Recreational Products Coverage Report

“Market Intelligence for Industry Players” Q1 2012

Capstone Partners Investment Banking Advisors

BOSTON | CHICAGO | LOS ANGELES | NEW YORK | PHILADELPHIA Recreational Products Coverage Report

MARKET OVERVIEW The U.S. recreational products industry is an $8.7 billion market comprised of companies engaged in the manufacturing and marketing of sporting goods, outdoor equipment and equipment for other recreational activities such as archery and billiards. CAPSTONE PARTNERS LLC www.capstonellc.com The recreational products industry was negatively impacted by the 2008‐2009 economic recession. According to IBISWorld, total industry revenue fell by an average of 2.8% John Ferrara annually from 2006 to nearly $8.6 billion in 2010. With an improving economy, sales are President, Managing Partner Direct (617) 619‐3325 expected to rise 1.4% in 2011 to $8.7 billion. Despite challenges over the past decade, a [email protected] result of a decline in consumer disposable income, the industry is projected to grow 1.2% annually to reach $9.2 billion by 2016. Growth will be fueled largely by greater health David Bench awareness and an improving economy. Managing Director Direct (949) 460‐6431 [email protected] Recreational Products Industry Revenue (2006‐2016)

Jacob Voorhees Director, Principal $10.0 Direct (617) 619‐3323 [email protected] $8.0

Sophea Chau $6.0 Senior Associate billions) Direct (617) 619‐3307

($ $4.0 [email protected] $2.0

$0.0 '06A '07A '08A '09A '10A '11E '12E '13E '14E '15E '16E

Source: IBISWorld

PRODUCT SEGMENTATION The recreational products industry is home to a wide array of product types. The sporting goods category constitutes the largest percentage of industry revenue (37.0%), followed by (25.0%), hunting equipment and firearms (16.0%), fishing equipment (12.5%) and camping equipment (9.5%).

Demand for each segment is largely driven by consumer trends at the retail level. Thus, identifying consumer preferences and interest is paramount in determining which goods will be in highest demand. In particular, participation rates in specific outdoor recreation activities and sports offer critical insight as to where demand is headed within the industry. An overall moderate increase in participation rates indicates that consumers have begun allocating more of their time to recreational and sports activities, which in turn has resulted in a rise in demand for recreational products over the long‐term.

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Product Segmentation (2011) Demand for each segment is Camping largely driven by consumer equipment Sporting goods trends at the retail level. Fishing 9.5% 37.0% Thus, identifying consumer equipment preferences and interest is 12.5% paramount in determining which goods will be manufactured by this industry. Firearms & Golf hunting equipment equipment 25.0% 16.0%

Source: IBISWorld

Sporting Goods– The sporting goods category is the largest segment, accounting for 37% of industry revenue. The activities these products serve have experienced strong growth in participation over the past year. Tennis participation grew by 13.2%, followed by basketball (10.1%), baseball (8.9%), hockey (7.9%) and football (4.8%). Other recreational activities with products in this segment include soccer, archery, boxing, bowling, billiards and extreme sports.

Golf Equipment – Golf equipment accounts for roughly 25% of industry revenue and consists of items such as clubs, balls, gloves, bags, tees, accessories and other related equipment. Golf equipment sales have posted stable growth over the past five years, with a slight dip during the recessionary 2008‐2009 period. Demand is driven by the rise in retirements among the aging baby boomer generation as well as an increase in the popularity of golf. In 2009, there were a reported 27.1 million golfers in the U.S., according to the National Golf Foundation. This number is projected to grow by 1.0% annually to reach 30.2 million by 2020. The majority of this population tends to be affluent, which affords them the means to buy technologically improved products that command premium pricing. As golf equipment becomes increasingly innovative, consumers are expected to buy and upgrade products because they can afford to do so, which helps to foster growth in this segment.

Firearms & Hunting Equipment – The firearms and hunting equipment segment comprises 16% of total industry revenue. In 2010, according to the Outdoor Industry Association (OIA), there were 15.7 million active hunters in the U.S., a 2.9% increase from the previous year. Increased sales of high‐end hunting equipment supports a fast‐growing niche of high‐income sportsmen who frequently enjoy luxury hunting retreats and are willing to pay top dollar for their equipment. Product innovations and niche manufacturing will continue to fuel growth in this division.

Fishing Equipment – Fishing equipment accounts for 12.5% of industry revenue. According to the OIA, there were an estimated 56.1 million fishing participants in 2010, a 3.5% decline from the prior year. Fishing poles are long‐lasting, durable goods and technology advancement does not inspire product innovation as much in this segment as it does in others. As a result, demand is relatively stagnant.

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Camping Equipment – Camping equipment accounts for 9.5% of industry revenue. The number of participants recorded camping during 2010 was 46.8 million, a 9.3% decline from the previous year. Sales of camping equipment are expected to remain stagnant due to the fact that the segment’s products (tents, cooking tools, sleeping bags, etc.) have an exceedingly long product lifespan and therefore do not need to be replaced often.

MARKET SEGMENTATION Manufacturers of recreational products sell mainly to wholesalers and retailers, which together comprise 85% of the total marketplace. Over the past five years, manufacturers have increasingly bypassed wholesalers to sell directly to retailers to improve profit margins. Schools account for 10% of the market and are expected to increase their market share as the government encourages more exercise through sports and recreation via the public school system.

Major Markets Segmentation (2011)

Sporting & Recreation Associations 5.0% Retailers 50.0% Schools 10.0%

Wholesalers 35.0% Source: IBISWorld

SAFETY & REGULATION The recreational products industry is facing increased scrutiny from the federal government over the safety of sporting goods equipment. The government is primarily concerned with products that pose potential dangers to their users, particularly children.

The 2008 expansion of product safety laws used an overly broad definition of “children’s products” and required additional testing of lead and phthalates in all products classified as “sporting goods and recreational equipment.” The Sporting Goods Manufacturers Association (SGMA) worked closely with the Consumer Product Safety Commission (CSPC) to properly define and differentiate general products and children’s products. In 2009, the CSPC released a revised, narrowed definition of children’s products, effectively removing sporting goods and recreational equipment from many of the safety regulations. With that said, some products still fall under the new definition of “children’s products” and are thus subject to the added regulations and testing.

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In addition, Congress has taken a keen interest in product‐related sports injuries such as concussions and traumas. This is certainly a liability for certain manufacturers, but no actions have been taken to regulate production. Furthermore, the SGMA states that it “anticipates much discussion and deliberation in policy circles, governing body rule‐making and industry innovation processes to address this critical issue.”

INDUSTRY TRENDS Over the course of the past decade, the recreational products industry has experienced stunted growth. The beginning of the 2000’s brought record‐high revenue figures, only to be followed by a sharp decline in 2008‐2009 due to the recession. As the economy builds momentum and participation in active and outdoor recreation increases, the industry is expected to recover and enter an upward trending growth phase. Key industry trends include globalization, product and seasonal cyclicality, an increase in substitutes and changes in consumer preferences.

Economic Recovery – Beginning in 2008, the recreational products industry was largely affected by the economic recession. The economic downturn resulted in decreased consumer demand for discretionary goods including recreational products. This caused a buildup in inventory at the retail level, which in turn translated into a decrease in demand for manufactured goods. The industry is just beginning to show improvement, and should continue to grow as the economy improves and retail sales pick up.

Consumer Preferences – The recreational products industry relies heavily how consumers choose to allocate their leisure time. As baby boomers near retirement, it is likely that they choose to participate in more outdoor and physical activity in hopes of preserving their health and extending their lifespan. The industry must compete for younger consumers as substitutes such as video games and computers take up more of that market’s leisure time. Moreover, consumer tastes can change based on seasonal cyclicality, geographic location and major sporting events being broadcasted in the media.

Healthy Lifestyle Trends –Ashealthproblemssuchasobesityanddiabetesbecome more prevalent in the United States, the nation has grown increasingly health conscious as a whole. According to the U.S. Center for Disease Control and Prevention, obesity has increased 74% among adults since 1991. Similarly, the number of young people overweight has more than tripled since 1980. In an effort to control healthcare costs, the government has made it a priority to implement initiatives that increase awareness of the health benefits associated with exercise throughprogramssuchasPersonalHealthInvestmentToday,or“PHIT.”Thishas resulted in a major upswing in participation rates for active recreation and sports, and thus, increased demand for the industry’s products.

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An overall moderate Sports have seen exceptional growth across a broad spectrum, while other forms of increase in participation outdoor recreation have also experienced a surge in popularity. The Outdoor Industry indicates that consumers Association reports consistent participation in outdoor recreational activities over the are allocating more of past three years (~48%), but identifies a few notable jumps in participation from the their time to recreation past year. Participation in triathlons saw a 63.7% change between 2009 and 2010, and sports, which leads to followed by windsurfing (43.4%), white water kayaking (34.6%), BMX biking (30.8%), an overall rise in demand freestyle skiing (23.6%), adventure racing (23%) and handgun hunting (19%). These for recreational products. sectors represent niche growth opportunities for operators in the industry and should help fuel future growth.

Participation in Sports & Outdoor Recreation, 2006‐2016

79.0%

78.5%

Population) 78.0%

of

(%

77.5%

77.0%

Participation 76.5%

76.0% '06(A) '07(A) '08(A) '09(A) '10(A) '11(P) '12(P) '13(P) '14(P) '15(P) '16(P)

Source: IBISWorld

Sourcing – An increasing number of manufacturers of recreational products have moved production overseas and have begun outsourcing to countries such as China in order to minimize production and labor costs. Although this helps to improve profit margins, outsourcing is growing increasingly expensive as foreign countries develop stronger economies. At the same time, changes in exchange rates impact this trend. The decline of the U.S. dollar relative to other major currencies results in increased costs of goods sold and thus hurts margins.

International Trade – As international manufacturers (and domestic players with established foreign subsidiaries) expand further into U.S. markets, the level of imports rises accordingly. This influx of imported goods negatively affects the industry’s domestic players by facilitating increased price‐based competition and lowered profit margins.

Moreover, fluctuations in international trade levels are largely dictated by changes in the trade‐weighted index (TWI). The TWI measures the U.S. dollar against a variety of other major international currencies, and has seen a progressive decline since 2007. Despite improving exchange rates, the TWI will continue to trend negatively and decrease export volumes. As a result of these two trends, domestic players will likely turn to outsourced production, differentiation and product innovation as a means of staying competitive.

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Branding & Product Innovation – Because the recreational products industry is characterized by such a high level of competition, branding plays an integral role in attaining and retaining customers. Despite market share being relatively low for the industry’s major players, their control of brand awareness among consumers is immense. Brand loyalty stems from a multitude of factors such as the brand name, its overall style and form of promotion, reputation, price and most importantly, product quality.

Thus, successful branding and product innovation go hand in hand. Companies vying for market share to product innovation as a means of improving their product portfolio enough to justify consumers switching to their brand. Thorough R&D and intimate product knowledge can occasionally result in patented or licensed products in which companies can market under a particular brand name and capture more market share. Lastly, as disposable income levels grow, consumers will demand more branded products, which are generally more expensive. Looking forward, this trend will heighten the importance of branding as fewer consumers look to purchase unbranded alternatives.

COMPETITIVE LANDSCAPE

Due to the wide array of Recreational product manufacturers operate in a highly competitive environment. product types within the Competition is however limited to the multitude of manufacturers within each recreational products product line. Due to the wide array of products found in this industry, only operators industry, the top two that manufacture the same line of products are true competitors. Major players players only account for make considerable investments in R&D, advertising and promotions as well as 12.8% of the total market maintain high customer and brand loyalty. This makes it difficult for new entrants to share, resulting in a highly acquire their piece of the market, but not impossible. Smaller companies tend to fragmented industry. specialize in one product (e.g., paddle surfing gear) and garner a loyal, selective customer base. These niche growth opportunities represent an emerging trend in the industry that prioritizes product innovation and specialty goods.

In the recreational products industry, innovation is of paramount importance. Leisure and recreational activities, such as paddle boarding and adventure racing, can literally be invented or innovatively developed, thus introducing new revenue‐ generating products to the market. Conversely, as opposed to creating new activities through product introduction, successful firms have developed innovative products for new niche markets. A prime example of this is the invention of a biodegradable used on driving ranges atop cruise ships, after the International Maritime Organization banned hitting regular golf balls into the ocean in an effort to protect sea life.

Long term success in this industry depends on a company’s ability to maintain relationships with customers, attract new customers and develop new products that satisfy consumers and help pioneer new activities. Accumulating market share is difficult as a result of intense price‐based competition. Additionally, because of the diverse range of products and lack of many “pure play” competitors, market share is difficult to quantify. Major players include Callaway Golf Co. (11.5%), Escalade, Inc. (1.3%), Amer Sports Corp., Black Diamond, Inc., , Dorel Industries, Inc. and Johnson Outdoors, Inc.

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MERGER & ACQUISITION ACTIVITY

Transaction activity was M&A activity in the recreational products market has been consistently strong since low in 2009 due to the 2009 with 88 deals reported in the last two years. There was a decline in deal activity recession, but rebounded during 2009 as companies were more focused on organic growth versus growing via in 2010 and 2011. acquisitions during the recessionary economic period. There is currently an elevated interest from both strategic and financial buyers in the industry. Strategic investors are seeking to boost market share and expand product capabilities, while private equity sponsors are prepared to deploy cash in search of new platform or add‐on acquisitions.

Recreational Product Transactions by Quarter 50 45 2009 43 2010 40 2011 34

30

20 15 14 13 13 11 9910 9 10 8 6 5

0 Q1 Q2 Q3 Q4 Total

Source: Capital IQ, Capstone Research Includes M&A transactions in North America and Europe Data as of December 30, 2011

WHAT IS DRIVING M&A? Consolidation – The recreational products industry is anticipated to see strong consolidation through 2016. IBISWorld reports that the number of operators in the industry will continue to fall at an average annual rate of 1.8% over the next five years.

Cash Flow Lending – Many young companies, which typically specialize in a certain product category, seek a sale in order for the company to sustain growth. Many of these smaller firms outsource much of their production, making it difficult for buyers to secure traditional M&A loans without hard assets to offer as collateral. As the credit crunch subsides and banks and private equity firms begin to shift their focus from asset‐based lending back to cash flow lending, M&A activity in this sector is expected to see an upswing.

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Strategic Growth – Major strategic buyers are proactively seeking acquisitions in order to fuel growth. Black Diamond, Inc., a global manufacturer of outdoor equipment, released an ambitious growth plan, calling for a $500 million increase in revenue by 2015, half of which it anticipates will come from acquisitions. VF Corporation, the world’s largest apparel company and owner of retail brands such as The North Face, JanSport and Timberland, announced that its “priority for cash flow continues to be acquisitions, primarily in the outdoor and action sports category.” As major industry players seek growth, many will look to do so through acquisitions.

Product Innovation – Product innovation is a major driver of M&A in the recreational products industry. As technology advances, new products are created each day. New products that find success are often quickly targeted for acquisition by strategic players looking to expand their product offering.

Geographic Reach – Acquisitions in this industry will also be fueled by the need for geographic expansion. Some products can only be used in certain parts of the world (e.g., skis, surfboards); as such, companies will use acquisitions in order to access those parts of the market. Moreover, outsourced production and globalization will encourage companies to look internationally for acquisitions.

SELECTED NOTABLE TRANSACTIONS Transactions in the space have been focused on accessing new distribution channels, penetrating different geographic markets, increasing globalization, improving brand recognition, acquiring innovative product lines and achieving economies of scale.

Britax Child Safety, Inc. acquires BOB Trailers, Inc. (October 2011) –BOBTrailersis the North American leader in the design, manufacturing and marketing of premier, high performance baby strollers, bicycle trailers and related accessories for the growing “outdoor enthusiasts with children” market. The cross‐border transaction between BOB and Britax combined two segment leaders with tremendous brand recognition and broad global distribution channels.

Apollo Global Management acquires PlayPower, Inc. (May 2011) – PlayPower, headquartered in Huntersville, NC, designs, manufactures and supplies recreation and leisure products. The Company focuses on manufacturing playground equipment, floating dock systems and lifts for boats and personal water craft. On May 27, 2011, Apollo Global Management acquired PlayPower, Inc. for an undisclosed amount. Apollo intends to invest in R&D and product innovation in order to bring PlayPower to the forefront of its industry.

Wieland Capital acquires doorout Group (April 2011) – doorout Group (d.b.a. doorout.com and xtend‐adventure.com) is a Germany‐based manufacturer of outdoor equipment, hiking accessories and tents. The Company markets most of its products under the Xtend‐Adventure brand. Wieland Capital acquired doorout.com in April of 2011 as a new platform company they intend to expand both organically and via add‐on acquisitions.

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Aqua Lung America, Inc. acquires Gorski (d.b.a G2000SS, Inc.) (March 2011) – Gorski, founded in Richmond, TX, develops and manufactures specialty diving helmets. Aqua Lung America acquired the Company in March of 2011 in order to expand its product offering to include diving helmets and increase focus on new product development for the commercial diving industry.

City Cycle, Inc. acquires Merlin Metalworks from The American Bicycle Group, LLC (March 2011) – Based in Tennessee, The American Bicycle Group’s Merlin Metalworks designs and manufactures titanium bicycles. City Cycle, Inc., doing business as Competitive Cyclist, acquired the Company in order to expand its manufacturing capabilities and capture a larger share of the market.

MarineTech Products, Inc. acquires Stearns, Inc. (December 2010) – Stearns, Inc. manufactures products such as personal flotation devices, wetsuits, inflatable towables, marine cordage and accessories, self‐inflating sleeping pads, rain and pants, gear hunting packs and accessories, waders and accessories, work vests, flotation jackets and coveralls, ice rescue suits and cold water immersion suits, as well as inflatable boats, kayaks and canoes. The acquisition of Stearns adds technological depth to MarineTech’s product portfolio which already includes brands such as Navigator, Angler’s Pal, EZ‐STEER, TrollMaster, Panther and Detwiller.

Platinum Equity acquires , Inc. (November 2010) –SchuttSports develops sporting goods for football, softball, baseball and basketball. After filing for Chapter 11 bankruptcy, the company began exploring strategic options to “maintain long‐term health, including selling some or all of the businesses or raising additional equity.” On November 21, 2010 Platinum Equity acquired Schutt Sports for $33.1 million as a new platform.

Clarus Corp. n.k.a. Black Diamond, Inc. (NasdaqG:BDE) acquires Gregory Mountain Products, Inc. (May 2010) – Gregory Mountain Products designs and manufactures backpacks and accessories for the outdoor products market. Prior to the deal, Black Diamond stated that it was “actively reviewing a variety of opportunities and ideas in which to redeploy Clarus' cash assets. The current economic and business environment, while tentative, should allow us to achieve our objectives while securing a business platform which may provide organic and acquisition growth.” It completed the acquisition of Gregory Mountain Products, Inc. from Warren B. Kanders, Robert R. Schiller and Gregory management for $40.8 million in May 2010.

KEE Action Sports acquires K2’s (Jarden) JT Sports (February 2010) –BeforeK2,Inc. was acquired by Jarden, it was arguably one of the most acquisitive companies in the sector. This divestiture indicates an exit from the paintball business. JT Sports was acquired by KEE Action Sports on February 28, 2010 for an undisclosed amount to form one of the largest players in the paintball segment. Reflecting Jarden’s disinterest in this unit, paintball participation rates decreased 2.7% in 2010 as compared to the previous year, according to the NSGA.

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SELECTED RECREATIONAL PRODUCTS M&A TRANSACTIONS

Enterprise EV / LTM Value Date Target Acquiror Target Business Description(mm) Revenue EBITDA

12/22/11 Power Balance, LLC Hanyang LLC Manufactures and markets sports accessories. ‐‐‐

11/18/11 Geurin Rife Putters, LLC Innovex Golf, LLC Manufactures and markets golf putters and related accessories. ‐‐‐

11/16/11 Emotion Kayaks, Inc. Lifetime Products, Inc. Manufactures boats in Pennsylvania. ‐‐‐

Designs, manufactures and markets premier, high performance baby 10/20/11 BOB Trailers, Inc. Britax Child Safety, Inc. strollers, bicycle trailers and related accessories for the growing CF CF CF “outdoor enthusiasts with children” market.

9/23/11 Perfect Fitness, LLC Implus Footwear, LLC Manufactures and markets fitness equipment and accessories. ‐‐‐

Compass Diversified Manufactures hands‐free hydration systems to mountain bikers and 08/24/11 CamelBak Products, LLC $245.0 2.0x 9.4x Holdings (NYSE:CODI) motocross riders for cycling, hiking, running and snowboarding/skiing.

Global Sport 6/20/11 Sherbrook SBK Sport Corp Manufactures and sells hockey sticks and equipment. ‐‐‐ Technologies Corp.

Manufactures and markets golf balls, clubs, shoes, gloves, bags, 5/20/11 , Inc. Korea; $1225.0 1.0x ‐ outerwear, and accessories.

Manufactures faceguards for baseball and softball players. Its 5/18/11 EMask, LLC Battle Sports Science LLC ‐‐‐ products include mouth guards, face masks, helmets and eye strips. Apollo Global Focuses on manufacturing playground equipment, floating dock 5/16/11 PlayPower, Inc. Management, LLC ‐‐‐ systems and lifts for boats and personal water craft. (NYSE:APO) doorout.com GmbH & Wieland Capital GmbH und Provides outdoor equipment, hiking products and tents under the 4/21/11 ‐‐‐ Co. KG Co. KG Xtend‐Adventure brand. Audax Group; Nivel Parts Designs, manufactures and distributes parts and accessories for golf 4/19/11 Fore‐Par Group & Manufacturing ‐‐‐ carts and golf courses. Company, LLC Credit Agricole SA Produces and markets trekking equipment and monostick skiing 3/9/11 S.A.R.L GUIDETTI FRÈRES ‐‐‐ (ENXTPA:ACA); UDIMEC backcountry products; trail running products.

Adams Golf Inc. 1/18/11 Yes! Golf, Inc. Manufactures and sells golf putters and accessories. $1.5 0.6x ‐ (NasdaqCM:ADGF)

12/22/10 Stearns, Inc. MarineTech Products Manufactures marine and outdoor activity products. ‐‐‐

Feel Golf Company, Inc. Offers golf ball retrievers, training aids, golf towels, golf cart 12/4/10 Pro Line Sports, Inc. ‐‐‐ (OTCPK:FEEL) accessories, and re‐conditioners.

11/19/10 Schutt Sports, Inc. Platinum Equity, LLC Develops football, softball, baseball and basketball gear. $33.1 ‐‐

Edwards Sports Products Manufactures and supplies and netting for outdoor 9/6/10 Broxap Ltd. ‐‐‐ Ltd. pitches, tennis courts and indoor sports halls.

Offers backpacks, sleeping bags, footwear, accessories and 7/12/10 Haglöfs Scandinavia AB ASICS Corp. (TSE:7936) $133.0 1.7x ‐ for men and women.

Gregory Mountain Black Diamond, Inc. Designs, manufactures and markets products such as mountaineering, 5/7/10 $46.5 ‐‐ Products, Inc. (NasdaqGS:BDE) backpacking, trail and travel products.

ONCAP; Andell Holdings, Manufactures and distributes sporting goods equipment, physical 3/15/10 Sport Supply Group, Inc. $186.0 0.7x 7.6x LLC education, recreational and leisure products and apparel.

Mean 1.3x 8.1x Median 1.4x 7.6x Harmonic Mean 1.0x 8.0x LTM = last twelve months; EV = enterprise value; CF = Confidential Source: Capstone Research, Capital IQ, company public filings and press releases Transactions highlighted in yellow have been completed by Capstone Partners

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PUBLIC COMPANY TRADING & OPERATING DATA

Price % 52 Wk Market Enterprise LTM 1‐Yr Rev EV / LTM Company 12/30/11 High Value Revenue EBITDA Margin Growth Revenue EBITDA Amer Sports Corp. $11.69 75.2% $1,374 $1,935 $2,565 $156 6.1% 16.3% 0.8x 12.4x

Black Diamond, Inc. $7.47 80.0% 163 201 141 14 10.1% 0.0% 1.4x 14.1x

Brunswick Corporation $18.06 65.2% 1,609 1,856 3,688 283 7.7% 10.7% 0.5x 6.6x

Callaway Golf Co. $5.53 66.1% 359 297 918 22 2.4% (5.1)% 0.3x 13.5x

Dorel Industries Inc. $25.13 72.6% 802 1,106 2,342 164 7.0% 1.0% 0.5x 6.8x

Escalade Inc. $4.43 62.4% 57 77 129 14 10.6% 8.7% 0.6x 5.6x

Johnson Outdoors Inc. $15.35 73.1% 143 113 407 27 6.6% 6.5% 0.3x 4.2x

Mean 7.2% 5.4% 0.6x 9.0x

Median 7.0% 6.5% 0.5x 6.8x EV = enterprise value; LTM = last twelve months $ is millions, except per share data Harmonic Mean 5.8% NA 0.5x 7.4x

Margin Performance

50.0% 43.0% 39.1% 40.0% 38.5% 40.0% 31.4% 30.0% 22.5% 21.9% 20.0% 10.6% 10.1% 10.0% 7.7% 6.6% 7.0% 6.1% 2.4% 0.0% Callaway Golf Brunswick Escalade Johnson Outdoors Dorel Industries Amer Sports Black Diamond Corporation

Gross Margin % EBITDA Margin %

Last Twelve Month 1‐year Revenue Growth

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

‐5.0% Callaway Golf Brunswick Escalade Johnson Outdoors Dorel Industries Amer Sports Black Diamond Corporation

Source: Capital IQ as of December 30, 2011

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MARKET PERFORMANCE

1‐Year 2‐Year

10%

30% 0%

15% ‐10%

0% ‐20%

‐15% ‐30%

5‐Year 10‐Year

20% 80%

0% 40%

‐20% 0% ‐40%

‐40% ‐60%

‐80% ‐80%

Capstone Recreational Products Index S&P 500 Index

Source: Capital IQ as of December 30, 2011

MARKET OUTLOOK  The Capstone Recreational Products Index has sometimes outperformed and sometimes under‐performed the S&P 500 Index on the 1‐year and 10‐year timetables. 2011 was a relatively stagnant year, but gained momentum in the fourth quarter as markets recovered.

 The 5‐year timeframe illustrates the effect of the recession on the recreational products industry. Between 2007 and 2009 the industry index fell due to lower disposable incomes and reduced consumer spending.

 The recreational products industry was deeply impacted by the recent market downfall. With that said, the industry tends to follow the cycles of the overall market, and we are now beginning to see signs of improvement moving into Q1 2012.

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THE RECREATIONAL PRODUCTS TEAM

John Ferrara, President and Managing Partner [email protected] • (617) 619‐3325 John Ferrara, the founder and principal shareholder of Capstone, serves as the firm's President and Managing Partner. Over his extensive career in investment banking, venture capital and management consulting, John has executed over 100 related engagements representing in excess of $6 billion in value. John was formerly a Regional Managing Partner with Andersen Corporate Finance, where he founded the Boston office and held various national and global leadership positions. He started his career in Lehman's Brothers' M&A group in New York, London and Riyadh, later becoming a founding member of Rodman & Renshaw's M&A practice in New York. He earned an MBA in Entrepreneurial Studies from The Anderson School at UCLA and the London School of Economics, during which time he founded and operated a corporate finance advisory boutique, JG Atlas Advisors, and its related investment arm, Atlantis Capital Partners. He holds dual BA degrees from Wesleyan University and is qualified as a General Securities Principal.

David Bench, Managing Director [email protected] • (949) 460‐6431 David joins Capstone as a Managing Director in charge of the Western Region, based out of Los Angeles. Prior to Capstone, David managed the Western region for Morgan Stanley Smith Barney’s Capital Strategies Group and its predecessor, Citi Capital Strategies. David has focused on middle market investment banking for over 23 years and has been the lead banker in over 250 M&A transactions involving both domestic and foreign corporate buyers, as well as leveraged recaps with private equity sponsors. David’s achievements in the investment banking industry have gained national recognition by The M&A Advisor: in 2008, one of his transactions was awarded the “Energy Deal of the Year” and, in 2007, he was awarded Middle Market Financing Professional of the Year. Mr. Bench holds a BS and an MBA in Finance from Brigham Young University. He is a Series 7 and 63 Registered Securities Representative and a Series 24 Registered Securities Principal..

Jacob Voorhees, Director and Principal [email protected] • (617) 619‐3323 Jacob is a founding member of Capstone Partners and focuses on asset positioning, strategy articulation, due diligence and negotiations coordination. Formerly, Jacob was with Andersen Corporate Finance LLC, where he focused his efforts on the software and direct marketing industries. He started his career in New York City with Rabobank International, a multi‐ national Dutch investment bank headquartered in Utrecht, the Netherlands. While at Rabobank International, Jacob worked in the mergers and acquisitions group focusing on cross‐border transactions in the consumer products, food and beverage industries. Jacob holds dual BS degrees from Cornell University and is qualified as a General Securities Representative.

Sophea Chau, Senior Associate [email protected] • (617) 619‐3307 Sophea works closely with senior team members while executing a variety of corporate finance transactions. Prior to joining Capstone, Sophea was an analyst at FTN Midwest Securities, a full‐service investment banking firm based in Cleveland. While working in their New York office, she focused on M&A advisory for middle‐market companies in a variety of industries, including healthcare, pharmaceutical services and marketing & advertising. Her responsibilities included providing financial and valuation analysis, performing due diligence, and drafting all marketing materials related to a wide range of M&A transactions. Sophea holds a Bachelor of Arts in Economics from Columbia University.

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CAPSTONE PARTNERS: RECREATIONAL PRODUCTS TRANSACTIONS Capstone Partners has completed several transactions within the Recreational Products industry. These transactions involved companies that manufacture and market several products and equipment related to biking, boating, off‐ roading, hunting, camping, etc.

Capstone’s experience in the Recreational Products sector provides us with insight into the valuable attributes and valuation metrics of a target company, the active buyers in the industry and the nuances of transactions in this space.

has been has been financial advisory acquired by acquired by

a portfolio company of THE AMERICAN BICYCLE GROUP, LLC

has been has been has recapitalized with acquired by acquired by

14 ABOUT CAPSTONE PARTNERS

Capstone Partners LLC is a leading national investment banking firm dedicated to serving the corporate finance needs of middle market business owners, investors and creditors. The firm provides merger & acquisition, private placement, corporate restructuring, valuation and financial advisory services. Capstone maintains various industry specialties including business services, consumer products, education & training, government services, health & medical, manufacturing & industrial, and technology & media. The firm also possesses merchant banking capabilities to actively co‐invest in transactions.

Additional information about Capstone Partners can be found at www.capstonellc.com.

NATIONAL AND REGIONAL LEADERSHIP TEAM

NATIONAL NORTHEAST REGION CORPORATE RESTRUCTURING John Ferrara Kevin Jolley Brian Davies President, Managing Partner Managing Director Managing Director (617) 619‐3325 (617) 619‐3330 (617) 619‐3328 [email protected] [email protected] [email protected]

MIDATLANTIC REGION VALUATION ADVISORY Eric Williams Ron Adams Managing Director Managing Director (215) 854‐4065 (617) 619‐3367 [email protected] [email protected]

MIDWEST REGION BUSINESS DEVELOPMENT Ted Polk Darryl Birtwistle Managing Director Director (312) 674‐4531 (212) 755‐7845 [email protected] [email protected]

WESTERN REGION David Bench Managing Director (949) 460‐6431 [email protected]

Capstone Partners Investment Banking Advisors

www.capstonellc.com

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