Data Managment and Disclosure Policy

Introduction

With the LGI Network's (LGI) introduction, timely broad and detailed consumer purchase information will become available to the industry for the first time. The availability of this information will prevent a great deal of the guessing and intuition-driven decision making on the part of industry players (e.g., retailers, brands, distributors, suppliers). Each party will dramatically improve its decision making -- leading to more efficient and profitable organizations. While "transparency" about what consumers purchase will provide a great economic benefit to the industry, it will also reveal indisputable performance problems that specific companies, and the industry generally, will need to tackle. Initially, this may lead to uncomfortable realities, as experienced by all other consumer categories that evolved similarly 15 to 20 years ago. Nevertheless, as with all consumer categories, the consumer marketplace will reward those companies that understand and deliver what it wants - and punish those that do not.

The Company believes the integrity of the service is central to its credibility. Consequently, LGI will take extreme care not to enter into any business arrangement that could be perceived to impact LGI's commitment to objectivity in both its reporting of information and its service to its clients. LGI's focus is to provide valuable information and services to help industry participants make important, and sometimes, competitively sensitive decisions. As such, the Company is committed to implementing these policies consistently across its subscribers.

Acquiring and Processing Information

1. From which retailers will sales and inventory information be gathered? LGI will seek to acquire watch information from as broad a cross-section of retailers as possible and anticipates receiving data from not less than 3,000 doors nationally by the time its Time Tracker™ services goes live in the 1st quarter of 2004. Initially the retailer panel focus will be on national chain jewelers, regional chain jewelers, department stores, lease operations in department stores, and top independent retailers. The Company's panel will not include major discount chains (e.g., Wal*Mart) at this time.
2. How will transaction information be gathered and quality controlled? Sales and inventory information coming from a retailer's point-of-sale (POS) system (i.e., scanner data) will be the "raw data" forming the foundation of the LGI database. Because no POS system is capable of correcting or identifying all problems, LGI will apply several methods of quality control including statistical edit checks and data dictionary evaluation.
3. How will watches be classified? Brands will be provided with an online application and a reasonable time period to provide specific descriptive information for each watch model including qualifiers such as model styling (e.g., sport, classic), case material, bracelet or band material, size (e.g., ladies, gents, mini), price-point range, etc. LGI's team of industry professionals will review this information for accuracy, and in cases where manufacturers are unable to supply the information in a timely manner, they will assign the model descriptive information.
4. What specific information will a brand subscriber be able to display and analyze? Using the LGI application, subscribing brands will have access to a spectrum of retail sales information and have the ability to access information on: broad and specific geographic market performance categorized in a range of ways (including by style, channel type, price-point, and material type); its performance in a given market; the specific performance of each of its models; and brand-level share information about competitors. No retailer-specific data will be displayed - and in the event that a retailer represents a dominant position (over 50%) of a particular market , the data will not be made available for viewing (i.e., it will be suppressed and a brand will need to broaden its definition of the market it is trying to evaluate ( by including more channels, price-points, or broader geography). Also, information for those brands where LGI does not have a sufficient number of retail stores contributing data will not be displayed individually, but will be included in the tabulation of overall market activity. LGI will not display a brand's information in cases where it collects data from fewer than 50 authorized brand dealers or extracts data from less than 10% of a brand's retail distribution outlets.
5. What specific information will a subscribing retailer be able to display and analyze? Subscribing retailers will have access to a spectrum of retail sales information and have the ability to access information on: broad and specific geographic market performance categorized in a range of ways (including by style, channel type, price-point, and material type); its performance in a given market; the specific performance of those models it carries; and national and market-level performance information on brands. As described above, no retailer-specific information will be displayed and in select cases, certain other information may not be available. Retailers that do not contribute data to the service will not have access to information.
6. What specific information about a brand will be displayed and available for other subscribing competitive brands to analyze? Brand-level market share by price-point  will be available to subscribing brands at a national and region level. No model specific information will be made available.
7. What other information will be made available to retailer and/or brand subscribers? The Company anticipates selling custom information solutions to clients, but in all cases, information provided will adhere to information disclosure policies outlined above.
8. What other information products may become available to parties that do not subscribe to the service? LGI anticipates designing information products like a monthly industry newsletter including high-level sales information (e.g., national and regional sales trends in various market segments) or an annual report providing a static look at the industry. In all cases, information published or released will adhere to information disclosure policies outlined above. Also, online copies of these information products will generally be made available to subscribers at no charge.

Contractual obligations of Subscribers

By contract, retailer and brand subscribers will agree to take reasonable precautions not to disclose or allow to be disclosed any of the data, analyses, or reports from the LGI service to any person outside of its organization without LGI's prior written consent. LGI will not unreasonably withhold consent to provide LGI data to 3rd parties in cases where the information is to be used by a subscriber to advance its own business objectives (e.g., advertising agencies, consulting firms).