June 5, 2012U.S. Growth Prospects in a JFinancial Talk Series WebinarpFlatter WorldThis information has been prepared solely for informational purposes and is not intended to provide or should not be relied uponfor accounting, legal, tax or investment advice. Please consult with your tax and/or legal advisor with regard to your individual circumstances. The factual statements herein have been taken from sources believed to be reliable, but such statements are madewithout any representation as to accuracy or completeness. Opinions expressed are current as of the date appearing in this material only. For a complete list of disclosures and potential conflicts please consult williamblair.com.

FeaturingJohn Jostrand, CFA Michael Lee, JD, CFP® - ModeratorPortfolio Manager All Cap Growth TeamWilliam Blair & Company Head of Corporate & Executive ServicesWilliam Blair & Company

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AgendaEconomic BackdropStructural Global RebalancingOperational Excellence

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Economic BackdropEconomic Backdrop

5

Sluggish Recovery from the Great Recession: Why There is No “V” Rebound This Time0 -1 0 1 2 3 4 5 6 7

Average path of GDP after banking crises(Selecting 2008 as the first year of the crisis in the US)

-4-2

d

-8-6

re-c

risi

s tr

en

-108

Per

cen

t of p

r

-14-12P

US Mean of countries experiencing banking crises-16

Years after banking crisis; First year of crisis = year 0

Source: Federal Reserve Bank of Dallas and Blue Chip Consensus Forecast6

U.S. Economic Growth Continues But at a Slow Pace102

103

60

65Ism (Napm) Manufacturing, Purchasing Managers Index - United States Usa Cli Leading Indicator Amplitude Adjusted, Stock Or Quantum, Amp Adj - United States

100

101

55

9950

97

98

40

45

95

96

35

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '1194 30

Source: Factset. ISM as of as of 3/30/12 and LEI as of 2/29/20127

Jobless Claims Continue to Trend Lower800,000

US Change in NonFarm Employment & Unemployment Rate Launch full data releaseInitial Claims For Unemployment Insurance Under State Programs, Sa - United States Recession Periods - United States

600,000

700,000

500,000

300 000

400,000

200,000

300,000

'67 '68 '69 '70 '71 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11100,000

Source: Factset as of 4/6/20128

Household Sector Deleveraging Continues

Source: BCA Research, December 16, 2011Source: BCA Research as of 3/31/129

Housing: Past the Bottom30

Formerly-Hot Market States and All Others 1Building Permits Authorized for One Unit StructuresYear-over-Year Changes2000 Through February 2012%

10 20

(10)0

(30)(20) Building activity is finally picking up. The most in formerly, hot states. (50)(40)(60) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1H 2011 2H 2011 2012-to-DateFormerly-Hot Market States All OthersSource: U S Census Bureau Empirical Resarch Partners AnalysisSource: U.S. Census Bureau, Empirical Resarch Partners Analysis.1 Formerly-hot market states are California, Florida, Arizona and Nevada.

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Structural Global RebalancingStructural Global Rebalancing

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Evidence of a Manufacturing RenaissanceCapex/Export Led US RecoveryFirst 2 ½ Years of Expansion Real GDP Nominal

GDPResidential Capex Exports Imports

GDPAverage After Last 4 US Recessions* 4.3% 8.0% 15.4% 8.5% 5.0% 11.4%2009Q2 to 2011Q4 2.5% 4.1% 0.0% 12.0% 9.1% 9.0%

Housing, consumer spending and government spending have all been weaker than previous recoveries/expansions. But both capital expenditures and exports have been stronger – sectors that are h l f dheavily manufacturing oriented.

Source: ISI*US Recessions: 1975Q1 to 1977Q3, 1982Q4 to 1985Q2, 1991Q2 to 1993Q3 and 2001Q4 to 2004Q2.12

Economics Will Drive Reinvestment in the US

The math is changing. In 2000, it would have made economic sense to source the part in China where wages were about 20x lower. In 2015, the cost savings are unlikely to be enough to justify outsourcing the part to China once all other costs and risks are taken into account. If this trend continues through p g2020, the equation might even reverse itself completely. 13

Improving North American CompetitivenessNatural Gas Prices for Manufacturing$/MBTU (2010)Japan $16Korea $15Mexico* $11US $5Canada $4The US and Canada have the

1980 2010 %Ch.US 92 89 -3%

Mfg Unit Labor Costs in $ Index: 2002=100

lowest gas prices in the world by a significant margin, whichis helping boost manufacturing.Germany 75 141 +88%

Over the past 30 years, US manufacturing unit labor costs have actually declined a little while German unit labor costs in US dollars have almost doubled.Source: ISI*Mexico as of 2008

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Attractive US Profitability/Employee 0 16

Gross Profit/EmployeeDeveloped Ex-US Emerging Markets United States0.140.16

0.100.12

ion

s

0.08

$USD

Mil

li

0.040.06

0.02

Jul-97 Dec-97 May-98 Oct-98 Mar-99 Aug-99 Jan-00 Jun-00 Nov-00 Apr-01 Sep-01 Feb-02 Jul-02 Dec-02 May-03 Oct-03 Mar-04 Aug-04 Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12

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Favorable Demographic Outlook for US1,20020.0

China Population of Working Age and Annual Change (Millions of Persons)

China’s working age population will start declining in the next couple of years. 4006008001,000-5.00.05.010.015.0

0200-15.0-10.05.01990 2000 2010 2020 2030 2040 2050Annual Change (LHS) Total (RHS)Sources: US Census Bureau ; ISI Group

US

Sources: US Census Bureau ; ISI Group..

Size of working age population in the US continues to expand.

Source: US Census Bureau, ISI. Working age is 15-64.16

Operational ExcellenceOperational ExcellenceInvestment strategy in a slow growth world

Fastenal: Value add and differentiationFastenal: Value add and differentiationQualcomm: Return on innovationReal Page: Customer loyalty and recurring revenue

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Fastenal Growth and Durability Industrial distributor

#1 fastener distributor and leading Maintenance/Repair/Operation (MRO) supplier in the US 2,550+ retail stores and 1 million SKUs – unmatched convenience for customer 2% market share of the $150 billion MRO market. Operates in a highly fragmented space – the top 50 suppliers have less than 30% market shareless than 30% market share.

Safety Supplies 7% Other, 3%Principal Products Key End Markets

Janitorial Electrical Supplies, 5%

Welding Supplies, 4% Supplies, 7%Maintenance, Repair &

Other, 10%

Fastners, 49%Material Handling, 6%Supplies, 6% Operations, 35%

OriginalConstruction, 25%

Tools, 9%Cutting Tools, 4%Hydraulics & Pneumatics, 7%

Original Equipment Manufacturer, 30%

Source: William Blair. 18

This information has been prepared solely for illustrative purposes and is not intended to provide and should not be relied upon as investment advice or a recommendation of the security described.

Fastenal Growth and Durability New initiative – on site vending machines

Customer Benefits•Accountability by employee•Control of inventory•Savings

Sample Customer Potential BenefitsLabor/Time Savings $30,000*Improved Product Usage $30,000*Reduced Inventory $40,000**Investment Payback Period 1 day to 1 week

Source: William Blair. For picture, Fastenal 2011 Annual Report.*N t 1/3 f l d 1 FTE (F ll Ti E i t)*Note: 1/3 of annual spend 1 FTE (Full Time Equipment)**Note: Assumes client previous consumed $100,000 worth of product. Fastenal takes over inventory on consignment.19

This information has been prepared solely for illustrative purposes and is not intended to provide and should not be relied upon as investment advice or a recommendation of the security described.

Fastenal Growth and DurabilityFastenal Benefits•Deeper penetration•Longer, stronger relationships•Higher barriers to switch

Fastenal Potential BenefitsMinimum Incremental Spend $24,000Profit $3,600Profit $3,600Investment Including Overhead $13,000Return on Investment 28%Vending Machine Impact onFinancials

Fiscal Year 2011

Fiscal Year 2016

Result

# of Vending Machines 9,180 59,000Incremental Sales/Year $53m $120mROE - 5 Year Trailing 22% 25%$ $Base Sales without Vending $2.6b $5.5b 15% CAGRAdditional Sales with Vending $53m $620m$2.7 $6.2b 18% CAGR

Source: William Blair. 20

This information has been prepared solely for illustrative purposes and is not intended to provide and should not be relied upon as investment advice or a recommendation of the security described.

QualcommR&D Drives Innovation, Profits and SustainabilityR&D Expense (millions), 2005 - 11

Leading provider of CDMA-based wireless chipsets used in next-generation mobile handsets 75% of the R&D expenses produced 75% of the category operating profits

2,000 2,500 3,000 3,500 p ( ),

R&D Spend 2005 2011QCOM $1,011m $2,995mRest $382m $1,510m-500 1,000 1,500 Rest $382m $1,510m

Qualcomm Spreadtrum Broadcom*Mediatek STMicro* Mediatek12% STMicro*-4%Cumulative Operating Profit, 2007- 11

Mediatek STMicroSpreadtrum1%Broadcom5%

12%

Source: BloombergQualcomm78%

Source: Bloomberg.*STMicro operating profit numbers reported for 2008-10 only.21

This information has been prepared solely for illustrative purposes and is not intended to provide and should not be relied upon as investment advice or a recommendation of the security described.

QualcommComplexity and Structural Advantage

Source: Qualcomm22

This information has been prepared solely for illustrative purposes and is not intended to provide and should not be relied upon as investment advice or a recommendation of the security described.

Real PageDuration and Potential Provides SaaS solutions and service to the rental housing industry Potential to double the number of units that utilize Real Page products Average client likely to buy more Real Page products Products sold on a monthly subscription basis

40 Million Apartment Units

Real Page Existing U i$350 Average Contract Value/Unit Listings7.3

18UnitsPotential Units

$20 $10 $5 $100

$200$250 $300 Infrastructure as a ServiceResell Renter InsuranceProperty MgmtPotentialRevenue per 7.4

7.4Competitor UnitsSmall Operators Units (Not C did t )$40

$40 $40

$100 $150 $200 p y g

Purchase/ InvoiceYield Star

perCustomerCandidates)

$40 $112 $36

$40 $0

$50 Product Top 50 Average

OtherRenter ScreeningLine Up Average Client Client Online Payment

Source: William Blair, Company research.23

This information has been prepared solely for illustrative purposes and is not intended to provide and should not be relied upon as investment advice or a recommendation of the security described.

Real PageDuration and Potential 94% unit retention Real Page shares about ½ the gains with their client

Real Page Economics C rrent 5 Year Propert Mgmt Firm Witho t With Res ltReal Page Economics Current 5 Year PotentialAverage Contract Value/Unit $36 $60Gross Profit/Unit $26 $45

Property Mgmt Firm Value Proposition (Per Year/unit)

WithoutReal Page

With Real Page

Result

Rent $9,000 $9,180 +2% Yield enhancingCosts $6 900 $6 635 4% Cost savingRetention rate 94% 94%Life Time Value (LTV) of Client $438 $750Cost to Acquire $54 $75LTV/C t t A i 8 10Costs $6,900 $6,635 -4% Cost savingProfit $2,100 $2,545Real Page Costs $0 $240*Net Profit $2,100 $2,305 +10% ImprovementLTV/Cost to Acquire 8x 10x , , pApartment value $72,000 $72,000Leverage 6x 6xReturn on Equity 18% 19.2% 120bp Improvement

Source: William Blair, Company research.*Full suite of products excludes listings.24

This information has been prepared solely for illustrative purposes and is not intended to provide and should not be relied upon as investment advice or a recommendation of the security described.

Quality Growth: The Durable Business FranchiseStrong Management

Record OfSuccessCommonGoals WithShareholders SignificantEquityOwnershipShareholders OwnershipAbility ToReinvent SolidCorporateCulture Leadership &ExecutionCapabilities

M k t d blSustainable Business Model Solid Financials

MarketOpportunityLeadershipIn Its Field Value AddedProducts & ServicesPredictableEarningsConservativeAccounting RecurringRevenueFlexiblePricing QualityProducts /Services CompetitiveBusinessModel SuperiorCash Flow High ReturnOn Investment Low Debt

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How Does Quality Growth Perform Over Time?16

The Case for Quality GrowthJune 97-Mar 12

US Q li 4 887)

The Case for Quality GrowthIn Up/Down Markets

810121416

Ret

urn

(%

)

US Quality

US Quality Growth

4.40 4.88 4.78-1135

hly

Ret

urn

(%

)

US Quality Growth2468

An

nu

aliz

ed

US Market -3.52 -4.42 -5.08-7-5-3Up Markets Down MarketsA

vgM

ont US Quality US Market

0 10 15 20 25 30Risk (Standard Deviation)

Companies with higher quality and sustainable growth characteristics tend to:• Produce attractive, risk-adjusted returns• Perform well in up marketsd k• Protect in down markets

From June 1997 to March 2012.Source: William Blair & Company. US quality group is defined by quality metrics such as accruals, Altman Z and leverage. The US quality growth group is our proprietary quantitative quality model. 26

AppendixAppendix

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History of US Dollar versus Euro, Yen – 10 Year

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