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Bear Stearns does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please read the important disclosure and analyst certification information in the Addendum section of this report. Equity Research JUNE 2004 Supply-Chain Technology Hardware Standard Could Be Near-Term Catalyst As RFID Investment Levels Have Lagged Expectations WAL-MART REMAINS PRIME MOVER IN RFID . . . With six months to go before its initial RFID mandates take effect, Wal-Mart recently reiterated its commitment to the January 2005 rollout for its top suppliers. The giant retailer remains the prime mover in this space, setting in motion accelerated product development and standards-making activity, as well as RFID mandates from other early adopters. A growing number of companies are pursuing this growth opportunity, and we have categorized and profiled more than 100 of them in this report. As vendor competition heats up, we believe there will be adequate manufacturing capacity to meet expected demand for RFID solutions. . . . BUT RECENT INVESTMENT BELOW EXPECTATIONS. We believe the level of investment in RFID hardware and software is tracking below expectations, especially as compliance deadlines approach. Many industry participants we spoke with noted that some firms facing the mandates are reluctant to make material investments in RFID now because new standards under development could render obsolete previous RFID equipment purchases. A patent infringement lawsuit filed in early June could further impede near-term adoption. GEN 2 STANDARD COULD BE CATALYST FOR INCREASED SPENDING. That said, we expect consumer packaged goods (CPG) firms and other suppliers facing mandates to step up their hardware and software purchases with resolution of the generation 2 electronic product code (EPC) hardware specification (Gen 2). Ultimately, we anticipate that this will serve as a catalyst for increased spending. The global standard for RFID tag/reader communications should serve as a foundation for broad adoption. Philip Alling Edward M. Wolfe (212) 272-6905 (212) 272-7048 [email protected] [email protected]

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Bear Stearns does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please read the important disclosure and analyst certification information in the Addendum section of this report.

Equity Research

JUNE 2004

Supply-Chain Technology Hardware Standard Could Be Near-Term Catalyst As RFID Investment Levels Have Lagged Expectations

WAL-MART REMAINS PRIME MOVER IN RFID . . . With six months to go before its initial RFID mandates take effect, Wal-Mart recently reiterated its commitment to the January 2005 rollout for its top suppliers. The giant retailer remains the prime mover in this space, setting in motion accelerated product development and standards-making activity, as well as RFID mandates from other early adopters. A growing number of companies are pursuing this growth opportunity, and we have categorized and profiled more than 100 of them in this report. As vendor competition heats up, we believe there will be adequate manufacturing capacity to meet expected demand for RFID solutions.

. . . BUT RECENT INVESTMENT BELOW EXPECTATIONS. We believe the level of investment in RFID hardware and software is tracking below expectations, especially as compliance deadlines approach. Many industry participants we spoke with noted that some firms facing the mandates are reluctant to make material investments in RFID now because new standards under development could render obsolete previous RFID equipment purchases. A patent infringement lawsuit filed in early June could further impede near-term adoption.

GEN 2 STANDARD COULD BE CATALYST FOR INCREASED SPENDING. That said, we expect consumer packaged goods (CPG) firms and other suppliers facing mandates to step up their hardware and software purchases with resolution of the generation 2 electronic product code (EPC) hardware specification (Gen 2). Ultimately, we anticipate that this will serve as a catalyst for increased spending. The global standard for RFID tag/reader communications should serve as a foundation for broad adoption.

Philip Alling Edward M. Wolfe (212) 272-6905 (212) 272-7048 [email protected] [email protected]

BEAR, STEARNS & CO. INC. Page 3

Table of Contents Page

Executive Summary....................................................................................................................................................9

Investment Conclusion .............................................................................................................................................11

Exposure to Growth Opportunity.......................................................................................................................11

Tag Converters/Inlays........................................................................................................................................12

Readers...............................................................................................................................................................13

Printer-Encoders ................................................................................................................................................13

Silicon Providers................................................................................................................................................14

Application Software .........................................................................................................................................14

Middleware/Web Services .................................................................................................................................14

Risks to Growth........................................................................................................................................................15

Gen 2 Standard...................................................................................................................................................15

Patent Risks........................................................................................................................................................15

Tag Yields..........................................................................................................................................................15

Tag Performance................................................................................................................................................15

System Performance and Reliability..................................................................................................................16

Integration Risk..................................................................................................................................................16

Product Availability ...........................................................................................................................................16

Wal-Mart and DoD Updates.....................................................................................................................................17

Wal-Mart: On Target for January 2005 Deadline ..............................................................................................17

DoD Sticks to Its Guns on RFID Policy ............................................................................................................19

Early DoD RFID Implementations: A Closer Look ..........................................................................................21

Other Notable Supplier Mandates ............................................................................................................................22

Albertsons ..........................................................................................................................................................22

Target .................................................................................................................................................................22

Page 4 SUPPLY-CHAIN TECHNOLOGY

METRO AG.......................................................................................................................................................22

Tesco..................................................................................................................................................................22

Who Else Has Shown Interest in RFID Since January? ...........................................................................................24

North American Treaty Organization (NATO) .................................................................................................24

United States Food and Drug Administration (FDA) ........................................................................................24

The Aerospace Industry .....................................................................................................................................24

Recent Developments in RFID.................................................................................................................................26

Intermec Patent Infringement Lawsuit Against Matrics...........................................................................................28

What the Lawsuit Means ...................................................................................................................................28

Matrics’ Response..............................................................................................................................................29

End-Users Are Not Targeted .............................................................................................................................29

Vendor Activity Accelerates ....................................................................................................................................30

Tag Converters/Inlays........................................................................................................................................30

Readers...............................................................................................................................................................30

Printer-Encoders ................................................................................................................................................30

Standards Update......................................................................................................................................................32

A Standards Decision Is Near . . . ......................................................................................................................32

. . . Despite Turmoil at EPCglobal . . . ...............................................................................................................32

. . . But the Road Was Long...............................................................................................................................33

What Will the Standard Look Like? ..................................................................................................................36

Wal-Mart Requirements.....................................................................................................................................36

Looking Beyond the Hardware Standards Issue.......................................................................................................37

Less than Full Compliance.................................................................................................................................37

Extended Pilot Testing.......................................................................................................................................37

Performance Improvements ...............................................................................................................................37

BEAR, STEARNS & CO. INC. Page 5

Incremental Adoption ........................................................................................................................................37

Manufacturing Scale ..........................................................................................................................................38

Software and Data Management Focus .............................................................................................................38

The RFID Universe ..................................................................................................................................................39

Drilling Down on the Vendors .................................................................................................................................42

RFID Tags..........................................................................................................................................................42

RFID Readers.....................................................................................................................................................48

Printer-Encoders ................................................................................................................................................51

Label Applicators...............................................................................................................................................53

Packaging...........................................................................................................................................................54

Application Software .........................................................................................................................................55

Middleware/Web Services .................................................................................................................................59

Systems Integrators/ Consulting ........................................................................................................................62

Logistics Providers.............................................................................................................................................65

RFID Universe Listing .............................................................................................................................................67

RFID Universe Alphabetical Listing........................................................................................................................69

Universe Tables ........................................................................................................................................................73

Financial Models ......................................................................................................................................................81

All pricing is as of the market close on June 4, 2004, unless otherwise indicated.

Special thanks to Andrew Matorin of our Supply Chain Technology research team for his significant contributions to this report. We also thank Bear Stearns software analyst John DiFucci, Bear Stearns small companies analyst

Peter Barry, and our summer intern, Max Baigelman.

Page 6 SUPPLY-CHAIN TECHNOLOGY

List of Exhibits Page

Exhibit 1. Selected RFID Vendors ...........................................................................................................................12

Exhibit 2. Timeline of Wal-Mart’s RFID Announcements & Expectations ............................................................18

Exhibit 3. Timeline of the DoD’s RFID Announcements & Expectations ..............................................................20

Exhibit 4. A Look at Supplier Mandates for RFID Compliance ..............................................................................23

Exhibit 5. Intermec Patents Referenced in Complaint .............................................................................................28

Exhibit 6. Summary Original EPCglobal UHF Generation 2 Standards Timeline ..................................................32

Exhibit 7. The Initial Generation 2 Standards Proposals..........................................................................................33

Exhibit 8. The Revised Generation 2 Standards Proposals ......................................................................................34

Exhibit 9. The Further Revised Generation 2 Standards Proposals..........................................................................35

Exhibit 10. Revised Timetable For a Gen 2 Specification Decision ........................................................................36

Exhibit 11. RFID Vendors........................................................................................................................................39

Exhibit 12. RFID Universe Alphabetical Listing .....................................................................................................69

Exhibit 13. Public Companies in RFID....................................................................................................................71

Exhibit 14. Bear Stearns Application Software / Supply-Chain Technology Universe — EPS and Revenue Multiples, 2001-05E.................................................................................................................................................75

Exhibit 15. Bear Stearns Application Software / Supply-Chain Technology Universe — Comparative Financial Returns and Metrics, 2001-05E................................................................................................................................76

Exhibit 16. Software Valuation Matrix ....................................................................................................................77

Exhibit 17. Bear Stearns Airfreight Universe — EPS and Book Value Multiples, 2001-05E................................78

Exhibit 18. Bear Stearns Airfreight Universe — Comparative Financial Returns, 2001-05E ................................79

Exhibit 19. JDA Software Group, Inc. — Annual Income Statement......................................................................83

Exhibit 20. JDA Software Group, Inc. — Quarterly Income Statement ..................................................................84

Exhibit 21. JDA Software Group, Inc. — Balance Sheet........................................................................................85

Exhibit 22. JDA Software Group, Inc. — Statement of Cash Flows ......................................................................86

Exhibit 23. Manhattan Associates, Inc. — Annual Income Statement ....................................................................87

Exhibit 24. Manhattan Associates, Inc. — Quarterly Income Statement .................................................................88

Exhibit 25. Manhattan Associates, Inc. — Balance Sheet .......................................................................................89

Exhibit 26. Manhattan Associates, Inc. — Statement of Cash Flows ......................................................................90

BEAR, STEARNS & CO. INC. Page 7

Exhibit 27. Retek Inc. — Annual Income Statement ...............................................................................................91

Exhibit 28. Retek Inc. — Quarterly Income Statement............................................................................................92

Exhibit 29. Retek Inc. — Balance Sheet ..................................................................................................................93

Exhibit 30. Retek Inc. — Statement of Cash Flows.................................................................................................94

Exhibit 31. SAP AG — Annual Income Statement..................................................................................................95

Exhibit 32. SAP AG — Quarterly Income Statement ..............................................................................................96

Exhibit 33. SAP AG — Balance Sheet.....................................................................................................................97

Exhibit 34. SAP AG —Statement of Cash Flows ....................................................................................................98

Exhibit 35. Symbol Technologies, Inc. — Income Statement .................................................................................99

Exhibit 36. Symbol Technologies, Inc. — Balance Sheet......................................................................................100

Exhibit 37. Symbol Technologies, Inc. — Statement of Cash Flows ....................................................................101

Exhibit 38. Tibco Software Inc. — Income Statement...........................................................................................102

Exhibit 39. Tibco Software Inc. — Balance Sheet.................................................................................................103

Exhibit 40. Tibco Software Inc. — Statement of Cash Flows................................................................................104

Exhibit 41. Unova, Inc. — Income Statement........................................................................................................105

Exhibit 42. Unova, Inc. — Balance Sheet..............................................................................................................106

Exhibit 43. Unova, Inc. — Statement of Cash Flows.............................................................................................107

Exhibit 44. webMethods, Inc. — Income Statement..............................................................................................108

Exhibit 45. webMethods, Inc. — Balance Sheet ....................................................................................................109

Exhibit 46. webMethods, Inc. — Statement of Cash Flows...................................................................................110

Exhibit 47. Zebra Technologies Corporation — Income Statement ......................................................................111

Exhibit 48. Zebra Technologies Corporation — Balance Sheet.............................................................................112

Exhibit 49. Zebra Technologies Corporation — Statement of Cash Flows ...........................................................113

BEAR, STEARNS & CO. INC. Page 8

BEAR, STEARNS & CO. INC. Page 9

Executive Summary

Bear Stearns provided a fairness opinion to Alaris Medical Systems Inc. in its announced transaction with Cardinal Health.

This is our third report in the past year that focuses on emerging supply-chain applications of radio frequency identification (RFID) technology. In our first report in June 2003, we discussed technology developments of new lower-cost configurations of RFID solutions operating in the ultra-high frequency (UHF) band that promised supply-chain efficiency and inventory visibility improvements over existing bar code infrastructure. Given performance and cost improvements, our expectation was that RFID for inventory tracking applications would experience a much faster adoption cycle than did bar codes, which got off to a slow start in the 1970s, but have since become ubiquitous. A week after we published our first report, Wal-Mart publicly announced a mandate for its top suppliers to begin phasing in use of RFID for pallet and case level tracking starting in January 2005. That event has been a major catalyst for increased development activity from technology vendors as well as standardization work and subsequent decisions by other early adopters to move forward with RFID plans.

In our follow-up report in January of this year, we discussed how two supply chain giants — Wal-Mart and the U.S. Department of Defense (DoD) — were driving early adoption of RFID with their respective RFID mandates, both of which called for all of their suppliers (10,000 for Wal-Mart and 43,000 for the DoD) to eventually equip all arriving pallets and cases with RFID tags for tracking purposes. The intention is to utilize interoperable technology in open-loop supply-chain applications that could be used globally. Implementation will be phased in, and will take several years, in our view.

Since publishing our second report, other early adopters, such as Tesco in the U.K., Metro AG in Germany, and Target and Albertsons in the U.S., have also outlined plans for RFID adoption, providing further momentum to this industry. These early adopters are expected to implement RFID technology that makes use of a standardized EPC that would be stored on the silicon chips embedded in the RFID tags. These standardized EPC codes — not unlike UPC codes in bar coding — would be used to uniquely identify products in the supply chain on a global basis.

In this report, we provide more details about RFID development activities in the expanding set of companies pursuing this growth opportunity. We have categorized and profiled more than 100 companies that are actively involved in RFID pilot projects and product development activity. Six months ago, there was some concern that manufacturing capacity for RFID hardware — including tags, readers, and printer-encoders — would not be adequate to meet expected demand in the ramp-up to initial compliance with RFID mandates. Our sense now is that vendor competition is heating up, with more large firms joining the fray, and that manufacturing capacity should not be a limiting factor in market adoption of the technology.

While development activity among technology vendors and service providers has certainly accelerated in the past six months, based on our research for this report, we

Page 10 SUPPLY-CHAIN TECHNOLOGY

believe the level of recent investment in hardware, software, and services is lower than previous expectations, especially given approaching compliance deadlines.

Many of the vendors and other industry participants we spoke with indicated that there has been reluctance on the part of the CPG firms and other retail suppliers facing the mandates to make material investments in RFID hardware at this time because of concern that new industry standards under development could render previous RFID equipment purchases obsolete. In this report, we go into greater detail on the Gen 2 RFID hardware standards that the EPCglobal group is currently working on. We expect this issue to be resolved in the near term, and believe that clarity on this matter will serve as a catalyst for increased investment in this emerging space. Delays in establishing a hardware specification for next-generation tag/reader communications that has the support of both end users and technology vendors would jeopardize near-term growth and adoption in this space, in our view.

In this report, we identify which firms we think are best-positioned in different industry segments to benefit from broader adoption of RFID tracking of inventory. The hardware subsegments include vendors of RFID tag converters and inlays, reader systems, printer-encoders, label converters and label applicators, as well as packaging firms. Within software and services, categories of firms include application software, middleware, and Web services, as well as systems integrators, consultants, and third-party logistics companies. As part of our work categorizing the technology providers in this space, we have included Exhibit 11, which lists all the public and private firms that we have profiled in their respective categories. Where applicable, we have included tickers, market caps, and revenue run rates.

We also outline risks to the growth story, including delays in establishing the Gen 2 standard (as we indicate above), tag performance in real world environments (which could lag pilot test results in more controlled environments), and potentially low tag yields in new manufacturing processes as well as integration risk and product availability.

This report provides an update on RFID activities at Wal-Mart and the U.S. DoD (notably that both are sticking to their previously announced implementation timeframes, despite concerns about the timing of availability of product that would meet the Gen 2 standard) as well as other mandates in retail and recent RFID developments in other verticals, such as applications at NATO, the U.S. FDA, and within the aerospace industry.

At the back of the report, we include comp sheets of our coverage universe as well as our financial models of companies under coverage. We also provide an alphabetical listing of companies in the RFID universe that we have profiled in this report.

BEAR, STEARNS & CO. INC. Page 11

Investment Conclusion

We continue to believe there is a significant growth opportunity in the RFID space for firms supplying hardware, software, and services to this nascent, though potentially multibillion-dollar market. What is apparent to us from doing the research on this, our third report on RFID in the past 12 months, is that an expanding set of companies is pursuing this space. In fact, we have information in this report on more than 100 companies that have identified new supply-chain applications of RFID technology as a growth area for their business.

The list of companies vying for early market share in this space range from startups focused exclusively on lower-cost configurations of RFID to large-cap multinational firms with sizable footprints in supply-chain, material handling, and other technology applications. The would-be industry players include RFID tag and reader system vendors, smart label converters, printer-encoder hardware manufacturers, shipping label applicators, packaging firms, and silicon suppliers as well as application software vendors, middleware/integration firms, systems integrators, consulting firms, and logistics providers.

In a relatively short period of time, these firms have stepped up their development efforts and are actively marketing their wares. At this point, efforts are mostly directed toward CPG firms that are facing mandates from Wal-Mart and the U.S. DoD, among others, for pallet- and case-level RFID tracking expected to get under way early in 2005.

While development activity among the technology vendors has been robust over the past year, our sense from numerous conversations with participants in this space is that the level of investment in hardware and software has been lower than expected thus far, especially given looming compliance deadlines. There are a couple of reasons for this. One is foot dragging by suppliers reluctant to make the additional outlays required for this new shipping label requirement, if you will, even though it is from their largest customer. However, we believe the main impediment to near-term investment in RFID has been the lack of an accepted standard for next-generation EPC-compliant tags and reader systems. There is concern among the supply bases to Wal-Mart, for example, that tags, readers, and printer-encoder systems purchased for initial compliance — based on earlier protocols, Class 0 and 1 — would not be upgradeable to the new EPC-compliant Gen 2 that standards officials are currently developing, and which the end users (Wal-Mart, the DoD, and so forth) have indicated are expected to be used when product is available that meets the new spec. While some industry participants talk about firmware upgrades, without agreement on a Gen 2 spec, it is unclear whether such upgrades would in fact work. And the point is that concern about this issue is holding up spending in this space, regardless of whether firmware upgrades could actually protect these initial investments.

Admittedly, this is an important issue in this young, evolving space, but we do not expect it to be a long-term problem. In fact, the EPCglobal group, a standardizing body that is working to commercialize this technology, expects to reach agreement on a Gen 2 specification later this month, and we believe resolution of this issue could be a catalyst for increased investment and adoption of RFID going forward (see

EXPOSURE TO GROWTH OPPORTUNITY

Page 12 SUPPLY-CHAIN TECHNOLOGY

Standards section below, with details on the lineup of companies in the different proposals).

EPCglobal expects to be in a position to ratify the new Gen 2 standard by this fall. How long after that will it be until silicon is available that meets the new spec? We have heard estimates ranging from three months to two years. It is precisely this type of uncertainty that has been disrupting purchase plans in the ramp-up to initial compliance with RFID mandates.

What does it mean? The market for new RFID solutions in the supply-chain space is going to evolve over time, and the standards-setting activity is part of that process. Certainly Wal-Mart remains a prime mover in this space, and its embrace of RFID technology for inventory-tracking applications in the supply chain has served as a major impetus for hardware and software development, standards making and investment activity, as well as subsequent announcements from other firms also choosing to become early adopters. Longer term, open standards should promote wider adoption of RFID technology, though in the near term, the issue of unresolved specifications for Gen 2 EPC-compliant hardware has been an impediment to investment in existing tags, readers, and printer-encoders, in our view. Clarity on the standards should promote increased investment going forward.

Exhibit 1. Selected RFID Vendors

Tag Converters/InlaysAlien TechnologyAvery DennisonMatricsTexas InstrumentsUPM Rafsec

Reader/EncodersAWIDIntermecMatricsSAMSysSymbol TechnologiesTyco Sensormatic

Printer-EncodersPaxarPrintronixSatoZebra Technologies

Silicon ProvidersImpinjPhilipsSTMicroelectronicsTexas Instruments

Middleware/ Web ServicesGlobeRangerOATSystemsSun MicrosystemsTIBCOwebMethods

Application SoftwareManhattan AssociatesProviaRedPrairieSAP

Systems Integrators /ConsultingAccentureCapgeminiIBM

Tag Converters/InlaysAlien TechnologyAvery DennisonMatricsTexas InstrumentsUPM Rafsec

Reader/EncodersAWIDIntermecMatricsSAMSysSymbol TechnologiesTyco Sensormatic

Printer-EncodersPaxarPrintronixSatoZebra Technologies

Silicon ProvidersImpinjPhilipsSTMicroelectronicsTexas Instruments

Middleware/ Web ServicesGlobeRangerOATSystemsSun MicrosystemsTIBCOwebMethods

Application SoftwareManhattan AssociatesProviaRedPrairieSAP

Systems Integrators /ConsultingAccentureCapgeminiIBM

Source: Bear, Stearns & Co. Inc.

Resolution of the hardware standards issues should serve as a catalyst for increased spending in this space, as well as perhaps prompting other firms beyond the group of initial early adopters to commit to using EPC-compliant technology for tracking applications. Adoption of a particular Gen 2 EPC specification for tag/reader communications could also further indicate which firms are better-positioned in the near term. Increasingly, vendors in the space — whether printer-encoder manufacturers, label converters, or application software firms — describe themselves

TAG CONVERTERS /INLAYS

BEAR, STEARNS & CO. INC. Page 13

as “tag-agnostic.” While both privately held Alien Technology and Matrics remain early pioneers in the development of lower-cost passive RFID solutions operating in the UHF band, the field of would-be suppliers of tags or inlays is getting crowded, and could become more so with clarity on standards. Ample availability of silicon that would meet new EPC specifications could lower barriers to entry among tag suppliers. Avery Dennison (a provider of pressure-sensitive and adhesive solutions), for one, is positioning itself as an RFID tag inlay provider (including antenna design and chip assembly) in addition to a manufacturer of RFID printer-encoders and smart labels. Finland-based UPM Rafsec is also looking to source silicon and integrate it with in-house-developed antenna designs and assembly processes, as part of its RFID tag solution offering. And Texas Instruments (TI) could also be well-positioned to provide EPC-compliant RFID tags, with its silicon design capability as well as its experience in high-frequency RFID solutions, though TI has not been at the forefront of developing UHF band systems intended for Wal-Mart compliance and other initiatives in the early testing phases.

A key issue in the reader system space is whether existing suppliers of bar code reader systems will be able to successfully leverage their domain expertise and customer relationships to advantage in the RFID space. In this regard, we continue to believe one of the best-positioned firms is the Intermec unit of UNOVA, which has a significant patent portfolio in RFID and is positioning itself to supply EPC-compliant tags and smart labels in addition to readers and printer-encoders. Primary bar code competitor Symbol Technologies has not been an early leader in the RFID space, but in the longer term the company expects to achieve a top market share position in RFID similar to its success in the automatic identification and data capture space, and we believe the company is increasing its investment in RFID up to $10 million this year as part of that effort. Firms focused exclusively on RFID, such as Alien Technology and Matrics, have supplied reader systems in addition to tags for ongoing pilots and other implementations. Of these two, Matrics has had more of an emphasis on the reader system side of the business, and we believe the company recently secured a sizable order for multi-protocol RFID readers from Wal-Mart. Another firm developing multi-protocol readers is Toronto-based SAMSys Technologies, which is supplying RFID reader engines to printer manufacturer Sato America, among others. Electronic Article Surveillance (EAS) system suppliers are looking to make the transition to RFID as well, such as Tyco Sensormatic, which has licensed RFID reader technology from startup ThingMagic, and is in the midst of at least four RFID implementations of its reader systems.

Suppliers facing RFID mandates will need printer-encoder systems that can output shipping labels with integrated RFID tags, and a number of existing suppliers of pressure-sensitive bar code printers are vying for market share in this space, with many of them already demonstrating EPC-compliant table-top printers and with some having print-and-apply systems as well. We expect the printer vendors to realize material incremental growth from broader adoption of RFID over the next two years. Zebra Technologies and Printronix are the early leaders in this space, with each already shipping 200-plus RFID-enabled bar code printers for use in pilot projects and other testing activity. Paxar and Japan-based Sato Corp. are also well-positioned in the RFID printer-encoder space, with EPC-compliant hardware currently available. These two firms are also looking to supply print labels with integrated RFID tags, which could become a meaningful source of recurring revenue in this space. Other

READERS

PRINTER-ENCODERS

Page 14 SUPPLY-CHAIN TECHNOLOGY

firms pursuing the smart-label segment of the market include Avery Dennison, Intermec, and RR Donnelly through its Moore Wallace division.

With silicon designed to meet open standards for EPC Gen 2 tag/reader communications, our sense is that this could become a commodity business longer term, and there is an expanding group of vendors lining up to meet the expected RFID demand for silicon. As chip suppliers, Philips and Texas Instruments have more RF experience than most, though more so in the high-frequency band than in UHF, but that could change with eventual resolution of the Gen 2 specification issue. Between these two vendors, Philips is focusing solely on supplying silicon for these applications, while Texas Instruments intends to supply silicon in addition to integrated tags. ST Microelectronics has been involved early on in RFID pilot projects as a supplier of chips to Alien Technology as well as UPM Rafsec. Newcomers such as venture capital-backed Impinj are pursuing this market as well.

Within software, the companies that should initially see incremental demand for their solutions from broader adoption of RFID are those focused on managing the movement of inventory in and out of warehouses and distribution centers (given that the initial RFID mandates call for pallet- and case-level tracking). This is precisely what we’re seeing from supply-chain execution software leader Manhattan Associates, which reported that about 4% of its sales in the March quarter stemmed from RFID, and that it is currently tracking 50 active sales cycles in the space. It’s still early in the game, and we believe the level of spending commitment would be higher now if there were resolution on the Gen 2 EPC hardware specification. But data generated from use of RFID devices will need to be managed at a tactical level by warehouse and transportation management applications from vendors such as Manhattan, which is already converting this growth opportunity into revenue. We continue to believe that Manhattan is the best-positioned supply chain software firm to benefit from RFID adoption, with its RFID-enabled warehouse and transportation management applications in conjunction with its in-house-developed RFID middleware and services capabilities. Also pursuing this space are privately held RedPrairie, which has a concentration of customers in the CPG vertical, and Provia Software, which is working with Gillette on its RFID rollout. In the supply-chain software space, SAP is another notable participant with its involvement in Metro AG’s RFID pilot test and subsequent implementation plans.

For the enterprise-level middleware firms, we expect the benefit from broader adoption of RFID to lag the demand the application software vendors experience, as solutions at the tactical level will need to be implemented before data can be made available to enterprise applications. That said, middleware looks to be a competitive space in RFID already, as firms are increasing their activity levels in pilots and implementations. Some of the more active companies are TIBCO and webMethods, in our view, with involvement also from larger firms such as IBM, Sun Microsystems, and SAP. At the savant or reader network level, smaller software firms are focusing exclusively on RFID, such as OATSystems and GlobeRanger.

SILICON PROVIDERS

APPLICATION SOFTWARE

MIDDLEWARE/WEB SERVICES

BEAR, STEARNS & CO. INC. Page 15

Risks to Growth

As previously outlined, we believe that there are substantial supply-chain benefits to RFID adoption. However, obstacles still remain that may impede broader adoption and implementation.

In our view, the primary obstacle to broad implementation and adoption in the near term is the lack of a Gen 2 standard. Gen 2 is the working name for a new standard EPC-compliant tag that will meet end user requirements, including the ability to operate in the UHF band, have multiple read-multiple write capability, 100% read rates, a 96-bit EPC, and global interoperability. While we note that EPCglobal and the Hardware Action Group members are working toward a Gen 2 standard and an announcement is expected by the end of this month, at this point a standard has not been agreed upon. As a result, companies have been left with a difficult decision: invest in a potentially obsolete hardware platform (the existing Class 0 or Class 1) in order to comply with Wal-Mart, or delay investment until Gen 2 hardware is available and risk being in violation of Wal-Mart’s mandate.

We believe that the lack of a standard has delayed investment and implementation activity later into 2004 than had been previously expected only six months ago. Resolution of the standards issue should help to reassure companies as they begin to make material investments in RFID.

Intermec, which owns a substantial patent portfolio as a result of acquisitions, has filed a patent infringement lawsuit against Matrics. The complexity of these systems and the prior activity related to nonsupply-chain implementations of RFID, could mean that there are other potential patent issues facing companies in this industry. In addition, Intermec could find similar grounds for patent infringement lawsuits against other tag converter/inlay or reader companies.

Manufacturing processes that are currently in use have only been able to produce yields of 75%-80% usable tags. We remain concerned that such low tag yields will act to slow and complicate adoption. Low yields drive up the average cost of a tag and, in the longer term, would limit the expected reduction in tag prices. In addition, low tag yields would slow conveyor systems as containers would have to be held up to wait for a good tag before being moved down the line. At 75%-80% yields, we would expect material handling to be compromised. However, we believe that the new participants in the tag space will spur innovation and enable improved tag yields to be achieved. In the long term, as yields are improved, we would expect to see additional price pressure on tags.

Tag read rates need to improve across application environments in order for RFID to be successful. In particular, problems occur when tags are applied to certain pallets that contain products with liquids or metals. In these situations, the metal or liquid causes read rates to deteriorate, and tag placement and antenna design become critical for tag performance. The complexity of these two aspects of tags could inhibit utilization of tags for certain products that, because of their makeup, do not provide for near-100% read rate accuracy. Improved antenna design and standardized

GEN 2 STANDARD

PATENT RISKS

TAG YIELDS

TAG PERFORMANCE

Page 16 SUPPLY-CHAIN TECHNOLOGY

solutions for tag placement will be required before tags can be used effectively in certain applications.

Tags are not the only area of an RFID implementation that could have performance difficulties in the early stages of adoption. Other elements of a system, including readers, printer-encoders, and label applicators, could also encounter startup difficulties. Therefore, we caution that system performance and reliability could develop as another implementation hurdle. While many companies are now involved in pilots to determine how to implement these systems, these pilots are on a limited scale and are, for the most part, being carried out in controlled environments. Any new technology goes through a period of refinement before it operates in a consistent manner. RFID, with so many new components and a multiplicity of vendors, is bound to encounter some performance and reliability hurdles. The rapid approach of the Wal-Mart mandate could test the performance limits of, as yet, unproven systems in real-world environments.

We continue to believe that most companies are currently focused solely on compliance with the Wal-Mart mandate. Some companies are evaluating ROI opportunities from use of RFID data tracking by integration into backend systems, but because of the newness of the application of RFID in the supply chain, there is a lack of expertise in integrating into these backend systems and therefore some risk that problems may arise. For instance, there is a risk that data will not be properly filtered or cleansed prior to introducing it into the company’s systems, thereby possibly polluting corporate planning, WMS, TMS, or other systems and, in turn, potentially causing a variety of problems. In the integration phase, the potential for systems and data problems to develop should not be underestimated. In the long term, as middleware in this space becomes more sophisticated, companies should be able to more easily integrate into existing backend systems and capture material ROI, but in the short term integration problems may act to inhibit ROI improvement for companies.

Previously, we were concerned about available manufacturing capacity for hardware as a potential major hurdle for widespread adoption. However, in the ensuing months, as we detail in the Vendor Update section of this report, a number of companies have aggressively entered the RFID space and have thus substantially reduced our concerns, in the longer term, about manufacturing capacity as a significant hurdle. We now believe that capacity for tags and equipment will be available and that, once a Gen 2 standard is decided, volume production will come on line shortly after design and testing are completed.

SYSTEM PERFORMANCE AND RELIABILITY

INTEGRATION RISK

PRODUCT AVAILABILITY

BEAR, STEARNS & CO. INC. Page 17

Wal-Mart and DoD Updates

Below, we take a look at the recent developments among the two early pioneers that are driving RFID adoption among their supply-bases for use in the supply-chain: Wal-Mart and the United States Department of Defense.

In late May, Wal-Mart reconfirmed that it is on track to meet its January 2005 RFID deadline for supplier compliance, contrary to speculation that the giant retailer is thinking of pushing its mandate out. It is our understanding that the giant retailer has assigned “coaches” to each supplier account in order to keep things on track and during the spring, Wal-Mart hosted individual meetings with its top suppliers to review their initial plans for RFID deployments. Furthermore, Wal-Mart plans to host meetings with its next 200 suppliers sometime in June to discuss requirements as well. Most recently, Wal-Mart began initial testing of RFID with eight suppliers at one distribution center in Texas and seven of its stores (see details below).

RFID Pilot with Eight Suppliers Under Way

At the end of April, Wal-Mart began its first RFID pilot with eight of its top suppliers in which each tagged cases and pallets of a total of 21 products traveling between one distribution center in Sanger, Texas, and seven of its stores. It is our understanding that the packaging of certain individual items — specifically two types of HP printers and an HP ScanJet scanner — will also contain RFID tags as well, but that these items will be specially marked, so that consumers are aware that an RFID tag is present. It is also our understanding that HP expects to tag and ship all of its 65 products sold in Wal-Mart stores prior to the January deadline. Wal-Mart maintains that it will not have readers installed in store areas to track these items once they leave the storeroom. This pilot is the first phase of its January 2005 mandate when it expects its top 100-plus suppliers to be RFID-compliant at the case and pallet levels for a portion of their SKUs. The eight suppliers in its initial RFID trial were Hewlett-Packard, Johnson & Johnson, Gillette, Kimberly-Clark, Kraft Foods, Nestle Purina PetCare Co., Procter & Gamble, and Unilever. Additional companies are expected to be added as the trial moves forward.

Additional Companies Seeking to Comply with January 1 Mandate Ahead of Schedule

While there has been significant amount of buzz that not all of Wal-Mart’s top 100 suppliers will comply by January 1, 37 suppliers who are not in the top 100 have voluntarily signed on to begin tagging product under the January 1 deadline. We believe that this suggests a willingness to adopt RFID technology among the Wal-Mart supply base.

Hiccup in March Pharma Mandate: What Happened?

Wal-Mart’s RFID implementation schedule for some pharma suppliers slipped, according to our channel checks and certain press accounts. Wal-Mart indicated last November that — aside from its existing RFID mandates at the time — it would also require its top 30 or so pharmaceutical suppliers to be RFID-compliant at the container level by March 2004. It is our understanding that, while some suppliers

WAL-MART: ON TARGET FOR JANUARY 2005 DEADLINE

Page 18 SUPPLY-CHAIN TECHNOLOGY

were sending some RFID-tagged pharmaceuticals to the giant retailer by this date, many were unable to meet the deadline given issues related to the technology and also the short window of time for preparation. Because the pharma suppliers were given only about four months of lead time to prepare, the feasibility of this original deadline, even with few hitches, was questionable to begin with.

The impact of the missed deadline is minimal, in our view, as the majority of the focus has been on Wal-Mart’s broader deadline, which calls for its top 137 suppliers to be compliant at the case and pallet levels for its Sanger, Texas, DC by January 2005. Our channel checks indicate that, while suppliers bound to Wal-Mart’s January 2005 mandate are acting slower than expected to date, most are expected to meet the deadline, but not without a lot of hustle in the second half of 2004. As we have indicated previously, even if all suppliers are not completely 100% up and running by January 2005, we don’t believe this will present much risk, given that Wal-Mart still moves forward with its plans and does not push out deadlines materially. The key takeaway, in our view, is that early adopters remain committed and are moving forward.

Exhibit 2 below provides a re-cap of Wal-Mart’s RFID announcements and expectations since last June.

Exhibit 2. Timeline of Wal-Mart’s RFID Announcements & Expectations Date Action

June 2003Announces intentions to require top-100 suppliers to be RFID-enabled at case& pallet levels by January 2005

July 2003Cancels item-level pilot with Gillette; Confirms dedication to RFID at warehouse level & reiterates supplier mandate

August 2003 Extends RFID mandate, calling for all suppliers to be RFID-enabled at the case & pallet levels by January 2006

November 2003Hosts meetings with top suppliers & technology vendors & provides clarity on its RFID requirements. Announces new mandate requiring its top-30 pharmaceutical suppliers to be RFID-enabled by March 2004

March 2004 Top-30 pharmaceutical suppliers expected to be RFID compliant at lot level (not achieved)

March / April 2004 Revised mandate for pharmaceutical suppliers, now calling for compliance by June 2004

April 2004 Begins initial RFID pilot with eight suppliers between one distribution center and seven stores

June 2004 Top-30 pharmaceutical suppliers expected to be RFID compliant at lot level (revised from March previously)

January 2005 Top-100+ suppliers expected to be RFID-enabled at case & pallet levels

January 2006 All suppliers (estimated at roughly 10,000) expected to be RFID-enabled at case and pallet levels

Source: Bear, Stearns & Co. Inc.

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At its Second RFID Summit for Industry in Washington, D.C. in early April, the DoD once again reiterated its commitment to its RFID policy, which requires its suppliers to begin using passive, EPC-compliant RFID by January 2005. The DoD also made it very clear that it intends to create requirements and endorsing standards that are compatible with those being pushed by Wal-Mart and other advocates of the technology. However, our conversations suggest that the DoD may be pushing standards that would have higher memory capacity than those currently being supported by Wal-Mart (such as Philips’ or TI’s 2Kb tags). This could add some additional complexity to the standards process currently under way.

The DoD will be providing more clarity in July, when it issues a directive that will guide agencies and contractors that are preparing for January’s deadline requiring suppliers to be ready for RFID. The policy will also explain the DoD’s standards for RFID tags in more detail.

How Many Suppliers Will Be Affected by the January 2005 Mandate?

In order to define which suppliers will be affected, the DoD expects to draft contractual clauses — called Defense Federal Acquisition Regulations Supplements, or DFARS — for suppliers agreeing to utilize RFID. The DoD anticipates publishing its official RFID policy some time in July, and then expects to issue its DFARS to suppliers in October for January 2005 compliance. In accordance with this, it is our understanding that only those suppliers under new contracts will be bound by the January 2005 deadline. (The DoD has not publicly indicated how many suppliers it thinks this may be.) In other words, for those suppliers under existing contracts that extend beyond October, the January deadline will not necessarily apply, unless these contracts are renegotiated between now and October. It is our understanding that as supplier contracts are renegotiated going forward, RFID compliance will be included, implying a phased-in approach to the technology, as expected.

What Is Expected of Suppliers?

Specifically, all suppliers of all materials and goods purchased by the DoD (excluding bulk commodities) are expected to begin placing EPC-compliant RFID tags on the following, beginning in January 2005:

pallets,

cases, and

packaging of certain items requiring unique identification (UID).

We note that — in addition to passive RFID — the DoD is also requiring the use of active RFID and Advanced Shipping notices (ASN), both of which are currently in use.

Supplier Concerns

At the DoD’s Summit for Industry, suppliers were given a chance to voice their questions and concerns to DoD personnel about its RFID mandate. Most of the

DOD STICKS TO ITS GUNS ON RFID POLICY

Page 20 SUPPLY-CHAIN TECHNOLOGY

questions centered around deadline feasibility, compatibility with existing technologies, and interoperability with existing standards and data constructs. More specifically, some suppliers were wondering if their RFID tags must use the DoD’s identification numbering scheme (called Unique Identification, or UID) in addition to EPC codes. The concern was driven by the fact that, because of data constraints on commercially available RFID tags (those that are 96 or 128 bits), some UIDs — which can be up to 78 characters long — might not fit in addition to EPC codes. The DoD indicated that it is working with standardizing bodies to make it possible to put both UIDs and EPC codes on a single tag (which will likely require a 256-bit tag) and also to incorporate UID as part of the EPC standard. In the instance that UIDs are required, but cannot fit in conjunction with EPC codes on an RFID tag, the DoD expressed a willingness to be flexible on a case-by-case basis.

Timeline of Expected Events for RFID Adoption

Exhibit 3 below provides a re-cap of the DoD’s RFID announcements and expectations since it first began using the technology in 1994.

Exhibit 3. Timeline of the DoD’s RFID Announcements & Expectations Date Action

1994Awards Savi Technology with a $90 million contract for "active" RFID technology

1997 Awards Savi Technology a follow-on contract for RFID technology worth $112M

2000 Signed a two-year contract with Savi Technology (amount not disclosed)

February 2003 Announcement of two-year contract with Savi Technology worth up to $90 million for RFID hardware & related logistics software and services

October 2003 DoD issues RFID mandate to its top suppliers

December 2003Holds RFID Summit for Industry and discusses its RFID policy and initial requirements

April 2003Holds second RFID Summit for Industry & reiterates commitment to RFID policy

Present-June 2004 DoD will participate in RFID pilots / initial implementations

April 2004 Expects to draft DFARS Clause

May 2004Expects to publish revised RFID policy Expects to publish proposed DFARS Rule for passive RFID

June 2004Expects to complete analysis of RFID initial implementations Expects to publish revised RFID policy

July 2004 Expects to publish final RFID policy

October 2004 Expects to issue final DFARS Rule

January 2005 Expects suppliers under contract to use EPC-compliant RFID Source: DoD RFID Policy Presentation, April 7, 2004.

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DoD Recruits IBM for RFID Deployment

IBM Business Consulting Services was recently awarded a three-year contract by the DoD to help it with its planned RFID deployment in January 2005. IBM will be responsible for working with both the DoD and its suppliers in order to educate and guide them toward a successful deployment. IBM will also set milestones related to the DoD’s RFID plans, and has indicated that it will monitor progress over the next few years to see that performance criteria are met.

The DoD has completed one of its early RFID implementations, its Combat Feeding Directorate (CFD), and plans to undertake at least two more: 1) the Norfolk Ocean Terminal and 2) its Individual Protective Equipment Initiative.

Combat Feeding Directorate (CFD) Completed

In this initiative — its first demonstration of EPC-complaint technology — the DoD tracked combat rations in its supply chain. Specifically, the pilot was conducted in San Joaquin, California, from February 23 to February 26. For the demonstration, Class 1 tags from Alien Technology were put on Meals-Ready-to-Eat (MRE) and Unitized Group Rations (UGR), and also on the shrink wrap covering of the pallets carrying each. Battery-powered Alien tags were also used in the initiative to track the temperature of the rations. OATSystems provided middleware for the demonstration and also acted as the systems integrator. The DoD reports that technical issues during the demonstration were minimal.

Norfolk Ocean Terminal Initiative In Process

In this initiative, the DoD is consolidating shipments of inventory being transported to overseas locations at a freight consolidation station. The goal of the DoD in this initiative is to improve inventory accuracy and supply-chain visibility.

Individual Protective Equipment Initiative In Process

In this initiative, the DoD is tracking chem/bio suits that are used to protect soldiers. The goal here is to increase visibility to these suits and reduce the handling required to track them.

EARLY DOD RFID IMPLEMENTATIONS: A CLOSER LOOK

Page 22 SUPPLY-CHAIN TECHNOLOGY

Other Notable Supplier Mandates

Below, we take a look at entities other than Wal-Mart and the DoD that have issued supplier mandates for RFID compliance this year (see Exhibit 4 below for a summary of RFID mandates to date). We also indicate the companies that we think might be next to issue RFID mandates.

In early March, Albertsons issued an RFID mandate that calls for its top 100 suppliers to be RFID-compliant at the pallet and case levels by April 2005, three months after Wal-Mart’s supplier deadline. The food and drug retailer also indicated that it has already launched its first RFID pilot with select partners. Albertsons has about 2,300 stores and ten distribution centers in the U.S., and further details surrounding its requirements are expected soon.

In February, Target, the nation’s fourth-largest retailer, indicated in a letter to its vendor partners that they will be required to utilize RFID technology at the pallet and case levels at certain regional distribution centers starting next year. Specifically, Target expects its top suppliers (which, to our knowledge, it did not identify or place a number on) to begin using RFID by late spring 2005, and the rest of its suppliers to follow by spring 2007. Target also indicated that it will begin moving forward with RFID pilots this year. While details surrounding the RFID mandate are limited at this point, it appears that Target’s initial requirements largely mirror those of Wal-Mart, which expects its top 136 suppliers to begin using RFID by January 2005 and the rest of its suppliers by the end of 2006. Target expects its suppliers to use EPC-compliant tags that are currently available (Class 0 and Class 1) until Gen 2 tags — those endorsed by Wal-Mart — are offered. It is also our understanding that, similar to Wal-Mart, Target does not intend to endorse any specific hardware or software providers of RFID technology, thus encouraging competition among vendors.

In January, METRO AG, a major German Retailer, announced a November 2004 mandate for its top 100 suppliers to begin utilizing RFID technology at the pallet and transport packaging level for delivery to ten of its warehouses and 250 of its stores. (We note that this mandate is two months ahead of Wal-Mart’s January 2005 mandate.) It is our understanding that METRO expects RFID to be utilized across 800 of its stores by 2007, and that the retailer has not yet decided which hardware vendors it will be using for this initiative.

As we noted in our earlier reports, Tesco, the U.K.-based retailer, has been testing RFID since last summer in a pilot that includes one DC and two retail stores. In April, the company was to put RFID tags on cases of nonfood items at its distribution centers and track them through to stores. It is our understanding that the company has not mandated a hard date for supplier compliance but is aiming for broad implementation by September 2004. Tesco has been working with MeadWestVaco, the Stamford, Connecticut-based packaging company, on smart-shelf technology and has begun testing it in two stores for DVDs and video games. Smart-shelf technology allows retailers to receive real-time reporting of inventory levels both in the store room and the store floor as well as to enable generation of real-time restocking, misplaced item, and low inventory reports.

ALBERTSONS

TARGET

METRO AG

TESCO

BEAR, STEARNS & CO. INC. Page 23

Exhibit 4. A Look at Supplier Mandates for RFID Compliance Vendor Date Announced RFID Compliance Deadline ScopeWal-Mart June 2003 January 2005 Top 136 suppliers RFID-enabled at case and pallet levels

August 2003 January 2006 Remaining suppliers RFID-enabled at case and pallet levels

U.S. Department of Defense September 2003 January 2005 Top suppliers RFID-enabled at case, pallet and item packaging levels

Tesco November 2003 September 2004 Certain suppliers RFID-enabled at case level

METRO AG January 2004 November 2004 Top 100 suppliers RFID-enabled at pallet and transport packaging levels

Target February 2004 Spring 2005 Top suppliers RFID-enabled at pallet and case levelsSpring 2007 Remaining suppliers RFID-enabled at pallet and case levels

Albertsons March 2004 April 2005 Top 100 suppliers RFID-enabled by April 2005 Source: Bear, Stearns & Co. Inc.

RFID Mandates: Who’s Next?

Over time, we expect most major retailers to adopt RFID for inventory tracking applications. Many of them are already in the midst of testing, some more quietly than others. Resolution of hardware standards issues by EPCglobal could accelerate adoption plans. We believe that further RFID initiatives could be announced in the coming months from retailers including Best Buy, The Home Depot, Lowe’s, Ace Hardware, Kmart, Sears, Kroger Company, Kohl’s, and Carrefour.

BEAR, STEARNS & CO. INC. Page 24

Who Else Has Shown Interest in RFID Since January?

Not all of the interest in RFID has come in the form of mandates, as other influential bodies have also shown their support for the technology. Below, we look at some other advocates of RFID for inventory tracking and other applications: The North America Treaty Organization (NATO), the United States Food and Drug Administration (FDA), and the Aerospace industry.

NATO is planning an RFID pilot in order to manage its supply chain between Europe and Afghanistan. It is our understanding that NATO currently plans to use tags and readers from privately held Savi Technology (in a contract estimated at $1-plus million), and that the pilot is set to run for about a year and cover supply-chain movements in four countries. That Savi, a provider of active RFID hardware, was the chosen vendor implies that NATO will be using “active” RFID (which is battery powered and provides long read ranges) in contrast to Wal-Mart and other retailers, which plan on using “passive,” low-cost RFID.

The FDA endorsed RFID for anti-counterfeiting in a recent report on ways to track, control, and identify prescription drugs. Specifically, it recommended the use of RFID technology — which it believes should be feasible to track all drugs — at the unit level by 2007. While the FDA has not yet issued a formal mandate for the use of RFID technology, the initial timeframe for adoption includes feasibility studies over the next year, recommends tagging of unit level drugs that are likely to be counterfeited by 2006, and calls for tagging of all drugs at the pallet, case, and unit levels by 2007.

We noted in our two previous RFID reports that Boeing has been testing RFID technology to track airplane parts, both those sitting in inventory and those being used on an airplane. Recently, both Boeing and Airbus have been collaborating to promote the adoption of standards for using RFID to track airplane parts. Specifically, from June through October, the two airplane manufacturers plan to host three forums in order to bring those in the industry together to discuss standard requirements for identifying parts. It is our understanding that HF tags operating at 13.56 MHz would be used, in contrast to the UHF band being endorsed by Wal-Mart for warehouse level tracking. Boeing also conducted a parts-tracking pilot with FedEx, where Zebra Technology provided the 13.56 MHz labels.

The Federal Aviation Administration (FAA) could approve the use of RFID for tagging plane parts by the end of 2004, at which time Boeing’s suppliers would likely begin adopting the technology. It is our understanding that, at some point, Boeing plans to incorporate an RFID requirement into its supplier contracts. We also note that Airbus is utilizing RFID to keep track of tools that it lends to airline maintenance centers. In addition to pursuing RFID for individual part tracking, Boeing and Airbus are investigating the use of EPC-complaint RFID (which operates at the UHF band) to track transport containers.

Delta Air Lines announced that it intends to begin testing RFID to track engine parts in July with partner Boeing. Delta has experience with RFID after conducting two

NORTH AMERICAN TREATY ORGANIZATION (NATO)

UNITED STATES FOOD AND DRUG ADMINISTRATION (FDA)

THE AEROSPACE INDUSTRY

BEAR, STEARNS & CO. INC. Page 25

pilots for baggage handling, for which it plans to make a decision on system-wide implementation this year.

Page 26 SUPPLY-CHAIN TECHNOLOGY

Recent Developments in RFID

Below, we take a look at some recent developments in the RFID space.

Intermec Files Lawsuit Against Matrics, Claiming Patent Infringement

On June 7, 2004, Intermec, a division of UNOVA, filed a patent infringement lawsuit against Matrics, relating to Intermec’s radio frequency identification (RFID) patents. The complaint, filed in Federal District Court in Delaware, alleges Matrics’ RFID products and systems infringe on intellectual property owned by Intermec and asks for a reasonable royalty. Intermec acquired its RFID technology from IBM Research through the 1997 acquisition of Amtech Corp. and through its own investments in RFID research and development.

Alien Technology Receives More Funding

In April, Alien Technology announced that it had closed an $18 million round of financing that was led by Advanced Equities and also includes major investments from Lago Ventures Fund and Forsythe Technology. This brings the total equity financing for the company to $143 million. Prior to this, we note that in August 2003, Alien closed its Series F round of financing, which totaled $38 million and included a $2 million investment from software partner Manhattan Associates.

Accenture Forms RFID Pharma Group

Earlier this year, Accenture announced that it had formed an RFID Pharma Group (including Abbott Laboratories, Barr Pharmaceuticals, Inc., Cardinal Health, CVS Pharmacy, Johnson & Johnson, McKesson, Pfizer, Procter & Gamble, and Rite Aid, among others) to evaluate RFID for the pharma industry. (We note that this group is not related to the pharma-related work under way at Wal-Mart.) Manhattan Associates is the sole software company involved in the initiative, which its management alluded to, without giving specifics, on its fourth-quarter 2003 conference call in February, when it indicated it has recently been selected as a technology provider for an RFID pilot project for nine Tier-1 companies in one of its key vertical markets. Accenture is serving as program manager for the group, which is also supported by the Healthcare Distribution Management Association (HDMA) and the National Association of Chain Drug Stores (NACDS).

IBM Gets Three-Year RFID Contract with the DoD

IBM was awarded a three-year RFID contract with the DoD, in which IBM Business Consulting Services will help the DoD’s RFID rollout in 2005. Specifically, IBM expects to help the DoD draft a deployment plan, provide advice, and measure the success of the deployment. Details related to the size of the contract were not disclosed.

Checkpoint Systems to Purchase 100 Million RFID tags from Matrics

Privately held RFID hardware vendor Matrics will provide Checkpoint Systems with 100 million RFID tags, as announced earlier this year. Details surrounding the size

BEAR, STEARNS & CO. INC. Page 27

of the multi-year deal were not made available, but it is our understanding that it will consist of both read-write (Class 0+) and read-only (Class 0) tags. Assuming that the average price per tag is around $0.30, we estimate that the size of the contract could be close to $30 million. It is our understanding that Checkpoint plans to use the tags in conjunction with its own RFID enterprise systems offerings.

Page 28 SUPPLY-CHAIN TECHNOLOGY

Intermec Patent Infringement Lawsuit Against Matrics

On June 7, 2004, Intermec (a division of UNOVA, Inc.) filed a lawsuit in the United States District Court for the District of Delaware against Matrics, Inc., alleging infringement on four patents held by Intermec. The lawsuit alleges infringement with respect to Class 0, Class 0+, and Class 1 standards. Exhibit 5 below highlights the patents Intermec alleges are infringed upon and those Matrics products referenced in the filing.

Exhibit 5. Intermec Patents Referenced in Complaint Patent Patent ReferencedNumber Date Patent Title Matrics Products

5,912,632 15-Jun-99 Single Chip RF Tag Oscillator Circuit Synchronized • RFID Tag SDR-001 By Base Station Modulation Frequency • RFID Tag DDS-001

• RFID Tag DDS-003• X1020 Series RFID Tags• Stationary Reader SR400• Stationary Reader RDR-001• Handheld Reader RDR-002

5,528,222 18-Jun-96 Radio Frequency Circuit and Memory in Thin • RFID Tag SDR-001 Flexible Package • RFID Tag DDS-001

• RFID Tag DDS-003• X1020 Series RFID Tags

5,995,019 30-Nov-99 Method for Communicating with RF Transponders • RFID Tag SDR-001• RFID Tag DDS-001• RFID Tag DDS-003• X1020 Series RFID Tags• Stationary Reader SR400• Stationary Reader RDR-001• Handheld Reader RDR-002

6,171,375 16-Apr-02 Method and Apparatus for Associating Data with a • RFID Tag SDR-001 Wireless Memory Device • RFID Tag DDS-001

• RFID Tag DDS-003• X1020 Series RFID Tags

Source: Complaint, Intermec IP Corp. v. Matrics, Inc., C.A. No. 04357.

Intermec is asking that the court:

grant injunctive relief prohibiting Matrics from further infringement on the aforementioned patents unless Matrics agrees to pay a reasonable royalty to Intermec;

award Intermec damages in the amount of a reasonable royalty plus interest; and

award Intermec treble damages for willful infringement.

While the filing is news, there had been previous interest regarding what actions Intermec may take with respect to its large RFID patent portfolio. Intermec has filed suit against only Matrics, but it is possible that Intermec may choose to file suits against other companies since it believes that both Class 0 and Class 1 tags and readers infringe on its patents. However, Intermec has stated its preference for a royalty-based resolution rather than injunctive relief.

Intermec is seeking to license its patent portfolio to RFID vendors, both tag converter/inlays vendors and reader vendors, and to receive an appropriate royalty

WHAT THE LAWSUIT MEANS

BEAR, STEARNS & CO. INC. Page 29

payment based on those licenses. Intermec has indicated that it is in active discussions with a number of RFID vendors about participating in an Intermec licensing program. The licensing program is expected to be announced shortly.

We believe that the lawsuit is another potential impediment to near-term adoption. End users, already concerned about Gen 2 backwards interoperability, could become anxious that yet another level of uncertainty has cast doubt on near-term availability of Gen 2 hardware.

Further, the filing of this lawsuit, at such a late stage of the Gen 2 standards process, could complicate the anticipated Gen 2 standards resolution that was expected to be finalized by the end of June 2004.

Matrics officials were unaware that a lawsuit was going to be filed. Matrics indicated that its patent lawyers had previously reviewed Intermec’s patents. Matrics told us that if Intermec’s claims are valid, it would be willing to license Intermec’s technology.

Intermec has indicated that it is not seeking to prevent any users of Matrics technology from continuing their activities.

MATRICS’ RESPONSE

END-USERS ARE NOT TARGETED

Page 30 SUPPLY-CHAIN TECHNOLOGY

Vendor Activity Accelerates

Since our last report, a number of companies have become more actively involved in UHF RFID, and several have introduced EPC-compliant RFID products. Below, we highlight some of these new participants in order to give a better sense of activity levels.

Up to this time, UHF Class 0 and Class 1 tags have only been available in varying quantities from a select group of vendors, including private companies Matrics, Alien Technology, and Impinj as well as UPM Rafsec, a public Finnish company. We believe that once a standard is promulgated by EPCglobal, a number of different vendors that have been actively involved in the Gen 2 proposals will aggressively enter the tag or inlay (the silicon portion of the tag, which requires further manufacturing, including the attachment of an antenna mechanism) provision markets, including several public companies: Avery Dennison, Texas Instruments, and Intermec (a division of UNOVA). We detail these companies’ recent activities later in the report in the Hardware Provider section.

Silicon manufacturers that have also entered the ring have become more prominent participants in UHF RFID. Currently, several of the major low-cost silicon manufacturers have indicated their interest in chip production, with most involved in the EPCglobal Hardware Action Group that is designing a Gen 2 standard. Companies include Atmel, EM Microelectronics-Marin (which has introduced an ISO 18000-6A-compliant chipset), Infineon, Philips, STMicroelectronics, and Texas Instruments. In addition, Impinj, a private fabless semiconductor company, has introduced its own version of the Class 1 protocol chip that enables multiple read/write functionality.

The reader space has been relatively crowded when compared to some of the other hardware areas. We have identified 15 companies that are involved in reader development and production. Companies like Symbol Technologies, a major participant in bar code scanning, and Tyco Sensormatic, an EAS player, are well-established vendors in the supply chain, while other companies are startups (e.g.,, Alien and Matrics, ThingMagic, and AWID) or smaller public companies (e.g., SAMSys and SIRIT Technologies).

We have seen a great deal of product introduction in the printer category since our last report. All of the major printer providers have introduced RFID-enabled or RFID-ready printers to the marketplace. Several of these companies have also been working with the label applicator companies in developing printer/applicators that can be utilized in conveyor systems, and several product introductions have ensued.

Printer companies such as Zebra and Sato, which have dominated the bar code printing business, along with Avery Dennison, Paxar, Printronix, and Datamax, have shipped printers to customers. These companies have generally utilized outside reader technology in their new offerings, and we expect them to continue this approach rather than turn to internal development.

TAG CONVERTERS/INLAYS

READERS

PRINTER-ENCODERS

BEAR, STEARNS & CO. INC. Page 31

Since our last report in January, there have been a number of product introductions by the label applicator companies. RFID label applicators have been introduced by Tharo Systems, NJM/CLI, Markem, and Danaher (through its Accu-Sort subsidiary). While initially it appeared that suppliers would utilize a “slap and ship” methodology (where labels are applied by hand) for initial compliance with Wal-Mart, there has been some indication that companies are increasingly looking at using label applicators to automate the process.

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Standards Update

Below, we take a look at the current state of standards development for EPC-compliant RFID technology.

The lack of a Gen 2 standard for tag/reader communications in the UHF band has been an impediment to broader adoption and implementation of RFID into the supply chain thus far this year. From our numerous conversations with industry participants, we have learned that activity levels, while rapidly increasing recently, have lagged expectations of only six months ago. We expect that any further delays in a Gen 2 decision could negatively affect the likelihood of near-term adoption. The following is a review of Gen 2 standards progress.

EPCglobal the joint venture between the standard-setting bodies, UCC and EAN, that is in charge of commercializing EPC technology — recently indicated that it expects the UHF Generation 2 Foundation Protocol (Gen 2) standard (formerly called the “Class 1 Generation 2” standard) that is being endorsed by Wal-Mart to be complete by this fall. Developments regarding this standard have been moving forward rapidly. While the initial timetable (see Exhibit 6 below) is no longer in effect, our belief is that a standards decision could be forthcoming as early as the end of June 2004.

Exhibit 6. Summary Original EPCglobal UHF Generation 2 Standards Timeline Date Action

April 13, 2004 Deadline for submission of of UHF Gen 2 protocol proposals

May 14, 2004 Deadline for comment on submitted proposals

May 28, 2004Bake-off commences if no consensus decision was reached on the superiority of one of the submitted proposals.

June 28, 2004 Bake-off completed.

August 12, 2004Comments gathered on "Last Call Working Draft" from EPCglobal subscribers. Prototype RFID tag testing to commence by either Auto-ID Labs or another expert body.

October 6, 2004 EPCglobal board to ratify "Last Call Working Draft" and submit it to ISO for ratification.

Source: EPCglobal.

EPCglobal has experienced managerial turmoil since our last report. In April, it was announced that Margaret Fitzgerald, then president of EPCglobal, had resigned for personal reasons. Uniform Code Council (UCC) Chief Operating Officer and President Mike Di Yeso has taken on the role of EPCglobal’s acting president until a replacement can be found. In May, the Uniform Code Council announced that Dicki Lulay had resigned as president of EPCglobal US, effective May 31. Michael Meranda, EPCglobal US vice president of strategic planning and development, took over as the new president of the organization. While we believe that turmoil is potentially disruptive to the group’s goals, based on recent discussions with EPCglobal, we believe the standards-setting work has not been negatively affected.

A STANDARDS DECISION IS NEAR . . .

. . . DESPITE TURMOIL AT EPCGLOBAL . . .

BEAR, STEARNS & CO. INC. Page 33

Initially, four proposals for the Gen 2 specification were submitted by vendors before the close of the submission period on April 14, 2004. The first set of proposals came from groups called the Unified Group, the Performance Team, Flexwork, and the Q Proposal. The following exhibit lists the various members of each submission team.

Exhibit 7. The Initial Generation 2 Standards Proposals

Unified GroupAWIDImpinj

IntelleflexIntermec Technologies

MeadWestVacoPhilips Electronics

QED SystemsSAMSys

Savi TechnologySIRIT TechnologiesTexas Instruments

UPM RafsecZebra Technology

Performance TeamBTG International

EM Microelectronic-MarinNanopower Technologies

RFIP Solutions

FlexworkAtmel

Matrics

Q ProposalAlien Technology

ST Microelectronics

Unified GroupAWIDImpinj

IntelleflexIntermec Technologies

MeadWestVacoPhilips Electronics

QED SystemsSAMSys

Savi TechnologySIRIT TechnologiesTexas Instruments

UPM RafsecZebra Technology

Performance TeamBTG International

EM Microelectronic-MarinNanopower Technologies

RFIP Solutions

FlexworkAtmel

Matrics

Q ProposalAlien Technology

ST Microelectronics

Source: Bear, Stearns & Co. Inc.

. . . BUT THE ROAD WAS LONG

Page 34 SUPPLY-CHAIN TECHNOLOGY

However, before the April 14, 2004, deadline, two of the submissions those from the Performance Team and Flexwork merged, thus leaving three competing proposals: Performance Team, Unified Group (a collection of 13 vendors), and Alien Technology.

Exhibit 8. The Revised Generation 2 Standards Proposals

Unified GroupAWIDImpinj

IntelleflexIntermec Technologies

MeadWestVacoPhilips Electronics

QED SystemsSAMSys

Savi TechnologySIRIT TechnologiesTexas Instruments

UPM RafsecZebra Technology

Performance TeamBTG International

EM Microelectronic-MarinNanopower Technologies

RFIP Solutions

FlexworkAtmel

Matrics

Q ProposalAlien Technology

ST Microelectronics

Unified GroupAWIDImpinj

IntelleflexIntermec Technologies

MeadWestVacoPhilips Electronics

QED SystemsSAMSys

Savi TechnologySIRIT TechnologiesTexas Instruments

UPM RafsecZebra Technology

Performance TeamBTG International

EM Microelectronic-MarinNanopower Technologies

RFIP Solutions

FlexworkAtmel

Matrics

Performance TeamBTG International

EM Microelectronic-MarinNanopower Technologies

RFIP Solutions

FlexworkAtmel

Matrics

Q ProposalAlien Technology

ST Microelectronics

Source: Bear, Stearns & Co. Inc.

BEAR, STEARNS & CO. INC. Page 35

Most recently, during EPCglobals’ Hardware Action Group meeting, which took place in Anaheim on May 24-25, 2004, the Performance Team withdrew its proposal and its members aligned themselves with either of the two remaining proposals. The Unified Group then changed its name to the Global Proposal in an effort to recognize the international nature of its proposal, which includes U.K.- and Italy-based companies. The resulting Freedom Proposal combined the leading Class 0 and Class 1 tag vendors, Matrics and Alien Technology.

Exhibit 9. The Further Revised Generation 2 Standards Proposals

Freedom ProposalAlien Technology

ST Microelectronics

FlexworkAtmel

Matrics

AWIDImpinjIntelleflexIntermecMeadWestvacoPhilipsQED Systems

SAMSysSavi TechnologySIRIT TechnologiesTexas InstrumentsUPM RafsecZebra Technology

Global Proposal

Performance TeamBTG International

EM Microelectronic-MarinNanopower Technologies

RFIP Solutions

Freedom ProposalAlien Technology

ST Microelectronics

FlexworkAtmel

Matrics

AWIDImpinjIntelleflexIntermecMeadWestvacoPhilipsQED Systems

SAMSysSavi TechnologySIRIT TechnologiesTexas InstrumentsUPM RafsecZebra Technology

Global Proposal

Performance TeamBTG International

EM Microelectronic-MarinNanopower Technologies

RFIP Solutions

AWIDImpinjIntelleflexIntermecMeadWestvacoPhilipsQED Systems

SAMSysSavi TechnologySIRIT TechnologiesTexas InstrumentsUPM RafsecZebra Technology

Global Proposal

AWIDImpinjIntelleflexIntermecMeadWestvacoPhilipsQED Systems

SAMSysSavi TechnologySIRIT TechnologiesTexas InstrumentsUPM RafsecZebra Technology

Global Proposal

AWIDImpinjIntelleflexIntermecMeadWestvacoPhilipsQED Systems

SAMSysSavi TechnologySIRIT TechnologiesTexas InstrumentsUPM RafsecZebra Technology

AWIDImpinjIntelleflexIntermecMeadWestvacoPhilipsQED Systems

SAMSysSavi TechnologySIRIT TechnologiesTexas InstrumentsUPM RafsecZebra Technology

Global Proposal

Performance TeamBTG International

EM Microelectronic-MarinNanopower Technologies

RFIP Solutions

Source: Bear, Stearns & Co. Inc.

Initially, EPCglobal had hoped that a consensus could be reached among the competing proposals at the Hardware Action Group meeting in Anaheim. However, we understand that this did not occur and that EPCglobal devised a plan for selecting a winning proposal that would maintain the original timeframe for ratification.

Page 36 SUPPLY-CHAIN TECHNOLOGY

Exhibit 10. Revised Timetable For a Gen 2 Specification Decision Date Action

May 24-25, 2004 EPCglobal Hardware Action Group Meeting

June 7, 2004 EPCglobal Arbitration Meeting

June 20, 2004 "Last Call Working Draft" decided.

August 12, 2004Comments gathered on "Last Call Working Draft" from EPCglobal subscribers. Prototype RFID tag testing to commence by either Auto-ID Labs or another expert body.

October 6, 2004 EPCglobal board to ratify "Last Call Working Draft" and submit it to ISO for ratification.

Source: Bear, Stearns & Co. Inc.

On June 7, 2004, EPCglobal held a meeting with members of the two competing proposals in an effort to either merge the two submissions or to devise a revised submission that met each team’s stipulations. During this meeting, a compromise was not achieved. Therefore, the Hardware Action Group is expected to have a binding vote on June 20, 2004, to determine the winning submission.

We believe that both remaining proposals are similar to the ISO 18000-6 air-interface standard that was previously announced by ISO (please see our June 2003 report for more information). The merging of these two standards will make the new EPCglobal Gen 2 standard interoperable across national boundaries and therefore, we believe, act as a catalyst to boost adoption rates.

Further, we believe that there is a high likelihood that existing hardware that has been deployed in pilots and live deployments may not be able to communicate with the new Gen 2 tags. Therefore, we believe that companies will need to migrate to new hardware as they move to full deployment.

Wal-Mart initially indicated its requirements for a Gen 2 tag at its supplier meeting in Bentonville, Arkansas, on November 4, 2003. At that time, Wal-Mart stated that it expected a Gen 2 tag to operate in the UHF band, and have multiple read/multiple write capability, 100% read rates, a 96-bit EPC, and global interoperability. Our understanding is that end-user requirements driving the standards process for interoperable EPC technology have not changed through the standards-making process.

WHAT WILL THE STANDARD LOOK LIKE?

WAL-MART REQUIREMENTS

BEAR, STEARNS & CO. INC. Page 37

Looking Beyond the Hardware Standards Issue

We have already indicated that there are numerous outstanding issues with respect to hardware, including standards, availability, performance, and reliability. However, we believe that these issues will be overcome and will act only as impediments to near-term adoption. In the longer term, we expect that RFID will be broadly implemented throughout the supply chain. To that end, we believe that the coming months will see stages of development to full deployment.

We expect to see less than full compliance with the Wal-Mart mandate in January 2005. We believe that Wal-Mart now expects many companies to ship a limited number of their SKUs to Wal-Mart’s Dallas DC. After conversations with a number of RFID vendors, we have come away with the impression that many companies have waited too long to begin pilot programs, although many have by now begun piloting, and will not be ready for a full implementation in January. However, we believe that Wal-Mart is working with its suppliers in redefining compliance to require fewer SKUs than were originally expected.

We believe that early 2005 will begin to take shape as a period of extended pilot testing in the open system. The introduction of Gen 2 hardware will likely require new hardware that needs to be tested in a real-world environment. In addition, companies will still be developing “best practices” with respect to tag placement, reading, system architecture, and material handling while building out implementation. Implementation problems that are sure to arise will be evaluated and solutions developed. As these procedures develop, additional SKUs could be added to the system.

There is a great deal of room for improvement in both tag yields and tag read rates, and we anticipate that, as pilot testing proceeds, there will be significant progress in both regards. Tag yields should improve as vendors become more comfortable with manufacturing processes. We expect to see continuous improvement in yields throughout 2004 and 2005, when Gen 2 tags should be widely available.

In addition, we expect that as familiarity with materials develops, tag read rates will improve as a result of better antenna design and the adoption of optimal tag placement rules.

Improved performance will translate to incremental adoption down the supply chain. As the technology and best practices develop around RFID, smaller companies that are not subject to mandates should begin to choose to adopt the technology as ROI improvements are proven out at an operational level. We expect that most of these companies will wait on the sidelines until the larger early adopters are running smoothly, the aforementioned issues with respect to tag yields and tag placement are ironed out, and lower hardware costs improve the value proposition.

LESS THAN FULL COMPLIANCE

EXTENDED PILOT TESTING

PERFORMANCE IMPROVEMENTS

INCREMENTAL ADOPTION

Page 38 SUPPLY-CHAIN TECHNOLOGY

Widespread demand for all elements of an RFID system will enable vendors to commit capacity and capital with confidence. Vendors should be able to achieve economies of scale as demand builds, thereby driving down costs to the end users. In the long term, we would expect substantial price competition, not only in the tag segment, where most attention has been focused, but also in readers and printer-encoder systems.

After successful implementation of hardware, we anticipate that companies will aggressively seek to obtain ROI from RFID by implementing solutions to capture the data that the systems are generating and integrating those data into their backend systems. We see a substantial opportunity to integrate data into warehouse management systems (WMS) and transportation management systems (TMS) in order to enhance operational efficiency by reducing inventory shrinkage, a major focus for CPGs and retailers. In addition, companies will look to integrate into their ERP systems in an effort to improve reporting and planning activities. This phase will provide ample opportunities for WMS, TMS, ERP, and middleware companies that can provide solutions for integrating RFID into existing or new platforms.

MANUFACTURING SCALE

SOFTWARE AND DATA MANAGEMENT FOCUS

BEAR, STEARNS & CO. INC. Page 39

The RFID Universe

The following exhibit lists and segments many of the players in RFID and illustrates the broad implications of this emerging technology for companies ranging from startups to major international companies.

Exhibit 11. RFID Vendors ($ in millions) Mkt. Cap. LTM

Ticker 4-Jun-04 RevenuesTag Converter/Inlays

Alien Technology ---- Private ----Avery Dennison AVY 6,585.6$ 4,874.1$ Intermec Technologies (Div of UNOVA) UNA 1,019.3 1,156.3 Matrics ---- Private ----Nanopower Technologies ---- Private ----RF Code ---- Private ----TAGSYS ---- Private ----Texas Instruments TXN 43,638.5 10,578.0 UPM Rafsec (Div of UPM-Kymmene Oyj) UPM 9,788.9 12,227.4

Silicon ProvidersAtmel ATML 2,880.2$ 1,441.6$ EM Micro-Marin (Div of The Swatch Group) UHR 4,728.9 3,100.8 Impinj ---- Private ----Infineon Technologies 19,787.6 8,020.8 Philips PHG 34,675.2 35,877.9 STMicroelectronics STM 19,775.8 7,644.9 Texas Instruments TXN 43,638.5 10,578.0 WJ Communications WJCI 190.4 25.9

Label ConvertersAvery Dennison AVY 6,585.6$ 4,874.1$ CCL Label ---- Private ----Datamax ---- Private ----Intermec Technologies (Div of UNOVA) UNA 1,019.3 1,156.3 Moore Wallace (Div of RR Donnelly) RRD 7,543.9 5,159.5 Paxar PXR 715.5 737.8 Top Flight ---- Private ----

RFID Reader/EncodersAlien Technology ---- Private ----AWID ---- Private ----Danaher DHR 14,497.6$ 5,640.9$ Escort Memory Systems (Div of Datalogic) DAL.IM 241.5 160.0 Intermec Technologies (Div of UNOVA) UNA 1,019.3 1,156.3 iPico ---- Private ----LXE (Div of EMS Tech) ELMG 220.8 262.8 Matrics ---- Private ----PSC ---- Private ----Psion Teklogix ---- Private ----RF Code ---- Private ----SAMSys SMY.TO 96.0 0.9 Savi Technology ---- Private ----SIRIT SI.TO 45.0 3.7 Symbol Technology SBL 3,615.3 1,563.6 ThingMagic LLC ---- Private ----Tyco Sensormatic TYC 62,371.4 38,806.3 WJ Communications WJCI 190.4 25.9

Printer-EncodersAvery Dennison AVY 6,585.6$ 4,874.1$ Checkpoint Systems CKP 687.6 747.5 Datamax ---- Private ----Paxar PXR 715.5 737.8 Printronix PTNX 89.9 125.1 SATO America (Div of Sato Japan) M6287 810.7 466.0 Zebra Technology ZBRA 3,760.6 565.9

Note: All data for non-U.S. listed companies have been converted to dollars. Source: Bear, Stearns & Co. Inc.

Page 40 SUPPLY-CHAIN TECHNOLOGY

Exhibit 11 (continued). RFID Vendors ($ in millions) Mkt. Cap. LTM

Ticker 4-Jun-04 RevenuesLabel Applicators

Danaher DHR 14,497.6$ 5,640.9$ Domino Amjet (Div of Domino) DNO.LN 384.3 284.8 Label Aire (Div of IMPAXX) ---- Private ----Markem ---- Private ----NJ Machines ---- Private ----Tharo Systems ---- Private ----Weber ---- Private ----

PackagingGeorgia-Pacific GP 9,043.1$ 20,910.0$ International Paper IP 20,278.5 25,468.0 MeadWestvaco MWV 5,618.7 7,692.0 Smurfit-Stone SSCC 4,543.0 7,787.0 Weyerhauser WY 14,279.6 20,296.0

Application SoftwareHighJump (Div of 3M) MMM 66,369.9$ 18,853.0$ i2 Technologies ITWO 354.0 420.6 JDA Software JDAS 375.8 221.4 Manhattan Associates MANH 910.8 201.2 Manugistics MANU 328.0 243.1 Microsoft MSFT 280,122.5 35,608.0 Oracle ORCL 58,920.5 9,911.0 Provia Software ---- Private ----Quatrotec ---- Private ----Red Prairie ---- Private ----Retek RETK 362.5 178.4 SAP SAP 49,612.4 8,685.0 V3 Systems ---- Private ----

Middleware/Web ServicesConnecTerra ---- Private ----GenuOne ---- Private ----GlobeRanger ---- Private ----IBM Global Services IBM 152,879.8$ 91,316.0$ InfoWave Solutions ---- Private ----OATSystems ---- Private ----Progress Software PRGS 665.5 323.6 RFIdeaWorks ---- Private ----Savi Technology ---- Private ----SeeBeyond Technology SBYN 266.2 136.5 Shipcom Wireless ---- Private ----Sun Microsystems SUNW 13,866.9 11,057.0 TIBCO Software TIBX 1,808.9 275.0 Tyco Sensormatic TYC 62,371.4 38,806.3 VeriSign VRSN 4,339.7 1,014.1 Visional Solutions ---- Private ----webMethods WEBM 430.3 194.5

Note: All data for non-U.S. listed companies have been converted to dollars. Source: Bear, Stearns & Co. Inc.

BEAR, STEARNS & CO. INC. Page 41

Exhibit 11 (continued). RFID Vendors ($ in millions) Mkt. Cap. LTM

Ticker 4-Jun-04 RevenuesSystems Integrators/Consulting

Accenture ACN 24,900.2$ 14,137.6$ AccuCode ---- Private ----Acsis ---- Private ----BearingPoint BE 1,683.0 3,195.6 Capgemini CAPP.PA 5,146.8 7,077.4 Checkpoint Systems CKP 687.6 747.5 ESYNC ---- Private ----Hewlett Packard HPQ 65,502.1 76,828.0 IBM Global Services IBM 152,879.8 91,316.0 IconNicholson (Div of IconMediaLabs) ICON.SS 95.8 62.7 Intellident ---- Private ----Kurt Salmon Associates ---- Private ----ODIN Technologies ---- Private ----Peak Technologies ---- Private ----R4 Global Services ---- Private ----Sapient SAPE 771.4 209.2 The ePC Group ---- Private ----Xterprise ---- Private ----

Third-Party LogisticsBeal Solutions ---- Private ----DHL DPWGN.DE 23,282.3$ 50,154.5$ Exel EXL.L 3,873.4 9,175.2 FedEx FDX 22,488.7 23,499.0 Lionize Logistics ---- Private ----Menlo Worldwide (Div of CNF Inc) CNF 1,988.1 5,246.5 Tibbett & Britten TBG 393.7 2,859.2 Trenstar ---- Private ----UPS UPS 81,783.6 34,389.0 UTI UTIW 1,607.8 1,502.9

Note: All data for non-U.S. listed companies have been converted to dollars. Source: Bear, Stearns & Co. Inc.

Page 42 SUPPLY-CHAIN TECHNOLOGY

Drilling Down on the Vendors

Below, we provide updates on many of the companies that we have highlighted in our previous reports, and include brief profiles of additional companies. We group the companies by category and give a brief overview of the opportunities that we see for the vendors within each category.

We break the RFID tag companies into three separate categories: tag converter/inlays, silicon providers, and label converters. While several of the following companies are positioning themselves to be participants in more than one sector, we believe that this breakdown best delineates how this market will be defined in the coming years. The RFID tag space has been characterized by new entrants this past year, as firms vie for market share.

Tag Converter/Inlays

Tag converter/inlay companies purchase silicon from the silicon providers and attach internally designed antennas to convert the silicon chip into an inlay or tag. We believe that the tag converter/inlays companies stand to see accelerated growth in the short term once Gen 2 silicon becomes widely available for conversion into tags. We view the larger players in this space, such as UPM Rafsec and Avery Dennison, to be well-positioned to capitalize on the adoption of UHF RFID. Both of these companies have substantial financial resources to fund antenna research, which should prove to be a differentiating factor in this space. Intermec, a division of UNOVA, owns a substantial IP portfolio related to RFID, and we believe that the company may be able to leverage this portfolio to develop a large presence in the tag converter/inlay sector. We are less sure of how some of the smaller or less well-capitalized companies in this space will fare. However, we do note that companies such as Alien and Matrics, which have shown an ability to innovate, may be able to find space to grow if their innovations continue. Other companies, such as privately held TAGSYS, which does not currently offer UHF RFID solutions but has a relatively large HF RFID business, may enter the EPC-compliant market in the future with resolution of hardware standards.

Alien Technology. Alien Technology is a privately held RFID hardware pioneer. Alien developed a new production method, Fluidic Self Assembly, or FSA, which it expects will materially lower the cost of UHF-based passive RFID transponder manufacturing (please see our June 2003 report for more information on FSA). The company designed and introduced what is now commonly referred to as the UHF Class 1 RFID tag. Alien moved to the forefront of passive RFID when, in 2003, Gillette placed an order with the company for 500 million RFID tags. In April of this year, the company announced that it had received $18 million in financing, and also recently announced an EPC-compliant RFID label that — at quantities of one million — can be purchased for under $0.20 apiece. The company attributes the low price point to its Fluidic Self Assembly (FSA) manufacturing process. This new RFID label, called ALL-9238, will be interoperable with Alien’s new RFID reader, the ALR-9780. We also note that Zebra Technologies recently selected Alien’s ALR 9930-A reader module for use in one of its printers, called the R4Mplus. In addition to the recent round of

RFID TAGS

BEAR, STEARNS & CO. INC. Page 43

financing, Alien announced in January that GE Technology Finance increased its equipment loan line of credit up to $7 million, from $2 million previously. We believe that the funding will be used to finance manufacturing equipment for Alien’s RFID tag production lines — specifically its FSA expansion. In terms of partnerships, we note that Alien is now part of EAI provider TIBCO’s Alliance Program (TAP) as the two work on developing integrated RFID solutions. The company has also recently announced alliances with Tacit Solutions (a systems integrator) and The Kennedy Group’s RFID group (a provider of EPC-compliant solutions). Alien also announced in March that, along with EPC International, Inc. (a RFID solutions and services company focused on the Chinese market), it will provide EPC-compliant solutions and training to the Chinese market. Specifically, Alien and EPC International will create an RFID demo center in China, develop an education program to educate Chinese companies about RFID, and develop implementation strategies for EPC-compliant products. Also, earlier this year, Alien announced that it would begin operations (RFID tag assembly, testing, and distribution) at a leased facility in Fargo, North Dakota, until its previously announced manufacturing site in Fargo is completed. This facility, which will be located in the North Dakota State University Research and Technology Park, is currently projected to be completed some time in early 2006. Alien expects to move from batch FSA to roll-to-roll FSA this summer. Our sources indicate that the company will be announcing shortly a Class 1 reader that is compliant with more restrictive European regulations. We also understand that a major computer vendor has begun using Alien tags in one of its manufacturing lines in order to comply with the forthcoming Wal-Mart mandate.

Avery Dennison. Avery Dennison is a provider of pressure-sensitive technology and self-adhesive solutions for consumer products and level materials. With respect to RFID, the company’s core focus is on making RFID tags/labels including chip assembly, antenna design and manufacturing, inlay assembly, and label assembly. Avery also designs and manufactures label printers and label applicators. The company is developing a high-speed label manufacturing process that it hopes will enable it to fulfill forthcoming demand for RFID labels. Avery is expected to spend more than $12 million this year on RFID (versus $6 million in 2003). The company is a member of EPCglobal and has a testing lab that it uses to validate its tag designs. Its tags have been used in pilots including METRO’s Future Store initiative, where all the tags are provided by Avery, and Microsoft’s RFID pilot with snack food producer KiMs. Avery believes that RFID will have a material impact on its business at some point, specifically stating that it could amount to tens of millions of dollars in calendar 2005, depending on adoption rates.

Intermec Technologies. Intermec Technologies, a subsidiary of UNOVA, is a major supply-chain solutions provider through development and manufacture of its Intellitag® RFID, bar code printers, and label media. Through its parent, the company has a portfolio of more than 130 patents related to RFID. The company claims that any RFID chip or circuit that is placed inside a plastic laminate potentially violates Intermec’s patents (please see the Bear Stearns November 7, 2003 report on Unova, Inc.). As mentioned above, on June 7, 2004, Intermec filed a patent infringement lawsuit against Matrics. The complaint, filed in Federal District Court in Delaware, alleges Matrics’ RFID products and systems

Page 44 SUPPLY-CHAIN TECHNOLOGY

infringe on intellectual property owned by Intermec and asks for a reasonable royalty. Intermec acquired its RFID technology from IBM Research, through the 1997 acquisition of Amtech Corp. and through its own investments in RFID research and development.

Intermec provides a line of tags, readers, and printers for RFID. In February, the company announced that it had joined EPCglobal, where the company’s CTO was named as co-chair of the Gen 2 working group. Also in February, the company introduced the CV60, its second generation of RFID forklift readers. The CV60 and its predecessor, the 5055 vehicle mount terminal, are designed for data collection applications in warehousing and distribution, manufacturing, transportation, and customer service. The company currently is involved in more than 25 RFID pilots, including some that are under way and others that are Gen 2-related. In March, Intermec appointed Tom Miller as president. Mr. Miller, who formerly served as Intermec executive vice president responsible for global sales and marketing, succeeds Larry D. Brady, who for the past three years served in the dual roles of UNOVA chief executive and Intermec president.

iPico Holdings. iPico, a private South African firm, designs tags and readers that operate in the UHF, microwave, and low-frequency bands — including dual-frequency designs — operating in both high and low frequency. It has stated that it will not be producing EPC-compliant tags and readers but will instead focus on its own unique product line of tags and readers, which will not be compatible with those of its competitors such as Alien or Matrics. In addition to the hardware, iPico offers its own software integration middleware to be used in conjunction with its tags and readers. U.K. retailer Marks and Spencer currently employs iPico’s tags and readers in a pilot program where select clothing is tagged in some stores. For the production of its chips, iPico has partnered with Swiss semiconductor manufacturer EM Micro-Marin, and has entered into agreements with an Israeli printed battery producer, Power Paper. In October 2003, iPico received a $1.5 million investment from a European packaging company, Mondi Europe, a subsidiary of Anglo American plc. With this money, iPico will initiate pilots of its RFID-equipped packaging at the individual, case, pallet, and container levels. The company is currently seeking $10 million in capital for product development and global expansion.

Matrics. Matrics, a pioneer in the passive UHF RFID space, developed what is commonly referred to as the Class 0 tag. The company also has introduced the Class 0+ tag, which builds on the Class 0 architecture by incorporating multi-write capability (Class 0 originally only allowed one write, limiting its utility). Class 0 tags are acceptable under the Wal-Mart mandate and were used as a foundation for the Performance Team proposal (which was subsequently withdrawn) of the EPCglobal UHF Gen 2 spec (see our section on standards for more detailed information). While Matrics was initially more focused on tags, it now offers a line of multi-protocol readers as well.

On June 7, 2004, Intermec, a division of UNOVA, filed a patent infringement lawsuit against Matrics, relating to Intermec’s RFID patents. The complaint, filed in Federal District Court in Delaware, alleges Matrics’ RFID products and

BEAR, STEARNS & CO. INC. Page 45

systems infringe on intellectual property owned by Intermec and asks for a reasonable royalty.

At the end of May, Matrics announced that it had been selected to provide an EPC-compliant baggage tracking system to Hong Kong International Airport. The company initially will be providing reader infrastructure worth an estimated $3.5 million in the implementation phase of the project. Earlier this year, Matrics announced that it will be providing Checkpoint Systems with 100 million RFID tags as Checkpoint customers needs arise. Although specific details surrounding the multi-year deal were not disclosed, we believe that the deal consists of both read-write and read-only tags. Assuming that the average price per tag is roughly $0.30, the size of the contract could be as much as $30 million over the life of the contract. However, we expect that actual revenues will be substantially lower as the price of tags should decrease as adoption rises in the coming quarters. We believe that Checkpoint plans to use the tags in conjunction with its own RFID enterprise systems offerings, which are primarily integration services-based. Also earlier this year, Matrics announced the availability of a new reader — its AR 400 model — which the company claims is a multi-protocol reader capable of reading all EPC-compliant tags. The company also recently disclosed its strategic alliance with IconNicholson (an IT professional services firm — see separate profile), indicating that the two are jointly working on four RFID implementations. Matrics is also partnered with TrenStar to create RFID-enabled mobile asset solutions. Sources indicated to us that Wal-Mart placed a sizable order (for several thousand units) with Matrics for multi-protocol readers and that the giant retailer is using Matrics technology on a widespread basis in its Dallas distribution center.

RF Code. Privately held RF Code has two primary RFID offerings: 1) Mantis hardware (active RFID tags and readers) and 2) TAVIS (an Auto-ID-based middleware offering). The company primarily provides its solutions to original equipment manufacturers (OEMs) and also sells its solutions through integration partners. Supply-chain execution vendors RedPrairie and Catalyst both make use of RF Code’s middleware in their RFID-enabled solutions, and the company also has partnership agreements with Alien Technology, Matrics, Texas Instruments, SAMSys, and EMS. RF Code competes primarily with Savi Technology in the active RFID market, and OATSystems and GlobeRanger in the middleware market. To date, RF Code has received funding from Mitsui and other private investors.

TAGSYS. TAGSYS is a privately held designer and manufacturer of HF RFID tags. Currently, the company does not have any immediate plans to enter the UHF RFID market, although that could change if hardware standards for Gen 2 are established. TAGSYS is also a developer of HF reader systems. The company was an active member of the MIT Auto-ID Lab and ISO 18000 and is a member of EPCglobal. The company is working with a number of manufacturers that want to incorporate HF RFID into their closed systems, including an electronic manufacturer and an apparel company.

Texas Instruments. Texas Instruments has not been, to this point, a leader in the passive UHF RFID space. However, the company has extensive experience

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in passive HF RFID with its Tag-It product line, which operates at the 13.56 MHz frequency and is currently used in a variety of nonsupply-chain applications, including parking access, vending machines, and contactless payment programs. Texas Instruments, a member of EPCglobal Hardware Action Group, is a member of the Global Proposal for a Gen 2 standard (please see our section on standards for more detailed information on the Gen 2 specification and the existing proposals). It is our belief that upon the publication of a Gen 2 proposal, Texas Instruments, with its expertise in integrated circuit manufacturing and its experience in HF RFID, could rapidly become a major player in transponder manufacturing. TI is particularly well-positioned in the RFID tag space, in our view, with its domain expertise in both RF and silicon design. TI-RFid also recently announced partnerships with Intellident (a U.K.-based integrator of RFID systems) and Shipcom Wireless.

UPM Rafsec. UPM Rafsec is a member of EPCglobal and was the first non-U.S. member of its predecessor, the Auto-ID Center. The company is a member of the Global Proposal for a Gen 2 standard (please see our section on standards for more information). UPM Rafsec is a wholly owned subsidiary of UPM-Kymmene Oyj, one of the world’s largest paper producers. The company is currently a major supplier of HF tags for use in libraries, product authentication, and access management. In EPC-compliant UHF, UPM Rafsec is a manufacturer of Class 1 tags and has a staff of about 70 people dedicated to the technology. The company currently sources its Class 1 silicon from ST Microelectronics, designs its own antennas, and has developed its own antenna attachment process. The company has been working with MeadWestVaco in its Tesco smart-shelf pilot (please see MeadWestVaco commentary for more information). In an effort to prepare for the expected demand increase for RFID tags as a result of the Wal-Mart, DoD, and other mandates, UPM Rafsec recently announced the doubling of its tag production capacity at its Jyväskylä, Finland, facility.

Silicon Providers

Longer term, we believe silicon supply for RFID tags could become a commodity business, but the first to market with Gen 2 EPC-compliant silicon will have a distinct first-mover advantage. As sources of supply increase, pricing pressure should ensue.

Atmel Corporation. Atmel, a San Jose, California-based semiconductor company, joined EPCglobal and is a member of the Performance Team submission for a Gen 2 standard (please see our section on standards for more information).

EM Microelectronics. EM Microelectronics, a Swiss semiconductor company, is a member of the Performance Team submission for a Gen 2 standard (please see our section on standards for more detailed information on the competing standards proposals) that has developed a chip that is compliant with ISO 18000-6A. The company believes that the chip will cost less than $0.10 in large volumes. The company also supplied ICs to Marks & Spencer, the British retailer, during its RFID trial.

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Impinj, Inc. Impinj is a VC-backed fabless semiconductor company based in Seattle, Washington. The company develops integrated circuit solutions, and offers RFID products targeting the CPG industry. Specifically, the company produces RFID chips through its Self-Adaptive Silicon technology, which is a proprietary integrated circuit design technique. The company is a member of EPCglobal and is a member of the Global Proposal for a Gen 2 standard (please see our section on standards for more information). In March, Impinj introduced its Zuma tag, which is based on the Class 0 architecture but, according to the company, allows read/write capability (rather than read-only, as in the Matrics Class 0 tag) over longer distances (up to 33 feet versus 20 feet for other tags). The company expects to launch commercial production in June to enable chip availability for pilot programs.

Infineon. Infineon, formerly a unit of Siemens AG, is a publicly held semiconductor company. In late March, Infineon opened its RFID Solution Excellence Center and System Lab in Graz, Austria, to provide solutions and a complete RFID system for logistics applications. The company has dedicated about 40 people to RFID activities at the facility.

Philips Semiconductors. Philips is involved in both ISO and EPCglobal, where it is a participant in the Hardware Action Group, and is a member of the Global Proposal for a Gen 2 standard (please see our section on standards for more detailed information). However, the company remains frequency-agnostic because it believes that different business applications will require different solutions. The company is solely focused on the provision of chips to the RFID market. Philips, an early developer of RFID, offers high-frequency solutions in car mobilization, animal ID, and smart-card applications. We believe that the company’s participation in the Global Proposal, its existing experience with HF RFID, and its financial strength leave it well-positioned to capitalize on wide adoption when a Gen 2 standard is released. Philips continues to participate in the Metro AG trials, where the tags used in the Metro Future Store contain Philips silicon, both the ICODE and UCODE EPC chipsets (please see our January 2004 report). The company’s UCODE chips are currently used in UPM Rafsec tags and SAMSys readers. Philips recently introduced the UCODE EPC 1.19 chipset, which is a 96-bit EPC-compliant chipset available for use in pallet and case identification, making it a compliant solution for existing retailer mandates. The company recently entered into a strategic alliance with Checkpoint Systems (please see Checkpoint Systems update for more information).

ST Microelectronics. ST Microelectronics currently is supplying Class 1 EPC-compliant chipsets to tag makers such as Alien and UPM Rafsec. The company’s first UHF device is the XRA00. We understand that ST Microelectronics is a member of Alien’s Gen 2 standard submission, the Freedom Proposal.

Texas Instruments. Texas Instruments is active in both the tag converter/inlay sector and the silicon provider segment. Please see our update in the tag converter/inlays section above.

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Label Converters

Label converters take tags or inlays and incorporate them into pressure-sensitive labels that can be used in printer-encoders. There are several large providers of label conversion as well as numerous smaller companies. The largest label converters (such as Avery, which also designs its own tags; Moore Wallace, a recent acquisition of RR Donnelly; Intermec, a division of UNOVA; and Paxar, a public provider of labels and printers) should be able to capture a significant share of this market because of their capitalization and existing customer relationships. However, this industry is fragmented, with numerous participants focusing on selected geographic areas.

Label converters include, in alphabetical order, Avery, CCL Label, Datamax, Intermec (UNOVA), Moore Wallace (a division of RR Donnelly), Paxar, and Top Flight.

RFID reader companies design and manufacture readers that can communicate with RFID tags. While some of these companies also produce their own tag designs, such as Alien and Matrics, others, such as AWID and SAMSys, remain agnostic with respect to tag manufacturer. We believe that companies such as Symbol Technologies and Tyco Sensormatic, which are major players in bar coding and EAS, will become large providers of RFID readers in the future. Other companies, such as pure-plays AWID and the publicly traded SAMSys, have been early leaders in this space. We note that Alien and Matrics, two of the early innovators in the tag sector, have remained involved in reader design and manufacture.

Alien Technology. Alien Technology is active in both the tag converter/inlay sector and the RFID reader segment. Please see our update in the tag converter/inlay section above.

AWID. AWID is a designer and manufacturer of multi-protocol reader systems. The company is currently involved in a few pilot projects, including one with Printronix, to integrate its readers with Printronix’s printer systems. We have also learned that the company’s reader is being used in at least one conveyor by Wal-Mart in its current pilot program. AWID’s readers are capable of being powered solely via an Ethernet connection rather than direct power, which could be a differentiator for AWID.

Danaher. Danaher, through its Accu-Sort subsidiary, is a provider of reader systems for RFID applications. Accu-Sort recently introduced its first integrated label applicator/reader system, the FAST Tag, which establishes if an RFID tag is required on each carton and controls the printing and application of the tag. The system includes the Labeljet 262/263 printer and the Labeljet 210 RFID label applicator from Accu-Sort’s sister company, Videojet Technologies. The system incorporates bad tag handling, which, it says, eliminates the possibility of a bad tag being applied. Danaher has indicated that it believes RFID will be a $20-$25 million opportunity at Accu-Sort in three to five years.

RFID READERS

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Intermec Technologies. Intermec is active in both the tag converter/inlay sector and the RFID reader segment. Please see our update in the tag converter/inlay section above.

LXE. LXE, a subsidiary of EMS Technologies based in Norcross, Georgia, is a provider of mobile computing products and bar code readers. The company is a member of EPCglobal. LXE has introduced a handheld computer, the MX-3 RFID, which can run over 802.11b wireless networks and is capable of reading Class 0 and Class 1 tags.

Matrics. Matrics is active in both the tag converter/inlay sector and the RFID reader segment. Please see our update in the tag converter/inlay section above.

PSC. PSC is a provider of mobile, ruggedized handheld RFID readers. The company is a member of EPCglobal. PSC recently introduced the Falcon 5500 mobile RFID reader, an EPC-compliant, handheld, Class 0 or Class 1 reader system that runs on the Windows CE operating system.

RF Code. RF Code is active in both the tag converter/inlay sector and the RFID reader segment. Please see our update in the tag converter/inlay section above.

SAMSys Technologies. SAMSys Technologies, a public Toronto, Canada-based company, provides Class 0/1-agnostic readers. SAMSys recently introduced the EPC Mobile Compliance Cart, which combines SATO America’s RFID-enabled bar code printer with SAMSys’ embedded EPC-compliant reader, and integrated into a battery-powered portable cart. The cart can power a laptop computer and can be wirelessly connected to the host warehouse management application. Once the EPC label is printed and encoded, it can be verified with the handheld antenna. SAMSys also introduced its EPC 2.5 reader, which has Ethernet connectivity and processing capacity for user-defined JAVA applets, providing system integrators with another option for connecting to SAMSys’ multi-protocol reader. It also simplifies reader firmware and protocol software upgrades.

Savi Technology. Savi is active in both the reader sector and the RFID middleware/Web services segment. Please see our update in the middleware/Web services section below.

SIRIT Technologies. The company operates two primary lines of business: 1) automatic vehicle identification (AVI) and 2) supply-chain management (SCM). AVI accounted for 85% of revenue in 2003, but the company views SCM as a growth area going forward, given recent supplier mandates by Wal-Mart, the DoD, and others. Within its SCM division, SIRIT’s primary strategy relies on selling its reader technology to original equipment manufacturers (OEMs) and, to a lesser extent, directly to mandate-bound suppliers. We believe that SIRIT is in discussions about potential partnerships with supply-chain firms, including Manhattan Associates and RedPrairie.

Symbol Technologies. Symbol, a founding sponsor of the MIT Auto ID Center and participant in several of EPCglobal’s working groups, has not been an early

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leader in the supply of RFID reader systems, but is the dominant provider of wireless bar code scanning systems. We believe that the company may be able to leverage its existing relationships within the logistics and retail verticals once it introduces a line of RFID-enabled products. Symbol is a participant in the Wal-Mart Sanger, Texas, pilot. The company continues to work with its partners, IBM and Manhattan Associates, to develop an end-to-end solution. Symbol expects to release a suite of mobility services around RFID, including a device manager for readers developed from technology acquired in its acquisition of Covigo in 2003. Symbol continues to develop its prototype fixed RFID reader and expects to release the reader in 2005. Our sources indicate that Symbol has divisionalized its RFID R&D effort and committed funding for a 40- to 50-person team with a ~$10 million spend for 2004 focused on EPC in the supply chain.

ThingMagic LLC. Earlier this year, Kevin Ashton, former executive director of the Auto-ID Center, joined the ThingMagic team as vice president of marketing and business development. ThingMagic continues to provide its reader technology to Tyco Sensormatic for use in the readers Tyco manufactures, including its newest reader, code-named Mercury 7. It was also learned that ThingMagic has licensed its reader technology to Omron, the Japanese industrial automation conglomerate.

Tyco Sensormatic. Tyco Sensormatic, a unit of Tyco Fire and Security, offers RFID readers systems, middleware, and services through its SensorID RFID Solutions Team. In terms of reader systems, Sensormatic maintains its licensing agreement with ThingMagic LLC in which it manufactures RFID readers based on ThingMagic’s reader technology. We are aware of four RFID implementations that the company is working on — one with a mass merchant, two with large CPG companies (one of which is in the pharmaceutical vertical), and one with the United States government. In terms of partnerships, Sensormatic has many, including one with middleware vendor Globe Ranger (see separate profile). Price points for Sensormatic’s readers (including antennas, services, and reader box) range from about $3,000 to $5,000. We believe reader systems (hardware only) make up about half of Sensormatic’s RFID business, with services and software making up the remainder. The company’s ADT unit recently announced the introduction of Sensormatic SensorID Device Commander, middleware software that lets companies manage large numbers of RFID readers remotely. Each server running Device Commander can manage data from up to 50 readers and then deliver the data to enterprise systems. In addition, Device Commander monitors system performance and alerts administrators to nonperforming readers. Device Commander is priced at approximately $45,000.

ADT also introduced the Sensormatic SensorID RFID Launch Package, priced at $150,000, for CPGs. The Launch Package is designed to meet Wal-Mart’s RFID mandate as well as other mandates and includes four Class 1 readers, eight antennas, software, 3,000 Class 1 labels, a printer, and a server. ADT will do compliance testing on three SKUs, provide site evaluation for potential RFID issues, deploy readers, and provide on-site training.

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WJ Communications. WJ Communications, a public RF semiconductor company based in San Jose, California, is a member of EPCglobal. During the first quarter of 2004, the company continued to ship its UHF SX2000 RFID reader engine and also commenced shipment of the SX2030 2.45 Ghz reader engine to Alien Technology. The company also designs and manufactures a line of EPC-compliant semiconductors. WJ recently announced the acquisition of EiC, a privately held designer of RF integrated circuits.

Printer companies are, in our view, well-positioned for the implementation of RFID. Suppliers to major retailers requiring RFID tagging will need to upgrade to units that can output smart labels with integrated RFID transponders. These hybrid systems need to be able to write EPC codes to the silicon embedded in the tag as well as verify the code on the tag. Existing printer investments will need to be replaced with new models that integrate tags and encoding into a single unit. A growing number of printer-encoder vendors are already shipping EPC-compliant hardware to customers, and we expect that as adoption rates increase, volumes will rise accordingly. In our view, companies that have a direct sales model may have an easier time implementing a targeted sales plan than those companies that rely on VARs.

Avery Dennison. Avery Dennison is active in the tag converter/inlay and the label sectors as well as in printer-encoders. We believe Avery will be more focused on smart-label supply than printer manufacture. Please see our update in the tag converter/inlay section above.

Checkpoint Systems. Checkpoint Systems is active in the systems integrators/consulting sector as well as in RFID printer-encoders. We believe Checkpoint will be more focused on services than printer manufacture. Please see our update in the systems integrators/consulting section below.

Datamax. Datamax is a private bar code printer vendor. The company has released an RFID-ready version of its I4210 printer and expects to release the plug-in RFID module within a month. However, the initial RFID module will be for HF tags (see Texas Instruments and Philips, two main vendors of HF RFID),which are not EPC-compliant. The company is not expected to release an EPC-compliant printer until later in the summer. The printer currently lists for $1,920 and the plug-in module is expected to list for $875.

Paxar. Paxar, a member of EPCglobal, provides apparel identification products, including bar code printers, garment labels, and tags. The company recently introduced an RFID Implementation Kit, which includes the following: 1) its Monarch 9855 RFID bar code printer; 2) Monarch RFID labels (pressure-sensitive labels that Paxar offers with Paxar-integrated transponders); 3) 12 months of its technology investment protection program (which provides users with on-site upgrades of Class-1 technology when changes are made); 4) an RFID reference guide and programming manual; and 5) sample RFID compliance formats with downloadable software. The Monarch is designed to be chip-agnostic and is currently engineered to handle Class 1 (Alien tags) labels. Testing is proceeding on Class 0+ (Matrics tags), and Class 0+ capability should be available shortly. The Monarch 9855 is currently being sold as part of Paxar’s Starter Kit, which includes the printer, a roll of labels, and 12 months of

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“technology insurance” that entitles customers to free hardware and software upgrades for any changes made to specifications or advancements in the field during the coverage period. We also note that Paxar has a partnership with Manhattan Associates, which recently approved the Monarch 9855 for use with its supply-chain execution solutions. Paxar, which is a member of EPCglobal, is also working with other partners to provide RFID-enabled solutions, including Cybra, a bar code and forms software company. In addition, it is working on an RFID label applicator, but there is no word as to when such a product might become available. The company is also positioning itself to be an RFID label converter.

Printronix. Printronix, an Irvine, California-based printer provider, has introduced its first printer for RFID pilots, the T5000e. The T5000e is a thermal, Web-enabled, industrial grade bar code printer that has support for Class 1 labels with a list price of $2,995. The printer has capability to read, write, verify, and print labels with overstrike error handling for bad RFID tags. We believe that the company has shipped in excess of 200 of these printers to customers. The company has indicated that it is working with a number of the top Wal-Mart suppliers in nonexclusive pilots and is participating in about two dozen active pilots. Printronix also provides pressure-sensitive labels with integrated RFID tags. Printronix certified a number of systems integrators on its product line, including Chafin, Goetz & Williams, Data Systems International, The Kennedy Group, International Paper, OAT Systems, Provia Software, R4 Global Services, RedPrairie, and Shipcom Wireless. The company is also a preferred bar code and RFID partner to Manhattan Associates.

In addition, Printronix has recently come to market with several new RFID-enabled products. First, Printronix is now offering a version of its T5000e thermal printer, called the T5000e SR (list price $2,995), which can be upgraded to support class 1 RFID labels for $2,295. Printronix has also just announced its SL5000e family of printers: the SL5000e MP (list price $4,995), which uses the AWID multiprotocol encoder, supporting class 0, 1, and 0+ (and has support for the Matrics “Dual-Dipole”), and the SL5000e C1 (list price $4,695), which uses the Alien class 1 encoder. Printronix is also offering a package called the SL5000e DK (developers kit), which, for $7,995, includes the SL5000e MP printer, two rolls of certified smart labels, software migration tools, PrintNet ethernet connectivity, thermal ribbon (615 mm), application notes, technical support, and programming manuals.

Printronix and FOX IV Technologies recently joined forces and co-developed an EPC-UHF print-and-apply system, the Smart Label Printer Applicator (SLPA) 7000. The printer utilizes Printronix’s EPC RFID Smart encoding technology and FOX IV’s Uniwall applicator system. The companies are offering two models differing in print quality: the 7204 model, printing at 200 dpi, lists for $21,500, while the 7304 model, printing at 300 dpi, lists for $21,800. Both models are available immediately. In addition to its new printer/applicator, Printronix recently announced the formation of its Auto-ID and RFID Professional Services Consulting Group aimed at providing customers with consulting services complementing its SLPA printer family.

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Sato America. Sato America, a division of Sato Corporation, a publicly traded Japanese company that was a pioneer in printers for label applicator systems, is offering its CL408e, which lists for $5,495, and CL412e printers with UHF RFID capability. These printers can write to RFID tags using EPC Class 1, UCODE, and ISO 18000. Several label applicator providers are integrating Sato printers into their systems, including NJM/CLI. The company is also offering consulting services that include preplanning consultation, on-site survey, pilot planning and implementation, and post-pilot consultation and customer service. SAMSys of Toronto is providing the multi-protocol readers for the printers. Sato has a relationship with CCL Label whereby CCL will manufacture all RFID tags and labels for SATO America.

Zebra Technologies. Zebra Technologies, the leading vendor of bar code printers, is actively involved in providing RFID-enabled printers to industry. The company began volume production of its R4Mplus EPC-compliant printer in February, and we believe that it had shipped 200-300 printers as of the end of May 2004. The printer, which lists for $4,000-$5,000 (versus $3,000-$3,500 for a bar code printer), is capable of working with Class 1 tags (and is expected to incorporate Class 0+ tag capability shortly). The company currently is involved in about 20 RFID pilots. Its products are utilized by a number of label applicators, including those offered by Tharo (see label applicators discussion below). We expect that Zebra will introduce a line of RFID-ready printers shortly that will enable companies that are not currently ready to implement RFID into their business processes to upgrade to RFID capability via a module rather than a new printer.

Label applicators are industrial grade equipment that use tamp-on or blower techniques to apply labels to packaging at line speeds. These applicators often integrate third-party label printers into their systems. After conversations with our network of contacts, we have learned of a number of providers of label applicators that have begun to take an active role in RFID pilot programs or have begun to modify their applicator equipment to handle the specific needs of RFID-enabled labels. We believe that there is an opportunity for these companies in the near term as companies look to integrate label application into their manufacturing process in an effort to replicate the process that they pursue for bar codes.

Markem Corporation. Markem Corporation, a private company based in Keene, New Hampshire, is a provider of equipment, software, supplies, and services to meet primary, case coding, and pallet labeling applications for a variety of industries. The company’s RFID-enabled applicator is based on its CimJet line. In March, the company announced the creation of its Applied Intelligence Solutions group to address the ability to apply RFID tags and manage the resulting digital identity at any point in the supply chain. The company has developed a suite of software tools to manage the application and monitoring of tags. Our sources indicate that the company is capable of applying tags at traditional line speeds in the plant setting and that it has been working with a number of CPGs with pilot programs at the DC level to apply tags to products that will be subject to the Wal-Mart mandate. We understand that one of these pilots will be launched at the plant level rather than at the DC. The

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company has been working primarily with Class 1 tags, but has begun to examine the usage of Class 0+ tags.

NJM/CLI. NJM/CLI has converted its Model 400 Print and Apply Labeler for RFID capability. The Lebanon, New Hampshire-based company expects shortly to integrate the 400 with printers from Zebra and Sato. The new applicator, which can run at speeds up to 50 units per minute, will list for $26,000, or existing Model 400 owners can purchase an upgrade kit for $11,500.

Tharo. Tharo, based in Brunswick, Ohio, recently introduced its PA1000tZ RFID-enabled Smart Label Printer/Applicator, which utilizes Zebra Technologies’ R4Mplus EPC-compliant printer and comes in both tamp-on and blow models. The offering can apply up to 58 labels per minute. The tamp label applicator costs $6,500 and the blow applicator is $6,900.

Other Label Applicator Providers. These include Avery, Domino Amjet, Label-Aire (a division of privately held IMPAXX), VideoJet (a division of Danaher Corporation; please see our Danaher overview in the RFID reader section), and Weber Marking Systems.

The major packaging companies are all evaluating the potential of integrating RFID tags into their product line. However, it is our belief, after numerous conversations, that the ability to integrate tags is still a way off. We believe that several technical hurdles must be overcome before integration can occur, including standardization of tags, development of best practices around placement of tags for a variety of product lines, procedures for dealing with faulty tags, and improved tolerances in the corrugated cardboard manufacturing process.

Georgia-Pacific. Atlanta, Georgia-based Georgia-Pacific continues to explore integration of RFID into packaging, which it has been researching since mid-1999. The company is a chair of the Packaging Special Interest Group of Auto-ID Labs and is a member of EPCglobal. Georgia-Pacific has participated in several field tests for RFID-enabled corrugated cardboard packaging and has seen a great deal of interest from customers regarding the Wal-Mart mandate. The company expects the folded carton to be the first packaging to be widely RFID-tagged, but it doesn’t anticipate committing to supplying integrated boxes to vendors. The current lack of an efficient way to mechanically affix a tag with adhesive on the box assembly line has limited the company’s immediate focus on the integrated product. The current manual process of “slap and ship,” the company maintains, is not cost-effective, with an estimated additional $0.45-$0.60 per case (excluding the cost of the tag) due to waste and labor. The company has tested tags and readers from several vendors and intends to remain technology-agnostic as the market develops.

International Paper. International Paper, based in Stamford, Connecticut, is a member of EPCglobal. The company uses RFID extensively in its Texarkana, Texas, facility. The system, which has been fully operational for one year, utilizes Matrics tags and Matrics readers, which are integrated into equipment in the facility. We believe that the company is currently evaluating the usage of RFID in other facilities. We understand that it has used its experience in RFID

PACKAGING

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implementation to create a services group that is geared toward helping other clients. The company expects to double its services group, which currently stands at around 20 people, by the end of the year. International Paper has done work relating to integrating transponders into packaging. We think that it may be able to provide an integrated transponder corrugated box in the near future, ahead of its competitors.

MeadWestVaco. MeadWestVaco (MWV), based in Stamford, Connecticut, became interested in RFID as a result of the company’s efforts in EAS source-tagging. MeadWestVaco is an original member of Auto-ID, now EPCglobal, and is involved with the organization’s working groups. The company set up the MeadWestVaco Intelligent Systems (MWVIS) subsidiary to focus on RFID technology. MWVIS is primarily focused on item-level RFID with smart-shelf technology. The company has partner relationships with UPM Rafsec and Philips. Our understanding is that MWVIS currently has a 30-person staff. MWV is working with co-development partners Tesco and CVS to develop its smart-shelf technology, which includes shelf-integrated antennas, readers, and software. The company continues its piloting projects with Tesco, which is focused on the DVD and game aisles of two Tesco stores. The deployments include smart shelves in both the front and back of the store and enable intelligent stocking, title replacement, availability queries, and location queries. The company is running a similar pilot with Best Buy that is in an earlier stage of development.

Smurfit-Stone. Smurfit-Stone, based in Chicago, Illinois, is a member of EPCglobal and its packaging special interest group. The company has a ten-person team committed to its RFID efforts, including people from IT, procurement, and communications, as well as scientists who are developing technologies and procedures for integration of RFID into customers’ packaging. Smurfit is currently involved in a number of pilot projects as well as several lab studies. The company also has a team of approximately 12 people that is devoted to internal use of RFID for tagging during the converting process.

We expect that the initial impact on supply-chain execution firms will be among those that are focused on managing the movement of inventory, such as Manhattan Associates, RedPrairie, HighJump Software, and Provia. Next, we would expect merchandising and retail supply-chain firms, such as Retek and JDA Software, to see more activity in RFID as item-level RFID tracking develops and the devices become more widespread in stores. Later, supply-chain planning providers, such as i2 and Manugistics, should see increased RFID activity as companies seek to capitalize on the integration of RFID into enterprise applications via middleware.

i2 Technologies. Earlier this year, i2 Technologies — a supply-chain planning software vendor and direct competitor to Manugistics — indicated that it is partnering with various middleware and enterprise application vendors so that its applications can be RFID-enabled. Specific partners on this initiative include Sun Microsystems, Informatica, GlobeRanger, and webMethods. The goal of the partnership program is to minimize the risk of RFID adoption for i2’s customers,

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and the company plans to embed RFID technology into its solutions in the future as well.

3M/HighJump Software. 3M, which already was one of the largest providers of RFID to libraries, completed its acquisition of HighJump Software in February 2004. The acquisition underscores the strategic importance of supply-chain functionality in the RFID era. The company has joined the Microsoft Radio Frequency Identification Council, which had its initial meeting in April 2004. We believe that 3M intends to keep HighJump as a stand-alone entity, with the same management team as prior to the acquisition. We believe that 3M acquired HighJump because of its belief in the convergence of packaging, RFID, and warehouse management systems and its confidence that it can sell these products and services into its existing client base.

HighJump is a member of EPCglobal. The company has worked with a number of partners, including ESYNC, a consulting and integration services company. We believe that HighJump made a number of sales of its Compliance Advantage (enabled with GlobeRanger middleware) product recently and that its pipeline is strong with respect to near-term sales of this shrink-wrapped RFID solution for compliance with the Wal-Mart mandate. We further believe that the Compliance Advantage product may provide a toehold into clients that may then choose to use HighJump’s SCE products, which are all RFID-enabled. The company continues to pursue an agnostic approach with respect to hardware.

JDA Software. Because JDA’s primary focus is on selling merchandising and supply-chain software that caters to the retail vertical, the company will likely become more involved in RFID once item-level tracking becomes more of a reality. In the meantime, JDA’s RFID strategy for warehouse-level tracking largely rests on its partnership with Manhattan Associates.

Manhattan Associates. We continue to believe that Manhattan Associates is the best-positioned SCE vendor to benefit from broader RFID tracking. On its first-quarter 2004 earnings call, Manhattan indicated that it continues to gain traction in RFID, specifically noting that it secured five RFID customers during the quarter; that it signed more than $500,000 in RFID-related revenue during the quarter (the majority of which was license revenue); and that it is currently tracking about 50 active RFID-related sales opportunities. Based on comments made by the Manhattan management team in the fourth quarter of last year (in which it claimed to have signed six RFID customers), we estimate the company has about 11 RFID customers to date, in addition to the pharma pilot it is working on with Accenture, which includes nine additional Tier-1 companies (see “Recent Events in RFID” section above for more details). In addition, a Manhattan competitor recently conceded to us in a conversation that it has lost at least one RFID-related deal to Manhattan this year. Manhattan and privately held RFID hardware provider Matrics also recently announced an alliance to promote RFID adoption, specifically targeting the consumer goods supply chain. Our view remains that Manhattan will continue to gain traction in RFID as suppliers bound by RFID mandates move forward with their adoption plans, which we expect to occur throughout the year and beyond.

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Manugistics. At its Strategy Summit in Rockville, Maryland, in April, Manugistics discussed RFID as a growth driver, especially in light of recent supplier mandates by the DoD and Albertsons, both of which are current customers of Manugistics. Specifically, Manugistics offers software that is RFID-enabled, and can thus accept and manage data from RFID hardware. While we believe that firms such as Manugistics, which are primarily focused on supply-chain planning applications, may benefit from broader adoption of RFID longer term, initially it is our sense that WMS vendors such as Manhattan Associates are better-positioned in the near term, given their warehouse-level focus. RFID data need to be available at the enterprise level before they factor into planning applications.

Microsoft Corporation. In January, Microsoft announced its first RFID project. The project with KiMs, Denmark’s largest snack food vendor, involves piloting new middleware to connect RFID systems to Microsoft databases and be integrated into Microsoft’s Axapta warehouse management system. The company hopes to use the KiMs pilot as an opportunity to market its software to mid-market vendors that are seeking to become RFID-enabled. In April, the company announced the formation of the Microsoft Radio Frequency Identification Council with initial members that include Accenture, GlobeRanger, HighJump Software, Intermec, Manhattan Associates, and Provia Software.

Oracle Corporation. Earlier this year, Oracle, which is a member of EPCglobal, announced that the next version of its warehouse management software will be RFID-enabled, and that it will leverage Oracle Database 10g and Oracle Application Server 10g. The company also recently introduced Oracle Sensor-Based Services, which aims to utilize data from sensors, including RFID. Specifically, Oracle has the following deployment options with respect to its Sensor-Based Services: 1) Compliance Assistance Package (targeting those that need to comply with RFID mandates; 2) RFID Pilot Kit (targeting those interested in piloting and prototype testing); 3) Enterprise Deployment (targeting those interested in a scalable RFID deployment); and 4) Sensor-Centric Applications (targeting those interested in using applications in Oracle’s E-business suite — including its WMS system — for RFID tracking). Oracle has also indicated that the next version of Oracle Application Server 10g will enable integration and device management capabilities for RFID readers. We understand that Oracle plans to leverage its relationships with consultants (including BearingPoint, Capgemini Ernst & Young, and Tata Consulting Services) to help clients utilize RFID.

Provia Software. Privately held Provia Software (which is owned by Germany-based viastore systems) is working with Gillette on its entire North American distribution operations, including its RFID initiatives at one of its distribution centers. It is also our understanding that Provia expects to assist Gillette at a second of its distribution centers in the near future. In addition to Gillette, Provia has multiple clients that are suppliers to Wal-Mart, and the company is still targeting the RFID space with two products: 1) its RFID-enabled WMS offering, called ViaWare; and 2) an RFID compliance kit, called RFIDware.

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RedPrairie. RedPrairie, a privately held WMS vendor and Manhattan Associates competitor, recently announced an OEM agreement with GlobeRanger, in which RedPrairie will integrate its software applications with GlobeRanger’s iMotion edgeware platform. We note that RedPrairie also recently indicated that it has partnered with GlobeRanger at CHEP’s Innovation Center in Orlando, Florida, in which RedPrairie’s visibility tool, called LENS, is used to track inventory. CHEP provides pallet and container pooling services. RedPrairie also announced alliances with RFID solution vendor RF Code and RFID solution integration provider Xterprise. Notably, RedPrairie recently announced that Unilever is using its RFID Accelerator platform for Wal-Mart and DOD compliance at three of its facilities: a manufacturing site, a home and personal care distribution center, and a Best Foods distribution center. In May, the company announced the introduction of RFID 360, which includes four software options tailored to meet each company’s RFID implementation environment and schedule. The first software module, which serves as the foundation for the three others, is RFID Data Manager, which handles data input, filtering, and aggregation, and is often referred to as the savant layer. RFID 360 includes two “bolt-on” middleware applications: RFID Igniter, which provides the ability to print, read, and track RFID tags for pilot testing environments, and RFID Accelerator, which provides tools to deploy RFID processing for compliance with the Wal-Mart, Target, DOD, and other mandates. The company says that RFID Accelerator can be integrated to any distribution environment. DLx MAX, the last component, is a fully RFID-enabled version of the company’s supply-chain execution and optimization suite.

Retek, Inc. Retek, like its direct competitor JDA Software, will most likely become more involved with RFID once item-level tracking begins to gain traction, something we do not expect to occur for at least a few years. We do note, however, that Retek is involved in RFID pilot activity, particularly with Best Buy, which is pilot-testing item-level RFID tracking in addition to pallet/case-level tracking for warehouse applications. The company is adapting its warehouse and inventory management applications for RFID use, underscoring its increasing involvement in this space. At a retail IT show in New York City earlier this year, Retek was part of an RFID demo conducted by Accenture, which utilized Retek software, Matrics tags for warehouse level tracking, and Texas Instruments tags for smart-shelf applications. We note that Retek also offers WMS software, which the company expects will be RFID-enabled within the next year.

SAP. In January, SAP launched an RFID solution for supply-chain management. The new solution, which is Java-based, includes the following: SAP Auto-ID Infrastructure (middleware); SAP Event Management; a component of mySAP Supply Chain Management; and SAP Enterprise Portal (a component of SAP’s NetWeaver platform). We note that SAP’s RFID technology is being used in METRO AG’s Future Store initiative, where a store in Rheinberg, Germany is outfitted with smart shelves, RFID self-checkout systems, kiosks, and other technologies. The SAP system receives all of the data generated by the RFID system and integrates it into Metro’s store measurement systems enabling out-of-stocks, replenishment processes, accurate inventory, and shelf refilling reports.

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Middleware/Web services is of critical importance in the medium term. We see two main sub-sectors in this space: savants and application integrators. As companies turn from compliance toward data integration, the middleware and Web services companies will increasingly become involved in implementation. We see opportunity in this space in integrating data into existing back end systems, by application integrators such as TIBCO, webMethods, and SeeBeyond. However, we do not view them as having an immediate revenue opportunity due to the current focus on compliance. At the savant level are several startups, such as ConnecTerra, OATsystems, and GlobeRanger, which develop software to manage the data streams generated by the RFID reader-tag systems. Over the longer term, this software could become embedded into the reader systems themselves.

ConnecTerra. ConnecTerra, based in Boston, Massachusetts, released RFTagAware 1.0 in March 2004. RFTagAware software provides software infrastructure for developing and deploying RFID applications. It aims to solve the filtering and integration of RFID data and the overall management of the RFID infrastructure and tie the data streams into the existing enterprise software. The company continues work with systems integrator Capgemini mostly outside of the U.S., where it is involved with non-Wal-Mart compliance business opportunities.

GlobeRanger. GlobeRanger, a provider of RFID and mobility solutions located in Richardson, Texas, recently announced that International Paper will use its iMotion Edgeware platform to develop RFID solutions. In addition, Franwell Software, a provider of development and marketing software for the agricultural produce/food industry, is using GlobeRanger’s iMotion Edgeware platform to develop RFID solutions. We note that the latest version of GlobeRanger’s iMotion Edgeware platform was released in March.

IBM. IBM is active in both the middleware/Web services sector and the systems integrators/consulting sector. Please see our update in the systems integrators/consulting section below.

InfoWave Solutions. A provider of RFID integration services and middleware, InfoWave Solutions, based in Indianapolis, Indiana, was founded in 2003. InfoWave offers two middleware products, the Activate Software Suite, its main RFID middleware package, and SenseTrack, a temperature/moisture sensing package for managing data from temperature sensing-enabled RFID tags. Recently, InfoWave partnered with Texas Instruments in its Team Tag-it Program to utilize the Activate Software Suite. InfoWave also recently announced a strategic partnership with RF Code to combine its integration software with RFCode’s TAVIS and Mantis Active RFID products.

OATSystems. Earlier this year, OATSystems, a privately held provider of RFID solutions that contributed to the development of the open-source Savant as well as the Object Name Service, announced a partnership with supply-chain execution provider MARC Global Partners, in which MARC Global’s solutions will make use of OATSystems’ middleware, called Senseware. As indicated in our January 2004 report entitled “Compliance Deadlines Loom: Supply-Chain Giants Drive Early Adoption of RFID,” we also note that the U.S. Department of

MIDDLEWARE/WEB SERVICES

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Defense utilized OATSystems’ middleware in its Combat Feeding Program (CFP), which was its first EPC-compliant RFID pilot and was successfully completed earlier this year. In addition, OATSystems was the systems integrator for the pilot. OATSystems announced that it has released Edge Server 3.0 software that enables the management of dozens of readers on an RFID network and can link that network with enterprise applications. The company also noted that its software is deployed by around 25 customers, three of which are among the first eight Wal-Mart suppliers, including Hewlett-Packard. Gillette, Target, Johnson & Johnson, Best Buy, Kodak, Roche, GlaxoSmithKline, Menlo Worldwide, Metro AG, and the DoD are also company customers.

Savi Technology. We have previously categorized Savi as a hardware provider, given its history of providing active RFID to users, including the DoD (which, under a contract that runs through 2006, sources all RFID equipment through Savi). However, we decided to include the company as a software provider for this report, given the recent broadening of its offerings to include software. Specifically, earlier this year, Savi introduced three new data collection products — SmartChain Client Tools, SmartChain Mobile Manager, and SmartChain Site Manager in order to support the capture and transfer of RFID-related data. Savi’s newest version of SmartChain (v. 4.3) software added support for EPC-compliant tags. In addition, the company introduced an RFID Starter Kit to help DoD suppliers ramp up their RFID implementations, and it offers a phased-in services program for DoD suppliers as well.

In March, Savi announced that NATO recently signed a contract to use SmartChain 4.3 in a pilot for tracking assets between Europe and Afghanistan. In this pilot, containers will be equipped with Savi’s active tag, SaviTag ST-654, in order to track movements in the supply chain. Savi is a longtime supplier of equipment and services to the DoD. The company helped build and maintains the DoD’s In-Transit Visibility (ITV) network, the world’s largest RFID cargo tracking system, which uses active RFID. It also provides automatic identification and data capture (AIDC) and support software solutions for in-facility military and commercial supply chains.

Shipcom Wireless. Shipcom Wireless is a provider of RFID, enterprise mobility, and supply-chain automation middleware that is based in Houston, Texas. Its flagship middleware product, CATAMARAN, allows the user to capture enterprise RFID, bar code, or keyed data, enabling back-end systems such as Siebel, SAP, Oracle, MFGPro, and MS Exchange with RFID, WAP, Windows CE, and Palm OS-based devices. Shipcom currently has bids for up to 40 projects in its pipeline. The company’s clients include Philips, Siemens, Shell, Johnson & Johnson, British America Tobacco, and Medtronic.

Sun Microsystems. Sun has a three-pronged approach to RFID: software, services, and hardware. The company has developed a suite of middleware including Sun Java System RFID Software, which includes the Sun Java System RFID Event Manager (an RFID savant), and the Sun Java System RFID Information Server. Pricing of the middleware offering will be $30,000 on an annual subscription basis per distribution center or warehouse. The initial release will be for the Solaris operating system, with a Linux version to follow around

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September. Sun recently announced that it has joined with Capgemini to offer a complete end-to-end RFID solution to CPG and retail companies. The company also has opened an RFID test center in Dallas that will enable companies to simulate real-world deployments at conveyor speeds. This is the first test center for Sun, but the company expects to open others. The test center will utilize Provia’s warehouse management system solution, and includes equipment and services from Sun’s partners: ADT Security Services, Alien Technology, AWID, i2, Matrics, Nortel Networks, Printronix, ProdexNet, SAMSys Technologies, SeeBeyond, SupplyScape, Texas Instruments, TIBCO, Tyco Fire & Security, and Venture Research. Goodyear was one of the first users of the new Sun test center.

TIBCO Software. TIBCO Software is, at the request of Procter & Gamble, integrating its middleware with readers from privately held Alien Technology, through the development of a software adapter. Under the agreement, Alien will supply the RFID technology that will link to business process management software via TIBCO’s integration and business software. It will also make use of Web services and the WS-Eventing standard TIBCO has developed in conjunction with Microsoft and BEA Systems. TIBCO’s software adapter accepts data from RFID readers and translates it into suitable formats for utilization by back-end applications, such as enterprise resource planning (ERP) or warehouse management system (WMS) software. It is also our understanding that TIBCO is working with some CPG companies, as well as some companies in the transportation and pharma verticals on RFID initiatives (and that only one of these is driven by a requirement mandate). The company expects to generate some RFID-related revenue as early as fourth-quarter 2004, and believes that RFID-related revenues may be material in calendar 2005. It is also our understanding that TIBCO plans to roll out RFID-specific products in the near-future, including an “EPC Agent” that will route and filter data among applications, and an “Event Cache” that will store and receive EPC-related information.

VeriSign. VeriSign, a provider of network infrastructure services, announced earlier this year that it had been chosen by standardizing body EPCglobal to provide the Object Naming Service (ONS) root directory for the EPC network. Basically, the ONS will provide a “look-up” system in which product information linked to an EPC number (which is stored on an RFID chip) can be looked up on the Web (similar to DNS servers for Internet sites). VeriSign was one of three to five candidates to provide this service. We believe that VeriSign plans to charge fees for this service, but that such fees have not yet been determined. Also, at this point, it remains to be seen how widely adopted the ONS portion of the EPC system will be, as it is unclear whether it will be used by Wal-Mart, the DoD, or any of the other early adopters that have issued RFID mandates to their supply bases. Aside from ONS, VeriSign offers RFID-related services as well (see our January 2004 report titled “Compliance Deadlines Loom: Supply-Chain Giants Drive Early Adoption of RFID” for details).

webMethods. webmethods, Inc. recently introduced its RFID Starter Pack, which provides software and services to help companies take on an RFID project. Specifically, the RFID Starter Pack includes the webMethods Integration Server;

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webMethods Modeler; a pilot kit that consists of data models based on business processes; adapters for connecting RFID readers to databases and other back-end applications; and 40 hours of professional services. We understand that the RFID Starter Pack is available now and is priced at approximately $27,500. webMethods will also provide 40 hours of RFID implementation services (in instances where customers already own webMethods’ integration server) for about $7,000. The company also joined EPCglobal in first-quarter 2004 and is active in its software action group (SAG). We believe that webMethods is engaged in a number of RFID pilots in the health care, life sciences, government, and consumer products verticals. It is our assumption that most — or all of these are with customers that had previously used its technology. webMethods also remains committed to its strategy of relying on systems integrators when pursuing customers outside of its current installed base, working with both large- and smaller-niche SIs.

We expect to see continued growth in demand for systems integration and consulting services in RFID as pilot test activity continues and full implementations start coming on line. We understand that the SIs are seeing a marked increase in inbound call activity from both retailers and CPGs as these companies seek to respond to Wal-Mart or comply with the Wal-Mart mandate. This activity level should be sustained as adoption spreads.

Accenture. Earlier this year, Accenture announced that it had formed an RFID Pharma Group — including Abbott Laboratories, Barr Pharmaceuticals, Inc., Cardinal Health, CVS Pharmacy, Johnson & Johnson, McKesson, Pfizer, Procter & Gamble, and Rite Aid, among others — to evaluate RFID for the pharmaceutical industry. (We note that this group is not related to the pharma work under way at Wal-Mart.) Manhattan Associates is the sole software company involved in the initiative, which its management alluded to, without giving specifics, on its fourth-quarter 2003 conference call in February, when it indicated that the company had been selected as a technology provider for an RFID pilot project for nine Tier-1 companies in one of its key vertical markets. Accenture is serving as program manager for the group, which is also supported by the Healthcare Distribution Management Association (HDMA) and the National Association of Chain Drug Stores (NACDS). It is our understanding that Accenture is forming a similar group for the electronics industry, although details are limited, and that the company plans to ramp up its resources dedicated to RFID to 100-200 people in the near term, given strong customer demand.

Capgemini. Capgemini, a member of EPCglobal and a participant in the EPCglobal hardware and software action groups, is working with a number of top retailers that are examining RFID applications in their businesses in both public and private pilots. In May, Capgemini announced a partnership with Sun Microsystems to offer RFID solutions to retail and consumer packaged goods companies. The partnership aims to provide a complete end-to-end solution including hardware, software, and services to companies that are seeking to comply with Wal-Mart and other mandates. Our sources indicate that the company has about 20 active deployments located in Europe and North America. We believe that Capgemini may seek to exploit its position as a systems integrator by offering managed services to reduce entry costs for vendors looking

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for a lower-cost solution for RFID compliance. The company has also developed a series of best practices for retail and DoD mandates.

Checkpoint Systems. Checkpoint is a founding member of the MIT Auto-ID Center and a member of EPCglobal. The company is a leading provider of EAS systems. We have included Checkpoint in the systems integrator group because we believe much of its effort is currently aimed toward service activities rather than tag manufacture or design. We do note, however, that the company recently introduced the mi-4210 RFID thermal printer under its Meto brand, which is capable of HF tagging and EPC-compliant UHF tagging. The printer comes in two versions, RFID-enabled and RFID ready (for those that want a migration path to RFID when ready). Recently, the company entered into a strategic alliance with Philips whereby Checkpoint will bring its own antenna technology and experience in attaching tags to packaging to help develop tags, smart labels, and sensors using Philips chips. Checkpoint Systems will also be building and integrating applications and solutions for the retail industry and its supply chain based on Philips HF and UHF RFID chip solutions, including EPC. In addition to collaborating on tags and readers, the two companies will deliver systems integration services for retailers seeking to adopt RFID in their supply chains. The company recently announced that it had agreed to purchase 100 million EPC-compliant tags from Matrics. The deal covers both Class 0 and Class 0+ tags in quantities that will be determined by customer demand. The company also has expanded its RF Source Tagging Design Center to include EPC RFID capability. Checkpoint is a vendor to Metro AG’s Future Store in Rheinberg, Germany.

Hewlett-Packard. We are including HP in the systems integrator segment of our overview because the majority of its announced efforts have been in services. The company, which recently joined EPCglobal, has been testing an RFID system that it believes will allow the tracking of inventory at the warehouse and retail outlet level. Hasbro, after a successful pilot, has selected HP as its strategic RFID technology provider and is increasing its investment in RFID with HP and Shipcom Wireless, a middleware provider. Conros, a provider of fire logs, is using HP Services to implement Wal-Mart RIFD compliance for its business lines. HP services has begun to offer a broad array of services to customers, including the RFID Discovery Service; the RFID Adaptive Starter Kit for companies that want a proof of concept (it includes a selection of tags and readers, as well as middleware that can be customized to each pilot deployment, and HP will also provide services); and RFID Readiness Assessment and Roadmap Planning for development and implementation of complete solutions. HP has also implemented Centers of Excellence in Palo Alto and Taiwan to showcase its RIFD capabilities and offerings. The company anticipates opening additional centers in Singapore, Geneva, and the U.K. in the coming months. In May, HP began shipping EPC-tagged printers and scanners to Wal-Mart’s Dallas DC. Only three of the products that the company currently ships to Wal-Mart will initially be EPC-tagged: one model of HP’s Scanjet scanners and two of its Photosmart photo printers. These products will be shipped from HP’s Memphis manufacturing plant.

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IBM Consulting Services. IBM has a number of clients in the RFID space, including Kimberly-Clark and Tesco, as we have indicated in earlier reports. The company has also signed a three-year contract with the DoD to help manage and support its planned deployment of RFID technology in 2005. The company will help the DoD develop its final RFID policy and support the policy execution throughout the DoD. This mandate includes assisting the DoD by identifying RFID commercial best practices, developing business rules based on analysis of RFID projects, educating and informing suppliers, and developing and executing a change management strategy. IBM is also working with Metro AG’s Future Store in Rheinberg, Germany.

IconNicholson. New York-based IconNicholson, a provider of technology solutions and services, is currently working on RFID projects with various customers, including those in the retail, government, pharmaceutical, and logistics verticals. Most notably, IconNicholson is working with the Tibbett & Britten Group (a U.K.-based logistics company) to design and implement an RFID lab at one of Tibbett & Britten’s member companies, Connect Logistics Inc., in Edmonton, Alberta. More specifically, Connect Logistics is the 3PL for the Alberta Gaming and Liquor Commission. As part of this initiative, IconNicholson will face the challenge of developing guidelines for the tagging of pallets and cases that contain liquids and metals, both of which interfere with RF transmission. Our understanding is that in first-quarter 2004, IconNicholson signed four new RFID clients, and the company plans to expand its work with Prada as well. While the company does not have any exclusive relationships, it appears to be most closely aligned with privately held RFID hardware provider Matrics.

Kurt Salmon and Associates. Kurt Salmon and Associates is a strategy-consulting firm focused on CPG and retailing. The company is working with a number of CPGs and retailers with respect to RFID activities. It currently has two dedicated RFID managers that are leading the company’s RFID efforts.

ODIN Technologies. Earlier this year, RFID systems integrator ODIN Technologies opened a 3,000-square-foot warehouse testing facility in Dulles, Virginia, in order to assist its customers with product testing. The lab also performs tag and reader evaluation, tag orientation strategy, and hardware and software comparisons, among other services. We note that this is an addition to its original testing facility in Reston, Virginia. Also, this spring, ODIN released the architecture for its Fully Automated System Design (FAS-D), which will essentially serve as an “install wizard” that enables the implementation of RFID systems. The FAS-D system is marketed as a tool to install an RFID system prior to a full-scale implementation while avoiding the costs associated with high-priced consultants. ODIN expects a beta version of the FAS-D system to be available in fourth-quarter 2004, or possibly sooner based on client demand, and is encouraging mandate-bound suppliers to partake in alpha testing and contribute to the design of the user interface at no cost.

R4 Global Services (R4GS). Privately held R4 is a services provider for the RFID market that was launched early last year, prior to Wal-Mart’s June announcement that it would be adopting the technology for inventory tracking.

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R4 has an RFID lab on the West Coast, which it uses for its internal R&D efforts and in conjunction with its partners and customers. The company also recently announced an RFID solution, R4 Accelerate, targeting pharmaceutical suppliers that are bound by Wal-Mart’s June 2004 mandate (pushed back from March 2004). Specifically, the solution consists of a pre-packaged suite of hardware, software, and services and aims to satisfy compliance for the mandate within eight weeks. R4 worked with Alien Technology and Matrics to develop the solutions, which are priced between $50,000 and $175,000, depending on the scope of the implementation. We understand that R4 is currently involved in five active RFID engagements (including those in the retail, pharmaceutical, and CPG verticals) and that the company has a number of additional opportunities in its pipeline.

Sapient. Sapient, a business and technology consultancy, continues to work with companies interested in utilizing RFID, including those bound by mandates, and in using the technology in their own operations. We believe that Sapient is working with a few clients on RFID pilot projects, and that its pipeline consists of about 18 potential clients — half of which are those bound by RFID mandates. Although the company currently has up to ten people dedicated to its RFID practice, Sapient plans to expand this number in the neighborhood of 30-50 in the fall, once RFID activity picks up further.

Xterprise. Xterprise, an RFID systems integrator and solutions provider based in Dallas, Texas, recently announced the release of Xterprise Automated RFID Modules (XARM), a suite of EPC/RFID compliance solutions. The company is currently working with its existing customers to integrate XARM into Enterprise Resource Planning (ERP) and Warehouse Management Systems (WMS), including Manhattan Associates, SAP, and RedPrairie, among others. In addition, we note that Xterprise recently formalized a partnership with Datatrac Corporation, a provider of business and network communications solutions for shippers, freight forwarders, and delivery service companies. Through the partnership, Datatrac’s eTrac solution (a Web-based information exchange network) will become RFID-enabled. Xterprise is currently working with at least four clients on RFID implementations, and has indicated that it is in discussions with 17 others related to RFID proposals and evaluations.

We believe that the third-party logistics providers (3PLs) could play an important role in the adoption of RFID. 3PLs are a natural supply-chain participant to assist companies seeking to integrate RFID into their business processes as a result of Wal-Mart, DoD, and other mandates. Those vendors that are not seeking to integrate RFID into their internal systems in the short term would represent a natural opportunity for the 3PLs to provide an outsource solution to their client base. We think that some of these companies could announce RFID activities as the year progresses. Longer term, some companies may adopt the 3PL as an outsourced provider of RFID tagging services, which could be a source of recurring and incremental revenue for the 3PLs.

DHL. DHL is providing logistics services for Metro AG’s Future Store Initiative in Rheinberg, Germany.

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Exel. Exel has worked with U.K.-based retailers Selfridges and House of Fraser in RFID test programs. The House of Fraser pilot will be pushing the technology to that company’s suppliers based in China.

Menlo Worldwide. Menlo Worldwide announced in February that it is planning to offer a spectrum of RFID solutions, from basic tag application services and facility-enablement, to strategic consulting services.

Tibbett & Britten. Tibbett & Britten announced that it is opening a “Living Lab” in its Connect Logistics warehouse in Alberta, Canada, in order to test RFID technologies for clients. The company has teamed up with IconNicholson, The Raymond Corporation, and the Econorack Group of Companies in this venture.

TrenStar. TrenStar is a logistics provider that has had extensive involvement in RFID. The company has worked with a number of customers in providing RFID asset tracking services. The company also has introduced TrenStarCM a software package that is focused on container management. TrenStar recently announced a deal with Adolph Coors Company to provide asset tracking services to Coors’ U.K. subsidiary. The company provides services to the health care industry through its Agility subsidiary.

UTI Worldwide Inc. UTI is currently exploring the possibilities of RFID, largely because many of its customers are suppliers bound by retail-driven compliance mandates. It is our sense that UTI may be interested in incorporating RFID into a services-based offering in the future.

Other Logistics Providers. FedEx and United Parcel Service have been involved in RFID initiatives, although they have not articulated plans.

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RFID Universe Listing

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RFID Universe Alphabetical Listing

Below is a listing of our entire universe of RFID related companies, which includes tickers, market capitalization, and LTM revenues for public companies.

Exhibit 12. RFID Universe Alphabetical Listing ($ in millions) Mkt. Cap. LTM

Company Ticker 4-Jun-04 Revenues Sector1 Accenture ACN 24,900.2$ 14,137.6$ Systems Integrators/Consulting2 AccuCode ---- Private ---- Systems Integrators/Consulting3 Acsis ---- Private ---- Systems Integrators/Consulting4 Alien Technology ---- Private ---- RFID Reader/Encoders

---- Private ---- Tag Converter/Inlays 5 Atmel ATML 2,880.2 1,441.6 Silicon Providers6 Avery Dennison AVY 6,585.6 4,874.1 Label Converters

AVY 6,585.6 4,874.1 Printer-EncodersAVY 6,585.6 4,874.1 Tag Converter/Inlays

7 AWID ---- Private ---- RFID Reader/Encoders8 Beal Solutions ---- Private ---- Third Party Logistics9 BearingPoint BE 1,683.0 3,195.6 Systems Integrators/Consulting

10 Capgemini CAPP.PA 5,146.8 7,077.4 Systems Integrators/Consulting11 CCL Label ---- Private ---- Label Converters12 Checkpoint Systems CKP 687.6 747.5 Systems Integrators/Consulting

Checkpoint Systems CKP 687.6 747.5 Printer-Encoders13 ConnecTerra ---- Private ---- Middleware/Web Services14 Danaher DHR 14,497.6 5,640.9 Label Applicators

DHR 14,497.6 5,640.9 RFID Reader/Encoders15 Datamax ---- Private ---- Printer-Encoders

---- Private ---- Label Converters16 DHL DPWGN.DE 23,282.3 50,154.5 Third Party Logistics17 Domino Amjet (Div of Domino) DNO.LN 384.3 284.8 Label Applicators18 EM Micro-Marin (Div of The Swatch Group) UHR.VX 4,728.9 3,100.8 Silicon Providers19 Escort Memory Systems (Div of Datalogic) DAL.IM 241.51 160.0 RFID Reader/Encoders20 ESYNC ---- Private ---- Systems Integrators/Consulting21 Exel EXL.L 3,873.4 9,175.2 Third Party Logistics22 FedEx FDX 22,488.7 23,499.0 Third Party Logistics23 GenuOne ---- Private ---- Middleware/Web Services24 Georgia-Pacific GP 9,043.1 20,910.0 Packaging25 GlobeRanger ---- Private ---- Middleware/Web Services26 Hewlett Packard HPQ 65,502.1 76,828.0 Systems Integrators/Consulting27 HighJump (Div of 3M) MMM 66,369.9 18,853.0 Application Software28 i2 Technologies ITWO 354.0 420.6 Application Software29 IBM Global Services IBM 152,879.8 91,316.0 Middleware/Web Services

IBM 152,879.8 91,316.0 Systems Integrators/Consulting30 IconNicholson (Div of IconMediaLabs) ICON.SS 95.8 62.7 Systems Integrators/Consulting31 Impinj ---- Private ---- Silicon Providers32 Infineon Technologies IFX 19,787.6 8,020.8 Silicon Providers33 InfoWave Solutions ---- Private ---- Middleware/Web Services34 Intellident ---- Private ---- Systems Integrators/Consulting35 Intermec Technologies (Div of UNOVA) UNA 1,019.3 1,156.3 Label Converters

UNA 1,019.3 1,156.3 RFID Reader/EncodersUNA 1,019.3 1,156.3 Tag Converter/Inlays

36 International Paper IP 20,278.5 25,468.0 Packaging37 iPico ---- Private ---- RFID Reader/Encoders38 JDA Software JDAS 375.8 221.4 Application Software39 Kurt Salmon Associates ---- Private ---- Systems Integrators/Consulting40 Label Aire (Div of IMPAXX) ---- Private ---- Label Applicators41 Lionize Logistics ---- Private ---- Third Party Logistics42 LXE (Div of EMS Tech) ELMG 220.8 262.8 RFID Reader/Encoders43 Manhattan Associates MANH 910.8 201.2 Application Software44 Manugistics MANU 328.0 243.1 Application Software45 Markem ---- Private ---- Label Applicators46 Matrics ---- Private ---- RFID Reader/Encoders

---- Private ---- Tag Converter/Inlays 47 MeadWestvaco MWV 5,618.7 7,692.0 Packaging48 Menlo Worldwide (Div of CNF Inc) CNF 1,988.1 5,246.5 Third Party Logistics49 Microsoft MSFT 280,122.5 35,608.0 Application Software

Source: Bear, Stearns & Co. Inc.

Page 70 SUPPLY-CHAIN TECHNOLOGY

Exhibit 12 (continued). RFID Universe Alphabetical Listing ($ in millions) Mkt. Cap. LTM

Company Ticker 4-Jun-04 Revenues Sector51 Moore Wallace RRD 7,543.9$ 5,159.5$ Label Converters52 Nanopower Technologies ---- Private ---- Tag Converter/Inlays53 NJ Machines ---- Private ---- Label Applicators54 OATSystems ---- Private ---- Middleware/Web Services55 ODIN Technologies ---- Private ---- Systems Integrators/Consulting56 Oracle ORCL 58,920.5 9,911.0 Application Software57 Paxar PXR 715.5 737.8 Label Converters

PXR 715.5 737.8 Printer-Encoders 58 Peak Technologies ---- Private ---- Systems Integrators/Consulting59 Philips PHG 34,675.2 35,877.9 Silicon Providers60 Printronix PTNX 89.9 125.1 Printer-Encoders61 Progress Software PRGS 665.5 323.6 Middleware/Web Services62 Provia Software ---- Private ---- Application Software63 PSC ---- Private ---- RFID Reader/Encoders64 Psion Teklogix ---- Private ---- RFID Reader/Encoders65 Quatrotec ---- Private ---- Application Software66 R4 Global Services ---- Private ---- Systems Integrators/Consulting67 Red Prairie ---- Private ---- Application Software68 Retek RETK 362.5 178.4 Application Software69 RF Code ---- Private ---- Tag Converter/Inlays

---- Private ---- RFID Reader/Encoders70 RFIdeaWorks ---- Private ---- Middleware/Web Services71 SAMSys Technologies SMY.TO 96.0 0.9 RFID Reader/Encoders72 SAP SAP 49,612.4 8,685.0 Application Software73 Sapient SAPE 771.4 209.2 Systems Integrators/Consulting74 SATO America (Div of Sato Japan) 810.7 466.0 Printer-Encoders75 Savi Technology ---- Private ---- Middleware/Web Services

---- Private ---- RFID Reader/Encoders 76 SeeBeyond Technology SBYN 266.2 136.5 Middleware/Web Services77 Shipcom Wireless ---- Private ---- Middleware/Web Services78 SIRIT SI.TO 45.0 3.7 RFID Reader/Encoders79 Smurfit-Stone SSCC 4,543.0 7,787.0 Packaging80 STMicroelectronics STM 19,775.8 7,644.9 Silicon Providers81 Sun Microsystems SUNW 13,866.9 11,057.0 Middleware/Web Services82 Symbol Technology SBL 3,615.3 1,563.6 RFID Reader/Encoders83 TAGSYS ---- Private ---- Tag Converter/Inlays84 Texas Instruments TXN 43,638.5 10,578.0 Silicon Providers

TXN 43,638.5 10,578.0 Tag Converter/Inlays 85 Tharo Systems ---- Private ---- Label Applicators86 The ePC Group ---- Private ---- Systems Integrators/Consulting87 ThingMagic LLC ---- Private ---- RFID Reader/Encoders88 Tibbett & Britten TBG.LN 393.7 2,859.2 Third Party Logistics89 TIBCO Software TIBX 1,808.9 275.0 Middleware/Web Services90 Top Flight ---- Private ---- Label Converters91 Trenstar ---- Private ---- Logistics92 Tyco Sensormatic TYC 62,371.4 38,806.3 RFID Reader/Encoders

TYC 62,371.4 38,806.3 Middleware/Web Services93 UPM Rafsec (Div of UPM-Kymmene Oyj) UPM 9,788.9 12,227.4 Tag Converter/Inlays94 UPS UPS 81,783.6 34,389.0 Third Party Logistics95 UTI UTIW 1,607.8 1,502.9 Third Party Logistics96 V3 Systems ---- Private ---- Application Software97 VeriSign VRSN 4,339.7 1,014.1 Middleware/Web Services98 Visional Solutions ---- Private ---- Middleware/Web Services99 Weber ---- Private ---- Label Applicators

100 webMethods WEBM 430.3 194.5 Middleware/Web Services101 Weyerhauser WY 14,279.6 20,296.0 Packaging102 WJ Communications WJCI 190.4 25.9 RFID Reader/Encoders

WJCI 190.4 25.9 Silicon Providers103 Xterprise ---- Private ---- Systems Integrators/Consulting104 Zebra Technology ZBRA 3,760.6 565.9 Printer-Encoders

Source: Bear, Stearns & Co. Inc.

BEAR, STEARNS & CO. INC. Page 71

Exhibit 13. Public Companies in RFID Vendors End-Users

Domestic Domestic

Company Name Ticker Company Name Ticker1 Accenture ACN 1 ACE ACE2 Atmel ATML 2 Albertson's Inc ABS3 Avery Dennison AVY 3 Best Buy Co. BBY4 Checkpoint Systems CKP 4 Boeing BA5 Danaher DHR 5 Delta Air Lines DAL6 Donnelley RR and Sons RRD 6 Home Depot HD7 Fedex Corp FDX 7 Kmart KMRT8 Georgia-Pacific GP 8 Kohl's KSS9 Hewlett Packard HPQ 9 Kroger Co KR

10 HighJump (Div of 3M) MMM 10 Lowes Cos LOW11 i2 Technologies ITWO 11 Sears, Roebuck and Co S12 IBM IBM 12 Target TGT13 Infineon Technologies IFX 13 Wal-Mart Stores WMT14 Intermec Technologies (Div of UNOVA) UNA 14 Abbott Laboratories ABT16 International Paper IP 15 Barr Pharmaceuticals BRL17 JDA Software JDAS 16 Cardinal Health CAH18 LXE (Div of EMS Tech) ELMG 17 CVS CVS19 Manhattan Associates MANH 18 Johnson & Johnson JNJ20 Manugistics MANU 19 McKesson MCK21 MeadWestvaco MWV 20 Pfizer PFE22 Menlo Worldwide (Div of CNF Inc) CNF 21 Procter & Gamble PG23 Microsoft MSFT 22 Rite Aid RAD24 Oracle ORCL25 Paxar PXR26 Philips PHG27 Printronix PTNX28 Progress Software PRGS Foreign29 Retek RETK30 SAP SAP Company Name Ticker31 Sapient SAPE 1 Airbus (Div of 80% EADS / 20% BAE Systems) EADSF.PK BAESF.PK32 SeeBeyond Technology SBYN 2 Metro AG MTAGF.PK33 Smurfit-Stone SSCC 3 Tesco TSCDY.PK34 STMicroelectronics STM35 Sun Microsystems SUNW36 Symbol Technology SBL37 Texas Instruments TXN38 TIBCO Software TIBX39 Tyco Sensormatic TYC40 United Parcel Service UPS41 UPM Rafsec (Div of UPM-Kymmene Oyj) UPM42 UTI UTIW43 VeriSign VRSN44 webMethods WEBM45 Weyerhaeuser WY46 WJ Communications WJCI47 Zebra Technology ZBRA

Foreign

Company Name Ticker1 Capgemini CAPP.PA2 DHL DPWGN.DE3 Domino Amjet (Div of Domino) DNO.LN4 EM Micro-Marin (Div of The Swatch Group) UHR.VX5 Escort Memory Systems (Div of Datalogic) DAL.IM6 Exel EXL.L7 IconNicholson (Div of IconMediaLabs) ICON.SS8 SAMSys Technologies SMY.TO9 Sato (Div of Sato Japan) M6287

10 SIRIT SI.TO11 Tibbett & Britten TBG.LN Source: Bear, Stearns & Co. Inc.

Page 72 SUPPLY-CHAIN TECHNOLOGY

BEAR, STEARNS & CO. INC. Page 73

Universe Tables

Page 74 SUPPLY-CHAIN TECHNOLOGY

BEAR, STEARNS & CO. INC. Page 75

Exhibit 14. Bear Stearns Application Software / Supply-Chain Technology Universe — EPS and Revenue Multiples, 2001-05E Application Software / SCT Share Market C04 ending Trading Short Sector Rating: Price ($) 52-Week Count Cap BSC Target Float Volume InterestMarket Weight 6/4/2004 High Low (MM)(3) (MM) Rating Price (11,12) (MM) (MM) (4) % (5)

Agile Software (AGIL) (7) $7.98 $12.73 $7.15 52 $417 Peer Perform 35 0.51 4.2%Aspen Technology (AZPN) (7) $6.22 $12.32 $2.27 52 $323 Peer Perform 31 0.63 20.4%FreeMarkets, Inc. (FMKT) $6.71 $10.45 $5.30 45 $304 Peer Perform 41 0.55 2.5%i2 Technologies (ITWO) $0.82 $2.45 $0.55 434 $354 Underperform 320 2.21 NMJDA Software (JDAS) $12.96 $22.36 $10.74 30 $385 Peer Perform 23 0.40 5.1%Manhattan Associates (MANH) $29.10 $34.16 $23.63 31 $912 Outperform $38 26 0.63 14.3%Manugistics (MANU) (7) (10) $4.00 $9.10 $3.80 82 $328 Peer Perform 45 1.22 5.5%MatrixOne, Inc. (MONE) (7) $7.09 $8.75 $4.04 48 $343 Outperform $8 35 0.39 6.7%PTC (PMTC) (7) $4.75 $5.50 $2.76 274 $1,300 Peer Perform 209 1.44 2.0%Retek, Inc. (RETK) $6.59 $11.99 $5.69 55 $362 Peer Perform 50 0.65 2.7%SCT Group Average $503 81 0.86 7.1%SCT Group Median $358 38 0.63 5.1%Nasdaq Composite 1,979 2,154 1,597

Adjusted EPS (1, 8, 9) PE (2)

2001-2005E 2001 2002 2003E 2004E 2005E 2001 (6) 2002 (6) 2003E 2004E 2005E

Agile Software (AGIL) (7) ($0.32) ($0.66) ($0.15) $0.01 $0.14 NM NM NM NM 56.6xAspen Technology (AZPN) (7) ($0.62) ($0.75) $0.18 $0.25 $0.39 NM NM 35.0x 25.2x 15.9xFreeMarkets, Inc. (FMKT) ($0.34) $0.26 $0.04 $0.20 $0.30 NM 25.4x NM 34.2x 22.1xi2 Technologies (ITWO) ($0.24) ($1.69) $0.11 ($0.13) ($0.10) NM NM 7.7x NM NMJDA Software (JDAS) $0.67 $0.55 $0.25 $0.23 $0.43 19.3x 23.7x 51.5x 56.3x 30.1xManhattan Associates (MANH) $0.72 $0.85 $0.80 $1.00 $1.25 40.2x 34.3x 36.2x 29.2x 23.3xManugistics (MANU) (7) ($0.19) ($0.66) ($0.17) ($0.06) ($0.04) NM NM NM NM NMMatrixOne, Inc. (MONE) (7) ($0.20) ($0.34) ($0.37) ($0.07) $0.17 NM NM NM NM 40.9xPTC (PMTC) (7) $0.15 ($0.10) ($0.14) $0.23 $0.31 31.1x NM NM 20.7x 15.1xRetek, Inc. (RETK) $0.08 $0.05 ($0.06) $0.15 $0.31 80.0x NM NM 44.8x 21.3xSCT Group Average ($0.03) ($0.25) $0.05 $0.18 $0.32 42.7x 27.8x 32.6x 35.1x 28.2xSCT Group Median ($0.19) ($0.22) ($0.01) $0.17 $0.31 35.6x 25.4x 35.6x 31.7x 22.7x

Revenue (MM) (8) Market Cap / Revenue

2001-2005E 2001 2002 2003E 2004E 2005E 2001 2002 2003E 2004E 2005E

Agile Software (AGIL) (7) $91 $67 $85 $110 $125 4.6x 6.3x 4.9x 3.8x 3.3xAspen Technology (AZPN) (7) 321 328 320 340 387 1.0x 1.0x 1.0x 0.9x 0.8xFreeMarkets, Inc. (FMKT) 167 182 151 153 185 1.8x 1.7x 2.0x 2.0x 1.6xi2 Technologies (ITWO) (13) 571 381 342 272 255 0.6x 0.9x 1.0x 1.3x 1.4xJDA Software (JDAS) 214 219 207 234 257 1.8x 1.8x 1.9x 1.6x 1.5xManhattan Associates (MANH) 161 173 196 216 249 5.7x 5.3x 4.7x 4.2x 3.7xManugistics (MANU) (7) 307 279 248 222 238 1.1x 1.2x 1.3x 1.5x 1.4xMatrixOne, Inc. (MONE) (7) 138 124 100 123 143 2.5x 2.8x 3.4x 2.8x 2.4xPTC (PMTC) (7) 898 719 664 670 721 1.4x 1.8x 2.0x 1.9x 1.8xRetek, Inc. (RETK) 179 192 168 193 222 2.0x 1.9x 2.2x 1.9x 1.6xSCT Group Average $305 $266 $248 $253 $278 2.3x 2.5x 2.4x 2.2x 2.0xSCT Group Median $197 $206 $202 $219 $243 1.8x 1.8x 2.0x 1.9x 1.6x

Enterprise Value / EBITDA Enterprise Value / Sales

2001-2005E 2001 2002 2003E 2004E 2005E 2001 2002 2003E 2004E 2005E

Agile Software (AGIL) (7) NM NM NM 71.7x 16.5x 1.4x 2.3x 2.0x 1.6x 1.4xAspen Technology (AZPN) (7) NM 69.7x 9.4x 6.7x 4.6x 1.2x 1.3x 1.3x 1.1x 0.8xFreeMarkets, Inc. (FMKT) 75.2x 6.5x 15.3x 9.0x 6.4x 1.3x 1.0x 1.3x 1.2x 0.9xi2 Technologies (ITWO) NM 1.5x 4.3x NM NM 0.1x 0.9x 1.2x 1.8x 2.0xJDA Software (JDAS) 10.0x 9.1x 14.4x 19.4x 10.4x 1.5x 1.3x 1.3x 1.3x 1.1xManhattan Associates (MANH) 20.7x 17.8x 20.0x 12.5x 9.1x 5.1x 4.6x 3.9x 3.3x 2.6xManugistics (MANU) (7) NM NM 26.3x 18.9x 12.4x 1.1x 1.5x 1.5x 1.6x 1.5xMatrixOne, Inc. (MONE) (7) NM NM NM 75.1x 12.5x 1.4x 1.7x 2.2x 1.8x 1.4xPTC (PMTC) (7) 11.6x 88.1x 54.2x 8.3x 5.6x 1.2x 1.5x 1.6x 1.5x 1.2xRetek, Inc. (RETK) 20.1x 19.8x NM 9.2x 5.2x 1.6x 1.4x 1.7x 1.3x 1.0xSCT Group Average 27.5x 30.4x 20.6x 25.6x 9.2x 1.6x 1.8x 1.8x 1.6x 1.4xSCT Group Median 20.1x 17.8x 15.3x 12.5x 9.1x 1.3x 1.5x 1.6x 1.5x 1.3x

Price / Adjusted Earnings / Earnings Growth Net Cash / Share

2001-2005E 2001 2002 2003E 2004E 2005E 2001 2002 2003E 2004E 2005E

Agile Software (AGIL) (7) NM NM NM NM 2.8x $6.19 $5.49 $4.88 $4.52 $4.45Aspen Technology (AZPN) (7) NM NM NM 1.7x 1.1x ($2.02) ($2.89) ($1.35) ($0.50) ($0.05)FreeMarkets, Inc. (FMKT) NM NM NM 2.3x 1.5x $2.51 $2.96 $3.00 $3.33 $3.67i2 Technologies (ITWO) NM NM NM NM NM $0.83 $0.11 ($0.10) ($0.30) ($0.34)JDA Software (JDAS) 1.3x 1.6x 3.4x 3.8x 2.0x $2.59 $3.61 $3.94 $2.55 $2.84Manhattan Associates (MANH) 2.0x 1.7x 1.8x 1.5x 1.2x $3.20 $3.99 $5.04 $6.25 $7.88Manugistics (MANU) (7) NM NM NM NM NM ($0.09) ($1.38) ($0.60) ($0.16) $0.19MatrixOne, Inc. (MONE) (7) NM NM NM NM NM $3.08 $2.85 $2.52 $2.43 $2.67PTC (PMTC) (7) 1.6x NM NM NM 0.8x $0.90 $0.80 $0.82 $1.05 $1.47Retek, Inc. (RETK) 5.3x NM NM NM 1.4x $1.71 $1.63 $1.53 $2.04 $2.74SCT Group Average 2.5x 1.6x 2.6x 2.3x 1.5x $1.89 $1.72 $1.97 $2.12 $2.55SCT Group Median 1.8x 1.6x 2.6x 2.0x 1.4x $2.11 $2.24 $2.03 $2.23 $2.70 (1) Adjusted EPS exclude effects of nonrecurring events and amortization expense. (2) Excludes impacts of nonrecurring events and amortization expense. (3) Estimated average diluted share count for the current quarter. (4) Average daily trading volume over past 52 weeks. (5) Shares short as a percent of float. (6) Based on current market price and historical earnings for the period and estimated average diluted share counts for the current quarter; based on First Call adjusted EPS estimates. (7) MANU reports fiscal February, AGIL fiscal April, MONE fiscal June, AZPN fiscal June, PMTC fiscal September. (8) Values calendarized for MANU, AGIL, MONE, AZPN and PMTC. (9) Adjustments to net income include amortization of intangibles, amortization of stock-based compensation, in-process R&D, net gains (losses) on investments, and restructuring charges. (10) With forward projections of operating losses and a net debt position, we do not have a target price for MANU. (11) Methodology for all stocks (w/ price targets) is based on a forward rolling target P/E multiple to derive our year-end 2004 price targets. (12) Risk to our price targets: weaker-than-anticipated economy leading to reduced demand and or pricing, and multiple contraction into improving earnings, and increased regulation by government. (13) Revenue figures for ITWO exclude contract revenues. Source: Company reports; First Call; Bear, Stearns & Co. Inc. estimates.

Page 76 SUPPLY-CHAIN TECHNOLOGY

Exhibit 15. Bear Stearns Application Software / Supply-Chain Technology Universe — Comparative Financial Returns and Metrics, 2001-05E

COMPOUND ANNUAL GROWTH RATES 2001-2005E (5) DEBT RATIO (2)Revenue EBITDA EPS (1) 2001-2005E 2001 2002 2003 2004E 2005E

Agile Software (AGIL) (4) 8.4% NM NM Agile Software (AGIL) (4) 0.0% 0.7% 0.3% 0.0% 0.0%Aspen Technology (AZPN) (4) 4.7% NM NM Aspen Technology (AZPN) (4) 29.4% 38.4% 44.2% 37.3% 32.6%FreeMarkets, Inc. (FMKT) 2.7% 71.1% NM FreeMarkets, Inc. (FMKT) 2.9% 1.8% 0.8% 0.9% 0.9%i2 Technologies (ITWO) NM NM NM i2 Technologies (ITWO) 41.4% 377.3% 596.0% 3810.1% -2640.9%JDA Software (JDAS) 4.7% -3.4% -10.4% JDA Software (JDAS) 0.0% 0.0% 0.0% 0.0% 0.0%Manhattan Associates (MANH) 11.5% 15.9% 14.7% Manhattan Associates (MANH) 4.0% 0.2% 0.2% 0.0% 0.0%Manugistics (MANU) (4) NM NM NM Manugistics (MANU) (4) 39.3% 56.1% 47.1% 46.3% 47.4%MatrixOne, Inc. (MONE) (4) 0.7% 8200.0% NM MatrixOne, Inc. (MONE) (4) 0.0% 0.0% 0.0% 0.0% 0.0%PTC (PMTC) (4) NM 14.0% 19.7% PTC (PMTC) (4) 0.0% 0.0% 0.0% 0.0% 0.0%Retek, Inc. (RETK) 5.4% 31.2% 39.3% Retek, Inc. (RETK) 0.1% 0.2% 11.7% 10.9% 9.5%SCT Group Average 5.5% 1388.1% 15.8% SCT Group Average 11.7% 47.5% 70.0% 390.6% -255.0%

GROSS MARGIN ADJUSTED OPERATING MARGIN (6)2001-2005E 2001 2002 2003 2004E 2005E 2001-2005E 2001 2002 2003 2004E 2005E

Agile Software (AGIL) (4) 80.3% 71.0% 67.7% 66.6% 67.6% Agile Software (AGIL) (4) -30.7% -55.9% -11.7% -4.3% 8.3%Aspen Technology (AZPN) (4) 58.8% 61.1% 63.8% 64.8% 66.1% Aspen Technology (AZPN) (4) -9.9% -8.2% 3.2% 7.7% 12.2%FreeMarkets, Inc. (FMKT) 52.8% 58.1% 53.9% 56.2% 58.0% FreeMarkets, Inc. (FMKT) -9.3% 5.1% -0.1% 4.0% 5.8%i2 Technologies (ITWO) 59.9% 67.8% 60.2% 52.0% 53.2% i2 Technologies (ITWO) -31.7% 19.6% 13.8% -12.0% -9.8%JDA Software (JDAS) 57.7% 60.0% 59.6% 61.6% 63.2% JDA Software (JDAS) 11.2% 10.4% 4.8% 3.7% 7.7%Manhattan Associates (MANH) 58.4% 61.0% 59.8% 61.5% 62.3% Manhattan Associates (MANH) 20.7% 21.8% 17.8% 21.7% 24.2%Manugistics (MANU) (4) 63.7% 54.7% 55.9% 56.3% 56.9% Manugistics (MANU) (4) -6.2% -14.0% 0.8% 2.9% 6.8%MatrixOne, Inc. (MONE) (4) 54.9% 54.0% 49.0% 55.1% 58.3% MatrixOne, Inc. (MONE) (4) -9.9% -14.7% -18.8% -3.9% 5.1%PTC (PMTC) (4) 71.5% 70.5% 67.6% 71.0% 71.6% PTC (PMTC) (4) 6.1% -3.4% -2.3% 12.8% 16.8%Retek, Inc. (RETK) 61.8% 59.1% 49.6% 50.9% 53.9% Retek, Inc. (RETK) 2.6% 0.9% -5.4% 5.7% 11.0%SCT Group Average 62.0% 61.7% 58.7% 59.6% 61.1% SCT Group Average -5.7% -3.8% 0.2% 3.8% 8.8%

LICENSE REVENUE AS A PERCENTAGE OF TOTAL REVENUE LICENSE REVENUE / SALES AND MARKETING EXPENSE2001-2005E 2001 2002 2003 2004E 2005E 2001-2005E 2001 2002 2003 2004E 2005E

Agile Software (AGIL) (4) 67.4% 43.2% 39.0% 39.4% 40.6% Agile Software (AGIL) (4) 1.0x 0.6x 0.9x 1.0x 1.1xAspen Technology (AZPN) (4) 41.5% 43.1% 45.7% 47.0% 48.0% Aspen Technology (AZPN) (4) 1.1x 1.2x 1.5x 1.6x 1.7xFreeMarkets, Inc. (FMKT) (8) NM NM NM NM NM FreeMarkets, Inc. (FMKT) (8) NM NM NM NM NMi2 Technologies (ITWO) 22.4% 9.8% 13.2% 14.5% 15.4% i2 Technologies (ITWO) 0.5x 0.4x 0.7x 0.6x 0.7xJDA Software (JDAS) 33.3% 30.4% 28.6% 28.0% 29.2% JDA Software (JDAS) 1.9x 1.7x 1.4x 1.2x 1.3xManhattan Associates (MANH) 22.1% 23.2% 22.1% 26.6% 28.2% Manhattan Associates (MANH) 1.6x 1.5x 1.4x 1.8x 1.9xManugistics (MANU) (4) 43.0% 30.1% 29.8% 26.2% 26.6% Manugistics (MANU) (4) 1.1x 0.8x 1.0x 0.9x 1.0xMatrixOne, Inc. (MONE) (4) 46.8% 42.0% 31.7% 40.2% 43.2% MatrixOne, Inc. (MONE) (4) 1.2x 1.1x 0.9x 1.2x 1.5xPTC (PMTC) (4) 38.4% 32.0% 30.7% 30.7% 31.5% PTC (PMTC) (4) 0.9x 0.7x 0.7x 0.9x 1.0xRetek, Inc. (RETK) (7) 73.4% 69.1% 53.6% 56.8% 58.8% Retek, Inc. (RETK) 2.5x 2.6x 2.7x 3.0x 3.2xSCT Group Average 43.1% 35.9% 32.7% 34.4% 35.7% SCT Group Average 1.3x 1.2x 1.3x 1.4x 1.5x

CASH FLOW FROM OPERATIONS (MM) FREE CASH FLOW YIELD (3)2001-2005E 2001 2002 2003 2004E 2005E 2001-2005E 2001 2002 2003 2004E 2005E

Agile Software (AGIL) (4) ($10.6) ($20.2) ($13.0) $1.4 $11.4 Agile Software (AGIL) (4) -4.7% -6.1% -4.2% -0.9% 1.3%Aspen Technology (AZPN) (4) (10.8) 6.7 22.8 36.6 53.9 Aspen Technology (AZPN) (4) -6.1% -0.4% 3.6% 6.2% 9.5%FreeMarkets, Inc. (FMKT) (14.7) 21.3 (2.3) 8.5 13.1 FreeMarkets, Inc. (FMKT) -10.4% 4.7% -2.3% 0.0% 1.0%i2 Technologies (ITWO) (73.9) (311.6) (99.7) (79.9) (10.9) i2 Technologies (ITWO) -19.5% -40.3% -14.3% -14.8% -5.0%JDA Software (JDAS) 29.4 41.5 20.8 1.0 21.5 JDA Software (JDAS) 5.9% 8.6% 2.7% -9.0% 2.3%Manhattan Associates (MANH) 39.4 46.0 36.3 59.0 63.9 Manhattan Associates (MANH) 3.2% 3.9% 2.8% 5.3% 5.9%Manugistics (MANU) (4) (10.7) (28.2) 0.6 4.9 17.0 Manugistics (MANU) (4) -3.6% -7.3% -0.7% 0.5% 3.0%MatrixOne, Inc. (MONE) (4) (1.7) (12.8) (12.1) 1.3 21.0 MatrixOne, Inc. (MONE) (4) -2.9% -5.0% -4.3% -0.6% 5.0%PTC (PMTC) (4) 32.7 (15.3) 17.8 68.6 125.3 PTC (PMTC) (4) -1.6% -3.3% -0.3% 3.6% 7.8%Retek, Inc. (RETK) 23.6 (2.3) 2.4 26.7 38.9 Retek, Inc. (RETK) 1.4% -2.0% 0.2% 6.6% 9.8%SCT Group Average $0.3 ($27.5) ($2.6) $12.8 $35.5 SCT Group Average -3.8% -4.7% -1.7% -0.3% 4.1%

RETURN ON AVERAGE EQUITY RETURN ON AVERAGE TOTAL CAPITAL2001-2005E 2001 2002 2003 2004E 2005E 2001-2005E 2001 2002 2003 2004E 2005E

Agile Software (AGIL) (4) -6.3% -8.3% -4.0% 0.3% 2.8% Agile Software (AGIL) (4) -6.3% -8.2% -4.0% 0.3% 2.8%Aspen Technology (AZPN) (4) -7.3% -7.8% 5.0% 15.3% 20.7% Aspen Technology (AZPN) (4) -5.1% -5.4% 2.7% 9.2% 13.5%FreeMarkets, Inc. (FMKT) -4.8% 7.7% 1.1% 6.5% 10.9% FreeMarkets, Inc. (FMKT) -4.7% 7.5% 1.0% 6.5% 10.8%i2 Technologies (ITWO) -2.2% -516.7% -16.2% 17.9% 11.7% i2 Technologies (ITWO) -2.0% -131.2% 57.4% -166.9% 2032.8%JDA Software (JDAS) 8.5% 9.2% 4.6% 6.7% 4.7% JDA Software (JDAS) 8.5% 9.2% 4.6% 6.7% 4.7%Manhattan Associates (MANH) 17.7% 15.8% 12.0% 12.9% 14.3% Manhattan Associates (MANH) 15.9% 14.4% 11.1% 12.3% 13.5%Manugistics (MANU) (4) -2.9% -16.5% -4.8% -2.5% 4.0% Manugistics (MANU) (4) -1.8% -8.7% -2.4% -1.4% 2.1%MatrixOne, Inc. (MONE) (4) -3.0% -13.3% -12.1% -5.2% 6.0% MatrixOne, Inc. (MONE) (4) -3.0% -13.3% -12.1% -5.2% 6.0%PTC (PMTC) (4) 8.2% -8.9% -13.9% 22.6% 22.6% PTC (PMTC) (4) 8.2% -8.9% -13.9% 22.6% 22.6%Retek, Inc. (RETK) 2.5% 1.6% -3.3% 8.7% 16.7% Retek, Inc. (RETK) 1.8% 0.7% -4.0% 6.6% 13.1%SCT Group Average 1.0% -53.7% -3.2% 8.3% 11.4% SCT Group Average 1.1% -14.4% 4.0% -10.9% 212.2% (1) Adjusted EPS, which exclude noncash, nonrecurring items. (2) Debt ratio defined as total debt/total debt + equity (%). (3) Free cash flow yield equals cash flow from operations minus capex divided by market cap plus debt (including redeemable preferred). (4) MANU reports fiscal February, AGIL fiscal April, MONE fiscal June, AZPN fiscal June, PMTC fiscal September. (5) Based on calendarized values. (6) Adjusted operating margin excludes amortization expenses and other nonrecurring charges. (7) RETK reports a combined software license and maintenance figure. (8) Currently, software license revenue is not broken out from total revenue at FMKT. Source: Company reports; First Call; Bear, Stearns & Co. Inc. estimates.

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Page 77

Exhibit 16. Software Valuation Matrix (in millions, unless otherwise noted) Price Shares Market Ent EPS(1) Revenue(1) Cash

Company Symbol Rating 06/04/04 High Low Outstg Cap Value FY 2003 2004E 2005E 2003 2004E 2005E 2003 2004E 2005E 2003 2004E 2005E Cash per Share ST Debt LT Debt

Integration SoftwareCitrix CTXS NR 20.16$ 27.86$ 16.74$ 172.6 3,479.3 3,228.1 Dec 0.78 0.81 0.95 25.8 24.9 21.2 588.6 704.0 777.4 5.5 4.6 4.2 251.2 1.46 - - IONA IONA NR 4.77$ 9.46$ 2.00$ 36.7 175.1 122.7 Dec (0.58) 0.10 0.14 NM 47.7 34.1 74.2 78.1 86.9 1.7 1.6 1.4 52.4 1.43 - - Plumtree PLUM NR 3.50$ 5.88$ 3.10$ 31.5 110.3 42.6 Dec 0.07 (0.34) (0.12) 50.0 NM NM 71.5 74.2 84.0 0.6 0.6 0.5 67.7 2.15 - - SeeBeyond SBYN NR 3.13$ 6.26$ 1.82$ 84.1 263.1 192.4 Dec (0.25) (0.01) 0.08 NM NM 39.1 137.8 159.1 188.1 1.4 1.2 1.0 73.8 0.88 2.6 0.4 Sybase SY NR 16.84$ 4.73$ 2.10$ 101.1 1,701.7 1,193.4 Dec 1.08 1.05 1.15 15.6 16.0 14.6 778.1 809.0 850.6 1.5 1.5 1.4 508.4 5.03 - - TIBCO TIBX O 8.13$ 9.75$ 4.39$ 222.5 1,808.5 1,345.7 Nov 0.07 0.23 0.25 NM 35.9 33.2 264.2 319.5 335.9 5.1 4.2 4.0 515.9 2.32 1.6 51.4 TIBCO TIBX O 8.13$ 9.75$ 4.39$ 222.5 1,808.5 1,345.7 Nov 0.07 0.21 0.25 NM 38.1 32.7 264.2 318.0 349.0 5.1 4.2 3.9 515.9 2.32 1.6 51.4 Vitria VITR NR 2.88$ 8.41$ 2.75$ 32.8 94.5 3.7 Dec (0.48) - - NM NM NM 80.7 - - 0.0 NM NM 91.0 2.77 0.1 0.1 webMethods WEBM P 8.18$ 12.17$ 7.24$ 52.1 426.2 271.5 Mar (0.26) 0.01 0.08 NM NM 98.7 187.8 226.3 247.0 1.4 1.2 1.1 155.9 2.99 0.9 0.4 webMethods WEBM P 8.18$ 12.17$ 7.24$ 52.1 426.2 271.5 Mar (0.26) (0.02) 0.07 NM NM NM 187.8 216.5 236.8 1.4 1.3 1.1 155.9 2.99 0.9 0.4 Average or Total(2) 8,058.8 6,400.1 30.5 31.1 40.1 2,182.9 2,370.2 2,570.0 2.2 2.1 1.9 1,716.3 5.3 52.3

S&P Avg 1,119.6 55.00 62.00 65.00 20.4 18.1 17.2 #REF! #REF! #REF! #REF! #REF! #REF! #REF!

52 Week P/E EV/Revenue

Rating key: O=Outperform, P=Peer Perform, U=Underperform, NR=Not Rated. Sector rating: Market Underweight. Shading indicates Bear Stearns estimates. (1) Calendarized revenue and EPS estimates. (2) Averages and totals include Bear Stearns forecasts (vs. consensus).

Source: Company reports; First Call; Bear, Stearns & Co. Inc. estimates.

Page 78 SUPPLY-CHAIN TECHNOLOGY

Exhibit 17. Bear Stearns Airfreight Universe — EPS and Book Value Multiples, 2001-05E Share Market BSC Rating C04 Year- Dividend

SECTOR RATING: Price ($) Year-to-Date Count Cap Stock Since End Target Annual YieldMarket Overweight 6/4/2004 High Low (MM) (5) (MM) Rating (U/D) (6) Price (10,11) Dividend (%)

Asset-BasedFedEx Corp. (FDX) $74.22 $76.07 $64.92 303.0 $22,489 Outperform 1/12/04 (U) $84 $0.28 0.4%TPG N.V. (TP) (1) $22.56 $24.30 $19.79 475.1 10,718 Outperform 1/16/02 (U) $28 $0.55 2.4%United Parcel Service (UPS) $71.74 $74.55 $67.98 1,140.0 81,784 Outperform 5/31/02 (U) $84 $1.12 1.6%Non-Asset Based ServicesC.H. Robinson (CHRW) $41.67 $43.85 $37.24 86.4 3,601 Outperform 3/23/04 (U) $47 $0.48 1.2%Expeditors Int'l (EXPD) $46.47 $46.88 $35.75 109.6 5,094 Outperform 05/06/04 (U) $55 $0.22 0.5%Manhattan Assoc. (MANH) $29.10 $30.60 $25.81 31.3 912 Outperform 1/26/2001 $38 Nil NilUTI Worldwide (UTIW) $50.72 $50.74 $37.81 31.7 1,610 Outperform 9/5/2002 (U) $50 $0.115 0.2%Asset-Light TransportsEGL Inc. (EAGL) (2) $23.49 $23.60 $15.05 47.1 1,107 NR 9/20/01 (S) - Nil NilForward Air (FWRD) $33.10 $34.26 $27.50 21.9 724 Outperform 4/25/03 (U) $37 Nil NilLandstar System (LSTR) $48.51 $49.73 $34.01 31.0 1,502 Outperform 2/17/2004 (U) $54 Nil NilPacer International (PACR) $18.60 $22.02 $18.34 38.2 711 Peer Perform 4/1/2004 (D) - Nil NilQuality Distribution (QLTY) $9.87 $19.98 $7.14 19.1 189 Peer Perform 5/10/2004 (U) - Nil NilS&P 500 $1,122.51 $1,157.76 $1,084.10 - - - - $1,160.00 $19.19 1.7%

Earnings / Share Book Value / ShareAbsolute Estimates2001-2005E 2001 2002 2003 2004E 2005E 2001 2002 2003 2004E 2005EAsset-BasedFedEx Corp. (FDX) (3) $1.95 $2.49 $2.96 $3.91 $4.40 $20.12 $21.60 $24.07 $26.45 $30.16TPG N.V. (TP) (1) 1.10 1.19 1.42 1.70 1.91 4.66 5.80 7.12 8.67 9.98United Parcel Service (UPS) 2.10 2.14 2.44 2.96 3.35 8.96 10.99 13.05 14.43 16.46Non-Asset Based ServicesC.H. Robinson (CHRW) 0.98 1.08 1.25 1.46 1.69 4.15 4.97 6.01 6.89 7.88Expeditors Int'l (EXPD) 0.92 1.02 1.10 1.42 1.66 3.78 4.80 5.92 6.91 8.13Manhattan Assoc. (MANH) 0.72 0.85 0.80 1.00 1.25 4.59 6.08 7.42 8.36 9.50UTI Worldwide (UTIW) 0.75 1.11 1.38 1.62 1.87 7.07 12.23 12.26 13.25 14.69Asset-Light TransportsEGL Inc. (EAGL) (2) 1.23 (0.62) 0.25 0.91 1.17 7.64 7.88 8.54 NA NAForward Air (FWRD) 0.89 0.92 1.19 1.38 1.60 4.79 5.36 6.80 8.13 9.69Landstar (LSTR) 1.25 1.47 1.65 2.03 2.35 3.44 4.45 4.47 5.22 6.85Pacer International (PACR) 0.40 0.75 1.03 1.28 1.40 0.11 5.38 5.69 6.93 8.33Quality Distribution (QLTY) (12) (0.48) (0.10) 0.59 0.78 1.05 NM NM NM 1.18 3.33S&P 500 45.16 47.94 55.41 63.25 69.00 290.27 319.01 355.23 399.28 449.09

Absolute P/E Multiples (9) Relative P/E Multiples (4)Price / Earnings 2001 2002 2003 2004E 2005E 2001 2002 2003 2004E 2005E2001-2005E Range Range Range Range Range RangeAsset-BasedFedEx Corp. (FDX) (3) 19.7x-14.3x 24.8x-14.7x 21.9x-17.3x 19.0x 16.9x 0.7x-0.7x 0.9x-0.8x 1.0x-0.9x 1.1x 1.0xTPG N.V. (TP) (1) 21.7x-13.4x 17.6x-11.1x 13.7x-9.0x 13.3x 11.8x 0.7x-0.7x 0.6x-0.6x 0.6x-0.5x 0.7x 0.7xUnited Parcel Service (UPS) 24.7x-20.5x 27.4x-24.4x 26.7x-22.8x 24.3x 21.4x 1.0x-0.8x 1.3x-0.9x 1.2x-1.2x 1.4x 1.3xGroup Average 22.0x-16.1x 23.3x-16.7x 20.8x-16.4x 18.8x 16.7x 0.8x-0.7x 0.9x-0.8x 0.9x-1.1x 1.1x 1.0xNon-Asset Based ServicesC.H. Robinson (CHRW) 31.5x-24.1x 31.5x-23.0x 29.7x-23.5x 28.6x 24.7x 1.2x-1.1x 1.2x-1.1x 1.3x-1.3x 1.6x 1.5xExpeditors Int'l (EXPD) 31.4x-21.9x 31.1x-23.8x 31.1x-25.4x 32.7x 28.0x 1.1x-1.1x 1.3x-1.1x 1.4x-1.4x 1.8x 1.7xManhattan Assoc. (MANH) 54.8x-14.3x 41.1x-13.8x 32.4x-16.3x 29.2x 23.3x 1.8x-0.7x 1.4x-0.7x 1.4x-0.9x 1.6x 1.4xUTI Worldwide (UTIW) 20.3x-13.0x 23.4x-15.4x 25.1x-18.6x 31.2x 27.1x 0.7x-0.6x 0.8x-0.8x 1.1x-1.0x 1.8x 1.7xGroup Average 34.5x-18.3x 31.8x-19.0x 29.6x-21.0x 30.4x 25.8x 1.2x-0.9x 1.2x-0.9x 1.3x-1.1x 1.7x 1.6xAsset-Light TransportsEGL Inc. (EAGL) (2) 56.2x-13.2x 32.2x-14.8x 21.6x-16.2x 25.8x 20.1x 1.9x-0.6x 1.1x-0.8x 1.0x-0.9x 1.5x 1.2xForward Air (FWRD) 31.0x-18.9x 31.3x-15.4x 24.9x-16.7x 23.9x 20.7x 1.0x-0.9x 1.1x-0.8x 1.1x-0.9x 1.3x 1.3xLandstar (LSTR) 12.8x-9.9x 18.0x-12.9x 20.8x-15.6x 23.9x 20.6x 0.5x-0.4x 0.7x-0.6x 0.9x-0.8x 1.3x 1.3xPacer International (PACR) NA 21.2x-12.9x 19.3x-13.4x 14.6x 13.3x NA 0.7x-0.7x 0.9x-0.7x 0.8x 0.8xQuality Distribution (QLTY) (13) NA NA NM 11.1x 8.7x NA NA NM 0.6x 0.5xGroup Average 33.3x-14.0x 25.7x-14.0x 21.7x-15.5x 19.9x 16.7x 1.1x-0.7x 0.9x-0.7x 1.0x-0.8x 1.1x 1.0xUniverse Average 29.2x-15.6x 26.1x-15.7x 24.1x-18.4x 23.1x 19.7x 1.1x-0.8x 1.0x-0.8x 1.1x-1.0x 1.3x 1.2xS&P 500 29.9x-20.5x 29.1x-18.6x 22.4x-18.8x 17.7x 16.3x NM NM NM NM NM

Enterprise Value/EBITDA (7, 8) Price / Book Value2001 2002 2003 2004E 2005E 2001 2002 2003 2004E 2005E

2001-2005E Range Range Range Range Range RangeAsset-BasedFedEx Corp. (FDX) (3) 11.3x-8.9x 10.7x-8.6x 12.0x-9.1x 11.0x 9.6x 2.5x-1.6x 2.5x-1.8x 3.2x-2.1x 2.8x 2.5xTPG N.V. (TP) (1) 12.0x-8.1x 10.4x-7.5x 6.9x-4.7x 6.8x 6.3x 5.7x-3.6x 3.9x-2.7x 3.2x-1.9x 2.6x 2.3xUnited Parcel Service (UPS) 14.4x-11.4x 14.5x-11.9x 14.5x-10.8x 11.6x 10.4x 6.9x-5.4x 6.1x-5.0x 5.7x-4.2x 5.0x 4.4xGroup Average 12.5x-9.4x 11.9x-9.4x 11.1x-8.2x 9.8x 8.8x 5.0x-3.3x 4.1x-2.8x 4.0x-2.7x 3.5x 3.0xNon-Asset Based ServicesC.H. Robinson (CHRW) NA NA NA 15.8x 13.4x 7.7x-5.7x 7.1x-5.3x 6.9x-4.7x 6.0x 5.3xExpeditors Int'l (EXPD) 19.4x-12.5x 18.2x-13.2x 20.3x-14.8x 18.1x 15.1x 8.6x-5.7x 7.1x-5.3x 6.8x-5.1x 6.7x 5.7xManhattan Assoc. (MANH) 65.1x-5.0x 31.0x-6.0x 29.4x-17.5x 19.5x 16.6x 9.3x-2.4x 6.5x-2.1x 4.4x-2.3x 3.5x 3.1xUTI Worldwide (UTIW) 9.4x-4.8x 13.3x-6.7x 15.5x-9.5x 18.1x 15.6x 2.8x-1.6x 2.1x-1.3x 3.1x-1.9x 3.8x 3.5xGroup Average 29.6x-10.0x 21.1x-10.5x 20.9x-13.5x 17.9x 15.2x 6.9x-3.2x 5.3x-2.9x 5.3x-3.5x 5.0x 4.4xAsset-Light TransportsEGL Inc. (EAGL) (2) NM 11.0x-5.4x 16.4x-11.9x NA NA 4.0x-1.1x 2.4x-1.2x 2.3x-1.4x NA NAForward Air (FWRD) 23.3x-11.3x 15.7x-7.1x 13.2x-7.4x 11.4x 9.5x 9.0x-4.4x 6.6x-3.1x 4.6x-2.8x 4.1x 3.4xLandstar (LSTR) 16.0x-12.6x 11.0x-7.2x 13x-8.9x 13.3x 11.8x 11.4x-8.9x 13.2x-8.4x 8.7x-5.8x 9.3x 7.1xPacer International (PACR) NA 9.9x-7.2x 14.6x-10.6x 11.9x 10.5x NA 3.2x-1.9x 3.8x-2.1x 2.7x 2.2xQuality Distribution (QLTY) NA NA 7.6x-7x 6.8x 6.0x NA NA NM 8.4x 3.0xGroup Average 19.6x-11.9x 11.9x-6.7x 12.9x-8.5x 10.9x 9.5x 8.1x-4.8x 6.3x-3.7x 4.9x-3x 6.1x 3.9xUniverse Average 20.5x-9.8x 14.6x-8.4x 15.1x-10.4x 13.1x 11.4x 6.6x-3.9x 5.4x-3.3x 4.8x-3.1x 5.0x 3.8x

(1) TP price and EPS based on NYSE ADRs in U.S. dollars. Price target in $US based on Euro 23 price target converted at current exchange rate. (2) EGL Inc. earnings model numbers are calendarized from 2001 forward. EGL forward estimates are based on First Call consensus. (3) FedEx Corp earnings model numbers are calendarized from 2001 forward; Calendar 01 and 02 EPS estimates include AFWY acquisition. Estimates for F04 and F05 are $3.44 and $4.10, respectively. (4) Multiples are relative to S&P 500 average. (5) Most recently reported (quarterly basis) fully diluted share count. (6) Date of last rating change along with direction of change (U=upgrade, D=downgrade, S=suspended coverage). (7) Enterprise value defined as market cap plus net debt minus cash and cash equivalents. (8) Balance sheet and cash flow figures for FedEx and UTi are FYE numbers. (9) Historical P/E multiples represent blended forward P/E estimates. (10) Methodology for all stocks (w/ price targets) is based on a forward rolling target P/E multiple to derive our year-end 2004 price targets. (11) Risks to our price targets: Weaker-than-anticipated economy leading to reduced demand and/or pricing, multiple contraction into improving earnings, and increased regulation by government. (12) QLTY pro forma EPS represent pretax earnings taxed at a 35% normalized tax rate and exclude the company's NOL carryforwards. (13) QLTY's P/E utilizes the current price (less the present value of QLTY's NOL carryforwards discounted back to the end of that respective year ($1.21-C04, and $0.69-C05) over pro forma EPS.

Source: Company reports; First Call; Bear, Stearns & Co. Inc. estimates.

BEAR, STEARNS & CO. INC. Page 79

Exhibit 18. Bear Stearns Airfreight Universe — Comparative Financial Returns, 2001-05E COMPOUND ANNUAL GROWTH RATES 2002-2005E PRETAX RETURN ON ASSETS

Gross Revenue Op. Inc. EPS 2002 2003 2004E 2005EAsset-Based Asset-BasedFedEx Corp. (FDX) (4) 9.9% 19.0% 20.9% FedEx Corp. (FDX) (4) 8.7% 10.0% 11.1% 12.0%TPG N.V. (TP) (12) 3.2% 6.2% 17.0% TPG N.V. (TP) (12) 12.4% 12.7% 13.9% 14.4%United Parcel Service (UPS) 8.1% 14.7% 16.2% United Parcel Service (UPS) 15.7% 16.1% 18.3% 19.5%Group Average 7.1% 13.3% 18.0% Group Average 12.3% 12.9% 14.4% 15.3%Non-Asset Based Services Non-Asset Based ServicesC.H. Robinson (CHRW) 14.2% 15.6% 16.2% C.H. Robinson (CHRW) 21.0% 21.1% 21.1% 20.9%Expeditors Int'l (EXPD) 18.2% 17.3% 17.6% Expeditors Int'l (EXPD) 21.8% 18.9% 21.0% 20.8%Manhattan Assoc. (MANH) 12.7% 17.1% 13.8% Manhattan Assoc. (MANH) 18.8% 14.4% 16.4% 18.0%UTi Worldwide (UTIW) (8,9) 22.0% 20.8% 19.3% UTi Worldwide (UTIW) (8) 8.8% 8.9% 9.4% 9.5%Group Average 16.8% 17.7% 16.7% Group Average 17.6% 15.8% 17.0% 17.3%Asset-Light Transports Asset-Light TransportsEGL Inc. (EAGL) (15) 14.1% NM NM EGL Inc. (EAGL) 3.2% 5.0% NA NAForward Air (FWRD) 9.9% 19.4% 20.1% Forward Air (FWRD) 22.5% 25.1% 24.9% 24.1%Landstar (LSTR) 9.4% 11.3% 17.0% Landstar (LSTR) 21.9% 21.0% 23.0% 24.0%Pacer International (PACR) 5.0% 9.2% 23.0% Pacer International (PACR) 6.8% 10.7% 13.3% 14.6%Quality Distribution (QLTY) (13) 8.4% 18.2% NM Quality Distribution (QLTY) (13) NM 2.9% 6.1% 7.8%Group Average 9.3% 14.5% 20.0% Group Average 13.6% 12.9% 16.8% 17.6%Universe Average 11.2% 15.3% 18.1% Universe Average 14.7% 13.9% 16.2% 16.9%

RETURN ON AVERAGE EQUITY OPERATING RATIOS2001 2002 2003 2004E 2005E 2002 2003 2004E 2005E

NET OPERATING MARGIN (5)Asset-Based Asset-BasedFedEx Corp. (FDX) (4) 12.2% 10.3% 11.9% 13.6% 14.5% FedEx Corp. (FDX) (4) 93.7% 93.1% 92.3% 92.0%TPG N.V. (TP) (12) 25.5% 21.8% 20.3% 20.9% 20.4% TPG N.V. (TP) (12) 91.2% 91.3% 90.8% 90.4%United Parcel Service (UPS) 24.0% 21.3% 20.3% 21.5% 21.7% United Parcel Service (UPS) 87.2% 86.7% 85.3% 84.7%Group Average 20.6% 17.8% 17.5% 18.7% 18.9% Group Average 90.7% 90.4% 89.5% 89.1%Non-Asset Based Services Non-Asset Based ServicesC.H. Robinson (CHRW) 25.7% 23.6% 22.8% 22.7% 22.9% C.H. Robinson (CHRW) 31.7% 32.3% 33.2% 33.3%Expeditors Int'l (EXPD) 26.0% 23.7% 20.5% 22.2% 22.1% Expeditors Int'l (EXPD) 25.1% 24.2% 25.6% 25.5%Manhattan Assoc. (MANH) 17.7% 15.8% 12.0% 12.9% 14.3% Manhattan Assoc. (MANH) 20.7% 15.6% 20.2% 23.2%UTi Worldwide (UTIW) (8) 10.4% 11.6% 12.2% 12.8% 13.4% UTi Worldwide (UTIW) (8) 11.2% 9.9% 10.1% 9.9%Group Average 20.0% 18.7% 16.9% 17.6% 18.2% Group Average 22.2% 20.5% 22.3% 23.0%Asset-Light Transports Asset-Light TransportsEGL Inc. (EAGL) -7.7% 3.2% 6.0% NA NA EGL Inc. (EAGL) 106.1% 96.1% NA NAForward Air (FWRD) 20.9% 18.1% 19.4% 18.6% 17.9% Forward Air (FWRD) 86.0% 83.4% 82.6% 82.0%Landstar (LSTR) 38.0% 36.9% 36.1% 41.0% 38.7% Landstar (LSTR) (10) 94.5% 94.5% 94.3% 94.2%Pacer International (PACR) NM 24.2% 19.8% 20.3% 18.4% Pacer International (PACR) 78.9% 77.9% 77.1% 76.9%Quality Distribution (QLTY) (13) NM NM 3.0% 6.1% 7.8% Quality Distribution (QLTY) (13) 93.8% 93.0% 93.0% 92.0%Group Average 17.1% 20.6% 16.9% 21.5% 20.7% Group Average 91.8% 89.0% 86.7% 86.3%Universe Average 19.3% 19.1% 17.0% 19.3% 19.3% Universe Average 86.9% 86.2% 84.2% 83.7%

RETURN ON AVERAGE TOTAL CAPITAL (1,6) FREE CASH FLOW RETURN ON AVG. TOTAL CAPITAL (3,6)2001 2002 2003 2004E 2005E 2002 2003 2004E 2005E

Asset-Based Asset-BasedFedEx Corp. (FDX) (4) 4.3% 4.0% 4.6% 5.5% 5.8% FedEx Corp. (FDX) (4) 3.6% 2.1% 6.2% 7.0%TPG N.V. (TP) (12) 9.8% 9.8% 10.2% 10.6% 11.1% TPG N.V. (TP) (12) 8.0% 11.5% 9.8% 10.1%United Parcel Service (UPS) 12.1% 11.5% 12.4% 14.2% 14.8% United Parcel Service (UPS) 13.1% 10.5% 9.9% 10.3%Group Average 8.7% 8.4% 9.1% 10.1% 10.6% Group Average 8.2% 8.0% 8.6% 9.1%Non-Asset Based Services Non-Asset Based ServicesC.H. Robinson (CHRW) 23.0% 21.8% 20.8% 20.5% 20.7% C.H. Robinson (CHRW) 18.1% 13.6% 12.9% 11.4%Expeditors Int'l (EXPD) 22.5% 20.8% 18.2% 19.8% 19.9% Expeditors Int'l (EXPD) 0.5% 11.4% 12.9% 14.1%Manhattan Assoc. (MANH) 15.9% 14.4% 11.1% 12.3% 13.5% Manhattan Assoc. (MANH) -6.5% 31.6% 13.7% 14.8%UTi Worldwide (UTIW) (8) 8.6% 9.9% 10.7% 11.9% 12.8% UTi Worldwide (UTIW) (8) 11.8% 11.5% 10.3% 11.9%Group Average 17.5% 16.7% 15.2% 16.1% 16.7% Group Average 6.0% 17.0% 12.4% 13.1%Asset-Light Transports Asset-Light TransportsEGL Inc. (EAGL) NM 1.5% 2.9% NA NA EGL Inc. (EAGL) 6.0% 10.8% NA NAForward Air (FWRD) 16.0% 15.4% 16.1% 15.9% 15.7% Forward Air (FWRD) 15.9% 15.9% 16.0% 16.5%Landstar (LSTR) 19.3% 20.4% 19.4% 20.7% 24.0% Landstar (LSTR) 31.5% 18.2% 22.8% 24.7%Pacer International (PACR) NM 0.9% 4.0% 5.9% 6.6% Pacer International (PACR) 3.1% 8.1% 6.4% 6.8%Quality Distribution (QLTY) (13) NM NM NM 0.7% 2.6% Quality Distribution (QLTY) (13) 12.4% -4.8% -10.7% 13.7%Group Average 17.7% 9.6% 10.6% 10.8% 12.2% Group Average 13.8% 9.6% 8.6% 15.4%Universe Average 14.6% 11.9% 11.9% 12.6% 13.4% Universe Average 9.8% 11.7% 10.0% 12.8%

NET DEBT RATIO (2) FREE CASH FLOW YIELD (11)2001 2002 2003 2004E 2005E 2002 2003 2004E 2005E

Asset-Based Asset-BasedFedEx Corp. (FDX) (4) 64.4% 61.8% 58.8% 60.4% 54.6% FedEx Corp. (FDX) (4) 1.4% 3.1% 3.5% 4.4%TPG N.V. (TP) (7,12) 41.0% 33.1% 26.5% 21.3% 18.1% TPG N.V. (TP) (12) 4.5% 5.0% 5.9% 6.7%United Parcel Service (UPS) 35.5% 21.9% 11.5% 0.0% 0.0% United Parcel Service (UPS) 5.1% 2.6% 3.8% 4.3%Group Average 47.0% 38.9% 32.3% 27.2% 24.2% Group Average 3.7% 3.6% 4.4% 5.2%Non-Asset Based Services (14) Non-Asset Based ServicesC.H. Robinson (CHRW) 0.0% 0.0% 0.0% 0.0% 0.0% C.H. Robinson (CHRW) 4.2% 2.6% 2.6% 4.0%Expeditors Int'l (EXPD) 0.0% 0.0% 0.0% 0.0% 0.0% Expeditors Int'l (EXPD) 0.1% 2.7% 4.5% 5.3%Manhattan Assoc. (MANH) 0.0% 0.0% 0.0% 0.0% 0.0% Manhattan Assoc. (MANH) NM 3.8% 7.0% 8.3%UTi Worldwide (UTIW) (8) 0.0% 0.0% 0.0% 0.0% 0.0% UTi Worldwide (UTIW) (8) NM 5.1% 4.9% 5.4%Group Average 0.0% 0.0% 0.0% 0.0% 0.0% Group Average 2.2% 3.5% 4.8% 5.7%Asset-Light Transports Asset-Light TransportsEGL Inc. (EAGL) 38.1% 43.8% 43.6% NA NA EGL Inc. (EAGL) 3.1% 0.1% NA NAForward Air (FWRD) 6.0% 0.0% 0.0% 0.0% 0.0% Forward Air (FWRD) 4.6% 5.3% 7.0% 9.0%Landstar (LSTR) 41.0% 21.8% 32.3% 22.0% NM Landstar (LSTR) 5.2% 3.3% 4.7% 5.4%Pacer International (PACR) 95.8% 74.1% 70.0% 63.8% 56.5% Pacer International (PACR) 2.2% 6.2% 5.2% 5.9%Quality Distribution (QLTY) 143.6% 198.8% 108.0% 92.3% 80.5% Quality Distribution (QLTY) (13) N/A -7.3% 10.4% 13.7%Group Average 64.9% 67.7% 50.8% 44.5% 45.7% Group Average 3.8% 1.5% 6.8% 8.5%Universe Average 38.8% 37.9% 29.2% 23.6% 21.0% Universe Average 3.4% 2.7% 5.4% 6.6%

(1) Total Capital defined as total debt plus total equity, return on average total capital defined as net income + tax-affected interest / total debt + total capital leases + total equity. (2) Net Debt ratio defined as total debt (including OBD) - cash / total debt (including OBD)- cash + equity. (3) Gross Cash Flow - dividend payouts - maintenance Cap.Ex. / total capital. (4) Balance Sheet and Cash Flow figures for FedEx are FYE numbers. (5) Total costs including purchased transportation/net revenue. (6) Includes off-balance-sheet debt in total capital formulation. (7) TPG debt includes provisions and off-balance-sheet debt. (8) Fiscal year ending January data for UTi (e.g., 2002 data based on fiscal 2003 results). (9) Based on pro forma EPS assuming flat 30% tax rate. (10) Represents Landstar's operating margin. (11) Free cash flow (operating cash flow minus net capex prior to dividends, acquisitions, and share repurchases) divided by Enterprise Value. Market capitalization-2002-03 figure represents an average between high/low market capitalization ranges. (12) TP price and EPS based on NYSE ADRs in U.S. dollars. (13) QLTY pro forma EPS represent pretax earnings taxed at a 35% normalized tax rate and exclude the company's NOL carryforwards. (14) Our Non-Asset Based companies all carry large Net Cash positions, resulting in the 0% Net Debt Ratios displayed. (15) EAGL is not Bear Stearns rated. Forward estimates are based on First Call consensus. Source: Company reports; First Call; Bear, Stearns & Co. Inc. estimates.

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Financial Models

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BEAR, STEARNS & CO. INC. Page 83

Exhibit 19. JDA Software Group, Inc. — Annual Income Statement ($ in millions, except per share data) 2000 2001 2002 2003 2004E 2005E

RevenueSoftware License $62.6 $71.2 $66.6 $59.3 $65.7 $75.2Maintenance 30.4 40.6 $57.6 71.1 80.2 88.0Services 78.7 102.0 $95.3 77.0 88.6 94.0Total Revenue 171.7 213.8 $219.5 207.4 234.4 257.2

Year-over-Year Growth 20.4% 24.5% 2.6% -5.5% 13.0% 9.7%

Gross CostsCost of Software Licenses 2.9 2.4 2.0 1.3 3.1 3.0Cost of Maintenance 7.7 11.2 14.3 17.4 20.2 21.1Cost of Services 65.0 76.9 71.5 65.1 66.7 70.5

75.6 90.4 87.8 83.8 90.0 94.6

Gross ProfitSoftware License 59.7 68.8 64.6 58.0 62.6 72.2Maintenance 22.7 29.4 43.3 53.7 60.0 66.9Services 13.7 25.2 23.8 11.9 21.8 23.5Total Gross Profit 96.2 123.4 131.6 123.6 144.5 162.6

Gross MarginSoftware License 95.3% 96.7% 96.9% 97.8% 95.3% 96.0%Maintenance 74.8% 72.5% 75.2% 75.6% 74.8% 76.0%Services 17.5% 24.7% 25.0% 15.5% 24.7% 25.0%Total Gross Margin 56.0% 57.7% 60.0% 59.6% 61.6% 63.2%

Operating ExpensesResearch and Development 28.8 34.4 41.8 48.5 56.7 59.2Sales and Marketing 28.8 38.0 39.8 41.6 53.1 56.6General and Administrative 20.8 27.1 27.1 23.5 26.1 27.0Total Operating Expenses 78.4 99.5 108.7 113.6 135.8 142.7

Operating Expenses as a % of RevenueResearch and Development 16.8% 16.1% 19.1% 23.4% 24.2% 23.0%Sales and Marketing 16.8% 17.8% 18.2% 20.1% 22.6% 22.0%General and Administrative 12.1% 12.7% 12.3% 11.3% 11.1% 10.5%Total Operating Expenses as a % of Revenue 45.6% 46.5% 49.5% 54.8% 57.9% 55.5%

(17.9)Total Operating Expenses and Gross Costs 153.9 189.9 196.6 197.4 225.8 237.4

Year-over-Year Growth 10.4% 23.4% 3.5% 0.4% 14.4% 5.1%

Adjusted Operating Income (Loss) 17.8 23.9 22.9 10.0 8.6 19.8Adjusted Operating Margin 10.4% 11.2% 10.4% 4.8% 3.7% 7.7%

Other Operating ExpensesAcquisition Related Amortization of Intangibles (6.5) (8.5) (7.1) (7.6) (7.9) (7.9)Amortization 6.5 8.5 7.1 7.6 7.9 7.9

Restructuring, Other (0.8) (1.0) (6.7) (1.8) (2.8)Purchase of In-Process R&D (0.2) (2.4) (0.8) 0.0Total Nonrecurring Items (1.0) (3.3) (7.5) (1.8) (2.8) 0.0

Total Operating Income (Loss) 10.2 12.1 8.3 0.6 (2.1) 11.9Total Operating Margin 6% 6% 4% 0% -1% 5%

Total Other Income (Expense) 4.2 2.7 1.7 2.0 2.4 2.6

Pretax Income (Loss) 14.5 14.7 10.0 2.6 0.3 14.5Income Tax Provision 5.6 5.1 1.039 (0.0) (0.2) 5.1Effective Tax Rate (for Adjusted Net Income) 38.7% 34.7% 10.4% -0.6% -71.7% 35.5%

Net Income (loss) Total 8.9 9.6 8.9 2.6 0.5 9.3

Nonrecurring EPS Items ($0.04) ($0.13) ($0.26) ($0.06) ($0.09) $0.00EPS Total $0.35 $0.37 $0.31 $0.09 $0.02 $0.28

Adjusted EPS $0.53 $0.67 $0.55 $0.25 $0.23 $0.43Year-over-Year Growth 197.0% 26.1% -18.3% -54.0% -8.5% 87.3%

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 20. JDA Software Group, Inc. — Quarterly Income Statement ($ in millions, except per share data) 1Q01 1Q02 1Q03 1Q04 2Q01 2Q02 2Q03 2Q04E 3Q01 3Q02 3Q03 3Q04E 4Q01 4Q02 4Q03 4Q04E

RevenueSoftware License $15.6 $19.5 $7.7 $14.6 $16.7 $18.3 $15.5 $16.0 $15.6 $10.8 $19.1 $17.0 $23.4 $18.0 $16.9 $18.1Maintenance 8.9 13.0 16.4 19.3 9.1 14.0 17.3 19.5 10.0 14.9 18.6 20.0 12.5 15.7 18.8 21.3Services 24.3 26.6 17.1 21.3 24.6 25.3 20.2 21.5 26.2 23.8 20.2 22.0 26.9 19.6 19.5 23.8Total Revenue 48.8 59.2 41.3 55.2 50.5 57.6 53.0 57.0 51.8 49.4 58.0 59.0 62.8 53.3 55.2 63.2

Year-over-Year Growth 24.4% 21.2% -30.3% 33.8% 9.5% 14.1% -8.0% 7.7% 19.0% -4.6% 17.3% 1.8% 46.3% -15.1% 3.6% 14.4%

Gross Costs Cost of Software Licenses 0.7 0.4 0.2 0.7 0.7 0.7 0.2 0.8 0.4 0.1 0.4 0.9 0.6 0.8 0.5 0.7Cost of Maintenance 2.3 3.4 3.9 5.0 2.5 3.5 4.4 5.0 2.8 3.6 4.5 5.0 3.5 3.8 4.6 5.2Cost of Services 18.7 19.9 15.6 15.6 18.2 16.9 15.9 16.6 19.2 17.1 16.4 16.7 20.6 17.6 17.2 17.8Total Costs 21.7 23.7 19.7 21.3 21.5 21.1 20.5 22.3 22.5 20.8 21.2 22.6 24.7 22.3 22.3 23.8

Gross ProfitSoftware License 14.9 19.1 7.5 13.9 16.0 17.6 15.3 15.2 15.2 10.7 18.7 16.2 22.8 17.2 16.5 17.4Maintenance 6.6 9.6 12.5 14.3 6.6 10.6 12.9 14.6 7.2 11.2 14.2 15.0 9.0 11.9 14.2 16.1Services 5.5 6.7 1.5 5.7 6.4 8.4 4.2 4.9 7.0 6.7 3.8 5.3 6.3 2.0 2.3 5.9Total Gross Profit 27.1 35.5 21.5 33.9 29.0 36.5 32.5 34.7 29.3 28.6 36.7 36.4 38.1 31.0 32.9 39.4

Gross MarginSoftware License 95.7% 97.9% 96.9% 95.3% 95.6% 96.1% 98.8% 95.0% 97.4% 98.7% 97.8% 95.0% 97.6% 95.7% 97.3% 96.0%Maintenance 74.2% 73.9% 76.2% 74.3% 72.5% 75.4% 74.7% 74.5% 71.7% 75.7% 76.0% 75.0% 71.9% 75.5% 75.4% 75.5%Consulting Services 22.8% 25.3% 9.0% 26.6% 25.9% 33.2% 21.0% 23.0% 26.6% 28.1% 19.0% 24.0% 23.4% 10.0% 11.8% 25.0%Total Gross Margin 55.5% 60.0% 52.2% 61.4% 57.4% 63.4% 61.3% 60.8% 56.6% 57.8% 63.3% 61.8% 60.6% 58.2% 59.6% 62.4%

Operating ExpensesResearch and Development 7.9 10.4 10.2 13.8 7.8 10.4 12.6 14.0 8.7 10.4 12.7 14.2 10.0 10.6 13.0 14.8Sales and Marketing 8.3 9.3 7.6 10.9 9.3 11.3 10.2 13.1 8.4 9.2 12.0 14.0 12.0 10.1 11.9 15.0General and Administrative 5.7 7.6 5.3 6.2 6.0 7.3 6.3 6.8 6.5 6.4 6.1 6.5 8.9 5.8 5.8 6.5Total Operating Expenses 21.8 27.3 23.1 30.9 23.2 28.9 29.1 33.9 23.6 26.0 30.8 34.7 30.9 26.6 30.7 36.3

Core Operating Expenses as a % of RevenueResearch and Development 16.1% 17.6% 24.7% 25.0% 15.5% 18.1% 23.8% 24.5% 16.8% 21.0% 21.9% 24.0% 16.0% 20.0% 23.6% 23.4%Sales and Marketing 16.9% 15.7% 18.3% 19.8% 18.5% 19.6% 19.3% 23.0% 16.3% 18.6% 20.6% 23.8% 19.1% 18.9% 21.5% 23.8%General and Administrative 11.7% 12.8% 12.9% 11.3% 12.0% 12.6% 11.8% 12.0% 12.5% 12.9% 10.5% 11.0% 14.2% 11.0% 10.5% 10.3%Total Core Operating Expenses as % Rev 44.7% 46.1% 55.9% 56.0% 45.9% 50.2% 54.9% 59.5% 45.7% 52.5% 53.1% 58.8% 49.2% 49.9% 55.6% 57.5%

Total Core Operating Expenses and Gross Costs 43.5 50.9 42.8 52.2 44.7 50.0 49.6 56.3 46.1 46.8 52.0 57.2 55.6 48.8 53.0 60.1Year-over-Year Growth 24.9% 17.1% -16.0% 22.0% 15.2% 11.9% -0.8% 13.5% 16.5% 1.5% 11.1% 10.0% 36.5% -12.2% 8.6% 13.4%

Adjusted Operating Income (Loss) 5.3 8.2 (1.5) 3.0 5.8 7.6 3.4 0.8 5.661 2.6 5.9 1.8 7.2 4.5 2.2 3.1Adjusted Operating Margin 10.8% 13.9% -3.7% 5.4% 11.5% 13.2% 6.4% 1.3% 10.9% 5.3% 10.3% 3.0% 11.4% 8.4% 4.0% 4.9%

Other Operating ExpensesAcquisition Related Amortization of Intangibles (1.8) (1.8) (1.8) (2.1) (1.8) (1.8) (1.8) (2.0) (2.1) (1.8) (2.0) (1.8) (2.7) (1.8) (2.0) (2.0)Amortization 1.8 1.8 1.8 2.1 1.8 1.8 1.8 2.0 2.1 1.8 2.0 1.8 2.7 1.8 2.0 2.0

Restructuring, Other (0.7) (0.7) (2.8) (1.3) (0.6) (0.5) (0.2) (5.4) (0.1)Purchase of In-Process R&D (0.2) (0.8) . (2.2)Total Nonrecurring Items (0.9) 0.0 (0.7) (2.8) 0.0 (2.1) (0.6) 0.0 (2.2) 0.0 (0.5) 0.0 (0.2) (5.4) (0.1) 0.0

Total Operating Income (Loss) 2.5 6.5 (4.0) (1.9) 4.0 3.7 1.0 (1.2) 1.3 0.8 3.5 (0.0) 4.2 (2.8) 0.1 1.1Total Operating Margin 5% 11% -10% -3% 8% 6% 2% -2% 3% 2% 6% 0% 7% -5% 0% 2%

Total Other Income (Expense) 0.9 0.6 0.5 0.7 0.8 0.4 1.0 0.6 0.5 0.3 0.2 0.6 0.4 0.4 0.2 0.4

Pretax Income (Loss) 3.4 7.0 (3.4) (1.2) 4.8 4.1 2.0 (0.624) 1.9 1.2 3.7 0.550 4.7 (2.4) 0.3 1.6Income Tax Provision 1.3 2.5 (1.2) (0.7) 1.8 1.5 0.7 (0.221) 0.7 0.4 0.4 0.195 1.4 (3.4) 0.1 0.6Effective Tax Rate (for Adjusted Net Income) 37.0% 35.5% 35.0% 35.5% 37.0% 35.5% 35.0% 35.5% 37.0% 35.5% 35.5% 35.5% 29.6% 35.5% 34.8% 35.5%

Net Income (loss) Total 2.1 4.5 (2.2) (0.4) 3.0 2.7 1.3 -0.4 1.2 0.8 3.4 0.35 3.3 1.0 0.2 1.0

Nonrecurring EPS Items ($0.04) $0.00 ($0.02) ($0.10) $0.00 ($0.07) ($0.02) $0.00 ($0.08) $0.00 ($0.02) 0.00 ($0.01) ($0.19) ($0.00) $0.00EPS Total $0.09 $0.16 ($0.08) ($0.02) $0.12 $0.09 $0.05 ($0.01) $0.05 $0.03 $0.11 $0.01 $0.12 $0.03 $0.01 $0.03

Adjusted EPS $0.16 $0.20 ($0.02) $0.07 $0.17 $0.18 $0.09 $0.03 $0.15 $0.07 $0.14 $0.05 $0.20 $0.11 $0.05 $0.08Year-over-Year Growth 17.2% 24.7% -111.4% NM -16.2% 5.8% -51.5% -64.7% 27.5% -55.8% 103.8% -62.7% 139.1% -44.3% -51.2% 40.8%

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

BEAR, STEARNS & CO. INC. Page 85

Exhibit 21. JDA Software Group, Inc. — Balance Sheet ($ in millions) 2000 2001 2002 2003 2004E 2005E 1Q04

ASSETSCurrent assets Cash and cash equivalents $60.8 $51.9 $71.1 $77.5 $38.6 $57.8 $44.5 Marketable securities 15.8 12.1 $30.8 37.3 37.3 37.3 36.4 Accounts receivable, net 54.4 60.9 $47.1 40.2 61.9 69.3 48.1 Income tax receivable 2.4 3.8 $7.5 2.4 3.9 Deferred tax asset 4.3 7.0 $5.6 4.9 4.9 Prepaid expenses, other current assets 7.2 10.8 $12.3 14.7 15.4 16.2 16.0Total Current Assets 145.0 146.5 174.3 176.9 153.2 180.6 153.8

Property and equipment 22.3 22.0 21.3 21.9 49.7 54.3 47.3Goodwill, other intangibles 48.3 116.9 116.4 118.0 162.4 154.3 130.0Deferred tax asset 2.9 0.0 0.0 3.8 3.6Marketable securities 0.0 3.4 3.0 0.0 0.0Total Assets 218.5 288.6 315.1 320.6 365.3 389.2 334.7

LIABILITIES Accounts payable 4.2 2.9 3.0 2.6 2.9 3.1 4.0 Accrued expenses and liabilities 15.1 33.0 27.0 23.0 26.3 27.7 25.6 Deferred revenue 12.9 17.6 23.3 25.2 28.5 31.2 34.0Total Current Liabilities 32.2 53.4 53.3 50.8 57.7 62.0 63.6Other liabilities 0.0 10.8 5.0 10.0 10.0Total Liabilities 32.2 64.2 58.3 50.8 67.7 72.0 63.6

Shareholders' Equity Preferred stock 0.0 0.0 0.0 0.0 0.0Common stock 0.2 0.3 0.3 0.3 0.3 0.3 0.3Additional paid-in capital 181.9 214.6 237.1 246.7 255.7 266.0 247.1 Retained earnings (deficit) 8.8 18.2 27.4 30.0 46.1 55.5 29.6 Accumulated other comprehensive loss (4.6) (6.1) (4.2) (2.7) (1.4)Less treasury stock (2.7) (3.8) (4.6) (4.6) (4.6) (4.6)Total Shareholders' Equity 186.3 $224.2 256.8 269.8 297.5 317.2 271.0

Liabilities and Shareholders' Equity 218.5 288.4 315.1 320.6 365.3 389.2 334.7

Leverage AnalysisTotal debt/ debt+equity 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Total debt/equity (x) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Asset turnover (x) (1) 0.8x 0.7x 0.7x 0.6x 0.6x 0.7x

Financial Return AnalysisReturn on average equity (2) 7.5% 8.5% 9.2% 4.6% 6.7% 4.7%Return on ave. total capital (%) (3) 7.5% 8.5% 9.2% 4.6% 6.7% 4.7%Free cash return on ave. total capital (4) 9.3% 10.1% 4.1% 0.6% -7.1% 3.9%Pretax return on ave. assets (%) (5) 8.6% 9.4% 7.6% 3.2% 2.5% 5.3%Return on invested capital (6)

Days Sales Outstanding 114.1 102.6 77.2 69.7 95.0 97.0 78.5 (1) Total revenue divided by total assets. (2) Adjusted earnings/average total shareholders' equity. (3) Cash or First Call earnings + tax-affected interest / total debt plus shareholders' equity. (4) Net income + depreciation + amortization + chg in deferred taxes - capex / average total debt + shareholders’ equity. (5) Adjusted EBIT / average total assets. (6) Net operating income minus cash taxes divided by PP&E plus goodwill plus off-balance-sheet leases, plus current assets minus current liabilities. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

Page 86 SUPPLY-CHAIN TECHNOLOGY

Exhibit 22. JDA Software Group, Inc. — Statement of Cash Flows ($ in millions, except per share data) 2000 2001 2002 2003 2004E 2005E

OPERATING SOURCESNet income (loss) $8.9 $9.6 $8.9 $2.7 $0.5 $9.3Depreciation and amortization 14.6 16.7 15.4 16.3 15.2 15.2Provision for doubtful accounts 3.2 4.9 2.9 0.5 0.8 0.9Tax benefit stock options 0.9 5.8 0.8Net loss on disposal of PPE 0.2 0.1 0.0 (0.6)Write-off of purchased IPRD 0.2 2.4 0.8Deferred income taxes 1.1 1.2 (6.3) (7.0)Accounts receivable (20.1) (7.1) 11.3 6.6 (21.7) (7.4)Accounts payable 1.3 (2.6) 0.2 (0.5) 0.4 0.2Changes in other assets and liabilitiesIncome tax receivable (0.2) 0.1 (2.5) 5.0Prepaid expenses and other current assets (0.9) (2.7) (2.2) 1.0 (0.7) (0.8)Accrued expenses and other liabilities 1.2 3.9 1.2 (3.6) 3.3 1.3Income taxes payableDeferred revenue (0.5) 2.1 6.0 (0.3) 3.2 2.8Other changes in working capital (0.4) 3.3 2.4 2.1 5.8 3.3Total Operating Sources 8.9 29.4 41.5 20.8 1.0 21.5

INVESTING ACTIVITIESPurchase/sale of marketable securities (696.9) (9.7) (37.1) (58.4)Maturities of marketable securities 716.4 13.4 18.4 51.9Purchases of property, plant, and equipment (7.8) (6.8) (8.3) (10.4) (35.8) (12.6)Proceeds from disposal of PPE 1.8 1.5 0.4 2.0Issuance of promissory note receivable (3.5)Payments received on promissory note receivable 0.1 0.3 0.1Purchase of businesses, net of cash (23.1) (30.6) (12.8) (8.1) (13.0)Total Investing Activities (9.6) (35.6) (38.9) (22.8) (48.8) (12.6)

Operating Cash Flow (0.7) (6.2) 2.7 (2.0) (47.8) 8.9

FINANCING ACTIVITIESNet change in debt (8.4)Issuance of common stock, secondary offeringIssuance of common stock, options 2.4 4.2 12.6 3.7 4.3 4.9Issuance of common stock, employee stock purchase 3.0 3.4 4.2 4.1 4.7 5.4Tax benefit, stock compensation 0.3 0.0 0.0Purchase treasury stock (1.8) (0.9) (1.1) (0.8)Other (0.0) (0.3) (0.3)Total Financing Activities 3.9 (1.6) 15.4 6.8 9.0 10.3

Effect of Exchange Rate Changes on Cash (0.7) (1.1) 1.2 1.6

CASH AND EQUIVALENTSCash at beginning of period 58.3 60.8 51.9 71.1 77.5 38.6Increase (Decrease) in cash 2.5 (8.9) 19.2 6.4 (38.8) 19.2Cash at end of period 60.8 51.9 71.1 77.5 38.6 57.8

Cash Flow Analysis ($ in millions)EBITDA $25.8 $32.0 $31.0 $18.7 $15.9 $27.8Operating cash flow (1) (0.7) (6.2) 2.7 (2.0) (47.8) 8.9 Gross cash flow (2) 24.5 27.5 18.1 11.9 15.7 24.5 Free cash flow (3) 4.7 1.4 19.4 5.8 (38.8) 19.2

Cash Flow Analysis per ShareEBITDA $1.02 $1.23 $1.07 $0.64 $0.54 $0.83Operating cash flow (1) ($0.03) ($0.24) $0.09 ($0.07) ($1.60) $0.26Gross cash flow (2) $0.96 $1.06 $0.62 $0.41 $0.53 $0.73Free cash flow (3) $0.19 $0.05 $0.67 $0.20 ($1.30) $0.57

(1) Total operating sources less operating uses. (2) Net Income plus depreciation, amortization, and deferred taxes. (3) Operating cash plus cash received from exercise of stock options. Cash flows from onetime events, such as IPOs, are not included. Investments in marketable securities are added back to the free cash flow figure. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

BEAR, STEARNS & CO. INC. Page 87

Exhibit 23. Manhattan Associates, Inc. — Annual Income Statement ($ in thousands, except per share data)

2000 2001 2002 2003 2004E 2005ERevenue Software license 26,190$ 35,436$ 40,233$ 43,229$ 57,370$ 70,005$ Services 81,085 97,510 110,516 129,320 136,783 154,011

Hardware 31,344 27,760 22,675 23,417 21,905 24,502 Total Revenue 138,619 160,705 173,424 195,966 216,057 248,518

Year-over-Year Growth 70.5% 15.9% 7.9% 13.0% 10.3% 15.0%

Gross CostsCost of software license 1,489 1,455 1,927 4,470 4,189 4,900 Cost of services 34,299 42,372 46,611 54,218 60,148 67,765 Cost of hardware and other 26,345 23,092 19,027 20,123 18,896 21,072

Total Costs 62,133 66,919 67,565 78,811 83,233 93,737

Gross ProfitSoftware license 24,701 33,981 38,306 38,759 53,180 65,105 Services 46,786 55,138 63,905 75,102 76,635 86,246 Hardware 4,999 4,668 3,648 3,294 3,008 3,430

Total Gross Profit 76,486 93,786 105,859 117,155 132,824 154,781

Gross MarginSoftware license gross margin 94.3% 95.9% 95.2% 89.7% 92.7% 93.0%Services gross margin 57.7% 56.5% 57.8% 58.1% 56.0% 56.0%Hardware gross margin 15.9% 16.8% 16.1% 14.1% 13.7% 14.0%

Total Gross Margin 55.2% 58.4% 61.0% 59.8% 61.5% 62.3%

ExpensesResearch and development 16,106 19,413 20,780 27,358 27,635 29,822 Sales and marketing 18,051 22,334 26,413 31,200 32,093 36,781 General and administrative 15,404 18,822 20,943 23,711 26,256 27,958

Total Expenses 49,561 60,569 68,136 82,269 85,985 94,561

Expenses as a % of RevenueResearch and development 11.6% 12.1% 12.0% 14.0% 12.8% 12.0%Sales and marketing 13.0% 13.9% 15.2% 15.9% 14.9% 14.8%General and administrative 11.1% 11.7% 12.1% 12.1% 12.2% 11.3%

Total Core Expenses 35.8% 37.7% 39.3% 42.0% 39.8% 38.1%

Total Gross Costs and Core Expenses 111,694 127,488 135,701 161,080 169,218 188,298 Year-over-Year Growth 38.9% 14.1% 6.4% 18.7% 5.1% 11.3%

Adjusted Operating Income (Loss) 26,925 33,217 37,723 34,886 46,839 60,220 Adjusted operating margin 19.4% 20.7% 21.8% 17.8% 21.7% 24.2%

Other Operating ExpensesAmortization 634 5,240 1,772 4,317 3,159 2,500

634 5,240 1,772 4,317 3,159 2,500

Total Operating Income (Loss) 26,291 27,977 35,951 30,569 43,680 57,720 Total operating margin 19.0% 17.4% 20.7% 15.6% 20.2% 23.2%

Other Income (Expense)Interest income 2,548 2,988 3,296 2,056 3,617 Interest expense (402) - - -

Total Other Income 2,718 2,059 2,801 2,746 2,006 3,617

Pretax Income 29,009 30,036 38,752 33,315 45,686 61,337 Income tax provision (benefit) 10,802 9,522 14,383 11,425 15,761 20,855 Effective tax rate 37.2% 37.0% 36.3% 34.3% 34.5% 34.0%

Recurring Net Income (Loss) 18,207 20,514 24,369 21,890 29,924 40,483 Nonrecurring items (1) (1,984) - 827 Net Income (loss) Total 16,223 16,187 25,196 21,890 29,924 40,483

EPS continuing 0.60$ 0.67$ 0.80$ 0.71$ 0.93$ 1.20$ Nonrecurring EPS (0.07)$ EPS Total 0.53$ 0.53$ 0.83$ 0.71$ 0.93$ 1.20$

Adjusted EPS (2) 0.61$ 0.72$ 0.85$ 0.80$ 1.00$ 1.25$ Year-over-Year Growth 1063% 18.4% 17.2% -5.1% 23.9% 25.4%

(1) In-process research and development from acquisitions. (2) First Call adjusted EPS is pretax income plus amortization multiplied by the complement of the tax rate spread over the sharecount. (3) Depreciation for EBITDA calculation is derived from a reported blended amortization and depreciation figure on cash flow statements from

MANH. Bear Stearns estimates the quarterly allocation of depreciation. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

Page 88 SUPPLY-CHAIN TECHNOLOGY

Exhibit 24. Manhattan Associates, Inc. — Quarterly Income Statement ($ in thousands, except per share data) 1Q01 1Q02 1Q03 1Q04 2Q01 2Q02 2Q03 2Q04E

Revenue Software license 7,841$ 9,373$ 10,159$ 12,306$ 9,362$ 10,239$ 11,357$ 13,680$ Services 23,497 26,405 30,240 33,606 23,890 28,152 33,385 34,009

Hardware and other (reimbursables) 5,958 6,365 5,698 5,381 4,206 6,722 5,455 5,062 Total Revenue 37,296 42,143 46,097 51,293 37,458 45,113 50,197 52,751

Year-over-Year Growth 26.1% 13.0% 9.4% 11.3% 3.6% 20.4% 11.3% 5.1%Sequential Quarterly Growth -1.2% -8.9% 6.4% 3.7% 0.4% 7.0% 8.9% 2.8%

Gross CostsCost of software license 485 392 1,123 823 385 470 1,222 1,094 Cost of services 9,898 11,622 12,766 15,096 10,041 11,808 14,084 14,964 Cost of hardware and other 4,829 5,320 4,927 4,578 3,697 5,539 4,629 4,404

Total Gross Costs 15,212 17,334 18,816 20,497 14,123 17,817 19,935 20,462

Gross ProfitSoftware license 7,356 8,981 9,036 11,483 8,977 9,769 10,135 12,586 Services 13,599 14,783 17,474 18,510 13,849 16,344 19,301 19,045 Hardware 1,129 1,045 771 803 509 1,183 826 658

Total Gross Profit 22,084 24,809 27,281 30,796 23,335 27,296 30,262 32,289

Gross MarginSoftware license gross margin 93.8% 95.8% 88.9% 93.3% 95.9% 95.4% 89.2% 92.0%Services gross margin 57.9% 56.0% 57.8% 55.1% 58.0% 58.1% 57.8% 56.0%Hardware gross margin 18.9% 16.4% 13.5% 14.9% 12.1% 17.6% 15.1% 13.0%

Total Gross Margin 59.2% 58.9% 59.2% 60.0% 62.3% 60.5% 60.3% 61.2%Core Expenses

Research and development 5,038 4,857 6,754 7,354 4,706 5,387 7,007 6,594 Sales and marketing 5,313 5,756 7,572 7,920 5,513 6,994 8,608 7,913 General and administrative 4,192 5,094 5,734 6,374 4,657 5,307 5,869 6,594

Total Core Expenses 14,543 15,707 20,060 21,648 14,876 17,688 21,484 21,100 Core Expenses as a % of Revenue

Research and development 13.5% 11.5% 14.7% 14.3% 12.6% 11.9% 14.0% 12.5%Sales and marketing 14.2% 13.7% 16.4% 15.4% 14.7% 15.5% 17.1% 15.0%General and administrative 11.2% 12.1% 12.4% 12.4% 12.4% 11.8% 11.7% 12.5%

Total Core Expenses 39.0% 37.3% 43.5% 42.2% 39.7% 39.2% 42.8% 40.0%

Total Gross Costs and Core Expenses 29,755 33,041 38,876 42,145 28,999 35,505 41,419 41,563 Year-over-Year Growth 17.8% 11.0% 17.7% 8.4% -1.5% 22.4% 16.7% 0.3%

Sequential Quarterly Growth 0.8% -10.7% 15.4% 6.2% -2.5% 7.5% 6.5% -1.4%

Adjusted Operating Income (Loss) 7,541 9,102 7,221 9,148 8,459 9,608 8,778 11,188 Adjusted operating margin 20.2% 21.6% 15.7% 17.8% 22.6% 21.3% 17.5% 21.2%

Other Operating ExpensesAmortization 1,310 534 763 870 1,310 534 825 763

1,310 534 763 870 1,310 534 825 763

Total Operating Income (Loss) 6,231 8,568 6,458 8,278 7,149 9,074 7,953 10,425 Total operating margin 16.7% 20.3% 14.0% 16.1% 19.1% 20.1% 15.8% 19.8%

Other Income (Expense)Interest income 739 173 900 440 595 1,014 700 464 Interest expense (117) (117)

Total Other Income 550 173 557 389 478 1,014 1,055 464 Pretax Income 6,781 8,741 7,015 8,667 7,627 10,088 9,008 10,889 Income tax provision (benefit) 2,509 3,234 2,475 2,990 2,833 3,839 3,174 3,757 Effective tax rate 37.0% 37.0% 35.3% 34.5% 37.1% 38.1% 35.2% 34.5%

Recurring Net Income (Loss) 4,272 5,507 4,540 5,677 4,794 6,249 5,834 7,133 Nonrecurring items (1) - - (45) Net Income (loss) Total 4,272 5,507 4,540 5,677 4,794 6,249 5,789 7,133

EPS continuing 0.14$ 0.18$ 0.15$ 0.18$ 0.16$ 0.20$ 0.19$ 0.22$ Nonrecurring EPS -$ -$ -$ -$ (0.00)$ -$ EPS Total 0.14$ 0.18$ 0.15$ 0.18$ 0.16$ 0.20$ 0.19$ 0.22$

Adjusted EPS (2) 0.17$ 0.19$ 0.17$ 0.20$ 0.18$ 0.21$ 0.21$ 0.24$ Year-over-Year Growth 64.5% 12.9% -11.9% 20.5% 20.4% 17.1% -3.0% 15.5%

(1) In-process research and development from acquisitions. (2) First Call adjusted EPS is pretax income plus amortization multiplied by the complement of the tax rate spread over the sharecount. (3) Depreciation for EBITDA calculation is derived from a reported blended amortization and depreciation figure on cash flow statements from MANH. Bear Stearns estimates the quarterly allocation

of depreciation.

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

BEAR, STEARNS & CO. INC. Page 89

Exhibit 25. Manhattan Associates, Inc. — Balance Sheet ($ in thousands, except per share data) 2000 2001 2002 2003 2004E 2005E 1Q04

ASSETSCurrent assets

Cash and cash equivalents 51,032$ 84,029$ 64,664$ 140,964$ 200,911$ 265,825$ 153,418$ Short-term investments 16,635 20,160 57,193 4,992 - 9,076 Accounts receivable 28,177 26,660 32,384 40,790 41,411 49,013 41,565 Deferred income tax 2,488 1,870 1,768 2,086 2,190 2,300 1,870 Other current assets 8,368 5,839 3,199 4,627 4,627 4,627 4,992

Total current assets 106,700 138,558 159,208 193,459 249,139 321,765 210,921

Long-term investments 9,447 4,316 Property and equipment, net 10,833 11,185 12,352 12,152 10,994 10,177 12,053 Intangible and other assets 34,842 30,960 48,636 48,961 46,822 28,972 48,240

Total Assets 152,375 180,703 220,196 264,019 306,955 360,914 275,530

LIABILITIESCurrent liabilities

Accounts payable 12,387 19,386 6,754 5,235 5,499 6,120 6,182 Accrued compensation and benefits 2,963 - 7,814 6,702 6,702 6,702 5,352 Accrued liabilities 5,599 - 3,357 3,617 3,800 4,228 2,455 Current portion capital lease obligations/debt 176 3,663 164 132 132 132 120 Income taxes payable 2,052 - 1,122 1,470 1,470 1,470 760 Deferred revenue 13,331 14,285 15,318 17,937 20,989 22,200 21,680

Total current liabilities 36,508 37,334 34,529 35,093 38,592 40,852 36,549

Long-term debt & capital leases 5,866 2,182 240 288 - - 253 Deferred income taxes - - 141 396 460

Total Liabilities 42,374 39,516 34,910 35,777 38,592 40,852 37,262

SHAREHOLDERS' EQUITYPreferred stock - - - Common stock 257 277 290 301 301 301 302 Additional paid-in capital 89,713 104,445 122,977 143,766 153,963 165,180 149,281 Retained earnings 20,380 36,567 61,763 83,653 113,577 154,060 89,330 Accumulated other comprehensive loss (131) (42) 253 720 720 720 836 Deferred compensation (218) (105) (42) (198) (198) (198) (1,481)

Total Shareholders' Equity 110,001 141,142 185,241 228,242 268,363 320,062 238,268

LIABILITIES & SHAREHOLDERS' EQUITY 152,375 180,658 220,151 264,019 306,955 360,914 275,530

Leverage AnalysisTotal debt/debt+equity (1) 5.2% 4.0% 0.2% 0.2% 0.0% 0.0%Total debt/equity (x) (1) 0.1x 0.0x 0.0x 0.0x 0.0x 0.0xCash interest coverage (x) (2) NM NM NM NM NM NMAsset turnover (x) (3) 0.9x 0.9x 0.8x 0.7x 0.7x 0.7x

Financial Return AnalysisReturn on average equity (4) 22.1% 17.7% 15.8% 12.0% 12.9% 14.3%Return on ave. total capital (%) (5) 19.2% 15.9% 14.4% 11.1% 12.3% 13.5%Free cash return on ave. total capital (6) 23.6% 16.1% -6.5% 31.6% 13.7% 14.8%Pretax return on ave. assets (%) (7) 23.1% 19.9% 18.8% 14.4% 16.4% 18.0%Return on invested capital (8) 32.1% 60.5% 37.1% 31.9% 46.1% 0.0%

Days Sales Outstanding 73 60 67 65 69 71 73

Book value / share 3.61 4.59 6.08 7.42 8.36 9.50 7.77Tangible BV / share 2.47 3.59 4.49 5.83 6.90 8.64 5.92Price/ tangible BV 11.3x 7.8x 6.2x 4.8x 4.0x 3.2x 4.7x (1) Total Debt includes bank debt plus convertible preferred note. (2) Net income + depreciation divided by net interest expense; if interest income > interest expense, interest coverage is listed as NM. (3) Total revenue divided by total assets. (4) Cash or First Call adjusted earnings / average total shareholders’ equity. (5) Cash or First Call adjusted earnings + tax-affected interest / total debt plus shareholders’ equity. (6) Net income - depreciation - amortization - chg in deferred taxes - capital expenditures / total debt + shareholders’ equity. (7) EBIT / Average total assets. (8) Net Operating Income minus cash taxes divided by PP&E plus goodwill plus off balance sheet leases, plus current assets minus current liabilities. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

Page 90 SUPPLY-CHAIN TECHNOLOGY

Exhibit 26. Manhattan Associates, Inc. — Statement of Cash Flows ($ in thousands, except per share data) 2000 2001 2002 2003 2004E 2005E 1Q04

OPERATING SOURCESNet income 16,268$ 16,187$ 25,196$ 21,845$ 29,924$ 40,483$ 5,677$ Depreciation and amortization (1) 6,100 11,368 8,573 7,830 13,317 13,317 2,602 Stock compensation 85 82 58 52 57 63 93 Deferred income taxes (2,127) (459) (627) (273) (300) (330) 75 Tax benefit options exercised 16,050 9,049 15,494 11,322 11,888 12,483 2,963 Change in accounts receivable (2,181) 1,385 (3,685) (6,814) (621) (7,602) (602) Change in accounts payable 4,484 (1,050) (2,237) (1,750) 264 620 (1,617) Other changes in working capital (2,323) 2,793 3,194 4,049 4,454 4,899 2,635

Total Operating Sources 36,356 39,355 45,966 36,261 58,984 63,932 11,826

INVESTING ACTIVITIESPurchases of property and equipment (5,089) (6,101) (5,990) (6,718) (9,000) (10,000) (1,565) Proceeds from sale of equipment, investments 3,610 (3,456) (37,077) 42,730 1,065 Capitalized software development costs - (717)

Net capital expenditures (1,479) (10,274) (43,067) 36,012 (9,000) (10,000) (500) Acquisitions (2) (12,780) - (21,163) (4,750)

Total Investing Activities (14,259) (10,274) (64,230) 31,262 (9,000) (10,000) (500)

Operating Cash Flow 22,097 29,081 (18,264) 67,523 49,984 53,932 11,326

FINANCING ACTIVITIES Purchase of MANH stock (885) (4,110) Net borrowings - issuance of notes (2,000) (1,750) (5,250) Capital lease payments (170) (197) (191) (234) (234) (234) (47) Net change in debt (2,170) (2,832) (9,551) (234) (234) (234) (47) Proceeds from issuance of common stock 11,310 6,717 8,636 9,270 10,197 11,217 1,180 Distributions to shareholders - - Sale (purchase) of short-term investments (3) - Net Cash from Financing Activities 9,140 3,885 (915) 9,036 9,963 10,983 1,133

Foreign currency impact on cash 100 31 (186) (259) (5)

CASH AND EQUIVALENTSCash at beginning of period 19,695 51,032 84,029 64,664 140,964 200,911 140,964 Increase (decrease) in cash 31,337 32,997 (19,365) 76,300 59,947 64,914 12,454 Cash at end of period 51,032 84,029 64,664 140,964 200,911 265,825 153,418

Cash Flow AnalysisEBITDA 32,391 39,345 44,524 38,399 56,997 71,037 Operating cash flow (4) 22,097 29,081 (18,264) 67,523 49,984 53,932 Gross cash flow (5) 20,241 27,096 33,142 29,402 42,941 53,469 Free cash flow (6) 31,267 33,254 39,976 29,543 49,984 53,932 (1) 2001 Depreciation & Amortization jumps up due to ~ $6 million in annual amortization from Intrepa acquisition (Oct 00). (2) Intrepa acquired Oct. 00 for $32 million consisting of $13 million cash, $2 million assumed debt, $7 million note issued, $10 million cash. (3) Reported by MANH as an investing cash flow item. (4) Total operating sources less operating uses. (5) Net Income plus depreciation, amortization and deferred taxes. (6) Cash flow from operations plus capex. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

BEAR, STEARNS & CO. INC. Page 91

Exhibit 27. Retek Inc. — Annual Income Statement ($ in millions, except per share data) 2000 2001 2002 2003 2004E 2005E

RevenueSoftware License and Maintenance $57.7 $131.7 $132.6 $90.2 $109.6 $130.5Services and Other 34.2 $47.8 $59.2 $78.1 $83.4 $91.4Total Revenue 92.0 $179.5 $191.8 168.3 193.0 221.9

Year-over-Year Growth 33.0% 95.2% 6.9% -12.3% 14.6% 15.0%

Gross CostsCost of Software Licenses and Maintenance 23.3 33.6 34.7 27.4 33.4 $36.5Cost of Services and Other 24.9 35.0 43.9 57.5 61.3 $65.8

48.2 68.5 78.5 84.9 $94.7 $102.3

Gross ProfitSoftware license and maintenance 34.4 98.1 97.9 62.7 76.2 94.0Services and other 9.3 12.8 15.4 20.7 22.0 25.6Total Gross Profit 43.7 110.9 113.3 83.4 98.2 119.5

Gross MarginSoftware license and maintenance 59.6% 74.5% 73.9% 69.6% 69.5% 72.0%Services and other 27.3% 26.8% 26.0% 26.5% 26.4% 28.0%Total Gross Margin 47.6% 61.8% 59.1% 49.6% 50.9% 53.9%

Operating ExpensesResearch and Development 37.8 40.3 45.8 44.1 39.2 42.2Sales and Marketing 38.6 52.3 50.9 33.5 37.0 41.0General and Administrative 10.8 13.6 14.8 14.9 11.1 12.0Total Operating Expenses 87.1 106.2 111.5 92.5 87.2 95.2

Operating Expenses as a % of RevenueResearch and Development 41.1% 22.4% 23.9% 26.2% 20.3% 19.0%Sales and Marketing 41.9% 29.2% 26.6% 19.9% 19.2% 18.5%General and Administrative 11.7% 7.6% 7.7% 8.9% 5.7% 5.4%Total Operating Expenses as a % of Revenue 94.8% 59.2% 58.1% 55.0% 45.2% 42.9%

Total Operating Expenses and Gross Costs 135.3 174.7 190.0 177.4 182.0 197.5Year-over-Year Growth 89.4% 29.1% 8.8% -6.6% 2.5% 8.5%

Adjusted Operating Income (Loss) (43.4) 4.8 1.8 (9.1) 11.0 24.4Adjusted Operating Margin -47.2% 2.6% 0.9% -5.4% 5.7% 11.0%

Total Amortization (18.2) (19.5) (17.1) (11.1) (9.2) (9.2)

Total Nonrecurring Items (4.0) (8.6) (31.5) 13.7 0.0 0.0

Total Operating Income (Loss) (65.6) (23.3) (46.7) (20.2) 1.8 15.2Total Operating Margin -71% -13% -24% -12% 1% 7%

Other Income (Expense)Interest Expense 0.0 (0.0) (0.0) (0.6) (0.8)Other Income 1.7 1.8 2.5 2.9 4.2Total Other Income (Expense) 1.7 1.8 2.1 1.5 1.9 3.4

Pretax Total Income (Loss) (63.9) (21.492) (44.6) (18.8) 3.8 18.6 Income Tax Provision (21.0) (7.2) 79.0 1.8 1.5 7.0 Effective Tax Rate (for Total Net Income) 32.8% 33.4% -176.9% -9.4% 37.5% 37.5%

Net Income (Loss) Total (42.9) (14.3) (123.6) (20.5) 2.3 11.6

Nonrecurring EPS ($0.08) ($0.17) ($0.60) $0.25 $0.00 $0.00EPS Total ($0.91) ($0.29) ($2.35) ($0.38) $0.04 $0.21

Adjusted EPS ($0.55) $0.08 $0.05 ($0.06) $0.15 $0.31Year-over-Year Growth NM NM -43.6% -226.5% NM 110.8%

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 28. Retek Inc. — Quarterly Income Statement ($ in millions, except per share data) 1Q01 1Q02 1Q03 1Q04 2Q01 2Q02 2Q03A 2Q04E 3Q01 3Q02 3Q03 3Q04E 4Q01 4Q02 4Q03 4Q04E

RevenueSoftware License and Maintenance $26.2 $41.7 $20.2 $26.1 $31.6 $45.7 $21.7 $27.0 $35.1 $24.8 $23.7 $28.0 $38.7 $20.4 $24.6 $28.6Services and Other 10.8 11.8 17.4 21.6 12.1 15.0 21.2 20.0 12.4 15.7 20.1 20.3 12.5 16.7 19.4 21.5Total Revenue 37.0 53.5 37.6 47.6 43.6 60.8 42.9 47.0 47.5 40.5 43.8 48.3 51.3 37.1 44.1 50.0

Year-over-Year Growth 165.1% 44.6% -29.9% 26.8% 122.8% 39.2% -29.4% 9.6% 80.3% -14.9% 8.3% 10.2% 60.1% -27.7% 18.9% 13.5%

Gross Costs Cost of Software Licenses and Maintenance 7.4 9.6 5.5 8.2 8.2 10.3 6.7 8.4 8.8 9.0 7.2 8.5 9.2 5.8 8.0 8.3Cost of Services and Other 7.9 8.7 13.7 16.1 8.9 10.6 15.5 14.8 9.1 11.5 14.4 14.8 9.1 13.0 13.9 15.6Total Costs 15.3 18.3 19.1 24.3 17.1 20.9 22.3 23.2 17.9 20.5 21.7 23.3 18.3 18.9 21.9 23.9

Gross ProfitSoftware License and Maintenance 18.8 32.1 14.7 17.9 23.4 35.4 15.0 18.6 26.4 15.8 16.4 19.5 29.5 14.6 16.7 20.3Services and Other 2.9 3.1 3.7 5.4 3.2 4.4 5.7 5.2 3.3 4.2 5.7 5.5 3.5 3.7 5.6 5.9Total Gross Profit 21.7 35.3 18.4 23.3 26.6 39.8 20.6 23.8 29.6 20.0 22.1 24.9 33.0 18.2 22.2 26.2

Gross MarginSoftware License and Maintenance 71.8% 77.0% 72.8% 68.5% 74.1% 77.5% 68.9% 69.0% 75.1% 63.8% 69.4% 69.5% 76.2% 71.5% 67.6% 71.0%Services and Other 26.8% 26.6% 21.5% 25.2% 26.3% 29.3% 26.7% 26.0% 26.3% 26.6% 28.4% 27.0% 27.8% 21.9% 28.6% 27.5%Total Gross Margin 58.7% 65.9% 49.1% 48.9% 60.9% 65.5% 48.1% 50.7% 62.4% 49.4% 50.6% 51.7% 64.3% 49.2% 50.4% 52.3%Operating Expenses Research and Development 9.6 12.0 9.8 9.5 9.6 13.6 12.0 9.7 10.2 10.3 11.5 9.9 10.8 9.9 10.7 10.0Sales and Marketing 11.8 13.3 10.0 8.9 12.7 14.2 8.6 8.9 14.1 12.9 8.0 9.4 13.9 10.5 7.0 9.8General and Administrative 3.1 3.6 4.9 2.3 3.2 4.3 3.4 2.8 3.5 3.4 3.3 3.0 3.8 3.5 3.2 3.0Total Operating Expenses 24.5 28.9 24.7 20.7 25.5 32.1 24.0 21.5 27.8 26.7 22.9 22.3 28.4 23.9 21.0 22.8

Operating Expenses as a % of RevenueResearch and Development 26.0% 22.4% 26.1% 20.0% 22.0% 22.3% 28.1% 20.7% 21.5% 25.5% 26.4% 20.5% 21.1% 26.6% 24.3% 20.0%Sales and Marketing 31.7% 24.9% 26.6% 18.6% 29.0% 23.3% 19.9% 19.0% 29.6% 32.0% 18.2% 19.5% 27.0% 28.4% 15.9% 19.5%General and Administrative 8.3% 6.7% 13.0% 4.8% 7.3% 7.1% 8.0% 6.0% 7.4% 8.5% 7.6% 6.2% 7.4% 9.4% 7.3% 6.0%Total Operating Expenses as % Rev 66.1% 54.0% 65.7% 43.4% 58.4% 52.8% 56.0% 45.7% 58.5% 65.9% 52.2% 46.2% 55.5% 64.4% 47.5% 45.5%

Total Operating Expenses and Gross Costs 39.8 47.2 43.8 45.0 42.5 53.0 46.3 44.7 45.7 47.2 44.5 45.6 46.7 42.7 42.8 46.6Year-over-Year Growth 38.7% 18.6% -7.2% 2.8% 31.6% 24.6% -12.6% -3.5% 27.8% 3.3% -5.6% 2.5% 21.1% -8.6% 0.3% 8.9%

Adjusted Operating Income (Loss) (2.7) 6.4 (6.2) 2.6 1.1 7.8 (3.4) 2.3 1.8 (6.7) (0.7) 2.6 4.5 (5.6) 1.3 3.4Adjusted Operating Margin -7.4% 11.9% -16.6% 5.5% 2.5% 12.8% -7.9% 5.0% 3.9% -16.6% -1.6% 5.5% 8.9% -15.2% 2.9% 6.8%

Other Operating ExpensesAcquisition-Related Amortization of Intangibles (2.3) (4.1) (3.7) (2.3) (3.1) (4.4) (2.8) (2.3) (4.3) (4.8) (2.4) (2.3) (5.3) (3.8) (2.3) (2.3)Amortization of Stock-Based Compensation (1.3) (1.5) 0.0 (1.5)Total Amortization (3.7) (4.1) (3.7) (2.3) (4.7) (4.4) (2.8) (2.3) (5.862) (4.8) (2.360) (2.3) (5.3) (3.8) (2.3) (2.3)

Nonrecurring ItemsImpairment, Other 5.4 3.1 (8.2) (9.1) 2.8 (0.4) (22.4) 2.4Purchase of In-Process R&DTotal Nonrecurring Items 0.0 0.0 5.4 0.0 0.0 0.0 3.1 0.0 (8.2) (9.1) 2.8 0.0 (0.4) (22.4) 2.4 0.0

Total Operating Income (Loss) (6.4) 2.3 (9.9) 0.4 (3.6) 3.4 (6.2) 0.0 (12.2) (20.6) (3.1) 0.3 (1.1) (31.9) (1.1) 1.1Total Operating Margin -17% 4% -26% 1% -8% 6% -14% 0% -26% -51% -7% 1% -2% -86% -2% 2%

Other Income Interest Expense (0.0) (0.0) (0.1) (0.0) (0.0) (0.1) 0.0 (0.0) (0.1) (0.0) 0.0 (0.0) (0.1)Interest Income, other 0.2 0.4 0.5 0.5 0.4 0.5 0.7 0.6 0.4 0.8 0.5 0.5 0.4 0.9Total Other Income (Expense) 0.2 0.4 0.6 0.0 0.4 0.8 0.2 0.5 0.6 0.6 0.3 0.6 0.7 0.3 0.4 0.7

Pretax Total Income (Loss) (6.2) 2.7 (9.4) 0.4 (3.2) 4.2 (5.972) 0.6 (11.6) (20.0) (2.7) 1.0 (0.4) (31.5) (0.7) 1.9 Income Tax Provision 1 1.1 0.0 0.0 (2.1) 2.0 0.2 0.5 (4.8) 75.0 0.0 0.5 (0.9) 0.9 1.6 0.5 Effective Tax Rate (for Total Net Income) -9.5% 39.5% -0.2% 37.5% 65.7% 46.6% -2.5% 37.5% 65.7% 37.5% 37.5% 41.1% -3.0% 37.5%

Net Income (Loss) Total (6.8) 1.6 (9.4) 0.4 (1.1) 2.2 (6.1) 0.1 (6.9) (95.0) (2.7) 0.5 0.5 (32.5) (2.3) 1.4

Nonrecurring EPS Items $0.00 $0.00 $0.10 $0.00 $0.00 $0.00 $0.06 $0.00 ($0.15) ($0.17) $0.05 $0.00 ($0.01) ($0.42) $0.04 $0.00EPS Total ($0.14) $0.03 ($0.18) $0.01 ($0.02) $0.04 ($0.11) $0.00 ($0.14) ($1.80) ($0.05) $0.01 $0.01 ($0.61) ($0.04) $0.02

Adjusted EPS ($0.03) $0.08 ($0.05) $0.03 $0.02 $0.10 ($0.03) $0.03 $0.03 ($0.07) $0.00 $0.04 $0.06 ($0.06) $0.02 $0.05Year-over-Year Growth NM NM -161.0% NM NM 428.0% -134.3% NM NM -365.1% NM 2930.7% NM -204.4% NM 139.2%

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

BEAR, STEARNS & CO. INC. Page 93

Exhibit 29. Retek Inc. — Balance Sheet ($ in millions) 2000 2001 2002 2003 2004E 2005E 1Q04

ASSETS Current assets: Cash and cash equivalents $31.1 $70.2 $56.5 $54.3 $84.0 $125.5 $60.2 Investments 14.7 13.4 29.0 36.3 36.3 36.3 15.7 Accounts receivable, net 28.0 41.4 43.2 33.7 40.2 46.2 39.8 Deferred income taxes 38.3 22.3 0.0 0.0 0.0 Other current assets 11.2 7.7 8.0 5.8 6.4 7.1 8.2Total Current Assets 123.3 155.1 136.8 130.1 166.9 215.0 123.9

Investments 6.1 2.0 0.0 3.7 3.7 3.7 16.7 Deferred income taxes 11.5 51.9 0.0 0.0 0.0 Property and equipment, net 26.2 29.6 19.5 12.2 (2.6) (17.2) 11.1 Intangible assets, net 28.1 56.2 42.1 32.0 22.9 13.7 29.8Other assets 0.1 4.6 0.2 0.2 0.0 0.0 0.2Total Assets 195.3 299.4 198.6 178.2 190.7 215.2 181.7

LIABILITIES Accounts payable 10.5 10.7 15.7 15.7 16.1 17.5 17.1 Accrued liabilities 6.0 14.2 32.0 13.2 13.5 14.7 9.6 Deferred revenue 44.1 70.7 42.0 32.0 36.7 42.2 35.9 Note payable, current portion 0.2 0.1 0.1 0.1 0.1 0.1 0.1 Payable to HNC Software Inc. 0.6 0.0 0.0 0.0 0.0 13.9Total Current Liabilities 61.4 95.7 89.8 61.0 66.4 74.4 76.6 Note payable, net of current portion 0.3 0.2 0.1 11.7 11.7 11.7 Deferred revenue, net of current portion 8.9 0.0 7.2 16.6 16.6 16.6 12.8Total Liabilities 70.6 95.8 97.1 89.3 94.7 102.8 89.4

Shareholders' Equity Common stock 0.5 0.5 0.5 0.5 0.5 0.5 0.6 Paid-in capital 173.9 262.0 278.7 283.4 288.3 293.1 286.0 Deferred stock-based compensation (9.7) (4.8) (1.5) (0.0) (0.0) (0.0) (0.0) Accumulated other comprehensive loss (1.2) (1.0) 0.5 2.3 2.3 2.3 2.8 Retained earnings (38.9) (53.2) (176.8) (197.4) (195.1) (183.5) (197.0)Total Shareholders' Equity 124.6 203.5 101.4 88.9 96.0 112.5 92.3

Liabilities and Shareholders' Equity 195.3 299.4 198.6 178.2 190.7 215.2 181.7

Leverage AnalysisTotal debt/debt+equity (1) 0.8% 0.1% 0.2% 11.7% 10.9% 9.5%Total debt/equity (x) (1) 0.8% 0.1% 0.2% 13.3% 12.3% 10.5%Asset turnover (x) (2) 0.5x 0.6x 1.0x 0.9x 1.0x 1.0x

Financial Return AnalysisReturn on average equity (3) -21.0% 2.5% 1.6% -3.3% 8.7% 16.7%Return on ave. total capital (%) (4) -20.5% 1.8% 0.7% -4.0% 6.6% 13.1%Free cash return on ave. total capital (5) -56.5% -17.1% -17.2% 6.0% 25.2% 30.4%Pretax return on ave. assets (%) (6) -24.8% 1.9% 0.7% -4.8% 6.0% 12.0%Return on invested capital (7) -31.5% 2.6% 0.5% -8.9% 6.3% 11.3%

Days Sales Outstanding 110 83 75 75 75 75 75 (1) Total Debt includes bank debt plus convertible preferred note. (2) Total revenue divided by total assets. (3) Adjusted earnings / average total shareholders’ equity. (4) Cash or First Call earnings + tax affected interest / total debt plus shareholders’ equity. (5) Net income + depreciation + amortization + chg in deferred taxes - capex / average total debt + shareholders’ equity. (6) EBIT / Average total assets. (7) Net Operating Income minus cash taxes divided by PP&E plus goodwill plus off balance sheet leases, plus current assets minus current liabilities. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 30. Retek Inc. — Statement of Cash Flows ($ in millions, except per share data) 2000 2001 2002 2003 2004E 2005E 1Q04

OPERATING SOURCESNet income (loss) $(42.9) $(14.3) $(123.6) $(20.5) $2.3 $11.6 $0.4Depreciation and amortization 13.6 28.6 29.3 18.9 25.9 25.9 3.7Provisions for doubtful accounts 1.5 2.8 2.5 1.6 0.0 0.0 (0.1)Amortization of stock-based compensation 10.9 5.3 3.1 1.4 0.0 0.0 0.0Acquired in-process reseach and development 4.0 0.0 0.0 0.0 0.0Deferred income tax (benefit) expense (31.6) (24.4) 74.2 0.0 0.0Tax benefit from stock option transactions 7.5 16.4 3.7 0.0 0.0Other 21.2 0.2 (2.9) Accounts receivable (5.0) (16.6) (5.5) 6.6 (6.5) (6.0) (6.3) Accounts payable 4.5 (0.4) 5.0 0.0 0.4 1.4 1.4Changes in assets and liabilities: 0.0 Other assets (5.6) 10.0 7.2 2.2 (0.4) (0.6) Accrued liabilities 3.0 2.5 (1.9) (7.3) 0.3 1.2 (0.8) Deferred revenue 46.5 13.7 (17.5) (0.6) 4.7 5.5 0.1Other changes in working capital 43.9 26.1 (12.2) (5.7) 4.7 6.0 (0.7)Total Operating Sources 6.4 23.6 (2.3) 2.4 26.7 38.9 (4.5)INVESTING ACTIVITIES Cash purchased in business acquisition 0.2 0.0 Cash paid for business acquisition (18.7) 0.0 (8.9) Purchases/sales of investments for sale (20.7) 5.3 (13.6) (10.9) 7.4 Purchases of property and equipment (14.0) (18.6) (4.8) (1.5) (1.8) (2.2) (0.3)Total Investing Activities (53.2) (13.3) (27.3) (12.4) (1.8) (2.2) 7.2

Operating Cash Flow (46.9) 10.3 (29.6) 24.8 36.7

FINANCING ACTIVITIESIssuance/ repayment of debt (1.5) (0.2) (0.1) (0.1) (0.0) Borrowings from HNC Software, Inc. 0.6 0.0 0.0 Repayments to HNC Software Inc. (15.4) 0.0 0.0Net change in debt (16.3) (0.2) (0.1) (0.1) 0.0 0.0 (0.0) Net proceeds from the issuance of common stock 11.2 28.7 13.1 4.8 4.8 4.8 2.5Total Financing Activities (5.0) 28.5 13.1 4.8 4.8 4.8 2.5

Effect of Exchange Rate Changes on Cash (0.7) 0.4 2.8 3.1 0.8

CASH AND EQUIVALENTSCash at beginning of period 83.7 31.1 70.2 56.5 54.3 84.0 54.3Increase (decrease) in cash (52.6) 39.1 (13.7) (2.2) 29.7 41.5 5.9Cash at end of period 31.1 70.2 56.5 54.3 84.0 125.5 60.2

Cash Flow Analysis (in $ millions)EBITDA $(48.0) $13.9 $14.0 $(1.3) $27.7 $41.1 $6.8Operating cash flow (1) (46.9) 10.3 (29.6) 0.0 24.8 36.7 2.6Gross cash flow (2) (60.9) (10.2) (20.1) (1.6) 28.1 37.5 4.1 Free cash flow (3) (14.9) 33.6 (2.8) 15.8 29.7 41.5 (2.3)

Cash Flow Analysis per ShareEBITDA $(1.02) $0.28 $0.27 $(0.02) $0.50 $0.73 $0.12Operating cash flow (1) $(0.99) $0.21 $(0.56) $0.00 $0.45 $0.65 $0.05Gross cash flow (2) $(1.29) $(0.20) $(0.38) $(0.03) $0.51 $0.67 $0.07Free cash flow (3) $(0.32) $0.67 $(0.05) $0.29 $0.54 $0.74 $(0.04)

(1) Total operating sources less operating uses. (2) Net Income plus depreciation, amortization, and deferred taxes. (3) Operating cash plus cash received from exercise of stock options. Cash flows from onetime events, such as IPOs, are not included. Investments in marketable

securities are added back to the free cash flow figure. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

BEAR, STEARNS & CO. INC. Page 95

Exhibit 31. SAP AG — Annual Income Statement (€ in millions, except per share data and as noted) 2001 2002 2003 2004E 2005E

Revenue: License revenue € 2,581 € 2,291 € 2,147 € 2,361 € 2,661 Maintenance revenue 2,121 2,423 2,569 2,726 3,017 Product revenue 4,702 4,714 4,716 5,087 5,678 Consulting 2,083 2,204 1,954 1,936 2,091 Training 466 414 299 280 298 Service revenue 2,549 2,618 2,253 2,216 2,389 Other revenue 90 81 56 38 40 Total revenue 7,341 7,413 7,025 7,342 8,106 Cost of revenue:Cost of product 888 860 839 840 937 Cost of service 1,965 1,956 1,694 1,660 1,792 Total cost of revenue 2,853 2,816 2,533 2,500 2,729 Gross profit 4,488 4,597 4,492 4,842 5,378 Operating expenses:R&D 898 910 996 1,046 1,135 Sales & marketing 1,798 1,627 1,411 1,488 1,646 General & administrative 386 399 354 338 334 Other income & expenses, net 94 35 7 15 16 Total operating expenses (reported) 3,176 2,971 2,768 2,886 3,131 Operating income (reported) 1,312 1,626 1,724 1,955 2,247 Operating income (ex. SBCP and acquisition-related charges) 1,471 1,689 1,880 2,059 2,355 Operating income (ex. acquisition-related charges, incl. SBCP and OBS STAR) 1,325 1,575 1,750 1,979 2,271 EBITDA (based on reported operating income) 1,598 1,847 1,940 2,210 2,513 EBITDA (ex. SBCP and acquisition-related charges) 1,757 1,910 2,096 2,314 2,621 Other non-operating income / (expenses) (reported) (10) 37 36 20 20 Financial income / (expenses) (reported) (233) (555) 17 20 18 Pretax income (reported) 1,069 1,108 1,777 1,995 2,285 Pretax income (ex. extraord gain (SAP), TT, CMRC and impairment of minorities) 1,364 1,651 1,817 2,020 2,309 Pretax income (ex. SBCP, acquisition-related charges and impairment-related charges) 1,299 1,600 1,947 2,100 2,393

Tax expense 477 599 693 738 845 Minority interest (11) (6) (7) (7) (7) Net income (reported) 581 509 1,077 1,251 1,433 Net income (ex. extraord gain (SAP), TT, CMRC and impairment of minorities) 850 1,029 1,107 1,267 1,448 Net income (ex. SBCP, acquisition-related charges and impairment-related charges) 749 969 1,189 1,317 1,501 Average diluted shares (mil.) 314 313 311 311 312 EPS (reported) € 1.85 € 1.62 € 3.47 € 4.02 € 4.59 EPS (ex. extraord gain (SAP), TT, CMRC and impairment of minorities) € 2.70 € 3.29 € 3.56 € 4.07 € 4.64 EPS (ex. SBCP, acquisition-related charges and impairment-related charges) € 2.38 € 3.10 € 3.82 € 4.24 € 4.81 Source: Company reports; Bear, Stearns International Limited estimates.

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Exhibit 32. SAP AG — Quarterly Income Statement (€ in millions, except per share data and as noted) 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04E 3Q04E 4Q04E

Revenue: License revenue € 352 € 431 € 433 € 931 € 370 € 466 € 442 € 1,083 Maintenance revenue 608 633 655 673 666 675 687 698 Product revenue 960 1,064 1,088 1,604 1,036 1,140 1,129 1,782 Consulting 476 479 479 520 442 469 479 546 Training 77 75 71 76 70 70 70 70 Service revenue 553 554 550 596 512 539 549 616 Other revenue 7 20 14 15 8 10 10 10 Total revenue 1,520 1,638 1,652 2,215 1,556 1,690 1,688 2,408

Cost of revenue:Cost of product 184 189 201 265 182 202 206 249 Cost of service 433 411 413 437 401 399 412 448 Total cost of revenue 617 600 614 702 583 602 618 698 Gross profit 903 1,038 1,038 1,513 973 1,088 1,070 1,710

Operating expenses:R&D 218 241 222 315 231 253 236 325 Sales & marketing 307 358 328 418 325 367 338 457 General & administrative 74 99 82 99 81 84 76 96 Other income & expenses, net 6 - (7) 8 3 4 4 4 Total operating expenses (reported) 605 698 625 840 640 709 654 883 Operating income (reported) 298 340 413 673 333 379 416 827 Operating income (ex. SBCP and acquisition-related charges) 304 388 423 765 332 410 447 870

Other non-operating income / (expenses) (reported) 10 2 - 24 5 5 5 5 Financial income / (expenses) (reported) 3 5 12 (3) 26 (2) (2) (2) Pretax income (reported) 311 347 425 694 364 382 419 830 Pretax income (ex. extraord gain (SAP), TT, CMRC and impairment of minorities) 327 355 433 702 371 388 425 836 Pretax income (ex. SBCP, acquisition-related charges and impairment-related charges) 327 397 437 786 364 413 450 873

Tax expense 123 127 171 272 133 141 155 307 Minority interest (2) (1) (2) (2) (2) (2) (2) (2) Net income (reported) 186 219 252 420 229 239 263 522 Net income (ex. extraord gain (SAP), TT, CMRC and impairment of minorities) 199 225 258 425 234 243 267 525 Net income (ex. SBCP, acquisition-related charges and impairment-related charges) 199 251 260 478 229 258 282 549

Average diluted shares (mil.) 311 311 311 311 311 311 311 311 EPS (reported) € 0.60 € 0.71 € 0.81 € 1.35 € 0.74 € 0.77 € 0.85 € 1.68 EPS (ex. extraord gain (SAP), TT, CMRC and impairment of minorities) € 0.64 € 0.72 € 0.83 € 1.37 € 0.75 € 0.78 € 0.86 € 1.69 EPS (ex. SBCP, acquisition-related charges and impairment-related charges) € 0.64 € 0.81 € 0.84 € 1.54 € 0.74 € 0.83 € 0.91 € 1.77

Source: Company reports; Bear, Stearns International Limited estimates.

BEAR, STEARNS & CO. INC. Page 97

Exhibit 33. SAP AG — Balance Sheet (€ in millions) 2003 2004E 2005E

Intangible assets € 421 € 421 € 421

Inventories / accounts receivable 2,287 2,390 2,639

Other liquid assets 2,097 3,114 4,249 Current assets 4,384 5,504 6,888 Deferred taxes 264 264 264 Prepaid expenses 68 71 79 Total assets 6,326 7,495 8,997

Shareholders' equity and liabilities:Shareholders' equity 3,709 4,764 5,992 Minority interest 59 59 59

Reserves and accrued liabilites 1,567 1,637 1,808 Total other liabilities 686 716 787 Deferred income 305 319 352 Total shareholders' equity and liabilities 6,326 7,495 8,997

Source: Company reports; Bear, Stearns International Limited estimates.

Page 98 SUPPLY-CHAIN TECHNOLOGY

Exhibit 34. SAP AG —Statement of Cash Flows (€ in millions) 2003 2004E

Net income before minority interest € 1,077 € 1,244Minority interest 7 7 Depreciation & amortization 216 255 Loss on disposal of PPE / marketable equity securities (4) - Changes in operating assets and liabilities:Increase / (decrease) in reserves and liabilities (37) 80 Increase / (decrease) in deferred income (57) 14

Change in the scope of consolidation (3) - Proceeds from the disposal of fixed assets 35 - Investment in CMRC - - Purchase of TopTier, net of cash acquired - - Change in liquid assets and marketable securities (639) - Net cash provided by/(used in) investing activities (911) (301)

Dividends paid (186) (196) Purchase of treasury stock (88) - Impact of convertible bonds 13 - Other changes to additional paid-in capital (2) - Proceeds from line of credit and long-term debt 1 - Principal payments on long-term debt (4) - Effect of 2000 STAR hedge - - Effect of 2001 STAR hedge - - Effect of 2002 STAR hedge - - Effect of 2003 STAR hedge (39) Proceeds from IPO of subsidiary - - Net cash provided by/(used in) financing activities (305) (196)

- effect of fx rates on cash (70) - Net increase/(decrease) in cash and cash equiv. 219 1,017 Cash and cash equiv. at the beginning of the year 1,122 1,340 Cash and cash equiv. at the end of the year 1,340 2,357

Source: Company reports; Bear, Stearns International Limited estimates.

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Exhibit 35. Symbol Technologies, Inc. — Income Statement ($ in millions, except per share data) 2001 (1) 2002 (1) 2002 (1) 2003(1) 2004E 2005E

Year Mar Jun Sep Dec Year Mar Jun Sep Dec Year MarA Jun Sep Dec Year Mar Jun Sep Dec YearLine of Business Revenues Products(E) $1,206.2 $254.9 $252.5 $303.5 $292.2 $1,103.1 $310.7 $290.3 $308.8 $314.1 $1,228.1 $348.3 $353.0 $365.0 $377.0 $1,443.3 $379.0 $387.0 $423.0 $443.0 $1,632.0 Scanners - 62.1 52.3 57.0 75.5 246.9 87.1 85.0 88.0 91.0 351.1 100.0 100.0 112.0 120.0 432.0 Scan Engines 18.6 20.3 30.0 31.4 100.4 20.7 21.0 21.0 21.0 83.7 Mobile - 186.4 171.3 183.0 185.2 725.9 202.0 207.0 213.0 220.0 842.0 224.0 230.0 250.0 262.0 966.0 Wireless - 28.0 31.9 30.6 18.8 109.3 35.0 36.0 38.0 40.0 149.0 39.0 41.0 45.0 45.0 170.0 Other - 15.5 14.5 12.4 3.2 45.6 3.5 4.0 5.0 5.0 17.5 16.0 16.0 16.0 16.0 64.0 Services(E) 281.3 62.7 76.6 78.5 80.7 298.5 75.6 83.5 68.3 78.9 306.4 71.4 75.0 73.0 79.0 298.4 80.0 88.0 80.0 90.0 338.0 Total Revenues 1,487.5 317.6 329.1 382.0 372.9 1,401.6 386.3 373.8 377.1 393.0 1,534.5 419.7 428.0 438.0 456.0 1,741.7 459.0 475.0 503.0 533.0 1,970.0

Cost of Sales Products(E) 446.6 116.8 113.6 159.1 152.8 542.3 151.9 140.1 145.4 150.9 588.3 171.8 173.0 180.0 185.0 709.8 188.0 192.0 210.0 218.0 808.0 Gross Margin (%) 63.0 54.2 55.0 47.6 47.7 50.8 51.1 51.7 52.9 52.0 52.1 50.7 51.0 50.7 50.9 50.8 50.4 50.4 50.4 50.8 50.5 Services(E) 185.0 41.7 52.2 54.7 52.1 200.6 56.0 59.5 49.7 58.0 223.3 53.0 57.0 54.0 58.0 222.0 55.0 60.0 54.0 60.0 229.0 Gross Margin (%) 34.2 33.6 31.9 30.4 35.4 32.8 25.9 28.7 27.3 26.5 27.1 25.8 24.0 26.0 26.6 25.6 31.3 31.8 32.5 33.3 32.2 Manufacturing Variances 250.4 69.0 50.7 7.8 17.2 144.7 6.6 21.8 15.1 Other Cost of Sales 164.1 11.2 14.3 - 0.8 26.3 - - - - - - - - - - - - - - - Total Cost of Sales 882.0 227.5 216.4 221.6 222.1 887.6 214.5 221.4 210.2 208.9 855.0 224.8 230.0 234.0 243.0 931.8 243.0 252.0 264.0 278.0 1,037.0 Total Cost of Sales (GAAP) 1,046.1 238.8 230.7 221.6 222.9 914.0 214.5 221.4 210.2 208.9 855.0 Gross Profit 605.5 90.1 112.7 160.5 150.8 514.0 171.9 152.4 166.9 184.1 675.3 194.9 198.0 204.0 213.0 809.9 216.0 223.0 239.0 255.0 933.0 Gross Profit (GAAP) 441.4 78.9 98.4 160.5 150.0 487.7 171.9 152.4 166.9 184.1 Total Gross Margin (%) 40.7 28.4 34.2 42.0 40.4 36.7 44.5 40.8 44.3 46.8 44.1 46.4 46.3 46.6 46.7 46.5 47.1 46.9 47.5 47.8 47.4 Total Operating Expenses 493.7 107.6 111.6 113.7 137.2 469.1 131.1 132.4 129.6 155.7 548.9 165.5 164.4 159.4 160.4 649.6 170.4 170.4 170.3 170.3 681.4

Engineering 149.5 35.5 34.2 35.7 37.2 142.6 37.1 38.1 42.3 45.0 162.5 41.6 43.0 44.0 45.0 173.6 50.0 50.0 50.0 50.0 200.0 As % of Revenues 10.1% 11.2% 10.4% 9.3% 10.0% 10.2% 9.6% 10.2% 11.2% 11.5% 10.6% 9.9% 10.0% 10.0% 9.9% 10.0% 10.9% 10.5% 9.9% 9.4% 10.2%SG&A 329.0 71.7 77.0 77.7 99.7 326.1 93.7 93.9 87.0 110.3 385.0 123.9 121.0 115.0 115.0 474.9 120.0 120.0 120.0 120.0 480.0 As % of Reveniues 22.1% 22.6% 23.4% 20.3% 26.7% 23.3% 24.3% 25.1% 23.1% 28.1% 25.2% 29.5% 28.3% 26.3% 25.2% 27.3% 26.1% 25.3% 23.9% 22.5% 24.4%Amortization 14.8 - - - - - - - - - - - - - - - - - - - -

Restructuring and Other Charges (73.3) (40.1) (27.6) 8.8 109.4 50.6 78.2 16.1 19.6 - 113.9 - - - - - - - - - - EBITDA 217.5 (0.1) 17.8 64.5 32.4 114.3 57.7 37.1 56.0 45.4 202.0 47.4 51.6 56.6 64.6 220.3 57.6 64.6 80.7 96.7 299.6 Depreciation and Amortization 90.6 17.1 16.4 17.4 18.5 69.3 16.6 16.7 18.4 17.0 75.6 18.0 18.0 12.0 12.0 60.0 12.0 12.0 12.0 12.0 48.0 Operating Income (EBIT) 126.9 (17.1) 1.4 47.1 13.9 44.9 41.1 20.3 37.6 28.4 126.4 29.4 33.6 44.6 52.6 160.3 45.6 52.6 68.7 84.7 251.6

Operating Margin (%) 8.5 (5.4) 0.4 12.3 3.7 3.2 10.6 5.4 10.0 7.2 8.3 7.0 7.9 10.2 11.5 9.2 9.9 11.1 13.7 15.9 12.8 Operating Income (GAAP) 21.3 11.7 14.7 38.2 (96.3) (31.7) (37.1) 4.2 18.0 28.8 Interest Expense 19.3 - - - 14.5 14.5 - - - - - - - Other Expense - - - - - - 4.0 - 2.7 (7.4) (0.6) - - - - Other Income (Expense) 4.2 (4.1) 1.2 6.9 12.6 16.7 - 4.5 - - 4.5 1.0 - - - 1.0 - - - - - Restructuring and Other Charges 23.8 - 32.2 - - 32.2 - - - - Pretax Income 111.8 (21.2) 2.6 54.0 12.0 47.1 37.1 24.9 34.9 21.0 117.8 30.4 33.6 44.6 52.6 161.3 45.6 52.6 68.7 84.7 251.6 Pretax Income (GAAP) (17.6) 7.7 (16.3) 45.1 (98.2) (61.7) (41.1) 8.8 15.3

Pretax Margin (%) 7.5 (6.7) (10.7) 14.1 3.2 3.4 9.6 6.7 9.2 5.3 7.7 7.2 7.9 10.2 11.5 9.3 9.9 11.1 13.7 15.9 12.8 Income Tax 0.2 2.3 (3.1) 13.6 (29.6) (16.8) (10.1) 2.2 3.7 4.8 0.6 23.6 11.0 14.8 17.5 66.9 15.5 17.9 23.3 28.8 85.5

Effective Tax Rate (%) 32.2 (10.9) (119.2) 25.2 (246.1) 32.1 (27.3) 8.7 10.7 22.9 0.5 77.6 32.7 33.2 33.2 41.5 34.0 34.0 34.0 34.0 34.0 Net Income (from Operations) 76.0 (14.4) 1.8 36.7 8.2 32.1 25.2 16.9 23.7 117.2 Net Income (GAAP) (17.8) 5.4 (13.2) 31.6 (68.7) (44.9) (31.0) 6.6 11.5 16.2 117.2 6.8 22.6 29.8 35.1 94.4 30.1 34.7 45.3 55.9 166.1 Shares Outstanding

Basic 226.8 228.9 229.4 230.4 230.4 229.6 230.5 230.8 231.0 231.0 230.8 230.0 230.0 230.0 230.0 230.0 230.0 230.0 230.0 230.0 230.0 Fully Diluted 232.0 234.3 234.3 234.3 234.3 234.3 234.4 236.8 234.0 234.0 234.8 235.4 235.4 235.4 235.4 235.4 235.4 235.4 235.4 235.4 235.4

Diluted EPS (GAAP) (0.08) 0.02 (0.06) 0.14 (0.30) (0.20) (0.13) 0.03 0.05 0.07 0.01 0.03 0.10 0.13 0.15 0.40 0.13 0.15 0.19 0.24 0.71 Diluted EPS (from Operations) 0.34 (0.06) 0.01 0.16 0.03 0.14 0.11 0.07 0.10 0.07 0.35 0.08 0.10 0.13 0.15 0.45 0.13 0.15 0.19 0.24 0.71 (1) Restated following SEC investigation. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

Page 100 SUPPLY-CHAIN TECHNOLOGY

Exhibit 36. Symbol Technologies, Inc. — Balance Sheet ($ in millions) 2001 (1) 2002 (1) 2003 2004

Dec Dec Mar Jun Sep Dec MarASSETS

Current AssetsCash and Cash Equivalents $70.4 $76.1 $98.6 $98.0 $120.9 $150.0 $179.0Accounts Receivable, Net 141.3 151.4 140.0 126.6 131.6 152.4 119.6 Inventories, Net 338.2 261.1 240.5 211.5 197.2 212.9 211.7 Deferred Taxes 288.4 167.4 155.2 146.7 151.7 141.0 Prepaid Expenses and Taxes 22.5 1.4 - - - - Other Current Assets 34.6 32.9 41.9 39.7 39.2 218.8 25.8

Total Current Assets 895.3 690.3 676.2 622.5 640.6 734.1 677.2

Property, Plant, and Equipment 250.8 208.2 205.2 206.1 203.5 210.9 207.5 Deferred Income Taxes 78.4 222.6 244.6 248.7 246.3 236.5 Investment in Marketable Securities and Related Hedge 76.0 54.9 54.7 70.1 82.5 99.8 Goodwill, Net 292.8 301.0 301.6 302.6 308.0 304.0 Intangible Assets, Net 36.9 37.1 35.3 33.8 37.2 31.5 Other Assets 75.2 58.0 44.2 42.8 36.4 701.6 33.4 Total Assets 1,705.4 1,572.2 1,561.8 1,526.6 1,554.6 1,646.6 1,590.0

LIABILITIES AND EQUITYCurrent Liabilities

Accounts Payable and Accrued Expenses 272.5 427.6 482.5 453.1 466.1 442.7 Current Portion of Long-Term Debt 6.5 6.7 50.3 15.3 0.3 3.6 Deferred Revenue 42.8 32.9 37.6 38.1 29.5 39.2 Income Taxes Payable - - - - - - Accrued Restructuring Costs 13.6 6.9 7.6 6.0 5.8 - 3.5

Total Current Liabilities 335.4 474.1 578.0 512.6 501.7 536.2 489.0

Long-Term Debt 220.5 135.6 54.5 65.4 79.5 104.4 Deferred Revenues and Other Noncurrent Liabilities 11.7 15.8 12.2 15.2 17.7 18.2 Other Liabilities 53.5 58.9 59.6 60.8 64.7 189.7 44.0 Common Equity Put Options - - - - - - Convertible Subordinated Notes and Debentures 85.1 - - - - -

Total Liabilities 706.3 684.5 704.4 653.9 663.6 725.9 655.5

Shareholders' Equity Common Stock 2.5 2.6 2.6 2.6 2.6 2.6 Paid-In-Capital 1,373.4 1,323.1 1,325.9 1,327.4 1,335.0 1,381.5 Cumulative Translation Adjustments (29.6) (13.9) (10.3) (3.2) (1.7) 3.8 Retained Earnings (125.2) (187.5) (221.7) (215.1) (205.8) (185.2) Other Shareholders' Equity - - - - - -

Less: Treasury Stock at Cost (222.1) (236.5) (239.0) (239.0) (239.0) (268.4) Total Shareholders' Equity 999.1 887.7 857.5 872.7 891.0 920.6 934.4

Total Liabilities and Equity 1,705.4 1,572.2 1,561.8 1,526.6 1,554.6 1,646.5 1,590.0 (1) Restated pursuant to SEC investigation. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

BEAR, STEARNS & CO. INC. Page 101

Exhibit 37. Symbol Technologies, Inc. — Statement of Cash Flows ($ in millions) 2001 (1) 2002 (1) 2003 (1) 2004

Year Mar Jun Sep Dec Year Mar Jun Sep Dec Year MarOperating ActivitiesNet Income ($17.8) $5.4 ($13.2) $31.6 ($68.7) ($44.9) ($31.0) $6.6 $11.5 $15.9 $3.0 $6.8Adjustments to Net Income Net Cash Used by Operating Activities:

Depreciation and Amortization 61.4 14.0 13.4 14.3 14.7 56.5 13.2 13.0 13.6 29.2 69.0 14.4 Other Amortization 29.2 3.0 3.0 3.1 3.8 12.9 3.4 3.8 4.8 (12.0) 3.6 Provision for Losses on Accounts Receivable 6.9 4.8 2.4 3.9 4.9 16.0 4.8 3.6 (1.1) (7.4) 0.5 Deferred Income Taxes 18.4 2.9 (5.9) 16.9 (36.9) (23.0) (10.1) 2.2 3.7 4.2 23.6 Tax Benefit on Exercise of Options & Warrants 20.5 - - - 0.1 0.1 - - - - 2.2 Research and Development - - - - - - - - - - - Loss (Gain) on Sale of Property, Plant & Equipment 2.9 0.8 1.0 1.4 (0.1) 3.0 (0.0) (0.1) 0.1 (0.0) 0.1 Loss on Marketable Securities 98.9 - 14.2 11.8 (8.9) 17.1 - (14.9) (11.9) 26.8 - Increase (Decrease) in Fair Value of Derivative (90.1) - (21.5) (24.1) 7.8 (37.8) - 7.8 13.1 (20.9) - Restructuring, Impairment Charges, and Other Non-Cash Items 108.6 (41.6) 31.0 9.7 8.9 8.0 12.5 14.8 8.5 53.2 89.0 -

Changes in Assets and Liabilities - Accounts Receivable, Net 18.7 7.0 (9.1) (33.9) 10.5 (25.6) 18.9 11.9 (4.6) (15.1) 11.0 27.6 Sale of Lease Receivables - - - - - - - - - - - - Inventories, Net (126.4) 36.6 27.3 (2.1) (10.5) 51.3 9.3 22.6 14.7 7.3 54.0 0.2 Prepaid Expenses and Other Current Assets (43.1) - - - - - - - - - - Software Development Costs - - - - - - - - - - - (47.9) Intangible and Other Assets - 12.6 (3.1) (9.5) 5.8 5.8 (4.5) 2.3 0.8 1.4 7.9 Net Proceeds from Lease Securitizations 8.5 - - - (3.9) (3.9) - - - - - Accounts Payable and Accrued Expenses (106.6) (21.0) 7.3 23.8 142.7 152.8 52.4 (27.6) 18.3 (53.1) (10.0) (47.9) Income Taxes Payable - - - - - - - - - - - Accrued Restructuring Costs (37.9) 0.1 (0.9) (1.2) (4.7) (6.7) 0.7 (1.6) (0.3) 1.2 (1.7) Other Liabilities and Deferred Revenues 5.6 4.7 (3.9) (3.7) (1.3) (4.2) 1.8 4.7 (5.2) 16.7 18.0 2.1

Cash Flow from Operations (42.4) 29.2 42.0 41.9 64.3 177.5 71.3 49.0 66.2 47.5 234.0 40.8 -

Investing Activities - Investment in Airclic Inc. - - - - - - - - - - - (4.1) Property, Plant, and Equipment, Net (98.0) (8.4) (4.7) (7.2) (10.2) (30.5) (10.2) (13.8) (11.1) (25.9) (61.0) - Net Subsidiary Acquisition Costs (2.9) (1.5) (4.1) (4.5) (0.7) (10.8) (1.8) - (13.3) 15.1 - (11.2) Other Investing Activities, Net 80.1 (1.1) 0.5 (1.7) (0.0) (2.4) (1.2) (0.8) (2.7) (13.4) (18.0) - Net Cash from Investments (20.8) (11.0) (8.4) (13.3) (10.9) (43.6) (13.2) (14.6) (27.1) (24.2) (79.0) (15.2) - Financing Activities - Proceeds from Issuance of Long-Term Debt 169.9 40.8 29.9 5.0 (75.6) - - - - - - 13.8 Principal Repayments of Long-Term Debt (106.4) (64.4) (65.2) (33.3) 26.7 (136.3) (36.6) (35.1) (15.1) 0.0 (86.7) (0.1) Exercise of Stock Options and Warrants 38.1 7.0 0.8 4.8 2.5 15.1 4.6 - - (4.6) 10.3 Dividends Paid (3.8) - (2.3) - (2.3) (4.6) - (2.3) (2.3) 4.6 - Purchase/Issuance of Treasury Shares (Net) (15.4) (5.4) (1.6) (1.5) (0.2) (8.8) (5.1) - - 11.1 6.0 (20.0) Net Cash from Financing 82.5 (22.1) (38.5) (25.0) (48.9) (134.6) (37.1) (37.4) (17.4) 11.1 (80.7) 4.1 Effect of Exchange Rate Changes on Cash (1.5) (1.0) 4.9 0.5 2.1 6.5 1.4 2.3 1.2 (4.9) - (0.6) Net Increase in Cash 17.7 (4.9) 0.1 4.0 6.5 5.8 22.5 (0.6) 22.9 29.5 74.3 29.0 Cash at Beginning of Period 52.6 70.4 65.5 65.6 69.6 70.4 76.1 98.6 98.0 120.9 76.1 150.0 Cash at End of Period 70.4 65.5 65.6 69.6 76.1 76.1 98.6 98.0 120.9 150.4 150.4 179.0 (1) Restated pursuant to SEC Investigation. Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 38. Tibco Software Inc. — Income Statement ($ in millions, except per share data; fiscal year ended November 30) US GAAP FY2002

Year Feb-03 May-03 Aug-03 Nov-03 Year Feb-04A May-04 Aug-04 Nov-04 Year Feb-05 May-05 Aug-05 Nov-05 YearRevenue

License (non-related) $144.2 $24.8 $28.0 $32.4 $36.2 $121.4 $36.5 $38.5 $42.7 $49.1 $166.8 $40.1 $42.3 $47.0 $55.0 $184.5q/q change -35% 13% 16% 12% 1% 6% 11% 15% -18% 6% 11% 17%y/y change -27% -42% -12% 5% -5% -16% 47% 38% 32% 36% 37% 10% 10% 10% 12% 11%

License (related) 14.9 10.2 2.8 2.2 3.9 19.1 4.3 4.0 4.0 4.0 16.3 4.0 1.3 - - 5.3 License fees 159.1 35.0 30.8 34.6 40.1 140.5 40.8 42.5 46.7 53.1 183.1 44.1 43.7 47.0 55.0 189.8 q/q change -16% -12% 12% 16% 2% 4% 10% 14% -17% -1% 8% 17% y/y change -27% -25% -14% 0% -4% -12% 17% 38% 35% 32% 30% 8% 3% 1% 4% 4%

Service & maintenance (non-related) 99.5 24.9 26.3 26.6 28.2 106.0 29.3 30.7 32.0 34.6 126.6 33.5 34.9 36.2 38.7 143.2 q/q change -4% 6% 1% 6% 4% 5% 4% 8% -3% 4% 4% 7% y/y change 7% 4% 6% 7% 9% 7% 18% 17% 20% 22% 19% 14% 14% 13% 12% 13%Service & maintenance (related) 12.3 3.2 3.8 4.2 3.9 15.1 3.5 2.5 2.0 1.5 9.5 1.0 0.7 0.5 0.5 2.7 Billed expenses 1.8 0.5 0.5 0.7 0.7 2.6 0.8 0.7 0.8 0.8 3.1 0.7 0.7 0.8 0.8 3.0 Service and maintenance 113.6 28.7 30.7 31.5 32.8 123.7 33.6 33.9 34.8 36.9 139.1 35.2 36.3 37.5 40.0 148.9 q/q change -3% 7% 3% 4% 2% 1% 3% 6% -5% 3% 3% 7% y/y change 11% 6% 8% 10% 11% 9% 17% 11% 10% 12% 12% 5% 7% 8% 9% 7%

Total revenue 272.7 63.7 61.5 66.1 73.0 264.2 74.4 76.4 81.5 90.0 322.3 79.3 79.9 84.5 95.0 338.7 q/q change -11% -3% 8% 10% 2% 3% 7% 10% -12% 1% 6% 12% y/y change -15% -14% -4% 4% 2% -3% 17% 24% 23% 23% 22% 7% 5% 4% 6% 5%

Cost of revenuesLicense 3.2 0.7 0.6 0.7 0.8 2.8 0.8 0.8 0.9 1.1 3.7 0.9 0.9 0.9 1.1 3.8 % License revenues 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2%Service & maintenance 57.1 14.1 12.9 14.9 14.5 56.4 13.9 15.3 14.6 15.5 59.2 14.8 14.9 15.4 16.0 61.0 % Service & maintenance revenues 50% 49% 42% 47% 44% 46% 41% 45% 42% 42% 43% 42% 41% 41% 40% 41%Amortization of acquired technology - - - 1.7 1.7 1.7 - - - 1.7 - - - - - Total other cost of revenues 60.3 13.6 13.5 15.6 17.0 60.9 16.4 16.1 15.5 16.5 64.6 15.7 15.7 16.3 17.1 64.8 Stock-based compensation 0.5 0.1 0.1 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.1

Total cost of revenues 60.8 13.7 13.6 15.7 17.0 61.1 16.4 16.1 15.5 16.6 64.6 15.7 15.8 16.3 17.1 64.9Gross Profit 211.9 50.0 47.9 50.5 56.0 203.1 58.0 60.3 66.0 73.4 257.6 63.6 64.2 68.2 77.9 273.9

Gross Margin 78% 78% 78% 76% 77% 77% 78% 79% 81% 82% 80% 80% 80% 81% 82% 81%

Operating expensesSales and marketing 126.5 26.8 29.1 28.4 25.6 110.0 26.6 26.4 28.6 31.6 113.2 28.5 28.0 29.6 32.3 118.4 % of total revenues 46% 42% 47% 43% 35% 42% 36% 35% 35% 35% 35% 36% 35% 35% 34% 35%General and administrative 21.4 5.0 5.7 4.4 5.1 20.3 4.8 4.7 4.9 5.4 19.8 5.2 5.2 5.5 5.7 21.5 % of total revenues 8% 8% 9% 7% 7% 8% 6% 6% 6% 6% 6% 7% 7% 7% 6% 6%Research and development 71.0 17.3 17.1 14.1 15.6 64.1 13.1 13.4 13.9 14.4 54.7 13.9 14.0 14.2 15.0 57.1 % of total revenues 26% 27% 28% 21% 21% 24% 18% 18% 17% 16% 17% 18% 18% 17% 16% 17%Acquired in-process R&D 2.4 - - - - - - - - - - - - - - - Stock-based compensation 3.5 0.3 0.3 0.2 0.1 0.9 0.1 0.1 0.1 0.1 0.3 0.1 0.1 0.1 0.1 0.3 Restructuring charges 49.3 1.1 - - - 1.1 - - - - - - - - - - Amort. of goodwill & acq. intangibles 24.4 1.7 1.7 1.7 0.5 5.6 0.5 1.7 1.7 1.7 5.6 1.7 1.7 1.7 1.7 6.8

Total operating expenses 298.6 52.2 53.9 48.8 46.9 200.7 45.1 46.3 49.1 53.2 193.6 49.3 48.9 51.0 54.8 204.1 Operating income (86.7) (2.3) (6.0) 1.7 9.1 2.4 12.9 14.0 16.9 20.2 64.0 14.3 15.3 17.2 23.1 69.8

Operating margin -32% -4% -10% 3% 12% 1% 17.38% 18.31% 21% 22% 20% 18% 19% 20% 24% 21%Other income (6.8) 0.5 0.9 - - 1.4 0.4 - - - 0.4 - - - - - Interest income (expense), net 23.1 4.6 4.1 2.1 2.8 13.6 1.2 1.9 1.9 1.9 6.9 2.0 2.0 2.0 2.0 8.0 Pretax income (70.4) 2.8 (1.0) 3.8 11.9 17.4 14.5 15.9 18.8 22.1 71.4 16.3 17.3 19.2 25.1 77.8 Provision for income taxes 24.2 1.2 (0.4) 1.1 4.2 6.0 6.0 6.0 7.1 8.4 27.6 6.2 6.6 7.3 9.5 29.6

Tax rate -34% 41% 44% 29% 36% 35% 41% 38% 38% 38% 39% 38% 38% 38% 38% 38%Net income (loss) (94.6) 1.7 (0.6) 2.7 7.6 11.4 8.5 9.9 11.6 13.7 43.8 10.1 10.7 11.9 15.6 48.2 Diluted EPS (0.45) 0.01 (0.00) 0.01 0.03 0.05 0.04 0.05 0.06 0.06 0.20 0.05 0.05 0.06 0.07 0.23Diluted shares outstanding 211.9 221.9 211.2 219.7 220.9 219.5 222.5 211.0 211.5 212.1 214.3 212.6 213.1 213.7 214.2 213.4

FY 2005EFY 2004EFY 2003

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 39. Tibco Software Inc. — Balance Sheet ($ in millions, except per share data; fiscal year ended November 30) 2002Year Feb-03 May-03 Aug-03 Nov-03 Feb-04A May-04 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05

AssetsCurrent assets Cash and cash equivalents $522.4 $110.2 $116.3 $94.9 $83.3 $86.2 $104.0 $122.2 $144.6 $165.0 $181.5 $200.4 $228.8 Short-term investments 2,058.9 542.4 530.2 506.5 521.4 429.8 429.8 429.8 429.8 429.8 429.8 429.8 429.8 Accounts receivable 222.4 36.1 48.6 36.5 53.7 54.0 52.2 53.0 55.5 48.9 49.3 52.1 58.6 Accounts receivable (related parties) 3.5 5.5 3.1 0.3 4.5 3.5 2.5 2.0 1.0 0.5 - - - Other current assets 76.4 12.8 15.3 16.0 15.5 15.2 15.2 15.2 15.2 15.2 15.2 15.2 15.2 Total current assets 2,883.5 707.0 713.5 654.2 678.3 588.7 603.7 622.1 646.1 659.4 675.8 697.5 732.4

Property, plant & equipment, net 234.2 51.5 48.2 123.2 119.1 116.9 116.2 115.4 114.7 113.9 113.2 112.4 111.7 Other assets 69.6 8.9 8.9 35.1 34.9 35.5 36.5 36.5 37.6 33.1 33.4 35.3 39.7 Goodwill and acquired intangibles 428.2 116.1 114.4 112.6 103.0 98.7 98.2 96.5 94.8 89.2 89.2 29.3 27.6 Acquired intangibles 7.9 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 Total assets 3,615.5 883.6 885.0 925.0 943.3 846.0 860.7 876.7 899.3 901.8 917.7 880.7 917.6

Liabilities and stockholders' equity (deficit)Current liabilities Accounts payable 37.9 4.8 4.3 4.1 3.7 3.5 3.6 3.8 4.2 5.3 5.3 5.6 6.3 Due to related parties 6.2 0.4 0.1 1.5 1.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Accrued liabilities 344.4 81.8 83.2 73.3 78.7 78.4 78.2 80.1 84.0 81.1 81.8 83.9 93.4 Deferred revenue 182.5 46.3 47.9 38.3 42.9 46.3 46.7 46.6 47.8 48.5 48.9 51.7 56.2 Current portion of long-term debt 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 Total current liabilities 571.1 133.4 135.6 118.8 128.6 129.7 130.1 132.2 137.7 136.6 137.7 142.9 157.7

Deferred income taxes - - - - - - - - - - - - Long-term debt - - 52.3 51.9 51.4 50.9 50.2 49.7 48.7 47.7 46.2 44.7

Total stockholders' equity (deficit) 3,044.5 750.2 749.5 754.0 762.8 664.8 679.7 694.3 711.9 716.5 732.4 691.6 715.2

Total liabilities and stockholders' equity 3,615.5 883.6 885.0 925.0 943.3 846.0 860.7 876.7 899.3 901.8 917.7 880.7 917.6

2003 2005E2004E

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 40. Tibco Software Inc. — Statement of Cash Flows ($ in millions, except per share data; fiscal year ended November 30) FY 2002

Year Feb-03 6 Mos 03 9 Mos 03 Year Feb-04A 6 Mos 04 9 Mos 04 Year Feb-05 May-05 6 Mos 05 Aug-05 9 Mos 05 Nov-05 YearOperating ActivitiesNet income (Loss) (91.1)$ 1.7$ 1.1$ 3.8$ 11.4$ 8.5$ 18.4$ 30.0$ 43.8$ 10.1$ 10.7$ 20.8$ 11.9$ 32.7$ 15.6$ 48.2$ Adjustments to reconcile net income (loss) to net - - - - Cash used in operating activities: - - - -

Depreciation & amortization expense 17.8 3.8 7.2 10.8 15.6 3.3 9.1 14.8 20.6 5.7 5.7 11.4 5.6 17.0 5.6 22.6 Write-off of in-process research and development 2.4 - - - - - - - - - - Amortization of goodwill and other intangibles 30.3 1.7 3.4 5.1 6.8 1.7 3.4 5.1 6.8 1.7 1.7 3.4 1.7 5.1 1.7 6.8 Non-cash compensation expense 3.6 0.4 0.7 0.9 1.1 0.1 0.1 0.2 0.3 0.1 0.1 0.1 0.1 0.2 0.1 0.3 Impairment of private equity investments 4.8 (0.5) (1.4) (2.1) (1.1) (0.4) (0.4) (0.4) (0.4) - - - - - - - Deferred income taxes 18.2 - - - - - - - - - - - - - - - Tax benefit from employee option plan - - - 0.6 - - - - - - - - - - - Tax benefit from acquisition - - - - 4.3 4.3 4.3 4.3 Establishment of valuation allowance against deferred tax assets - - - - - - - - - - - - - - - Changes in operating assets and liabilities: - - - - - - - - - - - - - - -

Accounts receivable 6.9 23.7 11.2 23.3 6.1 (0.3) 1.5 0.7 (1.8) 6.6 (0.4) 6.2 (2.8) 3.4 (6.5) (3.1) Account receivable (related parties) (0.4) (5.5) (3.4) 0.9 (3.2) (0.7) 0.3 0.8 1.8 0.5 0.5 1.0 - 1.0 - 1.0 Prepaid rent - - (27.9) (27.8) - - - - Other assets 1.1 1.0 (1.5) 0.3 0.7 0.3 0.3 0.3 0.3 - - - - - - - Accounts payable 8.5 (0.4) (0.9) (1.2) (1.6) (0.2) (0.1) 0.1 0.5 1.1 0.0 1.1 0.3 1.4 0.7 2.1 Accrued liabilities 9.4 (11.7) (9.4) (18.4) (14.4) (0.3) (0.5) 1.4 5.3 (2.8) 0.7 (2.2) 2.1 (0.1) 9.5 9.5 Deferred revenue 6.4 (3.4) (1.9) (11.3) (6.7) 3.3 3.8 3.7 4.9 0.7 0.4 1.0 2.8 3.8 4.6 8.4

Net cash provided by (used in) operating activities 17.7 10.7 5.2 (15.8) (12.5) 19.5 40.1 61.1 86.3 23.6 19.3 42.9 21.7 64.5 31.2 95.7

Investing activitiesDeposits held by Reuters - - - - - - - - - - - - - - - - Purchase of investments (1,125.0) (122.0) (441.1) (931.1) (1,284.3) (222.0) (222.0) (222.0) (222.0) - - - - - - - Sale & maturity of investments 1,166.8 161.8 492.6 1,004.3 1,342.6 315.4 315.4 315.4 315.4 - - - - - - - Purchases of property and equipment (65.1) (0.5) (1.0) (79.5) (80.3) (1.1) (2.3) (3.6) (4.8) (1.3) (1.3) (2.5) (1.3) (3.8) (1.3) (5.0) Acquisition costs, net (9.0) - - - - (1.5) (3.0) (4.5) (1.5) (1.5) (3.0) (1.5) (4.5) (1.5) (6.0) Investments in private equity investments (0.4) - - (0.1) (0.1) (0.0) (0.1) (0.1) (0.1) (0.0) (0.0) (0.1) (0.0) (0.1) (0.0) (0.1) Investments pledged as security for letter of credit 1.1 - - - (0.7) (0.7) (0.7) (0.7) - - - Net cash used in investing activities (31.6) 39.4 50.5 (6.4) (22.1) 91.6 88.8 86.0 83.3 (2.8) (2.8) (5.6) (2.8) (8.3) (2.8) (11.1)

Financing activitiesProceeds from issuance of common stock - - - - - - - - - - - - - - - Proceeds from exercise of stock options 13.7 0.2 0.6 1.4 2.5 4.4 4.4 4.4 4.4 - - - - - - - Proceeds from employee stock purchase plan 11.4 2.8 2.8 5.4 5.4 2.4 2.4 2.4 2.4 - - - - - - - Proceeds from long-term debt - - 54.0 54.0 . - - - - - - - - - - Payment of financing fees - - (0.7) (0.7) (115.0) (115.0) (115.0) (115.0) - - - - - - - Principal payments of long-term debt - - (0.1) (0.5) (0.4) (0.4) (0.4) (0.4) - - - - - - - Proceeds from issuance of preferred stock - - - - - - - - - - - - - - - Net cash provided by financing activities 25.1 2.9 3.4 59.9 60.6 (108.6) (108.6) (108.6) (108.6) - - - - - - -

Effect of exchange rates on cash 0.2 (0.0) (0.0) (0.0) 0.1 0.4 - - - - - - - - - - Net increase in cash and cash equivalents 11.4 53.0 59.1 37.7 26.0 2.9 20.3 38.5 60.9 20.8 16.5 37.3 18.9 56.2 28.4 84.6 Cash and cash equivalents at beginning of period 511.0 57.2 57.2 57.2 57.2 83.3 83.3 83.3 83.3 144.2 165.0 144.2 181.5 144.2 200.4 144.2 Cash and cash equivalents at end of period 522.4 110.2 116.3 94.9 83.3 86.2 103.6 121.8 144.2 165.0 181.5 181.5 200.4 200.4 228.8 228.8

Free cash flow to equity (56.8) 10.2 4.2 (95.4) (93.0) 18.5 36.2 54.4 76.8 20.8 16.5 37.3 18.9 56.2 28.4 84.6 Free cash flow to equity excl acquisitions (47.8) 10.2 4.2 (95.4) (93.0) 18.5 37.7 57.4 81.3 22.3 18.0 40.3 20.4 60.7 29.9 90.6 Effect of exchange rate changes 0.0 (0.0) (0.0) 0.0 (0.3) 2.6 - - - - - - - - - - Adjusted free cash flow to equity (56.8) 10.2 4.2 (95.4) (93.2) 21.1 36.2 54.4 76.8 20.8 16.5 37.3 18.9 56.2 28.4 84.6 Adjusted Free cash flow to equity/share (0.27)$ 0.05$ 0.02$ (0.44)$ (0.42)$ 0.09$ 0.17$ 0.25$ 0.36$ 0.10$ 0.08$ 0.17$ 0.09$ 0.26$ 0.13$ 0.40$

After-tax interest expense 27.6 2.7 5.0 6.5 8.3 0.7 1.9 3.0 4.2 1.2 1.2 2.5 1.2 3.7 1.2 5.0 Free cash flow to the enterprise (84.4) 7.5 (0.8) (101.9) (101.3) 17.8 34.4 51.4 72.6 19.5 15.3 34.8 17.6 52.5 27.2 79.7 Free cash flow to the enterprise excl. acquisitions (75.3) 7.5 (0.8) (101.9) (101.3) 17.8 35.9 54.4 77.1 21.0 16.8 37.8 19.1 57.0 28.7 85.7 Free cash flow to the enterprise/share (0.35) 0.03 (0.00) (0.47) (0.46) 0.1 0.17 0.25 0.36 0.10 0.08 0.18 0.09 0.27 0.13 0.40

FY 2005EFY 2004EFY 2003

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 41. Unova, Inc. — Income Statement ($ in millions, except per share data) 2000 2001 2002 2003 2004E 2005EYear Year Year Mar Jun Sep Dec Year MarA Jun Sep Dec Year Mar Jun Sep Dec Year

RevenuesAutomated Data Systems $725.5 $626.3 $631.9 $162.9 $171.8 $167.2 $185.9 $687.8 $193.0 $187.1 $183.1 $202.2 $765.5 $193.4 $210.0 $205.0 $215.0 $823.4Industrial Automation Systems 1,112.5 873.5 568.8 110.8 113.1 99.3 114.9 438.1 104.7 115.0 110.0 105.0 434.7 105.0 105.0 110.0 110.0 430.0

Total Product and Service Revenues 1,838.0 1,499.8 1,200.7 273.7 284.9 266.5 300.9 1,125.9 297.7 302.1 293.1 307.2 1,200.1 298.4 315.0 315.0 325.0 1,253.4 Other Revenues - 28.9 112.5 - 7.2 11.6 - 18.8 - - - - - - - - - -

Total Revenues 1,838.0 1,528.6 1,313.2 273.7 292.1 278.0 300.9 1,125.9 297.7 302.1 293.1 307.2 1,200.1 298.4 315.0 315.0 325.0 1,253.4 Cost of Sales of Prods. and Services (E) 1,392.9 1,118.0 870.6 197.2 201.5 182.1 202.7 783.6 195.0 206.3 198.6 202.5 802.3 201.4 208.4 209.3 212.8 831.9

Gross Profit (Pro Forma) 445.1 381.7 330.1 76.5 83.3 84.3 98.2 342.3 102.7 95.8 94.5 104.7 397.8 97.0 106.6 105.8 112.2 421.5 Gross Margin on Products & Services (%) 24.2 25.5 27.5 27.9 29.2 31.6 32.6 30.4 34.5 31.7 32.2 34.1 33.1 32.5 33.8 33.6 34.5 33.6

Other Cost of Sales (E) 33.7 28.1 - 1.8 2.9 - 4.7 - - - - - - - - - - Total Cost of Sales 1,392.9 1,118.0 898.7 197.2 203.4 185.0 202.7 400.6 195.0 206.3 198.6 202.5 400.6 201.4 208.4 209.3 212.8 400.6 Total Gross Profit 411.4 410.6 414.5 76.5 88.7 93.0 98.2 337.5 102.7 95.8 94.5 104.7 397.8 97.0 106.6 105.8 112.2 421.5 Gross Margin (%) 22.4 26.9 31.6 27.9 30.4 33.4 32.6 30.0 34.5 31.7 32.2 34.1 33.1 32.5 33.8 33.6 34.5 33.6

SG&A 430.2 373.8 317.1 77.7 74.0 73.2 80.3 305.2 78.7 75.9 74.4 79.2 308.2 75.3 77.3 78.6 79.6 310.6 EBITDA (Pro Forma) 14.9 15.2 13.0 (1.3) 9.4 11.1 17.9 37.1 24.1 19.9 20.1 25.5 89.6 21.7 29.3 27.2 32.7 110.9 EBITDA (GAAP) (18.8) 36.8 97.4 (1.3) 14.7 19.8 17.9 51.1 24.1 19.9 20.1 25.5 89.6 21.7 29.3 27.2 32.7 110.9

Depreciation & Amortization 67.3 57.2 34.6 7.2 7.0 6.2 5.2 25.6 4.8 5.0 5.0 5.0 19.8 5.3 5.3 5.3 5.3 21.0 Operating Income (EBIT, from Operations) (52.4) (42.0) (21.5) (8.4) 2.4 4.8 12.7 11.5 19.3 14.9 15.1 20.5 69.8 16.5 24.1 22.0 27.4 89.9 Operating Margin (%) (2.9) (2.7) (1.6) (3.1) 0.8 1.7 4.2 1.0 6.5 4.9 5.1 6.7 5.8 5.5 7.6 7.0 8.4 7.2 Restructuring or Other Operating Expenses (Income) (44.7) 242.0 34.6 1.0 0.9 1.0 7.0 9.9 0.4 - - - 0.4 - - - - -

Operating Income (GAAP) (41.4) (262.3) 28.2 (9.4) 6.8 12.5 5.7 (3.1) 18.9 14.9 15.1 20.5 69.4 16.5 24.1 22.0 27.4 89.9 Operating Margin (%, GAAP) (2.3) (17.2) 2.1 (3.4) 2.3 4.5 1.9 (0.3) 6.3 4.9 5.1 6.7 5.8 5.5 7.6 7.0 8.4 7.2

Interest Expense 33.9 32.9 23.4 4.5 4.1 3.1 2.9 14.6 3.1 4.0 4.0 4.0 15.1 4.0 1.8 1.8 1.8 9.3 Interest (Income) (3.4) (3.0) (2.8) (0.8) (0.9) - - (1.7) (1.2) (1.2) (1.2) (3.6) (1.2) (0.5) (0.6) (0.6) (2.9) Other, Net - - - - - - - - - - - - - - - - - -

Pretax Income (Pro Forma) (83.0) (71.9) (42.1) (12.1) (0.8) 1.7 9.8 (1.4) 16.2 12.1 12.3 17.7 58.3 13.7 22.8 20.8 26.3 83.5 Pretax Income (GAAP) (72.0) (292.2) 7.6 (13.1) 3.6 9.4 2.8 (16.1) 15.8 12.1 12.3 17.7 57.9 13.7 22.8 20.8 26.3 83.5

Income Taxes (32.3) - 5.2 1.6 2.6 2.0 6.2 12.4 5.3 4.5 4.5 6.5 20.9 5.1 8.4 7.7 9.7 30.9 Effective Tax Rate (%) 44.9 - 68.2 (12.2) 72.0 21.3 221.0 (77.2) 33.6 37.0 37.0 37.0 36.1 37.0 37.0 37.0 37.0 37.0 Statutory Tax Rate (%) 40.0 41.6 40.0 32.5 32.5 32.5 37.0 40.0 37.0 37.0 37.0 37.0 37.0 37.0 37.0 37.0 37.0 37.0

Net Income (Pro Forma) (49.3) (42.0) (25.3) (8.2) (0.5) (0.3) 3.6 (0.8) 10.9 7.6 7.7 11.2 37.4 8.6 14.4 13.1 16.5 52.6 Net Income (GAAP) (39.6) (292.2) 2.4 (14.7) 1.0 7.4 (3.4) (28.5) 10.5 7.6 7.7 11.2 37.0 8.6 14.4 13.1 16.5 52.6

Shares Outstanding:Basic 55.7 56.9 57.8 58.4 58.5 59.0 59.5 58.8 60.2 60.0 60.5 61.0 60.4 61.5 62.0 62.5 63.0 62.3 Fully Diluted 55.7 56.9 58.6 58.6 58.5 60.8 61.0 59.7 62.1 61.5 61.8 62.0 61.9 62.5 63.0 63.5 64.0 63.3

Earnings per ShareBasic (GAAP) (0.71) (5.14) 0.04 (0.25) 0.02 0.13 (0.06) (0.17) 0.17 0.13 0.13 0.18 0.61 0.14 0.23 0.21 0.26 0.84 Fully Diluted (Pro Forma) (0.88) (0.74) (0.43) (0.14) (0.01) (0.00) 0.06 (0.09) 0.18 0.12 0.12 0.18 0.60 0.14 0.23 0.21 0.26 0.83 Fully Diluted (GAAP) (0.71) (5.14) 0.04 (0.25) 0.02 0.12 (0.06) (0.17) 0.17 0.12 0.12 0.18 0.60 0.14 0.23 0.21 0.26 0.83 Loss from Discontinued Operations 5.5 0.02 Net Earnings per Share 0.03 (0.04)

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 42. Unova, Inc. — Balance Sheet ($ in millions) 2000 2001 2002 2003 2004EDec Dec Mar Jun Sep Dec Mar Jun Sep Dec MarA Jun Sep Dec

ASSETSCurrent AssetsCash and Cash Equivalents $106.8 $103.7 $72.6 $86.8 $112.8 $178.3 $187.6 $203.0 $226.2 $238.4 $227.5 $203.0 $226.2 $238.4Accounts Receivable, Net 453.7 375.9 372.6 377.4 352.1 341.2 293.6 296.4 265.8 275.6 280.6 296.4 265.8 275.6

Trade Receievables, Net 219.6 187.8 - - - - Receivables Related to Long-Term Contracts 156.3 153.3 - - - -

Inventories, Net 237.5 189.4 181.6 185.4 179.5 138.5 140.0 140.3 133.6 132.3 150.3 140.3 133.6 132.3 Assets Held for Sale 23.8 22.9 23.8 Deferred Tax Assets 79.8 77.2 73.5 69.9 72.6 78.6 74.3 71.1 68.3 71.2 65.4 71.1 68.3 71.2 Other Current Assets 17.2 13.1 13.9 10.9 6.8 9.2 11.4 11.8 39.0 19.5 21.5 11.8 39.0 19.5

Total Current Assets 895.1 759.3 714.2 730.4 723.7 745.8 706.9 722.6 732.9 760.9 768.4 722.6 732.9 760.9

Property, Plant and Equipment, Net 228.2 174.1 163.0 144.8 138.3 126.9 100.9 118.1 77.4 77.3 76.0 118.1 77.4 77.3 Goodwill and Other Intangibles, Net 369.9 87.1 83.9 84.4 84.0 75.3 75.4 75.4 75.2 75.6 75.3 75.4 75.2 75.6 Deferred Tax Assets 87.7 101.5 101.3 106.9 103.5 103.6 107.7 112.9 118.5 111.8 113.5 112.9 118.5 111.8 Other Assets 139.7 85.0 83.4 81.9 82.5 73.2 86.3 63.4 69.1 65.1 62.0 63.4 69.1 65.1 Total Assets 1,720.7 1,207.0 1,145.8 1,148.5 1,132.0 1,124.8 1,077.2 1,092.5 1,073.1 1,090.8 1,095.1 1,092.5 1,073.1 1,090.8

LIABILITIES & SHAREHOLDERS' EQUITYCurrent LiabilitiesAccounts Payable and Accrued Expenses 396.5 324.1 280.6 275.5 255.3 286.7 277.6 286.8 263.6 265.6 266.6 286.8 263.6 265.6 Payroll and Related Expenses 85.3 100.3 95.9 95.2 101.6 72.2 62.3 57.2 61.6 54.9 43.6 57.2 61.6 54.9 Notes Payable and Current Portion of Long-Term Debt 235.4 - - - - - - - - - 100.0 - - - Total Current Liabilities 717.2 424.4 376.5 370.7 356.9 358.9 339.9 344.1 325.2 320.5 410.2 344.1 325.2 320.5 Long-Term Debt 213.5 281.5 279.8 249.8 228.7 224.7 208.5 208.5 208.5 208.5 108.5 208.5 208.5 208.5 Other Long-Term Liabilities 102.2 103.1 109.7 110.1 112.6 123.3 125.2 125.9 125.0 131.0 133.5 125.9 125.0 131.0 Total Liabilities 1,032.9 809.0 766.0 730.6 698.1 706.9 673.6 678.4 658.8 660.0 652.1 678.4 658.8 660.0

Shareholders' EquityCommon Stock 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 Additional Paid-in Capital 660.1 669.4 670.3 672.7 673.1 674.7 675.0 677.8 678.4 690.7 694.4 677.8 678.4 690.7 Retained Earnings 51.5 (240.7) (258.9) (236.6) (222.3) (238.3) (253.2) (254.0) (255.3) (257.6) (247.1) (254.0) (255.3) (257.6) Accumulated Other Comprehensive Loss (24.4) (31.3) (32.2) (18.8) (17.5) (19.1) (18.8) (10.4) (9.3) (3.0) (5.0) (10.4) (9.3) (3.0) Total Shareholders' Equity 687.8 398.0 379.8 417.9 433.9 417.9 403.6 414.0 414.4 430.8 443.0 414.0 414.4 430.8

Total Liabilities and Equity 1,720.7 1,207.0 1,145.8 1,148.5 1,132.0 1,124.8 1,077.2 1,092.5 1,073.1 1,090.8 1,095.1 1,092.5 1,073.1 1,090.8 Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 43. Unova, Inc. — Statement of Cash Flows ($ in millions) 2000 2001 2001 2002 2002 2003 2003 2004Year Mar Jun Sep Dec Year Mar Jun Sep Dec Year Mar Jun Sep Dec Year Mar

Operating ActivitiesNet Income (as Reported) $(39.8) $(10.0) $(2.8) $(250.7) $(28.7) $(292.2) $(18.2) $22.3 $14.3 $(16.0) $2.4 $(14.9) $(0.8) $(1.3) $(2.2) $(19.3) $10.5Adjustments to Reconcile Net Income:

Depreciation and Amortization 67.3 16.0 16.2 14.7 10.3 57.2 9.0 8.8 8.3 8.5 34.6 7.2 7.0 6.5 5.2 25.8 4.8 Prepaid Pension Cost (14.2) (7.8) (5.5) (2.2) 5.9 (9.7) 1.2 1.5 1.5 1.6 5.8 1.9 2.0 (3.9) - Deferred Taxes (44.8) (6.6) 30.7 (16.9) (18.6) (11.4) 2.1 (2.5) 1.8 (0.9) 0.6 0.5 (2.1) 1.7 - Special Charges - - 4.6 1.6 14.0 20.2 4.7 - 5.2 21.7 31.6 1.0 0.9 (1.9) - Long-Lived Asset Impairment - - 31.0 256.0 9.8 296.8 - - - 3.0 3.0 - - - - - Other (54.2) (90.5) 46.9 - - (43.6) - - - - - - - - - -

Changes in Assets and Liabilities:Accounts Receivable 129.9 7.3 52.7 26.8 72.1 158.9 1.6 6.8 25.4 16.4 50.2 48.2 5.8 - - Inventories 55.7 9.5 (3.3) 10.9 28.5 45.6 4.2 (0.5) 6.0 42.3 52.0 (1.5) 1.8 - - Other Current Assets 2.2 (0.6) 1.6 1.6 1.2 3.8 (0.8) 3.4 4.1 (2.3) 4.3 (2.1) (0.1) - - Accounts Payable and Accrued Expenses (112.4) (47.4) 48.2 (46.3) (11.4) (56.9) (31.3) (19.0) (25.5) (3.8) (79.6) (6.7) 4.0 - - Payroll and Related Expenses (15.1) 2.8 (8.0) (0.6) 4.2 (1.7) (6.7) (2.4) 4.9 (8.5) (12.7) (10.6) (6.1) - - Other Long-Term Liabilities 8.1 4.1 (6.7) (1.4) (3.2) (7.2) 1.5 7.8 1.6 (0.1) 10.8 0.8 (0.6) - -

Other Operating Activities (7.2) 0.2 (1.7) 1.4 9.0 9.0 1.5 4.1 (0.8) 5.1 9.9 2.3 3.2 - - Total Changes in Assets and Liabilities and Other 61.2 (24.1) 82.8 (7.5) 100.4 151.6 (30.0) 0.2 15.8 49.0 34.9 30.4 7.9 25.2 - 63.7 (24.8) Cash Flow from Operations (24.5) (123.0) 204.0 (5.0) 93.0 169.0 (31.1) 30.3 46.9 66.8 112.9 26.0 14.9 26.1 2.9 70.2 (9.5)

Investing ActivitiesAcquisition of Property, Plant, and Equipment (31.6) (3.5) (6.2) (2.6) (2.4) (14.7) (1.9) (2.6) (2.6) (3.4) (10.5) (4.4) (3.4) (6.3) (6.0) (20.1) (3.7) Proceeds from Sale of Assets 100.1 - 7.8 (1.1) 2.7 9.4 1.4 14.1 1.7 4.1 21.3 3.1 1.1 (4.2) - Changes in Other Assets - - - - - - 1.6 - - - 1.6 - - - - Acquisitions, Net of Cash Acquired - - - - - - - - - - - - - - - Other Investing Activities 7.3 2.3 0.9 0.6 0.5 4.3 1.6 0.6 1.0 1.0 4.3 0.8 0.3 7.6 7.0 15.7 0.6 Net Cash from Investments 75.8 (1.2) 2.5 (3.0) 0.8 (1.0) 2.8 12.1 0.2 1.7 16.7 (0.4) (2.0) (2.9) 0.9 (4.4) (3.1)

Financing ActivitiesIssuance (Repayment) of Debt 26.0 52.9 (161.1) (10.5) (46.8) (165.5) (1.7) (30.0) (21.1) (4.0) (56.8) (16.2) - - - (16.2) Other Financing Activities 4.3 0.1 (1.1) (5.0) 0.4 (5.6) (1.0) 1.8 0.0 0.9 1.7 (0.0) 2.4 0.0 8.1 10.6 1.7 Net Cash from Financing 30.3 52.9 (162.2) (15.5) (46.4) (171.1) (2.7) (28.2) (21.1) (3.1) (55.1) (16.2) 2.4 0.0 8.1 (5.6) 1.7 Effect of Foreign Exchange on Cash - - - - - - - - - - - - - - - - Cash at Beginning of Period 25.2 106.8 35.6 79.8 56.4 106.8 103.7 72.6 86.8 112.8 103.7 178.3 187.6 203.0 226.3 178.3 238.4 Net Increase (Decrease) in Cash 81.6 (71.3) 44.3 (23.4) 47.3 (3.1) (31.1) 14.2 26.0 65.5 74.5 9.4 15.4 23.3 12.0 60.2 (10.9) Cash at End of Period 106.8 35.6 79.8 56.4 103.7 103.7 72.6 86.8 112.8 178.2 178.3 187.6 203.0 226.3 238.3 238.4 227.5 Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 44. webMethods, Inc. — Income Statement ($ in millions, except per share data; fiscal year ended March 31)

Jun-02 Sep-02 Dec-02 Mar-03 Year Jun-03 Sep-03 Dec-03 Mar-04 Year Jun-04 Sep-04 Dec-04 Mar-04 YearRevenue

License fees $28.7 $26.5 $33.9 $28.0 $117.1 $21.8 $22.0 $25.0 $28.4 $97.3 $26.0 $27.6 $30.3 $31.2 $115.1 q/q change -13% -8% 28% -18% -22% 1% 14% 14% -9% 6% 10% 3% y/y change -22% 22% 12% -15% -4% -24% -17% -26% 2% -17% 19% 25% 21% 10% 18%Service and consulting fees 8.2 8.6 8.0 8.6 33.4 8.9 10.6 11.2 13.3 43.9 13.4 13.7 13.8 14.1 54.9

q/q change 4% 5% -7% 9% 3% 19% 6% 18% 1% 2% 1% 2% y/y change -15% -9% -10% 10% -7% 8% 23% 41% 53% 32% 51% 29% 23% 6% 25%Maintenance 10.8 11.1 11.9 12.5 46.3 12.6 12.8 13.9 14.1 53.3 14.6 15.0 16.1 16.5 62.2

q/q change 7% 3% 7% 5% 1% 2% 8% 2% 3% 3% 7% 2% y/y change 21% 16% 21% 24% 21% 16% 15% 16% 13% 15% 16% 17% 16% 17% 17%

Total revenue 47.7 46.2 53.8 49.1 196.8 43.2 45.4 50.1 55.8 194.5 54.0 56.2 60.2 61.8 232.3 q/q change -6% -3% 17% -9% -12% 5% 10% 11% -3% 4% 7% 3% y/y change -14% 13% 10% -3% 0% -9% -2% -7% 14% -1% 25% 24% 20% 11% 19%

% license 60% 57% 63% 57% 59% 50% 49% 50% 51% 50% 48% 49% 50% 51% 50% % services 17% 19% 15% 18% 17% 21% 23% 22% 24% 23% 25% 24% 23% 23% 24% % maintenance 23% 24% 22% 25% 24% 29% 28% 28% 25% 27% 27% 27% 27% 27% 27%

Cost of revenuesLicense 0.1 0.5 0.8 0.5 1.9 0.5 0.6 0.6 0.6 2.2 0.5 0.6 0.6 0.6 2.4

% of license revenues 0.5% 2.0% 2.3% 1.8% 1.7% 2.1% 2.5% 2.4% 2.1% 2.3% 2.1% 2.1% 2.1% 2.1% 2.1%Services and maintenance 10.3 10.7 10.4 10.6 41.9 11.7 12.4 13.6 15.6 53.2 15.9 16.3 15.6 15.9 63.6

% of service & mtn revenues 54.0% 54.2% 52.4% 50.2% 52.6% 54.4% 53.1% 54.3% 56.8% 54.7% 56.8% 56.8% 52.0% 52.0% 52.0%Stock-based compensation 0.1 0.1 0.1 0.0 0.3 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.4

Total cost of revenues 10.5 11.3 11.2 11.1 44.1 12.1 13.0 14.2 16.2 55.5 16.5 17.0 16.3 16.6 66.4

Gross profit 37.2 34.9 42.6 38.0 152.6 31.077 32.4 35.9 39.7 139.0 37.5 39.3 44.0 45.1 165.9 Gross margin 78% 76% 79% 77% 78% 72% 71% 72% 71% 71% 69% 70% 73% 73% 71%

Operating expensesSales and marketing 24.3 22.6 24.3 21.7 93.0 22.5 21.5 24.6 22.8 91.3 22.1 23.3 25.3 25.6 96.4

% of total revenues 51.0% 48.9% 45.2% 44.3% 47.2% 51.9% 47.3% 49.1% 40.8% 46.9% 41.0% 41.5% 42.0% 41.5% 41.5%Research and development 12.3 11.8 12.1 11.3 47.4 11.2 10.9 11.4 11.5 45.0 11.9 12.4 13.0 12.7 49.9

% of total revenues 25.8% 25.6% 22.4% 23.0% 24.1% 25.9% 23.9% 22.8% 20.7% 23.2% 22.0% 22.0% 21.5% 20.5% 21.5%General and administrative 4.1 4.2 4.8 4.8 17.8 4.4 4.5 4.3 4.6 17.9 4.6 4.8 4.8 4.8 19.0

% of total revenues 8.5% 9.2% 8.8% 9.7% 9.1% 10.2% 10.0% 8.6% 8.2% 9.2% 8.5% 8.5% 8.0% 7.8% 8.2%Merger-related expenses - - - - - - - - - - - - - - - Restructuring costs - - 2.2 (0.1) 2.2 - - 1.3 2.6 3.9 Amortization of deferred stock comp. 1.0 1.0 0.9 0.9 3.9 0.7 0.7 0.7 0.7 2.8 0.6 0.4 0.2 0.2 1.6 Amortization of goodwill and acquired intangibles - - - - - - - 0.6 0.6 1.2 - - - - - In-process R&D and other - - - - - - - 4.3 2.3 6.5 - - - - -

Total operating expenses 41.7 39.7 44.3 38.7 164.3 38.8 37.6 47.3 45.0 168.7 39.3 40.9 43.3 43.4 166.9

Operating income (4.5) (4.8) (1.7) (0.7) (11.7) (7.7) (5.2) (11.418) (5.385) (29.671) (1.8) (1.7) 0.6 1.8 (1.0) Operating margin -9% -10% -3% -1% -6% -18% -11% -23% -10% -15% -3% -3% 1% 3% 0%

Impairment of equity investments - (1.0) - - (1.0) - - - - - Interest/ other income (expense), net 1.3 0.9 1.0 0.8 4.1 0.9 0.7 0.3 0.2 2.2 0.4 0.4 0.4 0.4 1.6 Pretax Income (3.1) (4.9) (0.7) 0.2 (7.6) (6.8) (4.5) (11.1) (5.1) (27.5) (1.4) (1.3) 1.0 2.2 0.6 Provision for income taxes - - - - - - 0.3 0.3 0.3 0.3 0.3 0.8 1.7

Tax rate 0% 0% 0% 0% 0% 0% 0% 0% NM -1% NM NM 29% 35% 287%Net income (loss) (3.1) (4.9) (0.7) 0.157 (7.585) (6.761) (4.5) (11.1) (5.463) (27.821) (1.7) (1.6) 0.7 1.4 (1.1)

Preferred stock dividend - - - - - - - - - - - - - - - Net income to common shares (3.1) (4.9) (0.7) 0.2 (7.6) (6.761) (4.474) (11.1) (5.463) (27.8) (1.7) (1.6) 0.7 1.4 (1.1)

Diluted EPS ($0.06) ($0.10) ($0.01) $0.00 ($0.15) ($0.13) ($0.09) ($0.21) ($0.10) ($0.53) ($0.03) ($0.03) $0.01 $0.03 ($0.02)Diluted shares outstanding 50.6 50.8 52.1 52.7 51.3 51.8 52.0 52.1 52.6 52.1 52.8 53.0 53.2 53.3 53.1

FY 2005EFY 2003 FY 2004

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 45. webMethods, Inc. — Balance Sheet ($ in millions, except per share data; fiscal year ended March 31)

Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04E Sep-04E Dec-04E Mar-05EAssets

Current assets: Cash and cash equivalents $118.5 $66.9 $74.3 $79.7 $98.2 $79.1 $63.9 $75.5 $75.4 $72.6 $75.3 $76.3 Marketable securities 83.4 103.6 116.4 97.1 96.8 75.5 57.7 44.3 44.3 44.3 44.3 44.3 Accounts receivable 40.6 41.1 44.7 43.7 32.1 39.5 38.3 47.1 45.8 48.3 49.1 51.0 Other current assets 8.2 9.3 6.7 7.6 8.0 8.9 6.7 6.4 6.2 6.4 5.7 5.8 Total current assets 250.6 220.8 242.0 228.0 235.0 202.9 166.5 173.2 171.7 171.6 174.4 177.5

LT marketable securities 5.2 28.2 9.3 24.8 10.5 37.7 37.1 36.2 36.2 36.2 36.2 36.2 Property, plant & equipment, net 16.0 15.4 13.4 12.1 11.9 10.6 9.6 8.1 7.8 8.2 8.1 7.7 Goodwill and acquired intangibles, net 29.8 29.8 29.8 29.8 29.8 29.8 58.1 55.8 55.8 55.8 55.8 55.8 Other assets 10.7 9.7 9.6 9.7 8.2 9.0 9.2 10.8 10.4 10.9 11.6 11.9 Total assets 312.4 304.0 304.3 304.4 295.4 290.0 280.4 284.1 282.0 282.7 286.1 289.2

Liabilities and stockholders' equityCurrent liabilities: Accounts payable 10.9 12.6 9.0 9.8 11.0 9.9 10.7 11.1 10.7 11.1 11.3 11.6 Accrued expenses 15.3 13.5 14.5 14.8 14.7 14.4 14.0 17.1 16.5 17.2 18.4 18.9 Accrued salaries and commissions 11.2 11.4 12.9 11.6 9.7 11.3 10.0 11.6 11.2 11.6 12.5 12.8 Deferred revenue 39.0 37.2 39.4 39.6 38.4 36.9 36.8 36.8 39.3 41.6 42.6 43.6 Current portion of capital lease obligations 5.0 4.6 3.7 2.7 1.9 1.5 1.2 0.9 0.9 0.9 1.0 1.0 Current portion of notes payable and lines of credit - - - - - - - - - - - - Total current liabilities 81.5 79.3 79.5 78.6 75.8 74.0 72.7 77.4 78.6 82.5 85.8 87.9

Capital lease obligations 1.3 1.3 0.8 0.6 0.9 0.7 0.7 0.4 0.4 0.4 0.4 0.4 Long-term obligations 1.0 Long-term deferred revenue 13.1 11.0 9.2 6.7 4.6 3.8 3.2 2.8 1.3 - - - Total liabilities 95.9 91.5 89.5 85.9 81.3 78.6 76.5 81.6 80.2 82.9 86.2 88.3

Redeemable preferred stock

Total stockholders' equity (deficit) 216.5 212.5 214.8 218.6 214.1 211.4 203.9 202.6 201.7 199.8 200.0 200.9 Total liabilities and stockholders' equity 312.4 304.0 304.3 304.4 295.4 290.0 280.4 284.1 282.0 282.7 286.1 289.2

2004 2005E2003

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 46. webMethods, Inc. — Statement of Cash Flows ($ in millions, except per share data; fiscal year ended March 31)

Jun-02 6 Mos 03 9 Mos 03 Year 03 Jun-03 6 Mos 04 9 Mos 04 Year 04 Jun-04 6 Mos 05 9 Mos 05 Year 05Operating ActivitiesNet Income (Loss) (3.1)$ (8.0)$ (8.7)$ (8.6)$ (6.8)$ (11.2)$ (22.4)$ (27.9)$ (1.7)$ (3.2)$ (2.5)$ (1.1)$ Adjustments to reconcile net income (loss) to net cashCash used in operating activities:

Depreciation & amortization 2.3 4.8 7.5 10.0 2.1 4.3 6.4 8.4 0.7 1.4 2.2 2.9 Provision for bad debt and returns 0.1 (0.0) 0.2 0.4 - - 0.0 0.0 0.7 1.4 2.1 2.9 Amortization of deferred stock compensation 1.1 2.2 3.2 4.2 0.7 1.5 2.2 2.8 0.6 1.1 1.3 1.6 Amortization of goodwill and acquired intangibles - - - - - - 4.9 5.5 - - - - Purchased research and development - - - - - - - - - - - - Conversion of interest income into private company investment (0.3) (0.3) (0.3) (0.3) - - - - Changes in operating assets and liabilities:

Accounts receivable 7.1 6.5 3.4 4.5 12.3 5.4 7.9 (1.0) 1.3 (1.2) (2.0) (3.9) Prepaid expenses and other current assets (0.6) (1.6) 1.0 0.2 (0.4) (1.2) 1.3 1.4 0.2 (0.0) 0.7 0.6 Other non-current assets 0.6 0.8 0.9 0.6 0.8 0.0 0.0 0.1 0.4 (0.1) (0.9) (1.2) Accounts payable (4.7) (2.9) (6.7) (6.1) 1.0 (0.2) 0.3 0.5 (0.4) 0.1 0.3 0.6 Accrued expenses (1.1) (2.7) (1.9) (1.7) (0.3) (0.7) (2.5) 1.8 (0.6) 0.1 1.4 1.8 Accrued salaries and commissions (including accrued ESPP) (4.6) (4.8) (3.4) (4.7) (2.1) (0.6) (2.2) (0.6) (0.4) 0.1 0.9 1.2 Deferred revenue (6.1) (10.0) (10.1) (12.6) (3.9) (6.5) (8.5) (8.9) 1.0 2.0 3.0 4.0 Other current liabilities - - - - - - 0.1 0.5 - - - - Other non-current liabilities - - - - - - - - - - - -

Net cash provided by (used in) operating activities (8.9) (14.6) (13.5) (12.8) 3.3 (9.5) (12.8) (17.7) 1.9 1.6 6.5 9.4

Investing activitiesPurchases of property and equipment (0.9) (2.0) (2.5) (3.0) (0.9) (1.6) (2.0) (2.7) (0.4) (1.5) (2.2) (2.5) Net purchases of marketable securities available for sale 24.8 (18.7) (12.5) (8.7) 14.7 8.7 26.9 41.3 - - - - Purchases of investments in private companies - - - - - - - - - - - - Purchase of other assets - - - - - - - - - - - - Sale of investment in private company - - - - 1.0 1.0 1.0 1.0 - - - - Acquisition of buisness, net of cash acquired - - - - - - (32.4) (32.4) (1.5) (3.0) (4.5) (6.0) Net cash used in investing activities 23.9 (20.7) (15.0) (11.7) 14.8 8.1 (6.4) 7.1 (1.9) (4.5) (6.7) (8.5)

Financing activitiesProceeds from issuance of common stock - - - - - - - - - - - - Borrowings under notes payable line of credit - - - - - - - - - - - - Repayment under notes payable line of credit - - - - - - - - - - - - Borrowings under leasing agreements 2.5 2.5 2.5 2.5 (1.5) (2.1) (2.8) - - - - - Payments on capital leases (0.7) (2.1) (3.5) (4.9) - - - (3.3) - - - - Repayments of notes receivable from shareholders - - - - - - - - - - - - Proceeds from issuance of preferred stock - - - - - - - - - - - - Issuance costs related to preferred stock offerings - - - - - - - - - - - - Proceeds from exercise of stock options and ESPP stock 2.4 2.6 4.1 5.6 1.5 1.6 3.3 5.5 - - - - Proceeds from OEM fees applied to deferred warrant charge - - - 1.3 - - - 1.0 - - - - Net proceeeds from Active's initial public offering - - - - - - - - - - - - Proceeds from webMethods' initial public offering - - - - - - - - - - - - Proceeds from concurrent private placement - - - - - - - - - - - - Issuance costs related to common stock offerings - - - - - - - - - - - - Net cash provided by financing activities 4.2 3.0 3.2 4.4 0.0 (0.4) 0.5 3.3 - - - -

Effect of exchange rates on cash 0.7 0.6 1.1 1.3 0.4 1.2 2.9 3.0 - - - - Net increase in cash and cash equivalents 20.0 (31.6) (24.2) (18.8) 18.5 (0.6) (15.8) (4.2) (0.0) (2.9) (0.2) 0.9 Cash and cash equivalents at beginning of period 98.5 98.5 98.5 98.5 79.7 79.7 79.7 79.7 75.5 75.5 75.5 75.5 Cash and cash equivalents at end of period 118.5 66.9 74.3 79.7 98.2 79.1 63.9 75.5 75.4 72.6 75.3 76.3

Free cash flow to equity (9.8) (16.5) (16.0) (15.8) 3.4 (10.1) (46.1) (51.8) (0.0) (2.9) (0.2) 0.9 Effect of exhange rate changes (0.4) 0.3 0.7 1.0 0.1 6.6 7.1 21.6 - - - - Adjusted free cash flow to equity (10.2) (16.2) (15.3) (14.8) 3.4 (3.5) (39.0) (30.2) (0.0) (2.9) (0.2) 0.9 Adjusted Free cash flow to equity per share ($0.19) ($0.33) ($0.31) ($0.31) 0.06$ (0.19)$ (0.89)$ (0.99)$ (0.00)$ (0.05)$ (0.00)$ 0.02$

After-tax interest income 1.3 2.3 3.2 4.1 0.9 1.6 1.9 2.2 0.3 0.5 (2.5) 0.4 Free cash flow to enterprise (8.5) (14.3) (12.8) (11.7) 4.3 (8.5) (44.2) (49.6) 0.2 (2.4) (2.6) 1.3 Free cash flow to enteprise excl. acquistions (8.5) (14.3) (12.8) (11.7) 4.3 (8.5) (11.8) (17.2) 1.7 0.6 1.9 7.3 Adjusted free cash flow to enterprise/share (0.17)$ (0.28)$ (0.25)$ (0.23)$ 0.08$ (0.16)$ (0.23)$ (0.33)$ 0.03$ 0.01$ 0.04$ 0.14$

FY2004 FY2005EFY2003

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 47. Zebra Technologies Corporation — Income Statement ($ in millions, except per share data)

Mar Jun Sep Dec Year Mar Jun Sep Dec Year MarA Jun Sep Dec Year Mar Jun Sep Dec YearRevenue by SegmentHardware $82.2 $86.9 $94.7 $96.0 $359.8 $94.6 $98.6 $102.8 $113.3 $409.1 $118.5 $122.7 $130.0 $135.0 $506.2 $136.2 $143.8 $148.0 $155.2 $583.2Supplies 20.9 21.7 21.4 23.9 88.0 23.1 24.2 24.4 26.7 98.5 28.7 29.0 30.0 31.0 118.7 30.0 31.0 32.0 34.0 127.0 Services 5.7 6.4 6.1 5.5 23.7 6.0 6.1 6.1 6.2 24.4 6.5 6.5 6.5 6.5 26.0 7.0 7.0 7.0 7.0 28.0 Freight 1.4 0.9 0.9 0.9 4.1 1.0 1.0 1.0 1.2 4.1 1.1 1.2 1.3 1.4 5.0 1.1 1.2 1.3 1.4 5.0 Hedging Activity - - 0.4 (0.2) 0.3 (0.6) - - - (0.6) - - - - - Total Revenues 110.2 115.9 123.2 126.3 475.6 124.7 129.9 134.6 147.2 536.4 154.2 159.4 167.8 173.9 655.3 174.3 183.0 188.3 197.6 743.2 Cost of Sales 58.2 60.2 62.7 63.8 244.9 60.3 63.3 66.9 72.8 263.3 73.6 77.0 81.0 84.0 315.6 85.0 89.0 92.0 96.0 362.0 Other Cost of Sales - - - - - - - - - - - - - - - - - - - - Gross Profit (from Operations) 52.0 55.7 60.4 62.6 230.7 64.3 66.6 67.8 74.4 273.1 80.6 82.4 86.8 89.9 339.7 89.3 94.0 96.3 101.6 381.2 Gross Profit (as Reported) 52.0 55.7 60.4 62.6 230.7 64.3 66.6 67.8 74.4 273.1 80.6 82.4 86.8 89.9 339.7 89.3 94.0 96.3 101.6 381.2

Gross Margin (%) 47.2 48.1 49.1 49.5 48.5 51.6 51.3 50.3 50.5 50.9 52.3 51.7 51.7 51.7 51.8 51.2 51.4 51.1 51.4 51.3 Sales & Marketing 12.0 13.5 14.3 16.4 56.2 14.5 16.8 15.9 19.5 66.6 17.2 18.0 19.0 20.0 74.2 20.0 21.0 22.0 23.0 86.0 Research & Development 7.5 7.5 7.6 6.7 29.2 7.6 7.6 7.9 8.7 31.8 8.9 9.0 9.0 9.0 35.9 9.0 9.0 9.0 9.0 36.0 General & Administrative 9.3 9.4 9.2 10.7 38.7 10.3 10.2 9.9 11.5 41.9 12.7 13.0 14.0 15.5 55.2 14.0 15.0 15.0 17.0 61.0 Other - - - - - - - - Amortization of Intangibles 0.4 0.4 0.4 0.4 1.5 0.4 0.4 0.4 0.5 1.6 0.6 0.6 0.6 0.6 2.4 0.7 0.7 0.7 0.7 2.8 EBITDA 25.9 28.0 32.0 31.6 119.0 34.5 34.5 36.6 37.2 142.9 44.1 44.8 47.3 48.0 184.2 48.9 51.7 53.1 55.5 209.2 Depreciation & Amortization 3.0 3.0 3.1 3.2 12.3 2.9 2.9 2.9 3.0 11.7 3.0 3.0 3.1 3.2 12.3 3.3 3.4 3.5 3.6 13.8

Operating Income (EBIT, from Operations) 22.9 24.9 28.9 28.4 106.6 31.6 31.6 33.7 34.2 131.2 41.1 41.8 44.2 44.8 171.9 45.6 48.3 49.6 51.9 195.4 Operating Margin (%) - Oper. 20.8 21.5 23.5 22.5 22.4 25.4 24.4 25.0 23.2 24.5 26.7 26.2 26.3 25.8 26.2 26.2 26.4 26.3 26.3 26.3 Restructuring and Other Charges 3.4 - - - 3.4 - - - 1.9 1.9 0.4 - - - 0.4 - - - - - Operating Income (EBIT, as Reported) 19.5 24.9 28.9 28.4 103.3 31.6 31.6 33.7 32.3 130.9 40.7 41.8 44.2 44.8 173.9 45.6 48.3 49.6 51.9 198.2

Operating Margin (%) - Reported 17.7 21.5 23.5 22.5 21.7 25.4 24.4 25.0 21.9 24.4 26.4 26.2 26.3 25.8 26.5 26.2 26.4 26.3 26.3 26.7 Other Income 1.8 0.7 1.7 2.9 7.1 2.4 2.6 (1.3) 3.2 6.9 2.1 1.5 1.5 1.5 6.6 1.5 1.5 1.5 1.5 6.0 Nonrecurring Income & Expenses, Net 2.0 - - - - (0.2) - (2.6) - - - - - - - - - - - - Pretax Income (from Operations) 24.8 25.7 30.6 31.3 112.3 33.9 34.2 32.4 37.4 137.9 43.2 43.3 45.7 46.3 178.5 47.1 49.8 51.1 53.4 201.4 Pretax Income (as Reported) 23.3 25.7 30.6 31.3 110.9 33.9 34.2 29.8 35.5 133.4 42.8 43.3 45.7 46.3 178.1 47.1 49.8 51.1 53.4 201.4

Pretax Margin (%) 22.5 22.2 24.8 24.8 23.6 27.2 26.4 24.1 25.4 25.7 28.0 27.2 27.2 26.6 27.2 27.0 27.2 27.1 27.0 27.1 Income Tax 8.4 9.2 10.7 10.9 39.3 11.9 12.0 9.4 11.1 48.3 14.9 15.0 15.9 16.1 62.5 16.4 17.3 17.8 18.6 70.5

Effective Tax Rate (%) 36.0 36.0 35.0 35.0 35.4 35.0 35.0 31.5 31.2 36.2 34.7 34.8 34.8 34.8 35.1 34.8 34.8 34.8 34.8 35.0 Tax Credits 1.9

Net Income (from Operations) 15.8 16.4 19.9 20.3 112.3 22.0 22.30 22.40 24.3 137.9 27.9 28.3 29.8 30.2 115.6 30.7 32.5 33.3 34.8 130.9 Net Income (as Reported) 14.9 16.4 19.9 20.3 71.6 22.0 22.3 23.0 24.4 85.1 27.9 28.3 29.8 30.2 115.6 30.7 32.5 33.3 34.8 130.9

Shares Outstanding (basic) 46.2 46.4 46.5 46.7 46.4 46.8 47.1 47.3 47.3 47.1 47.5 47.7 47.9 48.1 47.8 47.5 47.7 47.9 48.1 47.8 Shares Outstanding (diluted) 46.7 46.8 46.7 47.1 46.8 47.3 47.6 47.9 48.0 47.7 48.2 48.3 48.4 48.5 48.3 48.2 48.3 48.4 48.5 48.4 Diluted EPS (from Operations) 0.34 0.35 0.43 0.43 1.55 0.47 0.47 0.47 0.51 1.91 0.58 0.58 0.62 0.62 2.40 0.64 0.67 0.69 0.72 2.72 Diluted EPS (as Reported) 0.32 0.35 0.43 0.43 1.53 0.47 0.47 0.48 0.51 1.92 0.58 0.58 0.62 0.62 2.40 0.64 0.67 0.69 0.72 2.72

Expense & Income Margins (%)Cost of Sales 52.8 51.9 50.9 50.5 51.5 48.4 48.7 49.7 49.5 49.1 47.7 48.3 48.3 48.3 48.2 48.8 48.6 48.9 48.6 48.7 R&D/Sales 6.8 6.4 6.2 5.3 6.1 6.1 5.8 5.9 5.9 5.9 5.8 5.6 5.4 5.2 5.5 5.2 4.9 4.8 4.6 4.8 Operating Expenses 26.1 26.2 25.3 26.7 26.1 25.9 26.6 25.0 27.0 26.2 25.2 25.1 25.0 25.6 25.2 24.7 24.6 24.4 24.8 24.6 Gross Margin 47.2 48.1 49.1 49.5 48.5 51.6 51.3 50.3 50.5 50.9 52.3 51.7 51.7 51.7 51.8 51.2 51.4 51.1 51.4 51.3 EBIT 17.7 21.5 23.5 22.5 21.7 25.4 24.4 25.0 21.9 24.4 26.4 26.2 26.3 25.8 26.5 26.2 26.4 26.3 26.3 26.7 Tax Rate 36.0 36.0 35.0 35.0 35.4 35.0 35.0 31.5 31.2 36.2 34.7 34.8 34.8 34.8 35.1 34.8 34.8 34.8 34.8 35.0

2005E2004E20032002

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

Page 112 SUPPLY-CHAIN TECHNOLOGY

Exhibit 48. Zebra Technologies Corporation — Balance Sheet ($ in millions) 2002 2003 2003 2004Dec Mar Jun Sep Dec Mar

ASSETSCurrent AssetsCash and Cash Equivalents $18.4 $26.5 $19.1 $19.9 $14.3 $17.3Investment and Marketable Securities 330.2 349.4 382.2 402.7 435.7 470.3

Cash and Marketable Securities 348.6 375.9 401.3 422.6 450.0 487.6 Accounts Receivable, Net 71.3 78.3 79.6 82.9 81.9 82.1 Inventories, Net 38.1 40.2 40.0 39.1 42.8 48.0 Deferred Income Taxes 4.1 4.7 4.9 5.3 4.5 4.6 Prepaid Expenses and Other Current Assets 2.5 5.0 5.9 5.6 4.4 4.4 Total Current Assets 464.6 504.2 531.7 555.5 583.5 626.7

Property, Plant, and Equipment, Net 39.5 38.7 39.2 38.5 39.3 41.9 Revenue Equipment on Operating Lease - - - - - - Goodwill 54.5 54.5 54.5 54.5 61.2 61.1 Intangibles 3.6 3.2 2.8 2.4 9.0 8.4 Long-Term Deferred Income Taxes 1.7 1.2 1.3 0.1 - - Other 9.3 9.6 9.7 18.8 8.6 14.6 Total Assets 573.1 611.3 639.1 669.8 701.6 752.7

LIABILITIES AND EQUITYCurrent LiabilitiesAccounts Payable 15.4 18.3 16.5 17.5 16.2 20.8 Accrued Liabilities 17.7 16.2 16.9 19.5 26.9 22.1 Earnout Obligations - - - - - - Notes Payable 0.3 0.3 0.6 0.2 0.2 0.2 Other Current Liabilities 0.1 0.2 0.2 - - - Income Taxes Payable 3.4 15.9 7.5 8.3 2.3 11.1

Total Current Liabilities 36.9 50.8 41.7 45.5 45.6 54.2 Long-Term Debt 0.6 0.4 0.4 0.4 0.5 0.4 Other 0.5 Deferred Income Taxes and Other 1.4 1.7 2.3 2.2 3.6 5.5

Total Liabilities 38.9 52.9 44.4 48.6 49.7 60.1

Shareholders' EquityCommon Stock, No Par Value 0.3 0.3 0.3 0.5 0.5 0.5 Paid-in Capital 56.5 55.6 57.6 57.8 62.2 72.2 Retained Earnings 494.2 516.2 538.5 561.5 585.8 613.8 Treasury Stock (16.8) (12.9) (2.9) (1.1) - - Cumulative Translation Adjustment and Other (0.0) (0.9) 1.3 2.6 3.4 6.1 Total Shareholders' Equity 534.2 558.4 594.7 621.2 651.9 692.6

Total Liabilities and Equity 573.1 611.3 639.1 669.8 701.6 752.7 Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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Exhibit 49. Zebra Technologies Corporation — Statement of Cash Flows ($ in millions) 2002 2003 2004

Mar Jun Sep Dec Year Mar Jun Sep Dec Year MarOperating ActivitiesNet Income (as Reported) $14.9 $16.5 $19.9 $51.7 $71.6 $22.0 $22.3 $23.0 $24.4 $91.7 $27.9Adjustments to Reconcile Net Income:

Depreciation & Amortization 3.0 3.0 3.1 3.2 12.3 2.9 2.9 2.8 3.0 11.6 3.1 Acquired In-Process Technology - - - - - - - 0.7 0.7 - Investments (0.3) 1.1 (0.2) 1.7 1.6 - - - - - - Tax Benefit of Options - - - 3.1 3.1 - 2.9 0.5 1.6 5.0 3.1 Deferred Income Taxes (0.9) (1.5) 1.1 (1.7) (0.6) (0.1) (0.2) 0.8 (1.2) (0.7) 1.1

Changes in Assets and Liabilities:Accounts Receivable (5.4) 1.1 (5.3) 3.6 (1.6) (7.7) 0.2 (3.1) 5.4 (5.1) 1.1 Inventories 3.0 (2.3) 3.3 (0.4) 2.9 (2.4) 0.7 1.0 (0.9) (1.7) (4.7) Other Current Assets 2.6 1.5 (1.5) 4.4 3.0 (0.0) 0.4 (8.7) 10.8 2.5 (3.1) Accounts Payable 1.2 0.4 (0.3) (0.7) (0.9) 3.3 (2.7) 0.9 (4.6) (3.2) 3.5 Accrued Compensation and Liabilities (3.1) 0.7 0.9 1.6 2.6 (1.4) 0.6 2.3 5.4 6.9 (4.9) Income Taxes Payable 6.0 (5.1) 0.4 (1.3) (0.9) 12.6 (8.6) 0.8 (5.9) (1.0) 8.8 Other Operating Activities 1.0 (0.3) (0.5) 1.8 1.2 (2.6) (0.8) 1.3 (0.2) (2.2) 1.5 Investments and Marketable Securities (108.5)

Changes in Working Capital, Net 5.3 (4.0) (2.9) 9.1 (102.3) 1.6 (10.2) (5.4) 10.0 (4.0) 2.2 Cash Flow from Operations 22.1 15.1 21.0 67.1 (14.4) 26.7 17.6 21.8 38.5 104.5 37.4

Investing ActivitiesAcquisition of Property, Plant, and Equipment (2.3) (1.8) (1.4) (7.1) (8.5) (1.9) (2.6) (1.7) (2.1) (8.4) (4.8) Acquisitions, Net of Cash Acquired - - - - - - - - (13.7) (13.7) - Proceeds from Sale of Investments 307.4 411.6 136.1 96.5 951.7 196.6 Purchase of Investments - - - - - (326.7) (444.5) (156.7) (129.4) (1,057.2) (233.3) Net Cash from Investments (2.3) (1.8) (1.4) (7.1) (8.5) (21.2) (35.4) (22.3) (48.8) (127.6) (41.5) Financing ActivitiesProceeds from Stock Transactions - - - - - - - - - - - Proceeds from Options, Warrants, etc. 0.9 5.6 1.8 11.3 13.1 3.0 9.1 1.6 4.0 17.8 6.9 Issuance (Repayment) of Debt 0.4 0.2 0.2 0.8 1.1 - 0.4 (0.4) (0.1) (0.1) - Payments for Obligation Under Capital Lease (0.2) (0.0) (0.0) (0.1) (0.1) (0.2) (0.0) 0.0 (0.0) (0.2) (0.1) Net Cash from Financing 1.1 5.8 2.0 12.0 14.0 2.8 9.5 1.3 3.9 17.4 6.9 Effect of Exchange Rates on Cash (0.2) 0.9 0.1 0.9 0.9 (0.2) 1.0 (1.6) 2.3 1.5 0.3

Net Increase in Cash 20.7 20.0 21.7 72.9 (7.9) 8.1 (7.4) (0.8) (4.1) (4.2) 3.0 Cash at Beginning of Period 26.3 47.0 67.0 88.7 26.3 18.4 26.5 19.1 18.3 18.4 14.3 Cash at End of Period 47.0 67.0 88.7 161.5 18.4 26.5 19.1 18.3 14.3 14.3 17.3

Source: Company reports; Bear, Stearns & Co. Inc. estimates.

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