For Immediate Release
January 31, 2007

Norwest Equity Partners Reviews 2006 Investment Activity

$200 Million Invested in New Portfolio Companies; $600 Million Realized from Successful Investments

Dear Friends:

With the market landscape changing as much as it has, we continue to work harder and harder at what we do best: partnering with growing and profitable middle market companies. Investing in a company is just the beginning. The real value comes from us working closely with our portfolio company management teams, valuing their opinions and contributions. Together we strive to achieve the greatest possible outcomes in terms of organic growth and identifying and executing strategic add-on acquisitions. Our goal at NEP is to help our portfolio companies stand apart from the rest and be well-positioned industry leaders.

We also provide value by aligning ourselves with experienced operating partners and industry experts. Having these key relationships gives us an edge when it comes to seeking new investment opportunities and developing strategic initiatives for our portfolio companies.

We are in conversations daily with potential operating partners and seasoned executives who can help us identify investment opportunities. For example, we’ve had a relationship with Nick Clementi, a seasoned paper and plastic industry veteran. He has introduced us to companies looking for an investment partner, but our InnoWare deal was the first one that came to fruition. It took awhile to find “the” deal, but we realize and value the relationship and resources that a person like Nick Clementi can bring to the table; not only to us at NEP, but to our portfolio company management teams as well.

Another example is how we were introduced to Production Services Associates (PSA), a key 2006 platform investment. One of our operating partners, Bruce Lohn, had 35 years of senior management at businesses involved with direct mail, consumer fulfillment and parcel consolidation. Through his extensive network of resources, Bruce identified PSA as an acquisition target for NEP, and he ultimately introduced members of PSA’s management team to NEP. Upon closing of the transaction, Bruce assumed a position as a board member and non-executive Chairman, and he will work closely with PSA to identify and execute several growth strategies, including the addition of new customers and end-markets, and vertical integration of certain production operations.

Looking back at last year, we put $200 million of investment dollars to work for new portfolio companies and strategic acquisitions for several of our platform companies. We also realized $600 million from successful liquidity events. Following are some of our representative investment highlights from 2006:

New Platform Investments

PRODUCTION SERVICES ASSOCIATES (PSA) is a full service production management firm focused on serving direct marketing organizations across a wide range of industries and end-markets. PSA has established itself as a customer driven organization delivering fast-paced, high-volume direct mail and plastic card production programs.

• NEP was attracted to the company’s strong management team and the favorable attributes of the $57 billion direct mail industry
• NEP Operating Partner Bruce Lohn had 35 years of experience in direct mail and distribution and was able to step in as non-executive Chairman of the company
• There is an opportunity to broaden PSA’s products, services and capabilities and vertically integrate certain production operations
• PSA’s footprint and customer base will grow via strategic acquisitions

INNOWARE (formerly Duni Corp) is a manufacturer of disposable plastic food containers and converter of premium paper products. The company has complete in-house design, converting, thermoforming, printing, and embossing capabilities that enable it to offer customized and distinctive products; InnoWare is well-known within its market with more than 30 years of servicing customers in the U.S. food service and retail markets.

• NEP partnered with Nick Clementi, a paper and plastic industry veteran, in this transaction. Clementi serves as a co-investor and as the company’s non-executive Chairman
• InnoWare’s strong brand was built upon its longstanding reputation as a superior supplier
• The company has existing strong market share of niche markets and true organic growth opportunities
• There is real potential for growth by acquiring complimentary businesses

LINDSTROM METRIC is a Master Distributor of metric fasteners and has grown organically and through acquisition to be the largest and most successful competitor in the rapidly developing niche of the metric fastener industry. Lindstrom has been able to continually realize benefits from large purchasing economies and a scalable operating platform.

• NEP had extensive experience within the logistics and distribution sector and a proven ability to identify and complete successful add-on acquisitions
• Lindstrom’s management team was solid and had worked hard to build Lindstrom to be the “go to” metric product provider
• The company has strong sourcing capabilities and tremendous opportunity for continued growth of its national distribution footprint
• NEP expects to see significant expansion in market share, especially with favorable metric conversion trends

ROSETTA STONE is the creator of the revolutionary CD-ROM and online immersion-based language learning Rosetta Stone® software acclaimed for its speed, power and effectiveness. The diversity of program offerings and the effectiveness of the company’s method have made Rosetta Stone® the program of choice for individual users, as well as corporations, government agencies, and educational and community organizations. The programs are offered in 30 different languages spoken by over 90% of the world’s population in 150 countries.

• Rosetta Stone has been profitable since inception
• It is the most recognized software language learning brand in its market
• Its business model is unique and sustainable
• There is an exceptional management team in place

Strategic Add-On Acquisitions

JACOBSON COMPANIES is a third-party logistics provider including warehousing, packaging transportation, temporary staffing, and freight management. Jacobson is dedicated to helping customers manage their supply chain management activities and reduce supply chain costs. NEP invested in Jacobson in April 2004.

• Arthur Wells Group is a privately-held partnership of trucking, warehousing and distribution companies primarily focused on the food industry. Arthur Wells expands Jacobson’s product offerings to include the food industry.
• Wilpak is a contract packaging and warehousing provider. Wilpak greatly enhances Jacobson’s geographic footprint, especially in the Southeast region.
• Southwest Storage & Distribution is a contract warehousing provider, including freezer, cooler and dry storage. Adding cold storage capabilities has been one of Jacobson’s core growth strategies.

CVI LASER is a leading manufacturer of optical components; serves the semiconductor, biotech, industrial, commercial, aerospace and research industries. NEP invested in CVI Laser in May 2003.

• Quality Laser Optics (QLO) is a manufacturer of precision optics. QLO increases CVI’s European manufacturing capacity by over 25%, adds new material processing capabilities, and provides improved flexibility to serve its customers worldwide.

BECKER UNDERWOOD is a leading global supplier of specialty chemicals and biological products to the seed agricultural, landscape, turf, and horticulture markets. NEP invested in Becker Underwood in September 2004.

• Sub-Sahara International is a specialist producer of coatings and colorants to the international seed industry. Sub-Sahara enhances Becker Underwood’s operating and manufacturing efficiencies and provides the company with a more robust product line to offer its global customers.

Portfolio Liquidity Events

LIFE TIME FITNESS (NYSE:LTM) continues to be the category dominant operator of multi-purpose, state-of-the-art family fitness and recreation centers; $1.8 billion market capitalization and 60 clubs in operation across the U.S. Life Time Fitness completed its IPO in 2004, and NEP distributed its remaining shares in 2006.

PRIMARY ENERGY builds, owns, and operates recycling energy facilities in the U.S., providing sustainable electric and thermal energy. Primary Energy was acquired in November by EPCOR Power L.P.

PALADIN BRANDS is a leading independent designer, manufacturer and supplier of high quality construction equipment attachments. Paladin Brands was acquired in August by Dover Resources, a subsidiary of Dover Corporation (NYSE:DOV), a worldwide, multi-billion dollar diversified manufacturer of industrial products.

HIGHLAND MANUFACTURING is a leading regional manufacturer with a significant presence in the north central United States. Highland Manufacturing was acquired in March by Champion Enterprises (NYSE:CHB), a leader in factory-built construction.

Norwest Mezzanine Partners

We have a unique advantage over our private equity competition because we are able to offer our portfolio companies a wide array of equity-based solutions. Our investment charter is flexible and broad with both equity and mezzanine capabilities, so we are able to participate in a broad range of transaction types. Our affiliated mezzanine fund, Norwest Mezzanine Partners (NMP), successfully invested $100 million last year:

• Continental Structural Plastics is a manufacturer of compression-molded composite parts and components serving OEMs and Tier I suppliers in the automotive, air conditioning and general industrial end-markets.
• General Products Corporation is a manufacturer of highly engineered, precision-machined components and assemblies to the North American automotive and heavy-duty truck markets.
• ATI Holdings (d.b.a. Athletic and Therapeutic Institute) is a leading provider of outpatient physical therapy services.
• Southeast QSR Holdings is one of the top 20 franchisees of Taco Bell restaurants in the U.S. and the largest Taco Bell franchisee in the Southeastern U.S.
  InnoWare (NMP invested in our above-mentioned InnoWare transaction)

Team News

Reinforcing and adding key talent to our team is very important to us. We welcomed two new associates to our NEP team last year. Jason Sondell and Andrew Cantwell are both graduates from the Kellogg School of Management at Northwestern University. NMP welcomed Neal Sette as an Associate in June, and is pleased to announce that Carter Balfour was promoted to Principal in December.

One of the strategic decisions our firm made last year was to transition our Los Angeles-based investment team to our Minneapolis headquarters. Dorian Faust (Principal), Tom Schauerman (Director – recently announced promotion), and Michael Healy (Associate) have all relocated to Minneapolis (just in time for winter, too!), while our general partner, Steven Burge, has decided to remain in California with his family for personal reasons. Steve has been a truly valued partner since 1999, and we thank him for his years of contribution to our firm.

Your contributions to our investment activity are tremendously valued. Best wishes for a prosperous 2007.

John Lindahl and Timothy DeVries