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EARNINGS INSIGHT Key Metrics John Butters, VP, Sr. Earnings Analyst jbutters@factset.com Media Questions/Requests media_request@factset.com S&P 500 October 9, 2015 + Earnings Growth: For Q3 2015, the blended earnings decline is -5.5%. If the index reports a decline in earnings for Q3, it will mark the first back-to-back quarters of earnings declines since 2009. + Earnings Revisions: On June 30, the estimated earnings decline for Q3 2015 was -1.0%. Nine sectors have lower growth rates today (compared to June 30) due to downward revisions to earnings estimates, led by the Materials sector. + Earnings Guidance: For Q3 2015, 76 companies have issued negative EPS guidance and 32 companies have issued positive EPS guidance. + Valuation: The 12-month forward P/E ratio is 15.9. This P/E ratio is above the 5-year average (14.0) and the 10-year average (14.1). + Earnings Scorecard: Of the 24 companies that have reported earnings to date for Q3 2015, 19 have reported earnings above the mean estimate and 14 have reported sales above the mean estimate. To receive this report via e-mail, please go to: www.factset.com/data/news_research/researchdesk All data published in this report is available on FactSet. Please contact media_request@factset.com or 1-877-FACTSET for more information. FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 1

Topic of the Week: 1 EARNINGS INSIGHT October 9, 2015 Will the S&P 500 Actually Report a Decline in Earnings for Q3 2015? As of today, the S&P 500 is projected to report a year-over-year decline in earnings of 5.5% for the third quarter. What is the likelihood the index will report an actual earnings decrease of 5.5% for the quarter? Based on the average number of companies reporting actual earnings above estimated earnings in recent years, it is likely the index will report a smaller decline in earnings than 5.5%. However, based on this average, the index is still likely to report a year-over-year decrease in earnings for Q3. When companies in the S&P 500 report actual earnings above estimates during an earnings season, the overall earnings growth rate for the index increases because the higher actual EPS numbers replace the lower estimated EPS numbers in the calculation of the growth rate. For example, if a company is projected to report EPS of $1.05 compared to year-ago EPS of $1.00, the company is projected to report earnings growth of 5%. If the company reports actual EPS of $1.10 (a $0.05 upside earnings surprise compared to the estimate), the actual earnings growth for the company for the quarter is now 10%, five percentage points above the estimated growth rate (10% - 5% = 5%). Over the past four years, 72% of companies in the S&P 500 have reported actual EPS above the mean EPS estimates on average. As a result, the earnings growth rate has increased by 2.9 percentage points on average over the past four years from the end of the quarter through the end of the earnings season, due to the large number of upside earnings surprises. If this average increase is applied to the estimated earnings decline at the end of Q3 (September 30) of -5.1%, the actual earnings decline for the quarter would be -2.2% (-5.1% + 2.9% = -2.2%). It is interesting to note that for Q2 2015, the actual decline for the quarter of -0.7% was smaller than the projected decline of -1.6% on July 10 (based on this expected average increase in the earnings growth): http://www.factset.com/websitefiles/pdfs/earningsinsight/earningsinsight_7.10.15 FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 2

Topic of the Week: 2 EARNINGS INSIGHT October 9, 2015 What Factors Will S&P 500 Companies Cite as Negative Impacts on Q3 Earnings and Sales? While the majority of S&P 500 companies will report earnings results for Q3 2015 over the next few weeks, approximately 5% of the companies in the index (24 companies) have already reported earnings results for the third quarter. Given the number of concerns in the market, have these companies discussed specific factors that had a negative impact on earnings or revenues for the third quarter during their earnings conference calls? To answer this question, FactSet searched for specific terms related to a number of factors (i.e. currency China, etc.) in the conference call transcripts of the 23 S&P 500 companies that have conducted third quarter earnings conference calls through October 7 to see how many companies discussed these factors. FactSet then looked to see if the company cited a negative impact, expressed a negative sentiment (i.e. volatility, uncertainty, headwind, etc.), or discussed clear underperformance in relation to the factor for either the quarter just reported or in guidance for future quarters. The results are listed below. Similar to previous quarters, the stronger U.S. dollar has been cited by the most companies (18) in the index as a factor that either had a negative impact on earnings or revenues for Q3, or is expected to have a negative impact on earnings and revenues in future quarters. For examples of companies that have cited the negative impact of the stronger U.S dollar on Q3 results, please see pages 11-12. It is interesting to note that only one company has commented on the refugee crisis in Europe to date. By the time we get to December, maybe those things won't be the same, but today, with some of the headwinds in Europe, geopolitical, macroeconomic malaise, the intense tension over there around the refugee situation, that has affected all travel, not just cruise, but all travel. Carnival Corp. (Sep. 22) FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 3

Topic of the Week: 3 EARNINGS INSIGHT October 9, 2015 Year-Over-Year Earnings Decline (-0.4%) Now Projected for S&P 500 for Q4 2015 At the start of the peak weeks of the Q3 2015 earnings season, the blended earnings decline for the third quarter stands at -5.5%. Factoring in the average improvement in earnings growth during a typical earnings season due to upside earnings surprises (see page 2 for more details), it still appears likely the S&P 500 will report a year-over-year decline in earnings for the third quarter. If the index does report a year-over-year decline in earnings for the third quarter, it will mark the first time the index has reported two consecutive quarters of year-over-year declines in earnings since Q2 2009 and Q3 2009. Looking at the current quarter (Q4 2015), what are analyst expectations for year-over-year earnings? Do analysts believe earnings will decline in the fourth quarter also? The answer is yes. This past week marked a change in the aggregate expectations of analysts from flat year-over-year earnings (0%) for Q4 2015 to a decline in year-over-year earnings for Q4 2015. However, expectations for earnings growth for Q4 2015 have been falling not only over the past few weeks, but also over the past few months. On June 30, the estimated earnings growth rate for Q4 2015 was 4.3%. By September 30, the estimated growth rate had declined to 0.2%. Today, it stands at -0.4%. Eight sectors have recorded a decline in expected earnings growth for Q4 2015 since June 30 due to downward revisions to earnings estimates, led by Energy and Materials sectors. On June 30, the estimated earnings decline for the Energy sector for Q4 2015 was -39.2%. Today, it stands at -61.8%. On June 30, the estimated earnings growth rate for the Materials sector was 4.1%. Today, it stands at -12.4%. However, it is interesting to note that analysts in aggregate do expect earnings growth to return for all quarters in 2016. Please see the chart on page 5 for more details. FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 4

Q3 2015 Earnings Season: By the Numbers Overview Analysts and companies have been less pessimistic in their outlooks for the third quarter coming into the start of earnings season relative to recent quarters. Analysts lowered earnings estimates for the S&P 500 for Q3 2015 by a smaller margin than average during the quarter. On a per-share basis, estimated earnings for the third quarter fell by 3.7%. This percentage decline was smaller than the trailing 5-year and 10-year averages for a quarter. Fewer companies have lowered the bar for earnings for Q3 2015 as well. Of the 108 companies that have issued EPS guidance, 76 have issued negative EPS guidance and 32 have issued positive EPS guidance. The percentage of companies issuing negative EPS guidance is 70% (76 out of 108), which is below the 5-year average of 72%. The blended (combines actual results of companies that have reported and estimated results for companies that have yet to report) year-over-year earnings decline for Q3 2015 is -5.5% today, which is higher than the expected decline of -1.0% at the start of the third quarter (June 30). The Energy sector is expected to report the largest year over-year decrease in earnings of all ten sectors, while the Telecom Services and Consumer Discretionary sectors are predicted to report the largest earnings growth of all ten sectors for the quarter. The blended year-over-year sales decline for Q3 2015 is -3.3%, which is also higher than the estimated revenue decline of -2.5% at the start of the third quarter. The Energy sector is expected to report the largest year-over-year decrease in sales of all ten sectors, while the Telecom Services and Health Care sectors are expected to report the largest growth in sales of all ten sectors for the quarter. Looking at future quarters, analysts do not currently project earnings growth and revenue growth to return until Q1 2016. Analysts also expect net profit margins for the 2 nd half of 2015 to be below the levels reported for Q2 2015 (based on per-share estimates). The forward 12-month P/E ratio is now 15.9, which is above the 5-year and 10-year averages. During the upcoming week, 35 S&P 500 companies (including 6 Dow 30 components) are scheduled to report results for the third quarter. Small Increase in Blended Earnings Decline This Week Due to Financials and Materials Small Increase in Projected Earnings Decline This Week Due to Financials and Materials The blended earnings decline for the third quarter is -5.5% this week, which is slightly higher than the earnings decline of -5.2% last week. Downward revisions to estimates for companies in the Financials sector and downside earnings surprises reported by companies in the Materials sector accounted for most of the small increase in the estimated earnings decline for the index during the week. In the Financials sector, downward estimate revisions to MetLife (to $0.77 from $0.88), Goldman Sachs (to $3.20 from $3.46), and Morgan Stanley (to $0.63 from $0.68) were significant contributors to the increase in the earnings decline for the index this week. As a result, the earnings growth rate for the Financials sector dropped to 4.3% from 5.6% over this period. In the Materials sector, downside earnings surprises reported by Monsanto (-$0.19 vs. $-0.02) and Alcoa ($0.07 vs. $0.13) were significant contributors to the increase in the earnings decline for the index this week. As a result, the earnings decline for the Materials sector increased to -18.5% from -14.7% over this period. FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 6

Materials Sector Has Seen Largest Drop in Earnings Growth Expectations since June 30 The blended earnings decline for Q3 2015 of -5.5% is higher than the estimated earnings decline of -1.0% at the start of the quarter (June 30). Nine sectors have recorded a decline in earnings growth since the beginning of the third quarter due to downward revisions to earnings estimates and downside earnings surprises, led by the Materials, Financials, Industrials, and Energy sectors. The only sector that has recorded an increase in expected earnings growth due to upward revisions to earnings estimates is the Telecom Services sector. The Materials sector has recorded the largest decrease in earnings growth (to -18.5% from -1.5%) since the start of the quarter. Overall, 11 of the 28 companies in this sector have current EPS estimates or reported actual EPS numbers more than 10% below the expectations at the start of the quarter, led by Monsanto (to -$0.19 from $0.08), Freeport-McMoRan (to -$0.06 from $0.26), DuPont (to $0.13 from $0.60), and Alcoa to $0.07 from $0.21). The downward revisions to estimates for DuPont and Freeport- McMoRan have also been the largest contributors to the increase in the projected earnings decline for the sector. The Financials sector has seen the second largest decrease in expected earnings growth (to 4.3% from 10.1%) since the start of the quarter. Overall, 53 of the 88 companies in this sector have seen EPS estimates cut during the quarter, led by MetLife (to $0.77 from $1.48) and Goldman Sachs (to $3.21 from $4.31). The downward revisions to estimates for MetLife and Goldman Sachs have also been the largest contributors to the decrease in the earnings growth rate for the sector. The Industrials sector has witnessed the third largest decrease in expected earnings growth (to -5.7% from 0.1%) since the start of the quarter. Overall, 52 of the 66 companies in this sector have seen EPS estimates cut during the quarter, led by Joy Global (to $0.41 from $1.05), Quanta Services (to $0.45 from $0.67) and Deere & Company (to $0.76 from $1.12). However, the downward revisions to estimates for General Electric (to $0.26 from $0.33) have been the largest contributor to the decrease in the earnings growth rate for the sector. The Energy sector has recorded the fourth largest decrease in estimated earnings growth (to -64.3% from -58.9%) since the start of the quarter. Overall, 24 of the 40 companies in this sector have seen EPS estimates cut by 10% or more to date, led by EOG Resources (to -$0.27 from $0.03) and Baker Hughes (to -$0.12 from $0.03). However, the downward revisions to estimates for Exxon Mobil (to $0.91 from $1.04), ConocoPhillips (to -$0.21 from $0.20), and Chevron (to $0.80 from $1.04) have been the largest contributors to the increase in the projected earnings decline for the sector. On the other hand, the Telecom Services sector is the only sector that seen an improvement in expected earnings growth since the start of the quarter (to 18.4% from 16.1%). Overall, 3 of the 5 companies in this sector have seen an increase in EPS estimates to date. The upward revisions to estimates for AT&T (to $0.68 from $0.66) and Verizon (to $1.02 from $1.00) have been the largest contributors to the increase in the earnings growth rate for the sector. EPS Estimate Cuts: Smaller Cuts to Estimates than Average Downward revisions to earnings estimates in aggregate for the third quarter were lower than recent averages. The percentage decline in the Q3 bottom-up EPS estimate (which is an aggregation of the earnings estimates for all 500 companies in the index and can be used as a proxy for the earnings for the index) during the third quarter was 3.7% (to $28.97 from $30.07). This decline in the EPS estimate for the quarter was below the trailing 1-year (-5.3%), 5-year (-3.8%), and 10-year averages (-5.1%) for the bottom-up EPS estimate for a quarter. FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 7

Guidance: Negative EPS Guidance (70%) for Q3 Below Average EARNINGS INSIGHT October 9, 2015 At this point in time, 108 companies in the index have issued EPS guidance for Q3 2015. Of these 108 companies, 76 have issued negative EPS guidance and 32 have issued positive EPS guidance. Thus, the percentage of companies issuing negative EPS guidance to date for the third quarter is 70% (76 out of 108). This percentage is below the 5-year average of 72%. For more details on guidance for the S&P 500 for Q3, please see our FactSet Guidance Quarterly report at this link: www.factset.com/websitefiles/pdfs/guidance/guidance_9.29.15 Second Consecutive Quarter of Earnings Declines Projected for Q3 (-5.5%) The blended earnings decline for Q3 2015 is -5.5%. If this is the final earnings decline for the quarter, it will mark the first time the index has seen two consecutive quarters of year-over-year declines in earnings since Q2 2009 and Q3 2009. It will also mark the largest year-over-year decline in earnings since Q3 2009 (-15.5%). Four sectors are projected to report year-over-year growth in earnings, led by the Telecom Services and Consumer Discretionary sectors. Six sectors are predicted to report a yearover-year decline in earnings, led by the Energy and Materials sectors. Telecom Services: AT&T Leads Growth The Telecom Services sector is expected to report the highest earnings growth rate at 18.4%. Of the five companies in the sector, AT&T is projected to be the largest contributor to earnings growth. The EPS estimate for AT&T for Q3 2015 (which reflects the combination of AT&T and DIRECTV) is $0.68, compared to year-ago EPS (which reflects standalone AT&T) of $0.63 in Q3 2014. If this company is excluded, the estimated earnings growth rate for the Telecom Services sector would fall to 11.1%. Consumer Discretionary: Auto Manufacturers Drive Growth The Consumer Discretionary sector is expected to report the second highest earnings growth rate at 9.9%. Of the 31 sub-industries in this sector, 19 are predicted to report earnings growth. Twelve of these 19 sub-industries are projected to report double-digit earnings growth, led by the Automobile Manufacturers (50%), Internet Retail (41%), General Merchandise Stores (28%), and Homebuilding (25%) sub-industries. On the other hand, the Casinos & Gaming (-58%) and Publishing (-21%) sub-industries are projected to report the largest year-over-year declines in earnings in the sector. Energy: Largest Contributor to Earnings Decline for the S&P 500 The Energy sector is predicted to report the largest year-over-year decline in earnings (-64.3%) of all ten sectors. Five of the seven sub-industries are projected to report a year-over-year drop in earnings: Oil & Gas Exploration & Production (-126%), Coal & Consumable Fuels (-117%), Integrated Oil & Gas (-64%), Oil & Gas Equipment & Services (-63%), and Oil & Gas Drilling (-54%). On the other hand, the Oil & Gas Refining & Marketing (30%) and Oil & Gas Storage & Transportation (7%) sub-industries are the only two sub-industries expected to report earnings growth for the quarter. This sector is also expected to be the largest contributor to the earnings decline for the S&P 500 as a whole. If the Energy sector is excluded, the blended earnings growth rate for the S&P 500 would jump to 1.8% from -5.5%. Materials: Weakness in Metals & Mining The Materials sector is expected to report the second largest year-over-year decline in earnings (-18.5%) of all ten sectors. At the industry level, two of the five industries are predicted to report a year-over-year decrease in earnings, led by the Metals & Mining industry (-82%). This industry is also projected to be the largest contributor to year-over-year decline in earnings for the sector. If the Metals & Mining industry is excluded, the expected earnings decline for the Materials sector would be drop to -3.9%. FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 8

Third Consecutive Quarter of Revenue Declines Projected for Q3 (-3.3%) The blended revenue decline for Q3 2015 is -3.3%. If this is the final revenue decline for the quarter, it will mark the first time the index has seen three consecutive quarters of year-over-year revenue declines since Q1 2009 through Q3 2009. However, seven sectors are actually projected to report yearover-year growth in revenue, led by the Telecom Services and Health Care sectors. Only three sectors are predicted to report a year-over-year decline in revenue, led by the Energy and Materials sectors. Telecom Services: AT&T Leads Growth The Telecom Services sector is expected to report the highest revenue growth of all ten sectors at 13.7%. At the company level, AT&T is predicted to be the largest contributor to revenue growth for the sector. The mean revenue estimate for AT&T for Q3 2015 (which reflects the combination of AT&T and DIRECTV) is $40.7 billion, compared to year-ago revenue (which reflects standalone AT&T) of $33.0 billion. If AT&T is excluded, the expected revenue growth rate for the sector would fall to 5.4%. Health Care: Broad-Based Growth The Health Care sector is predicted to report the second highest revenue growth of all ten sectors at 8.1%. Four of the six industries in the sector are projected to report sales growth for the quarter. Three of these five industries are expected to report double-digit sales growth: Health Care Technology (40%), Biotechnology (18%), and Health Care Equipment & Supplies (10%). Energy: Largest Contributor to Revenue Decline for the S&P 500 On the other hand, the Energy (-37.9%) sector is projected to report the largest year-over-year decrease in sales for the quarter. All seven sub-industries in the sector are predicted to report a decrease in revenue: Integrated Oil & Gas (-46%), Oil & Gas Exploration & Production (-39%), Oil & Gas Equipment & Services (-33%), Oil & Gas Drilling (-31%), Oil & Gas Refining & Marketing (-30%), Coal & Consumable Fuels (-18%), and the Oil & Gas Storage & Transportation (-12%). This sector is also the predicted to be the largest contributor to the revenue decline for the S&P 500 as a whole. If the Energy sector is excluded, the blended revenue growth rate for the S&P 500 would jump to 2.2% from -3.3%. Materials: Weakness in Metals & Mining The Materials (-10.4%) sector is predicted to report the second largest year-over-year decrease in revenue of all ten sectors. Three of the five industries in the sector are projected to report a decline in sales for the quarter: Metals & Mining (-18%), Chemicals (-12%), and Paper & Forest Products (-3%). FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 9

Q3 2015 Earnings Season: Themes Overview EARNINGS INSIGHT October 9, 2015 Similar to last quarter, companies will likely discuss the impact of slower global economic growth, the stronger dollar, and lower oil prices during their earnings conference calls. Economic Themes: U.S., Europe, and China United States According to FactSet Economic Estimates, real (year-over-year) GDP growth in the U.S. is projected to be 2.5% in 2015, which would be consistent with GDP growth of the past few years. The U.S. remains the key geographic market for the S&P 500. According to FactSet Geographic Revenue Exposure data (based on the most recent fiscal year data), companies in the S&P 500 in aggregate generate about 70% of sales from North America, almost all of which comes from the U.S. And we are proud to report that, during the third quarter, PepsiCo was the largest contributor to U.S. retail sales growth among all food and beverage manufacturers with over $400 million of retail sales growth in all measured channels. This was double the next largest contributor to growth. Notably, North American Beverages was the key driver of U.S. retail sales growth within PepsiCo and the largest contributor to U.S. retail sales growth on a standalone basis. PepsiCo (Oct. 6) In the Americas region, we had a solid performance but mixed result. The growth this quarter came from pricing, our Brand Aromatics acquisition and sales from our operation in Mexico. However, these gains were partially offset by lower sales to quick-service restaurant customers that are working through a period of weak consumer demand in the U.S. McCormick & Co. (Oct. 1) In North America, we delivered 13% revenue growth for the year in the United States, where we have now delivered double-digit growth in four of the last five years. We have gained significant market share in the U.S. and are now positioned as the market leader. Accenture (Sep. 24) North America had another great quarter with revenues up 9% and futures up 15%. This geography continues to drive strong growth across nearly all key categories. NIKE (Sep. 24) Europe According to FactSet Economic Estimates, real (year-over-year) GDP growth in the Eurozone is projected to be 1.4% in 2015, which is a slight improvement relative to 2014. Europe is still an important geographic market for the S&P 500. According to FactSet Geographic Revenue Exposure data (based on the most recent fiscal year data), companies in the S&P 500 in aggregate generate about 12% of sales from Europe (combination of European Union and non-european Union countries). Western Europe also had a great quarter, with Q1 revenue up 14% on a currency-neutral basis, driven by growth in every territory. NIKE (Sep. 24) Well, overall, Continental Europe is probably more challenging. When you think about all the economic difficulties and the geopolitical issues and the growing refugee concerns, that's the area that has had the most challenges in terms of pricing for 2016. Carnival (Sep.22) China According to FactSet Economic Estimates, real (year-over-year) GDP growth in China is projected to be 6.8%, which would be a continuation of the declining growth seen in recent years. China continues to be a vital geographic market for the S&P 500. According to FactSet Geographic Revenue Exposure data (based on the most recent fiscal year data), companies in the S&P 500 in aggregate generate about 10% of sales from the Asia Pacific region, most of which comes from China and Japan. FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 10

In China, operating profit declined 25% prior to foreign currency translation, led by a same-store sales decrease of 10%, which was sequentially better than Q1's performance despite a more challenging lap. YUM! Brands (Oct.6) Another area of investor interest has been our consumer business in China. We continue to achieve double-digit constant currency sales growth in this market in contrast to some other consumer products companies. Given the broader impact of the economy on consumer retail purchases, to-date, our business has seen less of an impact and our leadership in China is cautiously optimistic. McCormick & Co. (Oct. 1) Now turning to China, where revenue grew an impressive 30% for the quarter on both a reported and currency neutral basis. While we are very mindful of the macroeconomic volatility in China, our brand has never been stronger and our marketplace has never been more healthy. We have momentum across nearly all key categories as well as continued strength in our DTC business. NIKE (Sep. 24) China has clearly made world news in recent weeks, but continues to be an aggressive growth region for us. Carnival (Sep. 22) Currency Themes: Stronger U.S. Dollar The dollar was stronger in Q3 2015 relative to year-ago values for both the euro and the yen. In the year-ago quarter (Q3 2014), one euro was equal to $1.33 dollars on average. For Q3 2015, one euro was equal to $1.11 dollars on average. In the year-ago quarter (Q3 2014), one dollar was equal to $103.97 yen on average. For Q3 2015 to date, one dollar was equal to $122.17 yen on average. Companies have continued to discuss the negative impact of the stronger dollar during their earnings calls for Q3. Assuming major currency rates remain relatively consistent with today's rate and the ratio of Brazilian reais to the U.S. dollar remains in the mid to high BRL 3s, we expect a $0.35 to $0.40 currency headwind in FY 2016. Monsanto (Oct. 6) As you model out the fourth quarter, I'd ask you to consider the following. First, we expect foreign exchange translation to have an approximate 8 point unfavorable impact on fourth quarter net revenue growth and an approximate 8 point unfavorable impact on fourth quarter core EPS growth based on current market consensus rates. PepsiCo (Oct. 6) I do want to point out foreign currency translation remains a strong headwind as we continue to expect this to impact full year EPS by about 5 percentage points. YUM! Brands (Oct. 6) Well, FX, obviously, is a large headwind on a reported basis because that, obviously, it's been a factor on both the reported top line and bottom line. So that obviously is one we continue to wrestle with. And as you heard in my comments, it's gotten slightly worse on the operating income line as we've upped the negative impact on the total company to 4% versus the prior 3%. McCormick & Co. (Oct. 1) In terms of a year-over-year EPS comparison, a few items of note, and the biggest item of note, FX. In Q4 year over year, the foreign currencies where we operate were weaker versus the U.S. dollar, resulting in our reported foreign earnings this year in Q4 being lower by about $53 million after tax or $0.12 a share than these earnings would have been had FX exchange rates been flat year over year. Costco (Sep. 30) Considering all of this activity, net earnings per diluted share increased to $1.21 for the second quarter of fiscal 2015, in line with our modeled range. This includes an unfavorable impact of approximately $0.01 from Canadian currency fluctuations. Bed, Bath, & Beyond (Sep. 24) Let's take a look at the highlights from the first quarter. NIKE, Inc. revenues grew 5% to $8.4 billion despite significant FX headwinds. NIKE (Sep. 24) FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 11

While sales in base currency were above plan this past year, the devaluation in the peso was much greater than we assumed at the start of the year. The peso devalued 28% over the course of the year. This created a headwind that caused our reported U.S. dollars and EBIT to be lower than last year. The EBIT dollar impact on the quarter assuming constant currency with last year's foreign exchange rate was meaningful, approximately double-digit millions of dollars. AutoZone (Sep. 22) However, we do expect this will be partially offset by the stronger U.S. dollar which will cost us approximately $0.10 based on current FX rates most of which will impact the first half of 2016. Carnival (Sep. 22) In our Consumer Foods segment, net sales were approximately $1.7 billion for the quarter, about flat with the year ago period, reflecting flat volume of 2% improvement in price/mix and a 2% negative impact from foreign exchange. ConAgra (Sep. 22) At current exchange rates, we estimate a $0.09 headwind to full-year adjusted diluted EPS growth in 2016. General Mills (Sep. 22) Total revenue for the quarter was $504 million, which grew 21% on a year-over-year basis in constant currency, or 13% in U.S. dollars. Taking into account the fluctuation in foreign exchange rates, total revenue would have been $37 million or 820 basis points higher using the rates from Q2 of last year. Red Hat (Sep. 21) From a year-over-year currency perspective, FX decreased revenue by $58 million. Considering the $9 million in hedge gains in Q3 FY 2015, versus $1 million in hedge gains in Q3 FY 2014, the net year-overyear currency decrease to revenue considering hedging gains was $50 million. Adobe Systems (Sep. 17) Earnings per share was $0.06 lower because of currency, $0.01 worse than we anticipated. Oracle (Sep. 16) Commodity Themes: Lower Oil & Gas Prices During the third quarter, the price of crude oil decreased by 21.5% (to $45.09 on September 30 from $56.96 on July 1). As a result, the average price of oil for Q3 2015 ($46.53) was more than 50% lower than the average price in the year-ago quarter ($97.10). The impact of oil and gas prices varies by sector, industry, and company. The negative impact of lower oil prices relative to last year has already been seen in the Energy sector, where year-over-year earnings are expected to decline by more than 60%. What will be the impact of lower oil and gas prices in other sectors of the index for Q3? Now switching to macro trends during the quarter, nationally unleaded gas prices started out at $2.69 a gallon and ended the quarter at $2.51 a gallon, an $0.18 decrease.we continue to believe gas prices have a real impact on our customers' abilities to maintain their vehicles and cost reductions help all Americans. We hope to continue to benefit from this increase in disposable income. AutoZone (Sep. 22) Lastly, at the current spot prices for fuel, we expect a $0.20 benefit in 2016. Carnival (Sep. 22) The corporate net impact of fuel was also slightly negative year-over-year. FedEx (Sep. 16) FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 12

Looking Ahead: Forward Estimates and Valuation Earnings and Revenue Growth Not Expected to Return Until 2016 For Q3 2015, companies are expected to report year-over-year declines in both earnings (-5.5%) and revenues (-3.3%). Analysts do not currently project earnings growth and revenue growth to return until Q1 2016. In terms of earnings, analysts are currently predicting a decline of 0.4% in Q4 2015, followed by growth of 4.9% in Q1 2016. Please see page 5 for more details. In terms of revenues, analysts are currently projecting a decline of 1.6% in Q4 2015, followed by growth of 4.0% in Q1 2016. For all of 2015, analysts are projecting earnings to grow by 0.2%, but revenues to decline by 2.6%. Decrease in Profit Margins Projected for 2 nd Half of 2015 Analysts are also expecting profit margins for the 2 nd half of 2015 to be below the level reported for Q2 2015. Using the bottom-up sales-per-share (SPS) and earnings-per-share (EPS) estimates for the S&P 500 as proxies for expected sales and earnings for the index over the next few quarters, profit margin estimates can be calculated by dividing the expected EPS by the expected SPS for each quarter. Using this methodology, the estimated net profit margins for Q3 2015 and Q4 2015 are 10.0% and 10.3%, respectively. These predictions are below the net profit margin of 10.5% reported for Q2 2015. Valuation: Forward P/E Ratio is 15.9, above the 10-Year Average (14.1) The forward 12-month P/E ratio is 15.9. At the sector level, the Energy (28.1) sector has the highest forward 12-month P/E ratio, while the Telecom Services (12.0) sector has the lowest forward 12-month P/E ratio. The P/E ratio of 15.9 for the index as a whole is above the prior 5-year average forward 12-month P/E ratio of 14.0, and above the prior 10-year average forward 12-month P/E ratio of 14.1. It is also above the forward 12-month P/E ratio of 15.1 recorded at the start of the fourth quarter (September 30). Since the start of the fourth quarter, the price of the index has decreased by 4.9%, while the forward 12- month EPS estimate has decreased by 0.3%. Eight sectors have forward 12-month P/E ratios that are above their 10-year averages, led by the Energy (28.1 vs. 12.6) sector. Two sectors have forward 12-month P/E ratios that are below their 10-year averages, led by the Telecom Services (12.0 vs. 14.7) sector. Companies Reporting Next Week: 35 During the upcoming week, 35 S&P 500 companies (including 6 Dow 30 components) are scheduled to report results for the third quarter. FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 13

Important Notice EARNINGS INSIGHT October 9, 2015 The information contained in this report is provided as is and all representations, warranties, terms and conditions, oral or written, express or implied (by common law, statute or otherwise), in relation to the information are hereby excluded and disclaimed to the fullest extent permitted by law. In particular, FactSet and its affiliates disclaim implied warranties of merchantability and fitness for a particular purpose and make no warranty of accuracy, completeness or reliability of the information. This report is for information purposes and does not constitute a solicitation or an offer to buy or sell any securities mentioned within it. The information in this report is not investment advice. FactSet and its affiliates assume no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this report. About FactSet FactSet combines integrated financial information, analytical applications, and client service to enhance the workflow and productivity of the global investment community. The Company, headquartered in Norwalk, Connecticut, was formed in 1978 and now conducts operations from 35 locations worldwide, including Toronto, New York, Chicago, San Francisco, London, Amsterdam, Frankfurt, Paris, Milan, Hyderabad, Mumbai, Dubai, Manila, Tokyo, Hong Kong, and Sydney. To learn more about FactSet, visit FactSet.com and follow us on Twitter: Twitter.com/factset. FactSet.com Copyright 2015 FactSet Research Systems Inc. All rights reserved. 31