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PROJECT ZOLA Executive Summary
HISTORICAL PRICE GRAPH WITH KEY EVENTS
[GRAPHIC OMITTED]
Historical price graph of Intek with key events identified from March 1, 1996
through January 15, 1999.
THE LAZARD HOUSES Preliminary Draft - Confidential
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PROJECT ZOLA Executive Summary
INTEK ONE YEAR STOCK PRICE PERFORMANCE AND VOLUME WEIGHTED CLOSING PRICES
STOCK PRICE
[GRAPHIC OMITTED]
Historical price graph of Intek from December 15, 1997 through January 15, 1999.
VOLUME WEIGHTED CLOSING PRICES
[GRAPHIC OMITTED]
Volume weighted closing prices for Intek shares traded from December 15, 1997
through January 15, 1999.
$1.00-$2.00 $2.00-$3.00 $3.00-$4.00 $4.00-$5.00
% Within
Trading Range: 39.4% 22.6% 29.5% 8.5%
Cumulative: 39.4% 62.0% 91.5% 100.0%
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PROJECT ZOLA Executive Summary
- --------------------------------------------------------------------------------
SUMMARY OVERVIEW OF INTEK'S CURRENT BUSINESS LINES
- ----------------------- ------------------------------------------------
- Exceeds FCC's future 6.25 kHz standard
COMMERCIALIZATION OF
LM TECHNOLOGY [arrow
right] - Nokia Development Contract
- Pipeline of additional development contracts
- ----------------------- ------------------------------------------------
- ----------------------- ------------------------------------------------
- Distribution of spectrum efficient products
- Exclusive provider of LM products
MIDLAND [arrow
right] - 24 hour customer service group
- Distributor of non-LM products (Hitachi)
- ----------------------- ------------------------------------------------
- ----------------------- ------------------------------------------------
- Full turnkey service offering
- National coverage capability
- Targeted markets: 220 MHz, refarming and
public safety
ROAMER [arrow
right] - 297 base station sites/300 dealers
- 100+ sites for 220 MHz licenses
- 10,500 subscribers at 9/30/98(a)
- 22,500 subscribers projected at 9/30/99(a)
- ----------------------- ------------------------------------------------
- ---------------
(a) Based on December business plans
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THE LAZARD HOUSES - 3 - Preliminary Draft - Confidential
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PROJECT ZOLA Executive Summary
STRATEGIC ASSESSMENT OF INTEK GLOBAL
BUSINESS PERSPECTIVE
[up arrow] 200 MHz spectrum assets gives company an efficient outlet for its LM
Technology (capacity for 750,000 -1 million users)
[up arrow] FCC 2005 Mandate (6.25 kHz) drives refarming market opportunity
(12.1 mm UHF/VHF users)
[up arrow] Attractive development opportunities for LM Technology (Nokia)
[up arrow] EF Johnson agreement significantly lowers equipment cost and
manufacturing risk
[up arrow] Potential for Laidlaw type sales
[up arrow] $50 mm NRTC agreement; potential revenue from sale of
decommissioned base sites in B/C markets
[up arrow] Numerous ancillary uses for technology (AVL, Security)
[up arrow] Experienced management team
[down arrow] Relatively unproven business model
FINANCIAL AND MARKET PERSPECTIVE
[up arrow] 9,500 subscriber additions in 1998; 61% revenue growth
[down arrow] $15 mm operating loss projected in 1999
[down arrow] Viability of equipment rental arrangement (growth case)
[down arrow] Little or no positive stock price movement in response to recent
business developments
[down arrow] $1.00-$2.00 trading range since late summer 1998
[down arrow] Likely need for additional capital beyond recent $25 mm financing
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PROJECT ZOLA Executive Summary
VALUATION SUMMARY BASED ON DECEMBER BUSINESS PLANS
- - OUR PRELIMINARY VALUATION WORK BASED ON THE DECEMBER BUSINESS PLANS SUGGESTS
THAT SECURICOR SHOULD BE WILLING TO PAY APPROXIMATELY $1.75 - $2.25 PER
INTEK SHARE
- Consistent with premiums paid (25% - 39%) and minority transactions (22%
- 29%)
- High end of DCF valuation
- - AS WITH FAHNESTOCK OPINION FROM THE 1996 MERGER, WE BELIEVE THAT COMPARABLE
COMPANY TRADING MULTIPLES AND COMPARABLE TRANSACTIONS ARE NOT PRIMARILY
APPLICABLE VALUATION BENCHMARKS FOR INTEK.
METHODOLOGY VALUATION RANGE PREMIUM VERSUS CURRENT
----------- --------------- ----------------------
Current value (1/15/99)(a) $1.44 -
20-Day average $1.31 (9%)
52 week High/Low $1.03 - $4.75 (28%) - 230%
Premiums Paid $1.80 - $2.00 25% - 39%
Minority Transactions $1.75 - $1.85 22% - 29%
DCF $1.75 - $2.25 22% - 56%
- ----------
(a) All references to Intek's current value reflect the closing stock price of
$1.44 on 1/15/99, the last trading day before its most recent Schedule 13D
filing.
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PROJECT ZOLA Executive Summary
SUMMARY COMMENTARY ON "UNCONSTRAINED" INTEK BUSINESS PLAN
LAZARD MET WITH BEAR STEARNS AND INTEK CEO BOB SHIVER ON FEBRUARY 2, 1999 TO
DISCUSS Intek's "Unconstrained" business plan.
- - PLAN IS NOT YET 100% COMPLETE
- Each business line (Roamer, Midland and LMT) have separate projections
with varying degrees of detail
- Fully integrated model is not available
- - ASSUMPTIONS REFLECT UNCONSTRAINED AVAILABILITY OF ADDITIONAL CAPITAL BEYOND
RECENT $25 MM FINANCING
- - ROAMER ITSELF COULD REQUIRE UP TO $100 MM OF ADDITIONAL FUNDING THROUGH 2003
- 525,000 projected subscribers by 2008 (spectrum capacity is estimated at
750,000 - 1 mm subscribers)
- Cash flow negative through 2003; Seven-year investment pay back (2005)
- - PROJECTIONS ARE DETAILED, BUT FAIRLY SIMPLISTIC IN NATURE AND LACK NECESSARY
SENSITIVITY STUDIES
- Generic Roamer models have been created for both large and small markets
- Assumes all market roll-outs have same financial characteristics
- Service pricing, subscriber acquisition costs and G&A costs held
constant for entire 10 year period
THE LAZARD HOUSES -6- Preliminary Draft - Confidential