EXHIBIT (c)(4)
MPSI Valuation Materials
Overview Section
MPSI Memo
To: | JOHN McQUEEN | |
From: | Jim Auten | |
CC: | Ron Harper, Bryan Gross | |
Date: | January 22, 2004 | |
Re: | PRIVATIZATION PRICE (VALUATION) INFORMATION |
Set forth in the following materials are various historical financial summaries, financial projections, comparable company information and other materials as we previously discussed, which may be germane to your valuation analysis of MPSI Systems Inc.
APPROACH
In preparing 5-year financial projections set forth in the attachments, we have tried to achieve a balance between increased expectations and conservative estimation. The basis for the 5-year projections is the 2004 Operating Plan. However, comparison of projected 2004 results in that Operating Plan against the 2004 projections set forth herein will highlight a different result at the bottom line. That is because the Operating Plan reflects “targets” for revenue growth and gross margin improvement through cost (process) improvement, both of which include “stretch”. The history of MPSI’s revenue projections versus ultimate results has not been particularly reliable. In 2003, for example, the original salesmen’s revenue projections were for $14+ million while MPSI only realized about $10.5 million (a difference of 25%). Although we employed a different (and we believe more conservative) estimation methodology for 2004, we still thought it wise to factor in a revenue discount of approximately 10%. At the gross margin level, we applied slightly higher cost of production percentages that were reflected in the Operating Plan. While we certainly hope we can institute changes in our survey and production processes that will result in the gross margins set forth in the Operating Plan, we deemed it advisable to be more conservative for the purposes of the 5-year projections. These measures result in revenues of $10.2 million and operating income of $182,000 in the 5-year projections ($11.4 million and $920,000, respectively in the Operating Plan).
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There are obviously potential occurrences (such as merger or acquisition) that could affect these projections materially but that are not reflected herein because management presently has no reason to contemplate nor any basis to estimate the effects of such possible items.
In developing the financial projections, we internally concluded that the most relevant valuation methods would be:
• | Comparable prices associated with recent merger / acquisition transactions involving companies materially similar to MPSI, or |
• | EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) Valuation, or |
• | Discounted Cash Flow Analysis |
This approach is of course not binding upon your ultimate selection of a proper valuation method, but it did suggest the type and format of information we have gathered for your use. Should you need additional information, we will be pleased to provide whatever might be available.
COMPUTATION SUMMARY
Having completed the attached materials, you may benefit from a summary of the analytical results we have presented.
• | Comparability Valuationbased upon recent merger / acquisition of materially comparable companies has been difficult at best, principally because we have been unable to identify a significant number of such transactions. The closest we have come was a transaction in January of 2003 in which MapInfo Corporation (a public company) acquired the assets of Thompson Associates (a private company). Thompson is a quasi competitor – that is, they perform some of the same services as MPSI but they target a different industry sector. Thompson’s annual revenue immediately prior to the transaction, according to MapInfo SEC filings, was approximately $13 million – roughly on par with MPSI at the end of 2002. It is difficult to determine how the acquisition price, $13 million, was derived. It is certainly coincidental with annual revenue, but described earn-out provisions indicated that earnings contribution was more likely the basis on which valuation of Thompson was derived. Unfortunately, since Thompson was a private company, MPSI has no access to their historical financial statements and can come to no reliable conclusion about valuation by MapInfo. Other than commentary in MapInfo disclosures about Thompson being an accretive transaction, which presupposes profitable operations (unlike MPSI during that period) we cannot determine how Thompson was valued. However, based upon MPSI’s own discussions with MapInfo more than five years ago, which were ultimately broken off, they seemed to place heavy reliance on future cash flows in their valuation process. We suspect that the apparent relationship between Thompson’s 2002 revenue and the purchase price is to some extent coincidental and that MapInfo likely did not value Thompson solely on the basis of annual revenue. | |||
MPSI itself has had no recent conversations of substance with potential acquirers. The last such discussions were with NeuroCorp in 1999 at which time MPSI was valued by NeuroCorp at $3.375 per share or approximately $9.8 million. That price was derived at a time when MPSI’s annual revenue was over $19 million and MPSI was apparently recovering from several years of successive losses. Thus the proposed purchase price was not tied directly to annual revenue but was derived from future cash flow projections. Further, MPSI had three times as many assets ($10.5 million) as we do now ($3.6 million), positive working capital ($259,000) compared with negative working capital now ($703,000) and considerably more equity ($3.7 million) than we do now ($176,000). As this transaction never came to fruition and a final valuation was therefore never established, this information is not particularly relevant to MPSI’s valuation today. | ||||
The absence of any significant number of comparable transactions, is likely due principally to the fact that (a) MPSI is a unique company in many respects – even from our so called competitors, and (b) comparable companies which might exist tend to be private companies and we are not privy to their financial condition and operating results. As a result, comparable |
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valuation information about materially comparable companies is unfortunately not available for use in this particular valuation scenario. | ||||
• | EBITDAcomputations in the accompanying materials indicate that MPSI’s likely valuation under present circumstances and giving weight to future estimates would yielda valuation somewhere between $.43 and $1.41 per share(Probable case versus Upside case) based on outstanding shares of 2,912,000. The difference is primarily attributable to the degree of success that MPSI ultimately enjoys with its industry diversification initiatives. The EBITDA calculation is an indicator which attempts to allow current operations comparability between like companies because it factors out variances in financing activities (interest), historical capital activities (depreciation / amortization) and tax rates. In the present analyses, there has been no anticipated change in statutory tax rates during the 5-year projection period, but MPSI will become liable for more cash taxes about midway in the 5-year period after we use up existing NOL carryforwards which are presently sheltering otherwise taxable income. | |||
EBITDA as the only evaluation tool, however, by its very nature fails to account for certain cash activities MPSI must entertain over the projection period, principally capital funding. For that reason, we feel that weight should also be given to a Discounted Cash Flow analysis. | ||||
• | Discounted Cash Flowanalyses set forth in the accompanying materials indicate MPSI’s likely valuation under expected circumstances could bebetween $.10 and $.20 per share. In order to overcome the eroding Petrol business we will have to make significant investment in diversification activities -–investment both in time (which affects future margin expectations) and cash (equipment and technology development). |
CONCLUSION
It is our opinion, given the hurdles MPSI will likely face, that the margin of potential error in revenue projections reflected in EBITDA is high the farther into the future we go. Of course DCF valuation is affected by the margin of revenue error as well. Perhaps the best measure of MPSI value lies somewhere between the EBITDA and DCF results. Present stock prices are in the range of $.17 (bid) to $.40 (ask) per share. What little increase there has been has occurred subsequent to MPSI’s announcement of its intent to go private. One has to wonder of investors willing to “take a flier” are not suspicious of an impending merger or other unwarranted boost in activity. Indeed, the present price is not really reflective of any substantial number of transactions but instead is based on a few trades per month. The present stock prices seem to give more weight to the EBITDA side of the analysis, although of course, outsiders are not yet privy to any such projections or analyses. One has to wonder at the validity of the post-announcement upsurge. Though suspicious, we probably have to give some weight to outside “analysis”. That being the case, the true value of MPSI, absent any “arms length information” probably lies somewhere between $.10 and $.40 per share in management’s opinion. However, the only opinion that counts in this case is yours John.
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EBITDA Evaluation Section
MPSI SYSTEMS INC. | Probable | |
PROJECTED INCOME STATEMENTS | ||
FY 2004 – 2008 |
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Traditional Petrol | 9,569 | 9,216 | 8,905 | 8,685 | 8,526 | |||||||||||||||
New Petrol Geography | 410 | 548 | 741 | 930 | 1,165 | |||||||||||||||
Petrol VAR Partners – T3 | 250 | 225 | 255 | 317 | 419 | |||||||||||||||
Industry Diversification | 0 | 100 | 225 | 394 | 590 | |||||||||||||||
Total Revenue | 10,229 | 10,089 | 10,126 | 10,326 | 10,700 | |||||||||||||||
Cost of Sales: | ||||||||||||||||||||
Traditional Petrol | 5,263 | 5,069 | 4,898 | 4,777 | 4,689 | |||||||||||||||
New Petrol Geography | 213 | 329 | 371 | 465 | 583 | |||||||||||||||
Petrol VAR Partners – T3 | 130 | 90 | 102 | 127 | 168 | |||||||||||||||
Industry Diversification | 0 | 60 | 135 | 236 | 354 | |||||||||||||||
Total COS | 5,606 | 5,548 | 5,506 | 5,605 | 5,794 | |||||||||||||||
Gross Margin | 4,623 | 4,541 | 4,620 | 4,721 | 4,906 | |||||||||||||||
Operating Costs: | ||||||||||||||||||||
Sales & Client Services | 1,849 | 2,018 | 2,025 | 2,065 | 2,140 | |||||||||||||||
G&A | 2,080 | 1,816 | 1,823 | 1,859 | 1,926 | |||||||||||||||
R&D | 512 | 455 | 408 | 470 | 492 | |||||||||||||||
Total Op. Expenses | 4,441 | 4,289 | 4,256 | 4,394 | 4,558 | |||||||||||||||
Operating Income | 182 | 252 | 364 | 327 | 348 | |||||||||||||||
Other Income (Expense): | ||||||||||||||||||||
Interest Income | 3 | 5 | 10 | 15 | 20 | |||||||||||||||
Interest Expense | (25 | ) | (15 | ) | (5 | ) | (5 | ) | (5 | ) | ||||||||||
Other | ||||||||||||||||||||
(22 | ) | (10 | ) | 5 | 10 | 15 | ||||||||||||||
Income Before Taxes | 160 | 242 | 369 | 337 | 363 | |||||||||||||||
Income Taxes | (50 | ) | (75 | ) | (167 | ) | (183 | ) | (220 | ) | ||||||||||
110 | 167 | 202 | 154 | 143 | ||||||||||||||||
EBITDA | 370 | 277 | 314 | 277 | 273 | |||||||||||||||
Discount Mos (Half Year Conv.) | 6 | 18 | 30 | 48 | 60 | |||||||||||||||
Present Value @ 8% | 356 | 246 | 257 | 201 | 183 | |||||||||||||||
Total Present Value @ 8% | 1,243 | |||||||||||||||||||
Company Value Per Share Based on 2,912,000 shares outstanding | 0.43 | |||||||||||||||||||
ASSUMPTIONS
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Traditional Petrol | 10,706 | 9,569 | 9,216 | 8,905 | 8,685 | |||||||||||||||
Erosion Factor – 5% | (478 | ) | (461 | ) | (445 | ) | (434 | ) | ||||||||||||
ChevronTexaco Uplift | 100 | 100 | 150 | 200 | ||||||||||||||||
Shell Uplift | 25 | 50 | 75 | 75 | ||||||||||||||||
Budget Conservatism Factor | (1,137 | ) | ||||||||||||||||||
Subtotal | 9,569 | 9,216 | 8,905 | 8,685 | 8,526 | |||||||||||||||
New Petrol Geography | 0 | 410 | 548 | 741 | 930 | |||||||||||||||
China – Petro China | 150 | 50 | 75 | 100 | 150 | |||||||||||||||
China – Sinopec | 50 | 75 | 100 | 150 | ||||||||||||||||
India – Hindustan et al | 260 | 100 | 125 | 100 | 75 | |||||||||||||||
Erosion Factor – 15% | (62 | ) | (82 | ) | (111 | ) | (140 | ) | ||||||||||||
Subtotal | 410 | 548 | 741 | 930 | 1,165 | |||||||||||||||
Petrol VAR Partners – T3 | 250 | 250 | 225 | 255 | 317 | |||||||||||||||
25 | 75 | 100 | 150 | |||||||||||||||||
Erosion Factor – 20% >15% | (50 | ) | (45 | ) | (38 | ) | (48 | ) | ||||||||||||
Subtotal | 250 | 225 | 255 | 317 | 419 | |||||||||||||||
Industry Diversification | 0 | 0 | 100 | 225 | 394 | |||||||||||||||
Banking | 25 | 25 | 50 | 75 | ||||||||||||||||
Real Estate | 25 | 50 | 100 | 100 | ||||||||||||||||
Restaurant | 50 | 75 | 75 | 100 | ||||||||||||||||
Erosion Factor – 25%>20% | 0 | (25 | ) | (56 | ) | (79 | ) | |||||||||||||
Subtotal | 0 | 100 | 225 | 394 | 590 | |||||||||||||||
Total Revenues | 10,229 | 10,089 | 10,126 | 10,326 | 10,700 | |||||||||||||||
Sales & Client Services | 1,849 | 2,018 | 2,025 | 2,065 | 2,140 | |||||||||||||||
Subtotal | 1,849 | 2,018 | 2,025 | 2,065 | 2,140 | |||||||||||||||
G&A | 2,080 | 1,816 | 1,823 | 1,859 | 1,926 | |||||||||||||||
Subtotal | 2,080 | 1,816 | 1,823 | 1,859 | 1,926 | |||||||||||||||
R&D | 612 | 605 | 608 | 620 | 642 | |||||||||||||||
Capitalized | (100 | ) | (150 | ) | (200 | ) | (150 | ) | (150 | ) | ||||||||||
Subtotal | 512 | 455 | 408 | 470 | 492 | |||||||||||||||
TOTAL OPERATING COSTS |
MPSI SYSTEMS INC. | Upside | |
PROJECTED INCOME STATEMENTS | ||
FY 2004 – 2008 |
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Traditional Petrol | 9,569 | 9,441 | 9,269 | 9,006 | 8,706 | |||||||||||||||
New Petrol Geography | 410 | 898 | 1,063 | 1,454 | 1,536 | |||||||||||||||
Petrol VAR Partners – T3 | 250 | 275 | 370 | 514 | 687 | |||||||||||||||
Industry Diversification | 0 | 200 | 550 | 987 | 1,140 | |||||||||||||||
Total Revenue | 10,229 | 10,814 | 11,252 | 11,961 | 12,069 | |||||||||||||||
Cost of Sales: | ||||||||||||||||||||
Traditional Petrol | 5,263 | 5,004 | 5,005 | 4,683 | 4,527 | |||||||||||||||
New Petrol Geography | 213 | 539 | 532 | 654 | 691 | |||||||||||||||
Petrol VAR Partners – T3 | 130 | 110 | 148 | 206 | 275 | |||||||||||||||
Industry Diversification | 0 | 120 | 303 | 494 | 570 | |||||||||||||||
Total COS | 5,606 | 5,773 | 5,988 | 6,037 | 6,063 | |||||||||||||||
Gross Margin | 4,623 | 5,041 | 5,264 | 5,924 | 6,006 | |||||||||||||||
Operating Costs: | ||||||||||||||||||||
Sales & Client Services | 1,849 | 2,163 | 2,250 | 2,392 | 2,414 | |||||||||||||||
G&A | 2,080 | 1,947 | 2,025 | 2,225 | 2,250 | |||||||||||||||
R&D | 412 | 449 | 413 | 765 | 509 | |||||||||||||||
Total Op. Expenses | 4,341 | 4,559 | 4,688 | 5,382 | 5,173 | |||||||||||||||
Operating Income | 282 | 482 | 576 | 542 | 833 | |||||||||||||||
Other Income (Expense): | ||||||||||||||||||||
Interest Income | 3 | 10 | 15 | 20 | 25 | |||||||||||||||
Interest Expense | (25 | ) | (10 | ) | (5 | ) | (5 | ) | (5 | ) | ||||||||||
Other | ||||||||||||||||||||
(22 | ) | 0 | 10 | 15 | 20 | |||||||||||||||
Income Before Taxes | 260 | 482 | 586 | 557 | 853 | |||||||||||||||
Income Taxes | (50 | ) | (75 | ) | (309 | ) | (298 | ) | (416 | ) | ||||||||||
210 | 407 | 277 | 259 | 437 | ||||||||||||||||
EBITDA | 1,013 | 782 | 1,001 | 992 | 1,333 | |||||||||||||||
Discount Mos (Half Year Conv.) | 6 | 18 | 30 | 48 | 60 | |||||||||||||||
Present Value @ 8% | 973 | 694 | 820 | 721 | 895 | |||||||||||||||
Total Present Value @ 8% | 4,103 | |||||||||||||||||||
Company Value Per Share Based on 2,912,000 shares outstanding | 1.41 | |||||||||||||||||||
ASSUMPTIONS
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Traditional Petrol | 10,706 | 9,569 | 9,441 | 9,269 | 9,006 | |||||||||||||||
Erosion Factor – 5% | (478 | ) | (472 | ) | (463 | ) | (450 | ) | ||||||||||||
ChevronTexaco Uplift | 300 | 200 | 100 | 100 | ||||||||||||||||
Shell Uplift | 50 | 100 | 100 | 50 | ||||||||||||||||
Budget Conservatism Factor | (1,137 | ) | ||||||||||||||||||
Subtotal | 9,569 | 9,441 | 9,269 | 9,006 | 8,706 | |||||||||||||||
New Petrol Geography | 0 | 410 | 898 | 1,063 | 1,454 | |||||||||||||||
China – Petro China | 150 | 150 | 150 | 200 | 100 | |||||||||||||||
China – Sinopec | 150 | 100 | 200 | 150 | ||||||||||||||||
India – Hindustan et al | 260 | 250 | 50 | 150 | 50 | |||||||||||||||
Erosion Factor – 15% | (62 | ) | (135 | ) | (159 | ) | (218 | ) | ||||||||||||
Subtotal | 410 | 898 | 1,063 | 1,454 | 1,536 | |||||||||||||||
Petrol VAR Partners – T3 | 250 | 250 | 275 | 370 | 514 | |||||||||||||||
75 | 150 | 200 | 250 | |||||||||||||||||
Erosion Factor – 20% >15% | (50 | ) | (55 | ) | (56 | ) | (77 | ) | ||||||||||||
Subtotal | 250 | 275 | 370 | 514 | 687 | |||||||||||||||
Industry Diversification | 0 | 0 | 200 | 550 | 987 | |||||||||||||||
Banking | 50 | 100 | 200 | 100 | ||||||||||||||||
Real Estate | 50 | 150 | 200 | 100 | ||||||||||||||||
Restaurant | 100 | 150 | 175 | 150 | ||||||||||||||||
Erosion Factor – 25%>20% | 0 | (50 | ) | (138 | ) | (197 | ) | |||||||||||||
Subtotal | 0 | 200 | 550 | 987 | 1,140 | |||||||||||||||
Total Revenues | 10,229 | 10,814 | 11,252 | 11,961 | 12,069 | |||||||||||||||
Sales & Client Services | 1,849 | 2,163 | 2,250 | 2,392 | 2,414 | |||||||||||||||
Subtotal | 1,849 | 2,163 | 2,250 | 2,392 | 2,414 | |||||||||||||||
G&A | 2,080 | 1,947 | 2,025 | 2,225 | 2,250 | |||||||||||||||
Subtotal | 2,080 | 1,947 | 2,025 | 2,225 | 2,250 | |||||||||||||||
R&D | 612 | 649 | 675 | 718 | 724 | |||||||||||||||
50 | 138 | 247 | 285 | |||||||||||||||||
Capitalized | (200 | ) | (250 | ) | (400 | ) | (200 | ) | (500 | ) | ||||||||||
Subtotal | 412 | 449 | 413 | 765 | 509 | |||||||||||||||
TOTAL OPERATING COSTS |
DCF Evaluation Section
MPSI SYSTEMS INC. | Probable | |
PROJECTED BALANCE SHEETS | ||
FY 2004 - 2008 | ||
(In Thousands) |
Actual | ||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||||||||||||||
Cash | 892 | 670 | 835 | 1,215 | 1,000 | 1,315 | ||||||||||||||||||
Receivables | 1,304 | 1,339 | 1,174 | 1,299 | 1,429 | 1,561 | ||||||||||||||||||
Inventory | 119 | 144 | 146 | 165 | 185 | 116 | ||||||||||||||||||
Other Current Assets | 71 | 71 | 71 | 71 | 71 | 71 | ||||||||||||||||||
Total Current Assets | 2,386 | 2,224 | 2,226 | 2,750 | 2,685 | 3,063 | ||||||||||||||||||
Property & Equipment | 363 | 175 | 125 | 100 | 125 | 150 | ||||||||||||||||||
Capitalized Products | 621 | 278 | 303 | 328 | 303 | 253 | ||||||||||||||||||
Long-Term Contracts | 157 | 122 | 87 | 62 | 32 | 0 | ||||||||||||||||||
Other Noncurrent Assets | 119 | 119 | 119 | 119 | 119 | 119 | ||||||||||||||||||
Total Assets | 3,646 | 2,918 | 2,860 | 3,359 | 3,264 | 3,585 | ||||||||||||||||||
Bank Debt | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Trade Payables & Accruals | 983 | 1,374 | 1,138 | 1,061 | 1,138 | 1,116 | ||||||||||||||||||
Current Deferred Revenue | 1,658 | 839 | 846 | 1,095 | 878 | 1,011 | ||||||||||||||||||
Total Current Liabilities | 2,641 | 2,213 | 1,984 | 2,156 | 2,016 | 2,127 | ||||||||||||||||||
Noncurrent Deferred Revenue | 829 | 419 | 423 | 548 | 439 | 506 | ||||||||||||||||||
Other Noncurrent Liabilities | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Common Stock & PIC | 13,291 | 13,291 | 13,291 | 13,291 | 13,291 | 13,291 | ||||||||||||||||||
Retained Earnings | (13,428 | ) | (13,318 | ) | (13,151 | ) | (12,949 | ) | (12,795 | ) | (12,652 | ) | ||||||||||||
Equity Adjustment | 313 | 313 | 313 | 313 | 313 | 313 | ||||||||||||||||||
Total Noncurrent Liabilities & Equity | 1,005 | 705 | 876 | 1,203 | 1,248 | 1,458 | ||||||||||||||||||
Total Liabilities & Equity | 3,646 | 2,918 | 2,860 | 3,359 | 3,264 | 3,585 | ||||||||||||||||||
MPSI SYSTEMS INC. | Probable | |
Projected Cash Flow Statements | ||
FY 2004 - 2008 |
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Net Income | 110 | 167 | 202 | 154 | 143 | |||||||||||||||
Non-cash adjustments to net income: | ||||||||||||||||||||
Amortization | 443 | 100 | 125 | 150 | 175 | |||||||||||||||
Depreciation | 288 | 150 | 100 | 75 | 50 | |||||||||||||||
Changes in current assets/liabilities | ||||||||||||||||||||
( Increase ) decrease in assets | (25 | ) | 198 | (119 | ) | (120 | ) | (31 | ) | |||||||||||
Increase (decrease) in liabilities | (838 | ) | (225 | ) | 297 | (249 | ) | 178 | ||||||||||||
Cash provided (used) from Operations | (22 | ) | 390 | 605 | 10 | 515 | ||||||||||||||
Fixed asset acquisitions, net | (100 | ) | (100 | ) | (75 | ) | (100 | ) | (75 | ) | ||||||||||
Capitalized software costs | (100 | ) | (125 | ) | (150 | ) | (125 | ) | (125 | ) | ||||||||||
Cash used for Investment Activities | (200 | ) | (225 | ) | (225 | ) | (225 | ) | (200 | ) | ||||||||||
Draw on working capital line | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Repay credit line | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Cash provided (used) in Financing Activities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Increase (decrease) in Cash | (222 | ) | 165 | 380 | (215 | ) | 315 | |||||||||||||
Cash at Beginning of Period | 892 | 670 | 835 | 1,215 | 1,000 | |||||||||||||||
Ending Cash Balance | 670 | 835 | 1,215 | 1,000 | 1,315 | |||||||||||||||
Discount Months (Half Yr Convention) | 6 | 18 | 30 | 48 | 60 | |||||||||||||||
Present Value @ 8% | (213 | ) | 146 | 311 | (156 | ) | 211 | |||||||||||||
Total Present Value @ 8% | 299 | |||||||||||||||||||
Company Value Per Share Based on 2,912,000 shares outstanding | 0.10 | |||||||||||||||||||
MPSI SYSTEMS INC. | Upside | |
PROJECTED BALANCE SHEETS | ||
FY 2004 - 2008 | ||
(In Thousands) |
Actual | ||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||||||||||||||
Cash | 892 | 570 | 470 | 930 | 1,295 | 1,815 | ||||||||||||||||||
Receivables | 1,304 | 1,439 | 1,374 | 1,199 | 1,329 | 1,261 | ||||||||||||||||||
Inventory | 119 | 144 | 171 | 158 | 171 | 108 | ||||||||||||||||||
Other Current Assets | 71 | 71 | 71 | 71 | 71 | 71 | ||||||||||||||||||
Total Current Assets | 2,386 | 2,224 | 2,086 | 2,358 | 2,866 | 3,255 | ||||||||||||||||||
Property & Equipment | 363 | 175 | 225 | 250 | 200 | 150 | ||||||||||||||||||
Capitalized Products | 621 | 378 | 428 | 528 | 428 | 478 | ||||||||||||||||||
Long-Term Contracts | 157 | 122 | 87 | 62 | 32 | 0 | ||||||||||||||||||
Other Noncurrent Assets | 119 | 119 | 119 | 119 | 119 | 119 | ||||||||||||||||||
Total Assets | 3,646 | 3,018 | 2,945 | 3,317 | 3,645 | 4,002 | ||||||||||||||||||
Bank Debt | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Trade Payables & Accruals | 983 | 1,374 | 1,008 | 1,055 | 1,085 | 1,174 | ||||||||||||||||||
Current Deferred Revenue | 1,658 | 839 | 763 | 795 | 821 | 708 | ||||||||||||||||||
Total Current Liabilities | 2,641 | 2,213 | 1,771 | 1,850 | 1,906 | 1,882 | ||||||||||||||||||
Noncurrent Deferred Revenue | 829 | 419 | 381 | 397 | 410 | 354 | ||||||||||||||||||
Other Noncurrent Liabilities | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Common Stock & PIC | 13,291 | 13,291 | 13,291 | 13,291 | 13,291 | 13,291 | ||||||||||||||||||
Retained Earnings | (13,428 | ) | (13,218 | ) | (12,811 | ) | (12,534 | ) | (12,275 | ) | (11,838 | ) | ||||||||||||
Equity Adjustment | 313 | 313 | 313 | 313 | 313 | 313 | ||||||||||||||||||
Total Noncurrent Liabilities & Equity | 1,005 | 805 | 1,174 | 1,467 | 1,739 | 2,120 | ||||||||||||||||||
Total Liabilities & Equity | 3,646 | 3,018 | 2,945 | 3,317 | 3,645 | 4,002 | ||||||||||||||||||
MPSI SYSTEMS INC.
Projected Cash Flow Statements
FY 2004 - 2008
Upside
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Net Income | 210 | 407 | 277 | 259 | 437 | |||||||||||||||
Non-cash adjustments to net income: | ||||||||||||||||||||
Amortization | 443 | 200 | 300 | 300 | 300 | |||||||||||||||
Depreciation | 288 | 100 | 125 | 150 | 200 | |||||||||||||||
Changes in current assets/liabilities | ||||||||||||||||||||
( Increase ) decrease in assets | (125 | ) | 73 | 213 | (113 | ) | 163 | |||||||||||||
Increase (decrease) in liabilities | (838 | ) | (480 | ) | 95 | 69 | (80 | ) | ||||||||||||
Cash provided (used) from Operations | (22 | ) | 300 | 1,010 | 665 | 1,020 | ||||||||||||||
Fixed asset acquisitions, net | (100 | ) | (150 | ) | (150 | ) | (100 | ) | (150 | ) | ||||||||||
Capitalized software costs | (200 | ) | (250 | ) | (400 | ) | (200 | ) | (350 | ) | ||||||||||
Cash used for Investment Activities | (300 | ) | (400 | ) | (550 | ) | (300 | ) | (500 | ) | ||||||||||
Draw on working capital line | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Repay credit line | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Cash provided (used) in Financing Activities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Increase (decrease) in Cash | (322 | ) | (100 | ) | 460 | 365 | 520 | |||||||||||||
Cash at Beginning of Period | 892 | 570 | 470 | 930 | 1,295 | |||||||||||||||
Ending Cash Balance | 570 | 470 | 930 | 1,295 | 1,815 | |||||||||||||||
Discount Months (Half Yr Convention) | 6 | 18 | 30 | 48 | 60 | |||||||||||||||
Present Value @ 8% | (309 | ) | (89 | ) | 377 | 265 | 349 | |||||||||||||
Total Present Value @ 8% | 593 | |||||||||||||||||||
Company Value Per Share Based on 2,912,000 shares outstanding | 0.20 |
Projection Assumptions Section
ASSUMPTIONS
5-YEAR OPERATING PROJECTIONS
REFERENCE | PROBABLE CASE | UPSIDE CASE | ||||||||
Historical Revenue | Historical trends of declining Petrol revenue will continue (11% loss throughout the 5-year projection period). We expect the rate of decline to lessen as compared with prior years. Part of the erosion relates to small customers whose revenue may not be recurring year to year. MPSI has reflected a 5% reduction each in the projections to give effect to this matter. | As in the Probable case, Petrol revenue will decline over the projection periods. However, recent sings point to the possibility of resurgent revenue from BP and Chevron Texaco. The Upside case reflects a partial offset from these sources against the decline curve. | ||||||||
New Geographies | MPSI has opportunities to partially mitigate the Petrol revenue decline by consummating business in certain new geographical areas – principally in China and India. We have been targeting those regions for some time with limited success. Conservative progress is anticipated based recent developments but sales cycles and business uplift will result in only marginal benefits from these sources, particularly during the earlier projection periods. | In the Upside scenario we also expect growth from new Asian geographies, but expect that growth COULD BE accelerated if we can: | ||||||||
(1 | ) | Develop local consultants into strategic partners thereby increasing the build-up of our brand value in those countries, and | ||||||||
(2 | ) | Position MPSI more as retail experts than as tool-makers thereby allowing delivery of “the answer” which may overcome customer lack of sophistication and resistance to unfamiliar tools. | ||||||||
Diversification | Another measure MPSI intends to employ in order to counterbalance the Petrol revenue trend is to leverage our capabilities through initiatives in other industry sectors. Building brand value will be slow because our lack of resources and marginal historical results will make it difficult to demonstrate brand value that is acceptable to new customers in new industries. | MPSI will hopefully experience better penetration of other industries over the five years if Upside financial statements help attract entrenched industry strategic partners. Brand value and revenue uplift can be achieved sooner under that business model. | ||||||||
Selling Expenses | With respect to selling expenses, this 5-year projection does not contemplate a substantial change in the sales process or headcount. Face-to-face selling will still be the method for new Petrol customers. Therefore, the % relationship between selling costs and revenue should remain relatively constant as to Petrol business. | SAME | ||||||||
As to new diversification business, that will involve part fact-to-face and part sales by partners. As the cost effects of partner selling should not generally differ from MPSI costs as a percent of revenue, overall sales costs (commissions or product discounts) should again be fairly consistent relative to revenues. | SAME |
G&A Expenses | G&A expenses should decline over the period as a % of revenue. This is because no major infrastructure (fixed costs such as office space) should be required to service the growth reflected in the Probable scenario. | Business expansion and penetration of new industries will likely require added staff in Production, R&D and even in administration. Additional fixed housing costs may result as reflected in the small growth trend of G&A expenses in the Upside case. | ||||||||
R&D Costs | Research and development expenses overall should not vary substantially as a % of revenue (although the nominal dollar increases allow for small headcount additions). MPSI can likely service the pace of geographic and industry expansion without adding significant headcount. | SAME, except anticipated costs would be higher in dollar terms (although approximately the same as a % of revenue) because of the accelerated pace of development – principally associated with industry diversification growth projections which are higher in this Upside case. | ||||||||
Fixed Assets | MPSI has forestalled PC/network upgrades during 2002 – 2003 but will have to begin replacement/upgrade in 2004 at a modest pace. Equipment lives will be shorter during the projection period as the pace of technology requires replacement more often. | Equipment lives will be shorter during the projection period as not only the pace of technology development increases, but MPSI’s broader customer exposure requires replacement more often. Upgrades will have to be accelerated if business growth accelerates as reflected in the Upside Plan. | ||||||||
Technology Development | The level of capitalized products will decline over time as MPSI will leverage existing technology for most of the growth anticipated in this plan. Thus new capitalized development costs are likely to be less over the 5-years than amortization of previously capitalized development (and product life spans will likely decline). | Same expectations with respect to reduced product life cycles, but increased penetration of new industries will result in more new MPSI technology (capitalized) than in the Probable case. | ||||||||
Financing Assumptions | No external funding anticipated during the period (debt or equity) as company financials and MPSI’s “investment quality” are likely to remain low until later in the 5-year period absent merger or acquisition. No merger or acquisition is contemplated in these projections. MPSI currently has no such discussions in process and could not contemplate the effects of future unknown events. | SAME |
Stock Prices Section
Financial Highlights and Stock Price Information
Periods FY2003, 2002, 2001, 2000, 1999
FY2003 | FY2002 | FY2001 | FY2000 | FY1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 10,800,000 | $ | 12,200,000 | $ | 15,400,000 | $ | 18,200,000 | $ | 19,300,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Income (Loss) | 120,000 | (1,446,000 | ) | (536,000 | ) | (26,000 | ) | 452,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | Breakeven | (1,889,000 | ) | (1,091,000 | ) | (267,000 | ) | 87,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | 0.0 | (0.65 | ) | (0.37 | ) | (0.09 | ) | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Qtly. Stock Price | Hi | Low | Avg | Hi | Low | Avg | Hi | Low | Avg | Hi | Low | Avg | Hi | Low | Avg | |||||||||||||||||||||||||||||||||||||||||||||
1st Quarter | .28 | .11 | .20 | .68 | .10 | .39 | 1.56 | .25 | .91 | 5.69 | 1.81 | 3.75 | 3.56 | 1.38 | 2.47 | |||||||||||||||||||||||||||||||||||||||||||||
2nd Quarter | .15 | .11 | .13 | .75 | .39 | .57 | 1.13 | .61 | .87 | 3.06 | 1.16 | 2.11 | 3.00 | 1.38 | 2.19 | |||||||||||||||||||||||||||||||||||||||||||||
3rd Quarter | .15 | .11 | .13 | .36 | .26 | .31 | .61 | .25 | .43 | 2.31 | 1.19 | 1.75 | 2.88 | 2.38 | 2.63 | |||||||||||||||||||||||||||||||||||||||||||||
4th Quarter | .51 | .11 | .31 | .32 | .06 | .19 | .51 | .17 | .34 | 1.75 | .31 | 1.64 | 3.25 | 1.06 | 2.16 |
Note: Pink Sheets quotation on January 22, 2004 shows the following:
Best Bid Last Sale | $0.17 $0.20 | Best Ask Last Trade Date | $0.40 01/13/04 |
MPSI
Pink Sheet Stock Activity Summary
2003-2004
Actual Sales | ||||||||||||||||||||||||||||||||
Week | Closing | Closing | Last | |||||||||||||||||||||||||||||
Ended | Shares | Price | Extended | Bid | Ask | Average | Sale | |||||||||||||||||||||||||
02/07/03 | $ | 0 | 0.12 | 0.28 | 0.20 | |||||||||||||||||||||||||||
02/14/03 | 0 | 0.12 | 0.28 | 0.20 | ||||||||||||||||||||||||||||
02/21/03 | 200 | 0.12 | 24 | 0.12 | 0.28 | 0.20 | 0.12 | 1 | ||||||||||||||||||||||||
02/28/03 | 100 | 0.28 | 28 | 0.12 | 0.28 | 0.20 | 0.28 | 2 | ||||||||||||||||||||||||
03/07/03 | 200 | 0.12 | 24 | 0.12 | 0.28 | 0.20 | 0.12 | 3 | ||||||||||||||||||||||||
03/14/03 | 100 | 0.28 | 28 | 0.11 | 0.28 | 0.20 | 0.28 | 4 | ||||||||||||||||||||||||
03/21/03 | 0 | 0.11 | 0.28 | 0.20 | ||||||||||||||||||||||||||||
03/28/03 | 200 | 0.28 | 56 | 0.11 | 0.28 | 0.20 | 0.28 | 5 | ||||||||||||||||||||||||
04/04/03 | 0 | 0.11 | 0.28 | 0.20 | ||||||||||||||||||||||||||||
04/11/03 | 2,400 | 0.11 | 264 | 0.11 | 0.28 | 0.20 | 0.11 | 6 | ||||||||||||||||||||||||
04/17/03 | 100 | 0.11 | 11 | 0.11 | 0.28 | 0.20 | 0.11 | 7 | ||||||||||||||||||||||||
04/25/03 | 200 | 0.11 | 22 | 0.11 | 0.28 | 0.20 | 0.11 | 8 | ||||||||||||||||||||||||
05/02/03 | 0 | 0.11 | 0.28 | 0.20 | ||||||||||||||||||||||||||||
05/09/03 | 0 | 0.11 | 0.28 | 0.20 | ||||||||||||||||||||||||||||
05/16/03 | 15,500 | 0.11 | 1,705 | 0.11 | 0.15 | 0.13 | 0.11 | 9 | ||||||||||||||||||||||||
05/23/03 | 0 | 0.11 | 0.15 | 0.13 | ||||||||||||||||||||||||||||
05/30/03 | 300 | 0.11 | 33 | 0.11 | 0.15 | 0.13 | 0.11 | 10 | ||||||||||||||||||||||||
06/06/03 | 0 | 0.11 | 0.15 | 0.13 | ||||||||||||||||||||||||||||
06/13/03 | 200 | 0.11 | 22 | 0.11 | 0.15 | 0.13 | 0.11 | 11 | ||||||||||||||||||||||||
06/20/03 | 0 | 0.11 | 0.15 | 0.13 | ||||||||||||||||||||||||||||
06/27/03 | 1,100 | 0.11 | 121 | 0.11 | 0.15 | 0.13 | 0.11 | 12 | ||||||||||||||||||||||||
07/03/03 | 100 | 0.15 | 15 | 0.11 | 0.15 | 0.13 | 0.15 | 13 | ||||||||||||||||||||||||
07/11/03 | 0 | 0.11 | 0.15 | 0.13 | ||||||||||||||||||||||||||||
07/18/03 | 100 | 0.11 | 11 | 0.11 | 0.15 | 0.13 | 0.11 | 14 | ||||||||||||||||||||||||
07/25/03 | 500 | 0.11 | 55 | 0.11 | 0.15 | 0.13 | 0.11 | 15 | ||||||||||||||||||||||||
08/01/03 | 0 | 0.11 | 0.15 | 0.13 | ||||||||||||||||||||||||||||
08/08/03 | 5,200 | 0.11 | 572 | 0.11 | 0.15 | 0.13 | 0.11 | 16 | ||||||||||||||||||||||||
08/15/03 | 10,000 | 0.15 | 1,500 | 0.12 | 0.27 | 0.20 | 0.15 | 17 | ||||||||||||||||||||||||
08/22/03 | 600 | 0.12 | 72 | 0.12 | 0.27 | 0.20 | 0.12 | 18 | ||||||||||||||||||||||||
08/29/03 | 100 | 0.12 | 12 | 0.12 | 0.27 | 0.20 | 0.12 | 19 | ||||||||||||||||||||||||
09/05/03 | 200 | 0.12 | 24 | 0.12 | 0.27 | 0.20 | 0.12 | 20 | ||||||||||||||||||||||||
09/12/03 | 1,000 | 0.13 | 130 | 0.13 | 0.27 | 0.20 | 0.13 | 21 | ||||||||||||||||||||||||
09/19/03 | 0 | 0.13 | 0.27 | 0.20 | ||||||||||||||||||||||||||||
09/26/03 | 0 | 0.13 | 0.27 | 0.20 | ||||||||||||||||||||||||||||
10/03/03 | 5,800 | 0.13 | 754 | 0.11 | 0.20 | 0.16 | 0.13 | 22 | ||||||||||||||||||||||||
300 | 0.11 | 33 | 0.00 | 0.11 | 23 | |||||||||||||||||||||||||||
10/10/03 | 0 | 0.11 | 0.20 | 0.16 | ||||||||||||||||||||||||||||
10/17/03 | 0 | 0.11 | 0.20 | 0.16 | ||||||||||||||||||||||||||||
10/24/03 | 0 | 0.11 | 0.20 | 0.16 | ||||||||||||||||||||||||||||
10/31/03 | 5,500 | 0.20 | 1,100 | 0.11 | 0.27 | 0.19 | 0.20 | 24 | ||||||||||||||||||||||||
11/07/03 | 8,500 | 0.20 | 1,700 | 0.11 | 0.20 | 0.16 | 0.20 | 25 | ||||||||||||||||||||||||
11/14/03 | 11,000 | 0.20 | 2,200 | 0.15 | 0.51 | 0.33 | 0.20 | 26 | ||||||||||||||||||||||||
8,000 | 0.51 | 4,080 | 0.00 | 0.51 | 27 | |||||||||||||||||||||||||||
11/21/03 | 0 | 0.16 | 0.51 | 0.33 | ||||||||||||||||||||||||||||
11/28/03 | 0 | 0.16 | 0.51 | 0.33 | ||||||||||||||||||||||||||||
12/05/03 | 100 | 0.16 | 16 | 0.16 | 0.51 | 0.34 | 0.16 | 28 | ||||||||||||||||||||||||
12/12/03 | 300 | 0.16 | 48 | 0.16 | 0.51 | 0.34 | 0.16 | 29 | ||||||||||||||||||||||||
12/19/03 | 8,200 | 0.22 | 1,804 | 0.16 | 0.51 | 0.34 | 0.22 | 30 | ||||||||||||||||||||||||
2,100 | 0.16 | 336 | 0.00 | |||||||||||||||||||||||||||||
12/26/03 | 6,700 | 0.16 | 1,072 | 0.16 | 0.45 | 0.31 | 0.16 | 31 | ||||||||||||||||||||||||
01/02/04 | 0 | 0.16 | 0.45 | 0.31 | ||||||||||||||||||||||||||||
01/09/04 | 4,000 | 0.40 | 1,600 | 0.20 | 0.40 | 0.30 | 0.40 | 32 | ||||||||||||||||||||||||
01/16/04 | 2,700 | 0.20 | 540 | 0.17 | 0.40 | 0.29 | 0.20 | 33 | ||||||||||||||||||||||||
01/23/04 | 900 | 0.40 | 360 | 0.17 | 0.40 | 0.29 | 0.40 | 34 | ||||||||||||||||||||||||
01/30/04 | 100 | 0.40 | 40 | 0.17 | 0.40 | 0.29 | 0.40 | 35 | ||||||||||||||||||||||||
500 | 0.17 | 85 | 0.17 | 36 | ||||||||||||||||||||||||||||
02/06/04 | 0 | 0.17 | 0.40 | |||||||||||||||||||||||||||||
02/13/04 | 0 | 0.18 | 0.40 | |||||||||||||||||||||||||||||
13 Mo Totals | 103,100 | $ | 20,497 | |||||||||||||||||||||||||||||
STATISTICS
Share | Weighted | Simple Average | ||||||||||||||
Trading | Purchase | Average | Transaction | |||||||||||||
Averages for: | Volume | Price | Bid / Ask | Price | ||||||||||||
12 months | 282 | $ | 0.20 | $ | 0.21 | $ | 0.18 | |||||||||
90 days | 496 | $ | 0.27 | $ | 0.29 | $ | 0.27 | |||||||||
60 days | 425 | $ | 0.23 | $ | 0.25 | $ | 0.25 | |||||||||
30 days | 273 | $ | 0.32 | $ | 0.23 | $ | 0.31 |
Historical Financials Section
MPSI Systems Inc. and Subsidiaries
Comparative Financial Information
(000’s)
Stub Period | ||||||||||||||||||||||||
FY 2003 | FY 2002 | FY 2001 | FY 2001 | FY 2000 | FY 1999 | |||||||||||||||||||
Cash Flow: | ||||||||||||||||||||||||
Net cash provided (used) by operating activities | 170 | 1,651 | (148 | ) | 1,943 | 1,353 | 1,038 | |||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Purchased equipment (net of disposals) | (30 | ) | (126 | ) | (24 | ) | (147 | ) | (66 | ) | (385 | ) | ||||||||||||
Capitalized product development costs | (112 | ) | (436 | ) | (58 | ) | (667 | ) | (1,202 | ) | (1,806 | ) | ||||||||||||
Cash flows from financing activities | — | (900 | ) | — | (1,100 | ) | 495 | 1,225 | ||||||||||||||||
Increase (decrease in cash and cash equivalents) | 28 | 189 | (230 | ) | 29 | 580 | 72 | |||||||||||||||||
Cash and cash equivalents at beginning of period | 864 | 675 | 905 | 876 | 296 | 224 | ||||||||||||||||||
Cash and cash equivalents at end of period | 892 | 864 | 675 | 905 | 876 | 296 | ||||||||||||||||||
Income Statement: | ||||||||||||||||||||||||
Revenues | 10,857 | 12,201 | 4,091 | 15,411 | 18,283 | 19,332 | ||||||||||||||||||
Gross profit | 5,917 | 6,717 | 2,508 | 9,192 | 10,741 | 11,087 | ||||||||||||||||||
Operating Expenses | (5,795 | ) | (8,163 | ) | (2,384 | ) | (9,728 | ) | (10,767 | ) | (10,635 | ) | ||||||||||||
Other income (expense) | (39 | ) | (247 | ) | (62 | ) | (438 | ) | (53 | ) | (58 | ) | ||||||||||||
Income taxes | (54 | ) | (196 | ) | — | (117 | ) | (188 | ) | (307 | ) | |||||||||||||
Net Income (loss) | 29 | (1,889 | ) | 62 | (1,091 | ) | (267 | ) | 87 | |||||||||||||||
Basic and diluted income (loss) per common share | 0.01 | (0.65 | ) | 0.02 | (0.37 | ) | (0.09 | ) | 0.03 | |||||||||||||||
Balance Sheet:
ASSETS | ||||||||||||||||||||||||
Cash and cash equivalents | 892 | 864 | 675 | 905 | 876 | 296 | ||||||||||||||||||
Trade receivables | 1,062 | 1,530 | 3,011 | 2,111 | 3,310 | 3,849 | ||||||||||||||||||
Other current assets | 432 | 419 | 491 | 672 | 1,404 | 1,554 | ||||||||||||||||||
Total current assets | 2,386 | 2,813 | 4,177 | 3,688 | 5,590 | 5,699 | ||||||||||||||||||
Long-term receivables | 157 | 595 | 530 | 539 | 912 | 1,756 | ||||||||||||||||||
Property and equipment, net | 363 | 652 | 939 | 1,004 | 1,046 | 945 | ||||||||||||||||||
Capitalized product development costs, net | 621 | 1,076 | 1,366 | 1,504 | 1,885 | 1,933 | ||||||||||||||||||
Other non-current assets | 119 | 120 | 153 | 161 | 170 | 185 | ||||||||||||||||||
Total assets | 3,646 | 5,256 | 7,165 | 6,896 | 9,603 | 10,518 | ||||||||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||||||||||||||||||
Current portion of note payable to bank | — | — | 900 | 350 | 2,000 | 1,575 | ||||||||||||||||||
Other current liabilities | 3,089 | 4,278 | 3,442 | 3,248 | 3,477 | 3,865 | ||||||||||||||||||
Total current liabilities | 3,089 | 4,278 | 4,342 | 3,598 | 5,477 | 5,440 | ||||||||||||||||||
Long-term debt | — | — | 145 | 550 | — | — | ||||||||||||||||||
Other non-current liabilities | 381 | 918 | 583 | 713 | 929 | 1,365 | ||||||||||||||||||
Total liabilities | 3,470 | 5,196 | 5,070 | 4,861 | 6,406 | 6,805 | ||||||||||||||||||
Stockholders equity, net: | 176 | 60 | 2,095 | 2,035 | 3,197 | 3,713 | ||||||||||||||||||
Total liabilities and stockholders equity | 3,646 | 5,256 | 7,165 | 6,896 | 9,603 | 10,518 | ||||||||||||||||||
Sample Valuations Section
Del L. Gustafson
Direct Dial: (918) 594-0413
Facsimile: (918) 594-0505
dgustafson@hallestill.com
Hall Estill
January 20, 2004
FIRST CLASS MAIL
James C. Auten
MPSI Systems Inc.
4343 South 118th E. Ave.
Tulsa, OK 74146
Re: Price Analysis
Dear Jim:
Enclosed please find two “fairness” opinions given in connection with going private transactions and the description of the such opinions as set forth in the proxy statement. I can certainly get you more samples if you or Mr. McQueen wish.
Very truly yours, | ||
/s/ Del L. Gustafson | ||
Del L. Gustafson |
Enclosures | – | [Fairness Opinions obtained from the SEC website – www.sec.gov for Flag Financial Corporation’s Preliminary Proxy filed with the SEC on February 8, 2002 and The Deltona Corporation’s Definitive Proxy filed with the SEC on December 8, 2003.] |