Daniel Hamilton Joseph Quinlan UPDATE THIRD QUARTER 2013

1. Daniel Hamilton Joseph Quinlan UPDATE THIRD QUARTER 2013

2. Overall, U.S. FDI outflows to Europe were $188 billion in 2012, a 17% decline from 2011, but still the 3rd strongest annual level on record. • In the first half of 2013, U.S. FDI outflows to Europe totaled $92 billion. Though this figure is down 8% from the same time last year, we see the possibility for a stronger second half of the year based on the improving earnings outlook in Europe and gains in consumer and manufacturing sentiment. • In the first half of 2013, U.S. investment surged in Poland (140%), Denmark (88%), the Czech Republic (39%) and Ireland (32%), compared to the same period in 2012. Though gains in Poland and the Czech Republic were from a relatively lower investment base, we expect further gains as American firms continue to expand into eastern Europe. Countries who experienced large declines in U.S net outflows were Russia (-238%), Germany (-151%), and Italy (-81%). • Europe is the most profitable region of the world for U.S. companies. U.S foreign affiliate income earned in Europe in 2012 was a record high $226 billion, accounting for more than half of total affiliate income earned abroad. • In the first half of 2013, U.S. affiliate income earned in Europe totaled $114 billion, down less than 1% from the same time last year. • In the first half of 2013, U.S. affiliate income increased the most in Sweden to $240 million from $74 million in the same period last year. Notable gains were also made in Turkey (21%), Hungary (19%), Poland (15%), the UK (11%) and Switzerland (10%). Notable losses were made in Germany (-93%), Italy (-73%), Spain (-38%) and France (-34%)

3. U.S. FDI inflows from Europe were $105 billion in 2012, an 18% decline from 2011. Europe accounted for roughly 65% of total U.S. inflows in 2012. • In the first half of 2013, U.S. FDI inflows from Europe totaled $49 billion, down 13% from the same period in 2012. Europe accounted for 73% of total inflows during this period. • In the first half of 2013, European investment in the U.S. increased the most from Denmark (820%) to $892 million. U.S. FDI inflows also increased from Finland (313%), Germany (313%), the Netherlands (312%), Ireland (137%) and the UK (80%). U.S. net inflows from Belgium and Sweden both turned negative as their amount of divestment was more than their amount of newly invested capital in the U.S. • European affiliate income in the U.S. increased 1% in 2012 to $125 billion, the highest level on record. Of all the foreign affiliate income earned within the U.S., 73% was paid to affiliates of European multinationals. • In the first half of 2013, European affiliate income earned in the U.S. was $60 billion, down nearly 3% from the same period last year. • In the first half of 2013, European affiliate income in the U.S. increased the most for Finland (70%), Denmark (36%), Spain (36%) and the UK (25%). The UK accounts for nearly one-third of all European affiliate income earned within the U.S. Those countries who’s U.S. affiliates experienced the largest declines in income were Ireland (-75%), Sweden (-43%) and Switzerland (-38%).