Annual State of the Business Presentation

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Annual State of the Business Presentation
2006 Annual Meeting

• FY2006 in Review
• Strategy
• FY2007 Outlook
• QA

Brian E. Dearing Chairman and CEO
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FY 2006 in Review
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Financial Results Revenue
Currently Single Digit Growth
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Financial Results Net Income
Consistently Profitable for 13 quarters Profitable
since 2004, thirteen consecutive
quarters Fiscally conservative but investing for
growth
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Financial Results Cash Generation
Cash Generation We continue to generate cash
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Financial Results Long-Term Debt
Long Term Debt We have no long-term debt as of
10/31/06 Our DB paydex score is low risk we pay
our debts No outstanding lawsuits
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TTM Revenue by Product
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Financial Results Growth Investments
Growth Investments Updating current products,
PS8.0 and EMPART New Products such as DMS and
WarrantySmart Subsidiary in Europe providing
local language Tech Support
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Valuation
EV 12.6M 0.9 x TTM revenue 4.3 x TTM
earnings 4.2 x TTM EBITDA As of Q1 FY2007
Enterprise Value (EV) calculated assuming 2.0M
"excess cash"
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Four Growth Initiatives - SCORECARD

• Maintain and Enhance Current Business A-
• US base catalog business grew 3
• Added adjacent market accounts (e.g., Schwinn,
  Yamaha Golf)
• However, there were issues at key OEM accounts
• FY2007 ACTION New VP-Global Sales, re-energize
  OEM side
• Grow Dealer Marketing Services Business B-
• Director hired, sales now on a doubling pace
• But still not (yet) a player in Power Sports
• FY2007 ACTION Product updates, OEM sponsorships
• Grow Dealer-Direct Business in Europe C-
• Operation launched, Briggs business transitioned
• Strong finish Harley deal
• But business declined overall
• FY2007 ACTION OEM relationships Regional
  titles
• Acquire Additional Business for Market Share,
  Products, and Talent D
• Small re-seller deal signed (DIY catalog product)
• But no acquisition closed (despite hard work and
  effort)
• FY2007 ACTION Close at least one acquisition

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REPORT CARD FY2006 Outlook

• Profit, Cash Flow, EBITDA remain strong
• A- Profit up Cash Flow, EBITDA strong and flat

• High single digit organic revenue growth
• C- 6 growth in 1H 3 growth for FY

• Growth focus on DMS and Europe
• C DMS doubled, but Europe did not grow

• Business Development is still active
• D Targets pursued, but no deals (yet)

A reconciliation of EBITDA to net income is
posted on our website, www.arinet.com, under
"Investor Relations". Click the link to access
EBITDA reconciliation.
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FY2006 Other Accomplishments

• North American Sales
• Customer Retention Renewal over 85 (again)
• Distributor initiative continued CODIS
  integration
• European Sales
• Briggs dealer transition completed 970 other
  dealers now direct (vs. VARs, etc.)
• Harley deal completed 5 more titles on the way
• Business Development
• Approximately 40 targets identified, investigated
  and/or pursued
• DIY Re-seller deal signed ADP integration deal
  done
• Technology Development and Publishing
• PartSmart 8 deployed and supported aftermarket
  support added
• Major DMS/WSS, Shopping Cart, EMPARTweb
  enhancements
• First Multi-lingual Load Cook (Dolmar)
• WarrantySmart industrial strength upgrade
  completed
• Finance Operations

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Awards

• Ernst Young Entrepreneur of the Year Nominee
• Small Business Success Story Award from Corporate
  Report Wisconsin

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FY2006 Summary
But very disappointing
An OK year

• Stayed profitable
• Continued cash flow
• Worked acquisition pipeline
• Retained customers
• Some revenue growth in 1H
• European operation completed 1st year ended well
• Paid down debt by 1.2M

• Stock price sagged
• Flat year financially
• Europe declined (slightly and again)
• (Still) mostly catalog products
• No business acquisition (again)

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Strategy
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Mission
ARI is the leading provider of technology-enabled
business solutions that help equipment dealers,
distributors and manufacturers build sales and
profits including Electronic Parts and
Service Catalogs, Dealer Marketing Services,
and related technology-enabled services
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ARI at a Glance

• 1981 Founded to provide electronic
  publishing services to the agriculture industry
• 1996 Evolved to equipment industry
  focus providing parts and service catalogs
• 2005 Expanded focus to include Dealer Marketing
  Services

Intl. Sales/SupportHQ Netherlands VARs in
UK, France

• 76,000 subscriptions
• 25,000 dealers
• 99 catalogs
• 77 manufacturers
• 12 market segments
• 89countries

HeadquartersMilwaukee, Wisconsin
DevelopmentColorado Springs, Colorado
Data ServicesWilliamsburg, Virginia

• FY2006
• Revenues 14.0M (USD)
• Income 0.49/share (diluted)
• EBITDA 3.2M (USD)

A reconciliation of EBITDA to net income is
posted on our website, www.arinet.com, under
"Investor Relations". Click the link to access
EBITDA reconciliation.
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Basic Strategy Be the Dealers
Technology-Enabled Services Partner
Industry Focus Manufactured Equipment Product
Focus Electronic Catalog Additional Products
(Dealer Marketing Services) Positioning
Sales, Profits for Dealers Channel mgt. for
OEMs/Distributors Business Critical to
long-term growth Development Want customers,
tech, talent Selling Current/related Markets
Strategy OEM/Distributor Sponsorship
Dealer Sales Team Cost Control Ongoing
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Acquisition Program
Focused vs. Opportunistic
cd \.IMG 1996 EMPART 1997 POWERCOM 1998 NDI 1999
VertX 2003 SMG (s/w only) 2004
6 DEALS
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Same Four Growth Initiatives for FY2007

• Maintain and Enhance Current Business
• Grow Dealer Marketing Services Business
• Grow Dealer-Direct Business in Europe
• Acquire Additional Business Market
  Share, Products, and Talent
• BUT WE NEED TO EXECUTE
• MUCH BETTER

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FY2007 Team Non-Financial Goals

• Worldwide Sales and Marketing
• Rejuvenate and extend OEM relationships
• Institute and execute an improved sales process
• Improve product marketing
• Business Development and Strategy
• Complete at least one significant acquisition
• Generate at least one growth initiative for
  FY2008
• Technology Development and Publishing
• Dramatically improve efficiency of publishing
  operations
• Deliver whole goods and accessories capability
  and content
• Deliver world-class DMS solution, especially for
  power sports
• Finance Operations
• Significantly improve Customer Service and
  Satisfaction
• Implement new accounting system (Softrax)

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Summary

• FY2006 wasnt a train wreck, but it wasnt
  anything to write home about either
• Were sticking with the same basic strategy
• But we have to execute
• much, much better
• And weve taken steps to improve

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Outlook
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FY2007 Outlook

• Profit, Cash Flow, EBITDA remain good

• Ramp to high single digit organic revenue growth

• Growth focus still on DMS and Europe

• Business Development is still active

A reconciliation of EBITDA to net income is
posted on our website, www.arinet.com, under
"Investor Relations". Click the link to access
EBITDA reconciliation.
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FY2008 Outlook

• Profit, Cash Flow, EBITDA remain strong

• Growth Accelerating to 10-20 per year
• Five layers
• Base Business Replacement Sales
• 2007 Growth Initiatives
• Future Organic Growth Initiatives
• Small Acquisitions
• Larger Acquisitions

A reconciliation of EBITDA to net income is
posted on our website, www.arinet.com, under
"Investor Relations". Click the link to access
EBITDA reconciliation.
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Thank you . . .
Customers Employees Board of Directors Shareholder
s
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(No Transcript)
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Other Charts (reference only)
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1995-2006 Results
2006 Sustained Profitability
Q1 FY2007 xx Growth
A reconciliation of EBITDA to net income is
posted on our website, www.arinet.com, under
"Investor Relations". Click the link to access
EBITDA reconciliation.
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TTM Results