Consumer Discretionary Sector

Oren Bossin

Michael Cooperman

Howard Weiss

Student Managed Investment Portfolio Class

Prof. P.V. Viswanath

Spring 2002

Objective

To find Consumer Discretionary stocks that are undervalued, but in a good position financially to capitalize in a recovery market.

Research Methodology

860735517502185

Leverage and Profitability Ratios *Return on Equity *

Initial UniverseNegative Free Cash FlowsLess than $200M Market CapBeta Greater than 2.0

Research MethodologyDebt Capacity Regression Analysis

1st Quartile

FCF/MVA 1st Quartile

FCF/Revenue 1st Quartile

Total Liabilities/Total Assets 1st Quartile

Research Methodology

Add ROE rank to the four variables in leverage and profitability analysis and re-rank all the variables with each variable receiving a weight. This provided a roughly 60-40 split of profitability and debt. We chose the top five companies from this analysis.

Initial Analysis

Percentage Weights 0.4 0.2 0.05 0.1 0.05 0.2 TotalRank Ret On Product

resid from regresid from Rank Rank Rank Equity Rank shs outstanRank of RanksStock Name I Symbolreg reg FCF/MVA FCF/MVA TL/TA TL/TA FCF/Rev FCF/Rev LFY ROE (thousands)SharesTOPPS COMPANY INCORPORATEDToySport TOPP -0.29199 4 0.180935 1 0.3 12 0.293729 3 54.33 2 42552 3 3.44KIDS ENTERTAINMENT INCToySport KDE -0.29424 3 0.116809 3 0.420455 16 0.904762 1 47.62 3 12202 12 5.25LYON WILLIAM HOMESHomeBldg WLS -0.29557 1 0.112379 4 0.652074 18 0.108932 8 38.31 4 10618 13 5.7K-SWISS INCORPORATED CL AShoe Mfg KSWS -0.29432 2 0.096798 5 0.223602 6 0.101695 9 19.06 19 6344 15 6.95SHUFFLE MASTER INCORPORATEDGamingEq SHFL -0.29055 5 0.07285 11 0.230769 7 0.354167 2 33.82 6 17760 10 7.05WMS INDUSTRIES INCORPORATEDGamingEq WMS -0.2877 6 0.054842 17 0.079137 1 0.219697 4 20.45 14 32191 7 8.35TIMBERLAND COMPANYShoe Mfg TBL -0.28233 8 0.067627 13 0.287129 11 0.089527 11 31.58 8 38818 4 8.65ACRES GAMING INCORPORATEDGamingEq AGAM -0.28192 9 0.076772 9 0.636364 17 0.113636 6 99.99 1 9300 14 9.7EQUITY MARKETING INCORPORATEDToySport EMAK -0.28491 7 0.085499 6 0.378378 14 0.083333 13 24.3 10 5878 16 9.7LANCASTER COLONY CORPORATIONConsProd LANC -0.27104 15 0.07773 8 0.195804 4 0.093807 10 20.62 13 36783 6 10.65KOSS CORPORATIONApplianc KOSS -0.28064 11 0.079342 7 0.333333 13 0.128205 5 32.1 7 3648 19 11.1INDUSTRIE NATUZZI SPAHse Furn NTZ -0.27241 14 0.062195 15 0.274633 10 0.083694 12 20.34 15 54682 2 11.45DEB SHOPS INCORPORATEDApprlStr DEBS -0.28147 10 0.062878 14 0.202312 5 0.081169 15 19.67 16 13555 11 11.55BUCKLE INCORPORATEDApprlStr BKE -0.27497 13 0.070099 12 0.155844 2 0.082474 14 19.48 18 21059 9 11.8FOSSIL INCORPORATEDConsProd FOSL -0.27504 12 0.057872 16 0.269481 9 0.076923 16 27.13 9 30170 8 12.1WESCAST INDUSTRIES INCAutoPart WCST -0.23097 18 0.131957 2 0.164835 3 0.112903 7 20.62 12 5573 17 12.45ETHAN ALLEN INTERIORS INCFurn Str ETH -0.26143 17 0.04672 18 0.248788 8 0.073009 17 19.64 17 38728 5 14.35READERS DIGEST ASSN INC CL APublish RDA -0.19296 19 0.046713 19 0.727761 19 0.069102 18 34.57 5 87161 1 14.6STRATTEC SECURITY CORPORATIONAutoPart STRT -0.2704 16 0.075756 10 0.411765 15 0.068966 19 22.11 11 4113 18 15.2

select

And the Winners Are...

TOPP TOPPS COMPANY INCORPORATEDKDE 4KIDS ENTERTAINMENT INCSHFL SHUFFLE MASTER INCORPORATEDWLS LYON WILLIAM HOMESKSWS K-SWISS INCORPORATED CL A

WLS

Anticipate Fed raising rates Result: dampen housing market

Housing market tends to lag economy showing signs of slowing

Did not want to focus on industry directly impacted by Fed interest rate moves

TOPP

Strong financial positionNot in a strategic position for growthGood debt capacityExcess cash reserves

possibility of management not knowing how to manage excess cash

Stock price has not moved in over 2 years

KDEGood debt capacityAvailable free cash flowGrowth opportunitiesCore product (Pokemon) fading

Result: Fad dies down earnings have substantially decreased

Success relies too much on next big fad Risk outweighs benefit at this point in time

Stock should be tracked for future investment

SHFL and KSWS

Good debt capacityAvailable free cash flowsOpportunities for growthLow relative risk

Model Value vs. Market ValueTicker TOPP KDE SHFL WLS KSWSModel Price 14.86 13.11 27.76 32.27 54.92Current Price 10.03 17.26 21.95 27.2 46.85Differential -48% 24% -26% -19% -17%Status undervalued overvalued undervalued undervalued undervalued

Corporate AnalysisConsiderations: Corporate Overview SWOT Analysis Damadoran 2-Stage Free Cash Flow Model Company to Index Comparison Insider activity Institutional activity

Corporate Overview

Shuffle Master Inc.:

Shuffle Master, Inc. develops, manufactures and markets automatic card shuffling equipment (shufflers) and gaming products such as table games, slot machine game software and slot machine operating system software for the gaming industry. The Company's card shuffler products, are automatic card shuffling machines designed to be used with table games in casinos and other legal gaming establishments. The Company's shufflers offer several benefits to its casino customers, including enhanced security and increased productivity.

Corporate Overview

Continuous multi-deck shuffler marketed to casino customers (fiscal 2000) Featured a design that eliminated card counting and tracked productivity over the Company's multi-deck batch shuffler

Acquired Gaming Products Pty Ltd. (fiscal 2001) Quick Draw shuffler product line Certain other assets related to the Gaming Products business

• Represents an alternate approach to continuous shuffler design Its long-term strategy is to develop a powerful, open-architecture

game operating system that could run proprietary games on any slot machine.

Products / M/A

Corporate Overview

Develop or acquire gaming products and systems Productivity enhancing equipment New table and slot games Slot game technology

Market these products worldwide Card shufflers and specialty-table game lines objectives

Obtain licenses, patents, and other intellectual property Identify a business model to leverage and commercialize those assets Generate high-margin cash flow in line with the company’s historical gross margins (70-80%)

Long-term strategy Develop a powerful, open-architecture game operating system that could run proprietary games on any slot machine

Strategy

Corporate Overview

Primary Competitor is WMS Gaming

Competitors

SWOT AnalysisShuffle Masters Inc.:

Strengths: Core business of card shuffler and specialty-table game lines are growing and providing gross margins of between 70%-80% No outstanding debt, an unused $15 million line of credit, and $23 million in cash Partnered with International Game Technology (IGT), the largest U.S. slot machine manufacturer to generate revenues using its

brands and licenses Regulatory approval was given to Shuffle Master’s slot machine operating system Strong pipeline of game titles, both by themselves (15 new game titles submitted for regulatory approval) and with IGT (538 games

have been installed as of January 31, 2002) Company one of the few leaders in gaming software technology

Weaknesses:

High R&D costs associated to keeping up with the accelerating rate at which games are being advanced and changed

Success is largely dependant on approval of gaming technology by state gaming agencies Gaming industry has been hurt by September 11, which has caused a slow down in vacations (to casinos). Recovery will take some time

Opportunities: Gaming system approval will allow Shuffle Master to develop proprietary games using its own titles and brands for casinos rather than

partner with other manufacturers and share revenues Will soon be introducing new single- and double-deck shuffler into the previously untapped poker market sometime this summer WMS Gaming’s (WMS) (Shuffle Master’s main competitor) difficulties with its game operating system have created 1) a delay in its

introduction of new titles and 2) a game base of roughly 50,000 faulty WMS video slots machines in the domestic market

Threats: The interface for the WMS machines has not received regulatory approval which can cause new operating system to be delayed to

market Strong competition from WMS Difficult to remain at the forefront of a changing (gaming) industry when technological advances, patents, and licenses usually have the

effect of restricting product development

Microsoft Excel

WorksheetShuffle Master AnalysisInputs to the model Earnings InputsCurrent Earnings per share = 0.63$ Do you want to use the historical growth rate? yesCurrent Dividends per share = -$ If yes, enter EPS from five years ago = 0.21$ Current Capital Spending/sh = 0.04$ Current Depreciation / share = 0.20$ Do you have an outside estimate of growth ? YesCurrent Revenues/ share = 2.72$ If yes, enter the estimated growth: 25.00%Working Capital/ share = 2.30$ Chg. Working Capital/share = 0.45$ Do you want to calculate the growth rate from fundamentals? yes

If yes, enter the following inputs:Enter length of extraordinary growth period = 4 Net Income Currently = $11,595.00

Interest Expense Currently = $0.00 Last yearDo you want to enter cost of equity directly? no Book Value of Debt = $11,833.00 6,604.00$ If no, enter the inputs to the cost of equity Book Value of Equity = $40,566.00 28,010.00$ Beta of the stock = 1.33 Tax Rate on Income= 36.00%Riskfree rate= 5.10% The following will be the inputs to the fundamental growth formulation:Risk Premium= 4.00% ROC = 33.50% D/E = 29.17%

Retention = 100.00% Interest Rate= 0.00%Do you want to change any of these inputs for the high growth period? No (Yes or No)

Beta If yes, specify the values for these inputs (Please enter all variables)Will the beta to change in the stable period? no ROC = 33.50% D/E = 29.17%

Retention = 100.00% Interest Rate= 0.00%Capital Spending, Depreciation & Working CapitalDo you want all these items to grow at the same rate as earnings ? yes Specify weights to be assigned to each of these growth rates:

Historical Growth Rate = 10.00%Do you want to keep the current fraction of working capital to revenues? Yes Outside Prediction of Growth = 20.00%

Fundamental Estimate of Growth = 70.00%Do you want to use the current debt ratio as your desired mix? Yes

Enter growth rate in stable growth period? 5.00%Capital spending and Depreciation during Stable GrowthIs capital spending to be offset by depreciation in stable period? yes

Shuffle Master AnalysisOutput from the program

Cost of Equity = 10.42% The FCFE for the high growth phase are shown below (upto 6 years)1 2 3

Proportion of Debt: Capital Spending (DR)= 22.58% Earnings 0.86$ 1.19$ 1.64$ Proportion of Debt: Working Capital (DR)= 22.58% - (CapEx-Depreciation)*(1-DR) (0.17)$ (0.24)$ (0.33)$

-Chg. Working Capital*(1-DR) 0.67$ 0.93$ 1.27$ Current Earnings per share= $0.63 Free Cashflow to Equity 0.36$ 0.50$ 0.69$ (Capital Spending - Depreciation)*(1-DR) (0.12)$ Present Value 0.33$ 0.41$ 0.51$ Change in Working Capital * (1-DR) 0.35$ Current FCFE 0.40$ Growth Rate in Stable Phase = 5.00%

FCFE in Stable Phase = 2.04$ Growth Rate in Earnings per share Cost of Equity in Stable Phase = 10.42%

Growth Rate Weight Price at the end of growth phase = 37.73$ Historical Growth = 24.41% 10.00%Outside Estimates = 25.00% 20.00% Present Value of FCFE in high growth phase = 1.88$ Fundamental Growth = 43.27% 70.00% Present Value of Terminal Price = 25.38$ Weighted Average 37.73% Value of the stock = 27.26$

Growth Rate in capital spending, depreciation and working capitalHigh Growth Stable Growth Estimating the value of growth

Growth rate in capital spending =37.73% 5.00% Value of assets in place = 3.86$ Growth rate in depreciation = 37.73% 5.00% Value of stable growth = 3.93$ Growth rate in revenues = 37.73% 5.00% Value of extraordinary growth = 19.47$

Value of the stock = 27.26$ Working Capital as percent of revenues = 84.45% (in percent)

Shuffle Master Ratio Comparison

Stock Industry S&P 500

Price/ Earnings 29.84 27.5 30.0Price/ Book 8.94 3.5 4.2Price/ Sales 8.4 1.2 2.3Price/ Cash Flow 21.3 14.3 17.1Dividend Yield % 0.0 1.2 1.2

Shuffle Master Insider TransactionsDate* NamePosition Action Shares $ Value

3/18/02 SUTTON THOMAS A Director Planned Sale 40,000 755,2003/18/02 SUTTON THOMAS A Director Sale 32,900 622,2751/31/02 CRUZEN PATRICK R Director Planned Sale 36,000 648,0001/31/02 CRUZEN PATRICK R Director Sale 18,000 324,720

12/28/01 ROBSON KEN Director Buy 200 3,200 10/26/01 LAHTI JOSEPH JOHN Director Planned Sale 56,257 795,40310/26/01 LAHTI JOSEPH JOHN Director Sale 56,252 815,6549/20/01 ROBSON KEN Director Buy 300 3,0969/20/01 SUTTON THOMAS A Director Buy 200 2,2507/24/01 ROBSON KEN Director Buy 100 1,610

6/13/01 CRUZEN PATRICK R Director Planned Sale 13,500 391,5006/13/01 CRUZEN PATRICK R Director Sale 13,500 392,6761/22/01 CRUZEN PATRICK R Director Sale 9,000 157,0621/17/01 CRUZEN PATRICK R Director Planned Sale 9,000 153,0001/17/01 SUTTON THOMAS A Director Planned Sale 10,000 180,813

1/16/01 LAHTI JOSEPH JOHN CEO Planned Sale 150,000 2,587,5001/16/01 LAHTI JOSEPH JOHN CEO Sale 150,000 2,631,8551/16/01 SUTTON THOMAS A Director Sale 10,000 180,813

12/21/00 SUTTON THOMAS A Chairman Planned Sale 7,500 105,46912/21/00 SUTTON THOMAS A Chairman Planned Sale 0 0

Shuffle Master Insider Activity

Shuffle Master Institutional OwnershipFund Ownership 5,505,600 shares 31%Total # of Funds 68 Major Fund OwnersFund Name % ofSharesHeld % ofFund Assets Change(000) inOwnership Liberty Acorn Z 8.8 0.49 512Nations Small Company Inv A 2.99 0.99 247PIMCO Micro Cap Instl 1.69 2.3 0Heritage Aggressive Growth A 1.49 4.04 265Fremont Institutional U.S. Micro-Cap 1.43 1.47 255STI Classic Small Cap Growth Stk Flex 1.3 0.72 0Consulting Group Small Cap Growth 1.13 0.49 0SEI Instl Mgd Small Cap Growth A 1.1 0.41 0Turner Small Cap Growth 0.72 0.85 24Heritage Small Cap Stock A 0.7 1.14 88Oppenheimer Discovery A 0.63 0.14 112Heritage Mid Cap Stock A 0.61 1.12 91Vanguard Small Cap Index 0.59 0.04 2Artisan Small Cap 0.52 1.23 -22Forward Hoover Small Cap Equity 0.39 1.12 41FBR Small Cap Value A 0.39 4.05 0Vanguard Explorer 0.32 0.02 0Quant Small Cap Ord 0.3 1.53 -12Oppenheimer Main St Small Cap A 0.3 0.15 -19Evergreen Global Opportunities A 0.3 0.46 -17

Corporate Overview

K-Swiss Inc.:

K-Swiss Inc. designs, develops and markets a growing array of athletic footwear for high performance sports use, fitness activities and casual wear. The Company was founded in 1966, by two Swiss brothers, who introduced one of the first leather tennis shoes in the United States. The shoe, the K-Swiss "Classic," has remained relatively unchanged from its original design, and accounts for a significant portion of the Company's sales. The Company sells its products in the United States through independent sales representatives, primarily to specialty athletic footwear stores, pro shops, sporting good stores and department stores. K-Swiss also sells its products to a number of foreign distributors. The Company now has sales offices or distributors throughout the world. K-Swiss’s goal is to become retailing’s most profitable vendor.

Corporate Overview

The Classic Category - High Performance Tennis Shoes (1966) Classic Originals K-S Collection Limited Edition

High-End Performance 7.0 System

• launched in 1997

• Sold in tennis specialty and pro-shops

Training - To differentiate lines from competitors (2000) Speed

• moderately priced running shoes Strength

• moderately priced cross-training shoes Endurance

• trail running shoes

Footwear

Corporate Overview

K-Swiss branded apparel and accessories Designed with the same classic strategies used in the footwear line

• Appeal to a variety of new markets from an urban distribution to an upscale suburban consumer

New 7.0 line of high tech tennis apparel (1999) Complement its performance 7.0 footwear (Men & Women) The product line consists of:

• skirts• shorts• tops• dresses• warm-ups

Collection for the casual athletic consumer tee shirts caps socks bags

Apparel and Accessories

Corporate Overview

Domestic Nike Adidas

International Nike Adidas Reebok

Competitors

SWOT AnalysisK-Swiss:

Strengths: Focused distribution and allocation strategy Senior management team has almost 16 years of experience in the industry President, Mr. Nichols, has been at the helm since he led the company's buyout in December 1986 Significant operating leverage from a low fixed - cost structure, resulting from efficient distribution and administrative

operations Strong financial position - at the end of 4Q01, K-Swiss had $61.6 million in cash on its balance sheet with essentially no debt

Weaknesses: International revenue only comprised 15% of 2001 total revenue Potential income loss due to a delay in starting the 2002 advertising campaign compared with that of 2001 Expected decrease in gross margins and increase in expenses due to investments in National Geographic and Royal Elastic

Brands

Opportunities: International markets present an attractive opportunity, and are performing well - international revenue increased 55.5% to

$6.5 million Beginning to see increased sales in some key markets - Asia, Europe (Classic #1 shoe in Japan)

Joint venture with Rugged Shark to license, produce and market a men's, women's and children's collection of National Geographic casual footwear

Acquired the rights and business of Australian designer and manufacturer, Royal Elastics (elasticated footwear) Niche within the footwear market, with approximately $8 million in sales

Threats: Spreading out into newly formed Joint Venture and Acquisition might hurt brand image and brand strength Core business ie. “Classic” shoe sales represent 70% of company’s total sales Might not be able to recover lost market share from 98’ product withdrawal overseas

K-Swiss Analysis Microsoft Excel

Worksheet

Inputs to the model Earnings InputsCurrent Earnings per share = 2.28$ Do you want to use the historical growth rate? yesCurrent Dividends per share = 0.06$ If yes, enter EPS from five years ago = 0.35$ Current Capital Spending/sh = 0.12$ Current Depreciation / share = 0.20$ Do you have an outside estimate of growth ? yesCurrent Revenues/ share = 28.45$ If yes, enter the estimated growth: 10.00%Working Capital/ share = 12.86$ Chg. Working Capital/share = 0.77$ Do you want to calculate the growth rate from fundamentals? Yes

If yes, enter the following inputs:Enter length of extraordinary growth period = 6 Net Income Currently = $23,309.00

Interest Expense Currently = $1,804.00 Last yearDo you want to enter cost of equity directly? no Book Value of Debt = $36,440.00 37,208.00$ If no, enter the inputs to the cost of equity Book Value of Equity = $1,672,628.55 1,665,033.15$ Beta of the stock = 0.73 Tax Rate on Income= 36.00%Riskfree rate= 5.10% The following will be the inputs to the fundamental growth formulation:Risk Premium= 4.00% ROC = 1.44% D/E = 2.18%

Retention = 97.36% Interest Rate= 4.95%Do you want to change any of these inputs for the high growth period? yes (Yes or No)

Beta If yes, specify the values for these inputs (Please enter all variables)Will the beta to change in the stable period? no ROC = 5.00% D/E = 2.18%

Retention = 97.36% Interest Rate= 4.95%Capital Spending, Depreciation & Working CapitalDo you want all these items to grow at the same rate as earnings ? yes Specify weights to be assigned to each of these growth rates:

Historical Growth Rate = 10.00%Do you want to keep the current fraction of working capital to revenues? Yes Outside Prediction of Growth = 20.00%

Fundamental Estimate of Growth = 70.00%Do you want to use the current debt ratio as your desired mix? Yes

Enter growth rate in stable growth period? 3.50%Capital spending and Depreciation during Stable GrowthIs capital spending to be offset by depreciation in stable period? yes

K-Swiss AnalysisOutput from the program

Cost of Equity = 8.02% The FCFE for the high growth phase are shown below (upto 6 years)1 2 3 4 5

Proportion of Debt: Capital Spending (DR)=2.13% Earnings 2.50$ 2.75$ 3.03$ 3.33$ 3.66$ Proportion of Debt: Working Capital (DR)=2.13% - (CapEx-Depreciation)*(1-DR) (0.08)$ (0.08)$ (0.09)$ (0.10)$ (0.11)$

-Chg. Working Capital*(1-DR) 1.26$ 1.38$ 1.52$ 1.67$ 1.84$ Current Earnings per share= $2.28 Free Cashflow to Equity 1.32$ 1.46$ 1.60$ 1.76$ 1.94$ (Capital Spending - Depreciation)*(1-DR)(0.07)$ Present Value 1.23$ 1.25$ 1.27$ 1.29$ 1.32$ Change in Working Capital * (1-DR) 0.76$ Current FCFE 1.59$ Growth Rate in Stable Phase = 3.50%

FCFE in Stable Phase = 3.39$ Growth Rate in Earnings per share Cost of Equity in Stable Phase = 8.02%

Growth RateWeight Price at the end of growth phase = 75.01$ Historical Growth = 45.43% 10.00%Outside Estimates = 10.00% 20.00% Present Value of FCFE in high growth phase = 7.70$ Fundamental Growth = 4.91% 70.00% Present Value of Terminal Price = 47.22$ Weighted Average 9.98% Value of the stock = 54.92$

Growth Rate in capital spending, depreciation and working capitalHigh GrowthStable Growth Estimating the value of growth

Growth rate in capital spending =9.98% 3.50% Value of assets in place = 19.81$ Growth rate in depreciation =9.98% 3.50% Value of stable growth = 16.57$ Growth rate in revenues =9.98% 3.50% Value of extraordinary growth = 18.54$

Value of the stock = 54.92$ Working Capital as percent of revenues =45.22% (in percent)

K-Swiss Ratio Comparison

Stock Industry S&P 500 Price/ Earnings 20.2 26.4 30.0 Price/ Book 3.5 4.3 4.2 Price/ Sales 1.8 1.7 2.3 Price/ Cash Flow 12.4 19.9 17.1 Dividend Yield % 0.1 0.8 1.2

K-Swiss Insider TransactionsInsider ActivityDate* NamePosition Action Shares $ Value

3/5/02 SMITH JANICE LYNN Officer Sale 1,000 37,0003/1/02 WORLEY PETER KENT Officer Sale 10,000 368,010

2/28/02 FLORA EDWARD Unknown Planned Sale 1,000 35,0002/28/02 FLORA EDWARD Officer Sale 1,000 35,0002/14/02 FINE STEPHEN A Director Sale 70,000 2,363,234

2/13/02 GREEN LEE General Counsel Sale 5,000 169,1772/13/02 POWLICK GEORGE EDWARD CFO Planned Sale 3,840 131,1122/12/02 GREEN LEE Unknown Planned Sale 5,000 172,0002/11/02 POWLICK GEORGE EDWARD CFO Sale 3,840 131,1128/10/01 MITCHELL DEBORAH A Divisional Officer Planned Sale 5,000 175,000

2/20/01 MITCHELL DEBORAH A Vice President Planned Sale 10,000 316,5632/15/01 MITCHELL DEBORAH A Vice President Planned Sale 5,000 155,0002/15/01 SMITH JANICE LYNN Controller Planned Sale 1,000 31,0002/13/01 NICHOLS FAMILY TRUST Chairman Planned Sale 30,000 876,0002/13/01 NICHOLS STEVEN CEO Sale 30,000 900,940

10/23/00 WORLEY PETER KENT Unknown Planned Sale 9,999 255,0008/11/00 POWLICK GEORGE EDWARD CFO Buy 10,700 216,5887/26/00 SULLIVAN BRIAN Vice President Planned Sale 9,000 153,0007/26/00 SULLIVAN BRIAN Vice President Planned Sale 3,000 51,0005/12/00 POWLICK GEORGE EDWARD CFO Buy 7,500 100,938

K-Swiss Insider Activity

K-Swiss Institutional OwnershipFund Ownership 1,208,090 shares 13%Total # of Funds 78 Major Fund OwnersFund Name % ofSharesHeld % ofFund Assets Change(000) inOwnership CGM Focus 2.49 4.5 231STI Classic Small Cap Growth Stk Flex 1.18 0.65 15Vanguard Strategic Equity 0.5 0.18 46One Group Small Cap Growth A 0.45 0.38 42Vanguard Small Cap Index 0.4 0.03 -3SEI Instl Mgd Small Cap Growth A 0.4 0.16 37Yacktman 0.38 1.14 -20Scudder-Dreman Small Cap Value A 0.36 0.28 0Turner Micro Cap Growth 0.35 0.58 0AXP Small Company Index A 0.3 0.09 1American Century Veedot Inv 0.27 0.33 10Standish Small Cap Tax-Sensitive 0.26 0.92 0Vanguard Small Cap Growth Index 0.25 0.16 23Golden Oak Small Cap Value Instl 0.22 1.4 -10Oppenheimer Main St Small Cap A 0.22 0.1 21UAM Sirach Special Equity Instl 0.2 0.56 19Vanguard Tax-Managed Small Cap Ret 0.16 0.08 -1Vantagepoint Growth 0.16 0.02 13Nations Small Cap Index Inv A 0.11 0.08 0Pitcairn Small Cap 0.1 0.66 9

Re-Cap

Recommend buy SHFL and KSWSWatch KDE for future investment