Earnings Leverage

• Earnings up despite recent revenue declines

Sales

Net Income (1)

Actual Results

FY 2002

(11%)

54%

Q1 2003

(3%)

72%

Outlook

Q2 2003

(5%) - (9%)

15% - 56%

YOY Percentage Change

• Actual results & outlook reflect
  • Impact of cost reduction and profit enhancement program actions
    • More than offset impact of sales decline

• In a revenue growth scenario, additional earnings leverage would be expected
  • Revenue and gross profit growth expected to outpace related growth in operating expense

(1) Excludes reorganization costs, major cost reduction program expenses and special items. Please refer to supporting bridge slides for reconciliation of GAAP to Non-GAAP financial measures.

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