.000 6722.559 6856.604 6993.332 7132.798 7275.056 Prepaid Expenses 0.000 503.000 586.000 566.000 296.000 296.000 296.000 296.000 296.000 296.000 Treasury Stock 25.000 64.000 112.000 135.000 0.000 0.000 0.000 0.000 0.000 0.000 Current Assets-Other Excl Prepaid Exp 836.000 986.000 359.000 351.000 459.000 459.000 459.000 459.000 459.000 459.000 Total Current Assets 30845.000 40092.000 39809.000 41452.000 42335.000 43139.668 44431.958 45782.704 47135.754 48185.118 Gross Plant, Property & Equipment 26794.000 28791.000 29506.000 30878.000 33730.000 36230.000 38730.000 41330.000 43930.000 46530.000 Accumulated Depreciation 16304.000 17278.000 17910.000 18669.000 19338.000 22117.086 25206.672 28486.058 31955.244 35614.230 Invest Grants and Other Deductions (-) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Net Plant, Property & Equipment 10490.000 11513.000 11596.000 12209.000 14392.000 14112.914 13523.328 12843.942 11974.756 10915.770 In vestments at Equ ity 203.000 215.000 351.000 550.000 614.000 614.000 614.000 614.000 614.000 614.000 Other Investments 1694.000 862.000 1014.000 667.000 2122.000 2122.000 2122.000 2122.000 2122.000 2122.000 Intangibles 1173.000 2515.000 2424.000 2262.000 2141.000 2013.000 1885.000 1757.000 1629.000 1501.000 Deferred Charges 127.000 0.000 0.000 0.000 3083.000 3083.000 3083.000 3083.000 3083.000 3083.000 Other Assets 293.000 623.000 814.000 924.000 974.000 974.000 974.000 974.000 974.000 974.000 TOTAL ASSETS 44825.000 55820.000 56008.000 58064.000 65661.000 66058.582 66633.286 67176.646 67532.510 67394.888 Total NA 17429.000 22889.000 25603.000 29367.000 25052.000 28485.132 28850.023 29009.386 29033.983 28956.741 Chg. NA 0.313 0.119 0.147 -0.147 0.137 0.013 0.006 0.001 -0.003 LIABILITIES Long Term Debt Due In One Year 1135.000 11069.000 10378.000 7735.000 2903.000 0.000 0.000 170.000 283.000 0.000 Notes Payable 11686.000 4117.000 2640.000 3200.000 21865.000 21865.000 21865.000 21865.000 21865.000 21865.000 Accounts Payable 8503.000 9173.000 9912.000 10021.000 10732.000 10599.451 10809.263 11023.261 11241.527 11464.147 Taxes Payable 588.000 796.000 663.000 443.000 136.000 136.000 136.000 136.000 136.000 136.000 Accrued Expenses 80.000 118.000 456.000 942.000 577.000 577.000 577.000 577.000 577.000 577.000 Accounts Payable/Creditors - Other 4,602.000 6,489.000 5,070.000 3,878.000 3,788.000 3788.000 3788.000 3788.000 3788.000 3788.000 Proposed Dividends 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Other Current Liabilities 802.000 1169.000 1286.000 2478.000 608.000 608.000 608.000 608.000 608.000 608.000 Total Current Liabilities 27396.000 32931.000 30405.000 28697.000 40609.000 37573.451 37783.263 38167.261 38498.527 38438.147 Long Term Debt 4739.000 9008.000 10759.000 13545.000 3791.000 6694.000 6694.000 6524.000 6241.000 6241.000 Deferred Taxes 1248.000 1285.000 1254.000 1499.000 2117.000 2117.000 2117.000 2117.000 2117.000 2117.000 Investment Tax Credit 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Minority Interest 658.000 792.000 731.000 687.000 585.000 585.000 585.000 585.000 585.000 585.000 Reserves - Untaxed 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Other Liabilities 1423.000 1522.000 1875.000 1772.000 5712.000 5712.000 5712.000 5712.000 5712.000 5712.000 A-5 . Q . . . . . . . .' ., " .' ., ., " . . . .. Ii' . . . . . .. .. .. . . :.~ c:-,ji J' .- :3 Polaris Capital Management Financial Model PEUGEOT SA TOTAL LIABILITIES 35464.000 45538.000 45024.000 46200.000 52814.000 52681.451 52891.263 53105.261 53153.527 53093.147 EQUITY Preferred Stock - Redeemable 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Preferred Stock - Nomedeemable 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Total Preferred Stock 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Common Stock 278.000 259.000 259.000 243.000 243.000 243.000 243.000 243.000 243.000 243.000 Share Capital - Other 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Participation Rights Certificates 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Less: Treasury Stock 507.000 51.000 568.000 16.000 466.000 466.000 466.000 466.000 466.000 466.000 Capital Surplus 276.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Revaluation Reserve 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Retained Earnings 0.000 0.000 0.000 0.000 0.000 530.132 1023.023 1480.386 1915.983 ]966.741 Unappropriated Net Profit 1.312.000 ],691.000 1,690.000 ],497.000 1,681.000 ]681.000 1681.000 1681.000 1681.000 ] 681.000 Equity Reserves - Other 8,203.000 8,788.000 10,185.000 ] 0.867.000 11,405.000 ] 1405.000 1 ]405.000 11405.000 11405.000 11405.000 Cumulative Translation Adjustment (201.000) (405.000) (582.000) (727.000) (16.000) -16.000 -]6.000 -16.000 -16.000 -16.000 Common Equity 9361.000 ] 0282.000 10984.000 11864.000 12847.000 ]3377.132 13870.023 14327.386 14762.983 14813.74] TOTAL EQUITY 9361.000 ] 0282.000 10984.000 11864.000 12847.000 13377.132 13870.023 14327.386 14762.983 14813.741 TOTAL LIABILITIES & EQUITY 44825.000 55820.000 56008.000 58064.000 65661.000 66058.582 66761.286 67432.646 67916.510 67906.888 COMMON SHARES OUTSTANDING 278.219 259.109 259.\09 243.109 243.109 243.109 243.109 243.] 09 243.109 243.109 A-6 . . . It f . t . II It . It I~ " If III . .. . . . .. .. lit .. . . . . .. If!; .. . 1# ,> PEUGEOT SA Polaris Capital Management Financial Model Discount Cash Flow Analysis Current Price 53.09999 3-Year Beta 5- Year Beta 10-Year Beta Contin'g Bus. Beta Debt Equity3Yr Total Equity5Yr Total Equityl0Yr Total Cont Firm Total Country Real Yield 0.0149 Nominal Cost of Asset Class 0.0393 Assumed Inflation Rate 0.0210 Real Cost of Asset Class 0.0]83 0.0600 0.0600 0.0600 0.0600 Tax Rate 0.3605 Tax Savings 0.0142 After-tax cost of asset class 0.0041 0.0600 0.0600 0.0600 0.0600 Risk Adjustment/Beta 1.000 0.955 0.895 0.825 1,,<>>2' <2','.;;."" 1.002 Iv..<O>>,', Risk Adj Cost of Asset Class 0.0041 0.057 0.054 0.050 0.060 BooklMarket Value of Asset Class 28559.000 12892 4]45] 12909 41468 12909 41468 12909 41468 Weight 0.6890 0.3110 I. 0000 0.3113 1.000 0.3113 ].000 0.3113 1.000 Firm W ACC 0.0029 0.0178f 0.0207 0.0167. 0.0196 0.0154f 0.0183 0.0187. 0.0215 PV of Firm Cash Flows 45799 47039 48583 44854 Equity Market Capitalization 12892 12892 12892 ]2892 NPV 32907 34]47 35692 31962 Buy Limit $188.64 $193.75 $200.11 $] 84.75 Sell Limit $321.49 $331.89 $344.91 $313.58 PCM Disc Rate 0.0922 0.0886 0.0844 . PV ofCF using PCM discount rate 13381 13954 14689 12974 NPV using PCM discount rate 489 ]062 1797 82 Buy Limit $55.12 $57.47 $60.50 ( Sell Limit $71.22 $75.00 $79.90 $68.57 FDShs 242.7855 Cash Flow Projections I Growth Year CFOPS MCAPEX Sust. FCF PV of SFCF 1 4168.393 2500.000 1668.393 1523.786 -0.40 2 3503.925 2500.000 1003.925 837.438 0.05 3 3649.440 2600.000 1049.440 799.529 0.15 4 3808.542 2600.000 1208.542 840.938 -0.17 5 3604.391 2600.000 1004.391 638.308 0.02 6 1024.479 594.643 0.02 7 1044.969 553.965 0.02 8 1065.868 516.069 0.02 9 ] 087.185 480.766 0.02 10 1108.929 447.877 0.02 11 1131.108 417.239 0.02 12 1153.730 388.696 0.02 13 1176.804 362.106 0.02 14 1200.340 337.335 A-7 ~ t I:, . . f . .' .. " .. .. II" . .. .. .. " .. .. .. I; to s . s jJ 4# J ,>> iii- ;JiT . ,~i#i iiiOi" ,fi/JIF Polaris Capital Management Financial Model Discount Cash Flow Analysis Cash Flow Projections Growth Year 0.02 15 0.02 16 0.02 17 0.02 18 0.02 19 0.02 20 0.02 21 0.02 22 0.02 23 0.02 24 0.02 25 0.02 26 0.02 27 0.02 28 0.02 29 0.02 30 0.02 31 0.02 32 0.02 33 0.02 34 0.02 35 0.02 36 0.02 37 0.02 38 0.02 39 0.02 40 0.02 41 0.02 42 0.02 43 0.02 44 0.02 45 0.02 46 0.02 47 0.02 48 0.02 49 0.02 50 CFOPS MCAPEX Sust. FCF 1224.347 1248.834 1273.811 1299.287 1325.273 1351.778 1378.814 1406.390 1434.518 1463.208 1492.472 1522.322 1552.768 1583.824 1615.500 1647.810 1680.766 1714.382 1748.669 1783.643 1819.316 1855.702 1892.816 1930.672 1969.286 2008.671 2048.845 2089.822 2131.618 2174.250 2217.735 2262.090 2307.332 2353.479 2400.548 2448.559 A-8 " Q " ft ~~. 1" It I. I~ II> I. II> I" I~' l!i l~ l~ ll, .