Exhibit (c)(2)
--------------
ADVANCING IDEAS
INVESTMENT BANKING
PROJECT FOREST Minneapolis
PRESENTATION TO THE BOARD OF DIRECTORS Menlo Park
Seattle
Chicago
San Francisco
Los Angeles
New York
London
Geneva
October 11, 2000 Tel Aviv
---------------------------------------
[LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Overview of Transaction 1
Summary of Due Diligence Procedures 2
Market Information 3
Summary of Analyses 4
. Aggregate Consideration
. Premium Analysis
. Comparable Public Company Analysis
. M&A Multiple Analysis
. Discounted Cash Flow Analysis
APPENDICES
- ----------
Historical & Projected Financial Information A
Comparable Public Company Analysis Detail B
Project Forest [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
OVERVIEW OF TRANSACTION
Project Forest
ADVANCING IDEAS
OVERVIEW OF TRANSACTION
Company Backgrounds
- --------------------------------------------------------------------------------
. Swan, headquartered in Jersey City, New Jersey, acts as a broker dealer,
providing wholesale market making of NASDAQ and Small-Cap securities;
provides deep discount retail brokerage services; and provides related
financial services, including online services. Swan Capital Markets trades
over 4,000 NASDAQ and Small-Cap securities as market maker and principal
for its own account.
. Rhine, headquartered in Frankfurt, Germany, provides a broad range of
banking, investment, fund management, securities, credit card, mortgage,
leasing and insurance services worldwide. The Company provides its services
to retailers and private clients, corporations and financial institutions,
as well as multi-national conglomerates. Rhine also offers a variety of
financial consulting and advisory services and has recently set up a
pan-European online broker as part of its new European strategy. Rhine has
over $800 billion in assets.
Project Forest 3 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
OVERVIEW OF TRANSACTION
Transaction Structure
- --------------------------------------------------------------------------------
. AGGREGATE CONSIDERATION
- $49.00 cash for each Swan outstanding share
- Outstanding options of Swan shall receive the excess of the
consideration over the exercise price, if any; provided that existing
stock options, which the per share price is equal to or greater than
the merger consideration shall receive $2.00 per share as further set
forth in the Agreement
. STRUCTURE
- Reverse triangular merger
- Purchase accounting
. TIMING
- Commence tender offer within seven business days following
announcement
- File Schedule TO with the SEC on date of commencement of the tender
offer
- File Schedule 14D-9 with the SEC on date of commencement of the tender
offer
- File HSR as soon as practicable
- Consummate Transaction within twenty business days of commencement of
offer, assuming the number of shares tendered represents at least a
majority of the outstanding shares on a fully diluted basis
Project Forest 4 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
OVERVIEW OF TRANSACTION
Transaction Structure (continued)
- --------------------------------------------------------------------------------
. OTHER
- The Parties to the Transaction have entered into a Stockholder Tender
Option Agreement as further set forth in the Agreement
- The Merger Agreement contains a non-solicitation clause with regard to
other potential acquirors (subject to fiduciary out)
- The Merger Agreement contains a termination fee payable to Rhine for
breach, as further set forth in the Merger Agreement
- The Parties to the Transaction have entered into an Employee Retention
Plan and Benefit Continuation Agreement as further set forth in the
Agreement
Project Forest 5 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF DUE DILIGENCE PROCEDURES
Project Forest
ADVANCING IDEAS
SUMMARY OF DUE DILIGENCE PROCEDURES
Due Diligence
- --------------------------------------------------------------------------------
. Meetings with members of Swan management, including:
- Arthur Kontos, President & Chief Executive Officer
- Daniel Fishbane, Executive Vice President & Chief Financial Officer
- Frank Lawatsch, General Counsel & Executive Vice President
. Visits to Swan's headquarters in Jersey City, New Jersey
. Conversations with Swan's external counsel
. Among other things, reviewed the following:
- Draft Merger Agreement as of October 11, 2000
- Annual report on Form 10-K for the year ended May 31, 2000
- Press Release and draft 10-Q report for quarterly period ending August 31,
2000
- Proxy Statement dated September 6, 2000
- Form 8-K report dated May 18, 2000 of Securities Purchase Agreement
- Certain projected financial data provided by Swan's management for the
fiscal years ending May 31, 2001, 2002, 2003, 2004
- Various press releases
- Certain analyst reports
- Historical stock prices and trading activity
Project Forest 7 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
MARKET INFORMATION
Project Forest
ADVANCING IDEAS
MARKET INFORMATION
($ in 000's, except per share data)
--------
Swan
--------
STOCK PRICE (AS OF 10/9/00)
-- Last Close $25.25
-- 30 Day Average $31.55
-- 60 Day Average $33.35
-- 90 Day Average $33.92
-- 180 Day Average $32.00
IN THE 52 WEEK PERIOD ENDING 10/9/00, THE STOCK HAS TRADED AT:
-- A Low Of $20.38
-- A High Of $59.25
-- An Average Daily Volume Of (in 000s) 392
SUMMARY CAPITALIZATION:
Common Stock Outstanding (1) 21,293
Last Close $25.25
--------
MARKET CAPITALIZATION $537,644
========
ESTIMATES SUMMARY: (2)
LTM Revenue (3) $400,860
CY 2000 Revenue Estimate $385,872
CY 2001 Revenue Estimate $442,238
LTM EPS $1.78
CY 2000 EPS Estimate $1.27
CY 2001 EPS Estimate $1.31
Multiples:
LTM EPS 14.2x
CY 2000 EPS 20.0x
CY 2001 EPS 19.3x
Book Value 1.2x
Research Coverage
Number of Analysts 4
Strong Buys/Buys 2
Recent Mean 12-Month Price Target $37.00
Institutional Ownership as a % of Common Shares Outstanding 44.0%
Approximate Number of Employees 900
Primary Stock Exchange NYSE
Core Brokerage Accounts 268,900
Avg. Customer Assets/Core Account $41,651
(1) Balance sheet information per latest 10-Q filing and fully diluted shares
per management; treasury method applied.
(2) Revenue and EPS estimates for Swan per Swan's management.
(3) Includes gain on Aether investment.
Project Forest 9 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
MARKET INFORMATION
Swan First Call Analyst Coverage
- ---------------------------------------------------------------------------------------------
Recent Price
Company Analyst Latest Report Target(1) Rating
- ---------------------------------------------------------------------------------------------
US Bancorp Piper Jaffray Stephen C. Franco 9/28/00 NA Strong Buy
Credit Suisse First Boston James Marks 9/27/00 NA Strong Buy
Prudential Securities Eva A. Radtke 9/29/00 $42 Accumulate
UBS Warburg Diane B. Glossman 9/28/00 $32 Hold
(1) Prudential price target is from report dated September 27, 2000
UBS price target is from report dated September 26, 2000
Project Forest 10 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
MARKET INFORMATION - SWAN
Relative Price Chart - Year to Date
- --------------------------------------------------------------------------------
Price Performance since December 31, 1999
- --------------------------------------------------------------------------------
Swan -3.8%
Market Maker Comparables(1) -22.0%
Online Broker Comparables(2) -0.1%
Nasdaq -17.5%
NYSE Composite 0.5%
- --------------------------------------------------------------------------------
[GRAPH]
(1) Market Maker Comparables include NITE, ITG, and LAB.
(2) Online Broker Comparables include AMTD, DIR, EGRP, SCH, and TWE.
Project Forest 11 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
MARKET INFORMATION-SWAN
Swan Comparable Company Descriptions
- --------------------------------------------------------------------------------
Market makers
. KNIGHT TRADING GROUP- is a leading market maker in NASDAQ securities and in
the Third Market, which is the over-the-counter market in exchange-listed
equity securities, primarily those listed on the New York Stock Exchange and
the American Stock Exchange.
. INVESTMENT TECHNOLOGY GROUP- provides equity trading services and transaction
research to institutional investors and brokers, using technology to increase
the effectiveness and lower the cost of trading.
. LABRANCHE & CO.- one of the oldest and largest specialist firms on the New
York Stock Exchange. The Company's role is to maintain, as far as
practicable, a fair and orderly market in the Company's specialist stocks.
Online brokers
. AMERITRADE- a provider of online discount, technology-based brokerage
services to retail investors through a variety of mediums, primarily through
the Internet.
. CHARLES SCHWAB- one of the nation's leading financial services providers, the
Company offers its products and services via: the Internet, 340 branch
offices, speech recognition and touch-tone telephone technologies, and access
to professionals.
. DLJDIRECT- a provider of online discount brokerage and related investment
services, offering customers automated securities order placement and
information and research capabilities through the Internet and online service
providers.
. E*TRADE- is a provider of online investing services, offering automated order
placement and execution, along with a suite of products and services that can
be personalized, including portfolio tracking, Java-based charting and quote
applications, real-time market commentary and analysis, news and other
information services.
. TD WATERHOUSE- a global online broker and a provider of online investing
services and related financial products, including banking, investment news,
mutual fund and other consumer financial products and services, and clearing
and execution services to correspondents and other broker-dealers.
Project Forest 12 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
Project Forest
ADVANCING IDEAS
SUMMARY OF ANALYSES
Consideration
in 000's except per share values
- --------------------------------------------------------------------------------
Consideration - Aggregate
- --------------------------------------------------------------------------------
Swan's Fully Diluted Shares Outstanding 21,699
Offer Price per Swan Share $49.00
-------------
Consideration for Fully Diluted Shares $1,063,228
Consideration for Out of the Money Options $1,475
-------------
Aggregate Consideration Value $1,064,703
-------------
- --------------------------------------------------------------------------------
Aggregate Consideration as a Multiple of Revenue:
LTM ending August 31, 2000 2.7x
CY 2000 2.8x
CY 2001 2.4x
Aggregate Consideration as a Multiple of Net Income:
LTM ending August 31, 2000 27.5x
CY 2000 39.5x
CY 2001 38.2x
Aggregate Consideration as a Multiple of Book Value
Latest quarter ended August 31, 2000 2.4x
Project Forest 14 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
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Premium Analysis
- --------------------------------------------------------------------------------
PREMIUM TO
SHARE PRICE ACQUISITION SWAN'S
TIME PERIOD (1) SWAN PRICE SHARE PRICE
- --------------------------------------------------------------------------------
1 Day $25.25 $49.00 94.1%
1 Week $28.31 $49.00 73.1%
1 Month $30.50 $49.00 60.7%
10 Day Average $28.41 $49.00 72.5%
20 Day Average $31.08 $49.00 57.7%
30 Day Average $31.55 $49.00 55.3%
60 Day Average $33.35 $49.00 46.9%
90 Day Average $33.92 $49.00 44.5%
180 Day Average $32.00 $49.00 53.1%
Year-to-Date Average $32.95 $49.00 48.7%
Latest 12 Months Average $32.08 $49.00 52.8%
- --------------------------------------------------------------------------------
Trading Range Summary
- --------------------------------------------------------------------------------
ACQUISITION
ACQUISITION PRICE AS
TIME PERIOD (1) LOW HIGH PRICE % HIGH
- --------------------------------------------------------------------------------
30 Days $24.25 $37.81 $49.00 129.6%
90 Days $24.25 $39.88 $49.00 122.9%
Latest 12 Months $20.38 $59.25 $49.00 82.7%
(1) As of October 9, 2000.
Project Forest 15 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SWAN PRICE VOLUME CHART LAST TWELVE MONTHS
* Aquisition price of $49.00 per share
[GRAPH]
(1) Stock data ending 10/9/00.
Project Forest 16 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
HISTORICAL TRADING ANALYSIS OF SWAN
6/22/99 - 10/9/00 (1)
* The Weighted Average Stock Price is $37.24
-----------------------------------------
Trading Data
-----------------------------------------
Price Percentage
Range Traded
=========================================
(LESS THAN) $24.00 4%
(LESS THAN) $28.00 23%
(LESS THAN) $32.00 39%
(LESS THAN) $36.00 60%
(LESS THAN) $40.00 69%
(LESS THAN) $44.00 72%
-----------------------------------------
(LESS THAN) $49.00 81%
-----------------------------------------
(LESS THAN) $52.00 85%
(LESS THAN) $56.00 92%
(LESS THAN) $60.00 100%
-----------------------------------------
[GRAPH]
(1) 6/22/99 was the date of Swan's secondary offering.
(2) Chart derived using daily closing prices.
Project Forest 17 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY SWAN OWNERSHIP
Total Shares Outstanding (1) 21,005,037
Total Options Outstanding (1) 1,914,329
Insider Holdings (2) 6,262,394
Institutional Holdings (2) 9,330,671
Implied Retail Holdings 5,411,972
* Total Institutional period over period net outflow of 944,669 shares;
represents 112 institutions.
[PIE CHART]
Insider Holdings 30%
Implied Retail Holdings 26%
Institutional Holdings 44%
- ------------------------------------------------------------------------------------------------------------------------------------
Top 20 Institutions(2) Filing Date Current Holdings Prior Holdings Change in Average Stock Price
Holdings * during Filing Period (3)
- ------------------------------------------------------------------------------------------------------------------------------------
White Rock Capital Management, L.P. 09/13/2000 1,301,900 326,900 975,000 $33.88
Fiduciary Trust Co. International 06/30/2000 508,000 297,000 211,000 $30.98
Loomis, Sayles & Company, L.P. 06/30/2000 489,653 296,000 193,653 $30.98
Deutsche Asset Management (US) 06/30/2000 399,444 517,282 -117,838 $30.98
Franklin Advisers, Inc. 06/30/2000 300,000 300,000 0 $30.98
Barclays Global Investors, N.A. 06/30/2000 254,834 201,966 52,868 $30.98
Mellon Bank Corp 06/30/2000 229,742 119,592 110,150 $30.98
Westpeak Investment Advisors, L.P. 06/30/2000 182,300 162,100 20,200 $30.98
The Vanguard Group 06/30/2000 174,200 163,500 10,700 $30.98
Dimensional Fund Advisors, Inc. 06/30/2000 144,200 151,100 -6,900 $30.98
Franklin Portfolio Associates 06/30/2000 141,800 58,400 83,400 $30.98
Bank of America Investment Mgmt (MO) 06/30/2000 119,375 38,200 81,175 $30.98
Goldman Sachs Asset Management (US) 06/30/2000 110,900 31,900 79,000 $30.98
TIAA-CREF Investment Management Inc. 06/30/2000 96,300 94,500 1,800 $30.98
Teacher Retirement System of Texas 06/30/2000 96,000 106,000 -10,000 $30.98
Smith Barney Asset Management 06/30/2000 89,514 117,982 -28,468 $30.98
Pennsylvania Public School Employees 06/30/2000 83,858 0 83,858 $30.98
State Street Bank and Tr. Co. Boston 06/30/2000 79,529 78,379 1,150 $30.98
Caxton Associates, L.L.C. 06/30/2000 78,900 0 78,900 $30.98
SIFE Trust Fund 06/30/2000 77,600 77,600 0 $30.98
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Per management.
(2) Source: Bloomberg, Swan Proxy, and 13F filings.
(3) Stock Price Average for 3 months prior to filing date.
Project Forest 18 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
- -----------------------------------------------------------------------------------------------------------------
Comparable Public Company Analysis - Market Makers Comparable Public Companies [3] (1)
- -----------------------------------------------------------------------------------------------------------------
Swan @49.00 Low Mean Median High
- -----------------------------------------------------------------------------------------------------------------
Aggregate Consideration / LTM Revenues (2) 2.7x 2.6x 4.0x 4.0x 5.4x
Aggregate Consideration / CY 2000 Revenue Estimates (3) 2.8x 2.4x 3.1x 3.1x 3.8x
Aggregate Consideration / CY 2001 Revenue Estimates (3) 2.4x 2.0x 2.6x 2.6x 3.2x
LTM P/E Ratio (2) 27.5x 10.9x 16.6x 18.4x 20.5x
CY 2000 P/E Ratio (3) 39.5x 11.5x 15.5x 17.1x 17.8x
CY 2001 P/E Ratio (3) 38.2x 10.6x 13.4x 14.1x 15.6x
Price / Book (4) 2.4x 4.4x 5.2x 4.6x 6.8x
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Comparable Public Company Analysis - Online Brokers Comparable Public Companies [5] (1)
- -----------------------------------------------------------------------------------------------------------------
Swan @49.00 Low Mean Median High
- -----------------------------------------------------------------------------------------------------------------
Aggregate Consideration / LTM Revenues (2) 2.7x 1.9x 4.5x 4.2x 8.5x
Aggregate Consideration / CY 2000 Revenue Estimates (3) 2.8x 1.7x 4.0x 3.9x 7.2x
Aggregate Consideration / CY 2001 Revenue Estimates (3) 2.4x 1.3x 3.2x 2.7x 6.2x
LTM P/E Ratio (2) 27.5x 32.9x 41.1x 41.1x 49.4x
CY 2000 P/E Ratio (3) 39.5x 29.9x 37.3x 37.3x 44.8x
CY 2001 P/E Ratio (3) 38.2x 16.4x 32.7x 37.5x 50.2x
Price / Book (4) 2.4x 2.4x 6.1x 2.9x 11.5x
Core Brokerage Accounts (000s) 269 1,000 3,040 2,722 7,300
Avg. Customer Assets/Core Account $41,651 $20,829 $54,028 $29,871 $137,438
- -----------------------------------------------------------------------------------------------------------------
(1) Comparable Public Company estimates per First Call and IBES.
(2) Swan's LTM data includes twelve months ended August 31, 2000.
(3) Per Swan's management.
(4) Fully diluted equity value.
Project Forest 19 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
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Comparable Transaction Analysis - Market Makers Comparable Transactions [3]
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Swan @49.00 Low Mean Median High
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Aggregate Consideration / LTM Revenues (1) (2) 2.7x 1.8x 3.4x 3.4x 4.9x
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Comparable Transaction Analysis - Traditional Brokers Comparable Transactions [10]
- ------------------------------------------------------------------------------------------------------------------------------------
Swan @49.00 Low Mean Median High
- ------------------------------------------------------------------------------------------------------------------------------------
Aggregate Consideration / LTM Revenues (1) 2.7x 0.8x 2.0x 1.6x 4.2x
Aggregate Consideration / LTM Net Income (1) 27.5x 11.3x 16.6x 16.2x 25.9x
Price / Book (3) 2.4x 1.8x 2.7x 2.5x 4.4x
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Premium Analysis Comparable Transactions [10]
- ------------------------------------------------------------------------------------------------------------------------------------
Swan @49.00 Low Mean Median High
- ------------------------------------------------------------------------------------------------------------------------------------
1 Day Premium 94.1% -7.7% 15.7% 17.6% 47.2%
1 Week Premium 73.1% 0.0% 27.2% 25.1% 64.0%
1 Month Premium 60.7% -1.0% 31.8% 32.0% 70.4%
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Swan's LTM data includes twelve months ended August 31, 2000.
(2) LTM revenues per equity research analysts.
(3) Fully diluted equity value.
Project Forest 20 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
- -------------------------------------------------------------------------------------------------------
Discounted Cash Flow Analysis - P/E Terminal Multiple (1)
- -------------------------------------------------------------------------------------------------------
Swan @ $49.00 Low Midpoint High
- -------------------------------------------------------------------------------------------------------
Aggregate Consideration Value Per Share $49.00 $30.95 $35.75 $41.06
- -------------------------------------------------------------------------------------------------------
(1) Based on discount rates of 18% - 22% and terminal P/E multiples of 18.0x -
22.0x.
- ------------------------------------------------------------------------------------------------------
Discounted Cash Flow Analysis - Price/Book Terminal Multiple (1)
- ------------------------------------------------------------------------------------------------------
Swan @ $49.00 Low Midpoint High
- ------------------------------------------------------------------------------------------------------
Aggregate Consideration Value Per Share $49.00 $32.65 $41.75 $51.91
- ------------------------------------------------------------------------------------------------------
(1) Based on discount rates of 18% - 22% and terminal Price/Book multiples of
2.0x - 3.0x.
Project Forest 21 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
PREMIUM ANALYSIS
Project Forest
ADVANCING IDEAS
SUMMARY OF ANALYSES
Premium Analysis
- --------------------------------------------------------------------------------
Overview
. The Premium Analysis involves a review of mergers and acquisitions involving
the sale of public companies. The analysis examines the premiums represented
by the transaction values as compared to the market prices of the targets at
certain points in time. This analysis is based on information obtained from
SEC filings, public company disclosures, press releases, industry and popular
press reports, databases and other sources.
Transaction Selection Process-General
. The comparable transactions used in this analysis were selected based on the
following:
- Acquisition of companies with primary SIC codes of 6211 (Securities
Brokers/Dealers)
- Minimum transaction size of $200 million
- Public targets in which 100% of the company was acquired
- Deals announced between 10/27/98 and 9/28/00
- Excludes repurchases, minority interests, and hostile transactions
Project Forest 23 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
Premium Analysis
- --------------------------------------------------------------------------------
Premium Analysis Comparable Transactions [10]
- --------------------------------------------------------------------------------
Swan @$49.00 Low Mean Median High
- --------------------------------------------------------------------------------
1 Day Premium 94.1% -7.7% 15.7% 17.6% 47.2%
1 Week Premium 73.1% 0.0% 27.2% 25.1% 64.0%
1 Month Premium 60.7% -1.0% 31.8% 32.0% 70.4%
- --------------------------------------------------------------------------------
Project Forest 24 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
Premium Analysis
TARGET TARGET
NET NET
SALES INCOME
DATE DATE EQUITY VALUE LTM LTM BOOK VALUE
ANNOUNCED EFFECTIVE TARGET NAME ACQUIROR NAME ($MIL) ($MIL) ($MIL) ($MIL)
- ------------------------------------------------------------------------------------------------------------------------------------
09/28/2000 Pending Dain Rauscher Corp Royal Bank of Canada $1,409.6 $1,091.4 $87.2 $469.0
08/30/2000 Pending Donaldson Lufkin & Jenrette Credit Suisse First Boston $8,140.0 $8,710.7 $720.8 $4,317.2
07/12/2000 Pending PaineWebber Group Inc UBS AG $13,940.3 $8,168.2 $537.6 $3,191.0
04/28/2000 06/12/2000 JC Bradford & Co PaineWebber Group Inc $620.0 $564.5 $46.7 $178.0
09/28/1999 12/10/1999 Hambrecht & Quist Group Inc Chase Manhattan Corp $1,374.0 $495.6 $78.7 $434.2
09/28/1999 03/16/2000 Ragen MacKenzie Group Inc Wells Fargo & Co $257.3 $84.4 $15.9 $120.6
08/31/1999 12/01/1999 OLDE Financial Corp H&R Block Inc $850.0 $384.0 $56.7 $386.5
06/17/1999 08/13/1999 First Marathon Inc National Bank of Canada $486.6 $116.3 $24.6 $276.9
04/26/1999 10/01/1999 EVEREN Capital Corp First Union Corp $1,171.7 $817.3 $69.2 $420.0
10/27/1998 04/01/1999 Interstate/Johnson Lane Inc Wachovia Corp $210.8 $257.6 $14.7 $103.6
----------------------------------------------------
Valuation Metrics
----------------------------------------------------
EQUITY
EQUITY VALUE/ EQUITY
DATE DATE VALUE/ LTM NET VALUE/ 1 DAY 1 WEEK 1 MONTH
ANNOUNCED EFFECTIVE TARGET NAME ACQUIROR NAME LTM SALES INCOME BOOK PREMIUM PREMIUM PREMIUM
- ------------------------------------------------------------------------------------------------------------------------------
09/28/2000 Pending Dain Rauscher Corp Royal Bank of Canada 1.3x 16.2x 3.0x 18.9% 24.0% 18.3% (1)
08/30/2000 Pending Donaldson Lufkin &
Jenrette Credit Suisse First Boston 0.9x 11.3x 1.9x 9.9% 49.2% 70.4% (2)
07/12/2000 Pending PaineWebber Group Inc UBS AG 1.7x 25.9x 4.4x 47.2% 64.0% 50.8% (3)
04/28/2000 06/12/2000 JC Bradford & Co PaineWebber Group Inc 1.1x 13.3x 3.5x NA NA NA (4)
09/28/1999 12/10/1999 Hambrecht & Quist Group
Inc Chase Manhattan Corp 2.8x 17.5x 3.2x 21.8% 26.2% 30.3%
09/28/1999 03/16/2000 Ragen MacKenzie Group
Inc Wells Fargo & Co 3.1x 16.1x 2.1x 16.2% 11.8% 33.7% (5)
08/31/1999 12/01/1999 OLDE Financial Corp H&R Block Inc 2.2x 15.0x 2.2x NA NA NA
06/17/1999 08/13/1999 First Marathon Inc National Bank of Canada 4.2x 19.8x 1.8x -7.1% 0.0% -1.0% (6)
04/26/1999 10/01/1999 EVEREN Capital Corp First Union Corp 1.4x 16.9x 2.8x 26.5% 32.0% 48.5% (7)
10/27/1998 04/01/1999 Interstate/Johnson
Lane Inc Wachovia Corp 0.8x 14.3x 2.0x -7.7% 10.1% 3.7% (8)
-----------------------------------------------------------
Low 0.8x 11.3x 1.8x -7.7% 0.0% -1.0%
Mean 2.0x 16.6x 2.7x 15.7% 27.2% 31.8%
Median 1.6x 16.2x 2.5x 17.6% 25.1% 32.0%
High 4.2x 25.9x 4.4x 47.2% 64.0% 70.4%
-----------------------------------------------------------
(1) Assumes 12.88 million shares and 1.96 million CSEs acquired for $95.00 per
share.
(2) Assumes 127.85 million shares acquired for $90.00 per share for the public
shareholders, plus $5.75 billion in stock and $2.39 billion in cash for AXA
Financial and affiliates. Net Sales and Net Income reflect the last twelve
months ending June 30, 2000.
(3) Assumes 147.8 million common shares and 41.9 million CSEs at $73.50 per
share; LTM revenue and net income is twelve months ended June 30, 2000, and
book value per 10-Q ended June 30, 2000.
(4) Per Press Release dated 4/28/00; Income statement and balance sheet items
per U.S. Bancorp Piper Jaffray.
(5) Per Press Release date 3/16/00; Each Ragen MacKenzie share is exhanged for
0.5208 shares of Wells Fargo & Co common stock. Per 10-K; LTM revenue and
net income is twelve months ended Sept. 24, 1999, and book value is at Sept.
24, 1999.
(6) Per Press Release dated 6/17/99; Exchange Ratio of .683 CD per US Dollar
(7) Assumes 35.2 million common shares and 3.0 million CSEs at $30.53 per share.
(8) Assumes 6.52 million common shares and 0.2 CSEs at $31.37 per share.
Data Source: SDC Platinum
10/27/98 - 9/28/00
Project Forest 25 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
COMPARABLE PUBLIC COMPANY ANALYSIS
Project Forest
ADVANCING IDEAS
SUMMARY OF ANALYSES
Comparable Public Company Analysis
- --------------------------------------------------------------------------------
Overview
. The Comparable Public Company Analysis reviews securities of publicly-traded
companies deemed comparable to Swan's business. It is generally accepted that
share pricing in the public market reflects the value of a minority interest
and does not reflect any control premium. Further, share pricing in the
public market incorporates a wide range of factors including general economic
conditions, interest rates, inflation and investor perceptions.
Selection Process
. The analysis focused on publicly-traded companies engaged primarily in the
online brokerage and market making universes
. Market capitalizations between $635 million and $42 billion
. Companies which U.S. Bancorp Piper Jaffray deemed similar to Swan's business
. The search yielded three companies for market makers:
Investment Technology Group
Knight Trading Group
LaBranche
. The search yielded five companies for online brokers:
Ameritrade E*Trade
Charles Schwab TD Waterhouse
DLJdirect
Project Forest 27 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
Comparable Public Company Analysis
- ----------------------------------------------------------------------------------------------------------------
Comparable Public Company Analysis - Market Makers Comparable Public Companies [3] (1)
- ----------------------------------------------------------------------------------------------------------------
Swan @$49.00 Low Mean Median High
- ----------------------------------------------------------------------------------------------------------------
Aggregate Consideration / LTM Revenues (2) 2.7x 2.6x 4.0x 4.0x 5.4x
Aggregate Consideration / CY 2000 Revenue Estimates (3) 2.8x 2.4x 3.1x 3.1x 3.8x
Aggregate Consideration / CY 2001 Revenue Estimates (3) 2.4x 2.0x 2.6x 2.6x 3.2x
LTM P/E Ratio (2) 27.5x 10.9x 16.6x 18.4x 20.5x
CY 2000 P/E Ratio (3) 39.5x 11.5x 15.5x 17.1x 17.8x
CY 2001 P/E Ratio (3) 38.2x 10.6x 13.4x 14.1x 15.6x
Price / Book (4) 2.4x 4.4x 5.2x 4.6x 6.8x
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Comparable Public Company Analysis - Online Brokers Comparable Public Companies [5] (1)
- ----------------------------------------------------------------------------------------------------------------
Swan @$49.00 Low Mean Median High
- ----------------------------------------------------------------------------------------------------------------
Aggregate Consideration / LTM Revenues (2) 2.7x 1.9x 4.5x 4.2x 8.5x
Aggregate Consideration / CY 2000 Revenue Estimates (3) 2.8x 1.7x 4.0x 3.9x 7.2x
Aggregate Consideration / CY 2001 Revenue Estimates (3) 2.4x 1.3x 3.2x 2.7x 6.2x
LTM P/E Ratio (2) 27.5x 32.9x 41.1x 41.1x 49.4x
CY 2000 P/E Ratio (3) 39.5x 29.9x 37.3x 37.3x 44.8x
CY 2001 P/E Ratio (3) 38.2x 16.4x 32.7x 37.5x 50.2x
Price / Book (4) 2.4x 2.4x 6.1x 2.9x 11.5x
Core Brokerage Accounts (000s) 269 1,000 3,040 2,722 7,300
Avg. Customer Assets/Core Account $41,651 $20,829 $54,028 $29,871 $137,438
- ----------------------------------------------------------------------------------------------------------------
(1) Comparable Public Company estimates per First Call and IBES.
(2) Swan's LTM data includes twelve months ended August 31, 2000.
(3) Per Swan's management.
(4) Fully diluted equity value.
Project Forest 28 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
M&A MULTIPLE ANALYSIS
Project Forest
ADVANCING IDEAS
SUMMARY OF ANALYSES
M&A Multiple Analysis
- --------------------------------------------------------------------------------
Overview
. The Merger and Acquisition Multiple Analysis encompasses a review of
transactions involving acquired entities deemed comparable to Swan's
business. This analysis is based on information obtained from SEC filings,
public company disclosures, press releases, industry and popular press
reports, databases, third party equity research reports and other sources.
Transaction Selection Process
. This analysis reviewed a group of transactions selected based on the
following:
- Acquisition of companies with primary SIC codes of 6211 (Securities
Brokers/Dealers)
- Minimum transaction size of $200 million
- Public or private targets in which 100% of the company was acquired
- Deals announced between 10/27/98 and 9/28/00
- Deals with publicly available information on terms
- Excludes repurchases, minority interests, and hostile transactions
- Targets which U.S. Bancorp Piper Jaffray deemed similar to Swan's business
- This search process yielded 3 transactions for the market makers list
which satisfied the selection criteria
- This search process yielded 10 transactions for the traditional
broker/dealers list which satisfied the selection criteria
Project Forest 30 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
M&A Multiple Analysis
- --------------------------------------------------------------------------------------------------------------
Comparable Transaction Analysis - Market Makers Comparable Transactions [3]
- --------------------------------------------------------------------------------------------------------------
Swan @$49.00 Low Mean Median High
- --------------------------------------------------------------------------------------------------------------
Aggregate Consideration / LTM Revenues (1) (2) 2.7x 1.8x 3.4x 3.4x 4.9x
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Comparable Transaction Analysis - Traditional Brokers Comparable Transactions [10]
- --------------------------------------------------------------------------------------------------------------
Swan @$49.00 Low Mean Median High
- --------------------------------------------------------------------------------------------------------------
Aggregate Consideration / LTM Revenues (1) 2.7x 0.8x 2.0x 1.6x 4.2x
Aggregate Consideration / LTM Net Income (1) 27.5x 11.3x 16.6x 16.2x 25.9x
Price / Book (3) 2.4x 1.8x 2.7x 2.5x 4.4x
- --------------------------------------------------------------------------------------------------------------
(1) Swan's LTM data includes twelve months ended August 31, 2000.
(2) LTM revenues per equity research analysts.
(3) Fully diluted equity value.
Project Forest 31 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
M&A Multiple Analysis - Market Makers
----------------
Valuation Metric
----------------
NET NET
SALES INCOME
DATE DATE EQUITY VALUE LTM LTM EQUITY VALUE/
ANNOUNCED EFFECTIVE TARGET NAME ACQUIROR NAME ($MIL) ($MIL) ($MIL) LTM SALES
- ------------------------------------------------------------------------------------------------------------------------------------
09/11/2000 Pending Spear Leeds & Kellogg Goldman Sachs Group Inc $6,324.5 $3,600.00 NA 1.8x (1)
06/05/2000 Pending Herzog Heine Geduld Merrill Lynch & Co Inc $919.1 NA NA NA (2)
11/18/1999 01/12/2000 Arbitrade Holdings LLC Knight Trimark Group $458.3 $92.7 $52.5 4.9x (3)
-----------------
Low 1.8x
Mean 3.4x
Median 3.4x
High 4.9x
-----------------
(1) Equity value assumes 34.0 million shares issued at the closing price on
9/8/00 of $124.25 per share; Income statement data derived from Prudential
equity research analysts for an annualized nine months ended September 30,
2000.
(2) Equity value assumes 17.0 million shares (post 2-for-1 split) issued at the
closing price on 6/5/00 of $53.75 per share.
(3) Equity value assumes 10.5 million shares issued at the closing price on
11/17/99 of $43.63 per share; Assumes Arbitrade's nine months net revenue
of $69.5 MM and net income of $39.4 MM on an annualized basis.
Data Source: SDC Platinum
11/18/99 - 9/28/00
Project Forest 32 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
M&A Multiple Analysis - Traditional Brokers
TARGET TARGET
NET NET
SALES INCOME
DATE DATE EQUITY VALUE LTM LTM BOOK VALUE
ANNOUNCED EFFECTIVE TARGET NAME ACQUIROR NAME ($MIL) ($MIL) ($MIL) ($MIL)
- ----------------------------------------------------------------------------------------------------------------------------
09/28/2000 Pending Dain Rauscher Corp Royal Bank of Canada $1,409.6 $1,091.4 $87.2 $469.0
08/30/2000 Pending Donaldson Lufkin & Jenrette Credit Suisse First Boston $8,140.0 $8,710.7 $720.8 $4,317.2
07/12/2000 Pending PaineWebber Group Inc UBS AG $13,940.3 $8,168.2 $537.6 $3,191.0
04/28/2000 06/12/2000 JC Bradford & Co PaineWebber Group Inc $620.0 $564.5 $46.7 $178.0
09/28/1999 12/10/1999 Hambrecht & Quist Group Inc Chase Manhattan Corp $1,374.0 $495.6 $78.7 $434.2
09/28/1999 03/16/2000 Ragen MacKenzie Group Inc Wells Fargo & Co $257.3 $84.4 $15.9 $120.6
08/31/1999 12/01/1999 OLDE Financial Corp H&R Block Inc $850.0 $384.0 $56.7 $386.5
06/17/1999 08/13/1999 First Marathon Inc National Bank of Canada $486.6 $116.3 $24.6 $276.9
04/26/1999 10/01/1999 EVEREN Capital Corp First Union Corp $1,171.7 $817.3 $69.2 $420.0
10/27/1998 04/01/1999 Interstate/Johnson Lane Inc Wachovia Corp $210.8 $257.6 $14.7 $103.6
- -------------------------------------------------
Valuation Metrics
- -------------------------------------------------
EQUITY
EQUITY VALUE/ EQUITY
VALUE/ LTM NET VALUE/ 1 DAY 1 WEEK 1 MONTH
LTM SALES INCOME BOOK PREMIUM PREMIUM PREMIUM
- ------------------------------------------------
1.3x 16.2x 3.0x 18.9% 24.0% 18.3% (1)
0.9x 11.3x 1.9x 9.9% 49.2% 70.4% (2)
1.7x 25.9x 4.4x 47.2% 64.0% 50.8% (3)
1.1x 13.3x 3.5x NA NA NA (4)
2.8x 17.5x 3.2x 21.8% 26.2% 30.3%
3.1x 16.1x 2.1x 16.2% 11.8% 33.7% (5)
2.2x 15.0x 2.2x NA NA NA
4.2x 19.8x 1.8x -7.1% 0.0% -1.0% (6)
1.4x 16.9x 2.8x 26.5% 32.0% 48.5% (7)
0.8x 14.3x 2.0x -7.7% 10.1% 3.7% (8)
- -------------------------------------------------------
Low 0.8x 11.3x 1.8x -7.7% 0.0% -1.0%
Mean 2.0x 16.6x 2.7x 15.7% 27.2% 31.8%
Median 1.6x 16.2x 2.5x 17.6% 25.1% 32.0%
High 4.2x 25.9x 4.4x 47.2% 64.0% 70.4%
- -------------------------------------------------------
(1) Assumes 12.88 million shares and 1.96 million CSEs acquired for $95.00 per
share.
(2) Assumes 127.85 million shares acquired for $90.00 per share for the public
shareholders, plus $5.75 billion in stock and $2.39 billion in cash for AXA
Financial and affiliates. Net Sales and Net Income reflect the last twelve
months ending June 30, 2000.
(3) Assumes 147.8 million common shares and 41.9 million CSEs at $73.50 per
share; LTM revenue and net income is twelve months ended June 30, 2000, and
book value per 10-Q ended June 30, 2000.
(4) Per Press Release dated 4/28/00; Income statement and balance sheet items
per U.S. Bancorp Piper Jaffray.
(5) Per Press Release date 3/16/00; Each Ragen MacKenzie share is exhanged for
0.5208 shares of Wells Fargo & Co common stock. Per 10-K; LTM revenue and
net income is twelve months ended Sept. 24, 1999, and book value is at Sept.
24, 1999.
(6) Per Press Release dated 6/17/99; Exchange Ratio of .683 CD per US Dollar
(7) Assumes 35.2 million common shares and 3.0 million CSEs at $30.53 per share.
(8) Assumes 6.52 million common shares and 0.2 CSEs at $31.37 per share.
Data Source: SDC Platinum
10/27/98 - 9/28/00
Project Forest 33 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
DISCOUNTED CASH FLOW ANALYSIS
Project Forest
ADVANCING IDEAS
SUMMARY OF ANALYSES
Discounted Cash Flow Analysis
- --------------------------------------------------------------------------------
. The Discounted Cash Flow (DCF) Analysis is used to calculate a range of
theoretical values for Swan based on (i) the present value of implied future
cash flows of Swan's business, and (ii) a terminal value which is an estimate
of future value of Swan's business.
. Terminal values were estimated using both a net income and book value
multiple.
. Swan's projected financial data for years ending May 31, 2001 through 2004 is
based on projections provided by Swan's management.
. For purposes of this analysis, we used a range of discount rates of 18% to
22%, a range of terminal net income multiples of 18.0x to 22.0x, and a range
of terminal book value multiples of 2.0x to 3.0x.
Project Forest 35 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
Discounted Cash Flow Analysis
- -------------------------------------------------------------------------------------------
Discounted Cash Flow Analysis - P/E Terminal Multiple (1)
- -------------------------------------------------------------------------------------------
Swan @$49.00 Low Midpoint High
- -------------------------------------------------------------------------------------------
Aggregate Consideration Value Per Share $49.00 $30.95 $35.75 $41.06
- -------------------------------------------------------------------------------------------
(1) Based on discount rates of 18% - 22% and terminal P/E multiples of 18.0x -
22.0x.
- -------------------------------------------------------------------------------------------
Discounted Cash Flow Analysis - Price/Book Terminal Multiple (1)
- -------------------------------------------------------------------------------------------
Swan @$49.00 Low Midpoint High
- -------------------------------------------------------------------------------------------
Aggregate Consideration Value Per Share $49.00 $32.65 $41.75 $51.91
- -------------------------------------------------------------------------------------------
(1) Based on discount rates of 18% - 22% and terminal Price/Book multiples of
2.0x - 3.0x.
Project Forest 36 [LOGO OF US BANCORP PIPER JAFFRAY]
SUMMARY OF ANALYSES
Discounted Cash Flow Analysis - P/E Multiple
- --------------------------------------------------------------------------------
Year Ended May 31
$ in 000s except per share data
----------------------------------------------------------------
Discounted Cash Flow Analysis(1)
----------------------------------------------------------------
Eight Months
Ended May 31,
2001 2002 2003 2004
----------------------------------------------------------------
NET INCOME $21,485 $31,417 $51,994 $64,933
Depreciation and Amortization $9,744 $20,865 $27,115 $33,365
Capital Expenditures ($16,667) ($25,000) ($25,000) ($25,000)
----------------------------------------------------------------
EQUITY FREE CASH FLOWS $14,562 $27,282 $54,109 $73,298
Plus: Terminal Value @ 20.0x LTM Net Income $1,298,655
----------------------------------------------------------------
TOTAL EQUITY CASH FLOW $14,562 $27,282 $54,109 $1,371,953
- --------------------------------------------------------------------------------
NET PRESENT VALUE CALCULATION
- --------------------------------------------------------------------------------
NPV of Free Cash Flow $103,867
NPV of Terminal Value $665,522
-----------
EQUITY VALUE @10/1/00 $769,390
Fully Diluted Shares Outstanding (2) 21,523,926
EQUITY VALUE PER SHARE $35.75
- --------------------------------------------------------------------------------
ASSUMPTIONS
- --------------------------------------------------------------------------------
Net Income Multiple: 20.0x
Discount Rate: 20.0%
Tax Rate: 40.0%
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS - EQUITY VALUE
- --------------------------------------------------------------------------------
DISCOUNT RATE
18.0% 20.0% 22.0%
---------------------------------------
NET 18.0x $745,541 $702,838 $663,282
INCOME 20.0x $816,324 $769,390 $725,920
MULTIPLE 22.0x $887,106 $835,942 $788,558
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS - EQUITY VALUE PER SHARE
- --------------------------------------------------------------------------------
DISCOUNT RATE
18.0% 20.0% 22.0%
---------------------------------------
NET 18.0x $34.67 $32.74 $30.95
INCOME 20.0x $37.86 $35.75 $33.78
MULTIPLE 22.0x $41.06 $38.75 $36.61
- --------------------------------------------------------------------------------
(1) Projections per Swan's management.
(2) Based on DCF implied per share value.
Project Forest 37 [LOGO US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
SUMMARY OF ANALYSES
Discounted Cash Flow Analysis - Price/Book Multiple
- --------------------------------------------------------------------------------
Year Ended May 31
$ in 000s except per share data
-------------------------------------------------------------------
Discounted Cash Flow Analysis(1)
-------------------------------------------------------------------
Eight Months
Ended May 31,
2001 2002 2003 2004
-------------------------------------------------------------------
NET INCOME $21,485 $31,417 $51,994 $64,933
Depreciation and Amortization $9,744 $20,865 $27,115 $33,365
Capital Expenditures ($16,667) ($25,000) ($25,000) ($25,000)
-------------------------------------------------------------------
EQUITY FREE CASH FLOWS $14,562 $27,282 $54,109 $73,298
Plus: Terminal Value @ 2.5x Price/Book (2) $1,558,341
-------------------------------------------------------------------
TOTAL EQUITY CASH FLOW $14,562 $27,282 $54,109 $1,631,639
- --------------------------------------------------------------------------------
NET PRESENT VALUE CALCULATION
- --------------------------------------------------------------------------------
NPV of Free Cash Flow $103,867
NPV of Terminal Value $798,604
-------------
EQUITY VALUE @10/1/00 $902,471
Fully Diluted Shares Outstanding (3) 21,615,250
EQUITY VALUE PER SHARE $41.75
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSUMPTIONS
- --------------------------------------------------------------------------------
Price / Book Multiple: 2.5x
Discount Rate: 20.0%
Tax Rate: 40.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS - EQUITY VALUE
- --------------------------------------------------------------------------------
DISCOUNT RATE
18.0% 20.0% 22.0%
-------------------------------------------------
PRICE/ 2.0x $787,991 $742,750 $700,847
BOOK 2.5x $957,864 $902,471 $851,175
MULTIPLE 3.0x $1,127,737 $1,062,192 $1,001,503
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SENSITIVITY ANALYSIS - EQUITY VALUE PER SHARE
- --------------------------------------------------------------------------------
DISCOUNT RATE
18.0% 20.0% 22.0%
-------------------------------------------------
PRICE/ 2.0x $36.59 $34.54 $32.65
BOOK 2.5x $44.25 $41.75 $39.44
MULTIPLE 3.0x $51.91 $48.95 $46.22
- --------------------------------------------------------------------------------
(1) Projections per Swan's management.
(2) Projected Book Equity of $623.3 million, as of May 31, 2004.
(3) Based on DCF implied per share value.
Project Forest 38 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
APPENDIX A:
HISTORICAL & PROJECTED FINANCIAL INFORMATION
Project Forest
ADVANCING IDEAS
HISTORICAL AND PROJECTED FINANCIAL INFORMATION
$ in millions except per share data
------------------------------------------------------------------
Swan's Projections (2)
------------------------------------------------------------------
Financial Summary - Swan LTM (1) FY 2001 FY 2002 FY 2003 FY 2004 CY 2000 CY 2001
-------- --------------------------------------------- -------------------
Revenue $400.9 $386.0 $482.4 $800.9 $1,001.1 $385.9 $442.2
Net Income $30.9 $22.9 $31.4 $52.0 $64.9 $26.9 $27.9
(1) Latest twelve months ("LTM") ending August 31, 2000; includes $3.97 million
gain on Aether investment.
(2) Projections per Swan's management.
Project Forest 40 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
APPENDIX B:
COMPARABLE PUBLIC COMPANY ANALYSIS DETAIL
Project Forest
ADVANCING IDEAS
COMPARABLE PUBLIC COMPANY ANALYSIS DETAIL
($ in millions except per share)
-----------------------------------------
Latest Twelve Months ("LTM") Data 10/9/00
----------------------------------------- AVERAGE STOCK
LTM NET MARKET DAILY STOCK PRICE AS
TICKER QUARTER NET MARGIN VALUE VOLUME PRICE A % OF 52
SYMBOL COMPANY DATE REVENUES INCOME (%) OF EQUITY (2) (000S) 10/9/00 WEEK HIGH
- ------ -------------------------- ------- -------- ------ ------- ------------- ------- ------- ---------
ONLINE BROKERS
- --------------
amtd Ameritrade Hldg Corp 6/00 $586.8 ($42.6) (3) NM $2,487.1 2,803.9 $14.13 45.6%
sch Charles Schwab Corp 6/00 $4,878.3 $759.9 (4) 15.6 $41,499.8 5,595.7 $29.13 65.1%
dir Dljdirect 6/00 $329.4 $1.7 0.5 $635.1 324.6 $6.19 31.0%
egrp E Trade Group Inc 6/00 $1,194.9 ($28.0) (5) NM $4,421.7 6,251.3 $14.06 35.2%
twe Td Waterhouse Grp Inc 7/00 $1,469.1 $189.1 12.9 $6,244.6 556.0 $16.44 60.9%
-------------------------------------------------------------------------------------------------------------------------
LOW 0.5 31.0%
MEAN 9.7 47.5%
MEDIAN 12.9 45.6%
HIGH 15.6 65.1%
-------------------------------------------------------------------------------------------------------------------------
MARKET MAKERS
- --------------
itg Investment Technology Gp Inc 6/00 $281.7 $62.0 (6) 22.0 $1,129.6 157.8 $34.75 66.0%
nite Knight Trading Group Inc 6/00 $1,222.3 $263.3 (7) 21.5 $3,225.1 4,570.6 $25.06 41.7%
lab Labranche & Co Inc 6/00 $263.9 $63.4 24.0 $1,426.8 114.2 $29.31 78.2%
-------------------------------------------------------------------------------------------------------------------------
LOW 21.5 41.7%
MEAN 22.5 61.9%
MEDIAN 22.0 66.0%
HIGH 24.0 78.2%
-------------------------------------------------------------------------------------------------------------------------
Swan 8/00 $400.9 (8) $30.9 7.7 $537.6 390.9 $25.25 42.6%
-----------------------
52 Week Price Range
TICKER -----------------------
SYMBOL COMPANY LOW HIGH
- ------ -------------------------- ------ -----
ONLINE BROKERS
- --------------
amtd Ameritrade Hldg Corp $10.50 - $31.00
sch Charles Schwab Corp $17.96 - $44.75
dir Dljdirect $6.06 - $19.94
egrp E Trade Group Inc $13.13 - $40.00
twe Td Waterhouse Grp Inc $11.44 - $27.00
MARKET MAKERS
- -------------
itg Investment Technology Gp Inc 17.81 - 52.69
nite Knight Trading Group Inc 21.69 - 60.06
lab Labranche & Co Inc 9.06 - 37.50
Swan $20.38 - $59.25
Financial data provided by Compustat Data Service.
(1) Operating Income is figured after Depreciation and Amortization.
(2) Market Value based on fully diluted shares; treasury stock method applied.
(3) Excludes Equity loss of $19.4 million.
(4) Excludes $68.6 million merger related charge.
(5) Net Income excludes $35.0 million merger related charge.
(6) Net Income excludes $(.2) million in spinoff costs.
(7) Net Income excludes $5.8 million in merger costs.
(8) LTM Revenue includes $3.97 million gain on Aether investment.
Project Forest 42 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
COMPARABLE PUBLIC COMPANY ANALYSIS DETAIL
($ in millions except per share)
----------------------- ------------ ---------------------------
P/E Ratios P/B Ratio Revenue Multiples
----------------------- ------------ --------------------------- AVERAGE 2000
FD MARKET "EQUITY CORE CUSTOMER CAL. P/E
FISCAL LATEST 2000 2001 CAP / VALUE"/ "EQUITY "EQUITY BROKERAGE ASSETS/ AS A % OF
YEAR TWELVE CALENDAR CALENDAR BOOK LTM VALUE"/ VALUE"/ ACCOUNTS CORE 5-YEAR EP
COMPANY END MONTHS YEAR YEAR VALUE REVENUE CY 2000 CY 2001 (000S) ACCOUNT GROWTH
- --------------------------- ------ ------ -------- -------- --------- -------- -------- --------- --------- -------- ----------
ONLINE BROKERS
- --------------
Ameritrade Hldg Corp 9/99 NEG NM 16.4x 11.5x 4.2x 4.0x 2.7x 1,165 $29,871 NM
Charles Schwab Corp 12/99 49.4x 44.8x 37.5x 10.9x 8.5x 7.2x 6.2x 7,300 $137,438 2.1
Dljdirect 12/99 NM NM 38.7x 2.6x 1.9x 1.7x 1.3x 1,000 $28,000 NM
E Trade Group Inc 9/99 NEG NM 50.2x 2.4x 3.7x 3.2x 2.2x 2,722 $20,829 NEG
Td Waterhouse Grp Inc 10/99 32.9x 29.9x 20.5x 2.9x 4.3x 3.9x 3.4x 3,011 $54,002 1.3
- ---------------------------------------------------------------------------------------------- -----------------------------------
LOW 32.9X 29.9X 16.4X 2.4X 1.9X 1.7X 1.3X 1,000 $20,829 1.3
MEAN 41.1X 37.3X 32.7X 6.1X 4.5X 4.0X 3.2X 3,040 $54,028 1.7
MEDIAN 41.1X 37.3X 37.5X 2.9X 4.2X 3.9X 2.7X 2,722 $29,871 1.7
HIGH 49.4X 44.8X 50.2X 11.5X 8.5X 7.2X 6.2X 7,300 $137,438 2.1
- ---------------------------------------------------------------------------------------------- -----------------------------------
MARKET MAKERS
- -------------
Investment Technology Gp Inc 12/99 18.4x 17.1x 14.1x 6.8x 4.0x 3.8x 3.2x NA NA 0.8
Knight Trading Group Inc 12/99 10.9x 11.5x 10.6x 4.6x 2.6x 2.4x 2.0x NA NA 0.4
Labranche & Co Inc 12/99 20.5x 17.8x 15.6x 4.4x 5.4x NA NA NA NA 1.0
- ---------------------------------------------------------------------------------------------- -----------------------------------
LOW 10.9X 11.5X 10.6X 2.4X 2.6X 2.4X 2.0X NA NA 0.4
MEAN 16.6X 15.5X 13.4X 5.2X 4.0X 3.1X 2.6X NA NA 0.8
MEDIAN 18.4X 17.1X 14.1X 4.6X 4.0X 3.1X 2.6X NA NA 0.8
HIGH 20.5X 17.8X 15.6X 6.8X 5.4X 3.8X 3.2X NA NA 1.0
- ---------------------------------------------------------------------------------------------- -----------------------------------
Swan(2) 5/00 14.2x 20.0x 19.3x 1.2x 1.3x 1.4x 1.2x 269 $41,651 0.4
------------------------------- ----------------------
Actual and Projected EPS (1) Revenue Estimates
------------------------------- ----------------------
2000 2001 2000 2001
EPS CALENDAR CALENDAR CALENDAR CALENDAR
COMPANY (LTM) YEAR YEAR YEAR YEAR
- ----------------------------- -------- ---------- ---------- ---------- ----------
ONLINE BROKERS
- --------------
Ameritrade Hldg Corp ($0.12) $0.12 $0.86 $623 $924
Charles Schwab Corp $0.59 $0.65 $0.78 $5,751 $6,647
Dljdirect $0.02 $0.02 $0.16 $378 $477
E Trade Group Inc ($0.22) $0.02 $0.28 $1,403 $2,020
Td Waterhouse Grp Inc $0.50 $0.55 $0.80 $1,582 $1,827
- ----------------------------
LOW
MEAN
MEDIAN
HIGH
- ----------------------------
MARKET MAKERS
- -------------
Investment Technology Gp Inc $1.89 $2.03 $2.47 $300 $358
Knight Trading Group Inc $2.29 $2.17 $2.37 $1,367 $1,613
Labranche & Co Inc $1.43 $1.65 $1.88 NA NA
- ----------------------------
LOW
MEAN
MEDIAN
HIGH
- ----------------------------
Swan(2) $1.78 $1.27 $1.31 $386 $442
(1) Estimates provided as of 10/9/00 by First Call and IBES.
(2) Estimates provided by Swan's management; LTM Revenue and EPS include $3.97
million gain on Aether investment; LTM EPS excludes discontinued
operations and is fully diluted, based on treasury stock method.
Project Forest 43 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
COMPARABLE PUBLIC COMPANY ANALYSIS DETAIL
($ in millions except per share)
FISCAL YEAR FISCAL YEAR
END END
COMPOUND COMPOUND
-------------------------- REVENUE % --------------------------- EPS %
Revenues GROWTH Earnings Per Share GROWTH 5-YEAR
-------------------------- RATES (1) --------------------------- RATES (1) ESTIMATED
LATEST LATEST (-2 YEARS TO LATEST (-2 YEARS TO EPS %
COMPANY YEAR -2 YEARS -1 YEAR YEAR LATEST YEAR) -2 YEARS -1 YEAR YEAR LATEST YEAR) GROWTH Rate
- ------------------------- ------ -------- ------- ------ ------------ -------- ------- ------ ------------ -----------
ONLINE BROKERS
- --------------
Ameritrade Hldg Corp 9/99 $92.2 $158.3 $315.2 84.9 $0.08 $0.00 $0.07 -8.3 34.8
Charles Schwab Corp 12/99 $2,845.2 $3,388.1 $4,713.2 28.7 $0.23 $0.29 $0.49 45.8 21.5
Dljdirect 12/99 $67.2 $117.9 $238.1 88.2 NA NA $0.07 NA 33.0
E Trade Group Inc 9/99 $234.1 $335.8 $694.8 72.3 $0.10 ($0.01) ($0.23) NM 35.3
Td Waterhouse Grp Inc 10/99 $446.6 $614.5 $1,153.1 60.7 NA $0.15 $0.28 NA 22.6
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Low 28.7 -8.3 21.5
Mean 66.9 18.7 29.4
Median 72.3 18.7 33.0
High 88.2 45.8 35.3
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MARKET MAKERS
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Investment Technology Gp Inc 12/99 $137.0 $212.2 $232.0 30.1 $0.93 $1.48 $1.48 26.3 21.0
Knight Trading Group Inc 12/99 $226.6 $355.8 $800.8 88.0 $0.54 $0.70 $1.52 67.8 28.3
Labranche & Co Inc 12/99 $67.6 $126.4 $201.0 72.4 NA $0.06 $0.72 NA 17.3
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Low 30.1 26.3 17.3
Mean 63.5 47.0 22.2
Median 72.4 47.0 21.0
High 88.0 67.8 28.3
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Swan 5/00 $138.8 $207.9 $385.8 66.7 $0.45 $1.29 $1.86 103.3 55.0
(1) Calculated using three data points.
Project Forest 44 [LOGO OF US BANCORP PIPER JAFFRAY]
ADVANCING IDEAS
COMPARABLE PUBLIC COMPANY ANALYSIS DETAIL
($ in millions except per share)
------------------------------
Book Value
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QUARTERLY QUARTERLY RECENT FULLY DILUTED FULLY DILUTED
INTANGIBLE STOCKHOLDERS' PRICE SHARES MARKET
COMPANY ASSETS EQUITY 10/9/00 X (000S) (1) = CAPITALIZATION
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ONLINE BROKERS
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Ameritrade Hldg Corp $12.8 $215.4 $14.13 176,075 $2,487.1
Charles Schwab Corp $45.1 $3,798.7 $29.13 1,424,886 $41,499.8
Dljdirect $0.0 $245.4 $6.19 102,650 $635.1
E Trade Group Inc $0.0 $1,859.6 $14.06 314,431 $4,421.7
Td Waterhouse Grp Inc $654.1 $2,187.6 $16.44 379,901 $6,244.6
MARKET MAKERS
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Investment Technology Gp Inc $0.8 $167.3 $34.75 32,506 $1,129.6
Knight Trading Group Inc $18.5 $706.1 $25.06 128,684 $3,225.1
Labranche & Co Inc $170.3 $326.5 $29.31 48,675 $1,426.8
Swan $0.0 $450.8 $25.25 21,293 $537.6
(1) Fully diluted shares calculated using the treasury stock method.
Project Forest 45 [LOGO OF US BANCORP PIPER JAFFRAY]