Lakeshore presentation master slides v final

+

FOR INTERNAL USE ONLY

June 17, 2009

IT Transition InitiativeI T IT

+ 2

How Did We Get Here?

Market conditions:

Reduction in luxury purchases

Sales drops in Active by Anne® and Nordic Ridge®

Losses for past two quarters

If things don’t change, we are headed for insolvency.

We are outsourcing our IT department to reduce costs.

+ 3

What Does This Mean to the Company?

Some alternatives considered:

Lower-cost manufacturing partner

New low-end brand

This was not planned from the start

IT not a core competency for us

If we don’t say goodbye to a few of you now, we’ll be saying goodbye to all of you soon.

+ 4

What Does This Mean to You?

Most IT positions transferred to partner firmin Hyderabad, India

Applications migrated over the next seven months

Calling this the IT Transition Initiative

We can’t succeed without you.

+ 5

What Does This Mean to You?

We understand your concerns

Want to make this as painless as possible…

Severance packages

Resume and job placement service

Retention bonuses

+ 6

What’s Going to Happen Today?

Mark Albright, CEO:Background & current situation

Yaw Ofosu, CFO: Fiscal implications, retention bonus

Geneva Todd, CIO: Position migrations, app migration plan

Lisa Greenspan, HR Director: Severance packages, insurance options

Tammy Smith, Training & Development: Resume & placement services

+ 7

Yaw Ofosu, CFO

Critical Targets

Financial Metrics

Competitive Intelligence

Contract Management

Projected Savings

+ 8

Critical Targets

1. More Efficient Organization

Remove Duplication

Consolidate Support Functions

2. Respond to Demand

Engage Contractors and Other Partners

3. “Rightshore” Organization

Outsourcing & Reemployment

+ 9

Financial Metrics

LAKESHOREFiscal 2008

Fiscal 2009(Projected)

Annual Revenue $97.6M $83MAnnual Profit (After Taxes) 12% 4%Expenses (And Percent of Revenue)

- Salaries & Benefits

$27.1M / 28%

$28.8M / 29%

- IT Legacy Systems

$2.6M / 7.4% $2.8M / 11.2%

- Real Estate

$1.9M / 5.5% $1.7M / 6.7%

- Administrative

-0.4% +2.8%

+ 10

Competitive Intelligence

Market Share

2005-2007

Average2009 2012

LAKESHORE 65% 50% 70%

EXCELSIOR 25% 30% 20%

IN-MOTION 10% 17% 7%

ORION Inc. N/A 3% 5%Sources: Crain’s Chicago Business, 2009 Book of Lists

+ 11

Contract Management

Renegotiate All Contracts

Terms and Conditions

Service Level Agreements

Fees

Low-Cost Offshore Delivery Locations

Reduce Costs

+ 12

Contract Management:IT Project Allocation Current In-House IT = 65%-80% SOLUTION = Contract Out All IT prior to 2010

+ 13

Contract Management:India.IT Expectations

1. Transparency

2. Services

3. Financial Viability

4. Notification

5. “Trusted Partner”

6. Fraud → Terminate Relationship → No $ Penalty

7. Checks & Balances

+ 14

Projected Savings: 2010 - 2011

Help Desk Operations Support = 5 - 10%

Network Service = 10 - 15%

Application Hosting = 10 - 20%

Projected Overall Savings = $13M

+ 15

Geneva Todd, CIO

IT Outsourcing Plan

Application Movement By Date

Positions Impacted

Positions Retained

Hardware/Software & Other Considerations

+ 16

+ 17

Lisa Greenspan, Director of HR

Severance Pay

Unemployment Insurance

COBRA

+ 18

Severance Pay

All employees are eligible

Employees < 5 years, 3 months’ severance

Employees 5+ years, 6 months’ severance

You must sign a separation agreement

+ 19

Unemployment Insurance

Eligible on first day of unemployment

To find your local office visit: http://www.ides.state.il.us/

+ 20

COBRA

Consolidated Omnibus Budget Reconciliation Act

Continuation of Employer-Sponsored Heath Insurance

Chicago Insurance Associates will contact employees directly

Employees will receive information within 30 days

Effective from last day of employment

+ 21

Tammy Smith, Manager of Training & Development

Internal Opportunities

Career Counseling Services

Support Functions

Availability

+ 22

Re-employment Opportunities

HR Resource Support

Career Transitioning

Career Planning and Placement

+ 23

Career Counseling: Support Options

1. Internal redeployment possibilities

2. External placement program

Job search experts

3. Office services support

4. Social support services

+ 24

Career Counseling: Availability

June 2009 to March 2010

Outplacement service

Counselors available to…

Advise

Assist

Alleviate distress

24-hour hotline: 800-FOR-HELP

+ 25

Why is this relevant to you?

Maintain economic viability

Manage the transition

Streamline

Assist employees

+ 26

Final Thoughts

Stay tuned for individual meetings

Difficult times, difficult decisions

If we don’t say goodbye to a few of you now, we’ll be saying goodbye to all of you soon.

Acknowledging your service

Thank you

+

FOR INTERNAL USE ONLY

Questions & Answers